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HomeMy Public PortalAboutJune 21, 2018 - Transcript of Rate Commission Prehearing Conference PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 1 1 2 3 4 5 6 MEETING OF THE RATE COMMISSION 7 OF THE 8 METROPOLITAN ST. LOUIS SEWER DISTRICT 9 2018 STORMWATER RATE CHANGE PROCEEDING 10 11 12 13 PREHEARING CONFERENCE 14 JUNE 21, 2018 15 16 17 18 19 20 21 22 23 24 25 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 2 1 I N D E X 2 Roll Call . . . . . . . . . . . . . . . . . . .5 3 Statement by Susan Myers . . . . . . . . . . . 5 4 Statement by Brandon Neuschafer . . . . . . . 21 5 Statement by Lisa Stump . . . . . . . . . . . 33 6 Adjournment . . . . . . . . . . . . . . . . . 59 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 3 1 PREHEARING CONFERENCE FOR THE METROPOLITAN 2 ST. LOUIS SEWER DISTRICT, produced and examined on 3 June 21, 2018, between the hours of 9:00 in the 4 forenoon and 10:14 in the forenoon of that day, at 5 the Metropolitan St. Louis Sewer District Offices, 6 2350 Market Street, Room 109, St. Louis, Missouri, 7 before Suzanne M. Zes, a Certified Court Reporter of 8 the State of Missouri. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 4 1 A P P E A R A N C E S 2 Commissioners: Leonard Toenjes 3 Paul Brockmann Mickey Croyle 4 Russell Hawes Chan Mahanta 5 Stephen Mahfood Tom Ratzki 6 Mark Schoedel Jack Stein 7 Brad Goss (Via Telephone) Paul Ziegler (Via Telephone) 8 9 Representing Metropolitan St. Louis Sewer District: Susan Myers 10 11 Representing the Rate Commission: Lisa O. Stump 12 Brian J. Malone Lashly & Baer, P.C. 13 714 Locust Street St. Louis, Missouri 63101 14 314.621.2939 lostump@lashlybaer.com 15 16 Representing the Missouri Industrial Energy Consumers (MIEC): 17 Brandon W. Neuschafer . Bryan Cave Leighton Paisner, LLP 18 211 North Broadway, Suite 3600 St. Louis, Missouri 63102 19 314.259.2317 314.552.8317 Fax 20 bwneuschafer@bclplaw.com 21 Court Reporter: 22 Suzanne Zes, CCR/RPR Alaris Litigation Services 23 711 North 11th Street St. Louis, Missouri 63101 24 314.644.2191 25 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 5 1 P R O C E E D I N G S 2 (Starting time of the Prehearing Conference: 9:00 a.m.) 3 MR. TOENJES: Good morning. Being nine 4 o'clock on June 21st, 2018, we'll call the meeting 5 of the Rate Commission of the Metropolitan St. Louis 6 Sewer District to order. With that, let us start 7 with roll call. 8 Mr. Schoedel, if you would take the roll. 9 MR. SCHOEDEL: Gerry Beckmann? Paul 10 Brockmann? 11 MR. BROCKMANN: Present. 12 MR. SCHOEDEL: Don Bresnan? Mickey 13 Croyle? 14 MR. CROYLE: Present. 15 MR. SCHOEDEL: Brad Goss? Russell 16 Hawes? 17 MR. HAWES: Here. 18 MR. SCHOEDEL: Kennard Jones? Chan 19 Mahanta? 20 MR. MAHANTA: Here. 21 MR. SCHOEDEL: Stephen Mahfood? Lloyd 22 Palans? Tom Ratzki? 23 MR. RATZKI: Here. 24 MR. SCHOEDEL: Mark Schoedel. Jack 25 Stein? PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 6 1 MR. STEIN: Present. 2 MR. SCHOEDEL: Leonard Toenjes? 3 MR. TOENJES: Present. 4 MR. SCHOEDEL: Paul Ziegler? 5 MR. ZIEGLER: Present on the phone. 6 MR. SCHOEDEL: Thank you, Paul. 7 Mr. Chairman, we have a quorum. 8 MR. GOSS: Mr. Chairman? 9 MR. TOENJES: Yes. 10 MR. GOSS: Mr. Chairman, this is Brad 11 Goss. I just got my connection to work, so I am 12 present on the phone. 13 MR. TOENJES: Thank you, Brad. I 14 appreciate it. 15 Good morning, everyone. Welcome to our 16 prehearing conference. My name is Leonard Toenjes 17 and I am the chair of the Rate Commission of the 18 Metropolitan St. Louis Sewer District and will serve 19 as chair of this proceeding. 20 Present are all the names of the folks you 21 just heard, including Paul Brockmann, Mickey Croyle, 22 Brad Goss, Russell Hawes, Chan Mahanta, Tom Ratzki, 23 Mark Schoedel, Jack Stein, Paul Ziegler, delegates 24 of the Rate Commission. 25 The Charter Plan of the District was approved PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 7 1 by the voters of St. Louis and St. Louis County at a 2 special election on February 9th, 1954, and amended 3 at a general election on November 7th, 2000. The 4 amendment to the Charter Plan established a Rate 5 Commission to review and make recommendations to the 6 District regarding changes in wastewater rates, 7 stormwater rates, and tax rates proposed by the 8 District. 9 Upon receipt of a rate change notice from the 10 District, the Rate Commission is to recommend to the 11 Board of Trustees changes in a wastewater, 12 stormwater or tax rate necessary to pay interest and 13 principal falling due on bonds issued to financed 14 assets of the District, the cost and operation -- 15 the cost of operation and maintenance, and such 16 amounts as may be required to cover emergencies and 17 anticipated delinquencies. 18 Further, any change in a rate recommended to 19 the Board of Trustees by the Rate Commission is to 20 be accompanied by a statement that the proposed rate 21 change is consistent with constitutional, statutory 22 or common law as amended from time to time, enhances 23 the District's ability to provide adequate sewer and 24 drainage systems in facilities or related services, 25 is consistent with and not in violation of any PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 8 1 covenant or provision relating to any outstanding 2 bonds or indebtedness of the District, does not 3 impair the ability of the District to comply with 4 federal and state laws or regulations as amended 5 from time to time and imposes a fair and reasonable 6 burden on all classes of ratepayers. 7 The Rate Commission received a rate change 8 notice from the District on February 26th, 2018. 9 Under procedural rules adopted by the Rate 10 Commission, any person affected by the rate change 11 proposal had an opportunity to submit an application 12 to intervene in these proceedings. An application 13 to intervene was filed by the Missouri Industrial 14 Energy Consumers. 15 The Rate Commission originally had until 16 June 26th, 2018, to issue its report on the proposed 17 rate change notice to the Board of Trustees of the 18 District. The Rate Commission requested an 19 additional 45 days to issue its report. And on May 20 1st, 2018, the District Board of Trustees granted 21 the Rate Commission's request. The Rate Commission 22 must now issue its report on or before August 10th, 23 2018. 24 Since February 26th, 2018, the MSD Rate 25 Commission has received testimony from MSD staff, PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 9 1 the intervener and the rate consultant. The parties 2 have also engaged in discovery requests. Technical 3 conferences were held on April 4th, 2018, May 17th 4 2018, and June 7th, 2018, where the participants and 5 the Rate Commission were given an opportunity to ask 6 questions of those submitting testimony. 7 The Charter Plan of the Metropolitan St. 8 Louis Sewer District and the operational rules and 9 procedural schedule of the Rate Commission of the 10 Metropolitan St. Louis Sewer District provides for a 11 prehearing conference to identify, define, resolve, 12 or settle the issues raised by the prepared 13 testimony, and to ensure orderly and expeditious 14 proceedings. 15 Each intervener may participate in this 16 prehearing conference conducted on the record to 17 permit counsel for the District, each of the 18 interveners, and the Rate Commission to briefly 19 describe the participant's position, if any, on each 20 of the criteria and factors identified in the 21 Charter Plan. 22 In the event participants are able to resolve 23 or settle any issues or issue raised in the prepared 24 testimony, such participants may also include as 25 part of the prehearing conference report, a joint PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 10 1 recommendation describing each issue, the 2 recommended solution of the issue, and the rationale 3 therefore. 4 The Rate Commission is interested in the 5 views of the participants on the extent to which the 6 District's rate change proposal or any alternative 7 proposed by the participants meets or fails to meet 8 the criteria or factors for recommendations 9 contained in the Charter Plan. 10 To that end, and without requiring any 11 participant to act in a particular manner, each 12 participant is requested to make an oral 13 presentation of the participant's respective 14 position. The parties may also submit a short 15 written summary of the presentation, if desired. 16 The Commission's procedural schedule as 17 amended provides that each participant of the 18 prehearing conference shall submit on or before June 19 28th, 2018, a prehearing conference report 20 describing the issues raised by the prepared 21 testimony together with a brief description of such 22 participant's position, if any, on each issue and 23 the rationale therefore. 24 The Rate Commission has established a public 25 hearing session for the participants to be held on PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 11 1 June 29th, 2018, at 9 a.m. at the District offices. 2 The purpose of this public hearing session will 3 include permitting ratepayers to testify, receiving 4 into evidence any prepared testimony previously 5 submitted to the Commission subject to any valid 6 objections together with discovery responses and 7 transcripts of the technical conferences, permitting 8 the Commission members to ask questions related to 9 any issue addressed by the prepared testimony or any 10 other element of the proposed rate change and 11 permitting closing statements by the District, the 12 intervener, and legal counsel for the Rate 13 Commission. 14 In preparation for the June 29th, 2018 15 hearing, the District will distribute the current 16 list of exhibits to all parties by June 27th, 2018. 17 Are there any procedural matters at this 18 time? 19 Hearing none, Ms. Myers, would you be 20 prepared to address the Rate Commission on behalf of 21 the District? 22 MS. MYERS: Yes, I am prepared to 23 present the District's position today in our 24 prehearing conference summary. 25 MR. TOENJES: Please proceed. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 12 1 MS. MYERS: Good morning. My name is 2 Susan Myers, and I'm the general counsel for the 3 Metropolitan St. Louis Sewer District. As you all 4 know, the District submitted a stormwater rate 5 change proposal on February 26th, 2018, to mitigate 6 flooding and erosion within our District. This 7 proposal was based upon the wants and the needs of 8 MSD's customers as they were articulated to Brian 9 Hoelscher and Lance LaComb. 