Fire Protection

FAQs: Public Fire Protection

What is the PFP charge, and what costs is it designed to recover?

The PFP charge, also known as hydrant rental charge, recovers the cost of water for fighting fires and the extra capacity built into the system necessary to rapidly deliver a large volume of water to a fire anywhere within the municipality's water service area. These costs include a portion of the wells, pumps, storage facilities, water mains, hydrants and an estimated quantity of water used for this purpose.

To learn more about options about the public fire protection charge, please see Public Fire Protection Study.

What are the options for recovering fire protection costs?

The municipality has three options for recovering the PFP charge.

1. Charges for PFP can be included on the water bills of utility customers (and non-customers) as allowed by Wis. Stat. § 196.03(3)(b). This method is referred to as a direct charge. Advantages to this method are that it does not increase property taxes, tax exempt water customers contribute to the system, and charges do not count against the municipality's levy limit. Disadvantages include the fact that the PFP charge cannot be deducted on individuals' income taxes, and the amount of the charge to a particular customer is not strictly related to the benefit received.

2. The municipality can pay the PFP charge and recover it through property taxes. This is referred to as a municipal charge. Advantages of this method are that the water bill is smaller, the PFP is deductible on individual income taxes, and all properties except those that are tax exempt pay for the PFP. While the charge is paid proportionate to benefits received, the PFP charge counts towards the municipality’s levy limit.

3. The municipality can elect to pay a portion of the PFP charge with the balance being made up through direct charges to customers.

To learn more about about public fire protection charge options, please see:


PSC's Public Fire Protection Study.

How are direct PFP charges calculated?

In 1988, Wis. Stat. § 196.03(3)(b) allowed for the direct charge on general service water customer bills or a combination of direct and municipal charges. This Statute also allows the municipality to apply direct charges to noncustomers owning land within the municipality. PSC staff understands this to mean that, if the municipality chooses to apply direct charges to noncustomers, it must apply charges to all land, improved or unimproved, located within the municipality. This rate is not applicable to land declared by the municipality as unbuildable. The PSC has preapproved eight methods for calculating direct charges for PFP. Of those eight methods the four most commonly used methods are described below. Utilities may propose alternative methods for calculating direct charges subject to PSC review. Note: Wisconsin Stat. § 196.03(3)(b)2 does not apply to property owned by the state. The exclusive mechanism for recovery of charges for PFP from the state is through Wis. Stat. § 70.119.

1. Equivalent Meters Method - Based on ratios of meter size

  • Simple to administer
  • Not perfectly equitable

2. Equivalent Services Method - Based on ratios of meter size, but uses different ratios

  • Simple to administer
  • Not perfectly equitable
  • Compared to the equivalent meters method this method results in relatively higher charges to small meters and lower charges to large meters

3. Property Values Method - Based on property value

  • Equitable; charges closely reflect benefits received
  • Provides continuity for utilities moving the PFP charge from municipal charge to direct charges
  • Property value data may not be readily available to the utility

4. Square Feet of Improvements Method - Based on square feet of improvements

  • Equitable; charges reflect benefits received
  • Some continuity with municipal charge
  • The data may not be readily available to the utility

The remaining four preapproved methods are the Madison method, the Alliant (WP&L) method, the fire calls method, and the actual method. These methods are complex and rarely used and some have fallen completely into disuse.

What is a municipal PFP charge?

Prior to 1988, all municipalities recovered the PFP charge through the tax levy. This approach is known as a municipal charge. About 60% of Wisconsin utilities recover the PFP charge through the tax levy, while the remaining water utilities recover at least some or all of their PFP costs through direct charges placed on water utility bills.

What is the process for changing the manner or method of PFP recovery?
      
  • A utility may request changes to its PFP charge as part of a conventional rate case proceeding. This option is preferred, as it allows Commission staff to review the method for calculating PFP charges, determine the total amount of the PFP charge, and analyze all related details within the context of a cost of service study and rate design.
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  • Alternatively, a utility may request changes to PFP charges outside a conventional rate case proceeding. A hearing is required whenever direct PFP charges are established or revised. A utility choosing to make revisions to its PFP charge outside a conventional rate case should click the following link for additional information: Application - Changing Method of Cost Recovery for PFP Charge Outside of a Conventional Water Rate Case
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FAQs: Private Fire Protection

What costs of the utility is the private fire protection charge designed to recover?

Fire protection service, either from public hydrants or from private connections, is a demand-related service. On an annual basis, very little water is actually used for fire protection. The major costs associated with this service are the costs of providing capacity in the wells, pumps, storage tanks, and water mains to be able to supply the required fire flow when and if needed. Only a small portion of the cost of providing such capacity is directly related to the volume of water actually used. The charge for private fire protection includes a portion of the fixed costs of depreciation, taxes, and return on net investment rate base attributable to the facilities available to supply fire protection. Charges for private fire protection are computed on a parallel basis with the public fire protection charge. The charge for an unmetered private fire protection connection is based on the potential demand which could be placed on the system due to that connection.

Accordingly, the size of the connection to the utility’s water main is used as the basis for calculating the private fire protection service charge. This method is appropriate, because the connection to the main and the utility’s portion of the service lateral from the main to the shutoff valve at the curb stop or property line are the utility’s only control points with respect to this service. The utility has little, if any, control over the sizing of and changes to the customer’s piping within the building.

