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Exhibit RC 63 - Rate Commission's Third Discovery Request to MSD - March 25, 2019BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT THIRD DISCOVERY REQUEST ISSUE: WITNESS: SPONSORING PARTY: DATE PREPARED: Lushly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 WASTEWATER RATE CHANGE PROCEEDING METROPOLITAN ST. LOUIS SEWER DISTRICT RATE COMMISSION MARCH 25, 2019 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 THIRD 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 THIRD DISCOVERY REQUEST 1. During the Rate Commission's Work Session on March 22, 2019, a reference was made to the District's use of a four-year cycle to establish rates. Please explain why the District uses a four-year period to set rates, and identify that factors that drove that decision. RESPONSE: 2. Please explain how wastewater projects are evaluated and prioritized for inclusion in the Capital Improvement and Replacement Program ("CIRP"). RESPONSE: 3. Please explain what effect, if any, a decision by the District's voters not to approve Proposition S (2019) would have on the wastewater CIRP or the Rate Change Proposal generally. Would funds presently allocated to address wastewater be redirected to address stormwater? If so, please explain how such funds would be reallocated. RESPONSE: 4. Please provide a detailed summary of investments made by the District to date to comply with the Consent Decree, as amended. See Ex. MSD 37; Ex. MSD 37A. Please provide calculations of dollars expended by the District, and any overflows eliminated as a result of these investments. RESPONSE: 5. Please explain how the District's debt capacity — presently $3 billion — is determined. Is this limit determined by statute, constitutional provision, or the Charter Plan? Or is it determined by rating agencies, the District's ability to recover cost, or some other factor(s)? Please explain how this limitation influences long-term financing projections, such as using PAYGO or a mix of PAYGO/debt financing. RESPONSE: 6. Please explain how the District's bond ratings compare to similarly situated wastewater/stormwater utilities. RESPONSE: 3 7. Section 7.2 of the Rate Change Proposal indicates that CCTV inspection and physical inspection of sewers are included within the CIRP for FY 2020 — FY2023. See Ex. MSD 1, p. 7-26. The SSO Master Plan indicates that inspections were performed in the formulation of the Master Plan. See Ex. MSD 37C. If inspections were performed as part of the SSO Master Plan, please explain why CCTV inspections and physical inspections are required through 2023? RESPONSE: 8. For all Public Infiltration/Inflow Reduction ("PIIR") projects, are specific PIIR projects in each watershed known at this time? If so, are funds allocated for these projects on a per-year basis? If these projects are not yet known, please explain how they will be identified. RESPONSE: 9. Please explain what additional work, if any, is required by the watershed consultants identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, if Consent Decree projects are already planned and funding for such projects has been set aside for design. RESPONSE: 10. Regarding the Construction Management Services — Tank/Treatment/Pump Station Facilities projects identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, pgs. 7-30 — 7-31, are these services for the projects identified or are they in addition to other identified projects? Please explain how the District determines how funds for these projects are spent. RESPONSE: 11. Regarding the projects identified as Critical Infrastructure Assessment in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, pgs. 7-32 — 7-33, are these projects different than the work performed for the SSO Master Plan or the Combined Sewer Overflow Long-Term Control Plan ("CSO LTCP")? Please explain how these projects provide additional benefit to the District beyond the work previously performed. RESPONSE: 12. Please explain how CSO Volume Reduction Green Infrastructure projects (See Ex. MSD 1, pgs. 7-34 — 7-35) are determined. Are these projects funded by or eligible for grant funding? RESPONSE: 4 13. Regarding the Easement Acquisition for Wastewater Projects identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, p. 7-38, are funds budgeted in addition to what is already included in project budgets? Or are these included in individual project budgets? Please explain how these funds are allocated to projects. RESPONSE: 14. Regarding the Flow Metering and Monitoring projects identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, pgs. 7-41 — 7-42, please explain why funds are allocated for such projects if flow monitoring was completed as part of the SSO Master Plan and/or the CSO LTCP. The project descriptions on pages 7-41 and 