HomeMy Public PortalAboutExhibit MSD 17 Transcript June 13, 2011 Technical Conference PROCEEDINGS 6/13/2011
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3 MEETING OF THE RATE COMMISSION
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5 OF THE
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7 METROPOLITAN ST. LOUIS SEWER DISTRICT
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17 2011 WASTEWATER RATE CHANGE PROCEEDING
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21 June 13, 2011
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25 (Starting time of the Meeting: 9:00 AM)
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1 APPEARANCES:
2 RATE COMMISSION:
3 Leonard Toenjes - Chairman
George Liyeos
4 Nancy Bowser
Mike O'Connell III
5 Eric Schneider
John L. Stein
6 Glenn Koenen
George Tomazi
7 Paul Brockmann
Brad Goss
8 Ralph Wafer
9
RAFTELIS FINANCIAL CONSULTANTS, INC.:
10
William Stannard
11 Thomas Beckley
12
LEGAL COUNSEL ON BEHALF OF THE RATE COMMISSION:
13
John Fox Arnold
14 Lisa O. Stump
Lashly & Baer, PC
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16 ON BEHALF OF METROPOLITAN ST. LOUIS SEWER
DISTRICT:
17
Susan Myers, Legal Counsel
18 Jan Zimmermann - Director of Finance
Keith Barber - Black & Veatch
19
20 ON BEHALF OF MISSOURI INDUSTRIAL ENERGY CONSUMERS:
21 John Kindschuh
Bryan Cave, LLP
22
Michael Gorman
23 Brubaker & Associates
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25
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1 ON BEHALF OF BARNES-JEWISH HOSPITAL:
2 Lisa C. Langeneckert
Sandberg, Phoenix & vonGontard, PC
3
4 ON BEHALF OF ROBERT MUELLER:
5 Robert Mueller
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21 Reported by:
22 Kimberly A. Ganz, CSR (IL), CCR (MO), RMR, CRR
Midwest Litigation Services
23 711 North Eleventh Street
St. Louis, MO 63101
24 (314) 644-2191
kganz@midwestlitigation.com
25
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1 COMMISSIONER TOENJES: Good morning.
2 It's 9:00 on June 13th and we will call to
3 order the Meeting of the Rate Commission for
4 the Metropolitan St. Louis Sewer District.
5 Miss Bowser, if you will call the roll please.
6 COMMISSIONER BOWSER: Mr. Brockmann.
7 COMMISSIONER BROCKMANN: Here.
8 COMMISSIONER BOWSER: Miss Casey.
9 Mr. Goss.
10 COMMISSIONER GOSS: Here.
11 COMMISSIONER BOWSER: Mr. Koenen.
12 COMMISSIONER KOENEN: Here.
13 COMMISSIONER BOWSER: Mr. Liyeos.
14 COMMISSIONER LIYEOS: Here.
15 COMMISSIONER BOWSER: Mr. O'Connell.
16 COMMISSIONER O'CONNELL: Here.
17 COMMISSIONER BOWSER: Mr. Post. Mr.
18 Schneider.
19 COMMISSIONER SCHNEIDER: Here.
20 COMMISSIONER BOWSER: Mr. Seidel.
21 Mr. Stein.
22 COMMISSIONER STEIN: Present.
23 COMMISSIONER BOWSER: Mr. Toenjes.
24 COMMISSIONER TOENJES: Present.
25 COMMISSIONER BOWSER: Mr. Tomazi.
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1 COMMISSIONER TOMAZI: Here.
2 COMMISSIONER BOWSER: Mr. Wafer.
3 COMMISSIONER WAFER: Here.
4 COMMISSIONER BOWSER: We have a
5 quorum.
6 COMMISSIONER TOENJES: We have a
7 quorum, thank you, Miss Bowser. I would ask
8 everyone to put their cell phones on vibrate or
9 off. Thank you. My name is Len Toenjes. I am
10 chairman of the Rate Commission of the
11 Metropolitan St. Louis Sewer District and will
12 serve as Chair of this proceeding. Present are
13 the Rate Commissioners who identified
14 themselves in the roll call as delegates of the
15 Rate Commission.
16 The Charter Plan of the District was
17 approved by the voters of St. Louis and St.
18 Louis County in a special election on
19 February 9th, 1954, and amended at a general
20 election on November 7, 2000. The amendment to
21 the Charter Plan established the Rate
22 Commission to review and make recommendations
23 to the District regarding changes in wastewater
24 rates, stormwater rates, and rates proposed by
25 the District. Charter Plan requires the Board
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1 of Trustees of the District to select
2 organizations to name delegates to the Rate
3 Commission to ensure a fair representation on
4 all users of the District's services. The Rate
5 Commission represents different organizations
6 to represent commercial industrial users,
7 residential users, and other organizations
8 interested in the operation of the District,
9 including organizations focusing on
10 environmental issues, labor issues,
11 socioeconomic issues, community neighborhood
12 organizations, and other non-profit
13 organizations.
14 The Rate Commission currently
15 consists of representatives of Associated
16 General Contractors of St. Louis, the Regional
17 Chamber and Growth Association, the Engineers
18 Club of St. Louis, the League of Women Voters,
19 Missouri Botanical Gardens, the Human
20 Development Corporation of Metropolitan St.
21 Louis, Missouri Industrial Energy Consumers,
22 Home Builders Association of Greater St. Louis,
23 the St. Louis County Municipal League, the St.
24 Louis Council of Construction Consumers,
25 cooperating school districts, the West County
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1 Chamber of Commerce, St. Phillip's Lutheran
2 Church, Greater St. Louis labor Council
3 AFL-CIO, and the Missouri Coalition For the
4 Environment.
5 Upon receipt of a rate change notice
6 from the District, the Rate Commission is to
7 recommend to the Board of Trustees changes in a
8 wastewater, stormwater or tax rate necessary
9 to, No. 1, pay interest and principal due on
10 bonds issued to finance assets of the district;
11 No. 2, pay for the cost of operation and
12 maintenance; and No. 3, to pay such amount as
13 may be required to cover emergencies and
14 anticipated delinquencies.
15 Further, any changes in a rate
16 recommended to the Board of Trustees by the
17 Rate Commission is to be accompanied by a
18 statement that the proposed rate change, No. 1,
19 is consistent with constitutional statutory or
20 common law as amended from time to time; No. 2,
21 enhances the District's ability to provide
22 adequate sewer and drainage systems and
23 facilities or related services; No. 3, is
24 consistent with and not in violation of any
25 covenant or provision relating to any
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1 outstanding bonds or indebtedness of the
2 District; No. 4, does not impair the ability of
3 the District to comply with applicable federal
4 or state laws or regulations as amended from
5 time to time; and No. 5, imposes a fair and
6 reasonable burden on all classes of ratepayers.
7 The Rate Commission received a rate
8 change notice from the District on May 10,
9 2011. The Rate Commission must on or before
10 September 6, 2011, issue its report on the
11 proposed rate change notice to the Board of
12 Trustees of the District unless the Board of
13 Trustees upon application of the Rate
14 Commission extends the period of time for the
15 issuance of the Rate Commission report for an
16 additional 45 day period.
17 Under procedural rules adopted by the
18 Rate Commission on May 17, 2011, any person
19 affected by the rate change proposal had an
20 opportunity to submit an application to
21 intervene in these proceedings. Applications
22 to intervene have been filed by the Missouri
23 Industrial Energy Consumers, Covidien,
24 Barnes-Jewish Hospital, and Robert Mueller.
25 These applications have been granted.
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1 On May 13, 2011, the District
2 submitted to the Rate Commission prepared
3 direct testimony of Jeffrey L. Theerman, Susan
4 M. Myers, Brian L. Hoelscher, Jonathan Sprague,
5 Janice M. Zimmerman, Karl J. Tyminski, and
6 Keith D. Barber.
7 On May 26, 2011, the Rate Commission
8 submitted its discovery request to the District.
9 On June 7, 2011, the District filed its
10 responses.
11 This technical conference will be
12 held on the record regarding the rate setting
13 documents and the direct testimony filed with
14 the Rate Commission by the District. The
15 purpose of this technical conference is to
16 provide the District an opportunity to answer
17 questions propounded by members of the Rate
18 Commission, then by any intervenor, and finally
19 by Lashly & Baer, legal counsel to the Rate
20 Commission.
21 Following the technical conference,
22 the intervenors and the Rate Commission
23 consultants may on or before June 22, 2011,
24 submit prepared rebuttal testimony and
25 schedules.
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1 A technical conference will be held
2 on July 13 through the 15, 2011, regarding the
3 rebuttal testimony. At that technical
4 conference, each person submitting rebuttal
5 testimony shall answer questions propounded by
6 members of the Rate Commission, the District,
7 then the other intervenors and finally by our
8 legal counsel.
9 Following the technical conference,
10 the District, its consultants, the intervenors,
11 and the Rate Commission consultants may on or
12 before July 22, 2011, submit prepared
13 surrebuttal testimony and schedules.
14 A technical conference will be held
15 on the record on August 8th through the 10th,
16 2011, regarding the surrebuttal testimony. At
17 that technical conference, each person
18 submitting rebuttal testimony shall answer
19 questions propounded by members of the Rate
20 Commission, then by the District, the
21 intervenors, and finally by our legal counsel.
22 Ratepayers who do not wish to
23 intervene will be permitted to participate in a
24 series of on the record public hearings
25 conducted in five sessions beginning on
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1 August 16, 2011, and concluding on August 24,
2 2011.
3 Who is here on behalf of the
4 Metropolitan St. Louis Sewer District?
5 MS. MYERS: Myself, Susan Myers,
6 general counsel. At the table with me I have
7 Jan Zimmerman, the Director of Finance, and
8 Keith Barber of Black & Veatch.
9 COMMISSIONER TOENJES: Who is here on
10 behalf of the Missouri Industrial Energy
11 Consumers?
12 MR. KINDSCHUH: Good morning. My
13 name is John Kindschuh and I'm an attorney with
14 Bryan Cave here on behalf of the Missouri
15 Industrial Energy Consumers.
16 COMMISSIONER TOENJES: Who is here on
17 behalf of Covidien? Let the record show no one
18 is here on behalf of Covidien.
19 Who is here on behalf of
20 Barnes-Jewish Hospital?
21 MS. LANGENECKERT: Lisa Langeneckert
22 of the law firm of Sandberg, Phoenix, and
23 vonGontard.
24 COMMISSIONER TOENJES: Who is here on
25 behalf of Robert Mueller?
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1 MR. MUELLER: I am here on behalf of
2 Robert Mueller, and I am Robert Mueller.
3 COMMISSIONER TOENJES: Also present
4 are William Stannard and Thomas Beckley of
5 Raftelis Financial Consultants, Inc.,
6 consultants to the Rate Commission, and John
7 Fox Arnold and Lisa Stump of Lashly & Baer,
8 legal counsel to the Rate Commission.
9 Under the Rate Commission's
10 operational rules, no persons shall be required
11 to answer questions for a total period of more
12 than three hours and the time shall be evenly
13 divided among all of the participants desiring
14 to ask questions. Following questions by
15 members of the Rate Commission, I will attempt
16 to allocate the time equally among the
17 participants and our legal counsel. To the
18 extent that the District, one of the
19 intervenors, or legal counsel has not completed
20 the questions at the expiration of that
21 person's allotted time, and to the extent that
22 time remains, such persons will be permitted to
23 propound additional questions until the three
24 hours has expired. Are there any procedural
25 matters? Ms. Stump.
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1 MS. STUMP: One procedural matter
2 that has come up that I wanted to bring to your
3 attention is that the procedural schedule
4 requires the filing of 20 hard copies with all
5 filings in this case. As this process -- that
6 was done before because in previous
7 proceedings, hard copies were mailed to each
8 Rate Commissioner. The process that's been
9 done this year with the repository and with the
10 use of e-mail, it's come to our attention that
11 filing of hard copies is probably not
12 necessary.
13 So, we discussed that with the
14 chairs, the presenting officer who waived that
15 requirement for everything that's been filed so
16 far but I wanted to get that on the record that
17 that requirement of filing 20 hard copies is
18 waived and to make sure that none of the other
19 Rate Commissioners have a problem with that.
20 And if there isn't any problem, then I would
21 like the record to reflect that the requirement
22 of submitting 20 hard copies is waived.
23 COMMISSIONER TOENJES: Any comments
24 from any of the Rate Commissioners either in
25 opposition to that change in requirement?
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1 Hearing none, we will allow for electronic
2 filings. Yes, Ms. Myers.
3 MS. MYERS: Could I add. It is on
4 the MSD website for all the public to see the
5 documents, all the copies of the documents.
6 COMMISSIONER TOENJES: Thank you.
7 There is a second procedural matter concerning
8 the Missouri Industrial Energy Consumers and
9 Barnes-Jewish Hospital proposal to revise the
10 procedural schedule. Mr. Kindschuh, would you
11 care to make a presentation in regard to that
12 matter?
13 MR. KINDSCHUH: Yes, thank you,
14 Mr. Toenjes, I appreciate it. My name is John
15 Kindschuh and I'm an attorney with the MIEC,
16 Missouri Industrial Energy Consumers. It's a
17 not-for-profit mutual benefit corporation that
18 represents the interest of certain corporations
19 that are large commercial users of MSD
20 services.
21 The MIEC co-authored a proposal dated
22 June 7th to revise the procedural schedule in
23 this rate case. We co-authored with
24 Barnes-Jewish Hospital, BJH, another intervenor
25 in this matter. Also as a point of note, we've
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1 had a chance to speak with both Covidien and
2 Robert Mueller, they agree to the terms of the
3 proposal as well, so all the intervenors kind
4 of come to you jointly with this proposal.
5 We submitted this proposal to revise
6 the procedural schedule for three key reasons.
7 The first is to provide all parties with
8 additional time to better identify the issues
9 in this rate case and hopefully resolve some of
10 those issues; second of all is to provide all
11 parties with an opportunity for additional
12 discovery; and third, to provide the Rate
13 Commission with more opportunity to evaluate
14 the issues and draft the Rate Commission
15 report. And there are many reasons why the
16 schedule should be extended to include more
17 time for the parties to file technical
18 testimony and exchange discovery. We had
19 submitted those, and quite honestly many others
20 too, in the memo dated June 7th but let me
21 highlight a few.
22 The first is the sheer magnitude of
23 this proposal. MSD staff is proposing an
24 increase in wastewater revenues of
25 approximately $130 million to take place over
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1 the course of a four year period. This is
2 approximately a 60 percent increase in
3 wastewater revenue collections. We feel that
4 all parties will want to carefully review the
5 specifics of this kind of an increase.
6 Secondly, a capital program of nearly
7 $1.3 billion is planned over the next four
8 years. In order to accomplish this program,
9 MSD is going to increase the debt service cost
10 by over $70 million per year. Once again this
11 is a sizeable number and we think all parties
12 will want to evaluate this carefully.
13 And last but certainly not least
14 involved the Consent Decrees. As we
15 understand, MSD recently agreed to the terms of
16 the consent. It's imperative that the Rate
17 Commission and all of the parties understand
18 the details of that agreement and whether or
19 not the necessary capital improvement projects
20 mandated by that agreement are in the proposed
21 rate plan.
22 So, pursuant to terms of the Charter,
23 the Rate Commission has the authority to
24 recognize that the Board of Trustees that the
25 120 day scheduling window be extended by one
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1 additional 45 days. And in prior rate cases,
2 the Rate Commission has in fact recommended
3 this and the Board of Trustees has approved of
4 this.
5 I would ask if you have a copy of our
6 proposal in front of you, we put together a
7 schedule, a proposed schedule in Exhibit A and
8 I would like to walk through a few of those
9 things with you. Some of our key goals in
10 revising the schedule, first of all, we wanted
11 to provide more time before rebuttal testimony
12 and surrebuttal testimony. In particular, we
13 added additional days, 26 to be exact, bottom
14 of the page on June and the June 1st to July,
15 we added an additional 26 days there because
16 that way the Rate Commission and the
17 intervenors can be allowed additional time to
18 review and evaluate MSD's testimony and we can
19 exchange more discovery and hopefully reach
20 some resolution of the issues.
21 The second key thing that we wanted
22 to do was provide additional time for you to
23 deliberate. So, if you look at the schedule
24 again, in October, we added an additional 16
25 days at the end of the process so the Rate
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1 Commission has time to digest the information,
2 discuss, and, of course, draft a rather lengthy
3 Rate Commission report. And let me emphasis
4 that this schedule is submitted in a
5 collaborative spirit. The dates and the
6 schedule are not set in stone in our minds,
7 rather we want to work with all of the parties
8 to make sure that we best utilize the
9 additional 45 days while minimizing any
10 inconveniences to folks.
11 We worked very hard in revising this
12 schedule to do that. For example, we looked at
13 the original schedule and saw the timeframes
14 between the various events, kept those same
15 time frames as we shifted things back. Another
16 thing is with respect to August, we were able
17 to keep the same dates for the technical
18 conference that was originally scheduled for
19 the rebuttal testimony, we proposed those same
20 dates in August be used for the testimony --
21 excuse me, for the rebuttal testimony on our
22 proposal which was originally for the
23 surrebuttal testimony so hopefully those dates
24 are still convenient for you and we can still
25 have the conference then.
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1 With respect to the public hearings,
2 we recommend that all the public hearings that
3 have been scheduled stay. We recognize there
4 is some logistical issues with publications,
5 obviously the public would like to participate
6 and we want to hear what they have to say. We
7 recommend keeping all of those meetings. The
8 only thing is is the operational rules require
9 at least one public hearing be conducted after
10 the prehearing conference.
11 If the proposed schedule is adopted,
12 we would have to move the prehearing conference
13 date so we would have to schedule one
14 additional public hearing. We find this would
15 be beneficial for all parties since more
16 members of the public can come and provide
17 their input.
18 And most importantly, we recognize
19 that MSD's staff is preparing for a bond
20 election in April of 2012. Jan Zimmerman had
21 distributed a timeline at the beginning of the
22 year. We attached this timeline as Exhibit B
23 and perhaps some of you had a chance to look at
24 it. Honestly, Jan had the foresight to build
25 in an additional 45 days into the schedule
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1 which is great. So, if adopted, our proposed
2 schedule will not interfere with MSD's bond
3 election timeline which is important for
4 everyone.
5 So, in conclusion, we are happy to
6 work with all the parties to shift any of the
7 dates as needed but we did our best to review
8 the legal and procedural requirements, looked
9 at the proposal, looked at the logistics and
10 came up with Schedule A. Please let us know if
11 you have any questions and once again, we
12 appreciate your consideration of this proposal
13 and hopefully this proposal will enable you to
14 reach a fair and reasonable determination for
15 this rate case.
16 COMMISSIONER TOENJES: I would ask
17 the Rate Commissioners to hold their questions
18 until we hear from the other intervenors from
19 the District and from our labor -- our labor
20 counsel, and hold your questions from all
21 parties. Would any of the other intervenors
22 care to make any comments on Mr. Kindschuh's
23 presentation?
24 MS. LANGENECKERT: BJC obviously
25 supports this. We join with MIEC and we think
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1 it's a reasonable way to approach the case and
2 make sure that we get all the information we
3 can and everyone has their appropriate due
4 process.
5 MR. MUELLER: I'll go on record as
6 supporting the request also.
7 COMMISSIONER TOENJES: Thank you.
8 The District have any comments on this request?
9 MR. THEERMAN: Mr. Chair, we support
10 the additional time that's been recommended.
11 We built that into our original schedule and we
12 think it's appropriate given the concerns that
13 have been expressed. If the Rate Commission
14 decides to request this of our Board, we are
15 prepared to take it to our Board at a special
16 Board meeting on the 29th of this month. If
17 for some reason that Board meeting doesn't
18 occur, then the next Board meeting will be
19 July 14th.
20 The only thing I point out is while
21 the budget will support the additional
22 advertising required for this, it will eat into
23 the money we had allocated for radio
24 advertising of the public hearings in August.
25 COMMISSIONER TOENJES: Ms. Stump or
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1 Mr. Arnold, comments? Ms. Stump.
2 MS. STUMP: As you all know, we
3 provided you with correspondence last week
4 which has also been made a part of the public
5 record. Whether or not to change the
6 procedural schedule is within the discretion of
7 the Rate Commission and it's your decision. We
8 gave you some issues to consider.
9 First of all is the fact that the 45
10 days does under the Charter really have to come
11 from the Board of Trustees. So, there will
12 have to be that procedural matter of actually
13 asking for the 45 days from the Board of
14 Trustees and the Board of Trustees granting the
15 45 days before it can be put into the schedule.
16 Secondly, there is the cost of
17 publication as we talked about. The Charter
18 requires that the notice of the public hearings
19 be published and we would recommend that the
20 entire schedule be republished and changes be
21 made just because the entire schedule is
22 published the first time and we think it would
23 be confusing to try to just do a shorter
24 publication if something is changed.
25 Third, the Charter only has the
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1 one-45 day extension, so it's certainly up to
2 you all, assuming the Board of Trustees grants
3 it, to include it throughout the process but
4 that's it, that's one-45 days. If something
5 else comes up later on, there is no provision
6 under the Charter for any additional
7 extensions.
8 And the last thing I think that we
9 pointed out was the whole issue of education
10 for the bond issue election. Certainly the
11 sooner the Rate Commission makes its decision,
12 the more time there is to educate the public on
13 what it is that is going to be proposed.
14 So, those were the four things that
15 that we pointed out which you all get to
16 balance with the issues raised by Mr. Kindschuh
17 and the intervenors, and then should the Rate
18 Commission consider or want to consider
19 changing it, there were certain things that we
20 ask that you direct us to do beginning with
21 asking for a change, directing us to ask the
22 Board of Trustees for the extension, and then
23 secondly, we need to push back the rebuttal
24 testimony date until we actually can adopt a
25 new procedural schedule, and what we would
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1 contemplate is that we would meet with the
2 intervenors and with the District and come up
3 with a new schedule probably similar to what
4 they have proposed but just to make sure that
5 everybody is on the right page, we have places
6 for all the hearings, everything is set, and
7 then we would present that to the Rate
8 Commission for approval. Probably at some date
9 there would need to be a meeting some date
10 after the Board of Trustees' meeting to approve
11 a new schedule. Questions?
12 COMMISSIONER TOENJES: Thank you. Do
13 any of the Rate Commissioners have questions
14 for the intervenors or for the District or for
15 Ms. Stump? Mr. Tomazi.
16 COMMISSIONER TOMAZI: Two quick
17 questions. We will have to republish the
18 entire public hearing schedule and all the
19 other schedules and that have already been out
20 half a dozen times in various publications?
21 MS. STUMP: We will need to
22 republish. The Charter requires that you
23 publish the notice of the actual public
24 hearings but the Rate Commission always has the
25 process of publishing everything including
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1 these technical conferences.
2 So, since that was all published for
3 the first time, we feel like it would be even
4 more confusing for the voters or the patrons to
5 just publish the hearing date so, yes,
6 everything would have to be republished which
7 we, given what we spent for the last
8 publication, would probably be around $20,000.
9 COMMISSIONER TOMAZI: Second
10 question. If we put in the 45 day extension,
11 what does this do in terms of having the MSD
12 put out its public education program for the
13 bond issue election in November? Is this going
14 to be too tight?
15 MS. STUMP: I think really that's
16 probably a question --
17 COMMISSIONER TOENJES: Jeff, Jan,
18 Susan?
19 MR. THEERMAN: We built the schedule
20 when we originally envisioned this with a 45
21 day extension, so the answer would be we don't
22 think it's too tight, we think we can do that.
23 COMMISSIONER TOENJES: Mr. Koenen.
24 COMMISSIONER KOENEN: We talked about
25 putting out information for the public
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1 hearings. If we don't have to repeat all the
2 technical date and things like that and the
3 advertising just talks about the public hearing
4 that is coming up in August, can't we just make
5 the ad simpler and figure the people who need
6 to know about this will find out about this
7 through the website and other communication?
8 MS. STUMP: Well, I think you could.
9 I think my concern would be that if you
10 published, let's say, the July -- I mean, if we
11 keep some of the same dates, then it may not be
12 a problem, but if we have a different date for
13 the prehearing conference that was published,
14 what if somebody does want to come or somebody
15 shows up at the wrong date? Certainly that's
16 something for you to consider. We can consider
17 putting something like language that there have
18 been changes have been made but that's
19 really -- that's up to you all.
20 COMMISSIONER TOENJES: Eric,
21 Mr. Schneider.
22 COMMISSIONER SCHNEIDER: The question
23 of Mr. Kindschuh. On your extension that you
24 submitted, I want to understand. You are
25 proposing that the issues of the Board would be
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1 October 21st, is that correct?
2 MR. KINDSCHUH: That is correct.
3 COMMISSIONER SCHNEIDER: And am I
4 interpreting, or Jan, the spreadsheet that was
5 originally presented with the 45 day extension
6 would have ended with the Board of Trustees on
7 October 13th, is that correct?
8 MR. KINDSCHUH: That is correct but
9 please note that the rate proposal to the Rate
10 Commission was actually not submitted on
11 May 2nd, which is what Jan had contemplated in
12 Exhibit B, it was actually submitted I believe
13 on May 10th. Yes, so you have to kind of
14 extend that by an extra eight days so you're
15 correct. It's the same idea, it's just shifted
16 back about eight days from what Jan had
17 originally proposed.
18 COMMISSIONER SCHNEIDER: We are
19 talking about eight days, the difference
20 between what the Board on fees would do,
21 therefore that would be impacting to what the
22 public would do -- we are only talking an eight
23 day difference overall in terms of what the
24 public campaign would be for this?
25 MR. KINDSCHUH: Yes. I think that
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1 makes sense.
2 MR. THEERMAN: We can support that
3 eight day change in our bond election work if
4 that's the question.
5 COMMISSIONER TOENJES: Do you have
6 other comments? Comments from the District?
7 MR. THEERMAN: We just want to make
8 sure you understand what that eight days is.
9 Mr. Kindschuh is right. The eight days relates
10 to when we started the rate proposal. So
11 instead of May 2nd, which had a total schedule
12 including a 45 day extension ending on
13 October 13th, we submitted a rate change notice
14 to the commission on May 10th which given the
15 same set of circumstances with the 45 day
16 extension would have on -- would end on
17 October 21st. So, it's not that there is a net
18 change of eight days by this 45 day extension,
19 that change in essence occurred because we
20 submitted the rate change proposal on the 10th
21 rather than the 2nd. By approval of the 45 day
22 extension, it's a 45 day extension of the 120
23 day schedule as prescribed in the chart.
24 That's pretty long-winded.
25 COMMISSIONER TOENJES: Mr. Schneider.
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1 MR. SCHNEIDER: So to clarify then,
2 let's say the Board of Trustees acted within
3 this timeframe and accepts the proposal of the
4 Rate Commission. How does that impact either
5 from what he's proposing or what the current
6 schedule is, the amount of time the public
7 would have to evaluate the rate proposal? It
8 sounds like there is zero impact then.
9 MR. THEERMAN: Is your question about
10 evaluating the rate proposal or evaluating a
11 bond election?
12 MR. SCHNEIDER: Bond election, I'm
13 sorry, a bond election.
14 MR. THEERMAN: If -- with the
15 extension, the Board of Trustees will have the
16 window of time by Charter, they can't take any
17 action on the rate proposal, and that 45 day
18 period, and don't get the two confused, there
19 is two-45 day periods there, the second 45 day
20 period is a waiting period for the Board and
21 that would end on December 5th, I believe.
