September/October 2018 Issue

Also in this issue: Wisconsin Supreme Court Affirms There is No Compensable Property Right to Visibility in Billboard Case     |     Court of Appeals Upholds Constitutionality of Municipal Smart Meter Program

Public Service Commission Approves First Financial Assistance Program for Private Lead Service Line Replacements

Jared Walker Smith | 09.27.18

On August 16, 2018, the Public Service Commission (PSC) approved the City of Kenosha’s private lead service line financial assistance program. Created pursuant to 2017 Wisconsin Act 137, the program allows revenue from water utility rates to be used to provide property owners with financial assistance to replace their private lead service lines. Kenosha was the first utility to apply for PSC approval of a program under the new law and, therefore, the three PSC Commissioners’ determination regarding Kenosha’s application addressed several outstanding questions. 

Under Kenosha’s program, a private property owner served by a private lead service line may receive financial assistance equal to 100% of the replacement cost. The financial assistance offered is a grant for 50% of the cost of replacement up to a maximum of $2,000, and a low interest rate loan for the remainder of the cost. Loan repayments will be included on the property owner’s tax bill. The Commissioners determined that Kenosha’s program satisfied the Act’s requirement that all property owners in a class be offered the same percentage of ​“financial assistance,” even though the component grant and loan percentages may differ between property owners. 

The Commissioners discussed whether to require Kenosha to extend its program to cover the replacement of galvanized steel pipes that are or were attached to Kenosha’s lead pipes because of the potential for deposits on the inside of the galvanized steel pipes to trap lead. PSC Staff recommended that PSC approval of Kenosha’s program be conditioned on extending the financial assistance program to the replacement of galvanized steel pipes. While the Commissioners encouraged Kenosha to look at the galvanized steel pipe issue, they did not condition approval of Kenosha’s program on their replacement. The Commissioners’ decision left open the option for each community to make its own decision on whether it wants to, or can, extend the community’s financial assistance program to cover replacement of galvanized steel pipes. 

The Act requires that replacement of a private-side lead service line and utility-side lead service line happen at the ​“same time.” PSC Staff suggested that the Commissioners define at the ​“same time” to mean that the replacements had to occur on the same day. The Commissioners did not find that any further definition of the statutory requirement that the service lines be replaced at the ​“same time” was necessary. The Commissioners recognized that communities needed flexibility to coordinate their public replacements with private contractors performing private replacements. 

PSC Staff also suggested that PSC approval of Kenosha’s program be limited to five years, and that Kenosha be required to seek re-approval of its program at that time. The Commissioners did not support placing a time limit on its approval of Kenosha’s program, but it did require Kenosha to apply for a full rate case that includes private lead service line replacement costs within two years. 

Kenosha expects its financial assistance program to be in full swing for the 2019 construction season, but it has already provided financial assistance for the removal of several leaking private lead service lines in the City. With the first program approved, the PSC expects to begin to receive additional applications from interested communities. Manitowoc Public Utilities became the second applicant on September 11, 2018. 

— Jared Walker Smith & Lawrie J. Kobza