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HomeMy Public PortalAboutExhibit MSD 94 - Transcript of Public Hearing May 22, 2019 PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 1 1 METROPOLITAN ST. LOUIS SEWER DISTRICT 2 PUBLIC HEARING 3 4 5 6 7 8 9 TRANSCRIPT OF PROCEEDINGS 10 MAY 22, 2019 11 MANCHESTER PARKS, RECREATION & ARTS CENTER 12 359 OLD MERAMEC STATION ROAD 13 BALLWIN, MISSOURI 63021 14 15 16 17 18 19 20 21 22 23 24 25 Exhibit MSD 94 PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 2 1 APPEARANCES 2 BRIAN L. HOELSCHER, P.E. Executive Director 3 Metropolitan St. Louis Sewer District 4 The Commissioners: 5 Leonard Toenjes, Chair 6 Russell Hawes, Vice Chair Mark Schoedel, Secretary 7 8 The Court Reporter: 9 MS. AMANDA N. FARRAR, CCR Alaris Litigation Services 10 711 North Eleventh Street St. Louis, Missouri 63101 11 (314)644-2191 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 3 1 P R O C E E D I N G S 2 (The public hearing commenced at 3 6:01 p.m.) 4 CHAIRMAN TOENJES: Good evening. I'm 5 Len Toenjes. I'm the chairman of the Metropolitan 6 St. Louis Sewer District Rate Commission. I will be 7 presiding over the public hearing this evening. 8 With me tonight are the following MSD 9 rate commission members: Mark Schoedel and Russell 10 Hawes. 11 Tonight's public hearing is being live 12 streamed and can be viewed online at 13 stlmsd.com/ratecommission or on Facebook 14 @MSDratecommission. 15 For ratepayers viewing the hearing 16 online, we will be taking comments on Facebook 17 @MSDratecommission, on Twitter @MSDratecommission, 18 and by email at ratecommission@stlmsd.com. 19 The charter plan of the district was 20 amended at a general election on November 7th, 2000 21 and established a rate commission to review and make 22 recommendations to the district regarding changes in 23 wastewater rates, stormwater rates and tax rates 24 proposed by the district. 25 The charter plan requires the MSD board PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 4 1 of trustees to select organizations to ensure a fair 2 representation of all users of the district's 3 services on the rate commission. The rate 4 commission representative organizations are to 5 represent commercial/industrial users, residential 6 users and other organizations interested in 7 operation of the district, including organizations 8 focusing on environmental issues, labor issues, 9 socioeconomic issues, community neighborhood 10 organizations and other nonprofit organizations. 11 The MSD rate commission currently consists of 15 12 members from organizations and institutions 13 throughout St. Louis City and County. 14 The rate commission received a rate 15 change notice from the district on March 4th, 2019. 16 Under the district's charter plan, the rate 17 commission must on or before July 2nd, 2019 issue 18 its report on the proposed rate change notice to the 19 board of trustees of the district unless the board 20 of trustees, upon application of the rate 21 commission, extends the period of time for the 22 issuance of the rate commission report for an 23 additional 45-day period. 24 At its meeting on March 14th, 2019 the 25 board of trustees approved the rate commission's PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 5 1 request for an extension. The rate commission's 2 report on the rate change proposal must now be 3 issued on or before August 16th, 2019. 4 The rate commission has engaged legal 5 counsel and a rate consultant independent of those 6 used by the MSD staff. 7 Under procedural rules adopted by the 8 rate commission as amended any person affected by 9 the rate change proposal had an opportunity to 10 submit an application to intervene in these 11 proceedings. An application to intervene has been 12 filed by Missouri Industrial Energy Consumers and 13 this application has been granted. 14 Since March 4th, 2019, the rate 15 commission has received testimony from MSD staff, 16 the rate consultant and the intervenors. The 17 parties have also engaged in discovery requests. A 18 prehearing conference for the purpose of identifying 19 any issues raised by the rate-setting documents and 20 the prepared testimony previously submitted will be 21 conducted on the record. All persons submitting 22 testimony may participate in the prehearing 23 conference and each participant in the prehearing 24 conference shall submit a prehearing conference 25 report describing the issues raised by the PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 6 1 rate-setting documents and the prepared testimony 2 together with a brief description of such 3 participant's position, if any, on each issue and 4 the rationale therefore. 5 Ratepayers who do not wish to intervene 6 are permitted to participate in these on-the-record 7 public hearings conducted in six sessions which 8 started on May 14th, 2019. After tonight's public 9 hearing session, there are four public hearings 10 remaining. 11 The rate commission published a public 12 notice regarding these proceedings in the St. Louis 13 Post-Dispatch and the St. Louis American. These 14 notices contain the time, dates and location of each 15 of the conferences and hearings. 16 The public hearing session tonight is 17 for the purpose of permitting the district to 18 present its wastewater rate change proposal and to 19 permit any ratepayer an opportunity to comment. We 20 will begin with a presentation by the district 21 followed by a public comment period. The district 22 will pre -- will be presenting a lot of information 23 and I ask that attendees hold their questions until 24 the end of the comment period as perhaps many of 25 your initial questions will be answered by the PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 7 1 conclusion of the presentation. 2 Those wishing to speak should sign in on 3 the rate sheet provided over here by the door and 4 will be called in the order their names are listed 5 thereon. Each ratepayer should identify themselves 6 and any organizations represented by such ratepayer. 7 We will also take comments from ratepayer -- 8 ratepayers on Facebook @MSDratecommission, on 9 Twitter @ratecommission, and by email at 10 ratecommission@stlmsd.com. 11 There are several housekeeping rules 12 before we begin. If you wish to present testimony 13 or expect that you may have questions, comments, 14 again a reminder, please sign in by the clipboard to 15 the entrance to the room. For those online, send 16 your questions or comments via Facebook, Twitter or 17 email. 18 Speakers will be recognized in the order 19 in which they sign up. Each ratepayer may have a 20 maximum of ten minutes to speak regarding the 21 proposed rate change. As the presiding officer, I 22 can limit or expand the time should I deem it 23 necessary. 24 If you haven't already done so, please 25 put your cell phones on silent or vibrate. PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 8 1 Emergency exits from the room are 2 located on the left and right sides of the room. 3 Restrooms are located across the hallway outside 4 these two doors to my left. 5 Are there any questions from anyone here 6 regarding the proceedings? Any online? 7 Is the district ready to proceed? 8 MR. HOELSCHER: Sure are, Mr. Chairman. 9 CHAIRMAN TOENJES: Mr. Hoelscher, please 10 proceed. 11 MR. HOELSCHER: Brian Hoelscher, I'm the 12 executive director and CEO of the Metropolitan 13 St. Louis Sewer District. I'm going to give you a 14 proposal on MSD's proposed wastewater rate 15 proposals -- rate proposal for rates that will be 16 effective from the summer of 2000 to the summer -- 17 summer of 2020 through the summer of 2024. 