PSC to Limit How Much of Relocation Costs Milwaukee Can Shift to Utilities

Published on: September 28, 2012

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Brett Healy and his fellow utility ratepayers, represented by the Wisconsin Institute for Law & Liberty (“WILL”), scored a significant victory in today’s proceedings before the Wisconsin Public Service Commission.  The City of Milwaukee had argued that the construction of its 2.1 mile downtown streetcar project is a proper exercise of its police power to promote the public safety and welfare, and therefore it has the legal right to force the utilities that will be affected by the project (and their ratepayers) to absorb all of the costs for the relocation or reconstruction of their facilities.  Those costs have been estimated at more than $50 million.  The City, which expects to essentially pay for the $65 million project with federal funds, has no room in its project budget to pay even one dollar of utility relocation costs.

The Commission declined to rule today that the construction of the streetcar project is a proper exercise of the City’s police power, setting that issue for a later hearing.  More importantly, however, the Commission held that even if the streetcar project is a proper exercise of the City’s power, the City cannot impose all of the relocation costs on the utilities that will be affected.  Only those costs that the Commission finds to be “reasonable” can be shifted to the utilities.  The Chairman of the Commission particularly noted that the Commission’s duty is to protect Wisconsin’s utility ratepayers, and expressed serious reservations that it would be appropriate for the City to pass on tens of millions of dollars in costs to Southeastern Wisconsin utility ratepayers who will receive no benefit from the City’s project.  The Commission rejected the City’s contention that it had no jurisdiction to decide the cost issue, and said that it would hold a hearing to determine what costs it would permit the City to pass on to the utilities and their ratepayers.

Rick Esenberg, President and General Counsel of WILL, said “this is a clear victory for our clients and for the concept of government accountability.  The Public Service Commission has done what we asked it to do, and will take a close look at the City’s decision to impose millions of dollars in costs on ratepayers who do not live in the City.  We are confident that the Commission will decide that, if the City wants to move forward with the streetcar project, the City’s taxpayers should pay for it.”

Brett Healy, who originally brought the matter before the Commission, said “it’s clear that the City has no room in its budget for paying any of the utility costs and equally clear that the Commission will not let the City get away with shifting all, or even most, of those costs to utility customers.  It’s time for the City to let its taxpayers know that the streetcar project cannot be financed with “free” federal dollars, and that it will likely cost them in substantially increased property taxes at the end of the day.”

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