10 Brian and Lance spent many months out talking 11 to the community about what additional stormwater 12 services they wanted and how much they were willing 13 to pay for such services. The accumulation of what 14 Brian and Lance learned and previous requests from 15 customers was the basis for this proposal. 16 In addition, as committed by Brian Hoelscher 17 during surrebuttal testimony, MSD staff will 18 continue to listen to the input of its ratepayers to 19 see if any change in scope or size of the program 20 should, in the future, be brought to the Rate 21 Commission for consideration. 22 This proposal is about setting a stormwater 23 capital rate that is fair and equitable to all 24 classes of ratepayers. Upon acceptance by the MSD 25 Board of Trustees, the stormwater capital rate will PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 13 1 be taken to the public for a vote. The public will 2 decide if they want MSD to have a revenue source to 3 fund additional District-wide stormwater services in 4 the form of capital improvements to mitigate the 5 impacts of flooding and erosion. 6 You heard a lot of testimony and received a 7 lot of evidence that supports the District's 8 proposal. You've also heard a lot of thoughts and 9 comments about the methodology used by the District 10 to determine the project list. This includes the 11 methodology MSD uses to prioritize projects, how MSD 12 utilizes cost sharing and how the projects are 13 programmed into the overall Capital Improvement and 14 Replacement Program, CIRP. 15 With these in mind, the task at hand is for 16 the Rate Commission to issue its rate recommendation 17 to the Board of Trustees that meets the five 18 criteria outlined in MSD's Charter Section 7.270. 19 Criteria one of the Charter requires that the 20 proposed rate change is consistent with 21 constitutional, statutory or common law as amended 22 from time to time. 23 The proposed stormwater capital rate complies 24 with this criterion and will be taken to the public 25 to be voted on in Fiscal Year 2019. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 14 1 Criteria two requires that the proposed rate 2 change enhances the District's ability to provide 3 adequate sewer and drainage systems and facilities 4 or related services. 5 As shown by the District's written evidence 6 and witness testimony the stormwater capital rate 7 complies with this criterion because the main driver 8 for the proposed rate is to provide a funding source 9 via an impervious rate primarily to mitigate 10 flooding and erosion. 11 Criteria three requires that the proposed 12 rate change is consistent with and not in violation 13 of any covenant or provision relating to any 14 outstanding bonds or indebtedness of the District. 15 The District has satisfied this requirement 16 because it is not proposing the use of bonds or 17 other indebtedness and, therefore, the proposed 18 stormwater capital rate will not violate any 19 covenants or provisions of outstanding bonds or 20 indebtedness. 21 Criteria four requires that the proposed rate 22 change does not impair the ability of the District 23 to comply with any applicable, federal or state laws 24 or regulations as amended from time to time. 25 The proposed stormwater capital rate does not PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 15 1 address any particular federal or state law or 2 regulation. The stormwater capital rate is being 3 proposed based upon the MSD ratepayers' needs and 4 wants to address flooding and erosion in our region. 5 Criteria five requires that the proposed rate 6 change imposes a fair and reasonable burden on all 7 classes of ratepayers. 8 The stormwater capital rate, as evidenced 9 through District testimony and also by your own 10 technical consultants, clearly imposes a fair and 11 reasonable burden on all classes of ratepayers. 12 The District has also identified three topics 13 for further discussion. Issue one is MSD's 14 prioritization system. You heard a lot of testimony 15 by both the District and the Rate Commission's 16 technical consultant that MSD's stormwater project's 17 prioritization system is an acceptable and 18 appropriate way to develop a Capital Improvement and 19 Replacement Program. 20 The identification and prioritization of 21 projects to be included in the CIRP is a multistep 22 process requiring monitoring and updating to ensure 23 that the highest priority problems within the 24 District are addressed in a timely manner given 25 available funding. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 16 1 The stormwater projects are identified to 2 address flooding and erosion issues and are 3 prioritized based upon the severity of the flooding 4 and erosion and the overall benefit provided by the 5 project. 6 In order to maximize the benefits per dollar 7 spent on a project, a benefit cost ratio is 8 calculated to determine the project priority 9 ranking. Your technical consultant agreed that this 10 type of scoring system is commonly used in 11 infrastructure projects to provide quantification to 12 project prioritization. 13 Cost sharing. Cost sharing has been a 14 discussion during the discussion about prioritizing 15 projects. It is the District's goal that the 16 projects with the highest priority are funded first. 17 With that being the case, MSD has always been 18 receptive to partnering with other entities for them 19 to provide full or partial funding contributions to 20 stormwater capital projects. 21 MSD plans to continue this policy so long as 22 the use of MSD funding does not delay the execution 23 of other scheduled projects that have a higher 24 priority. As has previously been testified to, the 25 potential use of outside funding will have no effect PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 17 1 in the priority calculation for each project. 2 In calculating the cost of a project and 3 determining the benefit cost ratio, costs shall 4 always be the cost to complete the project 5 regardless of the source of funding. This process 6 ensures that the value of the stormwater capital 7 dollars from all ratepayers will be weighed equally 8 and not be influenced by the ability of a 9 third-party source to provide additional funding to 10 the process. This helps ensure that the 11 prioritization process is fair and reasonable to all 12 classes of ratepayers. 13 Issue 2: The Capital Improvement and 14 Replacement Program includes projects and 15 programming. Development of the CIRP stormwater 16 program includes a process for prioritization of 17 projects and also programming of those projects. 18 There have been many questions around how projects 19 are prioritized and then how they got programmed. 20 Previously I discussed the prioritization 21 process and how it is fair and reasonable to all 22 classes of ratepayers. You also heard testimony 23 from your technical consultant validating that the 24 projects currently in the CIRP program are 25 appropriate. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 18 1 In addition, you heard that the 2 prioritization process in place allows the District 3 to have flexibility to include new projects or 4 projects with increasing severity in the program. 5 These statements are all true and support the 6 process that has been in place for many years and 7 allows the CIRP program to be fair and reasonable to 8 all classes of ratepayers. 9 The process for scheduling our programming 10 within the annual CIRP is an iterative process 11 impacted by a number of factors. Projects are 12 generally placed in the annual CIRP according to the 13 benefit cost ratio scheduling higher priority 14 projects sooner in the program. 15 The annual CIRP typically includes a 16 five-year rolling block of projects potentially 17 being impacted by a number of factors. Those -- 18 these factors and this programming process can 19 require the movement of projects both higher in 20 priority to be delayed or projects of lesser 21 priority to be expedited in the program. However, 22 as stated earlier, it is always the intent to 23 address the highest priority issues sooner in the 24 program. 25 Mr. Unverferth testified that the cost PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 19 1 estimates were based on historical District bid 2 prices using conceptual design information, 3 technical expertise of consulting engineers and past 4 data on similar District projects. Your technical 5 consultant is in agreement and testified that the 6 District's cost estimates were completed in 7 accordance with common practice for this phase of 8 the program. 9 Issue 3: Incentives and credits. The Rate 10 Commission's technical expert and MSD are in 11 agreement regarding the incentive credit program 12 being proposed. Ms. Young testified that we should 13 focus on how effective the incentive slash credit 14 program is to reducing impervious area, not whether 15 the incentive or credit is large enough. 16 Ms. Young further testified that best 17 management practices are beneficial to the overall 18 system if they are maintained over the long term. 19 However, it is unlikely that BMPs will have a 20 significant effect in reducing the civil 21 infrastructure investments necessary in this 22 program. 23 While it is beneficial to install BMPs, MSD 24 needs to collect the funds in order to build the 25 stormwater infrastructure to undertake buyouts PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 20 1 included in the CIRP. Increasing incentives or 2 credits may increase BMPs without actually achieving 3 a reduction in effective impervious area where 4 needed. 5 MSD testified that similar to other 6 stormwater programs across the country the District 7 has developed a proposed stormwater incentive 8 program that provides customer incentives for 9 reducing their effective impervious area through the 10 use of constructed features or low impact 11 development and the proposed program is within 12 industry norms for such programs with respect to its 13 major features. 14 Your technical consultant testified that the 15 incentive and credit program will provide some 16 nominal benefit to property owners to provide BMPs 17 without compromising the CIRP. Thus, the District's 18 program is a reasonable approach to providing some 19 benefit to BMPs while still maintaining the 20 integrity of accomplishing the CIRP. 21 As I stated at the beginning of my statement, 22 the task at hand is for the Rate Commission to issue 23 its rate recommendation to the Board of Trustees 24 that meets the five criteria outlined in the MSD 25 Charter Section 7.270. Upon review of the complete PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 21 1 record of these proceedings you will be able to 2 determine that the District's proposal does just 3 that. 4 This concludes the District's official 5 summary statement. A copy of our statement will be 6 filed as Exhibit MSD 64. Thank you. 7 MR. TOENJES: Thank you, Ms. Myers. 