HomeMy Public PortalAboutExhibit L&B 18 2nd Discovery Request L&B 062411BEFORE THE RATE COMMISSION OF THE
METROPOLITAN ST. LOUIS SEWER DISTRICT
SECOND DISCOVERY REQUEST
ISSUE: WASTEWATER RATE CHANGE PROPOSAL
WITNESS: METROPOLITAN ST. LOUIS SEWER DISTRICT
SPONSORING PARTY: RATE COMMISSION
DATE PREPARED: JUNE 24, 2011
Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, Missouri 63103
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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"), Operational Rule 3(2) and Procedural Schedule §§ 1, 14, 15 and 17
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 May 10, 2011 (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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1. During the Technical Conference for District Testimony and Rate Setting
Documents, Rate Commission Chair Toenj es inquired about personnel costs of the District.
Please (a) state the number of filled District employee positions as at the end of each of
the 2006, 2007, 2008, 2009, and 2010 fiscal years, and as at June 1, 2011; (b) provide copies of
existing collective bargaining agreements; (c) provide a breakdown of the District's personnel
costs showing salaries and wages, overtime, and benefits segmented into taxes, insurance,
pension, and other costs for each of fiscal years 2006, 2007, 2008, 2009, and 2010; (d) state the
increases per year, in both percentages and dollar amounts, of each of the segments of the
District's personnel costs identified in (c) over the length of the Rate Proposal; (e) state whether
the District's fiscal year 2011 Operating Budget for the pension contribution reflects the recent
change in the District's plan changing from a defined benefit to defined contribution; and (f)
provide copies of any memoranda, report, work paper, summary, analysis or schedule used by the
District in analyzing the costs and benefits of converting a defined benefit pension plan into a
defined contribution pension plan.
RESPONSE:
2. During the Technical Conference for District Testimony and Rate Setting
Documents, Jan Zimmerman testified that the employee benefits package for each District
employee costs approximately $41,000. Please (a) (i) identify each element of the employee
benefits package provided to employees and (ii) the per -employee cost; and (b) provide copies of
contracts providing for the benefits described in the response to this Question.
RESPONSE:
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3. During the Technical Conference for District Testimony and Rate Setting
Documents, Rate Commission Chair Toenjes inquired about the cost increase due to inflation
described in the Direct Testimony of Keith Barber (p. 20-1,11. 20-23, 1-11) and further described
in Response to Rate Commission Discovery Request 15. Please provide copies of any
memorandum, report, work paper, summary, analysis, or schedule that supports the conclusion
that the inflation allowances are reasonable. (See also Question 17(d).)
RESPONSE:
4. During the Technical Conference for District Testimony and Rate Setting
Documents, Rate Commission Delegate Goss inquired about the Consent Decree in the matter of
United States of America and the State of Missouri v. The Metropolitan St. Louis Sewer District.
Please provide a copy of the Consent Decree.
RESPONSE:
5. During the Technical Conference for District Testimony and Rate Setting
Documents, Rate Commission Delegate Goss inquired about pending counterclaims. Please (a)
provide a copy of each pending counterclaim filed by the District in the matter captioned United
States of America and the State of Missouri v. The Metropolitan St. Louis Sewer District; (b)
describe the current status of each such counterclaim; and (c) qualify the dollar amount possible
with each counterclaim.
RESPONSE:
6. During the Technical Conference for District Testimony and Rate Setting
Documents, Rate Commission Delegate Goss requested a copy of material made available to the
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Rate Commission in prior Rate Change Proceedings regarding compliance with constitutional,
statutory or common law. Please provide a copy of any material made available to the Rate
Commission in prior Rate Change Proceedings regarding compliance with constitutional,
statutory or common law. (See also Questions 17(b) and (e).)
RESPONSE:
7. During the Technical Conference for District Testimony and Rate Setting
Documents, Rate Commission Delegate Goss inquired about the collection procedures for
delinquent accounts. Please (a) describe (i) the basis upon which an account is referred to a
"collection agency" or a "second placement collection agency"; (ii) the basis upon which an
account is referred to a law firm; (iii) the percent commission paid to law firms for collection;
and (iv) the procedure for placing a lien on property; (b) prepare a schedule showing total lien
placement during fiscal years 2009 and 2010; and (c) provide (i) copies of any District guidelines
for the settlement of delinquent accounts; and (ii) copies of the agreements with law firms
engaged to collect delinquent accounts.