18 Give you a one-page real quick overview 19 of MSD just so we have some knowledge about MSD, and 20 then I'll go into the details of the rate proposal. 21 For the overview, MSD is a government 22 utility. We are created by a provision of the state 23 constitution. We are a municipal corporation. We 24 have a voter-approved charter which is our organic 25 law. Those are the laws that we have to follow in PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 9 1 running the district. We have a six-member board of 2 trustees. Three of those are selected by the mayor 3 of the City of St. Louis and three by the county 4 executive of St. Louis County. 5 It's important to remember we are two 6 utilities in one. It's probably more important in 7 this particular rate proposal than it's been in the 8 past. We are a wastewater utility and we are a 9 stormwater utility. We're here this evening to talk 10 about the wastewater side of our business. Both of 11 those two different businesses have a different 12 source of revenues, different set of activities, we 13 track the cost and the services differently. 14 So we just had an election in April 15 asking our customers whether or not they want us to 16 provide a new stormwater service. Folks elected not 17 to have another stormwater service. That is not 18 what we're talking about tonight. 19 What we are talking about is the 20 wastewater, what goes down the drain when you flush 21 the toilet or when you use your washing machine or 22 when you use your showers. We'll be talking about 23 those. 24 I would ask when we get to the question 25 period that Chairman Toenjes had mentioned, we'd ask PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 10 1 that you ask us questions during this proceeding 2 about wastewater. If you have other questions, 3 we've got a lot of MSD staff here as well as any 4 other source of questions we've got. After the 5 meeting, they're here and they can answer any 6 questions you have if you have questions other than 7 those around wastewater. 8 Service area is 520 square miles. 9 That's the City of St. Louis and about 85 percent of 10 the county west out to about Highway 109 in 11 Wildwood. There's 88 municipalities located within 12 our service area. We run seven treatment plants. 13 They treat an average of 350 million gallons of 14 sewage a day. We have just about 10,000 miles of 15 pipe, if you consider the sanitary sewers, the 16 combined sewers and the storm sewers, and that makes 17 MSD in sewers the fourth largest wastewater utility 18 in the country. 19 We'll talk about the wastewater rates. 20 MSD's proposal includes funding almost $1.6 billion 21 of capital work over the next four years. There's 22 300 projects that make up this list. They're meant 23 to meet regulatory requirements as well as permit 24 requirements. The primary driver is the consent 25 decree which is an agreement we made with the PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 11 1 federal government, the Department of Justice, EPA 2 and Coalition for the Environment on how fast we 3 have to resolve the issues that exist in the 4 wastewater system. 5 In that capital program over those four 6 years we plan on eliminating 50 additional overflows 7 from our wastewater system. The system exists right 8 now when there's too much flow due to rainwater 9 getting in the separate sanitary system, that water 10 either goes into basements or else it discharges to 11 local creeks and streams. We are under a mandate to 12 eliminate the basement backups as well as to 13 eliminate the overflows into creeks and streams. 14 It will include the construction of 15 60 miles of new wastewater sewers. We will inspect 16 64,000 manholes during that four-year period. The 17 sanitary manholes you see, oftentimes they are 18 sources of stormwater, whether it's surface water 19 that gets into the manhole lid or sometimes ground 20 water that comes in through the walls of the 21 manholes. 22 We will replace the incinerators at 23 Bissell and Lemay treatment plant. These two sites 24 contain the biosolids that result from the treatment 25 process and we burn those and we use the residual PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 12 1 ash as well as the heat to help run our plants and 2 provide a marketable material. 3 And, finally, one of the other bigger 4 projects, we will build a tunnel from the Fenton 5 treatment plant to lower Meramec. That will do two 6 things for us. One, it will take the Fenton 7 treatment plant offline, which is important for two 8 reasons. One, it is in the floodplain of the 9 Meramec River. It's been threatened twice in the 10 last five years due to flooding, but also the 11 removal of that plant and the construction of that 12 tunnel is necessary for us to also remove the 13 overflows that are in the wastewater system that 14 currently flow to the treatment plant. 15 So with those costs, I've just kind of 16 gone over what's in the capital program. What we're 17 proposing, that capital program represents over 18 50 percent of the planned expenditures over the next 19 four years. That other 45 percent consists of debt 20 service, which is about 20 percent of the proposal 21 and the rest is our operation and maintenance costs, 22 which are just about 25 percent of the overall 23 revenue needs. 24 There are some key considerations. The 25 first one are charter requirements. The staff which PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 13 1 prepared the proposal, the rate commission which 2 needs to review that proposal and give to our board 3 of trustees, and our board of trustees who need to 4 review the recommendations from the rate commission 5 have five factors they need to consider in this rate 6 proposal. 7 First, the rate proposal has to be 8 consistent with constitutional, statutory or common 9 laws as amended from time to time. The second item, 10 it needs to enhance the district's ability to 11 provide adequate sewer and drainage system 12 facilities or related services. The third, it must 13 be consistent with and not in violation of any 14 covenant or provision related to any outstanding 15 bond or indebtedness of the district. Cannot impair 16 the ability of the district to comply with 17 applicable federal or state laws or regulations as 18 are amended from time to time. And it must impose a 19 fair and reasonable burden on all classes of 20 ratepayers. 21 This last item is the one that staff and 22 the rate commission and our board of trustees spend 23 the most time on in reviewing. 24 You will see two options. You will see 25 an option to pay for this program that is mandated PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 14 1 by the federal government. We will give you two 2 options. One, you can pay for it just with cash. 3 We can just take the revenues we collect directly 4 from your bills over the next four years and pay for 5 this program. We'll also offer another option to 6 request whether or not the ratepayers would like to 7 authorize additional bonding authority for MSD. 8 It's somewhat similar to buying a house. If you 9 paid cash for a house, it costs a lot more upfront, 10 but you don't pay interest expense. If we buy 11 bonds, it does help control rates in the short term, 12 but then you have to pay that interest back as well. 13 We'll offer both of those options to the ratepayers. 14 It needs to be affordable. That's one 15 of the things we're constantly monitoring. I'll 16 mention later some things MSD has done to try and 17 make this as affordable as possible. It needs to 18 also be equitable. We need to make sure that 19 everybody's paying their fair share. 