8 Do any of the Rate Commissioners have 9 questions for Ms. Myers at this time? 10 Hearing none, Mr. Neuschafer, would you like 11 to address the Rate Commission on behalf of Missouri 12 Industrial Energy Consumers? 13 MR. NEUSCHAFER: I would. Thank you. 14 As you're all aware, I'm Brandon Neuschafer 15 and I represent the Missouri Industrial Energy 16 Consumers. I don't intend to rehash all the 17 arguments outlined in the testimony submitted to 18 date and in the reports that will be submitted next 19 week. You'll see a much deeper explanation of our 20 position with support from the record at that point 21 in time. But I do want to make a few points right 22 now. 23 It's MSD's duty to propose a program that is, 24 among other things, fair and reasonable to the 25 ratepayers. The Rate Commission's role in this PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 22 1 proceeding is to hold MSD to that standard. 2 Regrettably, the CIRP as proposed is neither fair 3 nor reasonable to the ratepayers. 4 First, we're concerned that the purported 5 public support for the program has been overstated. 6 MSD's data indicates that in most years from 2012 to 7 2017 they received about 300 calls per year 8 regarding flood and erosion issues. Some years it 9 was higher and in some of those years there was 10 significant flooding events. 11 But given the fact that MSD has approximately 12 425,000 accounts representing a population of 1.3 13 million individuals and will have approximately 14 465,000 accounts if it undertakes this program, that 15 means that about 0.00065 to 0.0007 percent of MSD's 16 accounts are contacting MSD on an annual basis about 17 flooding and erosion issues. That's hardly a clamor 18 from the rate-paying public. 19 Additionally, MSD has relied on a public 20 survey to support the need for the program. 21 Contrary to MSD's assertions, the survey clearly 22 indicates that nearly three-quarters of MSD's 23 ratepayers are not willing to pay the rates being 24 proposed by MSD. Recall that the current proposal 25 imposes a rate of $2.25 per month per ERU and may be PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 23 1 as much as $6.84 for residential properties with 2 large amounts of impervious area. 3 The survey data, however, indicated that only 4 32 percent of respondents would support a monthly 5 rate of $2 per month or more. That's less than what 6 MSD is actually proposing. A full 69 percent of the 7 respondents indicated that they either would not 8 support an increase to manage the stormwater issues 9 or would only support a 1 dollar per month increase. 10 Second, a lot has been made about the minimal 11 amount of engineering analysis and cost estimation 12 to support this program. This is not an 13 insignificant point. Conceptual ideas and, quote, 14 minutes-long analyses often based on information 15 that's decades old is not sufficient. 16 I understand that MSD needs additional 17 resources to do a deeper dive into the size and 18 scope of the program it's proposing, but at the same 19 time MSD owes a duty to the rate-paying public to 20 have confidence that this work needs to be completed 21 and to tailor a program including both rates and 22 duration that is appropriately scoped. 23 It's neither fair nor reasonable to 24 ratepayers to fund a program with deficiencies or 25 ask for ratepayers to write a blank check and let us PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 24 1 figure out what the program will entail later. 2 Additional deficiencies in the design of the program 3 will be identified in our report. 4 For example, despite all the discussion we've 5 had about how MSD prioritizes the projects within 6 the CIRP, MSD seems to have skipped over the 7 question of whether these projects truly justify 8 spending public money in the first instance or 9 whether at some point the costs of a particular 10 project outweigh the benefits. 11 Additionally, the rates and annual revenues 12 appear to have been designed based on what MSD 13 things the public will stomach, not factors such as 14 actual need or urgency of projects. In light of 15 recent and upcoming wastewater rate increases we 16 need to be more cognizant of the impact of quickly 17 rising rates on the public. 18 Third, similar to the inadequate engineering 19 and cost analyses conducted by MSD is the failure to 20 properly consider bond financing. MSD has made it 21 clear that it never considered bond financing for 22 this program and the arguments it presents in 23 opposition to bond financing are merely post hoc 24 rationalizations of that decision. 25 As will be explained more fully in our PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 25 1 post-hearing brief, MSD has a strong financial 2 position and the ability to use debt to fund a 3 competent capital plan. To be clear, MIEC is not 4 arguing that debt absolutely must be used to fund 5 the CIRP, but the rigger and programmatic planning 6 and protection of the customer interest. In other 7 words, the fairness and reasonableness of the 8 program being proposed requires a proper analysis of 9 the use of bond funding. Indeed that's ultimately 10 what MIEC's position entails. 11 The CIRP is based on minimal engineering, 12 aged data, hasty cost estimation and incomplete 13 financial planning, all in the absence of any 14 grounds of public support. As such, the program is 15 proposed as neither fair nor reasonable to any class 16 of MSD's ratepayers. 17 Thank you for your time. We appreciate your 18 careful consideration of our position. 19 MR. TOENJES: Thank you, Mr. Neuschafer. 20 Do any of the Commissioners have questions 21 for Mr. Neuschafer? 22 Hearing none -- we have one. Mr. Brockmann? 23 MR. BROCKMANN: Mr. Neuschafer, you 24 mentioned bonds but does it not cost a considerable 25 amount of money to just go out and prepare and issue PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 26 1 bonds and wouldn't that offset a lot of the cost 2 benefit and the amount of bonds would have to be, I 3 would think, several hundred thousand to be 4 beneficial, we're only talking 30 million per year 5 -- I'm sorry, several hundred million, not thousand. 6 MR. NEUSCHAFER: So we will address that 7 point in our papers because, frankly, our expert is 8 the person who understands the bond issue a bit 9 better. I'm not a financial person, but my 10 understanding is that a bond program could be 11 created and yes, you know, there is debt service 12 that would need to be paid over the years and there 13 is spending involved in issuing the bonds and paying 14 back those bonds over a period of time but those are 15 paid back over a period of time. 16 There are projects within this program that 17 would be more appropriate for bond funding based on 18 the nature of the projects. And, importantly, use 19 of bonds could, at this point in time, minimize the 20 initial impact on ratepayers. Yes, it may result in 21 paying back the bonds over a longer period of time 22 but we're also considering the impact over a short 23 period of time on ratepayers and that is where the 24 use of a bond program could be more beneficial to 25 ratepayers. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 27 1 MR. BROCKMANN: Will you also be 2 advocating increasing the spending? If you're 3 issuing the bonds you could possibly have more money 4 up front and knock out more of these projects at a 5 faster rate than what's being proposed? 6 MR. NEUSCHAFER: That's not part of our 7 proposal. Should MSD decide that that's appropriate 8 I think we could consider that. 9 MR. TOENJES: Any further questions? 10 Yes, Mr. Schoedel? 11 MR. SCHOEDEL: Is it your organization's 12 opinion that based on the survey data that MSD has 13 gathered that there isn't a flooding and erosion 14 issue in the ratepayers' area? 15 MR. NEUSCHAFER: No. And let me be 16 clear, the position is not that there isn't a 17 flooding and erosion issue. There may be local, 18 regional flooding or erosion issues. Our position 19 is that there's no support from the ratepayers to 20 pay for a program to address these issues. 21 MR. SCHOEDEL: Okay. Thank you. 22 MR. MAHANTA: I have a question. 23 MR. TOENJES: Yes, Mr. Mahanta? 24 MR. MAHANTA: Yes, Mr. Neuschafer, the 25 fact that the numbers of complainants are small, PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 28 1 does it in any way take away the importance to those 2 complainants about mitigating flooding and erosion 3 and things that they are suffering from? 4 MR. NEUSCHAFER: So I have a few points 5 to make in response to that. First, we're not 6 saying that there are no erosion or flooding issues 7 but this is a voluntary program. There's nothing 8 that requires MSD to undertake this program and in 9 order to have a properly I guess scoped program, 10 yeah, we need to do a few things. We need to make 11 sure that we have the data and the support for the 12 program. We need to make sure that the projects are 13 properly prioritized and we also need to make sure 14 that there really is public support for this 15 program. And, yes, there may be a small subset of 16 MSD's customers that are experiencing flooding and 17 erosion issues. 18 I think ultimately the question is: Is it 19 MSD's issue to deal with? Is it the ratepayers -- 20 that the rest of the ratepayer pays? Is it 21 something that they should be funding? Is it fair 22 and reasonable for the ratepayers to fund that? 23 So I don't want to leave the impression that 24 we don't think there are any erosion or flooding 25 issues. The ultimate question is: Is this the PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 29 1 right program? Has this program been designed 2 properly? Does the public really support this 3 program? The public as a whole, that's who's paying 4 for it. That's our concern. 5 MR. TOENJES: Yes, Mr. Brockmann? 6 MR. BROCKMANN: Mr. Neuschafer, based on 7 what you just said you're talking about a few number 8 of people that are experiencing problems but I 9 thought we were talking that this is a regional 10 issue. You don't feel it's a regional issue? 