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.
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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
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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--
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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:
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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
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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:
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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.
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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:
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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
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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
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