HomeMy Public PortalAboutExhibit L&B 11 First Discovery Request to MSD 52611Exhibit L&B 11
BEFORE THE RATE COMMISSION OF THE
METROPOLITAN ST. LOUIS SEWER DISTRICT
FIRST DISCOVERY REQUEST
ISSUE: WASTEWATER RATE CHANGE PROPOSAL
WITNESS: METROPOLITAN ST. LOUIS SEWER DISTRICT
SPONSORING PARTY: RATE COMMISSION
DATE PREPARED: MAY 26, 2011
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
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.
DISCOVERY REQUEST
1. Karl Tyminski states that District analysis shows that utilization of debt financing
allows the District to fund large near term capital improvements while moderating the rate
increases imposed on customers. (See lines 22-2 pp. 3-4.) Please (a) describe the analysis that
was performed to reach this conclusion; and (b) provide copies of any memorandum, report,
work paper, summary, analysis, or schedule that supports this conclusion; (c) describe the
rationale for such conclusions; and (d) identify any utility currently maintaining such rationale.
RESPONSE:
2. Karl Tyminski states that while projected debt coverage will exceed the Master
Bond Ordinance requirements, the projected coverages are in line with median metrics used by
credit rating agencies. (See lines 20-22 p. 2.) Please (a) describe the rationale for such a debt
coverage; (b) identify any utility currently maintaining such coverage; and (c) provide copies of
the median metric as used by credit rating agencies that are relied upon.
RESPONSE:
3. Karl Tyminski states that the rate covenant provided by the Master Bond
Ordinance requires the District to provide wastewater rates that are sufficient to pay all operating
and maintenance expenditures and provide net operating revenues together with investment
earnings that will at least equal 125% of the annual debt service requirement on all senior bonds
and at least equal 115% of the annual debt service requirement on all outstanding bonds, loans
and other obligations. (See lines 8-13 at p. 2.) Please provide a certified copy of the Master
Bond Ordinance and any Supplemental Bond Ordinances.
RESPONSE:
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:
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5. Susan Myers states that the projected rate change is needed to provide the District
with the necessary funds to address the aging wastewater system and resulting wet weather
ramifications. (See lines 9-11 at p. 2.) Please (a) describe the analysis which supports this
conclusion; and (b) provide copies of any memorandum, report, work paper, summary, analysis,
or schedule which supports this conclusion.
RESPONSE:
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:
7. Karl Tyrninski 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:
8. Karl Tyminski states that there is an intergovernmental agreement with the City of
Arnold relating to the Lower Meramec River Wastewater Treatment Plant. (See lines 12-15 at p.
9.) Please provide a copy of the Intergovernmental Agreement.
RESPONSE:
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9. Brian Hoelscher states that the District submitted a Long Term Control Plan
(LTCP) as mandated by Federal requirements, updated in 2009 to mitigate the impact of CSO's
on water quality. Please (a) identify the Federal requirements; and (b) provide a copy of the
current LTCP update.
RESPONSE:
10. Jan Zimmerman states that the Rate Change Proposal is fair and reasonable in that
it replaces the current uniform compliance charge with a five tiered structure, which more
equitably recovers the District's environmental compliance monitoring costs from non-residential
customers. (See lines 7-19 at p. 2 and lines 4-20 at p3) 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) provide the documents
that identify the District's five tiered structure; (d) describe the rationale for such conclusion; and
(e) identify any utility currently maintaining such a tiered structure.
RESPONSE:
11. Keith Barber states that the rate proposal presents an expanded recovery
mechanism for environmental compliance costs that more equitably recovers costs from non-
residential customers. (See lines 11-13 at p. 4.) Please (a) describe the rationale for such
conclusion; and (b) identify any utility currently maintaining such a recovery mechanism.
RESPONSE:
12. Keith Barber states that Black and Veatch prepared a 1993 Report entitled "Final
Report on Alternative Rate Structures for the Metropolitan St. Louis Sewer District." (See lines
19-23 at p. 2.) Please provide a copy of the Report.
RESPONSE:
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13. Keith Barber states that Black and Veatch Management Consulting prepared a
wastewater utility cost of service study completed on May 5, 2011. (See lines 22-23 at p. 24, and
lines 1-3 at p. 25.) Please provide a copy of the cost of service study.