11 MR. NEUSCHAFER: It's a regional -- I'd 12 say it's a regional issue in that there are flooding 13 and erosion concerns throughout MSD's region. Some 14 of the flooding or erosion -- the individual 15 flooding or erosion issues certainly affect more 16 than just one or two pieces of property. That -- I 17 don't think there's any dispute about that. 18 I'm not arguing and MIEC is not arguing that 19 there are not erosion or flooding issues. We're not 20 arguing that there are not erosion or flooding 21 issues at many different places throughout MSD's 22 service area. What we are arguing is that there 23 really does not appear to be the level of public 24 support that MSD has argued exists for this program 25 and that the program as designed is not the most PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 30 1 fair and reasonable program for the ratepayers to 2 deal with those issues. 3 MR. BROCKMANN: I guess I struggle a 4 little bit with you're not wanting to say it's 5 regional issue. There was flooding on the streets 6 that didn't affect property two days ago and part of 7 this proposal it says that 30 percent of the 8 impervious surface within MSD's District is not 9 being taxed because it is public streets and 10 right-of-aways and yet people's cars were floating 11 down the streets the other day and that's all on 12 public property and not on private property. How do 13 we address that? 14 MR. NEUSCHAFER: Well, perhaps that's 15 another issue with the design of the program to 16 exempt those impervious areas that are contributing 17 to flooding issues. 18 MR. BROCKMANN: And how would you 19 propose that MSD collect for those areas? 20 MR. NEUSCHAFER: It's not my program to 21 propose. It's MSD's -- you know, frankly, it's 22 MSD's program to propose a fair and reasonable 23 program to the ratepayers. 24 MR. BROCKMANN: That's all I had. 25 MR. TOENJES: Mr. Hawes, you have a PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 31 1 comment? 2 MR. HAWES: Yes. Mr. Neuschafer, you've 3 stated multiple times that there doesn't appear to 4 be the support for this program but isn't part and 5 parcel to this proposal a vote of the people, so is 6 that not how the support would be defined? I mean, 7 if they have what MSD has put together in front of 8 them, do you not feel that the voters can determine 9 what they support and what they don't? 10 MR. NEUSCHAFER: Yeah, ultimately the 11 voters will decide and they'll decide next spring. 12 Nonetheless, we still have an obligation at this 13 point in time to determine whether it's fair and 14 reasonable to take this to the voters and that's -- 15 that's the issue that we're raising. 16 MR. HAWES: So the 2.25 -- you mentioned 17 a survey where I think you said that 69 percent do 18 not support increase over $1 a month? 19 MR. NEUSCHAFER: Yes. 20 MR. HAWES: Are you suggesting that they 21 should redesign their program to fit within those 22 parameters, a dollar per month or something along 23 those lines? At what point between a dollar and 24 2.25 does it become reasonable? 25 MR. NEUSCHAFER: And the only data that PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 32 1 I've got is what's in that survey. There were 2 multiple -- I guess there were multiple dollar 3 amounts that were addressed in that survey. We've 4 got more of a breakdown in the paper that we'll file 5 next week. But customers were asked about would you 6 be willing to pay basically anything and there was 7 still a pretty large number, I think it was less 8 than 50 percent, I don't have the numbers in front 9 of me, but less than 50 percent that said, "I don't 10 want to pay a thing," then there was a pretty large 11 number that said, "I don't want to pay more than a 12 dollar." 13 Those two, the groups of people that said, "I 14 don't want to pay a thing," and "I don't want to pay 15 more than a dollar," totaled 69 percent. And then 16 the survey was designed such that they also asked, 17 "Would you pay $2? Would you pay $3? $4? $5?" 18 Those that said, "I would be willing to pay 19 $2 or more," those equated to about 62 -- or I'm 20 sorry -- 32 percent. The numbers are a little off 21 because of rounding but that's ultimately where they 22 came down. 23 MR. HAWES: And this was statistically 24 -- was it polling or what was the methodology of 25 that? PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 33 1 MR. NEUSCHAFER: The actual survey, the 2 final report of the survey is part of the record and 3 we can direct you to that. I don't have the answer 4 to that question right now but it's part of MSD's 5 support for the program, so if it's not 6 statistically significant or if there are other 7 deficiencies in the design of the survey that -- 8 MR. HAWES: So this is the same survey 9 that MSD has -- 10 MR. NEUSCHAFER: The absolute same one, 11 yeah. 12 MR. HAWES: Okay. I don't have any more 13 questions. Thank you. 14 MR. TOENJES: Thank you, Mr. Hawes. 15 Anything further? 16 Hearing none, thank you, Mr. Neuschafer. 17 Ms. Stump, would you like to address the Rate 18 Commission as our legal counsel? 19 MS. STUMP: I would. Thank you. 20 And as your legal counsel my role in this 21 prehearing conference is a little bit different. 22 Ultimately the Rate Commission is going to have to 23 make a recommendation in its report as to whether 24 the rate change proposal made by the District is 25 consistent with the five criteria and the three PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 34 1 factors that Mr. Toenjes read early in the 2 introduction of this prehearing conference. 3 Most of the issues that we've heard so far in 4 these proceedings have turned on the criteria of 5 whether the proposed rate change is fair and 6 reasonable. You also have to find that the proposed 7 rate change is consistent with the law and there are 8 a couple of issues that pop up, which the Rate 9 Commission will need to address. 10 But my role really here today is to help 11 summarize the issues for you based on the evidence 12 that's in the record and also describe the positions 13 of the parties on the issues. When you get to 14 deliberations you all can discuss in detail the 15 issues and certainly we will be providing more 16 documentation on these in our report that we file 17 next week. 18 So let's go through a few of the questions 19 that have been raised. I think the first issue that 20 the Rate Commission will have to consider is 21 questions relating to the overall program and, as 22 you've heard from both Ms. Myers and Mr. Neuschafer, 23 the first question is really is the $562 million in 24 projects the right amount? 25 The District has proposed that the stormwater PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 35 1 CIRP is prudent and reasonable and established 2 evidence in the record to that effect. As you heard 3 from Mr. Neuschafer, MIEC disagrees with that. The 4 testimony of their expert was that there's 5 inadequate planning to justify 30 million a year of 6 revenue collection from customers. There was a lot 7 of discussion about it because the projects being a 8 preliminary list of projects and there wasn't 9 adequate justification for this amount. 10 And you've also heard testimony from the Rate 11 Commission consultant, Ms. Young, that disagreed 12 with MIEC and in fact says that there is sufficient 13 reasonable planning by the District for the program. 14 Also related to the size of the program you 15 heard questions from the Commissioners themselves as 16 to whether in fact the $562 million is enough. The 17 District says that it is a reasonable start but you 18 did hear discussion about whether that amount is 19 going to be sufficient to address the problem. 20 The second question relating to the overall 21 program is related to the use of debt. As you heard 22 from Mr. Neuschafer, his client asserts that the 23 Rate Commission should at least be considering the 24 use of debt for this rate change. 25 You've heard from the District, however, and PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 36 1 specifically Mr. Gee testified that the District 2 should make improvements in the most affordable way 3 possible and debt funding will automatically 4 increase costs, moreover because the rate is so low 5 debt funding will have limited impact. And you also 6 heard from the District some concern about using 7 debt funding for this proposal when we are 8 presumably facing a wastewater rate change proposal 9 next year. 10 In the debt discussion we also had the issue 11 come up that tax exempt bonds can only be utilized 12 for improvements on facilities owned by the 13 District, which led us to our next issue for the 14 Rate Commission to consider which is whether MSD 15 could make and fund capital improvements on private 16 property. 17 The District, mainly and through 18 Mr. Hoelscher, discussed about how the Charter does 19 give them the authority to provide effective means 20 of ensuring the area within the whole District has 21 adequate sanitary and stormwater drainage and thus 22 they can remediate and provide improvements on 23 private property. You also heard the District 24 discuss that they will be getting easements in order 25 to do so. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 37 1 And you heard MIEC's expert, however, say 2 that it's also consistent with standard practices 3 for utilities that they don't make investments on 4 private property. 5 Your own rate consultant testified in support 6 of having MSD make improvements on private property, 7 discussing that if the capital program is addressing 8 erosion and flooding issues that are on private 9 property, for instance in the example of a steam 10 erosion -- stream, excuse me, erosion, that runoff 11 is occurring and that erosion is occurring due to 12 runoff through the watershed and so in that regard 13 it's benefiting the entire watershed area and the 14 service area. 15 And then the final issue related to the 16 District's overall program with the proposed capital 17 rate is the one that we've spent probably the most 18 time on and that is should private groups be allowed 19 to contribute funds to move their project up the 20 list. The discussions really revolved around the 21 issue of source of funding versus project cost and 22 you heard both from Mr. Myers and Mr. Neuschafer on 23 this today. 