MADISON – The Public Service Commission Thursday reprimanded the Hudson Public Utilities for constructing a well in 2007 without authorization.

Neither the city nor the PSC could find any documentation that authorized the construction of a well near Canary Road that Kip Peters, the city’s utility director since 2015, valued at approximately $1 million.

In 2006, the utility wanted a well to serve expected future demand. Well No. 10 was completed, but the high estimated cost of a well house to pump and treat the well’s output, plus slackening demand caused by the economic recession resulted in capping the well, Peters said.

By 2016, the Department of Natural Resources wanted the well put into service or filled in. The DNR also found that the city’s water supply was insufficient to fight fires. The utility sought and receive PSC permission to construct a $3.6 million well house to put Well 10 into service.

The PSC didn’t discover that Well 10 was built without agency approval until the utility requested a water rate increase in September 2019.

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The utility maintained that the cost associated with Well 10 was included in the approval the PSC granted for the well house project in 2016.

However, PSC staff told the utility that it did not provide enough detail in the well house construction application to allow staff to understand the project costs included costs previously incurred for Well 10.

Asked why the utility didn’t think it needed PSC approval for the Well 10 project, Peters responded, “No one is still here from 2007. You’ll need to ask someone who was,” said Peters without suggesting anyone in particular.

SEH Inc. was the utility’s consulting engineer for the Well 10 and well house project, said Peters, who also said that he fully depends on consultants during the pre-construction approval process

“The way I operate, that is part of what I require an engineer to do, to submit that information,” Peters said.

Miles Jensen, SEH’s Water Market Leader, also said there is no one currently employed at SEH that would have worked on the Hudson 2007 well project. He also said that the PSC didn’t contact his St. Paul office during its investigation into the well’s authorization.

“Our charge in 2016 was the well house project and there was never a question about the (existing) well,” Jensen said.

In 2017, the PSC ordered the utility to file a water rate case by July 2019 in order to recover the cost of Well 10. It allowed a two-month extension while the city changed finance directors. The rate application sought rates that would yield a 12.76% percent overall increase in revenue.

The PSC put that rate request on hold pending the outcome of the well approval investigation.

At stake for the utility was a reprimand and/or not being able to recover the well’s cost in the new rates.

On Thursday, Peters didn’t know what the PSC had decided and didn’t want to speculate on what impact the utility would face it not allowed to recover Well 10’s costs. Peters wasn’t scheduled to work on Friday.

The PSC was reviewing how much of the well’s cost would be recovered in the pending rate case, said spokesman Jerel Ballard.