Who is responsible for the maintenance of private fire protection equipment?

The water utility is not responsible for maintaining private fire hydrants. Some municipalities have ordinance provisions requiring periodic maintenance of private hydrants. If flushing is required, it should be done under the supervision of utility personnel so water use can be estimated and properly accounted for. The cost of the water used in flushing or testing hydrants - or fighting actual fires - is incorporated in the rate for public or private fire protection service. Under those circumstances, an additional volume charge is not applied. If the customer requests the utility to flush or otherwise maintain the private hydrant(s), the utility should bill these costs as non-utility business at an hourly rate. If a municipality elects to ensure that all hydrants - public or private - are operational, the utility may include the private hydrants in its testing/flushing program. In the case of private hydrants, the utility would need to have the approval of the property owner to gain legal access to the hydrant, as well as the owner's acceptance of the utility charges for this maintenance activity.

In general, Commission staff recommends that a utility adopt uniform practices in the treatment of all the private hydrants on its distribution system. If a utility needs to use a private hydrant to flush, but your overall practice is not to flush or otherwise test private hydrants, then the utility must communicate clearly to all private fire-protection customers the reason for the exception.

How should the utility apply the private fire protection charge in problematic situations?

Question 1: A building is served by a 6-inch line for private fire protection and potable water service. Branching off the 6-inch line is a line for potable water service with a 2-inch meter. What is the bill for private fire protection?

Answer 1: The charge for private fire protection service under Schedule Upf-1 is based on the size of the unmetered connection(s) to the utility main. The customer is billed the 6-inch private fire protection service charge. (The customer is also billed for general service under Schedule Mg-1 for the 2-inch meter service charge and the volume charge for the water used.)


Question 2: A building is served by a 6-inch line for private fire protection and potable water service. A 6-inch meter is placed where the water line first enters the building. The line then branches to serve the private fire protection system and the general service uses. What is the bill for private fire protection?

Answer 2: There is no charge for private fire protection under Schedule Upf-1 because there is no unmetered connection to the utility main. All of the water used, including any water used for private fire protection, is measured by the water meter. (The customer is billed for general service under Schedule Mg-1 for the 6-inch meter service charge and the volume charge for the water used.)


Question 3: A building is served by an 8-inch line for private fire protection and potable water service. The unmetered 8-inch line is downsized to 4-inch before reaching any use for private fire protection (sprinkler system, etc.). What is the bill for private fire protection?

Answer 3: The charge for private fire protection service under Schedule Upf-1 is based on the size of the unmetered connection(s) to the utility main. The customer is billed the 8-inch private fire protection service charge.

Alternative Answer 3: The charge for private fire protection service under Schedule Upf-1 is generally based on the size of the unmetered connection(s) to the utility main, and the utility would never be wrong to strictly adhere to this policy. However, if there is downsizing of the service pipe prior to any use for private fire protection purposes, the utility at its sole discretion could choose to apply the charges under Schedule Upf-1 based on the downsized pipe size. The difficulty for the water utility with this option is the lack of knowledge or control over the sizing of and changes to the customer’s piping within the building. Please note, though, that if the utility chooses to do this for one customer, it must be consistent and do this for all customers.


Question 4: An 8-inch private main (only one connection to the utility main, not looped) has three private hydrants on it. How is the bill calculated for private fire protection? Does it matter how many private hydrants there are? Who gets billed?

Answer 4: The charge for private fire protection service under Schedule Upf-1 is based on the size of the unmetered connection(s) to the utility main. This includes a connection for the purpose of supplying water to one or more private hydrants. The private fire protection charge is not dependent on the number of private hydrants behind that connection. The owner of the private main would receive the bill for the 8-inch private fire protection service charge.

If the above 8-inch private main was indeed looped (connected at both ends to the utility main), there would be two 8-inch private fire protection service charges, and it would still make no difference how many private hydrants there were.


Question 5: The owner of a strip mall has a 10-inch private main connected at each end (looped) to the utility water main. Each unit/tenant of the strip mall is individually metered for general service. How is the bill calculated for private fire protection? Who gets billed?

Answer 5: The charge for private fire protection service under Schedule Upf-1 is based on the size of the unmetered connection(s) to the utility main. If the 10-inch private main is connected at both ends to the utility main, there would be two 10-inch private fire protection service charges. The owner of the private main (presumably the owner of the strip mall) would receive the bill for private fire protection service.

Alternative Answer 5: The charge for private fire protection service under Schedule Upf-1 is generally based on the size of the unmetered connection(s) to the utility main, and the utility would never be wrong to strictly adhere to this policy. However, even though it is not the water utility’s responsibility to distribute private fire protection charges to the individual units in a multi-unit building, the water utility at its sole discretion could choose instead to bill each unit that has a private fire protection system (sprinkler system, etc.) for private fire protection service based on the size of each unit’s unmetered connection to the private main. The difficulty for the water utility with this option is knowing the sizes of those connections to the private main. This option should only be considered if each unit is individually metered for general service (meaning each is already being billed as a customer of the water utility).