24 MSD has noted that they would be receptive to 25 cost-sharing arrangements but will always, to be PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 38 1 fair and equitable, consider outside funding to be 2 the same as MSD funding in terms of calculating the 3 project score on their scoring sheet. That 4 municipalities and homeowners' associations may 5 participate but it's not going to change the project 6 cost. 7 And the District identified that certainly 8 they are open to and willing to have anyone 9 participate and they did specify that if it was 10 within a year it could move the project up the list 11 but only within the confines of that year. 12 MSD also testified that the process that they 13 have on the check -- the scoring card and the 14 project cost eliminates discrimination for those 15 municipalities with limited insufficient stormwater 16 funding and they also provided evidence that they 17 had a professional opinion that the prioritization 18 system is appropriate. 19 The rate consultant, Nicole Young, spent a 20 lot of time testifying on this issue and engaging 21 with some of the commissioners in a discussion on 22 this issue and also agreed with MSD's approach 23 stating that it would not be fair and equitable to 24 change -- in her opinion, to change the manner in 25 which MSD was doing the scoring and the score card. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 39 1 So those are pretty much the issues related 2 to the program itself. We also heard discussion 3 related to the method of imposition of the 4 stormwater capital rate and there were some 5 questions that came up in this regard. 6 As we've mentioned, one thing that the Rate 7 Commission has to do is find that the proposed rate 8 change is consistent with the law. We know that the 9 stormwater capital rate will be a rate that's 10 imposed based on impervious area and while we have 11 had discussion in this and prior proceedings that 12 that is the most fair and equitable means in which 13 to do it, there are still some legal issues that 14 remain that the Rate Commission may have to 15 consider. Specifically the footnote in the Zweig 16 case still raises some questions as to whether MSD 17 can do any stormwater rate that is not based on the 18 value of property. 19 The second legal issue with respect to the 20 rate is that MSD, as we've heard, will be charging 21 nonprofits and governmental property the same as 22 other property and there's a question as to whether 23 this is permissible. 24 MSD has testified that in both situations, 25 both of those legal issues, it has a legal opinion PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 40 1 supporting the current method that it's going to be 2 doing with the stormwater capital rate. But that's 3 just something that we're going to have to consider 4 as we go through the process and making a 5 declaration that the rate is consistent with the 6 law. 7 The other issues related to the method of 8 imposition of the rate and there was discussion in 9 the record on -- related to, you know, all parties 10 agree that the impervious area is best but the issue 11 came up should MSD differentiate for compacted dirt. 12 In doing so your consultant believes that utilities 13 can assess an effective impervious area based on a 14 runoff factor for properties such as vacant 15 properties that have compacted soil and things. 16 The MSD expert testified that to do so would 17 be time-consuming and prone to errors and difficult 18 to administer. So, again, that's going to have to 19 be an issue that the Rate Commission considers. 20 And, finally, the other issue related to the 21 rate itself, there was testimony about the incentive 22 programs and whether the incentive programs are 23 adequate incentives and should MSD consider 24 additional programs. The consensus I think seemed 25 to be from all the parties was perhaps the incentive PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 41 1 programs were small but when asked if there were 2 other alternatives there haven't been any that have 3 really been proposed for the Rate Commission to 4 consider. 5 So that's a summary of the issues that we 6 will be able to address more fully with you as we 7 get into the deliberation process and we will 8 summarize the evidence a little bit more in the 9 written document that we submit next week. 10 MR. TOENJES: Do any of the Rate 11 Commissioners have -- Mr. Stein? 12 MR. STEIN: Ms. Stump, you mentioned the 13 legal issues, one of which was the Zweig footnote. 14 Have you had the opportunity to review the legal 15 opinions that the District sought indicating that 16 this proposal will satisfy those legal requirements? 17 MS. STUMP: We have not reviewed the 18 legal opinion that has been provided to this date. 19 MSD has asserted that it's privileged. MSD did 20 submit and has -- on two occasions where it has 21 legal opinions submitted a summary of that into the 22 record. But, no, we have not reviewed the legal 23 opinion. 24 MR. STEIN: Thank you. 25 MR. TOENJES: Yes, Mr. Ratzki? PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 42 1 MR. RATZKI: You stated that the 2 incentives are small and I agree with that, but do 3 you feel like they meet the fair and equitable test, 4 so -- we need to have incentives in a program like 5 that, in my opinion, to make sure that the rate is 6 fair and equitable, but do you feel like size 7 doesn't matter in that case as long as they have 8 one? 9 MS. STUMP: Well, I'm just summarizing 10 it for you, so I'm going to let Pam because she 11 would be the one advising you on that. 12 MS. LEMOINE: No, I do agree that having 13 the incentive and credit program is an important 14 element of a stormwater user fee, having that 15 ability to adjust what you're paying based on 16 actions you're taking on the property. The 17 incentives and the credits are small but the fee 18 overall is small and the overall percentage credits, 19 if you will, are consistent with what others use in 20 the industry. 21 MR. RATZKI: Chair, is Pam going to 22 speak also or is this our only chance to talk to 23 Pam? 24 MR. TOENJES: Continue. Go ahead. 25 MR. RATZKI: I just want to make sure PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 43 1 one of the statements that Ms. Myers made, because 2 there's no bonds involved, that will meet the 3 criteria in the Charter that there's no impact on 4 the District's bond convenants? I think you 5 testified to that earlier. 6 MS. LEMOINE: Yes. 7 MR. RATZKI: Okay. I just wanted to 8 confirm that. Thank you. 9 MR. TOENJES: Yes, Mr. Mahfood? 10 MR. MAHFOOD: Direct this back to Pam, 11 just talking about the incentives issue again, and 12 maybe it does go back to something also Lisa said, 13 are we open to any proposals, let's say from Rate 14 Commissioners, to modify the incentive program to 15 consider them? Is that -- you mentioned we haven't 16 seen anything as an alternative. 17 MS. STUMP: I'm just talking about 18 what's in the evidence so far. 19 MR. MAHFOOD: Gotcha. 20 MS. STUMP: When the Rate Commission 21 makes its deliberations, the Rate Commission has the 22 ability to do whatever the Rate Commission would 23 choose to do. The difficulty is that we haven't had 24 a discussion. We don't know what MSD's reaction 25 would be to those, but certainly they can be PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 44 1 discussed because -- and this is just a reminder 2 too, after the next public hearing, when the Rate 3 Commission gets into its deliberations, that will 4 just be amongst you all, amongst yourselves and 5 you'll have the ability to talk to Pam and I but 6 there will no longer be the ability to talk to any 7 of the other parties. 8 MR. MAHFOOD: Thank you. 9 MR. TOENJES: Mr. Schoedel? 10 MR. SCHOEDEL: And with respect to the 11 incentive program, Pam, is there any way that you 12 can gather more data for us and any other incentive 13 programs that are out there to see if there would be 14 anything else that would be fair and equitable that 15 the Rate Commission could at least consider? 16 MS. LEMOINE: Yes, I could provide you 17 with some examples. I know there's some examples 18 that are in the record already but we could provide 19 you with some other examples as well. 20 MS. STUMP: And perhaps too, in doing 21 this issue in our report, we can cite to you two of 22 the examples that are already in the record. 23 MR. SCHOEDEL: Thank you. 24 MR. TOENJES: Yes, Mr. Mahanta? 25 MR. MAHANTA: Would it be possible for PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 45 1 the Rate Commission members to propose additional 2 measures to the current existing or proposed 3 incentive programs as a part of our deliberations? 4 MS. STUMP: Again, yes, the Rate 5 Commission can propose additional incentive measures 6 to the Board of Trustees in its report. 7 MR. TOENJES: Any further questions? 8 Yes, Mr. Brockmann? 9 MR. BROCKMANN: Lisa, if we look at this 10 process, MSD's presentation to the Rate Commission 11 and each time we do this every other year, so forth, 12 this particular one seems like it wouldn't be all 13 that difficult because it's a service that -- let me 14 rephrase that. It could be difficult or could not 15 be difficult, for one, a service is not being 16 provided, it's not mandated by law, it's not that 17 much money it doesn't seem like at the end of the 18 day. 19 But then so if we look at this as fair and 20 reasonable and let's just assume that everything 21 comes out that this proposal is fair and reasonable 22 and we make this decision recommendation to the full 23 board but later on there's going to be more rate 24 increases that come to the Rate Commission that are 25 going to have to be implemented because of the PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 46 1 Consent Decree, so how do we evaluate this one as an 2 individual thing and not consider everything going 3 forward that might be mandated by the Consent 4 Decree? 5 MR. TOENJES: Mr. Brockmann, I have -- 6 I'll jump in here a little bit. I guess from my 7 perception the fair and reasonable discussion, and 8 please correct me, Ms. Stump, but in my view the 9 fair and reasonable discussion is about the 10 distribution of current costs across all classes of 11 ratepayers. 12 The fair and reasonable is not compared to 13 your electric bill and your mortgage and all of your 14 entertainment expenses. Fair and reasonable has to 15 do with is this 562-million-dollar bill being 16 distributed across all classes of ratepayers in a 17 way that is fair and reasonable to all classes of 18 ratepayers. 19 MS. STUMP: And you are correct. I 20 mean, what the Charter specifically says is -- and 21 that's the other thing that's important to consider, 22 is your duty is to look at the proposed rate change. 