7-42 state that "this information will be used to calibrate hydraulic models to determine if projects are required." If the hydraulic models determine that these projects are not needed, will they be removed from the CIRP? Please explain the value of additional flow metering and monitoring to the District. RESPONSE: 15. Regarding the General Services Agreements identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, pgs. 7-43 — 7-53, these are all listed as "as needed." Are these items to be used for other identified projects? Or for additional projects? Please explain how these funds will be utilized. RESPONSE: 16. Regarding the Infrastructure Repairs at the Wastewater Treatment Facilities identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, p. 7-57, have projects been identified for these funds? Or are these funds targeted annual expenditures? Please explain how these funds will be utilized. RESPONSE: 17. Regarding the Infrastructure Repairs — Rehabilitation projects identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, pgs. 7-57 — 7-59, are these funds in addition to specific projects that are already identified? Please explain how and when the District determines where to spend rehabilitation funds. Please explain what efforts the District takes to ensure that infrastructure needs are expended in a fair and equitable manner. RESPONSE: 5 18. Regarding the Infrastructure Repairs — Wastewater projects identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, p. 7-59, please explain how these projects are identified. Please explain in detail what type of infrastructure (e.g., pipelines, pump stations, treatment facilities) is included. RESPONSE: 19. Regarding the RADAR Rainfall Data, Stream Flow Gauge Operation and Maintenance (USGS), and Stream Flow Water Quality Sampling projects identified in Section 7.2.2 of the Rate Change Proposal, Ex. MSD 1, pgs. 7-76 — 7-77 and 7-81 — 7-83, will the data from these projects be utilized for ongoing Consent Decree monitoring? RESPONSE: 20. Please describe the District's contract with the City of Arnold. Please explain how Arnold's Wastewater Treatment Plant revenue is derived. Further, please explain the reasoning for the projected increases in the Rate Model for Arnold WWTP revenues. See Ex. MSD 52, Inputs tab, line item 41500. RESPONSE: 21. Please provide a copy of the presentations made to ratings agencies for the District's most recent bond issuance. RESPONSE: 22. On the O&M Summary tab in the Rate Model, Ex. MSD 52, please explain the nature of the projected One Time Expenses (line item 2524) and Recurring Future Expenses (line item 2408), as well as how incremental additional costs were developed. RESPONSE: 23. Please provide a copy of the District's FY2020 Operating Budget to be included as an exhibit to the Rate Commission's proceedings. RESPONSE: 6 24. Please provide a copy of the utility cost trend analysis referenced in Section 7-2 of the Rate Change Proposal, Ex. MSD 1, p. 7-2. RESPONSE: 25. Please provide supporting file/documentation for the escalation factors indicated in the Rate Model, Ex. MSD 52, on the Inputs tab, for the following escalation factors: (a) 41160 Residential — Late Charges — please explain what led from the 1% increase in the 2015 recent wastewater rate change proposal to the 9% increase projected herein. Did the District experience an increase in delinquencies since the 2015 proposal? (b) 41260 Commercial — Late Charges — please explain what led from the 1% increase in the 2015 recent wastewater rate change proposal to the 9% increase projected herein. Did the District experience an increase in delinquencies since the 2015 proposal? (c) 41600 NSF Fees — Please provide documentation supporting the projected increase in NSF fees. (d) 42100 SSC Doubtful Accounts — Please confirm that this is the same information as is provided in Ex. MSD 61. (e) 43120 Connection Fees — Please state the most recent time MSD conducted a fee connection study. Do connection fees automatically increase 1% per year? Please provide a copy of any resolution/ordinance outlining projected increases. RESPONSE: Respectfully submitted, isa isa 0. 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 L 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; Susan Myers, Counsel for the Metropolitan St. Louis Sewer District, on this 25th day of March, 2019. Ms. Janice Fenton Office Associate Senior Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103 jfenton@stlmsd.corn Ms. Susan Myers General Counsel Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103 smyers@stlmsd.com Brandon W. Neuschafer Kamilah Jones Bryan Cave, LLP 211 North Broadway, Suite 3600 St. Louis, Missouri 63102 bwneuschafer@bc1plaw.corn kamijones@belplaw.com Attorneys for Missouri Industrial Energy Consumers Brian J. Malone 8