RESPONSE:
8. During the Technical Conference for District Testimony and Rate Setting
Documents, Rate Commission Delegate Liyoes inquired about the District's delinquency rates as
they compare to other cities which have implemented rate increases. Please provide a
comparison of the District's delinquency rates to comparable sewer districts.
RESPONSE:
9. During the Technical Conference for District Testimony and Rate Setting
Documents, Rate Commission Delegate Schneider inquired about the 13% increase for
residential customers. Please (a) describe the factors contributing to, and basis upon which, the
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District decided to maintain an increase of 13% per year; and (b) provide copies of any
memorandum, report, work paper, summary, analysis, or schedule that supports the District's
determination.
RESPONSE:
10. During the Technical Conference for District Testimony and Rate Setting
Documents, Karl Tyminski stated that the District was subject to a balanced budget requirement.
Section 7.130 of the Charter Plan provides that the total amount of proposed expenditures for the
budget year from any fund may not exceed the estimated revenues to be actually received plus
any unencumbered balance or less any deficit estimated for the beginning of the budget year.
Please (a) describe how the District calculates estimated revenues and unencumbered balances;
(b) describe how the District determines the amount of an encumbrance required for any fund for
the budget year; and (c) provide copies of any policy of the Board of Trustees regarding the
determination of revenue estimates and required encumbrances.
RESPONSE:
11. Please provide a breakdown of projects and costs for each project that comprise
the capital encumbrance shown on row 1012 of page G-16 of Exhibit 4A.
RESPONSE:
12. During the Technical Conference for District Testimony and Rate Setting
Documents, Brian Hoelscher testified that some projects contained in the previous CIRP which
was the basis for the 2008 Rate Proposal had to be deferred in order to fund disinfection related
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capital projects. Please (a) provide a list of the projects which the District deferred and indicate
if these projects are included in the current CIRP; and (b) identify and provide the estimated cost
of any other CIRP projects proposed to be funded by the Rate Change authorized in the 2008
Rate Change Proceeding, which will not be completed by the end of the 2012 fiscal year.
RESPONSE:
13. Please prepare a schedule on a cash -flow basis for the annual expenses (a) to
study, (b) to design, and (c) to construct the projects identified in the CIRP for completion in
fiscal years 2013, 2014, 2015 and 2016.
RESPONSE:
14. During the Technical Conference for District Testimony and Rate Setting
Documents, Jan Zimmerman stated that the Uniform Compliance Charge is based upon the
number of inspections which are determined by the nature of the commercial enterprise. See
Table 3-22 of Exhibit 1. Please (i) give examples of the types of customers that fall into each
tier; and (ii) provide the information which was used to determine the allocation of costs shown
in Column 1 of the table.
RESPONSE:
15. During the Technical Conference for District Testimony and Rate Setting
Documents, Karl Tyminski stated that a Black & Veatch Bond Feasibility Report and reports
issued by PFM and Butcher and Mark were utilized in determining the average annual interest
rate, the term and the associated issuance costs of proposed revenue bonds and State Revolving
Fund obligations to fund CIRP projects. Please provide (a) copies of each of these reports and
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(b) any other memorandum, report, work paper, summary, analysis, or schedule analyzing such
matters. (See also Question 17(c).)
RESPONSE:
16. Please provide copies of the financial analyses referred to in Section 3.10,
Alternative Wastewater Rates of the Wastewater Rate Proposal (Ex. MSD 1) for financing the
District's Major Capital Improvement Program on a 100% Pay -As -You -Go basis.
RESPONSE:
17. The First Discovery Request of the Rate Commission requested copies of
materials to support certain conclusions contained in Direct Testimony. The request for copies of
the following materials is renewed.
(a) (i) First Discovery Request Question 4.