23 That's what we're looking at today and that is just 24 this one rate and then whether that proposed rate 25 change imposes a fair and reasonable burden on all PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 47 1 classes of ratepayers. 2 MR. BROCKMANN: Okay. 3 MR. TOENJES: I think it's more of a 4 distribution discussion than an amount discussion in 5 that particular regard. 6 MS. STUMP: Right. And we'll get into 7 this more in the deliberations too but I think it's 8 -- I mean, I appreciate knowing whatever you all are 9 thinking so we can address that. 10 MR. SCHOEDEL: I think Mr. Brockmann's 11 comment is valid though. With us knowing that 12 additional rate changes are coming, how do we keep 13 those separate from this one in this whole 14 discussion? 15 MS. STUMP: I think that your obligation 16 is to look at that particular rate change. We may 17 know that other ones are coming. We don't know -- 18 and that is in the record. They have said that they 19 are planning on submitting one. We don't know the 20 details of that though, so that's just part of -- 21 that's kind of why you guys are sitting where you 22 are to make these policy determinations. 23 MR. TOENJES: Further questions? 24 MR. GOSS: Mr. Chairman? 25 MR. TOENJES: Yes, Mr. Goss? PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 48 1 MR. GOSS: If I might, on the incentive 2 program I understood from MSD that they were looking 3 further into how they might be able to provide 4 incentive -- an incentive program through or to an 5 owner's association, through that kind of pooling 6 concept that we -- that I talked about with them 7 during the hearing. 8 Are we going -- do we know if MSD will get 9 back to us further on that or is that something that 10 we as a Commission can propose if we think that's 11 something that's reasonable to do? 12 Sorry for the compound question, Lisa. 13 MS. STUMP: You are correct that in the 14 record, when you did have that discussion, MSD said 15 they were willing to look into it further. I will 16 let MSD comment but I would assume that should the 17 Rate Commission wish for MSD to do so that would be 18 a part of their report. I don't know if MSD plans 19 on looking at that before the end of this proceeding 20 or not. 21 MR. HOELSCHER: It's Brian Hoelscher 22 with MSD, Brad. I recall a lot of the discussion 23 not being on the record but that's fine. Yes, we're 24 going to send some information to you about pooling 25 as opposed to individual homes. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 49 1 I think I'd like to point out we're going to 2 provide that because we view it as a -- as an 3 extension or similar to what we do for current 4 homes. So while we've shown you the -- we've shown 5 you the credits, the incentives that we're 6 proposing, there's a lot of detail into the 7 implementation. When we run into situations that 8 look similar to what we're doing, we would do that. 9 In this case, MSD is just viewing it as 10 mechanically if there's a way to provide the credit 11 so it's equivalent to what we're doing for each 12 individual home, we'll do that. 13 I want to make sure the Rate Commission 14 understands that isn't the only time that this kind 15 of thing happens. The one we always talk about, we 16 know there's a property owner, who lives at the top 17 of the hill, whose predecessor built a big pond and 18 all their impervious area goes in that pond and does 19 not leave their property. We're planning on 20 treating those individuals as though they live next 21 to a large river and they're going to get a 70 22 percent credit. 23 Now, you don't see that spelled out. You see 24 us indicating we're going to give credits for next 25 to large rivers or equivalent situations. So we PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 50 1 will provide that and I think we're going to -- I 2 think we're to the point where we think there is 3 mechanically a way we could do that, we could 4 provide that for information, I just don't want to 5 leave the Rate Commission with the idea that we're 6 not going to manage the credit policy. It would be 7 impossible to have a credit policy for how the 8 credit applies in detail to every situation we run 9 into. 10 But I think in answering Mr. Goss' question, 11 yes, we will provide something that shows we think 12 we mechanically have a way that we can pool the 13 individual home credits for capturing 500 square 14 feet of impervious area. We'll get that to you 15 soon. 16 MS. STUMP: So, just to clarify, can we 17 get that in the record then before the 29th? 18 MR. HOELSCHER: Before the 29th? Yes -- 19 MS. STUMP: Would you be willing -- 20 MR. HOELSCHER: -- we will do that. 21 MS. STUMP: Okay. 22 MR. HOELSCHER: We will forward that to 23 you before the 29th. We'll file it as an exhibit. 24 MS. STUMP: Perfect. 25 MR. GOSS: Thank you. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 51 1 MR. TOENJES: Any further questions? 2 MR. MAHFOOD: Just kind of adding to our 3 discussion back on the incentive side and talking 4 about the future and our future deliberations and 5 commitments to meeting the Consent Decree, I can 6 tell you that from the -- since runoff from 7 impervious surface winds up collecting toxic 8 pollutants while it moves its way through the system 9 and out into the waterways, I know the Coalition for 10 the Environment sees this program as a really -- a 11 good faith effort to meet the spirit of the Consent 12 Decree, if not directly linked to the Consent 13 Decree. So for us it's very important as we go 14 forward and the importance of meeting the other 15 requirements in the Consent Decree, this seems to be 16 -- again, this is not analyzing -- pre-analyzing 17 where we're going deliberation-wise in determining 18 exactly the fair and reasonable part of this when we 19 make our final decision but in general and as an 20 overview think this whole concept is very important 21 and is in my mind, and this is my personal opinion, 22 this helps even the Coalition and others deal with 23 this issue from a legal perspective and can use this 24 very strongly, if done correctly, this program as a 25 way of meeting our commitment to improving water PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 52 1 quality in the St. Louis area. So I wanted to get 2 that into the record. 3 MS. STUMP: Good. 4 MR. TOENJES: Thank you, Mr. Mahfood. 5 Further questions? Comments? 6 I have one question, Ms. Stump. Going back 7 to the legal issues on the impervious area, how does 8 the fact that this is a public vote impact that -- I 9 guess my question is if the public vote -- the 10 public chooses through a public vote that the use of 11 an impervious area is -- passes by the electorate, 12 what's the legal implication of that? 13 MS. STUMP: Well, if it wasn't going to 14 a vote there would be -- there would be an 15 additional issue, let's put it that way. 16 As far as the remaining issues about the 17 Zweig -- the issue is, and I don't know if you all 18 recall from last time and I'll be happy to re-brief 19 this for you too, but the Zweig opinion had this one 20 footnote where they -- you know, since it went to 21 the vote of the people it was -- or since it was 22 going to go to the vote of the people that was the 23 discussion but there was a discussion in the 24 footnote about whether MSD has the authority to 25 impose a stormwater charge upon -- in an impervious PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 53 1 manner. So it's an authority question, not a does 2 it need to go to the vote question. And, again, 3 it's just this one footnote. 4 MR. TOENJES: So the vote -- would the 5 vote have the potential to grant that authority to 6 MSD? 7 MS. STUMP: It's an unrelated issue. 8 MR. TOENJES: Thank you. 9 MS. STUMP: And that's why it was just a 10 footnote in this decision. 11 MR. TOENJES: Okay. 12 MS. STUMP: And, again, MSD says they 13 have an opinion that says they do have the authority 14 to do it. We'll give you some guidance on that 15 during the deliberation but it's a separate issue. 16 MR. TOENJES: Thank you. 17 Further questions for Ms. Stump? 18 Hearing none, are there any other matters 19 from any of the Rate Commissioners that we should 20 address before we adjourn? 21 MR. RATZKI: Is this our last chance to 22 speak? I have a comment. 23 MR. TOENJES: It is not our last chance 24 to speak but you certainly may make a comment while 25 it's fresh on your mind. If you are like me, say it PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 54 1 now before you forget. 2 MR. RATZKI: Mr. Neuschafer made the 3 comment that this is a voluntary program, the 4 District can or cannot do this and I want to make 5 sure that the Charter is in place that the District 6 -- I know the District has the authority to do 7 stormwater matters and take care of stormwater 8 issues but does the District feel like it's a 9 voluntary obligation, I think is the exact term as 10 Mr. Neuschafer said, to have gone forward with this 11 proposed program? 12 MR. HOELSCHER: So it's a good point to 13 clarify. So when we indicate, we'll use the word 14 "voluntary" because it's coming up, in that context 15 if there is a distinct legal requirement to perform 16 something we consider that not voluntary. If there 17 is a distinct outline of facilities we own that we 18 are required to operate and maintain, therefore 19 collect revenues, I think in this context we're 20 saying that's involuntary. The reason we're calling 21 this voluntary is that it is a power that's 22 available to the District to institute if we move 23 forward. 24 Now, I will and I think with pretty much 25 confidence say most people believe and I think PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 55 1 they're correct if you read the Charter and 2 especially read the preamble to the Charter of the 3 original thought of the freeholders who put the 4 Charter together, the intent was for this to be 5 MSD's responsibility area-wide. So we've been very 6 careful not to say that that's the reason. We've 7 been trying to be absolutely legally correct about 8 when we say mandated or not mandated. But I think 9 that issue is out there and I think a full reading 10 of the Charter may lead you to believe that the 11 intent was for MSD to be the one to address these 12 issues. 