The Wisconsin Department of Justice is investigating the City of Lodi after a $1.2 million water utility project was completed without approval.
The Lodi city administrator received a letter of reprimand on Dec. 21 from the Public Service Commission of Wisconsin (PSC) after failing to obtain a certificate of authority prior to the construction of the west side booster station in April of 2017.
According to documents from the PSC, the booster station, originally estimated to be a $1.8 million project with Staab Construction, was proposed in the fall of 2017 to meet the water supply, fire flow and pressure needs to serve the new primary school and residential development.
State administrative code requires utilities to submit projects for approval if they exceed 25 percent of the utility’s annual net income, which the booster station did.
The booster station was scheduled to be completed in time for the new school year in September. Lodi awarded the construction bid to Staab Construction in February of 2018.
Lodi Municipal Light and Water Utility submitted an application for authorization to build the booster station on March 20 to the PSC. The project’s engineer consultant, MSA Professional Services, advised the City of Lodi the construction of the booster station could not start until they received authorization.
However, due to the time constraints for the project, the city began construction in April before approval from the PSC. In response to a list of questions from the PSC, the City of Lodi said “the consultant indicated to the City they were hopeful the merits of the project, the project schedule and the request for construction authorization would have resulted in an expedited review and issuance of authorization.”
The PSC opened their investigation into the project on Aug. 8. An investigation from the PSC determined the cover letter for the request for authorization did not request expedited review.
On Aug. 24, the Department of Natural Resources informed the PSC the booster station had been constructed and the City of Lodi was requesting permission to put it into operation. The booster station was placed into service on Aug. 28. According to PSC documents, the city said it was necessary to place the booster station into service in order for the school district to be granted an occupancy permit for the new facility.
The letter of reprimand says violating state statutes and Commission rules is a serious matter and utilities are “expected to know and follow the law.” This could result in disallowing the recovery of costs of the $1.2 million project in Lodi’s rate case.
Mayor Jim Ness declined to comment on the letter, saying the city is currently in talks with the PSC over this matter.
The PSC has directed staff to refer this case to the Department of Justice for further action. Along with this, the PSC could require Lodi utility to meet with PSC staff or submit a plan within 30 days as to the measures it will implement to avoid a recurrence of similar noncompliance issues.