22 Then the Board could introduce and adopt an
23 ordinance changing the rate. The actual moving
24 forward of a bond election isn't prescriptively
25 tied to any of these dates. The Board could go
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1 ahead and put something on the ballot after we
2 know what the rate reported is but before they
3 do anything with an ordinance on the rate
4 itself, and so we believe there is time to
5 educate the public on a bond election given
6 that those aren't directly tied to one another.
7 We either get it on the ballot and educate the
8 public before an election.
9 MR. SCHNEIDER: Thank you.
10 COMMISSIONER TOENJES: Any questions
11 from any other Rate Commissioners? I have one
12 question. Would it be accurate to assume that
13 this is somewhat a restructuring of our 45 day
14 extension then? Rather than asking for the 45
15 days at the end, we are sort of in essence
16 spreading out the 45 days with some of it at
17 the beginning, some in the middle, and some at
18 the end, is that an accurate --
19 MR. KINDSCHUH: Yeah, I believe
20 that's very accurate.
21 COMMISSIONER TOENJES: I will ask the
22 pleasure of the Rate Commissioners what they
23 would care to do about this proposal.
24 COMMISSIONER LIYEOS: I would move
25 that we take steps, advice that relates to
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1 this, and recommend to the Board of Directors
2 for MSD to grant the 45 day extension.
3 COMMISSIONER TOENJES: Motion by
4 Mr. Liyeos. Is there a second?
5 COMMISSIONER KOENEN: Second.
6 COMMISSIONER TOENJES: Second on that
7 motion. Any discussion on the motion? All in
8 favor signify by saying aye. Opposed? Motion
9 carries. We will move forward with accepting
10 the recommendation to the change in our
11 procedural schedule and Ms. Stump, I would ask
12 you to work with Mr. Brockmann and the
13 communications committee also concerning what
14 does or doesn't get published on that --
15 MS. STUMP: Okay.
16 COMMISSIONER TOENJES: -- so that
17 does or doesn't move forward.
18 MS. STUMP: May I ask one other
19 thing? I would ask that the Rate Commission
20 consider having a meeting and it may be by
21 telephone, you know, for some of you that
22 cannot be here, sometime after the 29th when
23 the Board of Trustees meet at which time we
24 would present the modified schedule, and that
25 in the meantime, you authorize us to work with
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1 the District and the intervenors to come up
2 with the actual new schedule, and that would be
3 approved at that meeting or considered at that
4 meeting.
5 COMMISSIONER TOENJES: That's a fair
6 request. We will move.
7 MS. STUMP: Okay. And then also
8 let's push back -- the rebuttal testimony right
9 now is due next week. So, in light of this, if
10 we could push that back to -- let's say even --
11 I'm looking at the dates that Mr. Kindschuh
12 has. Even with the dates -- let's go ahead and
13 say the 18th but we will be -- you will be
14 meeting before then with a new schedule which
15 may or may not have the 18th but let's at least
16 say it's not due on the 22nd. We could even
17 say on the 22nd and it's pushed back, that
18 requirement has been waived, and it will be due
19 on the date that you all adopt the new -- you
20 know --
21 COMMISSIONER TOENJES: The date to be
22 determined.
23 MS. STUMP: Yes.
24 COMMISSIONER TOENJES: Okay. So, the
25 current date for the submission of the rebuttal
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1 testimony would be waived by action of the Rate
2 Commission, the motion we just adopted, and the
3 new date will be announced when we meet at our
4 next meeting after all the parties have agreed
5 to what that date should be.
6 MS. STUMP: Sounds good.
7 COMMISSIONER TOENJES: Is that
8 acceptable with everyone? Okay. Thank you for
9 your clarification, Ms. Stump. Any other
10 comments on that or questions on that
11 procedural matter before we move forward? Are
12 there any other procedural matters that we
13 should entertain at this time that anyone would
14 care to bring forward? Hearing none, Ms.
15 Myers, would you care to make an opening
16 statement on behalf of the District?
17 MS. MYERS: I would, thank you. Good
18 morning. Again, I am Susan Myers, the general
19 counsel for the Metropolitan St. Louis Sewer
20 District. I would like to thank you all for
21 the opportunity to provide an opening statement
22 on behalf of the District. For the record, I
23 would like to provide a summary of the
24 District's history. MSD is the fourth largest
25 sewer district in the country based on miles
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1 per pipe, with the responsibility for over
2 6,300 miles of sanitary and combined sewers.
3 Although being the fourth largest sewer
4 district in the country, MSD's rate base is
5 approximately half the size of other comparable
6 entities.
7 MSD was formed pursuant to the
8 Missouri Constitution in 1954 and began
9 operation in 1946. Over time, MSD has absorbed
10 79 public and privately owned sewer systems
11 thereby providing consolidated regional sewer
12 treatment to the St. Louis community. Based on
13 miles per pipe, the District is over two times
14 as large as Kansas City. The large size of the
15 MSD system will require a massive multi-decade
16 reinvestment effort to maintain and improve the
17 community wastewater sewer infrastructure.
18 As most of you are aware, in June of
19 2007, the United States and the State of
20 Missouri filed a civil action against the
21 District for alleged violations of the Clean
22 Water Act. For the past four years, the
23 District has been in negotiations with the
24 plaintiffs, their attorneys, and the
25 intervenors, the Missouri Coalition For the
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1 Environment. At it's June 9, 2011, meeting,
2 the MSD Board of Trustees voted unanimously to
3 introduce an ordinance that would allow the
4 District to enter into a settlement or a
5 Consent Decree with the United States and the
6 Missouri Coalition For the Environment.
7 The State of Missouri, in spite of
8 being involved in these negotiations since
9 2007, has chosen not to sign the Consent
10 Decree. This settlement will place St. Louis
11 in a position to achieve compliance with the
12 Clean Water Act through a multi-decade schedule
13 without further litigation. This is consistent
14 with agreements made in numerous other cities
15 such as Kansas City, Indianapolis, Cincinnati,
16 Baltimore, Los Angeles, Atlanta, Washington,
17 D.C., and many others.
18 At this time, the District is unable
19 to discuss all aspects of the Consent Decree.
20 Full disclosure will be available once the
21 Consent Decree is lodged with the court. The
22 aspects of the decree that the District is at
23 liberty to discuss are provided in the detail
24 sheet submitted to the MSD Board on June 9th,
25 2011. This information has been provided as
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1 Exhibit MSD 11A32. The settlement resolves all
2 issues raised in the plaintiff's complaint and
3 includes a 23 year schedule which will allow
4 the time necessary to achieve compliance with
5 the Clean Water Act.
6 The District estimates the capital
7 program required to achieve compliance with
8 this agreement will cost $4.5 billion in 2011.
9 Included in this number is remaining master
10 planning work as well as design and
11 construction of remedial measures required to
12 achieve compliance. Implementation of the
13 District's CSO long-term control plan recently
14 approved by state regulators, the use of green
15 infrastructure in abating CSO discharges, and
16 capacity management operations and maintenance
17 program designed to optimally manage the
18 collection system and very extensive progress
19 reporting.
20 Also included in the decree is a
21 civil penalty of $1.2 million. $1.6 million to
22 fund supplemental environment projects related
23 to low income, lateral repair, and septic tank
24 elimination. Any settlement of the Missouri
25 Coalition For the Environment's claim for cost
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1 in the amount of $116,050.
2 Throughout these technical
3 conferences, the following should be kept in
4 mind. The program outlined in the Consent
5 Decree is a continuation of MSD's current
6 capital program and has been under way for the
7 past several decades. The capital program is a
8 reinvestment in the St. Louis community to
9 maintain and improve its wastewater
10 infrastructure. MSD has spent a total of
11 $1.3 billion on the recent sanitary system
12 since 1990 while spending an additional $800
13 million on the combined sewer system. During
14 this period, the District has reduced CSO
15 volume by over 30 percent and decreased the
16 number of constructed sanitary sewer overflows
17 from over 500 to less than 200.
18 The District has not been sitting
19 idle unlike several other wastewater entities
20 prior to entering similar Consent Decrees. The
21 decree provides a schedule for MSD to
22 accomplish compliance with the Clean Water Act.
23 The rate being proposed to the Rate
24 Commission is the same wastewater rate method
25 approved by the Rate Commission in the past
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1 three rate change proceedings. It is the
2 District's opinion the rate proposal imposes a
3 fair and reasonable burden on all classes of
4 ratepayers. As the proposed rates were
5 determined using an industry-accepted
6 wastewater rate design methodology, a
7 methodology that has been determined to be fair
8 and equitable by the Missouri Supreme Court in
9 1997.
10 Our testimony today will provide
11 clarification of the detailed aspects of the
12 District's rate proposal and demonstrate how
13 the proposed rates are necessary to MSD's
14 future obligations including compliance with
15 the Consent Decree. For the record, the
16 District's proposal addresses wastewater rates
17 only. Stormwater rates are not included due to
18 ongoing litigation.
19 The order of appearance of MSD's
20 witnesses today is Jeff Theerman, MSD's
21 Executive Director; myself, Susan Myers, MSD's
22 general counsel; Brian Hoelscher, MSD's
23 Director of Engineering; John Sprague, MSD's
24 Director of Operations; Karl Tyminski, MSD's
25 Secretary/Treasurer; Jan Zimmerman, MSD's
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1 Director of Finance; and Keith Barber of Black
2 & Veatch as the District's rate consultant.
3 This concludes my opening remarks. I
4 ask that my opening remarks be accepted by the
5 Rate Commission as Exhibit MSD 14. Thank you.
6 COMMISSIONER TOENJES: Thank you, Ms.
7 Myers. Are there any other parties present who
8 wish to make an opening statement?
9 MR. KINDSCHUH: The MIEC requests at
10 this point we do not have an opening statement
11 prepared but if we could have the liberty to
12 have any opening comments at the rebuttal
13 testimony if needed. Thank you.
14 MS. LANGENECKERT: BJH would like
15 that as well.
16 MR. MUELLER: I have no comment.
17 COMMISSIONER TOENJES: Hearing no
18 other opening comments, Ms. Myers, are you
19 ready to present those persons for whom you
20 filed District testimony?
21 MS. MYERS: We are.
22 COMMISSIONER TOENJES: Please proceed.
23 MS. MYERS: We would like to call
24 Jeff Theerman as our first witness.
25 COMMISSIONER TOENJES: Mr. Theerman,
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1 is the testimony you're about to give the
2 truth, the whole truth, and nothing but the
3 truth?
4 MR. THEERMAN: I do.
5 COMMISSIONER TOENJES: Thank you.
6 Please proceed.
7 MS. STUMP: We may want to just go
8 down the list of the intervenors and give them
9 an opportunity to ask questions first.
10 COMMISSIONER TOENJES: We will do
11 that.
12 MS. STUMP: And the Rate Commissioners
13 are free to ask questions at any time.
14 COMMISSIONER TOENJES: All right.
15 Any questions, Mr. Kindschuh?
16 MR. KINDSCHUH: Thank you.
17
18 JEFF THEERMAN,
19 of lawful age, being produced, sworn and
20 examined, and says:
21
22 EXAMINATION
23 Questions By: JOHN KINDSCHUH
24 Q. Good morning. I have a couple of
25 questions for you on behalf of the MIEC. You
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1 state in your testimony that the rate change
2 notice is consistent with constitutional,
3 statutory, or common law as amended. Why is
4 this the case?
5 A. Well, we are following the procedure
6 aligned in the Charter for proposing a rate
7 change notice. The rate change notice we are
8 proposing is sufficient to satisfy the
9 requirements of a Consent Decree we are
10 planning to enter into with the federal
11 government. It should -- it's sufficient to
12 cover operating costs as well as the capital
13 improvements we need to make for regulatory
14 reasons as well as just the ongoing operations
15 of the District.
16 Q. With respect to that Consent Decree,
17 it's my understanding that agreement has been
18 reached between MSD, EPA, and Missouri
19 Coalition of the Environment, is that correct?
20 A. That's correct.
21 Q. Okay. And if so, when was that
22 agreement reached?
23 A. We've been negotiating a settlement
24 to a lawsuit for four years. Those
25 negotiations included the parties you spoke of
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1 as well as the State of Missouri. We recently
2 got to the point of needing to seek approval of
3 our Board of Trustees to enter into this
4 Consent Decree. That process started last
5 Thursday with an ordinance being introduced
6 that if approved, it would allow Susan and I to
7 sign on behalf of the District for the
8 settlement. So, the exact day is officially
9 June 2nd when we posted the agenda showed that
10 potential settlement.
11 Q. Is MSD able to provide a copy of the
12 Consent Decree to the Rate Commission?
13 A. No.
14 Q. Okay. Do you have any idea when that
15 would be available?
16 A. The actual document becomes available
17 when it lies with the court is my understanding.
18 And that happens after all of the parties to
19 the Consent Decree have agreed to sign and have
20 signed.
21 Q. And it's our understanding the State
22 of Missouri has not agreed to the terms as we
23 talked about. Do you know why the State of
24 Missouri did not agree to the terms of the
25 Consent Decree?
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1 A. There are things I know that I cannot
2 say because of a confidentiality agreement we
3 entered into with the mediation process, and
4 there are other aspects that I do not know.
5 Q. Are there things you're able to share
6 at this point pursuant to the confidentiality
7 agreement?
8 A. I can share with you matters of the
9 public record. When we were sued, the suit was
10 brought by the United States Government and the
11 State of Missouri. The District filed
12 counterclaims to that suit that are a matter of
13 public record, and those counterclaims were
14 heard by the court and some continue to stand
15 today, others were dismissed because they were
16 not yet ripe. And in the process of hearing
17 about those counterclaims, the court determined
18 that the State had lost its sovereign immunity
19 with respect to some of these issues. I am not
20 an attorney, I am not qualified to speak as one
21 but these are the general facts. So, there are
22 counterclaims that still exist and there are
23 counterclaims that may be raised again if they
24 become ripe.
25 Q. Thank you. So I'm correct in saying
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1 that the agreement is not binding upon MSD at
2 this point?
3 A. It is not. As I mentioned earlier in
4 the proceeding on the 29th of June, we have a
5 Board of Trustees meeting where they will take
6 up the adoption of that ordinance that would
7 allow us to enter into the decree.
8 Q. Is the MSD Board of Trustees at
9 liberty at this point to change parts of that
10 agreement or have they been asked to approve
11 the agreement at this point?
12 A. They've been asked to approve what
13 has been negotiated.
14 Q. Okay. They are in the process of
15 reviewing those documents at this time?
16 A. They are. There's been a fairly
17 lengthy education process. This isn't anything
18 that's been finalized in a few days, so...
19 Q. Do you have any idea, Mr. Theerman,
20 when the Consent Decree would formally go into
21 effect?
22 A. That's a really hard date to determine.
23 Assuming our Board of Trustees approves the
24 ordinance allowing you to sign, our ordinances
25 have a 15 day waiting period, so I would sign
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1 that ordinance or actually sign the CD in the
2 middle of July. I am told that the plaintiff's
3 signatures would be subsequent to that and then
4 the Consent Decree would be lodged with the
5 court, the federal consent decree have a
6 mandatory 30 day public notice period. The
7 court would have -- and at that point, all the
8 terms of the CD are public knowledge and can be
9 reviewed and commented on. Following that
10 period, the court will take whatever time it
11 needs to finalize and enter the decree.
12 Q. Thank you. How will the terms of the
13 agreement impact the rate change notice that
14 was submitted by MSD on May 10th of 2011?
15 A. Rate change notice that we submitted
16 to the Rate Commission was crafted with the
17 requirements of the Consent Decree in mind, so
18 there are no changes anticipated to the rate
19 change notice.
20 Q. Ms. Myers mentioned a list of cities
21 that have been involved in the Clean Water Act
22 enforcement actions that are similar to ours.
23 Is MSD's Consent Decree modeled after any
24 particular agreement with another city or other
25 cities in mind?
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1 A. No, but all federal Consent Decrees
2 have a similar format, similar deliverables.
3 In my testimony, there was a rather long list
4 of cities that precede this and depending on
5 whether they have combined or combined and
6 separate sewer systems, they can be different.
7 Some of those decrees were crafted more than
8 ten years ago. So, there has been an evolution
9 in Consent Decrees over the last ten years.
10 Q. And you had stated in your testimony
11 that both the U.S. and the State of Missouri
12 jointly sued MSD for violations for the Clean
13 Water Act. Have any costs associated with any
14 fines or penalties been included in MSD's rate
15 change proposal that was submitted today?
16 A. I don't believe so. We have
17 encumbered the dollars associated with the
18 $1.2 million fine. The supplemental
19 environmental projects, I believe, they may be
20 included in the rate case.
21 Q. Do you know which projects those are?
22 A. That's $1.6 million of work over five
23 years on -- it's intended to benefit low income
24 customers that have lateral problems or are on
25 septic tanks be put on the public sewer.
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1 Q. Thank you. You also mentioned in
2 your testimony that there are numerous new
3 regulations that are being considered by
4 regulators or that will affect wastewater
5 utilities. What are these new regulations that
6 you're referring to?
7 A. I spoke about it generally in my
8 testimony. There is a myriad of regulations
9 and formation at any given time, so this is not
10 an exhaustive list but I can tell you sort of
11 what the big issues are right now that St.
12 Louis is facing that is not included in the
13 Consent Decree.
14 First is the issue of water quality
15 standards on the Mississippi River. MSD has
16 worked for the last seven years on analysis of
17 the use of the Mississippi River here in St.
18 Louis, the 28 miles in front of St. Louis, and
19 the ability for that waterway in that area to
20 be used recreationally. There is no doubt that
21 the Mississippi River is used for boating in
22 that area.
23 We have developed two different
24 scientific reports called Use Attainability
25 Analyses that are intended to show the use of
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1 the river and its ability to be used for
2 certain uses. This is a procedure in the Clean
3 Water Act. The federal government has the
4 perspective that the 28 miles of the
5 Mississippi River here in St. Louis should be
6 used for swimming, should be able to be
7 attainable for swimming, and the impact of that
8 sort of a decision would be significant because
9 of combined sewer overflows that exist on the
10 Mississippi River.
11 We developed our long-term control
12 plan. A part of the plan that was not
13 recommended was the construction of combined
14 sewer storage tunnels along the Mississippi
15 River with a cost of approximately
16 $1.5 billion. Those tunnels were not included
17 in our long-term control plan report that was
18 approved by the State of Missouri. So, that
19 particular decision has a potential additional
20 $1.5 billion impact. All are or practically
21 all paid for by the ratepayers of MSD.
22 Another regulation that's just
23 currently been created deals with sewage sludge
24 incineration. The byproduct of the treatment
25 process that we have in our treatment plants
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1 creates a solid that has to be appropriately
2 dealt with. Approximately 60,000 tons of bile
3 solids generated from our treatment plants is
4 incinerated every year at two of our
5 facilities. These new rules have the potential
6 to advance about a quarter billion dollar
7 investment we had planned for ten years or more
8 into the future, bringing it forward and need
9 to be expended very quickly. MSD is included
10 in a group of four utilities that practice
11 sewage sludge incineration and we are
12 challenging that new regulation. So, that is a
13 significant potential change.
14 The next big thing is nutrients.
15 Nutrient pollution deals with nitrogen and
16 phosphorus. It's the cause of environmental
17 issues like gulf hypoxia, a dead zone in the
18 gulf. You see rules being enacted in the
19 Chesapeake Bay and in Florida and in other
20 states concerning nutrient pollution. It's
21 likely that in the next ten years, MSD's
22 treatment facilities will be required to remove
23 nutrients and I don't have a cost for what it
24 takes to do that. It's hundreds of millions of
25 dollars to do that.
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1 And then there is a myriad of other
2 things that may or may not become regulations,
3 climate change issues, emergent contaminants,
4 security requirements. So, there is a
5 considerable environmental regulatory burden
6 that is either on the horizon or maybe to be
7 drawn.
8 Q. And you had mentioned a number of
9 things, the water quality standards, the sewage
10 sludge incineration, and nutrients. Mr.
11 Theerman, do you expect that any of these new
12 regulation issues that will impact this rate
13 proposal submitted on May 10th?
14 A. Well, it's possible. If there is a
15 swimming determination on the Mississippi
16 River, for example, then there will have to be
17 a re-evaluation of our long-term control plan.
18 If we are unsuccessful challenging the sewage
19 sludge incineration rule, we will have to dig
20 deeper if we really have to advance that
21 investment or whether we can rely on staying
22 off into the future perhaps ten years. I don't
23 -- it's really hard to handicap when nutrient
24 standard might come into play. They could.
25 MR. KINDSCHUH: Thank you. The MIEC
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1 has no further questions at this time.
2 COMMISSIONER TOENJES: Thank you,
3 Mr. Kindschuh. Ms. Langeneckert, do you have
4 any questions?
5 MS. LANGENECKERT: We do not, not of
6 Mr. Theerman.
7 COMMISSIONER TOENJES: Mr. Mueller,
8 do you have any questions?
9 MR. MUELLER: Yes.
10
11 EXAMINATION
12 Questions by: ROBERT MUELLER
13 Q. In the MSD rate change notice that
14 appeared in the Post Dispatch and in the public
15 notice I think that was related to this Rate
16 Commission, I did not detect any disclosure of
17 the $4.7 billion that was mentioned by Ms.
18 Myers earlier. Are you aware of any other
19 public notice that has been published
20 disclosing that amount of money that is really
21 in question here?
22 A. Well, first of all, the reason $4.7
23 billion is not found in those notices is
24 because until June 2nd, the mediation process
25 did not allow us to make that public. The full
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1 disclosure of that occurred on June 2nd. You
2 saw a front page article in the Post Dispatch
3 the very next day. So, that's the reason for
4 that not occurring earlier.
5 But the District has made no bones
6 about the fact that over the next multiple
7 decades, we have a $6 billion burden
8 regulatorally and from the infrastructure
9 respect that needs to be spent. I said that
10 repeatedly in the seven years I've been the
11 Executive Director. So, while we didn't have a
12 CD tied to a certain dollar amount, certainly
13 been very openly talked about for a number of
14 years.
15 Q. Did I just hear you mention $6 billion?
16 A. $6 billion is the number when you
17 include stormwater and other costs that are not
18 directly reflected in the requirements of the
19 Consent Decree. So, things like nutrient
20 standards that may come about, treatment plant
21 renewal and replacement, that sort of thing.
22 MR. MUELLER: I have no further
23 questions.
24 COMMISSIONER TOENJES: Thank you,
25 Mr. Mueller. Mr. Arnold or Ms. Stump, do you
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1 have any questions for the witness?
2 MR. ARNOLD: I do have a couple if I
3 may.
4
5 Examination
6 Questions by: JOHN FOX ARNOLD
7 Q. My name is John Fox Arnold and you
8 are well aware that together with Ms. Stump we
9 represent the Rate Commission and our role is
10 to essentially to assist and I've got a couple
11 of questions if I may. If you don't
12 understand, please let me know and we will work
13 that out.
14 In Ms. Myers' opening statement, I
15 believe she reported that all of the information
16 which can be shared with the commission at this
17 point with respect to the consent judgment is
18 found in Exhibit 11A32, is that correct?
19 A. That's correct.
20 Q. All right.
21 A. I'll just add unless it's a matter of
22 public record, it may not be in there. I mean,
23 for example, the counterclaim issue I spoke
24 about earlier is not in that exhibit but it is
25 a matter of public record.
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1 Q. Okay. Now, you've jumped to my next
2 question. The nature of the counterclaims
3 relate to matters to which parties involved in
4 the litigation have not agreed?
5 A. I'm not at liberty to say at what the
6 parties are not agreeing to at this point. I'm
7 just -- earlier I just spoke about -- I was
8 asked the question is there anything else and
9 that was a matter of public record.
10 Q. Well, let me return to 11A32 and do
11 you have available the responses which the
12 Commission -- I'm sorry, the District made to
13 our discovery request?
14 A. I do.
15 Q. Thank you. The question No. 29 on
16 page 14, and if you need to read aloud the
17 question or the response, I call your attention
18 to the last paragraph of that response, at the
19 top of page 15. If I may read it. "The entire
20 rate increase is crafted to fund required
21 infrastructure investment which is detailed in
22 the list of proposed projects and activities
23 provided as Exhibit MSD 11A10." What is the
24 difference between MSD 11A10 and MSD 11A32, if
25 any, or should I ask someone else?
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1 A. I don't have 11A10 or 11A32 in front
2 of me.
3 MR. ARNOLD: May I approach?
4 COMMISSIONER TOENJES: Yes.
5 A. 11A10 is a list of capital
6 improvements that we're proposing in this rate
7 case. So that would be for the fiscal year '13
8 through '16. 11A32 is a detail sheet from our
9 Board agenda of last week that details certain
10 aspects of the Consent Decree that's proposed
11 between us, the federal government, and the
12 Missouri Collision For the Environment. So, a
13 big difference between the two is that the
14 11A10 deals with a four fiscal year window and
15 the terms of the Consent Decree are dealing
16 with a bunch of longer periods of time. There
17 are others but those -- that's a significant
18 difference between the two.
19 Q. Thank you. Now, in the testimony
20 which you and your colleagues have filed, there
21 is sometimes reference to a six year test
22 period, sometimes reference to a five year
23 planning window, and sometimes a reference to
24 four fiscal years 2013 through 2016. Is it
25 fair to say that this rate increase proposal is
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1 limited to the period 2013 to 2016?
2 A. Our fiscal year is 2013 to 2016, yes.
3 MR. ARNOLD: All right. Thank you,
4 Mr. Chairman.
5 COMMISSIONER TOENJES: Any members of
6 the commission have questions for this witness?
7 Mr. Stein.
8
9 EXAMINATION
10 Questions by: JOHN L. STEIN
11 Q. Mr. Theerman, I believe that both you
12 and Ms. Myers indicated that the plans for the
13 overflow plant has been approved by the State
14 of Missouri. Does the agreement once the
15 parties for the Consent Decree imply that EPA
16 also has approved the CSO plan or is that still
17 out there as a future issue?
18 A. No. With respect to the long-term
19 control plan, State approval is what's
20 required. So, there is no further approval
21 necessary. The EPA did send a letter to the
22 State -- one moment. EPA sent a letter to the
23 State recommending approval.
24 COMMISSIONER STEIN: Thank you.
25 COMMISSIONER TOENJES: Mr. Tomazi.
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1 EXAMINATION
2 Questions by: GEORGE TOMAZI
3 Q. Two quick questions, Mr. Theerman.
4 One, at this point, the verbally agreed upon
5 arrangement between MSD and the federal
6 government in terms of the $4.7 billion
7 settlement, more or less, to what extent is
8 that front end loaded? Number two, what
9 timeframe it has been at least at this point
10 verbally agreed upon in terms of meeting all of
11 those EPA requirements?
12 A. I'm going to direct my comments to
13 Exhibit 11A32 which is the detail sheet we
14 spoke about earlier. It's a 23 year schedule.
15 That includes in it early action projects, 50
16 or so overflow eliminations by 2012. So, those
17 are a front loaded part of the agreement. The
18 delivery of a master plan that addresses the
19 elimination of all the other constructed
20 overflows by the end of 2013, and that master
21 plan would dictate the removal schedule of all
22 the remaining constructed overflows.