13 MR. RATZKI: And in the same spirit that 14 Mr. Mahfood spoke of his organization that he 15 represents, The Engineers Club of St. Louis, when I 16 said my creed as a professional engineer, the 17 highest standard we have to attain is to protect the 18 health and welfare of the public and in my opinion 19 providing regional and localized stormwater capital 20 improvements to prevent and mitigate the flooding 21 that we've seen recently is something that I'll use 22 the word "obligation" of the District since it is 23 empowered to do that and I think this program should 24 be considered -- it should be voluntary, it should 25 be something the District takes as a consideration PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 56 1 of their responsibility and this is a program that 2 you put forward to try to do that and I support it 3 from that standpoint. 4 MR. TOENJES: Thank you, Mr. Ratzki. 5 Any further comments? Mr. Schoedel? 6 MR. SCHOEDEL: That opens up another 7 question because it doesn't seem to be gray that 8 this is MSD's responsibility as you currently 9 require new development to do stormwater control and 10 water quality. 11 MR. HOELSCHER: So one of the regulatory 12 requirements that MSD has from the State of Missouri 13 and the Federal government and that portion which is 14 covered by a different revenue source is a 15 regulatory requirement, for MSD to have a regulatory 16 program and a permitting program to address 17 pollutant runoff from new development. So that 18 would in the -- I guess the language we're using 19 here, that is a mandated service that MSD has to do 20 for regulatory reasons, is providing those permits 21 and that review to make sure we're in line with 22 those regulatory requirements. 23 MR. SCHOEDEL: So to clarify, this 24 question really equates to those areas that are not 25 new development that have never been covered under PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 57 1 any legal requirements -- 2 MR. HOELSCHER: Yeah, I think that's not 3 the distinction I meant. If we -- I think quickly 4 three revenue sources for MSD: the regulatory side 5 of stormwater runoff related to the pollutant issue, 6 the impact on the creeks and streams, there's 7 currently a 2 cent property tax where we address 8 that. That's a regulatory requirement. 9 The public storm sewer system that we own and 10 have to operate and maintain by Charter and by 11 policy, that's the 10 cent. 12 This is something else. This is how well 13 those -- the non-public collection systems function 14 whether they are erosion that's occurring next to a 15 subdivision that was built six months ago or whether 16 it's erosion that's newly developed because of the 17 change in weather patterns on a property that has 18 been there for 40 years. 19 It really doesn't have an impact on how new 20 or how old something is. Those regulations that we 21 put on for detention and stormwater quality aren't 22 to leave the situation the same, try not to 23 exacerbate the situation in order to meet regulatory 24 requirements. So they're kind of two different pots 25 and two different services. PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 58 1 MR. SCHOEDEL: It's just there's not a 2 pot for the one right now? 3 MR. HOELSCHER: Correct, the one we're 4 looking for is -- I think we've expressed as being 5 one of the three large services that MSD needs to 6 provide. As I indicated, the first two were 7 mandated regulatory or just if it's our 8 responsibility because of assets we have to own and 9 operate. This is a third one that, like I said, I 10 think going back to the Charter probably envisioned 11 that MSD be the one to provide this service. 12 MR. SCHOEDEL: Thank you. I think that 13 helps clarify it. 14 MR. HOELSCHER: Thank you. 15 MR. TOENJES: I would refer the Rate 16 Commissioners back to either two or our items that 17 we are considering in the rate change proposal which 18 states that this enhances the District's ability to 19 provide adequate sewer and drainage systems and 20 facilities for related services. 21 Any further comments? Questions? 22 Hearing none, we will adjourn at this time 23 until 9 a.m. on June 29th, 2018, for the final 24 public hearing session. 25 And a reminder to the Rate Commissioners that PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 59 1 at that time that will be the final opportunity that 2 we have to ask questions of the parties, all 3 parties, including the District, before we begin 4 deliberations. 5 Thank you. We will stand adjourned. 6 - - - - - 7 (Prehearing Conference concluded at 10:14 a.m.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES Page 60 1 CERTIFICATE OF REPORTER 2 I, Suzanne M. Zes, a Certified Court 3 Reporter (MO) and Registered Professional Reporter, 4 do hereby certify that the witness whose testimony 5 appears in the foregoing deposition was duly sworn 6 by me pursuant to Section 492.010 RSMo; that the 7 testimony of said witness was taken by me to the 8 best of my ability and thereafter reduced to 9 typewriting under my direction; that I am neither 10 counsel for, related to, nor employed by any of the 11 parties to the action in which this deposition was 12 taken, and further that I am not a relative or 13 employee of any attorney or counsel employed by the 14 parties thereto, nor financially or otherwise 15 interested in the outcome of the action. 16 17 18 ______________________________ 19 Certified Court Reporter 20 within and for the State of Missouri 21 22 23 24 25 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES A a.m 5:2 11:1 58:23 59:7 ability 7:23 8:3 14:2,22 17:8 25:2 42:15 43:22 44:5,6 58:18 60:8 able 9:22 21:1 41:6 48:3 absence 25:13 absolute 33:10 absolutely 25:4 55:7 acceptable 15:17 acceptance 12:24 accompanied 7:20 accomplishing 20:20 accounts 22:12 22:14,16 accumulation 12:13 achieving 20:2 act 10:11 action 60:11,15 actions 42:16 actual 24:14 33:1 adding 51:2 addition 12:16 18:1 additional 8:19 12:11 13:3 17:9 23:16 24:2 40:24 45:1,5 47:12 52:15 Additionally 22:19 24:11 address 11:20 15:1,4 16:2 18:23 21:11 26:6 27:20 30:13 33:17 34:9 35:19 41:6 47:9 53:20 55:11 56:16 57:7 addressed 11:9 15:24 32:3 addressing 37:7 adequate 7:23 14:3 35:9 36:21 40:23 58:19 adjourn 53:20 58:22 adjourned 59:5 Adjournment 2:6 adjust 42:15 administer 40:18 adopted 8:9 advising 42:11 advocating 27:2 affect 29:15 30:6 affordable 36:2 aged 25:12 ago 30:6 57:15 agree 40:10 42:2,12 agreed 16:9 38:22 agreement 19:5 19:11 ahead 42:24 Alaris 4:22 allowed 37:18 allows 18:2,7 alternative 10:6 43:16 alternatives 41:2 amended 7:2 7:22 8:4 10:17 13:21 14:24 amendment 7:4 amount 23:11 25:25 26:2 34:24 35:9,18 47:4 amounts 7:16 23:2 32:3 analyses 23:14 24:19 analysis 23:11 25:8 analyzing 51:16 annual 18:10,12 18:15 22:16 24:11 answer 33:3 answering 50:10 anticipated 7:17 appear 24:12 29:23 31:3 appears 60:5 applicable 14:23 application 8:11 8:12 applies 50:8 appreciate 6:14 25:17 47:8 approach 20:18 38:22 appropriate 15:18 17:25 26:17 27:7 38:18 appropriately 23:22 approved 6:25 approximately 22:11,13 April 9:3 area 19:14 20:3 20:9 23:2 27:14 29:22 36:20 37:13 37:14 39:10 40:10,13 49:18 50:14 52:1,7,11 area-wide 55:5 areas 30:16,19 56:24 argued 29:24 arguing 25:4 29:18,18,20 29:22 arguments 21:17 24:22 arrangements 37:25 articulated 12:8 asked 32:5,16 41:1 asserted 41:19 assertions 22:21 asserts 35:22 assess 40:13 assets 7:14 58:8 association 48:5 associations 38:4 assume 45:20 48:16 attain 55:17 attorney 60:13 August 8:22 authority 36:19 52:24 53:1,5 53:13 54:6 automatically 36:3 available 15:25 54:22 aware 21:14 B back 26:14,15 26:21 43:10,12 48:9 51:3 52:6 58:10,16 Baer 4:12 based 12:7 15:3 16:3 19:1 23:14 24:12 25:11 26:17 27:12 29:6 34:11 39:10,17 40:13 42:15 basically 32:6 basis 12:15 22:16 Beckmann 5:9 beginning 20:21 behalf 11:20 21:11 believe 54:25 55:10 believes 40:12 beneficial 19:17 19:23 26:4,24 benefit 16:4,7 17:3 18:13 20:16,19 26:2 benefiting 37:13 benefits 16:6 24:10 best 19:16 40:10 60:8 better 26:9 bid 19:1 big 49:17 bill 46:13,15 bit 26:8 30:4 33:21 41:8 46:6 blank 23:25 block 18:16 BMPs 19:19,23 20:2,16,19 board 7:11,19 8:17,20 12:25 13:17 20:23 45:6,23 bond 24:20,21 24:23 25:9 26:8,10,17,24 43:4 bonds 7:13 8:2 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES 14:14,16,19 25:24 26:1,2 26:13,14,19,21 27:3 36:11 43:2 Brad 4:7 5:15 6:10,13,22 48:22 Brandon 2:4 4:17 21:14 breakdown 32:4 Bresnan 5:12 Brian 4:12 12:8 12:10,14,16 48:21 brief 10:21 25:1 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20:25 36:18 43:3 46:20 54:5 55:1,2,4,10 57:10 58:10 check 23:25 38:13 choose 43:23 chooses 52:10 CIRP 13:14 15:21 17:15,24 18:7 18:10,12,15 20:1,17,20 22:2 24:6 25:5,11 35:1 cite 44:21 civil 19:20 clamor 22:17 clarify 50:16 54:13 56:23 58:13 class 25:15 classes 8:6 12:24 15:7,11 17:12,22 18:8 46:10,16,17 47:1 clear 24:21 25:3 27:16 clearly 15:10 22:21 client 35:22 closing 11:11 Club 55:15 Coalition 51:9 51:22 cognizant 24:16 collect 19:24 30:19 54:19 collecting 51:7 collection 35:6 57:13 come 36:11 45:24 comes 45:21 coming 47:12,17 54:14 comment 31:1 47:11 48:16 53:22,24 54:3 comments 13:9 52:5 56:5 58:21 Commission 1:6 4:11 5:5 6:17 6:24 7:5,10,19 8:7,10,15,18,21 8:25 9:5,9,18 10:4,24 11:5,8 11:13,20 12:21 13:16 20:22 21:11 33:18,22 34:9,20 35:11 35:23 36:14 39:7,14 40:19 41:3 43:20,21 43:22 44:3,15 45:1,5,10,24 48:10,17 49:13 50:5 Commission's 8:21 10:16 15:15 19:10 21:25 commissioners 4:2 21:8 25:20 35:15 38:21 41:11 43:14 53:19 58:16,25 commitment 51:25 commitments 51:5 committed 12:16 common 7:22 13:21 19:7 commonly 16:10 community 12:11 compacted 40:11,15 compared 46:12 competent 25:3 complainants 27:25 28:2 complete 17:4 20:25 completed 19:6 23:20 complies 13:23 14:7 comply 8:3 14:23 compound 48:12 compromising 20:17 concept 48:6 51:20 conceptual 19:2 23:13 concern 29:4 36:6 concerned 22:4 concerns 29:13 concluded 59:7 concludes 21:4 conducted 9:16 24:19 conference 1:13 3:1 5:2 6:16 9:11,16,25 10:18,19 11:24 33:21 34:2 59:7 conferences 9:3 11:7 confidence 23:20 54:25 confines 38:11 confirm 43:8 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES connection 6:11 consensus 40:24 Consent 46:1,3 51:5,11,12,15 consider 24:20 27:8 34:20 36:14 38:1 39:15 40:3,23 41:4 43:15 44:15 46:2,21 54:16 considerable 25:24 consideration 12:21 25:18 55:25 considered 24:21 55:24 considering 26:22 35:23 58:17 considers 40:19 consistent 7:21 7:25 13:20 14:12 33:25 34:7 37:2 39:8 40:5 42:19 constitutional 7:21 13:21 constructed 20:10 consultant 9:1 15:16 16:9 17:23 19:5 20:14 35:11 37:5 38:19 40:12 consultants 15:10 consulting 19:3 Consumers 4:16 8:14 21:12 21:16 contacting 22:16 contained 10:9 context 54:14 54:19 continue 12:18 16:21 42:24 Contrary 22:21 contribute 37:19 contributing 30:16 contributions 16:19 control 56:9 convenants 43:4 copy 21:5 correct 46:8,19 48:13 55:1,7 58:3 correctly 