ELMWOOD — Ehlers Public Finance Advisors were authorized to move forward with a water utility rate analysis to comply with the Wisconsin Public Service Commission’s (PSC) letter requesting a conventional rate case, at the June 8 Elmwood Village Board meeting.

Ehlers Fiscal Consultant Peter Curtin presented the item, stating the PSC’s benchmark rate of return is 6.5% for water utility, and Elmwood is at -1.34% as of the 2025 annual report.

“Really what’s going on is that the village received a letter from the PSC saying that commission staff was concerned that the utility did not apply for a conventional rate case beyond the recommended timeframe,” Curtin said. “All water and electric utilities in the State of Wisconsin are regulated by the Wisconsin Public Service Commission.”

Curtin said the commission has started to look into specific municipalities in recent years.

“It’s not a matter of malpractice by the utility, it’s more so the Wisconsin Public Service Commission is trying to sort of have utilities come in for these conventional rate cases where they can analyze your rates and make sure they’re up to where their benchmarks are,” Curtin said.

If the village does not apply for a conventional rate case, the commission can investigate the utility on their own, taking away village input and making their own decision. The cost of that audit would also fall onto the village.

“Accordingly, the PSC uses standard business concepts when determining the revenue required for a water utility to provide safe, reliable, affordable, and environmentally responsible service over the long term. Within the context of a rate case, this necessary revenue is referred to as the revenue requirement. A revenue requirement is the amount of money that a public utility must receive from its customers on an annual basis to cover its operating costs, applicable taxes (including PILOT), debt payments, and earn a reasonable return (profit). The Commission bases the revenue requirement on a forward looking test year, typically the first calendar year for which the rates are expected to be in effect,” the PSC website states.

To keep up with the benchmark, the utility would need to increase by 33.32%. That would be an average of $7 per month on residents’ water bills.

A simplified rate case is an inflationary increase to water rates. The simplified rate case can be used if it meets the criteria of the rate of return test, the present rates test and the last full rate case test (based on the recency and size of previous rate increases). The conventional rate increase requires commission approval through a lengthy application process that includes a public hearing.

Elmwood’s last simplified rate case was in 2018. Average simplified rate case increases are about 3-4% per year.

The analysis is still in the early stages, with months still separating now and a public hearing and final ruling from the commission.

Other business

• After a brief closed session period, the board opted to inform the realtor of their decision to lower the listed price of the nursing home property. The 28,000 square-foot property at 232 E. Springer Ave. is currently listed with Edina Realty for $895,000.
• Approved the development of a new village website.
• Approved alcohol licenses for Dollar General, Sandbar, Half Throttle Saloon and Consumers Cooperative. La Veracruzana and Kern’s Hometown Cafe missed the application deadline, and the board will make a decision on their status during the July meeting.
• Approved paperwork, licenses and road closures for UFO Days on the last full weekend of July.