23 The remedial mazes associated with a
24 long-term control plan and that schedule has
25 been made public. It includes the construction
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1 of a number of treatment and storage facilities
2 in the combined sewer area and that stretches
3 through the entire 23 year period. There is a
4 requirement to remove, eliminate 85 percent --
5 I'm sorry, I'm bouncing back and forth, but 85
6 percent of the constructed sanitary sewer
7 overflows by the end of 2023 and then the
8 remaining 15 percent by 2033.
9 So, you see a front loading as
10 constructed SSO removal just based on those
11 facts, then an ongoing program of what is
12 called CMOM, but that's in essence operation
13 and maintenance on the system to control
14 overflows, basement backups.
15 So, there is a front loading of work
16 identified in the detail sheet, some prescribed
17 in early action, some that will become more
18 concrete with the delivery of a master plan.
19 COMMISSIONER TOENJES: Mr. Brockmann.
20
21 EXAMINATION
22 Questions by: PAUL BROCKMANN
23 Q. You mentioned the State will not
24 participate in signing this Consent Decree.
25 Does that mean there is going to be ongoing
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1 discussions, or discussions has stopped, there
2 is no further action, or if there is ongoing
3 discussions, is one to assume that you're still
4 negotiating, and what would you estimate would
5 be the potential cost of that setup, worst case
6 scenario?
7 A. That's going to take just a moment to
8 think about. One of the most difficult things
9 about this is I want to be forthright and I
10 can't be so please don't take this as being
11 evasive. We are always open to further
12 discussion. I think it's the best scenario in
13 any of these federal agreements if all parties
14 can enter into the agreement. We haven't been
15 able to get to that yet. I don't have a
16 timeframe for when that can happen. We don't
17 envision additional costs of settlement at this
18 point.
19 Q. Additional costs related to the
20 litigation or additional mandatory construction
21 or otherwise cost?
22 A. We don't envision additional costs of
23 construction for addressing compliance issues
24 at this point.
25
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1 EXAMINATION
2 Questions by: BRAD GOSS
3 Q. I'm confused about the State not
4 signing on the Consent Decree and the effect of
5 the litigation. Could you clarify that for me
6 because what I heard was that the Consent
7 Decree would be submitted after all parties had
8 signed, and if the State of Missouri isn't
9 going to sign the Consent Decree, I don't
10 understand what is going to be submitted to the
11 court. That is my first question.
12 A. Consent Decree is a settlement
13 between the United States Government, the
14 Missouri Coalition For the Environment, and MSD.
15 Q. Would the litigation still continue
16 with respect to the stay?
17 A. That will end up being a matter for
18 the court to decide, I believe.
19 Q. Do you have ongoing litigation, do
20 you not?
21 A. Yes.
22 Q. So, is it MSD's intention to continue
23 that litigation if the matter isn't settled by
24 this Consent Decree were to stay?
25 A. We believe that the litigation -- we
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1 believe it's likely the litigation will not
2 proceed further.
3 Q. Now, the litigation that is outstanding
4 with the State involves counterclaims by MSD
5 against the State, is that correct?
6 A. There are remaining counterclaims and
7 there are counterclaims that have been dismissed
8 as not being ripe.
9 Q. There are remaining counterclaims
10 that have not been dismissed, have those
11 allowed for cost recovery by MSD against the
12 State?
13 A. I am not -- I'm not able to testify.
14 Susan may be able to help with that in her
15 testimony. The remaining counterclaims, I'm
16 not sure I can elaborate on.
17 Q. Assuming those counterclaims involve
18 cost recovery against the State, would that
19 have a favorable impact on this rate proposal
20 in terms of its impact upon those who otherwise
21 will be paying for this rate proposal?
22 A. I'll answer that in a more general
23 station. Any revenues the District may be able
24 to receive could have a favorable effect on the
25 total amount needed for compliance. Timing
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1 would certainly be a question.
2 Q. Could you quantify the dollar amount
3 of the claims that MSD has against the State?
4 A. No.
5 Q. Has anyone done that?
6 A. Not to my knowledge.
7 Q. So, you don't know what the possible
8 impact could be on successful recovery of those
9 costs?
10 A. No.
11 Q. Is that information which can be
12 determined within this rate proceeding?
13 A. I think that would be unlikely.
14 Q. Why is that?
15 A. It would be a matter of working its
16 way through court. I don't think it could be
17 determined at this point.
18 Q. I'm asking for your estimate of the
19 dollar value, not the court's determination of
20 the value.
21 A. We have not made an estimate of that
22 dollar value.
23 Q. And you said you can't determine that
24 dollar estimate in this rate proceeding. I
25 don't understand why.
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1 A. Again, we are talking about the
2 claims that remain that have not been dismissed
3 and I've suggested to you and I am not -- I'm
4 not in a position to speak knowledgeably about
5 those remaining claims.
6 Q. I understand that. My question was
7 as to the quantification of the dollar value
8 for those claims, not as to the legal status of
9 them.
10 A. Without having a complete
11 understanding of what remains, I can't give you
12 an answer, but we have not calculated a dollar
13 figure related to those claims.
14 Q. Who would be able to answer these
15 questions? Ms. Myers?
16 A. Susan will be able to tell you what
17 the remaining claims are, I believe.
18 Q. And as to the quantification of what
19 dollar value this may have?
20 A. I'm telling you we've not calculated
21 a dollar value for those claims.
22 COMMISSIONER GOSS: Thank you.
23 COMMISSIONER TOENJES: Are there any
24 other questions for this witness? Mr. Koenen.
25
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1 EXAMINATION
2 Questions by: GLENN KOENEN
3 Q. Very quickly. The swimming standard
4 from the river water, that would seem to
5 include not just MSD but the East Side
6 Sanitation District and perhaps even Duck Creek
7 and other people on the Missouri watershed.
8 Because of the nature of that, that would also
9 seem to be a very expensive proposition premise
10 for everyone else. Do you perceive a
11 likelihood of anything happening on that matter
12 before the end of fiscal year '16?
13 A. It's possible. The State of Missouri
14 has presented the position that they may want
15 to change the water quality standards in this
16 area to include sort of a hybrid approach, but
17 it would include a standard that would be
18 requiring sizable investment the way I spoke
19 about earlier at the Clean Water Commission
20 this past month. So, it is possible they'll
21 make a determination that swimming needs to be
22 protected in that 28 mile stretch and if that
23 becomes the case, then the District will have
24 to decide how to deal with that.
25 COMMISSIONER TOENJES: Any other --
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1 Ms. Myers, do you have questions for this
2 witness?
3 MS. MYERS: I do. I have a few.
4 COMMISSIONER TOENJES: Please proceed.
5
6 EXAMINATION
7 Questions by: SUSAN MYERS
8 Q. Earlier you mentioned the early
9 action projects that are part of the Consent
10 Decree. Are these early action projects part
11 of this rate proposal?
12 A. No, they are not. They are already
13 funded in our current -- in the revenue stream
14 that was approved by the Rate Commission in
15 2008.
16 Q. Okay. In regard to the Consent
17 Decree and the parties during the negotiation,
18 is the Consent Decree the best option for the
19 District at this point?
20 A. Yes. The alternative would be
21 ongoing federal litigation and we believe this
22 is an appropriate settlement, albeit a hard one
23 to swallow, but one that is protective of the
24 environment, deals with the overflows, and
25 eliminates the need for further litigation.
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1 Q. Okay. Now to switch gears a little
2 bit here. Is MSD a member of the NACWA
3 organization?
4 A. Yes, we are.
5 Q. And can you kind of give the
6 Commission an overview of what NACWA is and
7 what kind of work they do?
8 A. It's the National Association of
9 Clean Water Agencies. It's an advocacy group
10 for large and medium size wastewater utilities
11 in the country. We advocate the utilities both
12 with Congress and with the regulators on issues
13 of interest to utilities.
14 Q. And what is your role with the NACWA?
15 A. I'm President of NACWA for about a
16 month and a half more.
17 Q. And so some of the national
18 regulatory -- future regulatory requirements
19 that you spoke of earlier, does your knowledge
20 of those and information come through your work
21 with NACWA?
22 A. Well, the national issues like
23 nutrients emergent contaminants, climate change
24 is all NACWA information that I've come to
25 understand through working there. The issue of
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1 swimming on the Mississippi River, the issue of
2 sewage sludge incineration is a combination of
3 what we know here in our work at MSD and sort
4 of the national perspectives by the agencies.
5 MS. MYERS: I have nothing further.
6 COMMISSIONER TOENJES: Hearing no
7 more questions for this witness, thank you,
8 Mr. Theerman. We will take a ten minute break
9 and reconvene at 25 til 11.
10 (Break.)
11 COMMISSIONER TOENJES: Our next
12 witness is Ms. Susan Myers. Ms. Myers, is the
13 testimony you're about to give the truth, the
14 whole truth, and nothing but the truth?
15 MS. MYERS: Yes, it is.
16 COMMISSIONER TOENJES: Thank you.
17 Does any member of the Rate Commission have any
18 questions for Ms. Myers before we move forward?
19 Hearing none, Mr. Kindschuh, do you have any
20 questions for Ms. Myers on behalf of the
21 Missouri Industrial Energy Consumers?
22 MR. KINDSCHUH: Yes, we have a few.
23 COMMISSIONER TOENJES: Please proceed.
24
25
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1 SUSAN MYERS
2 of lawful age, being produced, sworn and
3 examined, and says:
4
5 EXAMINATION
6 Questions By: JOHN KINDSCHUH
7 Q. Good morning. I have a couple of
8 questions regarding your testimony. You
9 indicated in your testimony that a, quote,
10 large proportion, end quote, of the proposed
11 rate change is necessary to meet legal
12 requirements in that the failure to construct
13 mandated projects or properly maintaining
14 existing lines and facilities bring them with
15 immediate and direct repercussions. What
16 constitutes as a large proportion, expressed in
17 like a percentile?
18 A. Well, I'm probably not the best
19 person to discuss that. I'll probably push
20 that off to Keith Barber with the rate proposal.
21 Q. So, we should direct that line of
22 inquiry to Mr. Barber?
23 A. Yes.
24 Q. Okay. Great. And specifically I
25 wanted to ask you what those projects were and
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1 what the percentage is, I should direct that
2 all to Mr. Barber?
3 A. That would be Keith Barber and Brian
4 Hoelscher.
5 Q. Okay. Great. Thank you. And the
6 other question I had actually was inspired by
7 the Rate Commissioners. Can you please describe
8 the status of the outstanding counterclaims in
9 the present suit?
10 A. Okay. I'm going to start with all
11 the counterclaims. We, MSD, filed
12 counterclaims to the civil action and part of
13 those counterclaims that had to do with Hancock
14 were dismissed by the court, so they were
15 dismissed out of the case for not being ripe.
16 There were some counterclaims that remained in
17 the case. Those are non Hancock related type
18 counterclaims that have to do with different
19 things that may happen in the future, not
20 related to Hancock, such as maybe if there is
21 legislative changes, if there is Charter type,
22 MSD Charter changes, things could happen in the
23 future not related to Hancock.
24 Q. And can you please break those down
25 further for us and describe what those are?
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1 A. The ones that still remain?
2 Q. Correct.
3 A. I don't have them in front of me
4 specifically so I'm speaking in general about
5 them. And my summation of them is the same as
6 I just gave you, they are legislative type,
7 Charter type changes, maybe a bond limits change.
8 Q. Thank you. The MIEC and other
9 parties that asked Mr. Theerman a number of
10 questions about the Consent Decree and there is
11 some confidential things in place. Is there
12 anything Mr. Theerman omitted when we were
13 asking questions about generally what was going
14 on with the Consent Decree, whether the Board
15 of Trustees would be able to approve it? Is
16 there anything else that you would like to add
17 with respect to the lines of questions that we
18 have for Mr. Theerman?
19 A. I think Jeff covered it pretty well.
20 The timeline and the process going forward is,
21 you know, we'll ask the Board to adopt the
22 ordinance to give Jeff and I the authority to
23 sign a Consent Decree on July 29th. Then it
24 will go -- there is a 15 day waiting period.
25 Once we sign the Consent Decree, then it will
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1 go back to the Department of Justice and EPA
2 for their signatures. We don't really have an
3 idea of how long that will take them. Once
4 they get that done, then there will be a notice
5 to lodge it with the court. Once it's lodged,
6 that will start a 30 day public comment period,
7 and then based upon how many comments the
8 regulators get from the public will determine
9 how long they need to respond to those comments
10 and when the Consent Decree may be available
11 for entry into the court.
12 Q. And at this point, are you aware if
13 the MSD Board of Trustees would like to make
14 any recommendations to change what has been
15 agreed upon or is it too soon to say?
16 A. Could you repeat that, please?
17 Q. Sure. At this time, are you aware if
18 MSD Board of Directors would like to make any
19 changes to what has been already agreed upon
20 between EPA, the coalition, and MSD?
21 A. I'm not aware at this time.
22 MR. KINDSCHUH: Okay. Thank you.
23 The MIEC has no further questions, Chair.
24 COMMISSIONER TOENJES: Thank you,
25 Mr. Kindschuh. Ms. Langeneckert, do you have
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1 any questions?
2 MS. LANGENECKERT: No questions of
3 Ms. Myers.
4 COMMISSIONER TOENJES: Mr. Mueller,
5 do you have any questions?
6 MR. MUELLER: No questions.
7 COMMISSIONER TOENJES: Mr. Arnold.
8 MR. ARNOLD: Mr. Chairman, I do have
9 two questions depending on follow-up.
10
11 EXAMINATION
12 Questions by: JOHN FOX ARNOLD
13 Q. Ms. Myers, I would like to continue
14 discussing the Consent Decree, if I may, and
15 simply to understand when, if at all, that
16 information will be available to the Rate
17 Commission, and I say if at all because if it's
18 signed on July 15th, then after the 15 day
19 waiting period, EPA and the Department of
20 Justice then have to act, and then after they
21 act, there will be a 30 day comment period and
22 EPA and Justice will have to respond to the
23 comments and then it will be lodged with the
24 court. Has the District any experience with
25 the timeliness of the lawyers and bureaucrats
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1 of EPA and the Department of Justice responding
2 to this kind of a proceeding?
3 A. Well, the entire Consent Decree
4 document will become a public document once
5 it's lodged with the court. So, best case
6 scenario is MSD would get authority to sign the
7 Consent Decree June 29, 15 days from that time
8 we would sign the Consent Decree which is
9 middle of July. The document would then go to
10 the Department of Justice and EPA for their
11 signatures. I don't have a clear understanding
12 of how long their signatures would take but we
13 have been told that, you know, that they have
14 been having discussions about getting this
15 Consent Decree signed. So, once the federal
16 government signs the Consent Decree and the
17 Coalition For the Environment, at that time the
18 document would be lodged with the court and
19 that's when it would become public.
20 Q. Thank you. In your testimony, you
21 referred to the complaint in the Consent Decree
22 requesting both injunctive relief and
23 penalties. Do you have a copy of the complaint
24 handy?
25 A. I do not.
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1 MR. ARNOLD: May I approach?
2 COMMISSIONER TOENJES: Yes.
3 Q. Go to, if you would, please, nearly
4 the end -- I apologize. I've got a cold and
5 bear with me. If you'll go toward the end of
6 the document, page 24 -- I'm sorry, page 23,
7 and the prayer for relief.
8 A. Right.
9 Q. The EPA requests permanent injunction
10 for any and all ongoing violations of the Clean
11 Water Act. A permanent injunction prohibition
12 on unpermitted discharges under the Clean Water
13 Act. It goes on for nine such permanent
14 injunctions. May we assume that the Consent
15 Decree will deal with some, if not all of
16 these -- of this list of prayer for relief?
17 A. The Consent Decree will resolve all
18 the claims made in this complaint.
19 Q. All complaints?
20 A. Yes.
21 Q. Finally, do you have handy a copy of
22 your response to -- I'm sorry, the District's
23 response to our request for information?
24 A. Which number? Which question are
25 you --
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1 Q. Well, I managed to destroy this
2 document. This is a general, not a specific
3 question. Let's try question No. 35. And if I
4 may, I'd like to read only a part of it. We
5 refer to a statement that Mr. Theerman made and
6 identify the pages and the lines at which that
7 statement was made and then we say, "Please, A,
8 describe the analysis which supports this
9 conclusion, and B, provide a copy of any
10 memorandum, report, work papers, summary,
11 analysis, or schedule which supports this
12 conclusion." Is that accurately stated?
13 A. Yes.
14 Q. Okay. And then the response referred
15 to your direct testimony of question 7, page 2
16 to 4. I would characterize your testimony, if
17 I would, as the analysis?
18 A. Give me a moment to find my direct
19 testimony. Okay. What was your question?
20 Q. Is it fair to analyze your response
21 to which we will refer as the analysis?
22 A. Yes.
23 Q. Then I refer to -- return again to
24 sub B. Are there copies of any memoranda,
25 report, work papers, or such which support this
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1 conclusion?
2 A. Well, there is definitely court cases
3 and case law that support this analysis.
4 Q. Well, my question is whether or not
5 the District has a copy of any memorandum,
6 report, work paper, or summary stating that the
7 rate change is consistent with constitutional,
8 statutory, or common law?
9 A. Well, the rate change proposal before
10 you all at this time is the same methodology
11 that we've used in the past on the wastewater
12 rate change proposals which was ruled
13 constitutional in the Missouri growth case
14 which this is referencing.
15 Q. I understand that and I understand
16 Missouri growth. My question is whether or not
17 there is any District document which could be
18 shared with the Commission which was the basis
19 for your analysis as contained in your testimony?
20 A. For this particular rate proposal?
21 Q. Yes, ma'am.
22 A. Okay. We did not do a separate
23 analysis for this rate proposal because the
24 methodology had not changed from the previous
25 rate proposal.
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1 Q. Thank you. Now, several times in the
2 response to our request for information we will
3 be referred to either a new document or
4 testimony or information which is the analysis.
5 Several times we were not provided with a copy
6 of any memorandum, report, work paper, summary,
7 et cetera. Is it fair to say that for the
8 purpose of that response and analysis, no such
9 documents exist?
10 A. Are you still referencing question
11 53?
12 Q. No, ma'am, there are a handful of
13 responses like this.
14 A. Without specifically knowing which
15 ones you're referring to, I cannot answer that.
16 Q. Is it then necessary for us to ask
17 for them again?
18 A. I can't answer without specificity.
19 MR. ARNOLD: Thank you. I have no
20 further questions. Thank you, Mr. Chairman.
21 COMMISSIONER TOENJES: Thank you,
22 Mr. Arnold. Questions from any Rate
23 Commissioners for Ms. Myers? Hearing none --
24 I'm sorry, Mr. Goss.
25
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1 EXAMINATION
2 Questions by: BRAD GOSS
3 Q. You had said that the MSD is not able
4 to provide the document, Consent Decree, to the
5 Commission because of the prohibition contained
6 in the mediation process, and listening, if I
7 heard you right, listening to this timeframe
8 which is dependent upon circumstances of people
9 and agencies that are out of your control, I
10 have concern that you could get to a point
11 where we don't see this Consent Decree prior to
12 us having to make some kind of decision.
13 Is it possible to go to the
14 Department of Justice, EPA, and Coalition of
15 the Environment and ask them if that document
16 could be disclosed to the Rate Commission with
17 a confidentiality provision placed upon us?
18 A. We have been working very closely
19 with the Coalition For the Environment and the
20 United States and they understand the Rate
21 Commission process that we are going through
22 and the timing and the need for specific
23 information that we can get. We have not
24 specifically asked them if we could provide you
25 a confidential copy of the agreement, but they
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1 are working to get this document signed on
2 their end in an expedient manner to support our
3 Rate Commission process.
4 Q. That's not answering my question,
5 though. Is that something that you would be
6 able to ask them?
7 A. We had not asked them to date. We
8 could -- I guess we could consult with our
9 attorney helping us about the negotiations as
10 to whether we could do that.
11 Q. When would you be able to get back to
12 the Rate Commission and let us know when that
13 would be possible to do that?
14 A. I will check with our outside counsel
15 later today.
16 Q. Earlier Mr. Theerman had made a
17 statement that the court had made a ruling with
18 respect to the waiver of sovereign immunity on
19 the part of the State of Missouri. Could you
20 explain that?
21 A. When we filed our counterclaims, the
22 State then addressed the court requesting that
23 they had sovereign immunity under the U.S.
24 Constitution 11th Amendment which provides a
25 state sovereign immunity to protect itself from
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1 civil actions. The Federal District Court
2 ruled and then the 8th Circuit Appellate Court
3 upheld that the State did not have sovereign
4 immunity because they brought this claim
5 against MSD as a plaintiff and, therefore, they
6 did not have sovereign immunity to protect
7 themselves because they weren't protecting
8 themselves, they were being aggressive and
9 suing us. So, that's how they lost their
10 sovereign immunity.
11 Q. I had asked Mr. Theerman a series of
12 questions about whether there was any kind of
13 quantification of the dollars associated with
14 MSD's counterclaims. Can you respond to any of
15 those questions?
16 A. Yeah. The counterclaims were -- the
17 counterclaims that were dismissed were the
18 counterclaims that had to do with the Hancock
19 provision and they were dismissed for not being
20 ripe at the time, and so we don't have a dollar
21 value on what those claims are. The
22 counterclaims that still remain in the action,
23 like I said earlier, the counterclaims would be
24 determined -- the State has to impact MSD from
25 being able to comply with the requirements of
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1 the Consent Decree, so when that impact would
2 take place, that's when we would determine the
3 value of the counterclaim.
4 Q. Can you be a little more specific?
5 A. The counterclaims that still exist
6 are not Hancock. So, let's say it's a
7 legislative change, for example. That
8 legislative change would have to happen and
9 then MSD could enforce its counterclaim. So,
10 depending on what that matter -- what that is
11 that happens to not allow MSD to comply with
12 the Consent Decree would then determine the
13 value. So, you can't determine the value of
14 the impact until you know what the impact is.
15 Q. Well, were the counterclaims that you
16 raised at this point take the position that the
17 State had prevented MSD from complying with the
18 federal requirements?
19 A. Those types of counterclaims were
20 included in the counterclaims that were
21 dismissed for not being ripe.
22 Q. When would those become ripe?
23 A. Well, you need a judgment for those
24 counterclaims to become ripe.
25 Q. And so the settlement decree that you
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1 entered into would mean there would be no
2 judgment rendered and, therefore, those claims
3 would go away?
4 A. Not necessarily. We feel that the
5 Consent Decree could be considered the
6 judgment.
7 Q. And does the State share that
8 consideration?
9 A. I can't speak for the State.
10 Q. So, once a Consent Decree -- I'm
11 going to go back. I had asked Mr. Theerman so
12 what does MSD plan to do as it relates to the
13 State after the entry of the Consent Decree,
14 and I think what I heard was that the
15 litigation would not be ongoing, that there is
16 no plans to continue that. So, I'm confused by
17 that response.
18 A. Well, we have not made the
19 determination at this time. I mean, what I can
20 tell you is that the counterclaims that have
21 been dismissed, they are no longer part of this
22 case. So, if we were to -- if we were to
23 refile or if we were to re-address those
24 counterclaims, it would have to be done as a
25 new suit.
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1 Q. I will go back to the non Hancock
2 claims because you have some existing non
3 Hancock claims that I would have thought
4 existing legislation was the basis for those.
5 Am I confused about that?
6 A. The reason for the counterclaims is
7 not based upon existing legislation. The way
8 they were written was to cover things that may
9 happen that were not Hancock related. So, they
10 were not written around things that exist now,
11 they were written around to protect us from
12 things that may happen in the future that were
13 not related to Hancock.
14 Q. Those claims sound unripe to me. I
15 think they don't -- they sound speculative so
16 I'm really confused by that.
17 A. They were left -- all I can say, the
18 Judge left those in the case.
19 Q. You mentioned that in response to
20 Mr. Arnold's question that your analysis was
21 based on the prior memorandum and analysis that
22 had been prepared in the prior rate case, and I
23 think that was in response to his question
24 about work papers or memoranda, analysis, and
25 for the request for document production No. 35.
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1 You said there was a prior memorandum that you
2 had used, is that right?
3 A. I didn't refer to a memorandum. What
4 I referred to was previous case law.
5 Q. Then you said you followed previous
6 case law but I thought your response to his
7 question, you answered that you did not do any
8 separate analysis because the methodology
9 hadn't changed from the prior rate case. Did
10 you produce something in the prior rate case
11 that was a memorandum or analysis at the time?
12 A. I don't recall.
13 Q. If you did, would you produce that
14 for the Commission at this time?
15 A. We can go back and check the previous
16 Rate Commission. What I was referring to was
17 that there is Supreme Court case law out there
18 that approved the method that we developed the
19 wastewater rate with previously or previous
20 Rate Commissions and we have not changed that
21 methodology; therefore, there was no need to
22 redo the analysis of whether the methodology is
23 constitutional or not.
24 Q. There has been no case law in the
25 intervening period that would have changed the
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1 holding in that case, is that correct?
2 A. Correct.
3 Q. So, your answer was if there was a
4 prior analysis, you will furnish it to the
5 Commission, is that true?
6 A. We can look, yes.
7 Q. You can furnish that then?
8 A. Yes.
9 MR. GOSS: Thank you.
10 COMMISSIONER TOENJES: Thank you, Mr.
11 Goss. Any further questions for Ms. Myers?
12 Hearing none, thank you.
13 MS. MYERS: Thank you.
14 COMMISSIONER TOENJES: The next
15 witness will be Mr. Brian Hoelscher.
16 Mr. Hoelscher, is the testimony you're about to
17 give the truth, the whole truth, and nothing
18 but the truth?
19 MR. HOELSCHER: Yes, I do, sir.
20 COMMISSIONER TOENJES: Thank you.
21 Does any member of the Rate Commission have any
22 questions for Mr. Hoelscher at this time?
23 Hearing none, Mr. Kindschuh, questions for
24 Mr. Hoelscher?
25 MR. KINDSCHUH: Yes, we do.
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1 BRIAN HOELSCHER,
2 of lawful age, being produced, sworn and
3 examined, and says:
4
5 EXAMINATION
6 Questions by: JOHN KINDSCHUH
7 Q. Good morning, Mr. Hoelscher.
8 A. Good morning.
9 Q. A couple of questions about your
10 testimony that you had submitted. What
11 progress requirements has MSD made over the
12 past five years to timely address the changing
13 regulatory requirements that you refer to in
14 your testimony?
15 A. What requirements have we made?
16 Q. What progress adjustments has MSD
17 made over the past five years, and in
18 particular, I am looking at page 2, question 10
19 of your testimony.
20 A. Page 2, question 10.
21 Q. Correct. Your response to question
22 10 on page 2, that is correct.
23 A. The adjustments that were made to the
24 capital improvements program.
25 Q. Uh-huh, yes.
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1 A. Yes. Most of the adjustments were
2 made to the program were changes in regulatory
3 requirements that occurred during the last rate
4 cycle, the biggest one being requirement for
5 disinfection facilities to be installed on
6 treatment plants that was discharged to the
7 Mississippi River. One was unanticipated.
8 There were other items that also
9 moved to the forefront contrary to what was
10 originally proposed. Pilot program for a Green
11 Infrastructure Program for CSO discharges to
12 the Mississippi. Cleaning of sewers in a
13 proactive fashion. Some of the items and
14 issues that came up as part of the ongoing
15 mediation and negotiations with the regulators,
16 but, by far and large, disinfection was the
17 largest item, largest adjustment that had to be
18 made.
