Loading...
HomeMy Public PortalAboutExhibit RC 61 - Rate Commission's Second Discovery Request to MSD - March 11, 2019BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT SECOND DISCOVERY REQUEST ISSUE: WASTEWATER RATE CHANGE PROCEEDING WITNESS: METROPOLITAN ST. LOUIS SEWER DISTRICT SPONSORING PARTY: RATE COMMISSION DATE PREPARED: MARCH 11, 2019 Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT For Consideration of a Wastewater Rate Change Proposal by the Rate Commission of the Metropolitan St. Louis Sewer District SECOND 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"), Restated Operational Rule § 3(7) and Procedural Schedule §§ 16 and 17 of the Rate Commission of the Metropolitan St. Louis Sewer District (the "Rate Commission"), the Rate Commission requests additional information and answers from the Metropolitan St. Louis Sewer District (the "District") regarding the Rate Change Proposal dated March 4, 2019 (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. 2 SECOND DISCOVERY REQUEST 1. Appendix 7.1.2 of Ex. MSD 1 lists several categories of projects included within the Capital Improvement and Replacement Program (the "CIRP") budget needed to meet the region's obligations under the Consent Decree. With regard to each of the following categories, please answer the following questions: a. "Projects identified in the SSO Master Plan to ensure system capacity and enable the removal of sanitary sewer overflows" — Are these specific projects which must be completed? If so, please state the specific dates by which the projects must be completed. b. "Projects to meet compliance with the CSO Long Term Control Plan" — Please describe how projects are selected and prioritized. c. "Projects to renew the wastewater system to meet Consent Decree goals" — Please describe how projects are selected and prioritized. Is the District required to spend a certain amount on renewal projects annually? Or are projects selected to achieve performance metrics? d. "Projects to meet Consent Decree targets for Cityshed and Green Infrastructure investment" — Please describe how projects are selected and prioritized. RESPONSE: 2. Is the District aware of future regulatory requirements which may impact the CIRP and the District's financial plan in the future? If so, please describe the regulatory requirements, their estimated costs, and timeframes which the District would be required to comply with such requirements. RESPONSE: 3. Table 4-18 of Exhibit MSD 1 shoes the proposed wastewater user charges for FY21 — FY24. While most proposed changes are in the 2-4% range, the extra strength surcharge for suspended solids would increase by 11% in FY21, the biochemical oxygen demand would increase by 27%, and the chemical oxygen demand will substantially increase. Please expand on the explanation provided in Section 4.10.4 on page 4-39 as to why these significant increases are proposed. Furthermore, please explain why the capital cost allocated to these factors increased by 70% from FY17 to FY21. Please explain these capital costs and why they did not impact the base and volume charges. RESPONSE: 4. Figure 4-8 in Section 4.10.3 of Exhibit MSD 1 illustrates the growth of the Customer Assistance Program ("CAP") from 2014 to 2018. Has the District projected the 3 anticipated growth in the number of CAP accounts for the years at issue in the Rate Change Proposal, FY21 — FY24? If so, please state the projected growth for each fiscal year through FY24. Please provide detail on how the foregone revenue from CAP accounts is recouped from the various user classes. RESPONSE: 5. Please explain the trend regarding delinquent charges from FY17 through FY21. Please state the projection for these charges for each fiscal year through FY24. RESPONSE: 6. Susan M. Myers states in Direct Testimony that the Wastewater Rate Change Proposal is consistent with constitutional, statutory or common law as amended from time to time. See MSD Ex. 3B, p. 1, 11. 22-24. Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: 7. Susan M. Myers states in Direct Testimony that the Rate Change Proposal will not impair the ability of the District to comply with applicable federal or state laws or regulations as amended from time to time. See MSD Ex. 3B, p. 2, 11. 22-24. Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: 8. Susan M. Myers states in Direct Testimony that the Rate Change Proposal imposes a fair and reasonable burden on all classes of ratepayers. See MSD Ex. 3B, p. 3, 11. 18- 19. Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: 9. Susan M. Myers states in Direct Testimony that "[r]ecent regulatory changes have compelled MSD to accelerate certain non-[Consent Decree] work." See MSD Ex. 3B, p. 5, 11. 1-- 4 2. Please identify the regulatory changes and describe the work the District is undertaking pursuant to these regulatory changes. RESPONSE: 10. Richard L. Unverferth states in Direct Testimony that the Wastewater Rate Change Proposal enhances the District's ability to provide adequate sewer and drainage systems and facilities or related services. See MSD Ex. 3C, p. 5, 11. 19-21. Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: 11. Bret A. Berthold states in Direct Testimony that the Wastewater Rate Change Proposal enhances the District's ability to provide adequate sewer and drainage systems and facilities or related services. See MSD Ex. 3D, p. 5, 11. 9-10. Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: 12. Marion M. Gee states in Direct Testimony that the Rate Change Proposal imposes a fair and reasonable burden on all classes of ratepayers. See MSD Ex. 3E, p. 3, 11. 22-23. Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: 13. Tim R. Snoke states in Direct Testimony that the Rate Change Proposal is consistent with and not in violation of any covenant or provision relating to any outstanding bonds or indebtedness of the District. See MSD Ex. 3F, p. 8, 11. 6-7. Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: 5 14. The Rate Proposal states that "Raftelis developed the [wastewater] rates contained in the Rate Proposal based on industry standard rate design methods." See Ex. MSD 1, p. 1. Please identify which "industry" and provide further detail as to how standards were developed? Further, please describe how these industry standards were used to meet the District's "unique needs." RESPONSE: 15. Please describe which metrics the District employed to determine that the proposed debt service for senior revenue bonds, as described on Table ES-1 of the Rate Proposal, Ex. MSD 1, are reasonable. Further, please describe any assumptions that have been made to formulate the proposed debt service levels. RESPONSE: 16. Please describe what risks or exposures could alter the rate model used to develop the proposed rates in the Rate Change Proposal. RESPONSE: 17. Please identify any covenants with which the Rate Change Proposal must comply. Please describe any loans, grants, or provisions of the Consent Decree which were considered in formulating the Rate Change Proposal. RESPONSE: 18. The 2015 Rate Change Proposal anticipated rate increases of roughly 10% for each year in the FY21 — FY24 period. This Rate Change Proposal proposes roughly 3% increases annually for this period. Please identify which factors account for the reduction in proposed rate increases? RESPONSE: 19. Please describe how the District's affordability metrics compare to similarly situated utilities. RESPONSE: 20. Please describe any other facts and circumstances which demonstrate whether the Rate Change Proposal and all portions thereof is necessary to pay interest and principal falling 6 due on bonds issued to: (a) finance assets of the District; (b) necessary to enable the District to provide for the costs of operation and maintenance; and (c) such other amounts as may be required to cover emergencies and anticipated delinquencies, as required by § 7.040 of the Charter Plan. RESPONSE: 21. Please describe any other facts and circumstances which demonstrate whether the Rate Change Proposal and all portions thereof is consistent with constitutional, statutory, or common law, as amended form time to time, as required by § 7.270(1) of the Charter Plan. RESPONSE: 22. Please describe any other facts and circumstances which demonstrate whether the Rate Change Proposal and all portions thereof enhances the District's ability to provide adequate sewer and drainage systems and facilities, or related services as required by § 7.270(2) of the Charter Plan and § 4(2)(b) of the Operational Rules.. RESPONSE: 23. Please describe any other facts and circumstances which demonstrate whether the Rate Change Proposal and all portions thereof is consistent with and not in violation of any covenant or provision relating to any outstanding bonds or indebtedness of the District, as required by § 7.270(3) of the Charter Plan. RESPONSE: 24. Please describe any other facts and circumstances which demonstrate whether the Rate Change Proposal and all portions thereof does not impair the ability of the District to comply with applicable federal or state laws or regulations as amended from time to time, as required by § 7.270(4) of the Charter Plan and § 4(2)(d) of the Operational Rules. RESPONSE: 25. Please describe any other facts and circumstances which demonstrate whether the Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on all classes of ratepayers, as required by § 7.270(5) of the Charter Plan. RESPONSE: 7 26. Please describe any other facts and circumstances which demonstrate whether the Rate Change Proposal and all portions thereof why the Rate Change Proposal is necessary, fair and reasonable, as required by § 4(2)(a) of the Operational Rules. RESPONSE: 27. Please describe any other facts and circumstances which demonstrate whether and to what extent the Rate Change Proposal and all portions thereof is necessary to enable the District to comply with any covenant or provision relating to outstanding bonds or indebtedness of the District, together with a specific quantification of the amount of the Proposed Rate Change is necessary for such purposes, as required by § 4(2)(c) of the Operational Rules. RESPONSE: 28. Please describe any other facts and circumstances which demonstrate that the Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each class of ratepayers, including whether and how cost of service considerations have been factored into such determination as required by § 4(2)(e) of the Operational Rules. RESPONSE: 29. Please describe any other facts and circumstances which demonstrate that the Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each class of ratepayers, including whether and how cost causation principles, have been factored into such determination as required by § 4(2)(e) of the Operational Rules. RESPONSE: 30. Please describe any other facts and circumstances which demonstrate that the Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each class of ratepayers, including whether and how customer impact data has been factored into such determination as required by § 4(2)(e) of the Operational Rules. RESPONSE: 31. Please describe any other facts and circumstances which demonstrate that the Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each class of ratepayers, including whether and how economic development considerations have been factored into such determination as required by § 4(2)(e) of the Operational Rules. 8 RESPONSE: 32. Please describe any other facts and circumstances which demonstrate that the Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each class of ratepayers, including whether and how environmental effects have been factored into such determination as required by § 4(2)(e) of the Operational Rules. RESPONSE: 33. Please describe any other facts and circumstances which demonstrate that the Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each class of ratepayers, including whether and how any other factors have been factored into such determination as required by § 4(2)(e) of the Operational Rules. RESPONSE: 34. Please (a) describe any other facts and circumstances which demonstrate that the measures taken by the District to ensure that the cost of constructing and maintaining the District's facilities and providing related services are being incurred in a reasonable and efficient manner; and (b) include copies of all internal or external audit reports that address such matters as required by § 4(2)(f) of the Operational Rules. RESPONSE: 35. Please describe any other facts and circumstances which demonstrate how, whether and to what extent the Rate Change Proposal and all portions thereof, will affect, impact and comply with the Consent Decree, as required by § 4(2)(g) of the Operational Rules. RESPONSE: 9 Respectfully submitted, Lis 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 10 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, on this 11th day of March, 2019. Ms. Janice Fenton Office Associate Senior Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103 jfenton@stlmsd.com Ms. Susan Myers General Counsel Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103 smyers@stlmsd.com Brian J. Malone 1 1