The city of Lodi appears to be in hot water with the state Public Service Commission, which Friday referred the city to the state Department of Justice to investigate why it built a booster station without PSC approval.
The Lodi water utility may not be able to recover the cost of the $1.24 million project in the rate case it has pending with the PSC, according to an agency order. If not, the PSC could authorize rates that would reduce the utility’s annual net income.
State administrative code requires utilities to submit projects for pre-construction approval that exceed 25 percent of a utility’s annual net income. The PSC concluded that Lodi’s West Side Booster Station exceed that cost threshold.
According to documents maintained by the PSC:
- The utility needed to increase water pressure on the city’s west side for the new Primary School, 1307 Sauk St., scheduled to be open in September 2018.
- Lodi School District officials met with city officials in February 2017 to discuss district plans to begin construction of an elementary school in June 2017.
- The need for higher water pressure and how to pay for it were evaluated during the summer of 2017.
- By mid-September 2017, architects confirmed the need for higher pressure and the next month the Common Council committed to providing the new school’s water pressure needs.
- The project consultant from MSA Professional Services Inc. phoned the PSC in November 2017 about the booster station and was told that pre-construction authorization was required.
- However, the construction would need to begin in spring 2018 to ensure adequate pressure and volume for the school’s fire protection before the PSC could approve the project.
- The city obtained financing for the booster station during the winter of 2017-18.
- The city council awarded the project to low bidder Staab Construction Co, of Marshfield in February.
- In March, the utility requested the PSC approve $1.789 million for the project that was to be built beginning in April.
- The project consultant sought expedited approval from the PSC citing the merits of the project and its tight construction schedule.
- The PSC did not open its investigation of the project until Aug. 8 and didn’t learn until after that the construction had already begun and was completed before the PSC finished its review.
- The booster station became operational in late August.
- The school opened in September.
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The PSC reprimanded on the city on Friday and notified it that the agency was referring the project to the DOJ to investigate the city’s failure to obtain pre-construction approval.
State law authorizes the PSC to request the DOJ to enforce a violation of its rules. The DOJ can seeks fines or civil forfeitures of up to $25,000 per violation.
In May, the city requested a 28 percent rate increase to fund the capital projects including booster station and operating expenses that have increase since the last rate case in 2009.
PSC staff will be addressing recovering the cost of the booster station in the pending rate case.
State and city offices were closed Monday. Attempts to contact Mayor Jim Ness Monday morning were unsuccessful.