20 There's some underlining items that you 21 would see in the rate proposal. We're making 22 assumptions on customer growth, assumptions on water 23 usage, assumptions on inflation. 24 Consent decree compliance, meeting the 25 goals and the deadlines under the consent decree PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 15 1 drive a big part of what we're doing. 2 And also there's the customer assistance 3 program for low-income individuals. Low-income 4 individuals will be able to take advantage of what 5 we call the cap program included in this next rate 6 proposal. Our current program, if you qualify as 7 low-income, we charge you half the rate that we 8 charge everybody else. That program would still 9 apply as we move forward. 10 Here's the important information, what 11 are we proposing for rates. So, first of all, I 12 want to just have a quick discussion about what it 13 is we measure when we bill you. So what we measure 14 is potable water usage. We use that as being 15 representative of what goes down the drain and what 16 ends up in our sewer system. If you are in a house 17 that has a meter on it, a water meter on it, what we 18 will do is we will take your winter water usage, 19 your potable water usage, either November through 20 January, that three-month period or December through 21 February. It just depends when we start the 22 measurements. We'll take that three-month reading. 23 That will be the volume we assume that you sewer 24 throughout the entire year. What we don't want to 25 include, because it doesn't go down the sewer, PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 16 1 filling swimming pools, washing cars, watering 2 grass, watering gardens. We don't want to charge 3 you for that. It doesn't go down the sewer. That's 4 a methodology to make sure we're as close as 5 possible to making sure just what goes down the 6 sewer and what we have to ultimately transport and 7 treat. 8 If you don't have a meter, and there are 9 individuals who live in the City of St. Louis, 10 residents who don't have meters, we get -- we charge 11 them by attributes. It's the same way they pay for 12 water service in the City of St. Louis. Based on 13 the number of bedrooms, water closets, other 14 factors, kitchens, those all have a flow rate 15 associated with them. It's the same way the City of 16 St. Louis pays for water. It's the same type of 17 volume charge. So we use that data and that's the 18 way we would bill folks in the city is based on that 19 volume conversion. That's the volume we would 20 charge them all 12 months. 21 So for those of you with meters, we 22 mentioned we would use the winter quarter to get 23 that usage. Any of those changes get reflected for 24 the first time in your August billing. So even 25 though we collect them over the winter, we want to PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 17 1 make sure we have the right data, and the first time 2 you see those billings are in August. That's the 3 first billing after the start of our fiscal year. 4 So that being the way we collect the 5 data, what you see up here is what we're proposing. 6 The first one we're going to concentrate is on the 7 light blue. 8 MSD is requesting -- we're going to give 9 you two options. One is to provide additional 10 bonding capacity. If you vote in MSD provide 11 additional bonding capacity, what will happen with 12 the rates is located on the light blue bars. So 13 whatever rate you're paying starting on August 2020, 14 that's the start of our next fiscal year, the 15 increases will consist of a 1.9 percent increase in 16 2021, a 3.8 percent increase in 2022, 3.8 percent 17 increase in 2023, and a 3.8 percent increase in 18 2024. 19 There's another chart that's very 20 similar to what I show up on the presentation that 21 you can find on these one-page handouts as well. 22 So if voters approve bonding, additional 23 bonding, that's what the rates will be. For our 24 typical customer, not all of you pay this, but the 25 typical customer in MSD in 2021 with a 1.9 percent PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 18 1 increase would be paying $56.63 per month. The 2 increase then in 2022 would result in an average 3 rate per month of $58.78, in 2023 it's $61.02, and 4 in 2024 $63.36. Again, everybody's would be 5 different. If you want to really see your impact, 6 you need to take what you currently pay on a monthly 7 basis and increase it by 1.9 percent the first year, 8 and then 3.8 percent the rest of the years. 9 There's also an option, because we'll 10 ask the voters whether or not they want to provide 11 this additional bonding authority, they also have 12 the option of saying no, we don't want to. If you 13 indicate that, we still have to do the program. We 14 are required by the federal government to do the 15 program. We will then just use the revenues you pay 16 and that will pay for the program for the next four 17 years. The impact there is a little bit different. 18 If you look on the chart, the first year it will be 19 a 1.9 percent increase. Whenever we do a rate 20 proposal, we make sure the first year increase under 21 either scenario is the same amount. That gives us 22 some flexibility when we go to the polls and ask the 23 voters whether or not they want to give us 24 additional bonding authority. But after that the 25 rates will up go faster. 2022 they would raise PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 19 1 15.1 percent, if the voters decide not to offer 2 additional bonding authority. 2023 they would go up 3 17.1 percent and in 2024 they would go up 4 13.1 percent. 5 So under the bonding scenario where MSD 6 gets additional bonding from 2021 to 2024, your 7 rates go from $56.63 on average per month to $63.36. 8 If you decide not to give MSD additional bonding 9 authority, you start from $56.36 in 2021 and it goes 10 up to $86.29 per month for the average customer in 11 2024. 12 That's a decision that the voters will 13 be able to make, which option they would like to 14 move forward with in paying for the program. Excuse 15 me. 16 What has MSD done to help -- to help 17 reduce costs? Well, there's four items here. I 18 mentioned the consent decree, the agreement we have 19 with the federal government. We've got an amendment 20 to that -- to that provision. There were some 21 regulatory changes that gave us the opportunity to 22 make things much more affordable in the future. 23 We've lowered our O&M expenses. We brought our 24 capital program in on time and under budget, and 25 also our finance people have done a very good job of PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 20 1 financing the program and using different options to 2 refinance the program. 3 What do those savings look like? So in 4 the last four years, 2017 through 2020, we've saved 5 about $27 million from what we thought our costs 6 would be for debt. This mostly through refinancing 7 of our debt. Some of those options have gone away 8 with the change in tax laws, but our secretary 9 treasurer and our director of financing will keep 10 looking for ways to continue doing that in the 11 future. 12 Capital program came in $110 million 13 under budget. A lot of that has to do with we've 14 had a very long program, we've had a lot of folks 15 that are working here, a lot of people fighting for 16 this work. We're getting some very, very good 17 prices in a lot of areas of our program. As long as 18 we do our job and make sure it's a level playing 19 field and let people want to come and bid, we'll 20 keep getting those lower prices. So we're 21 110 million under there. 22 For operation and maintenance, for the 23 last four years we came in $43 million under budget. 