Keith Barber states that municipal debt financing of major capital improvements is a
practical way of obtaining funds. (See lines 7-13 at p. 18.) Please (a) describe the analysis that
was performed to reach these conclusions; (b) provide copies of any memorandum, report, work
paper, summary, analysis, or schedule that supports this conclusion; (c) describe the rationale for
such conclusion; and (e) identify any utility currently maintaining such a use of municipal debt
financing as proposed in the Rate Change Proposal.
RESPONSE:
(ii) Keith Barber, MSD Rate Consultant, responded with an analysis but did not
provide any materials to otherwise support the conclusion.
RESPONSE:
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(iii) Please provide copies of any memorandum, report, work paper, summary,
analysis, or schedule that supports the conclusion that debt financing is a practical way to fund
this Rate Change Proposal.
RESPONSE:
(b) (i) First Discovery Request Commission Question 6.
Susan Myers states that a large proportion of the proposed rate change is necessary to
meet legal requirements. (See lines 16-19 at p. 2.) Please (a) identify that proportion of the
proposed rate change that is not necessary to meet the legal requirements; and (b) provide copies
of any memorandum, report, work paper, summary, analysis, or schedule which supports this
conclusion.
RESPONSE:
(ii) Keith Barber, MSD Rate Consultant, responded with an analysis but did not
provide copies of materials to support the conclusion.
RESPONSE:
(iii) Please provide copies of any memorandum, report, work paper, summary,
analysis, or schedule that supports the conclusion that the proposed rate change is necessary to
meet legal requirements.
RESPONSE:
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(c) (i) First Discovery Request Question 7.
Karl Tyminski states that the terms and associated issuance costs reported in the recent
feasibility report concerning future SRF loans are reasonable. (See lines 9-12 at p. 7.) Please (a)
provide a copy of the feasibility report; (b) describe the analysis which supports this conclusion;
and (c) provide copies of any memorandum, report, work paper, summary, analysis, or schedule
which supports this conclusion.
RESPONSE:
(ii) Karl Tyminski, MSD Secretary/Treasurer, responded by referring to certain
Exhibits and stated that the feasibility study is expected to be available by the end of June 2011.
RESPONSE:
(iii) Please provide copies of the District's feasibility study and any memorandum,
report, work paper, summary, analysis, or schedule that supports the conclusion that the terms
and associated issuance costs for SRF loans are reasonable.
RESPONSE:
(d) (i) First Discovery Request Question 15.
Jan Zimmerman states that the inflation allowances used in the rate study report are
reasonable. (See lines 14-15 at p. 5.) Please provide a copy of any memorandum, report, work
paper, summary, analysis or schedule that supports this conclusion.
RESPONSE:
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(ii) Keith Barber, MSD Rate Consultant, responded that the future inflation
allowances used in the rate study report are primarily based on judgment are consistent with prior
inflation rates experienced by the District and in -line with the overall long-term consumer price
index for urban consumers.
RESPONSE:
(iii) Please provide copies of any memorandum, report, work paper, summary,
analysis, or schedule that supports the conclusion that the inflation allowances are reasonable.
RESPONSE:
(e) (i) First Discovery Request Question 35.
Jeffrey Theerman states that the Proposed Rate Change is consistent with constitutional,
statutory or common law, as amended from time to time. (See lines 20-22 at p. 2.) Please (a)
describe the analysis which supports this conclusion; and (b) provide a copy of any
memorandum, report, work papers, summary, analysis or schedule which supports this
conclusion.
RESPONSE:
(ii) Jan Zimmerman, MSD Director of Finance, responded by stating:
See Susan Myers' May 13, 2011 Direct Testimony response to Question 7, pages 2 -4.
RESPONSE:
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(iii) Please provide copies of any memorandum, report, work paper, summary,
analysis, or schedule that supports the conclusion that the Proposed Rate Change is consistent
with constitutional, statutory or common law as amended from time to time.
RESPONSE:
Respectfully submitted,
471u4 -172, -----
Lisa 0. Stump
LASHLY & BAER, P.C.
714 Locust Street
St. Louis, Missouri 63101
Tel: (314) 621-2939
Fax: (314) 621-6844
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CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing was sent by electronic transmission
to Susan Myers, Counsel for the Metropolitan St. Louis Sewer District, on this 24th day of June,
2011.
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