19 Q. Thank you. My next question, I'm
20 referring to your answer to question 12 which
21 is found at the bottom of page 3 -- excuse me,
22 bottom of page 2, top of page 3. And
23 specifically, what necessary adjustments to the
24 engineering consultant delivery model have been
25 to ensure cost effective and timely completion
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1 of the CIRP?
2 A. With the past program, staff was of
3 sufficient size and the program identified to
4 the place where we actually did project by
5 project consultant selection and management of
6 projects. We had a project manager, a
7 consultant would be hired for a project and
8 complete that project. With what's coming up,
9 the ability to have resources much more
10 available in a much more timely manner was
11 needed and so we've changed our delivery model.
12 We have divided up the District kind
13 of along regulatory lines and technical
14 expertise and we will now go to actually hiring
15 consultant teams for packages of projects.
16 They will -- what this will gain us is it will
17 allow them to help us with the scheduling,
18 long-term scheduling, short-term scheduling
19 within these watersheds. The way we hire them
20 and with the resources we have available as
21 things come up in a much more timely fashion,
22 we will be able to bring resources to bear on
23 issues that were unknown whether they are
24 projects we're going after or issues that
25 weren't really identified up front. And also
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1 hopefully some cost effectiveness in that while
2 we are performing certain types of activities,
3 say surveying for certain projects are
4 identified, we have adjacent areas that we know
5 are coming up in the future and actions and
6 activities that can be performed to gather that
7 data on the front end in a much more timely
8 fashion, we'll have the ability to do that with
9 the changed model.
10 Q. Thank you. I have a couple of
11 questions with respect to the Consent Decree
12 and I'll narrow it down on the projects. What
13 CIRP projects are required to be completed
14 pursuant to the terms of the agreement between
15 MSD and EPA?
16 A. All of them.
17 Q. All of the projects?
18 A. Yes.
19 Q. Okay. So, will Exhibit MSD 9B1 which
20 is the fund of 660 infrastructure projects
21 which was attached to that exhibit, will that
22 need to be revised at all because of the
23 Consent Decree?
24 A. No.
25 Q. So, all of the projects on this
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1 Exhibit 9B1 are projects that are required by
2 the Consent Decree? I could give you a copy.
3 A. Yeah, I have it here. They are all
4 regulatory requirements, most of them
5 regulations that will be stated in the Consent
6 Decree. There are random items like expansion
7 of an ash lagoon so that we continue to have a
8 place to dispose of ash out of the treatment
9 plants is not specifically listed in those, the
10 items you saw in the fact sheet that was given
11 earlier, but nevertheless they are a regulatory
12 requirement.
13 Q. Okay. Are there any other examples
14 like the ash issue you just raised that you can
15 think of to share with the Rate Commission at
16 this point?
17 A. As I was flipping through the list, I
18 think that was the only one I saw.
19 Q. Okay. Thank you. What portion in
20 dollars of MSD's identified CIRP is associated
21 with the elimination of the remaining 185
22 constructed sanitary sewer overflows?
23 A. I haven't calculated those but if you
24 refer to Exhibit MSD 9B1 under the various
25 years, the items sanitary sewer overflow and
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1 probably almost all cases as related to
2 constructed sanitary sewer overflows. There
3 may be random ones where we have sanitary sewer
4 overflows not through constructed, but for the
5 most part they are all addressed in constructed
6 sanitary sewer overflows.
7 Q. Okay. And will the 185 known
8 remaining constructed sanitary sewer overflows
9 need to be removed pursuant to the Consent
10 Decree?
11 A. Yes.
12 Q. Okay. And do you have any idea about
13 what date do those remaining 185 constructed
14 sanitary sewer overflows need to be eliminated?
15 A. If you look at the fact sheet that
16 Jeff Theerman referred to earlier, it's item 4,
17 remedial measures. 85 percent by 2023 and all
18 remaining by 2033.
19 Q. Thank you. What portion in dollars
20 of MSD's identified CIRP is associated with the
21 elimination of the remaining 199 combined sewer
22 overflows, CSO's?
23 A. Restate the question, I'm sorry.
24 Q. Sure. What portion in dollars of
25 MSD's identified CIRP is associated with
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1 eliminating the remaining 199 CSO's?
2 A. I think to revise the question,
3 elimination of the CSO isn't what is required,
4 it's mitigating their impact, in some cases
5 that is removal, in other cases it's reducing
6 the amount of volume. That number -- just a
7 minute. I have a lot of numbers floating
8 around in my head. It's 1.9 billion.
9 Q. And will those 199 remaining
10 permitted CSO's need to be removed or abated
11 pursuant to the Consent Decree?
12 A. Yes.
13 Q. By what date does that need to occur?
14 A. They also fall under in the fact
15 sheet -- it's either one. Schedule of 23 years
16 from the date of approval by the State of
17 Missouri.
18 Q. Thank you. You indicated in your
19 testimony, Mr. Hoelscher, because of the
20 economy, MSD was receiving bids for capital
21 work that in some cases was 40 percent below
22 the traditional cost. Do you have that
23 testimony?
24 A. Yes.
25 Q. Okay. How many projects were bid out
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1 at this rate that was approximately 40 percent
2 lower than expected?
3 A. That was probably the extreme example.
4 I think I was giving the bottom. They are
5 traditionally smaller open cut sewer type
6 projects where we are seeing the most benefit
7 from the economy. They would have been those
8 sewer projects are probably large in number but
9 lower in dollar value, they are lower cost
10 projects. Exactly, I can't really tell you
11 exactly how many of those that were 40 percent
12 or less but that was probably the extreme case.
13 Q. You mentioned that the extreme case
14 for 40 percent. What would be a more common
15 percentage where you were able to receive a
16 lower bid than expected?
17 A. Best I can tell from the information,
18 you probably saw in the overall program, 5 to
19 10 percent reduction from what we thought the
20 cost of projects would be at the start of the
21 last rate case.
22 Q. Okay. And can you describe generally
23 what type of projects that would entail, the 5
24 to 10 percent reduction?
25 A. Well, again, 5, 10 percent would be
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1 the program overall. So, I think I had
2 mentioned the 40 percent coming in at 40
3 percent, that is very few projects at small
4 dollar amounts. The larger projects, you
5 wouldn't see that kind of reduction, you might
6 see it in the 5 approaching the 10, the piece
7 that would drive most of the programs. So,
8 probably 5 or 10 percent is probably about kind
9 of an average.
10 Q. How has this reduced cost
11 construction bidding affected the level of
12 capture expenditure cost in the rate change case?
13 A. It wasn't taken into account in
14 the -- you're talking about this rate change?
15 Q. Correct.
16 A. It was not taken into account.
17 Q. Why was it not taken into account?
18 A. What we found to be successful
19 practice after we've gone through this process
20 is to have additional work available if it
21 turns out we can get more projects done for a
22 given dollar. The main reason for that, we can
23 have the projects ready and if the economy is
24 such that we do have the extra dollars
25 available, it means we can get a good buy for
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1 future work.
2 So, over the last five, six years
3 that's been the strategy we've used is to have
4 extra projects sitting in the queue waiting to
5 go, and we've gone ahead and awarded those
6 projects and bid those projects up to the
7 amount of revenues that were available.
8 Strategies worked real well. It's got a good
9 long-term benefit to it and that would be the
10 kind of strategy we would use if these economic
11 conditions will exist through '13 through '16
12 if it does turn out that way.
13 Q. If for some reasons the economic
14 conditions change, how would you revise that
15 strategy?
16 A. Change in what way? Change in '13
17 through '16?
18 Q. Correct, yes. Change through '13
19 through '16.
20 A. '13 through '16, if we get this type
21 of economic climate, we would do this in the
22 same fashion. We would try to accelerate work.
23 This kind of economy would mean we are getting
24 work done at a better price. If it went the
25 other way and the economy went where prices
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1 went up, in general there is probably two
2 options. There is addressing prioritization of
3 projects with the regulators in light of the CD
4 or possibly requesting additional dollars,
5 additional revenues.
6 Q. Okay. And how will this reduced cost
7 construction bidding affect the level of
8 capital expenditure costs over the next four
9 years?
10 A. Again, if we use the strategy that I
11 had mentioned, you'll end up with kind of the
12 same result as we are at the end of this rate
13 cycle where we are able to spend all the
14 dollars that are available, and again the
15 benefit being if you do that, you spend the
16 same amount of dollars but get more work done;
17 therefore, you've lowered the overall cost of
18 the program. That is what we would do in '13
19 through '16 as well.
20 Q. And looking further out into the
21 future, I'll ask the same question with a
22 different timeline. How will the reduced cost
23 construction bidding affect the capital of
24 expenditure costs in ten years potentially?
25 A. Again, the answer is the same for
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1 whatever the time period you bid. I think my
2 comments about the strategy we've used through
3 '13 through '16 is based on what we know right
4 now. Depending on what the conditions are in
5 the end of that rate cycle, you may take a
6 different strategy for the next rate cycle over
7 whatever period that is.
8 So, what we are currently doing now
9 would be something we consider but I think it
10 would really be dependent upon the situation
11 the next time we consider it coming from a rate
12 proposal.
13 Q. Okay. And my final question, and I
14 actually asked Susan Myers this question and
15 she suggested that I talk with you or
16 Mr. Barber about it but let me state it again.
17 Ms. Myers had indicated in her testimony that,
18 quote, a large proportion, end quote, of the
19 proposed rate change is necessary to meet legal
20 requirements and the failure to construct
21 mandated projects or properly maintaining
22 existing lines and facilities bring with them
23 an immediate and direct repercussion. My
24 question of Ms. Myers is what constitutes a
25 large proportion in a percentage in that setting?
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1 A. And I think where we are sitting
2 today, it's all of the program is regulatory in
3 nature as opposed to almost all.
4 MR. KINDSCHUH: Okay. Thank you. I
5 appreciate your time. I have no further
6 questions.
7 COMMISSIONER TOENJES: Thank you,
8 Mr. Kindschuh. Ms. Langeneckert, questions for
9 the witness?
10 MS. LANGENECKERT: Just one, just
11 clarification.
12
13 EXAMINATION
14 Questions by: LISA C. LANGENECKERT
15 Q. On your testimony on page 2, you
16 describe at line 13 which is question 9, the
17 list of projects in your direct testimony and
18 you say 3B1. Should that be 9B1? I think
19 maybe it was numbered differently at the time.
20 A. That is correct.
21 Q. I just wanted to make sure when I
22 referenced it, I had the right one.
23 MS. LANGENECKERT: That was my only
24 question. Thank you.
25 COMMISSIONER TOENJES: Thank you.
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1 Mr. Mueller, any questions for the witness?
2 MR. MUELLER: Yes.
3
4 EXAMINATION
5 Questions by: ROBERT MUELLER
6 Q. Hopefully this is within your area of
7 knowledge. Can you tell me when unpermitted
8 discharges take place?
9 A. When as in under what conditions or
10 date I guess?
11 Q. What conditions.
12 A. Under what conditions. Two
13 conditions. There can be something happen in
14 the system when there is not a wet weather
15 event. Blockage is somebody washes grease down
16 our sewers during the holidays and it blocks
17 the sewer, and even without rains, the sewer
18 will back up. It will happen during dry
19 weather. If the system is functioning, we
20 don't have any dry weather overflow of the
21 system, that occurs when something is not
22 functioning properly in the system.
23 The most -- the event I think we are
24 kind of talking here is during wet weather.
25 There is something called I & I which is called
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1 inflow and infiltration and that is stormwater
2 getting into the system and that stormwater,
3 when it exceeds the capacity of the system, you
4 have an overflow from the system driven by the
5 amount of stormwater that gets into the system.
6 Those are kind of the two events that -- those
7 are the two events that cause an overflow.
8 Q. So that other than an unanticipated
9 event during dry weather, the only unpermitted
10 discharges occur during stormwater events or
11 storm rain events?
12 A. I think -- I hope I'm not missing
13 some real oddball thing but I believe, yes,
14 that is correct.
15 Q. Okay.
16 A. I will give you another one.
17 Somebody apparently poked a hole in one of our
18 forced mains at one time we didn't know about.
19 I guess you would call that a failure of the
20 system. Lacking that, there are no overflows
21 during dry weather.
22 Q. Are the issues in the litigation with
23 the EPA and the Coalition For the Environment,
24 do they deal primarily with unpermitted
25 discharges resulting from stormwater events, or
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1 do they also include other operational issues,
2 in other words, some of the things that you've
3 talked about?
4 A. Yes, they include --
5 Q. So they include --
6 A. Yeah, I would refer probably the best
7 description of that is Item 5 on the facts
8 sheet under the CMOM program. I think that
9 gives a description kind of a pretty
10 comprehensive general list of the types of
11 things that are also in this Decree besides
12 eliminating wet weather overflows.
13 MR. MUELLER: Okay. Thank you. I
14 have no further questions.
15 COMMISSIONER TOENJES: Thank you,
16 Mr. Mueller. Mr. Arnold, questions for the
17 witness?
18 MR. ARNOLD: I have a couple of
19 clarification issues if I may.
20
21 EXAMINATION
22 Questions by: JOHN FOX ARNOLD
23 Q. Good morning, Mr. Hoelscher. Would
24 you please take a look at your testimony on
25 page 2, question 11?
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1 A. Yes.
2 Q. And you refer to Table 3-9 as being
3 the basis for the wastewater capital improvement
4 and replacement program. Do you have 3-9 handy?
5 A. I don't have it here.
6 MR. ARNOLD: May I approach?
7 COMMISSIONER TOENJES: Yes.
8 Q. As I read that document, that's not a
9 declaration of the projects but the nature of
10 the financing for the projects, is that fair?
11 A. Yes.
12 Q. All right. And I'm no expert but
13 could you look at 3B which I've also handed
14 you -- I'm sorry, 3-8.
15 A. Oh, Table -- I'm sorry, 3-8.
16 Q. Is it possible to use that as the
17 basis for the wastewater CIRP program?
18 A. Yes.
19 Q. Thank you, sir. In response to our
20 request for discovery, you prepared a
21 tabulation of actual CIRP expenditures and we
22 also asked you whether or not the information
23 on Table 3-8 represented annual cash
24 expenditures or encumbrances, and your response
25 on page 12 of that document, if you don't have
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1 it, I --
2 A. Page 12 of the discovery request?
3 Q. Yes, sir.
4 A. Okay.
5 Q. And your response is, those are
6 encumbrances. Mr. Hoelscher, what is the
7 difference between an expenditure and
8 encumbrance?
9 A. The encumbrance, there must be a
10 sufficient -- we want to start a $5 million
11 project. The fund that we want to fund that
12 project out of has to have at least $5 million
13 in it for us to make the appropriation. So the
14 Board will take an action, appropriate $5
15 million, and the money is not encumbered so the
16 fund has to have sufficient dollars to be able
17 to make that appropriation. The expenditures
18 would be the actual cash flow of the payments
19 as that project moves forward.
20 Q. And that's later than the encumbrance?
21 A. Yes.
22 MR. ARNOLD: Thank you. Thank you,
23 Mr. Chairman. Thank you, Mr. Hoelscher.
24 COMMISSIONER TOENJES: Thank you,
25 Mr. Arnold. Any further questions for this
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1 witness from any of the Rate Commissioners?
2 Mr. Tomazi.
3
4 EXAMINATION
5 Questions by: GEORGE TOMAZI
6 Q. I have one comment. Back in June of
7 '07 when this EPA in the State of Missouri
8 filed a lawsuit, filed their lawsuit, I
9 remember at that time a rather different price
10 tag of something in the range of $20 billion
11 was thrown on the table to achieve everything
12 that was in that suit. Today we're
13 at 4.7 billion which still by any standard a
14 big number but it's a very significant change
15 from where this whole thing seemed to start
16 back in '07. So, all I can say is whatever you
17 did, you did good.
18 A. Thank you. I think I'll provide a
19 little clarification. I think the larger
20 number came from very much a worst case
21 scenario out of the long-term control plan but
22 we will take any compliment we can get.
23 COMMISSIONER TOENJES: Mr. Schneider.
24
25
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1 EXAMINATION
2 Questions by: ERIC SCHNEIDER
3 Q. In the Consent Decree fact sheet
4 mentions the Green Infrastructure Program or
5 the pilot program. Does this current rate
6 proposal have any elements of it that addressed
7 the Green Infrastructure, the $100 million
8 dedicated to the Green Infrastructure Program?
9 A. The five year pilot program, out of
10 that $100 million, $3 million has already been
11 appropriated prior to this rate hearing, prior
12 to this rate proposal for the five year pilot
13 program, so that leaves the balance of the
14 program being $97 million and there are dollars
15 in this rate proposal to start addressing the
16 $100 million commitment that is identified.
17 Q. Do you have an estimate of how many
18 dollars of the 97 remaining, how many will be
19 addressed in this rate proposal?
20 A. If you want me to take the time to
21 look through the list to find that. It's not
22 locked with me. It's $20 million, $5 million a
23 year.
24 Q. And kind of a similar question
25 regarding the SSO. Remedial measures on the
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1 SSO master plan, you had the removal of 85
2 percent of the constructed SSO outfalls by
3 2023. Roughly what percentage are you going to
4 get to in this rate proposal to get close to 85
5 percent?
6 A. Here is what I can give you. In
7 the -- if you look at the fact sheet on Item 2,
8 you do see 50 of the overflows being addressed
9 by 2012. Those will be funded prior to this
10 rate case. Of the ones that remain, the exact
11 schedules will come out of the SSO master plan
12 that's described under Item 3 but any
13 information about the exact details of removal
14 is unavailable.
15 MR. SCHNEIDER: Okay. Thank you.
16 COMMISSIONER TOENJES: Questions by
17 any other Rate Commissioners for Mr. Hoelscher?
18 I have a question, Mr. Hoelscher.
19
20 EXAMINATION
21 Questions by: LEONARD TOENJES
22 Q. You mentioned program adjustments in
23 disinfection. What was the cost of that
24 program adjustment?
25 A. The disinfection was in the range of
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1 $75 million for disinfection.
2 Q. Okay. And that 75 million dollars
3 was not anticipated in the last rate case?
4 A. Correct.
5 Q. So, could you describe the impact on
6 the rest of the program that occurred by having
7 to meet that $75 million obligation?
8 A. Sure. Once that came up, we
9 prioritized the funding for that regulatory
10 requirement. I think I mentioned earlier there
11 was some other ones but disinfection being the
12 largest. We started the design followed by the
13 construction process, dollars were eliminated
14 to address other regulatory issues that we
15 identified during the process. Those were set
16 aside, put on the shelf. If they were in the
17 design phase and toward the end of the design
18 phase, the design phase was completed; if they
19 were in the beginning, they were simply halted.
20 Because we were tracking the actual
21 dollar cost for the disinfection versus our
22 estimates, it did become evident that there
23 were going to be some more dollars available
24 because the bidding climate we mentioned, that
25 allowed us to pull some of the program in there
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1 but it was a continuous monitoring of the
2 actual cost of the disinfection to see what we
3 could bring back into the program that had been
4 originally planned.
5 Q. So, would it be accurate to say that
6 approximately $75 million of the work that was
7 considered during the prior rate case was not
8 completed?
9 A. We recovered about $40 million to $50
10 million of that -- I can't compare them because
11 they are different timings but it's something
12 less than $75 million as it became apparent of
13 the extra dollars being available, we were able
14 to pull some work up. Off the top of my head,
15 I think it was in the $20 million to $25
16 million range that we were able to put back
17 into the program.
18 Q. About $50 million, can I assume that
19 that got rolled forward into this rate case,
20 into this CIRP then?
21 A. Yes, there are projects that were
22 identified in the first rate case that appeared
23 now in this rate case.
24 Q. You know, we had some discussions
25 when that adjustment occurred and I guess a
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1 concern I have is and continue to have is when
2 we are at a four year timeframe of a rate case,
3 if some of these program adjustments or
4 regulatory changes take place in year two or
5 year three, in effect you are unable to address
6 that $50 million until the wheel came around
7 again?
8 A. Correct.
9 Q. And I think that continues to be a
10 concern of mine, that inability to respond and
11 I guess I would wonder where is the threshold?
12 How bad does it have to be before you decide
13 you're going to change and come back with
14 another rate? Is it $50 million, is it $100
15 million, where is that pain threshold because
16 our guys felt it.
17 A. The threshold -- we are under a
18 different set of rules. Under the last rate
19 proposal, the regulatory requirements we are
20 talking about, and I'll use constructed SSO's
21 as an example, they were illegal. We were
22 removing those as revenues were made available,
23 but as we sit here today, they are illegal.
24 That framework changes and we had the ability,
25 we have set deadlines for disinfection, do
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1 those, move some of the other regulatory issues
2 off that don't have set deadlines.
3 The Consent Decree indicates
4 schedules of removal and addressing either
5 mitigation or removal of some of these issues.
6 There will now be a measure for everything.
7 So, MSD would have much less latitude to be
8 able to make adjustments. Things are that are
9 in the program simply have to get done. So,
10 you won't see us -- we won't have the
11 ability -- nutrients happen tomorrow and we
12 have to spend 200 --
13 Q. Or happens two days after we finish
14 setting our new rate is more the question.
15 A. Whatever the worst time. If that
16 $250 million come up, we now have set schedules
17 for everything we are proposing to you. So,
18 it's the world is different. MSD will not
19 unilaterally be able to make a decision about
20 that. It will have to involve a lot of other
21 individuals. If that helps address the
22 question.
23 Q. I'm just trying to figure out what it
24 takes to push that button.
25 A. The threshold happens almost
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1 immediately this time as compared to the last
2 rate cycle.
3 COMMISSIONER TOENJES: Any further
4 questions for Mr. Hoelscher? Thank you. Ms.
5 Myers, do you have questions for Mr. Hoelscher?
6 MS. MYERS: I do have a couple.
7
8 EXAMINATION
9 Questions by: SUSAN MYERS
10 Q. The schedule for compliance of the
11 Consent Decree is outlined in the detail sheet
12 as 23 years, is that correct?
13 A. Correct.
14 Q. And the rate case that we have here
15 before us supports the start of that 23 years?
16 A. Correct.
17 Q. Okay. Do you foresee the ability to
18 get a longer schedule than the 23 years that's
19 outlined in the detail sheet?
20 A. Do I?
21 Q. Let me rephrase that. If we decided
22 we needed 25 or 29 years at this point, do you
23 foresee that we could obtain that?
24 A. I would think probably not without
25 some very, very extreme reasons to be able to
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1 extend the schedule.
2 MS. MYERS: Okay, thank you. I have
3 nothing further.
4 COMMISSIONER TOENJES: Thank you,
5 Mr. Hoelscher. Your next witness in order of
6 testimony filed is Jonathan Sprague. Is
7 Mr. Sprague here?
8 MR. SPRAGUE: Yes, I am.
9 COMMISSIONER TOENJES: Thank you,
10 Mr. Sprague. Is the testimony you're about to
11 give the truth, the whole truth, and nothing
12 but the truth?
13 MR. SPRAGUE: Yes, it is.
14 COMMISSIONER TOENJES: Thank you.
15 Any of the Rate Commissioners have questions
16 for the witness? That being the case,
17 Mr. Kindschuh, would you have questions for
18 Mr. Sprague?
19 MR. KINDSCHUH: Yes, we do. Thank
20 you.
21 COMMISSIONER TOENJES: Please
22 proceed.
23
24 JONATHAN SPRAGUE,
25 Of lawful age, being produced, sworn and
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1 examined, and says:
2
3 EXAMINATION
4 Questions By: JOHN KINDSCHUH
5 Q. Good morning. I have a few questions
6 regarding your testimony that you submitted and
7 in particular, if I could direct your response
8 to question 17, this is on page 5 of your
9 testimony.
10 A. All right.
11 Q. Specifically in your response to this
12 question, "What federal requirements create
13 mandatory levels of wastewater service that
14 must be met by MSD that you refer to"?
15 A. I can't speak specifically about
16 what's in the Consent Decree but there was a
17 reference in the Board paper CMOM requirements,
18 Capacity Management Operations and Maintenance
19 that it stands for, and anticipate there will
20 be operations and maintenance requirements that
21 in essence become mandates and will drive our
22 program.
23 Q. Thank you. And have copies of those
24 documents been provided?
25 A. The Consent Decree isn't available
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1 for public viewing yet.
2 Q. I'm aware of that.
3 MR. KINDSCHUH: Thank you. That's
4 all the questions that we have.
5 COMMISSIONER TOENJES: Thank you.
6 Ms. Langeneckert, do you have any questions of
7 this witness?
8 MS. LANGENECKERT: Not of Mr. Sprague,
9 no.
10 COMMISSIONER TOENJES: Mr. Mueller,
11 do you have any questions?
12 MR. MUELLER: I have no questions.
13 COMMISSIONER TOENJES: Mr. Arnold?
14 MR. ARNOLD: Nor have I.
15 COMMISSIONER TOENJES: Any
16 Commissioners have any further questions for
17 this witness? Ms. Myers?
18 MS. MYERS: We have none.
19 COMMISSIONER TOENJES: Mr. Sprague,
20 thank you for this.
21 I think we will begin Mr. Tyminski's
22 testimony and the Chair will reserve the right
23 to take a lunch break if we get too far into
24 his testimony.
25 You have to tell the truth both
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1 before and after lunch. The testimony you're
2 about to give the whole truth and nothing but
3 the truth?
4 MR. TYMINSKI: It is.
5 COMMISSIONER TOENJES: Thank you.
6 Does any member of Rate Commission have
7 questions for Mr. Tyminski at this time?
8 Mr. Kindschuh, do you have questions for
9 Mr. Tyminski?
10 MR. KINDSCHUH: Yes, we do.
11 COMMISSIONER TOENJES: Please
12 proceed.
13
14 KARL TYMINSKI,
15 of lawful age, being produced, sworn and
16 examined, and says:
17
18 EXAMINATION
19 Questions by: JOHN KINDSCHUH
20 Q. Mr. Tyminski, good morning. This may
21 not be as short as Mr. Sprague.
22 A. I only wish.
23 Q. You indicate in your testimony that
24 the CIRP is anticipated to be funded with a
25 combination of 85 percent senior bonds and 15
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1 percent State revolving fund loans, is that
2 correct?
3 A. That is correct, plus the cash.
4 Q. Sure. What are the maximum number or
5 amount of State revolving fund loans that MSD
6 could receive per year during the plan?
7 A. I'll go over what the constraints
8 are. I'm not sure there is a hard maximum on
9 that because it's a function of a number of
10 variables that have to be taken together.
11 The program itself that the State of
12 Missouri runs and I sent you, I believe, in the
13 response or at least in the Rate Commission's
14 response, I sent a copy of the intended use
15 plan from the State of Missouri is roughly a
16 billion dollar program. In looking at that
17 program, and knowing that their terms are
18 roughly a 20 year term, that presupposes a 5
19 percent payback a year or 1/20, so from that
20 you can deduce there is a cash flow of about
21 $50 million a year going into their program.
22 On top of that, the State of Missouri
23 receives capital grants from the federal
24 government as does any other state. The
25 capital grants were a target of the
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1 administration's cuts. So, the administration
2 is pushing more for this Obama bank, a larger
3 infrastructure bank, and not necessarily as
4 much targeted to the SRF type funds. But it's
5 safe to say that the State gets about $30
6 million in terms of that type of grant a year
7 so they have an inflow of about $80 million a
8 year. Of the billion dollars, roughly all
9 million dollars is spoken for.
10 The unwritten ruled had been to
11 allocate the funds in the pool in a manner
12 similar to that of the population of the state.