24 A lot of that had to do with technological changes. 25 One of the things we changed, excuse me just a PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 21 1 minute, has to do with the technological changes. 2 One example of that is when we inspect sewer. We 3 have to regularly inspect them and make sure they're 4 not blocked up. If they get blocked up, they can 5 cause overflows and basement backups. Used to be we 6 would go in, we would have to TV it, use a jetter to 7 clean the line out. That was a four-person with a 8 big piece of equipment operation to do that. We've 9 checked out some new technologies and now we're able 10 to just simply pop a manhole lid, put a transmitter 11 and a receiver on one manhole -- transmitter on one 12 manhole and a receiver on the other end, shoot an 13 ultrasonic signal through, and based on the strength 14 of that signal we can tell how clean that pipe is. 15 It allows us to do things with a much smaller crew 16 and we got a lot more production. Those types of 17 things carry over into the next year as well and are 18 ultimately reflected in the cost. 19 And then, finally, the impact of the 20 2018 consent decree, there was a regulatory change I 21 had mentioned. We are replacing our incinerators. 22 There's a regulatory change outside the consent 23 decree that required us to move that work up five 24 years. In order to accommodate that, that would put 25 an excessive burden in the next rate proposal on the PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 22 1 ratepayers. We went to the rate -- we went to the 2 EPA and the Department of Justice and we got a 3 five-year extension on the consent decree. So we're 4 doing basically the same amount of work, just 5 instead of 23 years we have 28 years to do it, and 6 that also helps reduce the amount of -- helps reduce 7 the amount, excuse me, of the increases over the 8 next four years. 9 So what's really important about that, 10 there's two things. One, if we have done some 11 savings that are sustainable and can be applied to 12 this year, it's reduced our cost upfront. Anything 13 else that we've saved in the previous four years go 14 back in our general fund and that's the first source 15 of funds that we tap in order to pay for the next 16 four years. So it's helping reduce rates. We don't 17 have stockholders. We don't have dividends to pay. 18 I guarantee you we don't get bonuses. The only 19 place we have for that money to go is back to the 20 ratepayers, and that's what we do every one of these 21 four-year cycles. Any savings we have we give that 22 back to the ratepayer resulting in lower rates. 23 Excuse me. 24 So the schedule. MSD submitted its 25 wastewater rate proposal to the rate commission on PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 23 1 March 4th, 2019. The chairman just gave you some 2 idea of what activities have gone on so far and 3 where you can look to see the future activities. 4 They are required to submit a report to our board by 5 August 19th, 2019 indicating what their 6 recommendations are with regard to MSD staff's rate 7 proposal. Whenever those decisions come out, right 8 now we are planning on putting those rate changes in 9 effect on July 1, 2020 which means any changes would 10 show up on your August 2020 bill. It's the first 11 time you would see them. Now, I mentioned that we 12 don't know how we're going to pay for it. That's up 13 to the ratepayers. Whether we would just use the 14 rates that you pay us or whether we borrow more 15 money. We have a lot of different dates. Somewhere 16 between spring 2020 through spring 2021 is when we 17 can go to the voters and find out whether or not 18 they want to give us additional bonding authority. 19 We're simply going to monitor what else is going on. 20 We're going to make sure we find an opportunity and 21 then go out and make sure all the voters are 22 educated on what choice they're making. We won't 23 advocate for one option or the other. It's up to 24 the voters, but we want to take the time to make 25 sure we have the best opportunity we can possible to PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 24 1 educate the voters and let them know what it is 2 they're voting on. 3 This is a list of the rate commission 4 public hearings. You happen to be attending the 5 second one on this list. This is also on the rate 6 commission's website. We will be giving exactly 7 this presentation at these other meetings as well. 8 And before I pass it back on to the 9 chairman again, I would let you know that if you 10 have questions other than on the wastewater rate 11 proposal such as billing questions or questions 12 about stormwater, we do have staff here and after 13 this hearing we'll stay as long as is necessary to 14 ask any questions you have about issues that are 15 outside of this proposal. 16 Mr. Chairman, that's the presentation. 17 CHAIRMAN TOENJES: Thank you, 18 Mr. Hoelscher. 19 I think the signatures are being 20 collected from folks here in the room who wish to 21 make a statement or ask a question. So as soon as I 22 get that list, we'll move forward with taking 23 questions from attendees and then we'll do the 24 online questions. 25 First person who is listed to ask some PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 25 1 questions or make a comment is Barbara Biondo. 2 Barbara, please come up to the microphone so you can 3 be heard and we will do our best to respond 4 accurately. 5 MS. BIONDO: My first question is is you 6 have this rate proposal that you want to give to us 7 people in St. Louis County. Why isn't the water 8 measurements done the same as in the county as in 9 the city? I don't understand why it has to be 10 different than in the city than in the county. 11 CHAIRMAN TOENJES: Let me start with 12 this and then I will ask Mr. Hoelscher to elaborate 13 if I'm incorrect. 14 The billing system for the water usage 15 is different in the city and the county. In the 16 city, the city water is provided by the city and the 17 city bills it based on, as Mr. Hoelscher said, the 18 number of sinks, the number of toilets, the number 19 of bathtubs and that is a city service that is 20 provided by the city billed to the city and they 21 don't meter the homes or residences. 22 In St. Louis County the properties are 23 metered by Missouri American Water and those folks 24 pay directly to Missouri American Water. So there 25 are two different delivery systems for clean water PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 26 1 into the residences in the city and the county. 2 Is that accurate? 3 MR. HOELSCHER: That is. I think I'll 4 expand on the reason for that. It's not 5 mechanically possible to actual measure the 6 wastewater that leaves your home. It's under 7 gravity. There's no way to actually do that. So we 8 use the water usage and the two methods that the 9 chairman described as a substitute for what would go 10 down the drain. Now, in case some of you -- maybe 11 anticipate a future question. That's why when we 12 get questioned on how much we bill you, if you've 13 ever been in that situation, all our data comes from 14 the water providers. So we always, when we get an 15 appeal, we always then have to turn around and go to 16 the water providers or have you help us go to the 17 water providers to make any corrections. We're 18 making adjustments all the time, but our only source 19 of data is the water provider. 