October/November 2026 Issue

Also in this issue: The MGS Public Utility Status Case Is About More Than Just a Power Line     |     Governor’s Race Could Reshape Wisconsin’s Utility and Natural-Resources Leadership     |     A Refresher On Attorney-Client Privilege

The PSC’s Decision in Docket 5-BS-296: Regional Cooperation, Utility Regulation, and the Limits of Traditional Cost-Of-Service Ratemaking

Lawrie J. Kobza | 11.11.26

In 5-BS-296, the Public Service Commission of Wisconsin ("PSC") was asked to determine whether the Village of Potosi Water Utility and the Village of Tennyson Water Utility could enter into a long-term arrangement to share water supply infrastructure, including two wells and Tennyson’s elevated water tower. The application represented an effort by two neighboring Grant County communities to make more efficient use of existing infrastructure and improve service reliability through regional cooperation.

The PSC decision is noteworthy because it addresses broader regulatory questions regarding how Wisconsin’s traditional public utility statutes apply to innovative intergovernmental arrangements that do not fit neatly within conventional utility ownership and ratemaking models. Rather than constructing duplicate facilities, the villages proposed sharing existing infrastructure through a shared-use and lease agreement. The proposed arrangement would allow both communities to benefit from existing storage capacity, improve system pressure and fire protection capabilities, and potentially avoid significant future capital expenditures.

Potosi and Tennyson had been discussing forms of cooperation for several years. A joint resolution adopted in 2019 expressed the communities’ intent to continue sharing resources and exploring future water-system collaboration. Prior PSC decisions involving improvements to the respective water systems had also encouraged the communities to pursue regionalized approaches to water supply.

In January 2026, the utilities formally filed their application seeking PSC approval under Wis. Stat. § 196.49. The Commission initially found the application incomplete and requested additional information before proceeding with substantive review. Following supplemental filings, the Commission opened an investigation and considered the legal, engineering, and ratemaking implications of the proposal.

The most significant issue in Docket 5-BS-296 was not whether the arrangement made practical sense. Commenters viewed shared use of existing infrastructure as a sensible method of reducing costs and increasing reliability. Instead, the difficulty arose from how to measure, allocate, and bill for water service between two regulated municipal utilities.

PSC staff’s memorandum focused on whether the proposed arrangement provided a sufficiently accurate method for measuring each utility’s use of the shared facilities. Concerns were raised regarding the absence of a dedicated interconnection meter and whether costs could be allocated fairly among customers of the respective utilities. According to comments filed by the municipalities and the League of Wisconsin Municipalities, installation of additional metering equipment would substantially increase project costs, potentially undermining the economic benefits that motivated the proposal in the first place.

The case therefore presented a classic tension in utility regulation: the desire to promote efficient regional cooperation versus the need for accurate accounting and rate design that protects utility customers from subsidizing others.

The Commission’s handling of Docket 5-BS-296 is important because it highlights the challenges facing small municipal utilities throughout Wisconsin. Many communities have aging infrastructure, limited customer bases, and increasing capital costs. Shared-service arrangements are often the most economical means of maintaining reliable utility service. The docket illustrates how existing regulatory requirements, developed largely for traditionally structured utility systems, can complicate innovative cooperative arrangements.

As Wisconsin communities increasingly seek shared-service models, Docket 5-BS-296 is likely to be cited as an important example of how the PSC approaches nontraditional utility partnerships and the regulatory issues that accompany them. The case demonstrates that, while the PSC is supportive of cooperative arrangements to provide efficient and cost-effective utility service, such arrangements must also satisfy the Commission’s obligations regarding customer protection, rate fairness, and accountability.

Boardman Clark, along with Town and Country Engineering and Onward Accounting and Consulting, provided assistance to Potosi and Tennyson.