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HomeMy Public PortalAboutExhibit RC 44 - Rebuttal Testimony of Nicole YoungBEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT REBUTTAL TESTIMONY ISSUE: STORMWATER RATE CHANGE PROCEEDING WITNESS: NICOLE YOUNG SPONSORING PARTY: RATE COMMISSION DATE PREPARED: MAY 2, 2018 Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 Rebuttal Testimony Nicole A. Young, P.E. Lion CSG 915 Olive Street Suite 902 St. Louis, MO 63101 2 Q1. Please state your name and business address. A. My name is Nicole Young. My local business address is 915 Olive Street, Suite 902, St. Louis, Missouri 63101. Q2. By whom are you employed and in what capacity? A. I am the Managing Principal and a Lead Engineer with Lion CSG LLC. Q3. Please describe the firm of Lion CSG LLC. A. Lion CSG LLC (“Lion CSG”) is a civil infrastructure, environmental engineering, and construction management firm. The majority of Lion CSG’s business is focused on wastewater and stormwater. Q4. Please describe your educational background and work experience. A. I received a Bachelor of Science in Civil Engineering from Purdue University, a Masters of Science in Environmental Engineering from Washington University in St. Louis, and a Masters of Business Administration from Pennsylvania State University. I started my career in early 1997 with a company called Dames & Moore, which is now a part of AECOM. While at Dames & Moore, I performed environmental assessments across the United States. In late 1998, I moved to Sverdrup to focus on wastewater engineering. Sverdrup was purchased by Jacobs Engineering in 1999. From 1998 through 2004, I focused on wastewater and stormwater projects including planning, engineering, and construction management on projects from conveyance through treatment. I also provided assistance on rate studies evaluating capitol improvement programs, cost estimation, and the financial analysis for rate setting. During my tenure at Jacobs, I spent several years working on the Sverdrup, Kwame, Metcalf & Eddy project known as the SKME project, which was the planning program for the MSD program that is currently being implemented. Included in the SKME project was an evaluation and modeling of MSD’s stormwater system. The initial prioritization worksheet was also developed during this program. In 2004, I took an opportunity with Jacobs Engineering in Europe with responsibilities in Italy, Germany and England, with secondary responsibilities in Spain and Portugal. While in Europe, I worked with the United States Department of Defense on meeting the legal requirements of their Status of Forces agreements with local governments and providing environmental assistance to the bases. In 2007, I returned to St. Louis to refocus on providing infrastructure solutions to the St. Louis region working for Camp, Dresser & McKee (known as “CDM”), now CDM Smith. While at CDM, I provided municipal solutions focusing on wastewater in Illinois and Missouri, with the exception of Chicago and Kansas City. CDM held the contract for the initial implementation of the stormwater rate structure, which I became tangentially involved with towards the end of the project. Lion CSG was started in May 2011; Rebuttal Testimony Nicole A. Young, P.E. Lion CSG 915 Olive Street Suite 902 St. Louis, MO 63101 3 and in 2012, I left CDM to focus full time on Lion CSG. At Lion CSG, I have performed wastewater and stormwater projects for MSD. I have also worked for private developers on stormwater issues including the development of BMPs. Q5. Are you a registered Professional Engineer? A. Yes, I am a registered Professional Engineer in the state of Missouri and Illinois with inactive registrations in Indiana and Tennessee. I am registered with the National Council of Examiners for Engineering and Surveying, known as the NCEES. Q6. Do you belong to any professional organizations or committees? A. Yes. I am a board member of the Engineers’ Club of St. Louis. For the Engineering Center of St. Louis, I serve as the liaison for the Science, Technology, Engineering & Math (or “STEM”) education and outreach in the St. Louis region including participation in the STL STEM Ecosystem. I am the newsletter committee person for the Missouri Water Environment Association, which is the local chapter for Water Environment Federation. For the St. Louis Economic Development Partnership (known as “STL Partnership”), I serve on the Business Retention and Expansion Committee, now known as StXL. Q7. Have you previously testified before the Rate Commission of the St. Louis Metropolitan Sewer District? A. No. Q8. Please describe your role in this proceeding? A. The scope of my assignment in this proceeding includes the review of the District’s 2018 Stormwater Capital Rate Proposal, to assist the Rate Commission to gain a better understanding of the District’s proposal, to advise the Rate Commission on the Capitol Improvement and Replacement Program (or “CIRP”), to assist legal counsel in the examination of witnesses, and to prepare testimony and exhibits setting forth my findings and recommendations. I believe it is my responsibility to advise the rate commission on the CIRP, and MSD processes including the MSD Stormwater Projects Prioritization System. The scope of my assignment is limited to relying on the record in this proceeding, statements, data, information and reports provided by the District and intervenors and their respective consultants and advisors as well as data and information available in the public domain. Rebuttal Testimony Nicole A. Young, P.E. Lion CSG 915 Olive Street Suite 902 St. Louis, MO 63101 4 I also rely on my over 20-years of experience in the wastewater industry working on CIRP programs, setting prioritization for projects, working with stormwater projects, and developing rate structures. Capitol Improvement & Replacement Program Q9. Has the District taken the appropriate steps in identifying CIRP projects? A. With an understanding of the engineering planning studies and MSD’s complaint system, I believe the projects in the program are appropriate. The District allows for flexibility in the program for new projects or projects with increasing severity. On Page 6-9 of the Rate Proposal (MSD Ex. 1), MSD states that the CIRP is primarily made up of projects identified from historical records and previous engineering studies to address customer complaints about flooding and erosion. In MSD’s Response to First Discovery Request of the Rate Commission (MSD Ex. 30B) – Question 2, Mr. Unverferth delineates work that has been done previously: in 1981 the Phase I Stormwater Management Plan was prepared to identify problem areas for 14 watersheds in the original area of the District; in 1984, the Annexed Area Stormwater Study was prepared to identify problems areas in the newly annexed area; in 1989, the District conducted a District-wide