20 MS. BIONDO: Okay. My other part of my 21 question is after you do all these improvements, 22 then our rates should be going down because you're 23 doing, you know, these projects that you want to do, 24 you know, you want to fix the incinerators at Lemay 25 and Bissell, which in my opinion should have been PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 27 1 done a long time ago. I just saw an episode on TV, 2 it was either Channel 5 or Channel 4, about the 3 waste that's coming out of those stacks. You've got 4 kids that got asthma that are going to schools and 5 stuff like that. People down in Lemay are having 6 health problems. This should have never been done 7 in these areas where there's schools and 8 populations. It should have been shut down a long, 9 long time ago, and you guys should be ashamed of 10 yourselves to keep letting this go on like it is. 11 When you got kids and people that are getting sick, 12 there's no reason you should be burning waste and 13 stuff like that in areas where people and kids are 14 living. You should be ashamed of yourselves and you 15 should have had -- the EPA should have come in and 16 shut these things down a long time ago and you 17 should have been doing something else somewhere 18 else. I mean, Illinois doesn't burn this stuff, and 19 we in Missouri should be ashamed of ourselves for 20 doing these things to people, especially little kids 21 that are going to school. And I don't have anything 22 else to say. 23 MR. HOELSCHER: I do need to respond to 24 that. I would ask that -- Sean Hadley is here, 25 right? PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 28 1 The data and information that was 2 presented on Channel 5 is very misleading, and the 3 way we're going to counter that is we'll show you 4 what the actual rest of the interview was that they 5 didn't show you on the set. You will find that what 6 you described is the impression we knew people would 7 have when they ran this story, which is why we taped 8 all the interviews. We knew this was coming. I 9 will let you know all those incinerators, both the 10 old ones we had as well as we're planning on 11 upgrading technologies and still incinerating, we're 12 still going to be doing that because it is the 13 safest for the environment and safest for all the 14 folks for us to dispose of this sludge. And we're 15 doing it under permit from EPA and MDNR, and we are 16 meeting permit requirements so that we don't impact 17 the health of the residents. 18 We have heard the issue about why can't 19 you just not incinerate in Illinois. We tried. We 20 have seven treatment plants. There's one medium 21 sized and one small that we try to land apply our 22 end product as much as we can, but we run out of 23 space. That includes in Illinois. Part of the 24 problem is how large the metropolitan area is. When 25 you add both health and cost together, incineration PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 29 1 is absolutely the best option. 2 So I would ask however much more 3 information you like, Sean, raise your hand again. 4 So get with Sean and he can get you all 5 the information you want on exactly what the 6 interview consisted of and give you an awful lot of 7 facts. 8 MS. BIONDO: Okay. Well, I'll backtrack 9 my thing then because -- 10 MR. HOELSCHER: Well, don't backtrack 11 until you see our information. 12 MS. BIONDO: Well, they should have -- 13 you know, Channel 5 and Channel 4 should have put 14 everything out there then as opposed to making you 15 guys look bad the whole time. I mean, that's not 16 fair. If you're going to run a story like that, 17 then you should put all the facts out there. 18 MR. HOELSCHER: Well, they got a job to 19 do and we just make sure we got all the data as 20 well. 21 MS. BIONDO: All right. Thank you very 22 much for listening. 23 CHAIRMAN TOENJES: Barbara, thank you 24 for your comments. I'd just -- I'd also like to 25 point out that on the rate commission, the Coalition PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 30 1 for the Environment and the Missouri Botanical 2 Garden are some of the folks who are on the rate 3 commission. So there are folks who are concerned 4 about the environmental concerns that you expressed 5 as part of our group also. So thank you so much. 6 Thanks for being here. 7 MS. BIONDO: All right. Thank you. 8 Thanks for listening. 9 CHAIRMAN TOENJES: Thank you. 10 Number two on our list of folks here in 11 the room is Tish Hanewinkel. Tish. 12 MS. HANEWINKEL: Can I pass it to my 13 husband? 14 CHAIRMAN TOENJES: You may pass it to 15 whoever you care to. 16 Chris. Chris, thanks for being here. 17 MR. HANEWINKEL: You're welcome. I just 18 wonder if there's not a little more information as 19 far as what's the better option for the customer 20 when it comes to a bond or a rate increase. As I 21 previously said, you know, eventually we'll get 22 beyond this and is the -- is the pain of the higher 23 rate per month, if you pay as you go, is it four 24 years later that it's reassessed again because that 25 four-year period is over and the projects are done PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 31 1 or -- I mean, how does that end? And then you've 2 got something to compare it to if you're looking at 3 a bond, that how long does that bond go on. So I 4 think -- I think the voters are going to need to 5 understand that. 6 CHAIRMAN TOENJES: I think in some of 7 the content that is in the booklets there that are 8 on the table when the rate commission receives a 9 rate proposal, there is a little bit of a future 10 projection, not just for this rate case. I think 11 the rate cases are normally on a four-year cycle, 12 but as the rate commission is trying to make that 13 determination, we looked at -- we look at a number 14 of factors. There is an additional four-year 15 projection in the case that's given to us. So that 16 is part of the -- we look at not just the what is 17 coming out of people's pockets, but what's the size 18 of the capital program, is that in alignment with 19 the consent decree or not, what is the impact on the 20 following four years. This extension of the consent 21 decree that Mr. Hoelscher mentioned did have a 22 significant impact on this particular rate case with 23 that five-year extension, that the projects could be 24 spread over a longer time period. That's why we 25 have a public vote to let the public make that PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 32 1 determination about temporary pain or a longer term, 2 lesser pain. 3 So that's a -- that's a tough call, but 4 that is -- it is in the rate proposal, perhaps 5 something we should include. Those are free for the 6 taking. It's all up online also on the rate case 7 website -- on the rate commission website. 8 MR. HOELSCHER: Just to -- and expand on 9 that a little further. You're right. We will reach 10 a place, but understand, all this work -- this work 11 doesn't end till 2039. Now, it starts humping and, 12 you know, start decreasing, you're right. Somewhere 13 in the 2030 range somewhere, we are going to reach a 14 point where the decision's going to come in, and it 15 depends on what the folks decide, whether they want 16 to pay go or whether they want to borrow money, 17 where the flattening or decreasing rate is something 18 that's going to have to be evaluated in the same 19 way. And as the rates are going down, you'll have 20 the same decision there, do you want to borrow money 21 or do I want to do this. 22 When we do the informational outreach, 23 that will be one of the main focuses that we'll give 24 to the voters to let them understand. Again, the 25 rate proposal does have, and we do do them in PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 33 1 four-year blocks, the '21 through '24, we've given 2 an unrefined outlook for 25 through 28. That's in 3 the rate proposal. And we know that we're going to 4 get somewhere around the 2031, 2032, 2033 we're 5 going to get where rates are going to start 6 plateauing, and the discussion will become a little 7 bit different. 