Petition for a Declaratory Ruling to Determine the Allocation of Costs for Modifying or Relocating Utility Facilities for the Milwaukee Streetcar Project

Type of Case: Government Spending

Court: Public Service Commission; Milwaukee County Circuit Court

Case Number: 05-DR-109; 14-cv-9797

Filed On: October 5, 2011

Current Status: Circuit court upheld PSC’s ruling requiring Milwaukee to pay utility relocation costs

The City of Milwaukee plans to build a 2.1-mile fixed street car line in downtown Milwaukee. General construction of the $64.6 million rail line woud be funded by $55 million in federal transit aid (previously allocated twenty years ago) and $9.7 million in tax-incremental financing district funds.  However, there are other costs associated with the street car. Construction will require the modification and relocation of underground utility facilities such as cables and gas and transmission lines. Cost estimates for these tasks exceed $55 million, potentially doubling the whole cost of the streetcar.

The City intends to make the utilities and their customers pay those utility relocation costs instead of raising the money from its own taxpayers.  On behalf of Brett Healy, president of the John K. MacIver Institute for Public Policy, and 35 other WE Energies customers, WILL has filed a challenge to Milwaukee’s illegal cost-shifting scheme with the Public Service Commission.  Our goal is to prevent the City from passing costs on to the utilities – who will pass those costs on to customers all around southeastern Wisconsin – which will force the City to decide whether the streetcar is worth spending an additional $55 million or more of its own money on.

The PSC has issued its first substantive ruling in the case, determining that it has the authority to decide what amount – if any – of cost-shifting of the utility relocation costs by the city to the utilities is “reasonable”.  It will set that issue for a hearing, where we intend to argue that shifting nearly half the cost of a government project onto ratepayers who will not benefit in any way from the project is utterly unreasonable.

However, legislation included in the 2013-2015 biennial budget made it unlawful for municipalities to require utilities to bear the costs of utility relocation and alteration necessitated by streetcar projects.  At the request of WILL and the ATU utilities, the PSC issued a final ruling that this new law prohibited Milwaukee from passing on its utility relocation costs to the utilities and their ratepayers.

The city appealed to the Milwaukee County Circuit Court, arguing that the streetcar legislation was unconstitutional and that the PSC lacked authority to prohibit it from passing costs on to the utilities.  The court ruled that Milwaukee lacked standing to challenge the constitutionality of the legislation and that the PSC was acting within its authority.  Milwaukee chose not to appeal the decision.

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