RESPONSE:
14. Please provide copies of each contract or lease for goods or services in which the
payment obligation of the District exceeds $500,000.
RESPONSE:
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:
16. Please provide a breakdown of the expenses shown in Table 2-1 on page 2-2 of
the MSD Wastewater Rate Change Proposal by the categories used for the inflation allowances
shown on page 2-3 of the MSD Wastewater Rate Change Proposal. (See Ex. MSD 1.)
RESPONSE:
17. Please provide a breakdown of the District's expenses for the fiscal year ending in
2006 through 2010 by the categories used for the inflation allowances shown on page 2-3 of the
MSD Wastewater Rate Change Proposal. (See Ex. MSD 1.)
RESPONSE:
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18. For the additional O&M expense shown on line 20 of Table 2-1 on page 2-2 of the
MSD Wastewater Rate Change Proposal, please (a) describe the analysis which supports this
conclusion; and (b) provide copies of any memorandum, report, work paper, summary, analysis
or schedule which supports this conclusion. (See Ex. MSD 1.)
RESPONSE:
19. Keith Barber states that a customer resistance factor is not considered in the
development of proposed rates. but is factored in the alternative PAYGO rates should the District
not obtain approval for additional debt authorization, and that the increased balances for the
CIRP contains funds that could be available to make up potential revenue shortfalls caused by
temporary customer resistance to the higher wastewater rates. (See lines 13-21 at p. 7.) Please (a)
describe the analysis which supports this conclusion; and (b) provide copies of any
memorandum, report, work paper, summary, analysis or schedule supporting this conclusion or
any alternatives.
RESPONSE:
20. Please provide a copy of the Consolidated Annual Financial Report (CAFR) of the
District for the fiscal years ending in 2009 and 2010, and a certified copy of any action taken by
the Board of Trustees with respect to each such CAFR.
RESPONSE:
21. Please provide a copy of the Budget of the District for the fiscal years ending in
2009 and 2010 and a certified copy of any action taken by the Board of Trustees with respect to
each such Budget.
RESPONSE:
22. Please provide a copy of the Capital Improvement and Replacement Program
Budget for the fiscal years ending in 2009 and 2010 and a certified copy of the actions taken by
the Board of Trustees with respect to each such Program Budget.
RESPONSE:
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23. Please provide the actual Capital Improvement and Replacement Program (CIRP)
expenditures for the fiscal years ending in 2006 through 2010.
RESPONSE:
24. Describe what the cap expenditures shown in Table 3-8 on page 3-14 of the
MSD Wastewater Rate Change Proposal represent, e.g., expected annual cash expenditures or
encumbrances for projects initiated in those years. (See Ex. MSD 1.)
RESPONSE:
25. Please provide a copy of the Capital Improvement and Replacement Program
Project Listing for the fiscal years ending in 2006 and 2010 and a certified copy of any action
taken by the Board of Trustees with respect to each such Project Listing.
RESPONSE:
26. Brian Hoelscher states that without a successful wastewater rate increase,
approximately $840 million in projects would need to be delayed which have a high priority.
(See lines 19-22 at p. 4.) Please describe how such projects to be delayed would be selected.
RESPONSE:
27. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof whether and to what extent the Proposed Rate
Change is necessary to enable the District to comply with any covenant or provision relating to
any outstanding bonds or indebtedness of the District, together with a specific quantification of
the amount of the Proposed Rate change that is necessary for such purposes, as required by
§7.040 of the Charter Plan and §3(2)(c) of the Operational Rules.
RESPONSE:
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28. 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 bond or indebtedness of the District, as
required by §7.270(3) of the Charter Plan and §3(2)(c) of the Operational Rules.
RESPONSE:
29. Please describe any other facts and circumstances which demonstrate that the Rate
Change Proposal and all portions thereof will enhance 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 §3(2)(b) of the Operational Rules.
RESPONSE:
30. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof is necessary to enable the District to provide for
the costs of operation and maintenance and such other amounts as may be required to cover
emergencies and anticipated delinquencies as required by §7.040 of the Charter Plan.
RESPONSE:
31. Brian Hoelscher states that wastewater projects are selected from the existing
Capital Improvement Plan database based on their level of potential impact on the environment,
and then scheduling and sequencing constraints. (See lines 1-8 at p. 4.) Please provide copies of
the selection analysis.