13 Our service area has roughly 20 percent of the
14 population so if you do the math, 20 percent of
15 a billion dollars is about $200 million.
16 Currently we have closer to $400 million
17 outstanding so we are at a maximum level, I
18 believe, with the State of Missouri right now.
19 Given where we are population-wise, our share
20 of the pool, we're the largest singular
21 borrower in the pool. With that said, I would
22 see our return or our ability to use SRF funds
23 in the future to be something in the
24 neighborhood of $25 to $35 million depending on
25 their constraints in a given year, depending on
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1 the projects, depending on the priority points
2 reaching those projects. Long answer but that
3 is the best answer.
4 They are constrained by the inflows.
5 They no longer have a leverage program because
6 of the market conditions. This is a cash basis
7 program so understand that what we are doing is
8 divvying up a share of that cash and I am
9 saying to you, if you think of that cash inflow
10 at $80 million a year, 20 percent would be 16
11 million, we are looking at a rate of that
12 already.
13 Q. All right. How many applications has
14 MSD submitted for State revolving loan funds at
15 this point?
16 A. I don't have an exact count. I know
17 it's numerous. We certainly have submitted for
18 the Missouri River Treatment Plant, we've
19 submitted other loans, smaller dollars in
20 nature, so my guess, somewhere between three
21 and five. It's a year by year basis. I don't
22 have an exact.
23 Q. What are the status of these
24 applications?
25 A. Missouri River Treatment Plant has
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1 been approved. That is the one that we are
2 seeking that we are seeking current funding on.
3 We've been approved for a total of $77 million
4 of that on that plant. Future ones are to be
5 determined and it will be in the cycles of a
6 few years.
7 Q. Okay. And you state in your
8 testimony that the rate proposal assumes
9 approximately $35 million of the State revolving
10 fund loans per year.
11 A. Right.
12 Q. Given all the information that you
13 know today, do you still feel that that $35
14 million is an appropriate number?
15 A. I think it's on the optimistic side
16 but, yes, it's appropriate.
17 Q. What factor or factors could enable
18 MSD to secure more than $35 million?
19 A. I have to think that one through.
20 Obviously some windfall to the State of
21 Missouri program, but there is nothing that I
22 can see in the current legislation given the
23 current structure of the federal government
24 that would raise that.
25 Q. Okay. Thank you. What is the status
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1 of Congress approving the authorization for the
2 Build America bonds or other similar vehicles
3 that you referenced in your testimony?
4 A. Well, if I could answer that
5 question, I should become a Washington
6 lobbyist, but barring that, the legislation,
7 you know, guide last year did not get renewed.
8 There is talk about that but I really can't
9 answer it. It's pure speculation on my part.
10 Q. Are there any other types of
11 government bonds or funding program grants, for
12 example, that MSD has considered at this point?
13 A. At this point, no.
14 Q. Are you aware of any other wastewater
15 districts that have received government-
16 sponsored funding assistance to fund their
17 capital expenditure programs?
18 A. Various districts have received
19 funding. I'm not sure of all the specifics. I
20 know that some have, though.
21 Q. Okay. Do you know what districts
22 these are?
23 A. Again, just in general I know that
24 they exist.
25 Q. And Mr. Tyminski, are you the person
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1 who speaks with the State revolving fund staff
2 about loan availability?
3 A. I am one of the people that speaks to
4 them.
5 Q. Who else on MSD's staff would also
6 speak with them?
7 A. A representative from the engineering
8 department would usually go with me.
9 Q. But you're involved in almost all of
10 those conversations?
11 A. Yes.
12 Q. Okay. What federal, state, or local
13 agencies have you and your staff contacted to
14 discuss grants and contributions at this point?
15 A. Over the last 15 years, we have
16 gotten grants from the U.S. EPA, from Homeland
17 Security, and from the Department of the Army
18 through the Corps of Engineers projects.
19 Q. And have you contacted all of those
20 agencies recently?
21 A. We have a federal lobbyist that works
22 on our behalf to try to gain funds. There
23 really are no funds available at this point in
24 time, other than with the Corps and the
25 projects that are targeted in the St. Louis
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1 area.
2 Q. Are there any other funds, federal,
3 state, local agencies, you intend to contact at
4 this point but haven't done so?
5 A. We always look to various federal
6 agencies but again, the budget situation in
7 Washington is kind of strained and we do not --
8 we will work to obtain the most possible
9 funding but it is limited given the constraints
10 in Washington.
11 Q. Thank you. You stated in your
12 testimony that a feasibility report assumes
13 that future revenue bonds will be issued in the
14 average annual interest rate of 5.50 percent
15 over the next 30 years. Do you recall that?
16 A. For a 30 year term over the next four
17 years or over the life cycle of the term of the
18 rate report, yes.
19 Q. Correct, yeah. Thank you for that
20 clarification. Where did you get this
21 information, Mr. Tyminski?
22 A. At the time we were looking at an
23 existing rate on the 30 year debt of about four
24 and a half percent. We know that there is --
25 we looked at long-term graphs that are in the
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1 public domain such as on Bloomberg and the
2 various media sources and we know that we are
3 at one of the low points of that graph, so what
4 we did is we added 100 basis points to the
5 existing rate to get the five and a half percent.
6 Q. Do you believe that the five and a
7 half percent is an appropriate figure at this
8 point?
9 A. At this point it is. I mean, if you
10 consider the past rate cycle, the high point of
11 interest rates on a coupon basis was between
12 five and a half and 6 percent which occurred in
13 the fall -- late fall of 2008. So, given where
14 the last cycle was, given that parts were below
15 and parts were above, there is some uncertainty
16 with respect to interest rates.
17 You keep hearing about how the
18 interest rates are going to have to go up at
19 some point in time. We are projecting out that
20 the earliest we could issue the debt would be
21 at sometime in 2012, so we are projecting at
22 least a year if not four or five years into the
23 future. We were looking at more normalized
24 rates so that is why the five and a half was a
25 more realistic rate.
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1 Q. I appreciate it. You just
2 anticipated my next question, so thank you.
3 With respect to that feasibility report, how
4 does it arrive to the conclusion that the rate
5 will be at 5.5 percent?
6 A. Based on discussion between myself,
7 our financial advisor, and Mr. Barber, who
8 you'll have to chance to talk to later.
9 MR. KINDSCHUH: Great. Thank you.
10 At this point, the MIEC has no further questions.
11 COMMISSIONER TOENJES: Thank you.
12 Ms. Langeneckert, do you have questions for
13 Mr. Tyminski?
14 MS. LANGENECKERT: I do have a few if
15 I could move on up.
16
17 EXAMINATION
18 Questions by: LISA C. LANGENECKERT
19 Q. Good morning, Mr. Tyminski. If the
20 District receives approval for $945 million
21 bond authorization and issues all of the bonds
22 in the fiscal year of 2013 -- by fiscal year of
23 2016, what will the District's debt-to-equity
24 ratio be?
25 A. It would be -- I'll double check it
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1 but I believe it will be -- we would reach 67
2 percent, I believe, debt to 30 percent -- 33
3 percent equity, I believe. I'll have to double
4 check the numbers.
5 Q. And what's the District's current
6 debt-to-equity ratio?
7 A. You are talking total or by the
8 wastewater line itself?
9 Q. Give me both.
10 A. Can I defer to a little later? I
11 need to get the financial statements. I'll be
12 happy to get those for you.
13 Q. Okay. So, later --
14 A. Because we have a break for lunch,
15 I'll have those after lunch.
16 Q. Okay. Did the District consider an
17 alternative amount of unauthorization?
18 A. The alternative is obviously cash.
19 Q. No, an alternative amount. A higher
20 amount of cash and a lower amount of bonds.
21 A. We looked at a number of different
22 amounts. What we put in the report itself are
23 what I call the two book ends. We looked at
24 zero percent bonds of 100 percent cash and we
25 looked at and what we are proposing is pretty
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1 much the polar opposite of that, being 94
2 percent bonds and roughly 6 or 7 percent cash.
3 Q. And did you look in the middle? Did
4 you look at a little more cash, a little less
5 bonds, or did you just look at the two options?
6 A. We looked at the two end posts
7 basically. We focused on the higher bond number
8 gives you yield a lower rate in the current
9 cycle. It gives you a more gradual rise in
10 rate but will cost more over the long run so,
11 yes, there are an infinite number of points
12 between zero, you know, percent bonds and 100
13 percent cash and where we are, so we do not
14 look at all of them but any of those could be
15 visited by this Commission.
16 Q. But you did not look at any other
17 than the two end posts?
18 A. Right.
19 Q. You didn't look at the middle?
20 A. No.
21 Q. Did you participate in the decision
22 to seek $945 million of bond authorizations?
23 A. Yes.
24 Q. If the MSD receives voter approval
25 for the bond funding, the plan is to phase in
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1 rates, is that correct?
2 A. Yes.
3 Q. And MSD would increase rates by 11
4 percent in 2013 fiscal year, 12 percent per
5 year through 2016?
6 A. I thought it was around 13 percent a
7 year but okay.
8 Q. If the MSD does not receive voter
9 approval for the bonding issuance, the plan is
10 to increase rates in fiscal year 2013 by about
11 155 percent, is that correct?
12 A. About $73, yeah.
13 Q. For the average residential customer?
14 A. Right.
15 Q. And rates would remain flat for 2014
16 to 2016?
17 A. Essential. If you take a look at it
18 from a kind of a cost standpoint, the sooner
19 you get an increase, the longer you can keep
20 that increase going, so obviously if you take a
21 big jump in year one, then you can keep that
22 for a longer period of time, you'll end up
23 paying less in the total program over time, but
24 you're paying for it by cash. The bonds serve
25 as a gradual increase or somewhat more gradual
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1 increase or a series of smaller step increases
2 to some point in time and then the cost of the
3 bonding will be greater than the cost of the
4 cash program.
5 Q. So, is that why the rates are not
6 phased in under the PAYGO scenario?
7 A. If you go with the PAYGO scenario,
8 you'll have to pay for the program up front
9 right now in cash and that cash will come in on
10 a 1/12 basis. You know, a little bit each
11 month. But you're going to have to be able to
12 fund a program right now so you're going to
13 even have to do some short-term borrowing to
14 get to where you need to be in that all cash
15 scenario.
16 Q. So, all of the cash would have to be
17 received in the very beginning, you could not
18 get smaller amounts as you would under the
19 bonding?
20 A. Are you asking -- okay, you're saying
21 instead of -- you are saying in an all cash --
22 I don't know the answer to that. I don't
23 believe so. I think you're going to have to go
24 straight up to the 73.
25 Q. And why is that?
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1 A. Because you're funding a program and
2 you need the ability to say we have a balanced
3 budget clause in our Charter. To comply with
4 the balanced budget clause of the Charter, we
5 have to show the ability to pay for the
6 projects.
7 So, if the projects for the cycle,
8 some of those are multi-year projects, you'll
9 have to pay for those up front. You'll have to
10 say okay, I've got the funding basis in hand.
11 So, because of that, you're going to have to
12 raise your rates significantly in the early
13 year to fund those projects.
14 Q. So, the reason for asking the full
15 amount in the beginning is because of the
16 clause in your --
17 A. The balanced budget clause, correct.
18 MS. LANGENECKERT: That's all I have.
19 Thank you.
20 COMMISSIONER TOENJES: Thanks, Ms.
21 Langeneckert. Mr. Mueller.
22 MR. MUELLER: I have no questions,
23 thank you.
24 COMMISSIONER TOENJES: Mr. Arnold.
25 MR. ARNOLD: I do have several
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1 questions.
2
3 EXAMINATION
4 Questions by: JOHN FOX ARNOLD
5 Q. Good morning. Early on in your
6 testimony you refer to the rate covenant in the
7 master bond ordinance. How many bond issues
8 have been authorized by the Board of Trustees
9 since the master bond ordinance was adopted?
10 A. Bear with me. Two in 2004, one in
11 2005, three in 2006, none in 2007, two in 2008,
12 and two in 2010.
13 Q. During the negotiations of the
14 amendment to the master bond ordinance, have
15 the rate -- has the rate covenant ever been
16 changed?
17 A. No. Rate covenant remains in effect
18 at 125 and 150.
19 Q. Okay. On page 4 of your testimony,
20 you make reference in the answer which begins
21 on line 13 to generation of debt service
22 coverages consistent with rating agencies,
23 expectations for high AA rated large
24 metropolitan wastewater systems. Have the
25 bonds issued by the Trustees generally been
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1 treated as AA?
2 A. Yes. They've been AA+ bonds throughout.
3 Q. All right. Have they been rated AA+
4 bonds with or without a credit enhancement?
5 A. Well, in more recent days there are
6 no credit enhancements. They've been rated
7 without the credit enhancements. Only the 2004
8 A series did we use credit enhancements.
9 Q. The pattern now is that the credit
10 markets do not require credit enhancements for
11 District obligations?
12 A. The credit enhancements would be very
13 questionable in the current market, yes.
14 Q. No question because --
15 A. Yes, I'm in agreement.
16 Q. All right. Moving on to line 17, you
17 refer to today's cash on hand estimated at 485
18 days which is modestly stronger than credit
19 agencies median for this metric. Where does
20 the metric come from?
21 A. Metric comes from Fitch.
22 Q. It is Fitch.
23 A. It is a Fitch metric, yes. And also
24 there is a comparison table that our financial
25 advisor uses, it's somewhat proprietary. I do
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1 not have it in my files.
2 Q. Then that may be the answer to my
3 next question. Does the District currently
4 engage a financial advisor?
5 A. Yes, we do, we engage two. We use
6 the firm of PFM and we also use the firm of
7 ButcherMark.
8 Q. I'm sorry?
9 A. ButcherMark and PFM.
10 Q. Page 7, question 21 at line 9, you
11 talk about 20 year term, two and a half net
12 interest administration fee, issuance cost of
13 .65, and a recent feasibility study series
14 2011A. Was that feasibility study prepared by
15 PFM or ButcherMark?
16 A. No, that feasibility study was
17 prepared by Black and Veatch.
18 Q. Thank you. Do you know whether or
19 not PFM and ButcherMark agreed with the
20 feasibility study prepared by Black and Veatch?
21 A. They seen copies of the feasibility
22 study or areas of the feasibility study that
23 would impact interest rates and issuance costs,
24 so yes, they have seen it and they have
25 concurred.
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1 Q. So, they have not expressed any
2 reservations about the terms of the study?
3 A. As it stands, no.
4 Q. Page 8, your response beginning on
5 line 8 and here we are talking about what you
6 describe as the District's revenue bond
7 requirements. Are these bonds different than
8 the State revolving fund?
9 A. Yes, they are.
10 Q. All right?
11 A. This is our stand-alone debt.
12 Q. All right. And you refer to a
13 feasibility report which assumes --
14 A. The same feasibility report.
15 Q. It's the same report?
16 A. The same.
17 Q. All right. I'll pretend to ask all
18 of my PFM questions and you'll pretend to
19 answer?
20 A. Okay.
21 Q. Okay. Were you present when
22 Mr. Hoelscher described the distinction between
23 encumbrance and expenditure?
24 A. I was.
25 Q. Could you describe the District's
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1 policy with respect to encumbrance, the
2 requirement for an encumbrance?
3 A. The requirement for a encumbrance in
4 general is a municipal accounting period to
5 encumber your cost. In the case of the
6 District when it comes to the capital projects,
7 which is really the focus of this discussion,
8 essentially we have a balanced budget clause in
9 our Charter. Most projects are appropriated or
10 cumbered at the time they are approved by the
11 Board, with the exception of a large multi-year
12 project that would drain the dollars where we
13 will sometimes go in with phased appropriation
14 over time. So, there is a correlation between
15 them from a budget standpoint.
16 If you think in terms of
17 appropriations in a one year period of time,
18 roughly 60 percent of those are actually
19 expended in that year, 30 percent will be
20 expended in the following year, 10 percent the
21 year after that. So it's 60, 30, 10 kind of
22 flow on average.
23 Q. All right. Now, the Internal Revenue
24 Service takes the position, I hope you agree
25 with me, that if the District issues bonds,
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1 that the District must generally -- there is
2 some exceptions -- expend an amount within six
3 months, an amount within 18 months, and nearly
4 all of it at three years. If we have a
5 significant bond program such as the one with
6 which we are now concerned, do you have an
7 opinion as to whether or not recommendation of
8 the staff to the District would be to
9 completely encumber these projects or partially
10 encumber these projects, and if there is a
11 recommendation for partial encumbrance, what
12 would be the threshold?
13 A. Obviously there is going to be a
14 spend on provision in the IRS code, and 60
15 percent -- what is it 45 percent in six months
16 and everything spent out in the three year
17 period of time. So, the bond issues that we
18 will go out with will be sized to meet those
19 spend-out requirements as they have in the past.
20 Now, with respect to the encumbrances
21 in a larger -- there is something that has to
22 be considered. In a larger project, you can
23 effectively encumber on an annualized basis to
24 kind of spread over time. A series of smaller
25 projects, it's much more difficult because of
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1 the nature and the number of them and when they
2 actually will come out. So, we have an -- all
3 I'm saying is that there is an administrative
4 constraint to the issue. We have to a degree
5 factored in multi-year or phased-in
6 appropriations. Case in point, cold water
7 project is one of those that we used and that
8 is the $77 million project, a very large
9 project, concurrent environment that we have
10 phased in over time. We have a history with
11 other projects where they are very large single
12 dollar projects that we phase in over time so
13 it's going to become a function of the
14 composition of the projects.
15 You have a number of million dollar
16 projects, you may, as Mr. Hoelscher pointed
17 out, as dollars become available through, let's
18 say, competitive bidding, keep in mind, we have
19 a program -- we have a program going which is a
20 series of projects so you're constantly moving
21 projects in and out of that program or forward
22 and back in that program.
23 So to answer your question, yes, I
24 think we've considered to the best possible
25 case given the administrative side of how these
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1 projects work.
2 Q. There's been testimony this morning
3 about front end loading. Is there a cost to
4 the ratepayers when projects are front end
5 loaded?
6 A. Well, to a degree, yes. I mean, you
7 know, just from a conceptual standpoint. The
8 earlier you spend the money, the earlier it
9 leaves the treasury, that is going to incur an
10 interest cost, so yeah, there is a time value
11 of money to it.
12 Q. Is it possible to recover any of that
13 by investing the proceeds of the bond issues
14 before the expenditure of those funding without
15 running afoul of the arbitrage's rules?
16 A. In a normal interest rate environment
17 like we are in today, I would say yes, it is.
18 It is possible to do that as long as the issue
19 is sized correctly, and the interest rate
20 structure is more competitive with respect to
21 the interest expense structure. That is not
22 the case today, though. When you're investing
23 at five basis points or ten basis points, I'm
24 more concerned about the negative arbitrage.
25 Q. Has the District issued any Build
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1 America bonds?
2 A. Sure have.
3 Q. And would you describe the role of
4 the federal government in the opinion of
5 interest -- in the payments of interest on
6 these bonds?
7 A. The Build America bonds were targeted
8 for the -- targeted in the corporate bond
9 marketplace so they are issued as taxable bonds
10 and the federal government will give us a 35
11 percent return or credit in the form of cash
12 after the interest was paid. We make a filing,
13 we file every year. We get 35 percent back in
14 cash.
15 So, when you look at the net interest
16 rate to the District, I think the Build America
17 bonds were something like a 340 for us for a 30
18 year debt which we thought was quite good,
19 though in fact we probably paid closer to like
20 5 percent of the coupon, but the federal
21 government gave us money back, yes, sir.
22 Q. Have you received any indication that
23 the federal government will delay the payment
24 of these federally-supported interest payments
25 as part of the discussion on debt, deficit, and
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1 budgets?
2 A. We have received no formal notice.
3 Q. Informal notice? I read the Wall
4 Street Journal too.
5 A. I read what you've read in the press.
6 I don't have -- I don't have any formal or
7 informal notice for it.
8 MR. ARNOLD: Thank you, sir.
9 COMMISSIONER TOENJES: Thank you,
10 Mr. Arnold. We will now break for lunch until
11 1:20. We will reconvene at 1:20. We will
12 resume Mr. Tyminski's testimony.
13 (Break.)
14 COMMISSIONER TOENJES: We will resume
15 with the questioning for Mr. Tyminski. We left
16 off with Mr. Arnold having completed his
17 questioning and we will ask any Rate
18 Commissioners at this point if they have any
19 questions for Mr. Tyminski. Mr. Tomazi, please
20 proceed.
21
22 EXAMINATION
23 Questions by: GEORGE TOMAZI
24 Q. Would you tell us at the present time
25 what the existing total bonded indebtedness is
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1 of the District and, second, what is it, the
2 maximum that the District can do without being
3 in serious financial trouble on interest rates
4 and credit rating?
5 A. Okay. The District currently has
6 outstanding as of April 30, $613,571,000 and
7 change. Now, the maximum -- there is a maximum
8 level of debt when it comes to general
9 obligation bonds, but in revenue bonds there's
10 not. It's what the market will bear in kind of
11 how you stack up against other agencies.
12 Traditionally, that had always been roughly
13 $1,000 per capita. So, if St. Louis had a
14 population of a million four, that is what our
15 service area is, multiply it by $1,000 is a
16 billion four.
17 That standard has gone up, though,
18 because of the EPA's pressure nationwide in
19 various cities to construct programs. That's
20 gone up.
21 Now, is there a magic number? There
22 is no set number but what it is it's ten
23 criteria that you're judged under depending on
24 how you fall on those ten, one of which would
25 be your coverage ratio, your interest rate
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1 coverage ratio. In this proposal you targeted
2 two and a quarter times, 2.25 times coverage.
3 In this proposal, another one is the amount of
4 cash you have on the end, the number of days
5 cash you have on end and I'll answer that in
6 your bottom line question in a second. What
7 has happened with the Districts, we've seen our
8 cash eroded. When Mr. Hoelscher was up here
9 earlier, he talked about the projects that were
10 not included in the rate cycle, the
11 disinfection projects. Those disinfection
12 projects were paid for on a cash savings. The
13 District drew down cash, so that cash number is
14 a little lower today than it had been in the
15 past which impacts the amount of bonding we can
16 take on in the future without a decrease.
17 The third thing they look at is
18 something called operating margin. It's how
19 much extra we have after our operations, you
20 know, to sum total. Somebody like Northeast
21 Sewer District would -- out of the Cleveland
22 area -- would be about 60 percent. Our numbers
23 show more like 30 percent. So, if you take a
24 look at all of these metrics or measures, we
25 come off somewhere in the billion seven to
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1 $2 billion area before we run into a credible
2 problem.
3 But, again, that's a judgment call.
4 Everybody is going to look at these differently.
5 The rating agencies have been under a lot of
6 pressure since 2008. They can get scared very
7 fast. It's not a quantitative judgment, it's a
8 qualitative. It's just a judgment call.
9 Q. Second part of that question is, as I
10 recall, there was -- there is a limit also
11 based on the median family income of how much
12 the monthly bill could be or annual bill and
13 there might have even been different rates for
14 the St. Louis City and St. Louis County. Do
15 you have those handy?
16 A. There is -- there is a percentage of
17 median household income to determine burden on
18 the ratepayer themselves. I'm probably not the
19 best person to ask that question to. I'm going
20 to defer either to Jan or to Keith coming after
21 me for that answer but there is -- you are
22 correct.
23 COMMISSIONER TOENJES: Further
24 questions? Yes, Mr. Koenen.
25
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1 EXAMINATION
2 Questions by: GLENN KOENEN
3 Q. Compared to other sewer districts
4 around the country, $945 million in new bonds,
5 where would that put St. Louis, say, compared
6 to Cleveland or other areas that have gone into
7 debt with bonds?
8 A. Pretty much in the middle of the
9 pack. It will fall right in the medians across
10 the board. If you currently have $600 million
11 outstanding, you add 945 to that and subtract
12 out maybe $70 million in payments, you're going
13 to be kind of right at that number. You're not
14 going to be above it. Your days of cash on
15 hand will be decent but not 600 or 700 days of
16 cash on hand, more like four.
17 The operating margins, as I said, is
18 already running a little bit below where others
19 are. So, looking at the variables, they'll put
20 us at the median, not above.
21 Q. Which would imply a pretty decent
22 bond rating because you're not on the outside?
23 A. No, we're above. Right now we are
24 AA+ in two of the categories and AAA with
25 Fitch. It means that our metrics are above
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1 normal. It will put us more in line with
2 normal. It's slightly below where we are or
3 show right now.
4 MR. KOENEN: Thank you.
5 COMMISSIONER TOENJES: Any further
6 questions for Mr. Tyminski from the Rate
7 Commission? Yes, Eric.
8
9 EXAMINATION
10 Questions by: ERIC SCHNEIDER
11 Q. Karl, in your testimony on Question
12 6, you talked about the projected debt
13 coverage, kind of go in some calculations about
14 the senior debt service coverage and percentage
15 of and your final sentence says, "While the
16 projected debt coverage exceeds master bond
17 ordinance" -- I'm on page 2.
18 A. I see it. Lines 20 through 23.
19 Q. "Projected cover rates are only in
20 line with median metrics used by the credit
21 rating." Can you expand on that? You said
22 only in line with median metrics. What are the
23 median metrics and exactly where?
24 A. The median metrics, the best place to
25 find them would be in the Fitch 2011 Median
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1 Metrics or Metrics for Organizations of various
2 size or various size and credit ratings.
3 We are carrying a better than average
4 credit rating and what I'm saying to you is
5 that the metrics that we are seeing are more in
6 line -- this program will be a large burden for
7 the population. I mean, there is two things
8 you have to consider. When this program comes
9 to us, you have to consider first the number of
10 miles of sewers that we have. That was
11 mentioned in the opening comments but I would
12 like to hone in on that a little bit.
13 We have 10,000 miles of sewers, much
14 greater than anybody else. So, you got a large
15 number of sewers concentrated on a smaller
16 population base than other cities, which is
17 going to require a program size which is larger
18 than some that we've seen. I mean, if you take
19 a look at the program size to the average
20 population, it's like $13,000 a person. There
21 are some larger than ours but it is on the
22 larger size, so this is a large program for
23 this area. We are also seeing an area that is
24 not an area that's of great growth. Anything,
25 we've seen a slight negative growth.
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1 So, what I'm saying is that what we
2 are seeing is median metrics, we carry a better
3 than median credit rating now. There is some
4 pressure on that credit rating is what I'm
5 saying. That is exactly what I was trying to
6 get at.
7 Q. And then it's hard to predict for the
8 next rate cycle but if we were to continue
9 bonding, that puts continued pressure on the
10 rate. If we were to do the same type of
11 percentage bonding for the next rate proposal,
12 that would put considerable more pressure on
13 the bond ratings or does --
14 A. As you go through with a large use of
15 debt, it is going to put considerably more
16 pressure on bond ratings because you'll have --
17 it comes down -- think of in terms like your
18 household and how much you have in the bank as
19 far as savings and how much you have cushion
20 each paycheck, and the more savings you have
21 and the more cushion you have, the stronger
22 credit rating you have.
23 In the case where we go through a
24 large program when you start drawing down that
25 cash and the amount of PAYGO cash relative to
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1 debt cash is smaller means that you're not as
2 able to meet an unexpected event as you are
3 with higher cash.
4 MR. LIYEOS: Mr. Chairman.
5 COMMISSIONER TOENJES: Mr. Liyeos.
6
7 EXAMINATION
8 Questions by: GEORGE LIYEOS
9 Q. The bonding capacity that you have is
10 based upon assessed valuation?