study to verify problem areas from the previous studies; in 1995-2000, the Stormwater System Master Improvement Plan was prepared for 23 watersheds including modeling performed to establish release rates for future development and to identify problem areas; in 2006-2010, the District conducted an overall review of known problem areas to verify project viability. The District also provided copies of several stormwater studies including: Stormwater System Master Improvement Plan, performed by Horner & Shifrin and CDM in 1995 (Exhibit 37F); and Wastewater and Stormwater Rate Proposal, performed by CDM and Black &Veatch in 2007 (Exhibit 5). Additional historical studies were available for viewing at the District’s office. On May 1, 2018, I did view the 53 binders of technical data on each watershed and 3 general reports on the overall stormwater program. The District made the reports available for viewing in hard copy form at the their headquarters location, electronic versions were not available. I reviewed the 3 general reports in detail. I reviewed one of the watershed reports in detail, the rest of the reports contained similar information for the other watersheds. A substantial amount of technical work was completed to review each watershed and identify problems, solutions, costs, benefits, and project priorities. Rebuttal Testimony Nicole A. Young, P.E. Lion CSG 915 Olive Street Suite 902 St. Louis, MO 63101 5 In MSD’s Response to Third Discovery Request of the Rate Commission (MSD Ex. 37A) – Question 27, it is stated that newly identified projects through customer complaints or as identified by municipalities will be added to the District’s list of identified stormwater capital needs; it is also stated that projects increasing in severity will be evaluated and updated. Based on this the program appears to have sufficient flexibility to address the highest priority projects in the region as identified by the District through this program. Q10. Are the District’s cost estimates for projects sufficient for the proposed projects? A. I believe the District’s cost estimates were completed in accordance with common practice for this phase of the program. The District has a long history of historical bid prices, which provides a good basis for cost estimation. On Page 6-10 of the Rate Proposal (MSD Ex. 1), MSD states that the current project list is based on minimum amount of detailed information available regarding geotechnical conditions, utility relocation requirements, easement requirements, and other site-specific issues that have the potential to significantly affect the project’s eventual construction cost. Mr. Unverferth testified that the storm sewer cost estimates were based on historical District bid prices using conceptual design information; channel and green infrastructure improvements estimates were based on the technical expertise of consulting engineers and past data on similar District projects; property buyouts estimates are based on St. Louis City or St. Louis County assessed values plus cost for relocation and demolitions. Q11. Is the District’s Prioritization System common practice and is it appropriate? A. It is my opinion that this system is appropriate. The District should consider continuing to model the solution side of this worksheet as projects are completed to determine if scoring should be adjusted. The MSD Stormwater Projects Prioritization System, Revised Benefit Points Allocation Schedule (MSD Ex. 30K) is unique to the District. This type of scoring system is commonly used in infrastructure projects to provide quantification to project prioritization. The District has modeled a number of projects with the algorithm from the scoring, and provided slight adjustments to ensure the prioritization was appropriate. The Stormwater System Master Improvement Plan, performed by Horner & Shifrin (H&S) and CDM in 1995 (MSD Ex. 37F) reviewed the existing scoring sheet which at the time a priority ranking system based on 1-9 scale of threat. H&S and CDM recommended inclusion of project cost and number of people benefited in the scoring, as well as increasing the scale to allow for greater differentiation. The Stormwater Facility Planning, prepared by Parsons Water & Infrastructure Inc. (Parsons) in 2010 Rebuttal Testimony Nicole A. Young, P.E. Lion CSG 915 Olive Street Suite 902 St. Louis, MO 63101 6 (MSD Ex. 37G) reviewed the prioritization point system used at the time and suggested revisions to include additional “Solution Points”, and additional modifications were included to increase the weights of flooding severity. Q12. Do the District’s proposed incentive and credit program provide sufficient incentive to achieve a reduction in effective impervious area within the service area? A. The District’s incentive and credit programs provide some nominal benefit to property owners to provide BMPs without compromising the CIRP. I believe this is a reasonable approach to provide some benefit to BMPs while maintaining the integrity of accomplishing the CIRP. As testified by Pam Lemoine, the District may want to consider other programs, which provide ongoing incentives for operations and maintenance of the BMPs. Much of the discussion surrounding the incentive and credit program has been around the question of the sufficiency of the incentive, however I would focus on the question of effectiveness in reduction of impervious area. BMPs are beneficial to the overall system if they are maintained over the long term. However, it is unlikely that BMPs will have a significant effect in reducing the civil infrastructure investments necessary in the program. While it is beneficial to install BMPs, MSD needs to collect the funds in order to build the stormwater infrastructure or undertake buyouts included in the CIRP. Increasing incentives or credits may increase BMPs, without actually achieving a reduction in effective impervious area where needed. Additionally, BMPs are expensive to build and maintain. In my experience, the amount of incentive or credit that would need to be provided to gain interest from residential or commercial property owners would need to equal the cost to the property owner to inspire participation that is not regulated, to gain a green certification, or altruistic. Q13. Does this conclude your testimony? A. Yes. 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; Susan Myers, Counsel for the Metropolitan St. Louis Sewer District; and Brandon Neuschafer, Counsel for the Missouri Industrial Energy Consumers, on this 2nd day of May, 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 Counsel for the Metropolitan St. Louis Sewer District Brandon Neuschafer Bryan Cave Leighton Paisner LLP One Metropolitan Square, Suite 3600 St. Louis, MO 63102-2750 bwneuschafer@bclplaw.com Counsel for Intervenor Missouri Industrial Energy Consumers /s/ Brian J. Malone Brian J. Malone