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Editorial: PSC rate ruling floods Oak Creek

No matter how thirsty the three members of the state’s Public Service Commission get, they shouldn’t expect anyone in Oak Creek to offer up a glass of water.

Water in Oak Creek is about to get a lot more expensive unless someone injects reason into what so far has been a senseless act of random regulation.

It started in 2011, when the Oak Creek Water & Sewer Utility, which supplies Oak Creek, Franklin and Caledonia, requested across-the-board rate increases. The PSC regulates all such rates throughout the state.

The request gave Franklin, one of the utility’s wholesale customers, the opening it had been waiting for. Franklin wanted to change the terms of its contract with the utility to abolish the city’s annual fire protection payment, which, under the proposed rate increase, would have been about $230,000.

The utility and PSC call that insurance. Water customers pay it in case of fire emergencies that require more than the typical flow of water.

But Franklin, since 2009, had been stockpiling water to cover fire emergencies. Thus, Franklin argued, the insurance payment was wasted money.

PSC commissioners agreed. They shook hands with reason.

Then they slapped it in the face.

The commissioners ruled that if Franklin does not pay for fire protection, then the residents and business owners in Oak Creek must cover the $230,000. By its own formula, the PSC had painted itself into a corner because the insurance really isn’t insurance in the traditional sense.

It’s not set aside and used only as needed. It’s not refunded to customers when they don’t use all of it.

The money goes into the utility’s general budget. It is revenue, and the PSC will not let a utility take the kind of hit that Franklin’s reduced payments represent.

A reasonable solution would be for all of the utility’s customers to share the burden.

For now, though, the weight squarely falls on Oak Creek ratepayers. The extra fire protection payment, combined with the utility’s rate increase, amounts to an additional $68.24 for the average annual bill in Oak Creek.

The average bill payers in Oak Creek could wonder why they are paying twice for insurance. Some might suspect they are the victims of what amounts to a legalized shakedown.

They all should question how it is that a utility and the organization that regulates it strayed so far from the simple concept of customers’ paying for only what they use.

The PSC commissioners are looking at documents and precedents and proclaiming their solution technically correct; instead, they should look into the eyes of a resident of Oak Creek and try to explain why it is reasonable.

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