Municipal Authority FAQs

FAQs: Obligation to Serve

Is the municipal utility obligated to provide service outside the municipal limits?

The PSC ordinarily does not require a public utility to provide service outside its identified service area. Typically, for a municipal utility, the service area corresponds to the municipal boundaries.

There are, however, instances where municipalities elect to serve outside their corporate limits. Here, the municipality acquires an ongoing obligation to serve outside its municipal limits in this immediate area and, possibly, under like conditions, surrounding property beyond the municipal limits. A municipality may, however, limit such obligation by adopting an ordinance in conformance with Wis. Stat. § 66.0813(3)(b).

Can a utility abandon service outside the municipal limits in order to encourage annexation?

Once a utility begins serving a customer, it gains an ongoing obligation to provide that service which it cannot abandon without specific authorization from the Public Service Commission. Approval to abandon is almost always contingent on service no longer being needed or wanted by the current customer and some additional circumstance that results in little likelihood future property owners would elect utility service either. As you can see, these factors can rarely be met, thus there is substantial precedent and case history to not allow a municipality to get out from under its obligation to continue an established service obligation. Abandonment would not be allowed as a tool to force customers outside of corporate boundaries to annex to the city.

Wis. Stat. 196.81 Abandonment; commission approval required.

(1) No public utility may abandon or discontinue any line or extension or service thereon without first securing the approval of the commission. In granting its approval, the commission may impose any term, condition or requirement it deems necessary to protect the public interest. If a public utility abandons or discontinues a line or extension or service thereon upon receiving commission approval, the public utility shall be deemed to have waived any objection to any term, condition or requirement imposed by the commission in granting the approval.


Our water utility is facing some challenges providing additional water to meet the needs of our largest customer’s planned expansion. The water needed by the customer is greater than the capacity of our local aquifer. Does the water utility have an obligation to provide the total water needs of this customer?

This question is difficult to answer in the absence of additional facts. In general, a water utility has the obligation to meet reasonable requests for water service throughout its service area. In exchange for being recognized as the exclusive service provider (monopoly), the utility is required by Wis. Stat. § 196.03(1) to provide reasonable and adequate service in exchange for just and reasonable compensation. However, this does not mean that the utility must meet every, and any, customer demand. The key is “reasonable” service. Commission staff would consider multiple issues in determining what is reasonable for a specific system. These situations warrant discussion between all the parties and Commission staff.

FAQs: Connection to a Municipal Utility

Can an existing customer bordering the service area of a neighboring utility unilaterally elect to transfer general water or fire protection service to a neighboring water utility?

The PSC recognizes the local water utility as the exclusive provider of water service to customers located within its service territory. A customer cannot unilaterally decide to receive utility service from a different utility provider without PSC approval. Even if all parties support the transfer for technical reasons (eg: availability of larger fire flow capacity, access to existing water mains, cheaper rates, etc.), the utilities will need to file a joint application requesting PSC authorization for the transfer of utility responsibilities. This process requires a formal docketed proceeding under Wis. Admin.Code § 2.11 and may require a hearing if all parties do not waive objections to transferring the customer’s utility service. If the local utility opposes the transfer, the utility can contest the case and participate in opposition to the application. Past precedent suggests contested customer transfers are unlikely; however, the Commission would make its decision based on the merits of the hearing record and case history dealing with utility service territory.

Can a utility prevent residents from drilling their own wells to circumvent using a municipal water supply?

The PSC does not have jurisdiction over private wells. Wis. Stat. § 281.45 allows a municipality to pass an ordinance requiring a building used for human habitation which is located on a street adjacent to a water (or sewer) main to connect to the water (or sewer) main. In addition, a private well meeting DNR and local requirements may be used for outdoor and non-potable use, but the utility and customer must be careful to avoid cross connections between the utility and private well systems. Commission staff recommends you contact your municipal attorney for guidance on this subject.

Can a municipality require residents on wells to connect to the municipal utility?

Any well abandonment must follow the requirements of DNR § 812.26.

Wisconsin Stat. § 281.45 allows the municipality to require properties adjacent to utility mains with dwellings used for human habitation to connect to the municipal water system. The requirement to connect to the municipal system must be uniformly applied to all properties adjacent to the main, or in a block through which mains have been extended, unless there is a good reason why it is impractical for certain properties to connect. In this case, the utility must have a reasonable and uniformly applied standard for determining which properties are required to connect. Commission staff recommends you contact your municipal attorney for guidance on this subject.

If the municipality does not require connection or exempts certain properties, the utility may still be able to charge the owners. If the utility’s filed rates include standby charges or direct charges for public fire protection applicable to non-customers, these charges should be applied to residents on private wells.

FAQs: Other

Should the municipality exempt a property from a special assessment for the cost of water main installation if the new main will not provide any benefit to the property?

In general, the application of special assessments falls under local authority, not PSC authority. The municipality should have a uniform, consistently applied policy for dealing with this kind of situation. It should follow its past practice in applying special assessments unless there is a good reason for changing. If the municipality has not encountered a similar situation before, it should be aware that its decision will set a precedent for the application of future special assessments.

Wisconsin Stat. § 66.0703(3) offers guidance on whether a property already receiving water service from one street should be exempt from special assessments for a main extension in a second street. The owner of such a property is entitled to a deduction or exemption from the assessment that the municipal governing body determines to be reasonable based on the details of the situation.

What alternatives are available for serving a newly developed property adjacent to the service area of a neighboring utility if the local water utility does not have facilities in a common shared street, but the neighboring utility does?

The local utility can require the property connect to its system and pay for the main extension into the border street. This is not an efficient solution and is not likely to be received well by the customer. Another solution is for the newly developed property to become a retail customer of the local utility and pay the local utility’s retail rates but actually be served by the neighboring utility. The neighboring utility would charge its retail rates to the local utility for the water used. Alternatively, the two municipalities could agree to amend their respective service areas through an intermunicipal agreement to make the newly developed property a customer of the neighboring utility. Commission staff recommends contacting the Department of Natural Resources to gain clear understanding of their requirements concerning cross connections.