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Home My Public Portal AboutExhibit RC 31 - Rate Commission's Second Discovery Request to MSD March 19, 2018BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT SECOND DISCOVERY REQUEST ISSUE: STORMWATER RATE CHANGE PROCEEDING WITNESS: METROPOLITAN ST. LOUIS SEWER DISTRICT SPONSORING PARTY: RATE COMMISSION DATE PREPARED: MARCH 19, 2018 Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 2 BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT For Consideration of a Stormwater ) Rate Change Proposal by the Rate Commission ) of the Metropolitan St. Louis Sewer District ) DISCOVERY REQUEST OF THE RATE COMMISSION Pursuant to §§ 7.280 and 7.290 of the Charter Plan of the Metropolitan St. Louis Sewer District (the “Charter Plan”), Operational Rule 3(5) and Procedural Schedule §§ 1, 17 and 18 of the Rate Commission of the Metropolitan St. Louis Sewer District (“Rate Commission”), the Rate Commission requests additional information and answers from the Metropolitan St. Louis Sewer District (“District”) regarding the Rate Change Proposal dated February 26, 2018 (the “Rate Change Proposal”). The District is requested to amend or supplement the responses to this Discovery Request, if the District obtains information upon the basis of which (a) the District knows that a response was incorrect when made, or (b) the District knows that the response, though correct when made, is no longer correct. The following Discovery Requests are deemed continuing so as to require the District to serve timely supplemental answers if the District obtains further information pertinent thereto between the time the answers are served and the time of the Prehearing Conference. 3 DISCOVERY REQUEST 1. The Capital Improvement and Replacement Funding (“CIRP”) annual funding is an input in the Rate Model in the dashboard. See MSD Ex. 18, Storm Dashboard tab. It appears that this is an input from another data source as there are trailing digits behind the decimal point. Please provide the backup for the annual spending input for all 3 CIRP lines. RESPONSE: 2. Per Appendix 6C of the Rate Proposal (MSD Ex. 1, App. 6C), CIRP costs were escalated at 3.7%, which is the Engineering News Record (“ENR”) Construction Cost Index (“CCI”) for the 12 months ending April 30, 2017 for the St. Louis region. Please provide a summary of calculated escalation factors over historical average periods. Please explain why the most recent 12 month period is representative of all years in the projection period. RESPONSE: 3. Please explain the “Stormwater Regulatory Capital Override” in the dashboard – how is this cost determined and what does it cover? See MSD Ex. 18, Storm Dashboard tab. It appears that this cost is recovered from the Regulatory Fund. Please confirm the rationale for recovering these costs from the Regulatory Fund as opposed to the Stormwater Capital Rate. RESPONSE: 4. The District’s OMCI Fund Financial Plan in the Rate Proposal reflects negative cost (“revenue”) beginning in FY 2023 in an expense category titled “Capital.” See MSD Ex. 1, Table 4-2. Please explain what this cost is and how it was derived. RESPONSE: 5. The Districtwide Stormwater Fund includes “O&M and IR Managed in Capital,” “Capital,” and “Capital Labor.” See MSD Ex. 1, Table 4-4. Please explain what each line item is and how it was derived. RESPONSE: 6. In the “Revenue Requirements” tab of the Rate Model, the Districtwide Stormwater Fund includes “Additional O&M.” See MSD Ex. 18, Rev. Req. tab. Please provide a description of the nature of such expenses and how projections were derived. RESPONSE: 4 7. On the Stormwater Budget-Input tab of the Rate Model (MSD Ex. 18, SW Budget-Input tab), several cells are highlighted in blue for lines 21, 31, 32, and 42 for FY 2018. Please provide the basis for the factors used in the calculations in these highlighted cells. Are these adjustments to the adopted budget? If so, please provide the original adopted budget and reason for the adjustment. RESPONSE: 8. For FY 2019 and FY 2020, several line items are inputs, while others are calculated based on assumed escalation factors. See MSD Ex. 18, SW Budget-Input tab. Please provide the basis for the values input as opposed to calculated projections. RESPONSE: 9. The District indicates that the CIRP costs are conceptual in nature due to lack of detailed information/design/etc. See MSD Ex. 1, App. 6D, p. 10. Please explain how a “contingency” for risk of increased costs was incorporated into the annual CIRP funding requirement. RESPONSE: 10. The District proposes to charge two-thirds of the Proposed Rate in the first 18 months of the program, beginning January 1, 2020. See MSD Ex. 1, Sec. 4-3. Please explain the basis for this decision. RESPONSE: 12. Please provide the District’s proposed Credit/Incentive Program Manual, if such manual has been created. See MSD Ex. 1, App. 6J, p. 6-27. RESPONSE: 13. Please provide source data for “Typical Assessed Property Value” used in calculating the FY 2020 Residential Impact analysis in Table 5-1. See MSD Ex. 1, Table 5-1. Has the District calculated comparisons such as that in Table 5-1 for “typical” or “average” assessed property value in various parts of the District? How was the “Typical Assessed Property Value” for non-residential properties determined? RESPONSE: 5 15. Please provide an explanation, with necessary supporting analysis, describing how the Single-Family Residential Tiers were determined. See MSD Ex. 1, Table 4-5. Please include an impervious area distribution analysis/summary and calculation of the Equivalent Residential Unit (“ERU”) rate of 2,600 square feet. RESPONSE: 16. Please provide a detailed summary of total impervious area by land use category. RESPONSE: 17. Please provide information regarding Stormwater-Only accounts, including the number of accounts and ERUs by customer type, and whether any Stormwater-Only customers are projected to be eligible for Customer Assistance Program (“CAP”). See MSD Ex. 1, App. 6F. RESPONSE: 18. Please explain how the rate of $2.25 per ERU was calculated. Were any alternative amounts considered and rejected? If so, why? RESPONSE: 19. Please provide a summary of the analysis used to calculate the alternative property tax rate of $0.0998 per $100 of assessed value discussed in Appendix 6I. See MSD Ex. 1, App. 6I, p. 26. RESPONSE: 20. The District states in the Rate Proposal that there is no minimum fund balance in the Capital Rate Fund. See MSD Ex. 1, p. 4-3. Would the absence of a minimum fund balance be expected to delay projects? Has the District considered setting a minimum fund balance? Please explain why or why not. RESPONSE: 6 Respectfully submitted, /s/ Brian J. Malone Lisa O. Stump Brian J. Malone LASHLY & BAER, P.C. 714 Locust Street St. Louis, Missouri 63101 Tel: (314) 621-2939 Fax: (314) 621-6844 lostump@lashlybaer.com bmalone@lashlybaer.com 7 CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing was sent by electronic transmission to Janice Fenton, Office Associate Senior, Metropolitan St. Louis Sewer District; and Susan Myers, Counsel for the Metropolitan St. Louis Sewer District, on this 19th day of March, 2018. Ms. Janice Fenton Office Associate Senior Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103 JFENTON@stlmsd.com Ms. Susan Myers General Counsel Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103 smyers@stlmsd.com /s/ Brian J. Malone Brian J. Malone