Oak Creek formally asked for a hearing Wednesday on the state Public Service Commission's decision that raises water rates for Oak Creek residents and indirectly threw a proposed contract between the city and Waukesha into question.
The Oak Creek Water and Sewer Utility says in the appeal it did not have a chance to be heard before the PSC made its ruling, which it argues is illegal and should prompt the commission to hold a public hearing.
The utility has also asked the Milwaukee County Circuit Court review the case.
The issue goes back to a 2011 request by Oak Creek for a water rate increase. That increase was contested by Franklin and Caledonia, Oak Creek's two wholesale customers.
The PSC issued a decision on that request in July, and a water-rate increase went into effect the next day.
Oak Creek then asked the commission to reconsider part of its decision in which it would not allocate fire protection costs to Franklin. Instead, according to the appeal, the commission reopened the entire case and decided to change two aspects of its July decision, neither of them being the fire protection issue.
Those two revisions shifted some of the cost sharing from Franklin to Oak Creek retail customers — about $240,000, according to the PSC. The utility says that would result in an average quarterly residential increase of $17.06 for Oak Creek, compared to $8.14 for Franklin.
Oak Creek also argues in the appeal the PSC didn't have a right to take a fresh look at the original request for a water rate increase.
"The time for that has past," according to the appeal. "The commission already approved new rates for Oak Creek in its July 23, 2012 decision and order, and these rates have already gone into effect."
Kristin Ruesch, communications director for the PSC, said a hearing would be limited to the two revisions the PSC made in its ruling last week.
The hearing may be up to 30 days from now, she said.
Following the PSC's decision, the Oak Creek Water and Sewer Utility said it may not be able to go through with a contract to provide Waukesha with Lake Michigan water.
General Manager Steve Yttri said in an interview that while the Waukesha contract and Franklin cost-sharing are two separate issues, "they're intertwined because the Franklin situation sends a signal about how the PSC is going to judge wholesale service."
The PSC has to approve the Waukesha-Oak Creek contract.