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Exhibit MSD 103 - District Response to Letter from Kevin Morris_0Exhibit MSD 103 measured by each customer's water meter as similarly used by the water provider and as reported to MSD by the water provider. For unmetered customers, contributed wastewater volume is likewise based on water usage, but water usage is determined by applying certain average water usage volume figures to each customer's rooms and plumbing fixtures as similarly used by the water provider and as reported to MSD by the water provider. An exception to this rule is that currently unmetered residents in the City of St. Louis can install a water meter and be charged as a metered customer similar to the residents in St. Louis County. MSD would then use the metered winter water usage as reported by the City of St. Louis water Division in developing the monthly bill. Specifically, the District applies water usage volumes of 14.5 gallons per day (gpd) for each room, 54.2 gpd for each water closet (toilet), and 45.2 gpd for each bath and separate shower. To calculate the volume based charge on the unmetered customer's monthly wastewater bill, the District takes the customer's rooms and fixtures, multiplies those attributes by the appropriate water usage volume and calculates an annual usage volume, and then divides the annual usage volume by 12 (after converting to Ccf) to obtain the monthly water usage. The monthly usage is then multiplied by the same volume rate that metered customers pay to obtain the charge for each room, water closet, bath, and shower. The monthly fixed based charge that appears on MSD's bills is the same for both unmetered and metered customers. The water usage volume figures used by the District can be traced back to a 1958 study by Black & Veatch (B&V) for the City of St. Louis Water Division. That study was later validated and used in B&V's 1993 rate study that resulted in the District's first variable rate wastewater user charge (MSD Ord. 9029). That charge was the subject of the Missouri Growth 2 litigation, in which the Missouri Court of Appeals held the District's wastewater user charge was a "fee," not a "tax" under a Hancock Amendment analysis. Missouri Growth Ass 'n v. MSD, 941 S.W.2d 615 (Mo. App. E.D. 1997). In its opinion, the court aptly described the District's methodology: For customers who have water meters, the consumed volume is determined by their metered water usage. ...For non -metered customers, the consumed volume charge is determined by using water consumption figures based on the number of rooms and fixtures on their property... . Therefore, the charge bears a direct relationship to the services provided. Missouri Growth, 941 S.W.2d at 623-24. In 2014 the District engaged Vertex Business Services to determine whether the 1958 water usage data (validated in 1993) for rooms and plumbing fixtures should be updated. A study was conducted which analyzed available metered water usage data for similar properties taking into account demographic attributes of the customer account such as age, number of people in the household, region, etc. This was done by developing a statistically representative sampling of similar, but metered, properties with various numbers of rooms and fixtures, and then comparing those actual metered water usage volumes with the District's room/fixture volume figures. The results of the analysis revealed that the water usage of unmetered customers was approximately 10% higher than metered customer usage and nearly 10% lower than the estimated unmetered usage being utilized at the time of the study. As a result of the analysis, the applied water usage volumes that were used to determine the amount to bill unmetered customers were reduced by approximately 10%. In addition, the study determined that there was not another alternative methodology that did a better job of approximating water usage than the current room/fixture method. 3 In conclusion, as described above the methodology used to bill unmetered MSD customers has been in place since the 1950's, it was validated in the 1990's, approved by the MO Court of Appeals in 1997 and the volume figures were updated in 2014. This methodology has been found to impose a fair and reasonable burden on all classes of ratepayers five times since 2000. It is fair to say that this methodology accomplishes just what you are asking for, a fair and reasonable burden on all classes of ratepayers. If you have additional questions feel free to contact me at 314-768-6299. Sincerely, Marion Gee Director of Finance cc: MSD Rate Commission 4