8 Right now for this rate cycle and the 9 next we know we've got some increases that, plus or 10 minus, were about inflation and then things are 11 going to start to decrease. And when we go out to 12 the voters, we'll make sure we have some additional 13 information so they really understand what's going 14 on in the future. 15 MR. HANEWINKEL: Thank you. 16 CHAIRMAN TOENJES: Thank you, 17 Mr. Hanewinkel. 18 The third person in the room who has 19 their name on the list is Mr. McGraw. 20 MR. McGRAW: Please excuse my voice. 21 I've had cancer and it makes it tough to talk. 22 CHAIRMAN TOENJES: Thank you for being 23 here. 24 MR. McGRAW: But I was just -- the same 25 thing, in the city and the county do you merge the PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 34 1 sewer plants? 2 CHAIRMAN TOENJES: I will -- as far as 3 the treatment is? 4 MR. McGRAW: Is sewer coming in mutual 5 places from the city and the county? Because I see 6 the city all the time they will have their fire 7 hydrants open all day so they can cool down and I 8 know, you know, that's going somewhere. 9 MR. HOELSCHER: So MSD has five major 10 watersheds. Four of those are served by individual 11 plants and one along the Meramec River has got three 12 plants that are currently activated. That makes the 13 seven plants we have. 14 Our boundaries, our municipal 15 boundaries, again as I explained earlier, kind of 16 everything from the Mississippi River out to about 17 109. None of the treatment plants treat just the 18 city or the county. The watersheds that we operate 19 in, they don't follow municipal boundaries and 20 nobody drew the municipal boundaries to match the 21 watersheds. 22 So the Bissell wastewater treatment 23 plant, which is located in Grand, it serves north 24 county and it serves part of north city. The Lemay 25 treatment plant that's to the south, it serves part PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 35 1 of south city and also serves part of west and near 2 southwest county. The Meramec plants, the plants 3 along the Meramec. Coldwater treatment plant is 4 everything to the very far north and Coldwater 5 Creek, and then we have the Missouri River treatment 6 plant for everything that flows to the Missouri 7 River. 8 MR. McGRAW: So the city can put in as 9 much water as they want and can just go on a basic 10 pay, right? 11 MR. HOELSCHER: Well, so what we just 12 described, when we do billing for residential 13 customers only -- in the city only residential 14 customers are not metered. All the businesses, all 15 the commercial entities, they are metered, and we 16 bill them in the same way based on their actual 17 water usage, and that's where your extra water would 18 come from. 19 So when I was mentioning the meter to 20 non-metered, we're really focusing this presentation 21 on the residential customers. There's a difference. 22 When you get to nonresidential customers, apartment 23 complexes, commercial, industrial, any of those kind 24 of users, we're actually using meter data and basing 25 the charge based on the amount of potable water they PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 36 1 actually use on a monthly basis. 2 CHAIRMAN TOENJES: I'd just like to 3 comment on that for a minute. And, again, this 4 is -- everything you heard tonight is residential. 5 When we get into the rate case hearings, you heard 6 me say earlier the one intervenor we have is 7 Missouri Industrial Energy Consumers. Those are 8 folks like Anheuser-Busch or some of the large 9 chemical plants that really have a significant 10 amount of water usage and because of that look for 11 ways to mitigate that discharge and mitigate the 12 impact on the district. So I understand what you're 13 saying about the fire hydrants, but once you get 14 past the residential, everything is on a meter and 15 everything is measured consistently in the city and 16 the county. 17 MR. McGRAW: Fire hydrants are measured? 18 MR. HOELSCHER: Well, the city's not the 19 only place that turns the fire hydrants on during 20 the summer. We have that everywhere. So we do -- 21 we do see that issue throughout the entire service 22 area. 23 MR. McGRAW: Well, most places like 24 Ballwin we have places you can go to swim and they 25 pay for that. You know, we don't open up. In PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 37 1 Fenton we don't open up hydrants, and I'm sure 2 Ellisville don't. I'm just, you know, wondering. 3 Okay. Thank you very much. 4 CHAIRMAN TOENJES: Thank you, 5 Mr. McGraw. 6 Let us move to our electronic questions. 7 MODERATOR: Yes, Chairman Toenjes. 8 Just a reminder that we have three ways 9 that if you're viewing us online tonight you can ask 10 questions. If you're on Facebook, which is 11 @MSDratecommission, you can ask a question right 12 there as you're watching us; or if you'd like to 13 comment on Twitter, our handle is @ratecommission. 14 You can also send us an email this evening and we'll 15 answer your question. It's 16 ratecommission@stlmsd.com. 17 And we do have a few questions from 18 people who've been watching tonight and also some 19 people who have commented on Facebook in the days 20 leading up to today's hearing. 21 Carl on Facebook asks why does it cost 22 more to handle the water runoff than it does to have 23 freshwater pumped to my house? 24 MR. HOELSCHER: Well, I guess when we 25 say runoff, just so we understand, this is not PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 38 1 regarding stormwater. This is not -- this rate is 2 not with regard to runoff. It's with regard to what 3 you flush down the toilet. So I really think my 4 first easy quick answer is to just think about what 5 you think the cost would be to turn river water into 6 drinkable water versus what it costs to take what 7 goes down the toilet, what goes down the drain and 8 make it acceptable to go back into the river. It 9 simply costs more. 10 Now, in MSD's case with regard to 11 potable water, there's a little bit bigger 12 difference because, as I indicated, MSD is the 13 fourth largest sewer utility in the country with 14 regard to miles of pipe, and that results in just 15 larger costs. If we were going to build St. Louis 16 from scratch today, we would not have the 17 underground sanitary sewer system we do now, but we 18 have what we have. 19 The water companies, they work under 20 pressure. It allows them to be much more cost 21 effective with the way they distribute potable 22 water. The sewer entities, especially in St. Louis, 23 mostly work on gravity and we've got existing 24 systems that we have to maintain. So that's the 25 reason for it. It just simply costs more to clean PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 39 1 the water that comes out of your house, put back 2 into the river and meet permits that the EPA 3 requires us to clean it to a certain degree than it 4 does take to take water out of primarily the 5 Mississippi River and provide it to your home for 6 drinking water. 7 CHAIRMAN TOENJES: And I guess I would 8 answer that question slightly differently. It 9 really does not cost more to drink the runoff 10 because the runoff is the stormwater portion of the 11 bill, not the wastewater portion of the bill. And 12 if you look at the stormwater charges for MSD and 13 what you actually pay to treat the runoff, which is 14 the stormwater portion, it is significantly less 15 than your freshwater bill. So I would suggest that 16 it probably costs much less to treat storm -- much 17 less to get rid of stormwater and much more to treat 18 wastewater. 