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HomeMy Public PortalAboutExhibit MSD 94A Responsive Testimony (Keith D Barber)Exhibit MSD 94A  BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT SEPTEMBER 22, 2011 RESPONSIVE TESTIMONY OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT REGARDING SUPPLEMENTAL TESTIMONY ISSUE: WASTEWATER RATE CHANGE PROPOSAL WITNESS: KEITH D. BARBER, MSCE, P.E. SPONSORING PARTY: METROPOLITAN ST. LOUIS SEWER DISTRICT DATE PREPARED: SEPTEMBER 22, 2011 Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103   Responsive Testimony of Keith D. Barber, MSCE, P.E. Regarding Supplemental Testimony Exhibit MSD 94A Q1. Please state your name and your relationship with the Metropolitan St. 1 Louis Sewer District. 2 A. My name is Keith D. Barber and I serve as the District’s current rate consultant. 3 Q2. Mr. Barber are you familiar with the Black and Veatch electronic model 4 used for the Rate Proposal submitted by the Metropolitan St. Louis Sewer 5 District on May 10, 2011? 6 A. Yes. 7 Q3. How are you familiar with this model? 8 A. I am the author of the model, including all calculations, content and VBA coding. 9 Q4. Have you reviewed the supplemental testimony and schedules submitted 10 by Mr. Thomas A. Beckley on behalf of the MSD Rate Commission, marked as Exhibit L&B 87? 11 12 15 17 19 20 23 A. Yes. 13 Q5. Are there any assertions in this testimony which purports to invalidate the 14 electronic rate model? A. No. Mr. Beckley states in his testimony that he did not find any outright errors in the 16 model and that he believed it to be consistent with industry standard methodologies. Q6. Have you reviewed the supplemental testimony and schedules submitted 18 by Ms. Billie S. LaConte on behalf of Barnes-Jewish Hospital (“BJH”), marked as Exhibit BJH 88? A. Yes. 21 Q7. Are there any assertions in this testimony which purports to invalidate the 22 electronic rate model? - 1 - Responsive Testimony of Keith D. Barber, MSCE, P.E. Regarding Supplemental Testimony Exhibit MSD 94A A. No, Ms. LaConte does not attempt to address the validity of the model at all in her 1 supplemental testimony. It appears that BJH used this supplemental testimony as 2 an opportunity to restate their position regarding assumptions made in the District’s 3 rate recommendation. 4 Q8. Do you wish to address Ms. LaConte’s restatement of BJH’s position as to 5 the revisions she made to the rate model? 6 A. No. As this testimony is not related to the validity of the rate model I will not address 7 it. The District has on multiple occasions provided information as to the 8 appropriateness of the assumptions made in the rate proposal. I also believe that 9 the appropriateness of the District’s assumptions will be addressed in the District’s pre-Hearing Conference Report which will be submitted in this rate proceeding. 10 11 13 14 17 19 20 21 22 Q9. Have you reviewed the supplemental testimony and schedules submitted 12 by Mr. Michael P. Gorman on behalf of the Missouri Industrial Energy Consumers, marked as Exhibit MIEC 89? A. Yes. 15 Q10. Are there any assertions in this testimony which purports to invalidate the 16 electronic rate model? A. No. None of the testimony provided by Mr. Gorman affects the validity of the rate 18 model. Mr. Gorman does identify what he calls “one area of concern” in his testimony related to the District’s projection for bad debt expense. His area of concern is apparently due to his lack of understanding of the detailed calculations used in the electronic rate model. Q11. Do you wish to address Mr. Gorman’s area of concern? 23 - 2 - Responsive Testimony of Keith D. Barber, MSCE, P.E. Regarding Supplemental Testimony Exhibit MSD 94A A. Yes. Mr. Gorman asserts that the text in paragraph 2.2 of the Rate Proposal is in 1 conflict with the rate model. Paragraph 2.2 is a summary of the bad debt provision. 2 The full explanation of the bad debt provision is found in section 3.4.1 (page 3-10) of 3 the Rate Proposal stating: 4 “The provision for bad debt is projected to be temporarily offset in 2012 and 2013 due to the expected recovery of prior years’ bad debt expense by greater use of contracted collection agencies, law firms and computer automated payment reminders. However, after these enhanced collection efforts of prior year’s bad debt, the annual allowance for bad debt expense is projected to increase from normal levels in proportion to the proposed revenue increases.” 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 21 23 24 26 This explanation aligns with the bad debt expenses of Table 3-6 on page 3-10 of the Rate Proposal as generated by the model The District can correct MIEC’s misinterpretation by restating the information provided in paragraph 2.2, as follows: the provision for bad debt has historically increased but is expected to temporarily decline a total $6.5 million in the next two years comprised of $4 million in 2012 and $2.5 million in 2013, due to more comprehensive use of collection agencies and aw firms to collect prior years’ past due amounts. Q12. Mr. Barber, does this testimony by Mr. Gorman appear to be an area of 20 concern in your opinion? A. No, the explanation given above should eliminate any misunderstanding MIEC had 22 regarding the projected bad debt expense made by the District for this Rate Proposal. Q13. Do you wish to address any other portion of Mr. Gorman’s Supplemental 25 Testimony? - 3 - Responsive Testimony of Keith D. Barber, MSCE, P.E. Regarding Supplemental Testimony Exhibit MSD 94A - 4 - A. No. I believe the District will address the misunderstanding that Mr. Gorman has 1 related to the CIRP in the supplemental testimony of Brian Hoelscher. 2 Q14. Does this complete your testimony on this matter at this time? 3 A. Yes 4