51:24 cost 7:14,15 13:12 16:7,13 16:13 17:2,3,4 18:13,25 19:6 23:11 24:19 25:12,24 26:1 37:21 38:6,14 cost-sharing 37:25 costs 17:3 24:9 36:4 46:10 counsel 9:17 11:12 12:2 33:18,20 60:10,13 country 20:6 County 7:1 couple 34:8 Court 3:7 4:21 60:2,19 covenant 8:1 14:13 covenants 14:19 cover 7:16 covered 56:14 56:25 created 26:11 credit 19:11,13,15 20:15 42:13 49:10,22 50:6 50:7,8 credits 19:9 20:2 42:17,18 49:5,24 50:13 creed 55:16 creeks 57:6 criteria 9:20 10:8 13:18,19 14:1,11,21 15:5 20:24 33:25 34:4 43:3 criterion 13:24 14:7 Croyle 4:3 5:13 5:14 6:21 current 11:15 22:24 40:1 45:2 46:10 49:3 currently 17:24 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differentiate 40:11 difficult 40:17 45:13,14,15 difficulty 43:23 direct 33:3 43:10 direction 60:9 directly 51:12 dirt 40:11 disagreed 35:11 disagrees 35:3 discovery 9:2 11:6 discrimination 38:14 discuss 34:14 36:24 discussed 17:20 36:18 44:1 discussing 37:7 discussion 15:13 16:14,14 24:4 35:7,18 36:10 38:21 39:2,11 40:8 43:24 46:7,9 47:4,4,14 48:14,22 51:3 52:23,23 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES discussions 37:20 dispute 29:17 distinct 54:15,17 distinction 57:3 distribute 11:15 distributed 46:16 distribution 46:10 47:4 District 1:8 3:2,5 4:9 5:6 6:18 6:25 7:6,8,10 7:14 8:2,3,8,18 8:20 9:8,10,17 11:1,11,15,21 12:3,4,6 13:9 14:14,15,22 15:9,12,15,24 18:2 19:1,4 20:6 30:8 33:24 34:25 35:13,17,25 36:1,6,13,17 36:20,23 38:7 41:15 54:4,5,6 54:8,22 55:22,25 59:3 District's 7:23 10:6 11:23 13:7 14:2,5 16:15 19:6 20:17 21:2,4 37:16 43:4 58:18 District-wide 13:3 dive 23:17 document 41:9 documentation 34:16 doing 38:25 40:2,12 44:20 49:8,11 dollar 16:6 23:9 31:22,23 32:2 32:12,15 dollars 17:7 Don 5:12 drainage 7:24 14:3 36:21 58:19 driver 14:7 due 7:13 37:11 duly 60:5 duration 23:22 duty 21:23 23:19 46:22 E E 2:1 4:1,1 5:1,1 earlier 18:22 43:5 early 34:1 easements 36:24 effect 16:25 19:20 35:2 effective 19:13 20:3,9 36:19 40:13 effort 51:11 either 23:7 58:16 election 7:2,3 electorate 52:11 electric 46:13 element 11:10 42:14 eliminates 38:14 emergencies 7:16 employed 60:10,13 employee 60:13 empowered 55:23 Energy 4:16 8:14 21:12,15 engaged 9:2 engaging 38:20 engineer 55:16 engineering 23:11 24:18 25:11 engineers 19:3 55:15 enhances 7:22 14:2 58:18 ensure 9:13 15:22 17:10 ensures 17:6 ensuring 36:20 entail 24:1 entails 25:10 entertainment 46:14 entire 37:13 entities 16:18 Environment 51:10 envisioned 58:10 equally 17:7 equated 32:19 equates 56:24 equitable 12:23 38:1,23 39:12 42:3,6 44:14 equivalent 49:11 49:25 erosion 12:6 13:5 14:10 15:4 16:2,4 22:8,17 27:13,17,18 28:2,6,17,24 29:13,14,15,19 29:20 37:8,10 37:10,11 57:14 57:16 errors 40:17 ERU 22:25 especially 55:2 established 7:4 10:24 35:1 estimates 19:1,6 estimation 23:11 25:12 evaluate 46:1 event 9:22 events 22:10 evidence 11:4 13:7 14:5 34:11 35:2 38:16 41:8 43:18 evidenced 15:8 exacerbate 57:23 exact 54:9 exactly 51:18 examined 3:2 example 24:4 37:9 examples 44:17 44:17,19,22 excuse 37:10 execution 16:22 exempt 30:16 36:11 exhibit 21:6 50:23 exhibits 11:16 existing 45:2 exists 29:24 expedited 18:21 expeditious 9:13 expenses 46:14 experiencing 28:16 29:8 expert 19:10 26:7 35:4 37:1 40:16 expertise 19:3 explained 24:25 explanation 21:19 expressed 58:4 extension 49:3 extent 10:5 F facilities 7:24 14:3 36:12 54:17 58:20 facing 36:8 fact 22:11 27:25 35:12,16 52:8 factor 40:14 factors 9:20 10:8 18:11,17,18 24:13 34:1 fails 10:7 failure 24:19 fair 8:5 12:23 15:6,10 17:11,21 18:7 21:24 22:2 23:23 25:15 28:21 30:1,22 31:13 34:5 38:1,23 39:12 42:3,6 44:14 45:19,21 46:7,9,12,14,17 46:25 51:18 fairness 25:7 faith 51:11 falling 7:13 far 34:3 43:18 52:16 faster 27:5 Fax 4:19 features 20:10 20:13 February 7:2 8:8,24 12:5 federal 8:4 14:23 15:1 56:13 fee 42:14,17 feel 29:10 31:8 42:3,6 54:8 feet 50:14 figure 24:1 file 32:4 34:16 50:23 filed 8:13 21:6 final 33:2 37:15 51:19 58:23 59:1 finally 40:20 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES financed 7:13 financial 25:1,13 26:9 financially 60:14 financing 24:20 24:21,23 find 34:6 39:7 fine 48:23 first 16:16 22:4 24:8 28:5 34:19,23 58:6 Fiscal 13:25 fit 31:21 five 13:17 15:5 20:24 33:25 five-year 18:16 flexibility 18:3 floating 30:10 flood 22:8 flooding 12:6 13:5 14:10 15:4 16:2,3 22:10 22:17 27:13,17 27:18 28:2,6 28:16,24 29:12,14,15,19 29:20 30:5,17 37:8 55:20 focus 19:13 folks 6:20 footnote 39:15 41:13 52:20 52:24 53:3,10 foregoing 60:5 forenoon 3:4,4 forget 54:1 form 13:4 forth 45:11 forward 46:3 50:22 51:14 54:10,23 56:2 four 14:21 frankly 26:7 30:21 freeholders 55:3 fresh 53:25 front 27:4 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15:6,10 22:25 46:25 imposition 39:3 40:8 impossible 50:7 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES impression 28:23 Improvement 13:13 15:18 17:13 improvements 13:4 36:2,12 36:15,22 37:6 55:20 improving 51:25 inadequate 24:18 35:5 incentive 19:11 19:13,15 20:7 20:15 40:21 40:22,25 42:13 43:14 44:11,12 45:3 45:5 48:1,4,4 51:3 incentives 19:9 20:1,8 40:23 42:2,4,17 43:11 49:5 include 9:24 11:3 18:3 included 15:21 20:1 includes 13:10 17:14,16 18:15 including 6:21 23:21 59:3 incomplete 25:12 increase 20:2 23:8,9 31:18 36:4 increases 24:15 45:24 increasing 18:4 20:1 27:2 indebtedness 8:2 14:14,17 14:20 indicate 54:13 indicated 23:3 23:7 58:6 indicates 22:6 22:22 indicating 41:15 49:24 individual 29:14 46:2 48:25 49:12 50:13 individuals 22:13 49:20 Industrial 4:16 8:13 21:12,15 industry 20:12 42:20 influenced 17:8 information 19:2 23:14 48:24 50:4 infrastructure 16:11 19:21,25 initial 26:20 input 12:18 insignificant 23:13 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44:17 47:17,17 47:19 48:8,18 49:16 51:9 52:17,20 54:6 knowing 47:8,11 L LaComb 12:9 Lance 12:9,10 12:14 language 56:18 large 19:15 23:2 32:7,10 49:21 49:25 58:5 Lashly 4:12 law 7:22 13:21 15:1 34:7 39:8 40:6 45:16 laws 8:4 14:23 lead 55:10 learned 12:14 leave 28:23 49:19 50:5 57:22 led 36:13 legal 11:12 33:18 33:20 39:13 39:19,25,25 41:13,14,16,18 41:21,22 51:23 52:7,12 54:15 57:1 legally 55:7 Leighton 4:17 LEMOINE 42:12 43:6 44:16 Leonard 4:2 6:2,16 lesser 18:20 let's 34:18 43:13 45:20 52:15 level 29:23 light 24:14 limited 36:5 38:15 line 56:21 lines 31:23 linked 51:12 Lisa 2:5 4:11 43:12 45:9 48:12 list 11:16 13:10 35:8 37:20 38:10 listen 12:18 Litigation 4:22 little 30:4 32:20 33:21 41:8 46:6 live 49:20 lives 49:16 Lloyd 5:21 LLP 4:17 local 27:17 localized 55:19 Locust 4:13 long 16:21 19:18 42:7 longer 26:21 44:6 look 45:9,19 46:22 47:16 48:15 49:8 looking 46:23 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES 48:2,19 58:4 lostump@lash ... 4:14 lot 13:6,7,8 15:14 23:10 26:1 35:6 38:20 48:22 49:6 Louis 1:8 3:2,5 3:6 4:9,13,18 4:23 5:5 6:18 7:1,1 9:8,10 12:3 52:1 55:15 low 20:10 36:4 M M 3:7 60:2 Mahanta 4:4 5:19,20 6:22 27:22,23,24 44:24,25 Mahfood 4:5 5:21 43:9,10 43:19 44:8 51:2 52:4 55:14 main 14:7 maintain 54:18 57:10 maintained 19:18 maintaining 20:19 maintenance 7:15 major 20:13 making 40:4 Malone 4:12 manage 23:8 50:6 management 19:17 mandated 45:16 46:3 55:8,8 56:19 58:7 manner 10:11 15:24 38:24 53:1 Mark 4:6 5:24 6:23 Market 3:6 matter 42:7 matters 11:17 53:18 54:7 maximize 16:6 mean 31:6 46:20 47:8 means 22:15 36:19 39:12 meant 57:3 measures 45:2 45:5 mechanically 49:10 50:3,12 meet 10:7 42:3 43:2 51:11 57:23 meeting 1:6 5:4 51:5,14,25 meets 10:7 13:17 20:24 members 11:8 45:1 mentioned 25:24 31:16 39:6 41:12 43:15 merely 24:23 method 39:3 40:1,7 methodology 13:9,11 32:24 Metropolitan 1:8 3:1,5 4:9 5:5 6:18 9:7 9:10 12:3 Mickey 4:3 5:12 6:21 MIEC 4:16 25:3 29:18 35:3,12 MIEC's 25:10 37:1 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possible 36:3 44:25 possibly 27:3 post 24:23 post-hearing 25:1 pot 58:2 potential 16:25 53:5 potentially 18:16 pots 57:24 power 54:21 practice 19:7 practices 19:17 37:2 pre-analyzing 51:16 preamble 55:2 predecessor 49:17 prehearing 1:13 3:1 5:2 6:16 9:11,16,25 10:18,19 11:24 33:21 34:2 59:7 preliminary 35:8 preparation 11:14 prepare 25:25 prepared 9:12 9:23 10:20 11:4,9,20,22 present 5:11,14 6:1,3,5,12,20 11:23 presentation 10:13,15 45:10 presents 24:22 presumably 36:8 pretty 32:7,10 39:1 54:24 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES prevent 55:20 previous 12:14 previously 11:4 16:24 17:20 prices 19:2 primarily 14:9 principal 7:13 prior 39:11 prioritization 15:14,17,20 16:12 17:11,16 17:20 18:2 38:17 prioritize 13:11 prioritized 16:3 17:19 28:13 prioritizes 24:5 prioritizing 16:14 priority 15:23 16:8,16,24 17:1 18:13,20,21,23 private 30:12 36:15,23 37:4 37:6,8,18 privileged 41:19 probably 37:17 58:10 problem 35:19 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responsibility 55:5 56:1,8 58:8 rest 28:20 result 26:20 revenue 13:2 35:6 56:14 57:4 revenues 24:11 54:19 review 7:5 20:25 41:14 56:21 reviewed 41:17 41:22 revolved 37:20 rigger 25:5 right 21:21 29:1 33:4 34:24 47:6 58:2 right-of-aways 30:10 rising 24:17 river 49:21 rivers 49:25 role 21:25 33:20 34:10 roll 2:2 5:7,8 rolling 18:16 Room 3:6 rounding 32:21 RSMo 60:6 rules 8:9 9:8 run 49:7 50:8 runoff 37:10,12 40:14 51:6 56:17 57:5 Russell 4:4 5:15 6:22 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES S S 4:1 5:1 sanitary 36:21 satisfied 14:15 satisfy 41:16 saying 28:6 54:20 says 30:7 35:12 35:17 46:20 53:12,13 schedule 9:9 10:16 scheduled 16:23 scheduling 18:9 18:13 Schoedel 4:6 5:8,9,12,15,18 5:21,24,24 6:2,4,6,23 27:10,11,21 44:9,10,23 47:10 56:5,6 56:23 58:1,12 scope 12:19 23:18 scoped 23:22 28:9 score 38:3,25 scoring 16:10 38:3,13,25 second 23:10 35:20 39:19 Section 13:18 20:25 60:6 see 12:19 21:19 44:13 49:23 49:23 seen 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35:12,19 suggesting 31:20 Suite 4:18 summarize 34:11 41:8 summarizing 42:9 summary 10:15 11:24 21:5 41:5 41:21 support 18:5 21:20 22:5,20 23:4,8,9,12 25:14 27:19 28:11,14 29:2 29:24 31:4,6,9 31:18 33:5 37:5 56:2 supporting 40:1 supports 13:7 sure 28:11,12,13 42:5,25 49:13 54:5 56:21 surface 30:8 51:7 surrebuttal 12:17 survey 22:20,21 23:3 27:12 31:17 32:1,3,16 PREHEARING CONFERENCE 6/21/2018 www.alaris.us Phone: 1.800.280.3376 Fax: 314.644.1334 ALARIS LITIGATION SERVICES 33:1,2,7,8 Susan 2:3 4:9 12:2 Suzanne 3:7 4:22 60:2 sworn 60:5 system 15:14,17 16:10 19:18 38:18 51:8 57:9 systems 7:24 14:3 57:13 58:19 T tailor 23:21 take 5:8 28:1 31:14 54:7 taken 13:1,24 60:7,12 takes 55:25 talk 42:22 44:5 44:6 49:15 talked 48:6 talking 12:10 26:4 29:7,9 43:11,17 51:3 task 13:15 20:22 tax 7:7,12 36:11 57:7 taxed 30:9 technical 9:2 11:7 15:10,16 16:9 17:23 19:3,4,10 20:14 Telephone 4:7 4:7 tell 51:6 term 19:18 54:9 terms 38:2 test 42:3 testified 16:24 18:25 19:5,12 19:16 20:5,14 36:1 37:5 38:12 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