19 MODERATOR: All right. If Carl were 20 here, I would say is that okay, but since he's not, 21 we'll move on. 22 Nick on Facebook asks -- or says MSD's 23 infrastructure is already built. So what are you 24 doing with the money that you collect? 25 He wasn't -- he may not have seen your PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 40 1 presentation earlier. So Chairman? 2 CHAIRMAN TOENJES: I'll take a run at 3 that, and certainly any of the other rate 4 commissioners can jump in. 5 Yes, it is already built, and the 6 determination of the United States Environmental 7 Protection Agency what is built and what is there is 8 not sufficient to meet today's environmental 9 standards and needs some significant upgrades. 10 Mr. Hoelscher mentioned the consent decree that was 11 negotiated with the Missouri Department of Natural 12 Resources, Coalition for the Environment, the 13 Environmental Protection Agency and MSD. Those four 14 entities entered into an agreement to look at what's 15 already built and what needed to be done to the 16 system that was built in some instances 60, 70, 80 17 years ago before there was an EPA, and bring that up 18 to the standards that folks expect now to make sure 19 that our rivers and streams are, are safer than they 20 were at that point. 21 MR. SCHOEDEL: I think you said it well. 22 I think people don't understand that MSD was created 23 to help manage a lot of infrastructure that was 24 installed many years ago to different standards than 25 we have today, let alone the combined sewers where PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 41 1 we're trying to put stormwater and wastewater 2 together, which is not a good idea where we have the 3 overflow. So there's a lot of issues with the 4 infrastructure there because it wasn't designed 5 properly. We still have some, I believe, wood pipes 6 that are passing sewage around as well. 7 MODERATOR: In fact, we had a question 8 about that very thing. Someone said a lot of pipes, 9 wood included, why do we have to repair sewers now 10 that are so very, very old? 11 CHAIRMAN TOENJES: Well, part of that 12 reason I would say has to do with history and the 13 evolution and people's willingness to, in fact, 14 invest in the infrastructure. I would suggest that 15 probably without the consent decree I question how 16 much people would be willing to invest in the 17 infrastructure even today. It's largely a problem 18 that it's out of sight, out of mind I think in a lot 19 of people's minds from the perspective of the rate 20 commission and we just, I think, experienced that 21 with the stormwater case that the rate commission 22 went through a lot of deliberations about the 23 stormwater case. That was an elective imposition of 24 a fee to improve the quality of life and mitigate 25 some flooding and the voters decided that was not PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 42 1 something that they cared to invest in. That being 2 said, the flooding will continue, the stormwater 3 system will continue to exist as it is and perhaps 4 10 or 15 years from now somebody may ask, well, why 5 didn't MSD fix that 15 years ago, and I would 6 suggest that the answer would probably be that that 7 was not a decision that MSD made, but a decision 8 that the voters made. 9 MR. HOELSCHER: Little background on 10 this. I want to make sure everybody understands the 11 EPA and the Department of Justice are not picking on 12 St. Louis. All the cities were doing work in order 13 to try and meet the Clean Water Act. For some of 14 the reasons that the chairman mentioned, the 15 Department of Justice and EPA decided to pursue a 16 strategy and they've done this to over 200 cities 17 throughout the United States, MSD being one of the 18 last ones, St. Louis MSD, to sue in order to meet 19 the Clean Water Act and put exact schedules and 20 exact performance criteria in place in a 21 court-enforceable document. So we aren't the only 22 ones that were meeting the Clean Water Act. I will 23 tell you just about everybody has a problem with the 24 Clean Water Act and water. That was a strategy. 25 That's why we are where we are now. PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 43 1 Quite honestly, our burden is a little 2 less. We're somewhat lucky that we don't have 3 beaches. We are somewhat lucky that we have very -- 4 rivers that have a pretty good volume of water. It 5 allows us a lot more options to be much more cost 6 effective with some of our potential solutions than 7 other municipalities, but don't think that they're 8 just going after MSD. 9 MSD has been addressing this issue since 10 it got created by the voters in 1954. We're going 11 along at a pace that matched -- we were spending as 12 many dollars that we got to correct these issues. 13 The federal government just got impatient with how 14 fast cities throughout the country are addressing 15 these and decided to use the court-type documents in 16 order to enforce those. 17 MODERATOR: Just a reminder if you're 18 viewing us online tonight, you can ask a question on 19 Facebook, Twitter or email. Facebook is 20 @MSDratecommission, Twitter is @ratecommission, 21 email is ratecommission@stlmsd.com. 22 We had a commenter on Facebook tonight 23 who said, I'll paraphrase, no means no. I assume 24 that's referring to the stormwater vote in April. 25 Have you considered cutting your top employees' pay? PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 44 1 MR. HOELSCHER: So, again, as you said, 2 no means no is for the optional service in April for 3 stormwater. That's not what we're talking about. 4 We're talking about wastewater. As far as being 5 cost effective, which is the way I'll take that 6 question, you'll find in the rate proposal we are 7 constantly comparing ourselves to other wastewater 8 utilities and the cost effectiveness of our 9 services. You'll find in almost every case we are 10 in the top one quarter of being cost effective with 11 the way we are providing services. 12 With regard to salaries, I will let you 13 know that every ten years we do a study, we compare 14 it to the salaries that are being paid in our 15 industry throughout the Midwest and we adjust our 16 salaries accordingly. We are traditionally, 17 especially for the higher-paid and professional 18 employees, we try to keep that below what the 19 weighted average is for the City of St. Louis. 20 We've done a good job of doing that. So that is 21 something we're cognizant of, we're making sure we 22 pay -- we want to pay people the proper amount for 23 the work they're doing, but we definitely don't want 24 to pay them an extravagant amount, and we put a lot 25 of processes in place to make sure that doesn't PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 45 1 happen. It's something, again, we formally look at 2 every ten years as part of our charter, but also 3 then we are required every four years to bring those 4 cost effectiveness type issues also to the rate 5 commission for investigation. 6 CHAIRMAN TOENJES: I would answer that 7 question that Mr. Hoelscher does not set his pay or 8 the pay of the other folks at the sewer district. 9 The rate commission does not establish the pay or 10 those who work at the sewer district. Those pay 11 rates are set by the trustees, three appointed by 12 the mayor of the City of St. Louis, three appointed 13 by St. Louis County, and those are the folks that 14 make those pay determinations. 