RESPONSE:
32. Brian Hoelscher states that the District, with the assistance of design and
construction management consultants, has the resources to successfully manage, construct and
complete the $1.3 Billion Wastewater Capital Improvement and Replacement Program within the
six -year period presented in the Rate Proposal. (See lines 2-5 at p. 3.) Please provide a copy of
each memorandum, report, work paper, summary, analysis or schedule which supports this
conclusion.
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RESPONSE:
33. 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 § 3(2)(f) of the Operational Rules.
RESPONSE:
34. Please state (a) whether the District's Long -Term Combined Sewer
Overflow/Sanitary Sewer Overflow (CSO/SSO) Control Plan as updated meets the requirements
of and has been approved by the United States Environmental Protection Agency (EPA) or the
Missouri Department of Natural Resources (MDNR).
RESPONSE:
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:
36. Please describe any current or threatened enforcement proceeding of the United
States EPA or the MDNR with respect to combined sewer overflows or sanitary sewer overflows
within the District.
RESPONSE:
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37. Please describe any current or threatened enforcement proceeding of the United
States EPA or the MDNR regarding wastewater to which the District is subject and the current
status of any such proceeding.
RESPONSE:
38. Please describe any current or threatened enforcement proceeding of the United
States EPA or the MDNR regarding other wastewater facilities within the State of Missouri.
RESPONSE:
39. Please describe any current or threatened enforcement proceeding of the United
States EPA or the MDNR or state environmental agencies regarding the wastewater facilities of
the 50 largest wastewater facilities in the United States.
RESPONSE:
40. 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 from time to time, as required by §7.270(1) of the Charter Plan.
RESPONSE:
41. Please describe any other facts and circumstances which demonstrate that the Rate
Change Proposal and all portions thereof are necessary to enable the District to comply with
applicable federal or State laws or regulations as amended from time to time, together with a
specific quantification of the amount of the Rate Change Proposal that is necessary for such
purposes as required by § 3(2)(d) of the Operational Rules.
RESPONSE:
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42.. 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).
RESPONSE:
43. 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 §3(2)(e) of the Operational Rules.
RESPONSE:
44. 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:
45. Please describe any other facts and circumstances which demonstrate whether the
Rate change Proposal and all portions thereof why the Proposed Rate Change set forth in the
Rate Change Notice is necessary, fair and reasonable, as required by §3(2)(a) of the Operational
Rules.
RESPONSE:
46. 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 § 3(2)(e) of the Operational Rules.
RESPONSE:
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47. 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 § 3(2)(e) of the Operational Rules.
RESPONSE:
48. 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 § 3(2)(e) of the Operational Rules.
RESPONSE:
49. 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 § 3(2)(e) of the Operational Rules.
RESPONSE:
50. • 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 § 3(2)(e) of the Operational Rules.
RESPONSE:
51. Please provide the District's actual bad debt expense, actual write-offs, and end of
year bad debt balance for the fiscal years ending in 2006 through 2010.
RESPONSE:
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52. Please provide an aged receivables report for the end of each fiscal year ending in
2006 through 2010.
RESPONSE:
53. Please provide a description of the District's process for securing payment of
receivables from delinquent accounts.
RESPONSE:
54. Please provide the forecasted expense related to the Low -Income Assistance
Program described on page 3-33 of the MSD Wastewater Rate Change Proposal. (See Ex. MSD
1.)
RESPONSE:
55. Please provide the actual expense related to the Low -Income Assistance Program
for the fiscal years ending 2006 through 2010.
RESPONSE:
56. Please provide billed consumption and account data as shown in Tables 3-1 and 3-
2 of the MSD Wastewater Rate Change Proposal for the current fiscal year to date. (See Ex.
MSD 1.)
RESPONSE:
57. Please provide a hard copy of MSD Exhibits 4 and 5. Please provide an Excel
version of the rate model shown in MSD Exhibits 4 and 5 to facilitate the Rate Commission's
review of the methodology used.
RESPONSE:
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Respectfully submitted,
o
Lisa 0. Stump
LASHLY & BAER, P.C.
714 Locust Street
St. Louis, Missouri 63101
Tel: (314) 621-2939
Fax: (314) 621-6844
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing was sent by electronic transmission
Susan Myers, Counsel for the Metropolitan St. Louis Sewer District, on this 26th day of May,
2011.
Lisa 0. Stump
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