11 A. No. That is a general obligation
12 bond rating -- remember, the two types, the GO
13 bonds which are based on assessed valuation and
14 then there is revenue bonds which are based on
15 the metrics I was talking about.
16 Q. Okay. In terms of the cycle that
17 you've experienced over the last several years,
18 has there been a downturn in terms of that
19 revenue stream?
20 A. Yes. As a matter of fact, I'll defer
21 to Ms. Zimmerman. They'll talk about that but,
22 you know, you have a number of major players
23 that are not here today that were here then.
24 Q. Does that represent, again, to Eric's
25 point as it relates to the timing of this, if
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1 you go forward with that, that may continue to
2 decrease in terms of that revenue stream?
3 A. That's correct. There is going to be
4 pressure on our credit rating as we go through
5 this program. The goal is that we maintain
6 that credit rating as long as possible at the
7 current level.
8 Q. And more than likely, a AAA bond
9 rating is not in the cards?
10 A. Over the long-term, I would doubt it.
11 There is no other place to go but down.
12 COMMISSIONER TOENJES: Thank you,
13 Mr. Tyminski. Further questions by any Rate
14 Commissioners?
15
16 EXAMINATION
17 Questions by: LEONARD TOENJES
18 Q. As the bond rating drops, which I
19 think you suggested it may.
20 A. It could.
21 Q. What is the dollar value of that for
22 each drop in rating percentage-wise?
23 A. It depends. A drop from, let's say,
24 a AAA to a AA+ probably could be absorbed in
25 the numbers that we are looking at right now.
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1 If it drops more than a couple notches, like if
2 you have a AAA, then you have a AA, then you
3 have an A, if you go from a AAA -- or a AA to
4 an A, let's take that hit, that could easily be
5 75 basis points or three-quarters of a percent
6 on the amount that you're paying over a third
7 of your life. You can have significant
8 numbers. On this proposal I looked at if we
9 went from a AA to an A, you could be talking at
10 least $25, $30 million more. So, the credit
11 rating does matter.
12 Q. And your suggestion is that this 67
13 percent that the equity where you'd be in 2016
14 would be in the middle of the pack?
15 A. It would be in the middle of the
16 pack, yes. It would be in the middle of the
17 pack. It puts us in the middle. What does
18 that mean to the credit rating agencies? I'm
19 not sure. Does that mean it's a AAA? Probably
20 not. Does it mean it's a AA? I don't know,
21 it's only speculative. Does it mean it's a
22 AA-? I don't know. I'm hoping that we stay in
23 that area. We are working to that stay in that
24 area.
25 Q. I think you would be, from what I'm
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1 hearing, you would be safe to assume by the
2 conclusion, if the bonding proposal you have
3 before us was accepted by the Rate Commission,
4 that you would see a reduction in the bond
5 rating for the District?
6 A. I don't know if I would say would.
7 You could. You could. There are other factors
8 that come into play and that's how -- we have a
9 number of factors going forth to keep in mind
10 that the credit rating, like the management,
11 like the proactive stance we've taken and like
12 our strategic planning, they feel the community
13 has responded well, so there is some pluses
14 there. I can't speak for them. I would say
15 that there is that possibility, could be a
16 strong possibility, but I wouldn't say it
17 would. Okay.
18 Q. I have one other question. You
19 mentioned that you had developed book ends that
20 you had before us but didn't develop any
21 scenarios along the rest of the continuum?
22 A. That is correct. And maybe you want
23 to defer to Mr. Barber to see if he has any
24 extra set of scenarios but I did not use any
25 other scenarios, I looked at the two book ends.
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1 COMMISSIONER TOENJES: Any other
2 questions by any Rate Commissioners? Ms.
3 Myers, do you have questions for Mr. Tyminski?
4 MS. LANGENECKERT: Could I inquire
5 before she does? Mr. Tyminski was able to get
6 the answer during the lunch break?
7 A. Yes, I was. Right as of April 30th,
8 our total net assets are $2.2 billion. As of
9 April 30th, as I just testified, we have $613
10 million of debt. On a total basis that
11 calculates out to be 27 percent. On the
12 wastewater operation alone, our assets are a
13 billion, 698 net, of which $613 million is the
14 debt. That comes out to be 36 percent.
15 MS. LANGENECKERT: Thank you.
16 COMMISSIONER TOENJES: Ms. Myers.
17 MS. MYERS: I just have one.
18
19 EXAMINATION
20 Questions by: SUSAN MYERS
21 Q. For clarification purposes, the Fitch
22 metrics that you were referencing in your
23 discussion, are those shown in MSD Exhibit 11C?
24 A. That is correct.
25 MS. MYERS: Thank you. That's it.
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1 COMMISSIONER TOENJES: Thank you,
2 Mr. Tyminski. Our next witness by order of
3 testimony filed is Janice Zimmerman. Janice,
4 is the testimony you're about to give the
5 truth, the whole truth, and nothing but the
6 truth?
7 MS. ZIMMERMAN: Yes.
8 COMMISSIONER TOENJES: Thank you.
9 Does any member of the Rate Commission have
10 questions for the witness at this time? Seeing
11 none, Mr. Kindschuh, do you have any questions
12 for Ms. Zimmerman?
13 MR. KINDSCHUH: Yes, we do.
14 COMMISSIONER TOENJES: Please proceed.
15
16 JANICE ZIMMERMAN,
17 of lawful age, being produced, sworn and
18 examined, and says:
19
20 EXAMINATION
21 Questions by: JOHN KINDSCHUH
22 Q. You state in your testimony that the
23 proposed wastewater increase is fair and
24 reasonable and that it proportionately
25 distributes the District's projected costs over
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1 all classes of ratepayers using a user charge
2 method tied to customer water usage. Why is
3 this the case?
4 A. Primarily because this is a rate
5 design method that is -- has been accepted and
6 used across the country and has been upheld by
7 the Missouri courts. So, based on that
8 methodology, we consider the rate to be fair
9 and equitable.
10 Q. Thank you. Why did MSD get rid of
11 the Uniform Compliance Charge?
12 A. The Uniform Compliant Charge, if you
13 remember from the last proceeding, ended up
14 being about $30 per commercial entity
15 regardless of the size, and that was one of the
16 components where we did have some members of
17 the public appear and basically express their
18 dissatisfaction with that.
19 The individuals, if I remember
20 correctly, who appeared were of smaller
21 commercial entities and the example that we use
22 when we explain this is sort of like an H & R
23 Block, they have a bathroom, maybe they have a
24 little kitchenette and a sink, and so they
25 don't require as much monitoring for
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1 environmental reasons of their wastewater flow,
2 and they were still bearing the $30 a month
3 charge versus an Anheuser-Busch. So, this
4 proposal restructures that compliance charge to
5 what we think makes it more fair and equitable.
6 So, there are tiers so that if a
7 customer is an H & R Block, which is 94 percent
8 of our commercial customers, they will pay less
9 and it ramps down from the $30 a month which
10 they'll be paying for one more year to just
11 over $2 a month by fiscal '12. Conversely, the
12 larger commercial customers will then pay more
13 relative to the amount of monitoring that's
14 required for clean water.
15 Q. How did MSD develop this five tier
16 structure?
17 A. We looked at the cost. We do have a
18 component of the District that does nothing but
19 monitor these types of environmental components
20 in the wastewater flow. We looked at their
21 costs and we determined through their costs on
22 an inspection and sample basis how much was
23 associated to varying levels of commercial
24 customers. Usually the larger the customers,
25 the more the number of inspections they need
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1 and the number of samplings. Not always the
2 case. You can have a restaurant, small, but
3 they have grease going into their drains so
4 that may require more of a sample, more
5 sampling.
6 So, we looked at their costs and we
7 were able to discern what levels of monitoring
8 apply to different sizes of commercial
9 customers, and on that we were able to use that
10 as the basis to charge back, if you will, the
11 cost of that compliance based on commercial
12 charges.
13 Q. Okay. Why did MSD define the level
14 of effort by the number of inspections and
15 samples needed to assess the compliance of each
16 residential customer?
17 A. Primarily because that's the cost
18 driver, and MSD, since we are not a profit-
19 oriented company, we have to recover our costs,
20 so it's tied as closely as we could to the
21 cost.
22 Q. Are there any other cost drivers
23 besides the inspections of the sampling?
24 A. No. I mean, there is a level of
25 regulatory monitoring that occurs across the
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1 District, so part of that compliance charge was
2 to shift that to basically everybody. So,
3 everybody shares the cost of that more generic
4 kind of monitoring but it's all tied to one
5 monitoring cost.
6 Q. What are MSD's anticipated environmental
7 compliance costs for non residential customers
8 for this year?
9 A. I don't have that handy. I don't
10 have it handy right now. I would have to look
11 that up.
12 Q. Is that something you prepared and
13 have available or is that something that you
14 haven't --
15 A. No, we can make it available.
16 Q. Okay, great. And then what portion
17 of MSD's costs are recovered from each customer
18 tier level, you know, 1 through 5, for each
19 year?
20 A. I don't know on a percentage basis
21 the total cost. As I said, we tried to
22 structure the rate so it recovered the costs
23 associated with each of those types of tiers
24 but I don't have the exact percentage
25 proportion right now.
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1 Q. So, the goal would be to recover as
2 close to 100 percent of those costs as possible?
3 A. Definitely. That's how the entire
4 rate proposal is designed. We have to recover
5 our costs.
6 Q. Okay. Are there any customers that
7 do not fall into one of the five tiers for any
8 reason?
9 A. Residential. It only applies to
10 commercial customers. And multi-family, it
11 doesn't apply to multi-family.
12 Q. Are there any exemptions or
13 opportunities for non residential customers to
14 move down in a classification? For example,
15 originally identified as a Tier 5 then would be
16 reclassified as a Tier 4?
17 A. I suppose that's a possibility. We
18 didn't really factor that kind of movement into
19 the proposal.
20 Q. Okay. With respect to the budget,
21 what are the inflation allowances used in the
22 rate study report and how are these derived?
23 A. There were -- I can talk generally to
24 it since I don't have it in front of me, and I
25 think the more specific information would come
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1 from Mr. Barber, but for the most part, we used
2 inflationary types of percentages but then
3 there are key components of our budget that do
4 not bear on inflation. As we all know health
5 benefit costs are very high, our pension plan
6 growth is based on investments and how much we
7 have to contribute. Those are two big
8 categories that are out of, say, whack and
9 there are some others, but for the most part,
10 we try to gauge it off of inflation.
11 Q. Okay. And how do these inflation
12 allowances compare with previous budgets for
13 MSD? For example, are they higher, are they
14 lower, are they the same?
15 A. They are slightly lower. We don't
16 tag them to what inflation is right now,
17 recognizing that we are kind of in an
18 extraordinary situation right now in the
19 economy, so we try to do the best we can and
20 say what was the historical average, yet we
21 know the historical average was probably too
22 high to take going forward. So we try to do
23 kind of a best estimate as we plan the worst
24 case scenario with the best case scenario.
25 Q. How do these inflation allowances
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1 compare with other budgets for other sewer
2 districts across the country?
3 A. I can't tell you that. I don't know.
4 Q. That's something you haven't studied?
5 A. No.
6 Q. Do you know if there is anyone on
7 MSD's staff who has studied that?
8 A. Not to my knowledge, no.
9 Q. Do you anticipate that there will be
10 any deficiencies or challenges with the budget
11 that's currently being reviewed by the Board of
12 Trustees?
13 A. No, I don't. We historically come
14 under budget every year and we do have to
15 present a balanced budget, and given that we
16 tightly budget and we tightly manage to that
17 budget, I don't foresee any problems. That's
18 the general operating budget I'm referring to.
19 Q. Thank you. And shifting topics a
20 little bit to the taxing subdistricts. What
21 portion of the SEP is associated with MSD's two
22 taxing subdistricts, the Lower Meramec River
23 Basin and the Missouri River Bottom?
24 A. I can't answer how those projects
25 fall into those two subdistricts. That would
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1 be a question for Brian Hoelscher.
2 Q. Mr. Hoelscher?
3 A. Yes.
4 Q. And what was the amount of the ad
5 valorem tax revenue collected in these
6 subdistricts prior to 2008?
7 A. In those particular two?
8 Q. Correct?
9 A. I would have to check and get that to
10 you. I don't have it in front of me.
11 Q. But that's information that you would
12 have available?
13 A. Yes, it is.
14 Q. Okay. Thank you. And my final
15 question, why have ad valorem taxes not been
16 levied in either subdistricts since 2008?
17 A. Those are wastewater only
18 subdistricts. All the other subdistricts we
19 have are stormwater. When the stormwater
20 litigation came on in and that rate was
21 determined to be unconstitutional, we put those
22 taxes back in place; however, those two
23 subdistricts are wastewater only and so we
24 don't run wastewater with taxes, so there are
25 no taxes in those two.
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1 MR. KINDSCHUH: Okay. Thank you for
2 your time. The MIEC has no further questions.
3 COMMISSIONER TOENJES: Thank you,
4 Mr. Kindschuh. Ms. Langeneckert, do you have
5 any questions?
6 MS. LANGENECKERT: I do.
7
8 EXAMINATION
9 Questions by: LISA C. LANGENECKERT
10 Q. I'm referencing your testimony,
11 Exhibit 90, on page 2, and lines 5 through 7.
12 A. Am I looking at direct testimony
13 or --
14 Q. Yes, your direct testimony.
15 A. Okay.
16 Q. And you state that the rate proposal
17 is necessary to avoid jeopardizing the
18 District's compliance with anticipated
19 regulatory requirements.
20 A. Yes.
21 Q. Does the District now know what those
22 regulatory requirements are going to be for
23 compliance?
24 A. What that refers to is the Consent
25 Decree and the entire CIRP is structured to
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1 comply with that CD, so that is limited to the
2 CD.
3 Q. So, you learned of that before any of
4 the rate increase was put together?
5 A. Excuse me?
6 Q. You knew what the amount would be and
7 what your requirements would be for compliance
8 before the actual rate case was developed?
9 A. No, no, that is not what I said.
10 Brian Hoelscher in engineering developed a CIRP
11 to meet, what my understanding is, what he
12 knows of the CD. I wasn't privy to those
13 conversations as part of the mediation, and so
14 it's basically engineering presented what that
15 program needs to be and we structured a rate to
16 make sure that it could be funded.
17 Q. Okay. So, at the time the case was
18 designed, someone was aware of what the
19 requirements would be so that it could meet
20 those requirements?
21 A. I really can't -- I don't know. I
22 don't know what engineering knows and what they
23 were basing it on. I just know that the
24 premise of this was to parallel and be in
25 compliance with the Consent Decree.
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1 Q. Mr. Hoelscher?
2 A. Yes. The projects and CIRP would be
3 Mr. Hoelscher.
4 Q. Did you participate in the decision
5 to seek the $945 million in bond authorization
6 to help the MSD's CIRP program?
7 A. I was involved with that discussion
8 to the extent that it would affect the cash
9 debt relationship and the rate proposal and
10 what that would do with rates.
11 Q. If MSD receives voter approval for
12 the bond funding, the plan is to phase in rate
13 increases, is that correct?
14 A. Yes.
15 Q. And in some of the materials, the
16 numbers showed 11 to 12 percent and others it
17 showed 13 percent. So, what is your
18 understanding of how the rates would increase
19 over that four year period?
20 A. 13 percent a year.
21 Q. These are the same questions I asked
22 Mr. Tyminski so you probably know what is
23 coming. If MSD doesn't receive the voter
24 approval for the bond issue, the plan is to
25 increase the rates by 155 percent and the rates
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1 would remain flat for the remaining years, is
2 that correct?
3 A. Right. In the rate proposal, the
4 rates hit about $47 a month by fiscal '16 and
5 ramps up to that point from fiscal '13. If we
6 didn't get the bond authorization, those rates
7 would have to go up to about $73 a month right
8 away and then they would level out which was,
9 if you remember the last Rate Commission, there
10 was the concept of, you would use PAYGO,
11 meaning 100 percent cash, to a certain point,
12 you would use bonds to a certain point, and
13 eventually they would cross and you would be in
14 100 percent PAYGO situation.
15 In the last proceedings, that is what
16 we proposed is that we use PAYGO longer before
17 we tapped into debt. And then at the point
18 that it would go to 100 percent debt, it levels
19 out basically at rate of inflation.
20 Well, given the need for bonds now
21 and if we don't get that authorization, we
22 would be basically crossing into that 100
23 percent PAYGO right away and the same premise,
24 it then would stay at about inflationary rate
25 going forward. That is why you see the drop
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1 and then it stays flat. Not that you can see
2 my hands moving on the record.
3 Q. And that's why there is no phase-in
4 of PAYGO?
5 A. In the second alternative?
6 Q. Yes.
7 A. Yes.
8 Q. Well, not alternative, but yeah.
9 A. Yes.
10 Q. The default program.
11 A. Right. It assumes that since we
12 don't have bonds to fund what is the
13 significant portion of that CIRP, we have to
14 get the money somewhere, we would have to get
15 it out of PAYGO.
16 Q. You would have to get it all up front?
17 A. Right.
18 Q. Is that because all of the projects
19 that you have to develop would be paid for in
20 the very beginning?
21 A. Well, the projects still have to be
22 paid for and right now the projects are for
23 each of those components paid for with a piece
24 of cash and a piece of debt. When you remove
25 that debt, you still have to pay for that total
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1 CIRP and the only place you can make it up is
2 in the cash, okay. And then that gets you the
3 rate that you need to sustain what is pretty
4 much an equal CIRP every year. It's about 250
5 to 270 in terms of a million.
6 So you get up to cover your first
7 $250 million chunk what you need through cash
8 and then every year you are doing about 250, so
9 that same rate can be sustained and funded the
10 same every year.
11 Q. Has the District considered an
12 alternative CIRP project schedule if the voters
13 reject the bond issuance?
14 A. No, not to my knowledge. The CIRP is
15 what we need to comply with the Consent Decree.
16 Q. So, it's because of the Consent
17 Decree, then, it is that amount and you
18 couldn't change it even if you wanted to?
19 A. That's my understanding.
20 Q. Now, you reference Mr. Hoelscher's
21 direct testimony -- I already asked him this.
22 In Mr. Barber's testimony, he was asked the
23 question and maybe that you will prefer that I
24 ask him this but I wanted to get your opinion.
25 He states that his testimony, and I can give
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1 you the page reference if you have it, page 16,
2 line 3. He states, "That although anticipated
3 expenditure levels are presented as fixed, the
4 District has scheduling flexibility of the
5 projects within each major category." If the
6 District has scheduling flexibility, was this
7 considered in determining the PAYGO alternative
8 or is your answer still the same as previously?
9 A. I would rather leave that to
10 Mr. Barber. By major category, I think you can
11 look at page 3.6 in the rate report and that
12 will give you the CIRP broken down by the
13 types, CSO, SSO, et cetera. My understanding,
14 I'm not sure, you would have to defer to
15 Mr. Hoelscher, if we have any flexibility to
16 move them between those major categories, but
17 that's what Mr. Barber is referring to is those
18 major categories, not deferring or changing
19 projects.
20 Q. Okay. I'll check with Mr. Barber.
21 Did the District consider an alternate amount
22 of bond authorization? I know Mr. Tyminski
23 said no but I didn't know if perhaps you had or
24 other divisions in the District have?
25 A. I can't remember the exact dollars.
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1 It might have changed from $900 million to 945.
2 It was always very close to the 945.
3 Q. So, the percentage was generally the
4 same?
5 A. Right. Right.
6 Q. And do you know if there is a reason
7 why that was not considered other alternatives
8 other than the end posts as Mr. Tyminski
9 described?
10 A. We were trying to take an approach of
11 being -- as having a practical balance as we
12 can between bonds and cash to still provide as
13 much mitigation of rate increases as we could.
14 So that was still our philosophy to try to use
15 the bonds to keep the rates what we think is as
16 low as practical given the CDs.
17 Q. And a little bit earlier after lunch
18 Mr. Tyminski had said what he thought that the
19 debt-to-cash ratio was for the company. Are
20 those numbers that you also agreed to?
21 A. Agreed to --
22 Q. Do you agree with the numbers, the
23 percentages he gave?
24 A. Yes.
25 MS. LANGENECKERT: That's all I have.
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1 Thank you.
2 COMMISSIONER TOENJES: Thank you, Ms.
3 Langeneckert. Mr. Mueller.
4 MR. MUELLER: I have no questions.
5 Thank you.
6 COMMISSIONER TOENJES: Mr. Arnold.
7 MR. ARNOLD: Thank you, Mr. Chairman.
8 I do have at least one area I would like to
9 explore a little bit.
10
11 EXAMINATION
12 Questions by: JOHN FOX ARNOLD
13 Q. Good afternoon, Ms. Zimmerman.
14 A. Good afternoon.
15 Q. Do you have handy MSD 11B --
16 A. Yes.
17 Q. -- which represents the responses to
18 our discovery request?
19 A. Yes.
20 Q. Could you turn to page 25. In
21 response to our request, you provided a
22 schedule of the bad debt expense and write-offs
23 for the years 2006 through 2010 and also part
24 of 2011. If I read this schedule correctly,
25 the bad debt in fiscal year 2006, now, is this
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1 at the end of the fiscal year?
2 A. End of the fiscal year.
3 Q. Okay. Was $3,160,972?
4 A. Yes.
5 Q. All right. And at the end of 2010,
6 it was $10,187,508?
7 A. Correct.
8 Q. I won't mess with the partial year
9 for '11. What is the policy of the District
10 with respect to writing off bad debt?
11 A. Bad debt is written off per our
12 financial statements after 12 months. So, if
13 the debt is older than a year, it is written
14 off for financial statement purposes. There is
15 a percentage, though, that the debt is looked
16 at in total and then there is a probability
17 applied. So, if something is 90 days
18 delinquent, what is the probability you would
19 collect it. Probably close to 100 percent. As
20 the accounts get older, your probability of
21 collection goes down. So, those write-offs are
22 a combination of the probabilities of what we
23 would collect of things that are 12 months or
24 less in length. Did that answer your question?
25 Q. Yes, ma'am. Does the staff of the
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1 District have any opinion as to why the bad
2 debt rose, I guess, a little more than three
3 fold over the four year period?
4 A. There is two things that probably
5 impacted that the most. The rate increases
6 were happening through there. So, someone who
7 might be delinquent on a current bill, then
8 their delinquency grows because the bill itself
9 has gone up. In addition, we are also starting
10 to see the impact of the economy. Delinquencies
11 have increased since the economy has gotten
12 worse and people didn't have the ability to
13 pay, so it's a combination of those two things.
14 Q. Now, at our request you provided a
15 description of the District's process for
16 payment of receivables from delinquent accounts?
17 A. Correct.
18 Q. What I'd like to do, if I may, is go
19 through each of these areas and have you
20 describe it for us.
21 A. Fine.
22 Q. How about pre collect?
23 A. Pre collect is the initial portion of
24 our collection process. It's pretty much an
25 automatic call on your phone, I'm sure
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1 everybody has gotten them. They are referred
2 to as robocalls. If someone is 30 days
3 delinquent, they'll get an automated call just
4 kind of reminding them hey, and we do that for
5 the first 90 days. So, that's pre collect.
6 Q. Now, you started this program in
7 January of this year?
8 A. Yes. As a pilot, like a beta
9 program. We are about to implement it
10 permanently but we did have considerable
11 success on a beta basis.
12 Q. And why did you pick 120 days as the
13 delinquency period?
14 A. 120 days is pretty much a standard.
15 When you look at collection operation, 120 day
16 delinquencies is the first threshold that you
17 then take it to another level in the collection
18 process.
19 Q. All right. Let's go to collection
20 agencies where you're talking about 90 to 120
21 days. It seems to be the same metric, if you
22 will, for the pre collect?
23 A. Correct. I mean, we hit accounts at
24 120 days and we move them to collection
25 agencies. Robo Cops -- Robo Cops, I have a
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1 22-year-old who is a film major so I've got
2 movies on my mind. Anyway, 120 days, we don't
3 necessarily stop these calls when they move to
4 a collection agency, we will continue them for
5 some time after that to still give someone an
6 opportunity to bring their account current.
7 But it does at 120 days, our system does
8 transfer those accounts that have hit 120 days
9 delinquent to one of our four collection agencies.
10 Q. All right. How are the collection
11 agencies compensated?
12 A. They are on a commission basis.
13 They, whatever they collect, they get 15 percent,
14 which the average in the industry is about 18.
15 So, we are able to pay. But you have to
16 understand, where we pay 15 percent, they bring
17 in about $21 million of bad debt a year. So,
18 it's a pretty good return on investment.
19 Q. Now, I'm having a little trouble
20 understanding the material at the page -- at
21 the top of page 26 because I'm not sure that I
22 understand the time period to which you refer
23 when you talk about 15,268 accounts at $11
24 million.
25 A. When we -- we have revamped our
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1 collection operation over the last year. We
2 are not completely finished implementing the
3 entire plan but what we have is implemented
4 what we call the algorithm. In the past,
5 collection agencies were basically allowed to
6 keep a delinquent account until they told us
7 that they couldn't get anything out of it. And
8 what we saw through looking at those numbers is
9 they weren't necessarily going after the longer
10 term delinquencies, they were going after low
11 hanging fruit so they could get their 15
12 percent, and they would hold the account for a
13 significant amount of time.
14 We put this algorithm in place
15 basically telling them you have six months and
16 you have to not only collect a piece of a
17 delinquency but you have to get them to pay --
18 keep the current charges going, so then we
19 continue to make headway, and that algorithm is
20 in place and if after six months they have
21 three months of which they did not meet the
22 algorithm, we pull the account away from them
23 and we take it to the next step.
24 When we initially put this in place,
25 we looked at their accounts and found thousands
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1 of accounts that they didn't meet the
2 algorithm. So, we pulled all of those accounts
3 and we shifted them partially to a second
4 placement but mostly to the litigation phase of
5 our process and that's what that represents.
6 Q. All right. Thank you. Now, the last
7 sentence of that first paragraph you refer to
8 15,768 accounts valued at $26 million. Are
9 these in the first collection agency payment
10 process or in the second?
11 A. That's in the first.
12 Q. All right. So, you've identified $37
13 million, something north of 30,000 accounts
14 that are in the first phase of this collection
15 program?
16 A. By first phase --
17 Q. I'm sorry, the first collection
18 agency phase?
19 A. Yes, yes. We were able to determine
20 basically what they hadn't been touching for
21 quite a long time and we yanked all of those
22 and put them into our legal status.
23 Q. All right. Then please describe for
24 me the activities of the second placement
25 collection agency?
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1 A. The second placement agency is the
2 same as the first. The only difference is
3 customers hear a different name and they see a
4 different letterhead and it's been proven that
5 that produces a little bit more result. People
6 tend to think it's been ratcheted up and in
7 reality it's the same thing as the first
8 collection agency was doing.
9 Q. All right. And then describe for me
10 the activity of the law firms.
11 A. The point that an account has gotten
12 either too old or the collection agency hasn't
13 made any progress, we place a lien on that
14 property, we prepare packets of information
15 that are required to take it to a law firm, and
16 then they can start legal proceedings to try to
17 collect the money. We have three law firms
18 that are now helping us with that.
19 So, what this has resulted in is a
20 much faster collection path than we had in the
21 past but that's what the law firm portion
22 applies to.
