Wisconsin Regulators Provide Guidance for Utilities to Track Costs Related to COVID-19 Crisis

The Wisconsin Public Service Commission provided direction on utilities’ accounting mechanism for costs incurred during the ongoing response to the COVID-19 pandemic. The agency seeks to ensure operational and financial stability for regulated utilities while providing for future decisions on cost recovery and protecting consumers from unreasonable rate increases, according to an April 16 press release.

The commission decided that the deferral authorization can include the incremental increase in bad debt or uncollectible expenses related to the crisis beyond what is currently included in rates. However, the agency found that it is premature to include declining sales revenue as a component of foregone revenue. The agency also decided to authorize specific carrying-cost rates for investor-owned utilities to accrue based on the cost of short-term debt, while municipal utilities will accrue at the benchmark rate of 4.9 percent. Investor-owned utilities and municipal utilities must report total deferral amounts on a monthly and quarterly basis, respectively.

On March 24, the commission issued an order, authorizing public utilities to defer expenditures incurred from the compliance with the emergency order in response to the COVID-19 pandemic. Utilities were directed utilities to waive late fees, temporarily suspend disconnections, and ensure that deferred payment agreements are available to residential, commercial, farm, and industrial customers. As such actions, and other activities that utilities may need to take during the emergency period may result in expenditures and/or foregone revenues, the agency allowed utilities to track the costs which are the subject of the deferral.