15 MODERATOR: Very good. 16 Another person tonight on Facebook 17 comments you don't pay for sewers in Valley Park, 18 taxpayers pay for new sewers, you don't clean out 19 the river and that's where our water goes. 20 Any clarification on that? 21 CHAIRMAN TOENJES: Mr. Hoelscher? 22 MR. HOELSCHER: So the charter that was 23 approved by the ratepayers in our district have laid 24 out the process. You're right. MSD does not pay to 25 construct new sewers around new development. That PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 46 1 cost lands on the ratepayers. However, as required 2 by our charter, we inspect and do a plan approval 3 process for every new sewer that goes in the ground, 4 and we're talking wastewater here, and then once 5 that goes in the ground, the developer of that 6 product is then mandated to turn those over for the 7 operation and maintenance by MSD, the operation and 8 maintenance of the sewer, the operation and 9 maintenance of any pump stations that go in place. 10 And hopefully there isn't any place in 11 Valley Park where the wastewater sewers are 12 discharging to the river. I will guarantee you they 13 are all going to our treatment plants. We are 14 treating the waste and then we are discharging that 15 waste into local creeks and streams. 16 CHAIRMAN TOENJES: Any other comments? 17 MODERATOR: Andy on Facebook asks so 18 there is a cost savings from what the rate was 19 projected to be four years ago; is that correct? 20 MR. HOELSCHER: Is that the question? 21 MODERATOR: That's the question. 22 MR. HOELSCHER: You want to go? 23 CHAIRMAN TOENJES: Well, my 24 understanding is yes. If you look back at the rate 25 case -- the rate case that we had over the last PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 47 1 four-year cycle and we had these four-year 2 projections going forward, for this current case 3 those projections in that prior case were higher 4 than what we received. If I recall correctly, not 5 having it in front of me, I think those rate 6 increases were somewhere in the 3 1/2 to 4 percent 7 range projected, and now it's the 1.9 percent. And 8 I'm just thinking off the top of my head. 9 MR. HOELSCHER: I'm going to use the 10 real numbers. Four years ago we thought we were 11 going to end up with four 10 percent increases. The 12 savings I've indicated has changed it from four 10 13 percent increases to a 2, and three 4 percent 14 increases. That's the results of the savings that 15 we've put in place. Fairly significant. 16 And that information, by the way, Len 17 mentioned the rate commission saw it four years ago. 18 The rate commission process from four years ago is 19 still on our website and you can either look there 20 or if you want to ask one of our staff, we'll show 21 you exactly what those projections looked like four 22 years ago, again, showing instead of the 2, 4, 4 and 23 4 percent you see here, we were anticipating with 24 bonding 10 percent increases every year from 2021 25 through 2024. Those cost savings are what helped PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 48 1 us, along with the consent decree change, what 2 helped us to reduce the cost in this rate proposal. 3 CHAIRMAN TOENJES: So the answer to the 4 question is yes? 5 MR. HOELSCHER: Yes. 6 MODERATOR: There were two comments on 7 Facebook that indicate that MSD's rates are higher 8 than the national average. First, is that true? 9 And if so, why? 10 CHAIRMAN TOENJES: I do not know. Do 11 you know? 12 MR. HOELSCHER: Can I go? 13 CHAIRMAN TOENJES: Please do. 14 MR. HOELSCHER: So it depends on where 15 you're at in the program. Up until four years ago, 16 we were at or below the median rate pay throughout 17 the entire country and we were in the middle of our 18 consent decree. With the last rate proposal that 19 brought us 2017 to 2020 we creeped above the median 20 number. You saw these numbers here that I had shown 21 previously, and I'm going to get there. So they're 22 somewhere in the numbers of 56 to 65. If you look 23 at large cities throughout the country, some folks 24 are paying $125 a month. Some folks are paying $25 25 a month. We are slightly above the median, but we PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 49 1 are close to the median and we're trying, especially 2 with this last increase, of just having increases of 3 about inflation for the next four years, hoping 4 we'll creep up on that. We'll get those data from 5 the appropriate agency as to what actually has 6 happened to rates in the past. We are slightly 7 above the median, but we're going to try and get 8 back down to it and below as quickly as we can and 9 do these things as cost effectively as possible. 10 CHAIRMAN TOENJES: I think to answer the 11 second part of that question. My answer to why 12 they're slightly higher would probably be the age of 13 the system, which was talked about earlier, deferred 14 maintenance and the consent decree. 15 MODERATOR: Mr. Chairman, I think that's 16 all the questions we have from our online viewers 17 tonight. 18 CHAIRMAN TOENJES: Thank you. 19 Any of the rate commissioners have any 20 questions or comments? Mr. Hawes? 21 MR. HAWES: No, I don't have any. 22 CHAIRMAN TOENJES: Mr. Schoedel? 23 MR. SCHOEDEL: No. 24 CHAIRMAN TOENJES: Nothing else online? 25 I'd like to thank you, Mr. Hoelscher, PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 50 1 for sharing the facts and the transparency of the 2 information with us so we can all make an informed 3 decision. 4 Thanks to everybody for being here 5 tonight. Our next public hearing will be conducted 6 on June 4th, 2019 at 6 p.m. at the Heights which is 7 the Richmond Heights Community Center. This public 8 hearing is adjourned. Thank you. 9 (The public hearing concluded at 10 7:01 p.m.) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 51 1 CERTIFICATE OF REPORTER 2 3 I, Amanda N. Farrar, a Certified Court 4 Reporter for the State of Missouri, do hereby 5 certify that the foregoing hearing was taken by me 6 to the best of my ability and thereafter reduced to 7 typewriting by me; that I am neither counsel for, 8 related to, nor employed by any of the parties to 9 the action in which this hearing was taken, and 10 further that I am not a relative or employee of any 11 attorney or counsel employed by the parties thereto, 12 nor financially or otherwise interested in the 13 outcome of the action. 14 15 16 ________________________ 17 Certified Court Reporter 18 19 20 21 22 23 24 25 PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES A a 3:20,21 4:1,14 5:5,17,24 6:2 6:11,20,21,22 7:14,19 8:13,18 8:21,22,23,24 9:1,8,8,11,16 10:3,14 11:11 12:2,4 13:18 14:8,9,9 15:1 15:12,16,17,17 16:4,8,14 17:15 17:16,17,25 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12:19,20,22 13:3,3,13,15,16 13:19,22 14:13 14:15 15:1,4,11 15:15 16:9,12 16:13,15,16,21 16:23 17:3,14 17:15,24 18:3 18:8,12 19:25 20:7,7,9,13,14 20:15,17,17,24 20:25 21:2,8 21:14,16,19 22:2,4,5,6,7 PUBLIC HEARING 5/22/2019 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES 22:15,20 23:2 23:15 24:3,15 25:18,18,19 26:10,19,20 27:3,9,14,19 28:4,14,17,22 28:23 29:6,6 30:2,5,10,22 31:6,9,14,16,17 31:18,20 32:23 34:10 34:15,17,24 35:1,1,23,24 35:25 36:8,10 36:10 38:14 39:1,4,10,11,17 40:3,6,11,23 41:3,8,11,18,18 41:19,19,22,23 41:24 42:11,13 42:15,17 43:4 43:6 44:8,10 44:19,20,21 44:25 45:2,8 45:12,12 46:5 46:8,9 47:5,8 47:14,20,22 48:17,22 49:2 49:2,11,12,19 50:1 51:1,4,6,8 51:10,13 off 47:8 offer 14:5,13 19:1 officer 7:21 offline 12:7 oftentimes 11:17 okay 26:20 29:8 37:3 39:20 old 1:12 28:10 41:10 on 3:13,16,17,20 4:3,8,15,17,18 4:24 5:2,3,21 6:3,8 7:2,8,8 7:25 8:2,14 11:2,6 13:19,23 14:22,22,23 15:17,17 16:12 16:18 17:6,12 17:13,20,21 18:6,18 19:7 19:24 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