23 Q. All right. Now, how are the law
24 firms compensated?
25 A. They are on a percentage basis also.
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1 Q. Do you happen to know what the
2 percentage is?
3 A. I'm not -- I don't think they get the
4 same as the collection agencies. I think it's
5 slightly less but I would have to check. I
6 don't have it in front of me. It's a
7 percentage commission, though.
8 Q. Would you be in a position to provide
9 that information?
10 A. Yes.
11 Q. Thank you. Ms. Zimmerman, with
12 respect to the low income program, you indicate
13 that the program will discount the bill for an
14 individual who qualifies for low income by 50
15 percent upon their payment of the other 50
16 percent, and that there are approximately 1,900
17 customers in the program. What percentage, if
18 you know, of the low income program qualifiers
19 are also delinquent?
20 A. That's approximately 20 percent.
21 Q. Now, in response to our request, you
22 prepared and filed Exhibit MSD 11A33?
23 A. Yes.
24 Q. Age receivables. If I read this
25 correctly, from 2006, the number of accounts
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1 has grown from 71,791 to 177,293. Now, these
2 accounts vary in delinquency from 15 years to
3 three months, and the dollars have grown from
4 $42,444,213 to $75,223,520. Has any of this
5 been written off?
6 A. Anything greater than one year is
7 written off.
8 Q. All right. So that reading down
9 from -- let's take --
10 A. If I could clarify. It's written off
11 for financial statement purposes.
12 Q. I understand.
13 A. But it's still money that we go after
14 to collect.
15 MR. ARNOLD: All right. So that --
16 you just answered my next two questions. I
17 think I'm going to let you go. Wait a minute,
18 with your permission, Mr. Stannard.
19 COMMISSIONER TOENJES: Yes.
20
21 EXAMINATION
22 Questions by: BILL STANNARD
23 Q. Thank you. I just had a few more
24 questions on the delinquent account and bad
25 debt area just to make sure I understand the
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1 information that has been provided. I'm
2 going -- I'll go back to Exhibit MSD B, the
3 responses to the first discovery request,
4 question 51 on page 25, just to make sure I'm
5 understanding what is being presented in the
6 response.
7 For those historic years 2006 through
8 2010 and the partial year 2011, there was a
9 table that presents three columns. One, the
10 actual bad debt which was determined as being
11 at some level of delinquency during the year to
12 determine those would be bad debts, and then
13 the actual write-off balance, and then a column
14 called year end bad debt balance. So that the
15 bad debt balance is not what is in your reserve
16 or bad debts on your balance sheet but is the
17 total of all of the accounts whether or not
18 they've been written off that you determined to
19 be doubtful at this point. Is my understanding
20 correct?
21 A. Yes. That year end debt balance is
22 pretty much the dollar amount that is still out
23 there to try to collect.
24 Q. In total?
25 A. In total, yes.
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1 Q. So that when I -- I don't have -- I
2 don't believe the 2010 financial statements are
3 an exhibit but I'm looking at your June 30,
4 2010, balance sheet and there is a receivable
5 less allowances in 2010 of $4,055,258 and
6 that's what's on the balance sheet as an
7 allowance for doubtful accounts.
8 A. The receivable? Are you talking
9 about the receivable?
10 Q. The financial statements says the
11 sewer service charges receivable less allowance
12 of $4,055,258. So, that was the, again, for
13 the financial statement purposes, the allowance
14 for doubtful accounts at that point. That's
15 not in -- because then on the other -- back on
16 question 51, for 2010, we had a bad debt
17 balance of $51,858,057. So, the difference is
18 that of that $58 million, all but a lot of that
19 has been written off already for financial
20 statement purposes, not for collection purposes?
21 A. Correct. Yes.
22 MR. STANNARD: That's all I have.
23 COMMISSIONER TOENJES: Thank you.
24 Any further questions, Mr. Arnold?
25 MR. ARNOLD: No, sir.
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1 COMMISSIONER TOENJES: Any Rate
2 Commission members have any questions for this
3 witness? Yes, Mr. Koenen.
4
5 EXAMINATION
6 Questions by: GLENN KOENEN
7 Q. Very quickly. It appears the number
8 of past due accounts is still rising, is that
9 true?
10 A. Yes, but the collection plan is just
11 now starting to bear fruit so you're not seeing
12 it in the numbers there, but in fact in the
13 last several months, we've seen a substantial
14 increase in the collection of those bad debts.
15 We are anticipating over the next year or two
16 as that collection plan really starts to make
17 an impact, that we will start to see that
18 number either stabilize or even get better.
19 So, we are hoping this plan will help deal with
20 that. We still won't have any control over the
21 economy, so I don't know what real impact that
22 will continue to have.
23 Q. You mentioned that part of the reason
24 for the increase in the bad debt seemed to be
25 the last rate increase. Would you expect a new
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1 rate increase to budge that number upward again?
2 A. Yes. There is something that happens
3 obviously if the rate goes up, more and more
4 people have a hard time paying that,
5 particularly compounded by the economy. People
6 resist paying that. There is a resistance.
7 So, we would expect to see those delinquencies
8 be impacted by that. That has been factored in
9 somewhat to the rate report but not a lot. The
10 last go around with the Rate Commission, it was
11 decided that resistance should not be factored
12 into the rate.
13 COMMISSIONER TOENJES: Yes, all the
14 way at the end. Ralph and then Mr. Tomazi.
15
16 EXAMINATION
17 Questions by: RALPH WAFER
18 Q. What percentage of delinquencies are
19 residential accounts versus commercial accounts?
20 A. We have about 420,000 total accounts,
21 30,000 of that are commercial. I don't have
22 the percentage exactly but just by the nature
23 of how many more residential and multi-family
24 accounts that we have, the largest portion of
25 those delinquencies fall within residential and
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1 multi-family.
2 Q. In managing the data when a house or
3 building becomes unoccupied, how long does it
4 take for MSD to learn that and realize its
5 effect -- in other words, it's no longer
6 producing wastewater?
7 A. We generate our bills based on water
8 usage. That comes from primarily American
9 Water. Most of our customers, a lot of our
10 customers are in the county. We get water
11 usage from them, we get water usage data from
12 the city, and from Kirkwood. Those are
13 automatic fees into our system. As long as we
14 are getting water usage readings, we continue
15 to bill.
16 If it's an empty building and the
17 owner has gone through the process of having
18 the water officially shut off, that will come
19 through in those readings and then we stop
20 billing that account.
21 Q. So, you feel that's as effective a
22 method you have of knowing that the debts that
23 are out there, they are not false debts, they
24 are not -- there is not money there that you're
25 trying to collect because -- I'm thinking in
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1 the city how many are on -- are not metered
2 that you don't have any way of knowing unless
3 the water division communicates with you
4 clearly or you communicate with them.
5 A. There are -- and we do. They are
6 part of that data feed but let me just make the
7 distinction. In the county -- and you'll see
8 that in our rate structure. In the county,
9 most people have meters, overwhelming people
10 have meters, so we get a meter reading. In the
11 city, that's not the case. The majority do not
12 have meters. So, there is an equivalent
13 component charged to the city and it's based on
14 what we call attributes, number of rooms,
15 number of bathrooms, showers, et cetera. The
16 city does give us that information, okay, and
17 then we apply those same calculations to that.
18 When a house is vacant, that's one of
19 the detriments to the people in the city. They
20 have less ability to control their usage, if
21 you will, because it's not based on meters.
22 You can't exactly shut off a room. So, that is
23 one of the disadvantages to city residents not
24 having meters, but we do get data from the city
25 that we use to chart their bills.
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1 Q. Do you get data from -- when
2 buildings are renovated and swimming pools are
3 constructed that would obviously affect your
4 rating, it would affect the water division
5 rating too, do you get that data on a
6 continuous basis? Are you confident in what
7 you get?
8 A. Residential customers, we go through
9 what is called an annual rate or usage
10 adjustment. We only take readings during what
11 we call the winter period so it doesn't take
12 into account the building of swimming pools,
13 washing people's cars, running a sprinkler. We
14 only grab the usage period that we think is a
15 pure measurement of what actually goes into the
16 system and then we take that usage once a year,
17 we then calculate residential usage, and it
18 stays constant then all year until we go
19 through it again in July. So, we are trying to
20 isolate what we call pure -- goes into the
21 system pure.
22 Q. That makes sense and I knew that. I
23 shouldn't have added swimming pool to my
24 question. That was more of a City Hall question.
25 A. Maybe I misunderstood.
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1 Q. No, you didn't. It was right there.
2 But in a flat rate account when renovation is
3 done and bathrooms are added, which is frequent,
4 are you confident in the information you get
5 that that is reflected in your knowledge? I
6 know you get information from the city water on
7 a metered account. Other than that, you're
8 just dependent upon what city water tells you
9 is at that house or that building?
10 A. That's correct.
11 Q. And there is no auditing process or
12 any investigation you make to ensure that --
13 A. No. No, there isn't.
14 Q. Well --
15 A. We haven't done any audits.
16 MR. WAFER: Done.
17 COMMISSIONER TOENJES: Thank you.
18 Mr. Tomazi.
19
20 EXAMINATION
21 Questions by: GEORGE TOMAZI
22 Q. One quick question, Ms. Zimmerman.
23 The number of people that qualify for the low
24 income assistance program, is that set by a
25 fixed budget or a certain percentage or all of
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1 the above?
2 A. It's based on a combination of
3 household income, assets, those are the two
4 primary components, but in assets, the
5 residence is not included, so if you have a
6 home, that's not included.
7 Last time we came to the Rate
8 Commission, that program was only offered to
9 residential customers. We've now expanded that
10 so it includes multi-family. We've known for
11 some time that tenants are in need more times
12 than not of this type of assistance. So, we
13 have revamped that program so it's on a voucher
14 basis. So multi-family or tenants when they
15 meet the requirements get these vouchers and
16 they are able to pay -- they get the 50 percent
17 discount and as long as they are able to show a
18 voucher which is barcoded, they get advantage
19 of the 50 percent, and that was our way to get
20 the relief to the tenant rather than to the
21 property owner because then we couldn't
22 guarantee that the tenants themselves were
23 getting 50 percent, the property owner was
24 taking it all. So, we've expanded that help
25 but the requirements are basically the same.
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1 Q. In the proposed rate increase,
2 normally what percentage or what dollar amount
3 has been factored into the next four years?
4 A. I would have to check on the rate. I
5 don't have it off the top of my head but right
6 now we are at 1,900 low income customers. We
7 don't anticipate that going through the roof.
8 We expect some steady increases because of the
9 voucher program, but that's only been in place
10 for a short time.
11 COMMISSIONER TOENJES: Any other
12 questions, Mr. Tomazi?
13 A. That question, Mr. Tomazi, about the
14 dollar amount, Mr. Barber will be able to
15 address that.
16 COMMISSIONER TOENJES: Mr. Goss.
17
18 EXAMINATION
19 Questions by: BRAD GOSS
20 Q. How does the delinquency rate in the
21 District compare to those of other districts?
22 A. I haven't really done that much
23 comparison to other districts.
24 Q. Did I understand you correctly that
25 delinquency rate isn't being factored into the
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1 current rate proposal?
2 A. It's being factored into the extent
3 that we are seeing usage go down and number of
4 accounts decrease but there hasn't been a
5 resistance factor greatly factored into that.
6 Q. No kind of bad debt set aside or
7 anything like that?
8 A. No. There is reserve set aside, so
9 bad debt is taken into consideration. The
10 resistance factor, what I meant is the
11 incremental change as rates go up.
12 Q. So, the fact that you, if I heard
13 your numbers right, you had like a 200 percent
14 increase in the amount of delinquent accounts
15 over the last rate period, is that right? Go
16 from $3 million to $10 million?
17 A. It's kind of a little bit of an
18 anomaly. When the stormwater rate was found to
19 be unconstitutional, we had to stop billing
20 those stormwater accounts, right? So, we had
21 to put those into our bad debt and that was
22 40,000 accounts that paid stormwater only. So,
23 you're seeing kind of an artificial increase
24 built in there. So, we could include those in
25 our calculations.
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1 Q. Have you supplied the unadulterated
2 unofficial amount to anyone so we could true
3 the numbers up?
4 A. No, we don't have it but we can get
5 that for you.
6 Q. And could you explain to me what the
7 priority of MSD's lien is when the non payment
8 occurs?
9 A. All I can say is I know it's near the
10 top. It's either the second or the third from
11 taxes or whatever, but I don't know off the top
12 of my head. I just know it's a fairly strong
13 lien.
14 Q. That was my understanding as well.
15 It has priority over the loan of a first deed
16 of trust, for example, is that your understanding?
17 A. Yes.
18 Q. The collection policy seems to be one
19 that has a fairly lengthy period of time in
20 this collection effort. Is there a reason for
21 that?
22 A. To the point we get to a lien or --
23 Q. To the point you get to a lien. If I
24 was hearing you right.
25 A. We could place a lien on an account
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1 that was delinquent immediately. It's purely
2 an aspect of manpower.
3 Q. Does that notice go to the lenders,
4 go to the holders of the deed of trust on those
5 properties?
6 A. I don't know the details of actually
7 filing each lien. So, I'm not sure.
8 Q. Is there any settlement policy the
9 District has with respect to settling these
10 disputes, any guidelines?
11 A. There aren't necessarily -- the only
12 guideline is really we do not settle on actual
13 sewer charges. When an account is delinquent
14 and it gets to a point where someone is either
15 wanting to make a settlement, we will make
16 settlements more times than not, writing off
17 late charges, but we never go beyond settling
18 and giving up any actual sewer charges.
19 Now, we do routinely make payment
20 plans. I wouldn't consider those settlements
21 but people will call and we will work out a
22 payment plan between two and three years
23 interest free and they are able to pay down
24 their account.
25 Q. In the city, the account continues to
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1 remain open unless somebody is to shut off the
2 water, do I hear you correctly? You're not
3 actually meter reading the majority of the
4 homes in the city?
5 A. Right, we are not metering them.
6 Q. If someone leaves a building and the
7 building becomes vacant but they don't go to
8 the trouble of notifying the water department,
9 they just continue to generate bills, MSD will
10 continue to show that as a live account, is
11 that right?
12 A. Yes, until we have indication from
13 the water usage providers that either there
14 isn't any water usage or for some reason there
15 isn't a basis to bill, we continue to bill. We
16 will bill at a minimum amount which is like 3
17 CCF, 2 CCF, but we continue to bill. We have
18 to have basic -- we have to have some type of
19 information to justify to stop billing.
20 MR. GOSS: Thank you.
21 COMMISSIONER TOENJES: Mr. Schneider.
22
23 EXAMINATION
24 Questions by: ERIC SCHNEIDER
25 Q. In your testimony, Ms. Zimmerman, on
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1 page 5 here, you talk about the question was
2 what was the percentage of total operating
3 budget the District actually spends. You said
4 the three year average is a favorable variance
5 of less than 2 percent. Do I understand that
6 correctly it means that for three years you
7 average being under budget by 2 percent?
8 A. I've been here ten years and we've
9 always been under budget. Last couple of years
10 we've been under 2 percent, and that's not
11 indicative of us spending every little penny in
12 the budget, we've just gotten better and better
13 at budgeting. They are very tight budgets now
14 and so that is correct. The last couple of
15 years it's been 2 percent.
16 Q. Where does the variance go, the
17 positive variance go? Does it go to the
18 capital plan or does it go to the operating
19 reserve?
20 A. That is our first choice is to shift
21 that variance, positive variance, to the CIRP
22 to escalate houses, to do more projects as
23 Brian indicated. There are projects in the
24 queue where we can put more money there to
25 bring those projects on-line.
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1 Q. You annually switch it over to the
2 CIRP or do you do it in larger increments like
3 over two or three years?
4 A. It's usually annually at the end of
5 the year.
6 Q. So, roughly how much money is that in
7 that 2 percent? What dollar amount is that
8 roughly?
9 A. It's about $2 million or so.
10 Q. Then on the same page, actually, you
11 talk about you said that the inflation
12 allowance used in the rate study are
13 reasonable, you answered yes to that question.
14 Can you give some of the inflation allowances,
15 percentages that you used in the major
16 categories, what allowances you used to create
17 this budget?
18 A. Mr. Barber can give you the actual
19 details but it's around 3 percent on an -- just
20 a basic inflationary kind of factor, if I
21 remember. Keith will be able to verify that.
22 It's double digits on benefits and pension and
23 things like that.
24 MR. SCHNEIDER: Okay.
25 COMMISSIONER TOENJES: Any other
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1 questions? I have one question or a couple of
2 questions.
3
4 EXAMINATION
5 Questions by: LEONARD TOENJES
6 Q. I'll shift away from the debt
7 discussion here. Just to sort of set the
8 stage, I guess I live in a construction world
9 where we've had -- we negotiate a labor
10 agreement, we negotiate overall rates for
11 trade, per trade, so much per hour and out of
12 that negotiated rate comes pension, wages, and
13 medical, all out of there. So, when I looked
14 at the, you know, I know some of the trades
15 have had freezes, some have had rollbacks, and
16 I look at page 2.3 when I see 3 percent per
17 year for wages, I see 10 percent for group
18 insurance from 2011 to 2015, and 6 percent in
19 2016, then I see pension increases of 8.4, 9.3,
20 10.2, 11.4 and 5 --
21 A. Which page?
22 Q. Page 2.3.
23 A. Of the rate proposal.
24 Q. Of the rate proposal, yes.
25 A. I see where you are.
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1 Q. I guess when I start thinking about
2 some math here and start talking about the
3 tight budgeting and economy and resistance
4 factor, I've had several people raise this
5 issue to me that if you add up the salary plus
6 the insurance, plus the pension, what is
7 that -- my question is what does that total up
8 in an annual increase in personnel costs
9 because it's not 3 percent, it's probably more
10 like 4 or 5, 6 percent annually by the time you
11 go all in. In the world I'm living in, we go
12 all in. Here is what my total package went up
13 this year.
14 Now, what is the total package? I
15 guess I probably don't have it which I
16 understand but I'd like to have some
17 information of what the total package is when
18 you're looking at all in wages, medical,
19 pension, what does that really mean for what it
20 costs the District per employee to employ that
21 person? It's not 3 percent.
22 A. No. This might give you a little bit
23 of a benchmark but I can get those numbers for
24 you and calculate in that detail. But someone
25 is hired in at a salary, obviously, and then
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1 when we want to do all in, we usually add 41
2 percent. That then puts that all in, the
3 benefits, the pension, FICA, all the other
4 costs associated with the salary.
5 Q. I guess what -- taxes are taxes but --
6 A. Right.
7 Q. We live in a world where people
8 haven't had a cost of living adjustment in two
9 years and I guess what I'd like to see is
10 what -- all I'm looking at is wages, pension,
11 and medical.
12 A. In terms of the percentage increase?
13 Q. In terms of the percentage increase
14 per year over the length of this rate proposal.
15 A. I see what you're looking for.
16 Q. Looking forward to what you have
17 here, if you could combine the 3 percent, the
18 10 percent, and the 8.4 percent, what does that
19 really mean in terms of --
20 A. In dollars?
21 Q. Yeah. In terms of overall increase.
22 That would help considerably, I think.
23 A. I can get you that.
24 COMMISSIONER KOENEN: I have a
25 follow-up question.
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1 EXAMINATION
2 Questions by: GLENN KOENEN
3 Q. Is your pension plan defined benefit
4 or defined contribution?
5 A. We just switched to defined
6 contribution is what we just switched to.
7 Q. Are the payments to the fund
8 automatic or are they calculated each year to
9 get to your target level based on investment
10 income and things like that?
11 A. Each year based on an actuary report.
12 COMMISSIONER TOENJES: I'm assuming
13 that these are determinations that are made by
14 the Trustees, not by the State?
15 A. Which determinations?
16 COMMISSIONER TOENJES: The wages,
17 salaries, overtime, group insurance, and
18 pension, those are numbers that are determined
19 by the Trustees?
20 A. Well, we factor those into our budget
21 but the Board approves the budget and they are
22 encompassed in there.
23 COMMISSIONER TOENJES: Okay.
24
25
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1 EXAMINATION
2 Questions by: JOHN L. STEIN
3 Q. What percentage of your employees are
4 bargaining unit employees for whom wages and
5 benefits are negotiated?
6 A. I would say two-thirds or so. 60
7 percent.
8 COMMISSIONER TOENJES: I just have
9 some sensitivity to that issue. Any other
10 questions by any of the Rate Commissioners?
11 Ms. Myers.
12 MS. MYERS: I do have one.
13
14 EXAMINATION
15 Questions by: SUSAN MYERS
16 Q. Jan, in reference to the bad debt
17 collection, does MSD have shutoff capability?
18 A. Technically we can shut off a sewer
19 is my understanding, I'm not an engineer, but
20 obviously we don't do that. It's not a pretty
21 picture if we were to do that. So, we don't
22 really have a shutoff. We do selectively on
23 commercial accounts, we don't do that that
24 often. It's one of the detriments to us
25 collecting bad debt. We are not like the water
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1 company and we are not like the cable company.
2 If you don't pay, they shut off the water, they
3 shut off the cable, whatever, and that tends to
4 get people to pay pretty quickly. We don't
5 shut off their ability to use their sewer. So,
6 we don't have what I call the big hammer to get
7 people to pay.
8 MS. MYERS: I have nothing further.
9
10 EXAMINATION
11 Questions by: GEORGE LIYEOS
12 Q. As it relates to delinquency for
13 other cities who have gone through this process
14 in terms of a rate increase, what kind of
15 increase are we looking at in terms of
16 delinquency rates?
17 A. Compared to other utilities?
18 Q. No. Compared to other sewer
19 districts in other parts of the country who
20 have gone through this.
21 A. I haven't done that kind of comparison,
22 comparing us to other sewer entities.
23 Q. Would somebody else know?
24 A. We -- I can get that information. I
25 just don't -- we haven't done it to this point.
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1 Q. Okay. Very good. I'd like to see
2 that. I don't know if the rest of the Rate
3 Commission would be interested in that number
4 but I think it's important to note going
5 forward. I let the Chair decide on that.
6 COMMISSIONER TOENJES: Good point.
7 Anything else as far as the witness? All
8 right. Let us thank you, Ms. Zimmerman, for
9 your testimony and let us take a break until
10 2:45.
11 (Break.)
12 COMMISSIONER TOENJES: It's 2:45.
13 Let us reconvene the Rate Commission of the
14 Metropolitan Sewer District and call our next
15 witness in order of testimony which is
16 Mr. Keith Barber. Mr. Barber, is the testimony
17 you're about to give the truth, the whole
18 truth, and nothing but the truth?
19 MR. BARBER: Yes, it is.
20 COMMISSIONER TOENJES: Thank you.
21 Does any member of the Rate Commission have a
22 question for Mr. Barber? Hearing none at this
23 time, Mr. Kindschuh, do you have a question of
24 Mr. Barber?
25 MR. KINDSCHUH: Yes, Mr. Chairman.
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1 COMMISSIONER TOENJES: Please
2 proceed.
3 MR. KINDSCHUH: Thank you. The MIEC
4 would like to introduce at this time Michael
5 Gorman of Brubaker & Associates. Mr. Gorman is
6 our consultant in this matter. And with your
7 permission, Mr. Chair, I would like to ask
8 Mr. Gorman to ask questions on behalf of the
9 MIEC.
10 COMMISSIONER TOENJES: Please
11 proceed, Mr. Gorman.
12 MR. KINDSCHUH: Thank you.
13
14 KEITH BARBER,
15 of lawful age, being produced, sworn and
16 examined, and says:
17
18 EXAMINATION
19 Questions By: MICHAEL GORMAN
20 Q. Good afternoon, Mr. Barber.
21 A. Good afternoon.
22 Q. I would like to refer you to your
23 rate study page 3.18, Table 3-11. Am I
24 accurate, Mr. Barber, that that table represent
25 the summary of your projected increase in
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1 revenues and cost of service --
2 A. Yes.
3 Q. -- during this time period? So, I'd
4 like to walk through this a little bit to get a
5 better understanding of all the elements that
6 have gone into determining the amount of the
7 needed rate increase during that time period.
8 Is line 1 on that, does that represent the
9 amount of revenues the District would produce
10 under current rates?
11 A. Yes.
12 Q. Okay. And now under that, you're
13 showing a decrease in revenues under current
14 rate, is that correct?
15 A. Yes.
16 Q. And that is produced because you're
17 projecting client and volumetric sales for
18 metered building units?
19 A. I didn't hear the last name.
20 Q. For metered building units.
21 A. It's declining in part due to a
22 continuation of customer growth decline, and in
23 part due to decline in billable sales, yes.
24 Q. Okay. And this is produced through
25 your electronic version of this cost-to-service
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1 model, is that correct?
2 A. Yes, it is.
3 Q. In that electronic version of
4 cost-to-service model, would there be some
5 historical data showing the annual levels of
6 revenue produced under existing rates?
7 A. Yes, there is.
8 Q. There is. And how does calendar year
9 2011 sales compare to the sales in the last
10 several years in terms of billing units and
11 rate revenue?
12 A. Those summaries are presented in the
13 front end of the report. Table 3-1 on page 3.2
14 shows the projection of customer accounts as
15 well as historical information that you
16 requested. Table 3-2 shows the historical
17 information for wastewater volume. Those
18 projected accounts and volumes are applied to
19 Table 3-3 for the current year which is the
20 last column of Table 3-3. And that produces
21 the number on Table 3-5 on page 3.9 and the
22 bottom total there on line 12 will match up
23 with line 1 of Table 3-11.
24 Q. Thank you. Then on page 3.2 under
25 Table 3-1, that shows the decline in volumetric
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1 billing units for all the rate classes in the
2 District as a whole, is that correct?
3 A. Table 3-2?
4 Q. Yes.
5 A. Yes.
6 Q. So, the projects for calendar year
7 2011 represent a decrease in volumetric billing
8 units relative to the period 2008 through 2010,
9 is that correct?
10 A. Yes. This is a continuation of the
11 decline in billable units as you notice at the
12 bottom on line 12, that the decline in 2010 was
13 4 percent and before that in 2009 it was 5.3
14 percent.
15 Q. If you go back from '06 to '08, there
16 is a slight increase to a level, volumetric
17 sales level for the District during that time
18 period, is that correct?
19 A. Yes.
20 Q. And then around 2009 through 2011,
21 there is -- that's the period of declining sales?
22 A. We've had a constant decline since
23 2007.
24 Q. Now, within that time, you agree that
25 the Metropolitan Sewer District territory and
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1 the U.S. economy as a whole has experienced one
2 of the worst recessions we've had in 100 years?
3 A. Part of the decline is likely due to
4 the economy.
5 Q. Okay. And your projections would
6 suggest that the sales levels that were lost
7 due to economic activity during that time
8 period will not come back in the forecasted
9 period?
10 A. We are forecasting that the decline
11 will taper off and be much lower than it has
12 been in the past and then level off by 2016.
13 Q. Is that based on your projection of
14 economic activity in the MSD service territory?
15 A. No. There has not been a projection
16 of the economic activity as part of this study.
17 Q. Okay. Did you review any state,
18 local, or federal government projection of
19 economic activity in the counties?
20 A. No.
21 Q. So, how exactly did you derive the --
22 your projection used in the forecast?
23 A. Projection was based on the analysis
24 of historical accounts and how those would
25 likely be projected out in the future, and we
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1 also looked at the relationship of historic
2 volume to accounts to see how the billed volume
3 per account was going and that was showing a
4 slight decline. And so we estimated what we
5 expected to be the billed volume in the future
6 and apply that to the projected accounts and
7 that is how we got to the billed volume
8 projection.
9 Q. Okay. But if any of that lost volume
10 was a result of lost sales due to depressed
11 economic conditions, that was not captured in
12 your study?
13 A. No, like I said before, there was no
14 attempt to do any kind of economic study.
15 Q. Referring back to page 3.18 and Table
16 3-11, again, back to line 1 of that, the effect
17 of the decline in sales resulted in loss of
18 approximately three and a half million dollars
19 on an annual basis between 2016 and 2011, is
20 that pretty accurate?
21 A. Yes. The revenue introduced rates
22 shown in line 1 of Table 3-11 is projected to
23 decline by $3 million in that six year period,
24 which out of $210 million I suspect represents
25 maybe less than a 2 percent decrease.
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1 Q. But it is a decrease?
2 A. Yes, it is a decrease.
3 Q. And if the sales were to stay flat
4 like they were during the '06 to '08 period,
5 then revenue production during that period of
6 current rates would be higher than reflected in
7 your study?
8 A. I'm sorry, can you repeat the question?
9 Q. If your sales level stayed relatively
10 flat between 2010 and 2016, similar to the
11 pattern sales from 2006 through 2008, then the
12 amount of revenue produced at current rates as
13 shown on line 1 would be higher?
14 A. Yes.
15 Q. Thank you. I'd like to briefly go
16 through the other revenue items and ask whether
17 or not they are also impacted by the projection
18 for declining sales levels. On line 9, you
19 have other operating revenue. Is that impacted
20 by the decline in projected volumetric sales
21 units?
22 A. No.
23 Q. Line 10, connection fee?
24 A. No.
25 Q. Would that be impacted if you were
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1 projecting lower numbers of new customers on
2 the system?
3 A. If they were new customers, yes, it
4 would be impacted.
5 Q. Okay. So it might not be directly
6 related to volume but part of the same
7 assumption, projection of decline in the number
8 of customers on the system?
9 A. Yes.
10 Q. Skip over the interest income, those
11 are not affected by sales levels, is that
12 correct?
13 A. That's correct.
14 Q. Now, down to lines 16 and 17, that
15 reflects the increase in operation of
16 maintenance expense during forecast period,
17 correct?
18 A. Yes.
19 Q. Line 17, there are new O and M
20 activities projected starting in calendar year
21 2013, footnote B indicates that they are
22 anticipated regulatory projects, is that
23 correct?
24 A. That is correct. They are the new
25 regulatory projects that will be built during
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1 the study period.
2 Q. Okay. So, if you look at the total
3 increase in O and M included in the study per
4 calendar year 2016, it would be the sum of
5 $162.1 million and $7.9 million of the O and M
6 related to the new projects?
7 A. Yes.
8 Q. Roughly $171 million. So, over the
9 time period, it would be roughly a $36 million
10 increase in O and M?
11 A. Yes.
12 Q. Relative to 2011, O and M expense
13 level of $134.4 million. So, it's a very
14 significant increase in O and M, is that correct?
15 A. Yes, it is an increase in O and M.
16 Q. Okay. What is the historical
17 operation and maintenance expense level for the
18 District?
19 A. That is shown on Table 3-7 on page
20 3.12 -- I'm sorry, you have to go back to
21 Section 2. In Section 2 we have it in total
22 historically from 2006 it went from $116
23 million in 2010 to $149 million, an increase of
24 about $33 million in five years.
25 Q. I'm sorry, Table 2-1, are you
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1 referring to line 21?
2 A. Yes, line 21.
3 Q. Well, how do we get a direct
4 comparison of the 2011 O and M shown on Table
5 3-11 that shows $134.4 million, roughly on line
6 16? Where does that number appear in Table
7 2-1?
8 A. Table 2-1 is combined utility and
9 Table 3-11 is wastewater only.
10 Q. Have you separated Table 2-1 for
11 wastewater and sewer?
12 A. Not on the historic basis.
13 Q. Okay. Would that information be
14 included in the electronic version of your
15 cost-to-service model?
16 A. No.
17 Q. Is that information available?
18 A. Only reason we have separated in 2011
19 and forward is for rate design purposes. The
20 District budgets by department, and within
21 those departments, they either provide direct
22 support for wastewater and stormwater
23 operations or indirect support, and the only
24 way at this current time to determine how much
25 is wastewater and how much is stormwater is to
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1 apply the factors shown in Section 2. Now, the
2 District has recently gone to segmented
3 financial statements but those are on a
4 different basis than the budget.
5 Q. Do you have a budget through 2016
6 that would correspond with the information you
7 have on Table 3-11 for total system, or is that
8 what is shown on Table 2-1?
9 A. The District doesn't have a 2016
10 budget at this time.
11 Q. On Table 2-1 you do have projected
12 out to 2016. How much of that includes
13 approved budgets for the District, or proposed
14 budget?
15 A. Well, at the time of this report, the
16 2011 was the budget values.
17 Q. Okay. So, past 2011 it's a
18 projection and not yet an official bucket?
19 A. Yes.
20 Q. Okay. I think you've -- Ms. Zimmerman
21 has already commented on some of the escalation
22 projections including the O and M numbers and I
23 believe she was going to provide me all the
24 escalation and labor costs. Some of the larger
25 escalation items identified in your report
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1 relate to healthcare benefits and pension
2 benefits. Now, did I understand correctly or
3 do you know that MSD has recently changed its
4 pension plan from defined benefit to defined
5 contribution?
6 A. That was testified to earlier, yes,
7 I'm aware of that.
8 Q. Are you familiar with that?
9 A. No, I'm not familiar with the details
10 beyond what I heard today.
11 Q. So, the pension numbers included in
12 your study were provided to you from staff?
13 A. The pension numbers were provided
14 from staff, that is correct.
15 Q. Did you do some work with staff or
16 participate with staff in doing any stress test
17 like evaluations of the projections to make
18 assessments whether or not they can be reduced
19 or managed in some other way?
20 A. No, that was not part of my
21 responsibility during this study.
22 Q. Okay. Do you know -- did anybody
23 else perform that study that you're aware of?
24 A. That would be a better question for
25 the District staff to answer.
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1 Q. Thank you. Did you perform a rate
2 comparability study for the District staff as
3 included in your cost to service file?
4 A. We compared the District's rates with
5 the survey that Black and Veatch does
6 periodically on the largest 50 states.
7 Q. Okay. Now, do those rate comparisons
8 also consider the projected increase in
9 wastewater rates for other sewer districts?
10 A. Yes, they include the largest 50
11 sewer districts by population.
12 Q. Would those rate projections, then,
13 include details underlying those projected
14 increase or change in rates for those
15 districts?
16 A. Well, page 5.6 of our report does
17 show a NACWA survey. On that graph is a red
18 line, the blue bars are the projected rates for
19 the District, and as you can see, what NOCWA is
20 projecting is pretty close to what the District
21 is projecting.
22 Q. But other than the actual change
23 in -- these are residential bills, correct?
24 A. Residential bill with 10-100 cubic
25 feet per month.
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1 Q. If you look at the website identified
2 on this page, would I see some details backing
3 up why they are projecting these rates to
4 increase at the level they are?
5 A. You're referring to the NOCWA survey?
6 Q. Whatever survey you've identified on
7 this page.
8 A. You would see a number of tables with
9 different classes and how the water and
10 wastewater rates for those various cities
11 compare with each other by different categories
12 like small residential, medium residential,
13 large residential, commercial, and industrial.
14 Q. And do you know what the source
15 documents are for those projections in that
16 report?
17 A. Those were internal calculations
18 developed by Black and Veatch based on a survey
19 of rates from the various cities contacted.
20 Q. But it's projected rates. What --
21 A. Those are historic rates.
22 Q. All right. For the projection, what
23 information was provided to Black and Veatch to
24 support the forecast?
25 A. You're talking about the NACWA
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1 projection?
2 Q. Whatever information was used to
3 project what wastewater rates would be at other
4 wastewater systems.
5 A. NOCWA surveys their member agencies
6 and then they provide that projection themselves.
7 I'm not aware of how they go about doing it.
8 Q. They don't provide any detail
9 underlying that projection?
10 A. No, no, but you can get this
11 information from the NACWA site and it will
12 show you -- it's called the Service Charge
13 Index and they'll show the projection but I
14 don't recall it explaining how it projects.
15 Q. Okay. For example, they wouldn't
16 provide operating statements out through a
17 forecast period that shows suspected change in
18 revenues and operating costs, debt-to-service
19 costs, and capital improvements?
20 A. No, I don't believe so. They do
21 provide details financial information. They
22 have a survey questionnaire helping filled out
23 by their members to provide detailed
24 information early next year, and they do have a
25 historic one out now that was based on 2008
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1 data.
2 Q. Okay. So, that might be one source
3 of getting a sense of just how other wastewater
4 systems are attempting to manage these cost
5 escalators that you've included in your cost
6 per service projection.
7 A. The information they collect is very
8 detailed and very informative. It's well worth
9 getting a copy of it.
10 Q. So, have you done any review of that
11 information other than the projections and
12 residential bills as shown at page 5.6?
13 A. No.
14 Q. Was Black and Veatch retained to
15 review the proposed capital budget of the
16 District?
17 A. No.
18 Q. Have you done any benchmarking to
19 determine whether or not the projected capital
20 expenditures are consistent with good industry
21 practice to meet the requirements of BPU's
22 infrastructure expansion and enhancement?
23 A. I'm not sure -- are you talking about
24 the BPU?
25 Q. Pardon me, the MSD.
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1 A. Okay. I'm somewhat aware of the BPU
2 but I was surprised it came up here. No, we
3 didn't do any benchmarking. A lot of that is
4 going to be based on the negotiations the
5 District had with the EPA, so, and those
6 negotiations are unique to each individual
7 utility. So, you can't really benchmark them
8 because each utility has a different situation.
9 Q. Right. But if there is capital
10 replacements of existing sewer lines in that,
11 is there a standard practice for reviewing what
12 the cost might be to accomplish stated
13 infrastructure activities MSD has identified as
14 necessary over the next four years?
15 A. Well, again, that's going to be
16 unique to each utility. It depends on how long
17 they've been making improvements. Some
18 utilities defer capital improvements due to
19 pressures on rates. Some, you know, especially
20 the ones with PAYGO, are able to keep up with
21 them. A lot of times utilities defer that and
22 then they are operating from a catch-up
23 position and so it's going to be different. I
24 don't think you can categorize utilities by
25 benchmarking on how much they are spending on
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1 improvements unless you know the point where
2 they started from.
3 Q. You're reviewing their annual capital
4 budget for accomplishing specific capital
5 expenditure projects. Is there a way of
6 comparing the MSD's estimated cost of
7 accomplishing those objectives relative to what
8 other sewer district utilities might be
9 projecting for similar type activities?
10 A. You can get a utility's budget, I
11 suppose, and look at what they are spending,
12 but I'm not sure they are really comparable. I
13 mean, there are several factors involved. Age
14 of the system, for example. Whether you have
15 separate sewers only or you have a system of
16 separate sewers and combined sewers. How many
17 storm sewers you have. There is just really
18 too many variables to say you can compare
19 utility A with utility B and if utility B has
20 an answer you like, then utility A is wrong.
21 There is no right and wrong in their capital
22 improvement programs. It's what they happen to
23 need at that particular time.
24 Q. All right. Thank you. The funding
25 projections included for meeting the necessary
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1 financing programs, were you simply using MSD
2 staff's projected interest rates for revenue
3 bonds and State revolving loan costs?
4 A. I initially came up with those rates
5 and those rates were discussed with the
6 financial advisors and deemed to be reasonable.
7 Q. How was -- what sort of information
8 was used to deem them to be reasonable?
9 Specifically with respect to revenue bond.
10 A. Well, basically looking at the market
11 to see what interest rates you expect. I mean,
12 the District has been issuing bonds on a 30
13 year basis, so the term was fixed at that. The
14 percent increase I think Mr. Tyminski has
15 already testified to is basically based on an
16 estimate of what you might expect in the future
17 especially if your bond rating is starting to
18 slip due to the magnitude of the bonds that
19 will be coming out. So, we are looking at
20 reasonable estimates is about all we can do.
21 Q. Historically do you know whether or
22 not tax exempt municipal utility bonds have had
23 an interest rate that is lower than taxable
24 corporate utility bonds?
25 A. I have not compared corporate to
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1 municipal.
2 Q. Okay. Is that something the
3 financial advisor might have provided you to
4 help deem that the 5.5 percent is reasonable?
5 A. I'm not sure what information the
6 financial advisors maintain, but that might be
7 a question better addressed to Mr. Tyminski.
8 MR. GORMAN: Thank you very much.
9 That's all the questions I have.
10 COMMISSIONER TOENJES: Thank you.
11 Ms. Langeneckert, do you have any questions for
12 the witness?
13 MS. LANGENECKERT: I do.
14
15 EXAMINATION
16 Questions by: LISA C. LANGENECKERT
17 Q. Good afternoon, Mr. Barber.
18 A. Good afternoon.
19 Q. I'm rarely accused of not talking
20 loud enough so I better grab this just in case.
21 Your testimony on page 3, lines 6 through 8,
22 you state that "The proposed rate change will
23 increase the District's wastewater revenues to
24 provide funds for essential repairs,
25 replacements, and improvements," and Ms.
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1 Zimmerman stated that the funds were needed for
2 anticipated regulatory requirements. Are the
3 essential repairs, replacements, and
4 improvements you referenced the same as those?
5 A. Yes, these are all regulatory
6 requirements.
7 Q. If the estimated regulatory
8 requirements are less in terms of actual
9 projects and/or costs than those that were
10 anticipated, would that change your opinion of
11 what is essential?
12 A. What do you mean by if they are less?
13 Q. If it turns out that they are less
14 than what has been previously thought.
15 A. Well, if there is some reason that
16 the District did not need to build some of the
17 projects currently on the schedule, then yes, I
18 would agree with that.
19 Q. Okay. Now, referencing your
20 testimony on page 7, lines 16 through 21, you
21 discuss modest adjustments being made to
22 projected annual billed volume per customer
23 account to reflect a decreasing trend
24 historically experienced by the District. What
25 is the dollar amount of the increase of the
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1 CIRP balance?
2 A. That comes from Table 3-9. You can
3 see on page 3.15, Table 3-9, we take the lowest
4 point of the study period is in 2012. As our
5 existing bond authority is exhausted, we drop
6 to a $4 billion level, but through the
7 increased rates beginning in 2013 through 2016,
8 we are able to build that up in fiscal years
9 '13, '14 and '15 to the level specified by the
10 financial advisors in order to provide
11 liquidity for the utilities and enhance the
12 bond rating possibly.
13 Q. Okay. Then it goes in 2015 it goes
14 from $52 million to $37.9 in 2016?
15 A. Yes.
16 Q. What would be the effect on the
17 District's bond rating if some of the extra
18 liquidity in the CIRP balance was used to make
19 up potential revenue shortfalls?
20 A. I think that's a better question for
21 the District's financial advisor.
22 Q. On page 12 of your testimony, lines
23 15 through 17, you indicate that "Revenues were
24 allocated to the respective wastewater and
25 stormwater operations based on staff input and
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1 the District's method to segment its financial
2 statements as accepted by external auditors."
3 What allocation of revenues between wastewater
4 and stormwater remain the same if the stormwater
5 impervious charge were still in place?
6 A. I think those didn't remain the same.
7 Are you saying they did?
8 Q. I'm asking, would they if the
9 stormwater impervious charge was still in place?
10 A. If we still had the same revenue
11 levels as we did when we were implementing the
12 impervious charge, yes, then they would have no
13 reason for them to be changed.
14 Q. In your testimony on page 13, lines
15 21 through 23, you indicate that "The proposed
16 wastewater capital financing plan anticipates
17 17.5 percent as the major capital improvement
18 cost for the six year study period will be met
19 from annual wastewater revenues on a PAYGO
20 basis." Does that 17.5 percent equal the
21 historical amount of PAYGO funding?
22 A. I'm sorry, what page are you on?
23 Q. I am on page 13, lines 21 through 23.
24 A. I'm sorry, I'm not clear. That is
25 not what --
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1 Q. Yes, 15. Thank you.
2 A. Can you restate the question?
3 Q. I think. Does 17.5 percent equal the
4 historical amount of PAYGO funding?
5 A. No.
6 Q. Okay. And why not?
7 A. In the past, the District had the
8 availability of more PAYGO, so the percentage
9 of PAYGO was much higher than that. It wasn't
10 until the prior rate proceedings where we were
11 more or less limited to the increases that made
12 a shift more towards debt, and as you shift
13 more towards debt, at that point then you're
14 going to get a higher percentage of debt than
15 you had before and, therefore, a lesser percent
16 of PAYGO. That's within this period. It
17 doesn't mean the cumulative level that was
18 discussed earlier.
19 Q. All right. I had a question for Ms.
20 Zimmerman and she said that I should ask you,
21 so here we are. On page 16, line 6-3, you
22 indicate that "Although anticipated expenditure
23 levels are represented as fixed, the District
24 has scheduling flexibility of the projects
25 within each major category." If the District
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1 had scheduling flexibility, was this considered
2 when determining the PAYGO alternative?
3 A. No.
4 Q. Why not?
5 A. What I mean by scheduling flexibility
6 is that the District will spend perhaps a fixed
7 amount of money within a specific period but
8 not necessarily in the categories presented in
9 Table 3-9. As I understand it, there are
10 milestones that need to be met and there is
11 flexibility in those milestones but that's all
12 I know.
13 So, what we know for sure is that the
14 total number was $4.7 million and there are
15 projects that are currently allocated different
16 shares but that is over a 23 year period. It
17 doesn't matter if in my opinion if you do one
18 more than the other but at the end of the
19 period, you have to spend those amounts in that
20 Decree to get that 4.7.
21 So, what I'm thinking there is
22 flexibility in not only between categories but
23 perhaps in scheduling but really all the EPA is
24 concerned with is whether or not milestones are
25 set as part of that Consent Decree, those are
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1 met at those times.
2 Q. Those times being the end of the full
3 period?
4 A. Those times being whatever was set by
5 EPA which I have no knowledge of.
6 Q. Okay. Do you know who the $4.7
7 million, is that a number that MSD came up with
8 or a number that is part of the Consent Decree
9 or do you know and can you say?
10 A. I only know what was in the fact
11 sheet presented to the June 9th Board, and in
12 that fact sheet it said $4.7 million was the
13 negotiated amount.
14 Q. Okay. So that was the negotiated --
15 that was a dollar number, not certain set items
16 that had to be done?
17 A. It was a dollar number.
18 Q. In 2011.
19 A. That's what I understand.
20 Q. Okay. Now, I've gone through the
21 proposed rate structure and I'm sure I have
22 made this too simplistic but I hope that you
23 might be able to help me out and figure out
24 what -- where I'm missing the numbers. This is
25 Exhibit MSD 3 but it's also part of the numbers
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1 that are under 3-17, I believe. 3-21 on
2 page 3.36 of the plan has the comparison
3 existing and proposed wastewater rates. And
4 I'm looking at the compliance charge for the
5 different tiers and then I'm multiplying that
6 by the number of customers in each of the five
7 tiers, and the numbers are coming out very
8 differently so I'm trying to understand why
9 there is such a large difference between the
10 two.
11 If I multiply out Tier 1 in July of
12 2015 or fiscal year 2016, if I multiply all the
13 numbers in that row, I only come out with
14 $171,000 under compliance charges. But it
15 appears currently there is $804,000 when you
16 take the total number of people paying the
17 compliance charge by the 3195 uniform number.
18 A. These are monthly charges.
19 Q. Right. You multiply it by 12 if you
20 want or 1/12.
21 A. Well, for the 2012 you should get
22 something around $8 million.
23 Q. Well, I'm just doing it for one
24 month. If I multiply one month of the number
25 of customers times 3195, I come up with
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1 $804,000.
2 A. Okay.
3 Q. But if I do the same for fiscal year
4 '16 for all those same customers under the new
5 rates, I only come up with $171,000. So I'm
6 trying to figure out where the $630,000 is and
7 I know there is some shift from residential,
8 but --
9 A. There is significant shift of cost
10 from non residential to all customers such that
11 where you might have, say, $8 million in 2012,
12 by 2016 you'll only be looking at around $2
13 million.
14 Q. So, you're shifting it to residential?
15 A. We are shifting it out of the non
16 residential customer class to other cost
17 components which affect all customer classes.
18 Q. Okay. Is there a schedule that shows
19 that?
20 A. If the schedule -- I'm sorry, other
21 than 3-21?
22 Q. Well, I see the numbers there but I'm
23 trying to see the shift where the shift
24 actually occurred. I see the dollars there
25 but --
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1 A. The discovery request out now that
2 asks that question on 123. I have an answer
3 for it.
4 Q. Okay. That would be the discovery
5 request from the Rate Commission?
6 A. It's from MIEC.
7 Q. The answer has not been provided yet,
8 has it?
9 A. We are still formulating our responses.
10 Q. Okay. So, I should wait for that?
11 A. Yeah.
12 MS. LANGENECKERT: Okay. That's all
13 my questions.
14 COMMISSIONER TOENJES: Thank you, Ms.
15 Langeneckert. Mr. Mueller, do you have
16 questions for the witness?
17 MR. MUELLER: I have no questions.
18 COMMISSIONER TOENJES: Mr. Arnold.
19 MR. ARNOLD: Mr. Chairman, may I
20 yield my time to Mr. Stannard?
21 COMMISSIONER TOENJES: Yes. Mr.
22 Stannard.
23
24 EXAMINATION
25 Questions by: BILL STANNARD
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1 Q. Thank you, Mr. Arnold. Mr. Barber, I
2 have a couple of questions with regard back on
3 the operation and maintenance expense and I'm
4 going to refer you to Exhibit MSD 4A which is
5 the detailed printout from the electronic model
6 that you've developed and used for this
7 analysis. And I would like to start with
8 Schedule D7 that is the summary of the historic
9 operation and maintenance expense, and at the
10 bottom of that page it totals it for the system
11 which is both stormwater and wastewater for
12 these historic years as fiscal years 2006
13 through 2010 and it also has a budget for 2011
14 and then at far right is the wastewater budget
15 for 2011 which I presume was calculated based
16 on the allocation factors that you discussed in
17 your testimony?
18 A. Yes.
19 Q. What, on line 4-66 which is pension
20 contributions, in 2006 that number was
21 $216,243. If we move over to actual 2010, that
22 was just shy of $8.3 million. The budget for
23 2011 was $9.3 million -- $9.4 million and the
24 wastewater share of that is $7,892,000. Am I
25 correct that the forecast for the rate proposal
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1 starts with the 2011 budget for wastewater as
2 the base year and then applies the escalation
3 rates that are presented in the report to
4 each -- to that 2011 going forward?
5 A. Yes.
6 Q. If based on the -- in this analysis,
7 you've not made any adjustment for any changes
8 to the pension program that might impact that
9 base level of $7,892,000. That's based on the
10 actual or the budget for 2011 which pretty much
11 tied with the actual 2010. So, do you know if
12 the budget reflects some of the changes to the
13 pension program that was described earlier by
14 Ms. Zimmerman?
15 A. I don't know if it does or not. That
16 number was from the budget looking forward from
17 page D1 that is an expense that has increases
18 factored in which are different for each year
19 which was provided by Mr. Tyminski. So, if
20 that was known at that time, then perhaps those
21 adjustments are built into those inflation
22 factors.
23 Q. For the inflation factors that are
24 incorporated in the -- in your forecast?
25 A. Yes.
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1 Q. Would it be -- if I looked at those
2 historic years by major categories which
3 included personal services, which includes
4 wages and salaries, insurance, which I presume
5 is health insurance and insurance related to
6 employees and it's provided to employees,
7 pension contributions, then supplies,
8 utilities, contractual services and so forth,
9 if I look over that historic period of 2006
10 through 2010, that would give me a sense of
11 what MSD's actual experience has been in
12 escalation of cost during that period?
13 A. It may, but during this time, there
14 is also shifts in personnel reductions,
15 increases. So, it would be difficult just to
16 relate it just on price and inflation.
17 Q. So, for employees, the employee count
18 has changed over this period?
19 A. It changes and shifts and sometimes
20 the organization is restructured. So, I mean,
21 it would be pretty difficult, I think, to just
22 look at these raw numbers and see what the
23 overall inflation is at any one point in time.
24 Q. Do you know if MSD's total head count
25 over the last several years has changed? Did
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1 you look at that as you were analyzing the
2 operating costs?
3 A. The head count has increased over
4 time.
5 Q. Okay. I just wanted to find another
6 of my dog-eared page. Go to Schedule G16 which
7 presents the wastewater fund balance summary
8 table.
9 A. Yes.
10 Q. Okay. In this table, you present a
11 beginning balance as of beginning of fiscal
12 year 2011. Would the beginning balance number
13 tie to MSD's balance sheet in its consolidated
14 annual financial report?
15 A. It should tie to end the year 2010.
16 Q. But in the end of 2010 which is the
17 beginning of 2011?
18 A. Yes, I mean, this is on a cash basis
19 so it may not exactly tie to the financial
20 statement but it would tie to the detail that I
21 was provided.
22 Q. Okay. The balance sheet probably?
23 A. Probably pretty close.
24 Q. One of the questions I have is at the
25 bottom is the reserve for capital improvement
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1 encumbrances. Earlier Mr. Hoelscher explained
2 and in response to our data request with regard
3 to the CIRP that it's based on encumbrances,
4 does that $178,998 shown for 2011, that
5 reflects the amount of money that's been
6 previously raised either through bonds or other
7 borrowings plus cash that has been essentially
8 encumbered by all the existing CIRP projects
9 not included in the new CIRP?
10 A. Yes.
11 Q. Can you explain the process that you
12 used to project how those funds were used over
13 the rate period?
14 A. I believe they are drawn down. I
15 can't recall the assumptions right now but the
16 purpose of this line is more or less to make
17 sure we capture income. So, I'd have to check
18 my notes and see what that is.
19 Q. Possibly you did get some information
20 with regard to expected cash draw schedules on
21 the existing construction projects?
22 A. I don't recall.
23 Q. But I notice that as to $50 million
24 in 2015 but then stays at $50 million thereafter.
25 A. Right.
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1 Q. Is that the anticipation that there
2 will be $50 million that will be left over?
3 A. It's anticipation that at any one
4 point in time there will be about $50 million
5 available of earned interest income due to cash
6 in and cash out.
7 Q. Okay. The other fund balances that
8 are shown above, some of which are described in
9 the rate proposal in your report, others are
10 not, but I think this is a very helpful
11 presentation understanding what the makeup of
12 the MSD's cash fund balance is in terms of the
13 operating fund, the bond reserve fund which is,
14 of course, required by the bond adventures and
15 one year principal and interest payments on the
16 outstanding bonds, the capital fund and the
17 emergency fund plus the operating reserve which
18 is I understand is one of the objectives of the
19 fiscal policies of the Board of Trustees to
20 maintain an operating reserve of 60 days of
21 operation and that is reflected in that
22 operating reserve?
23 A. 60 days of operating and maintenance
24 expense plus capital outlay.
25 Q. Plus the capital outlay. And then as
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1 you've forecasted, interest income in your
2 forecast to recognize interest income, these
3 fund balances are what is part of the analysis
4 that you do in your algorithms to estimate what
5 future interest income will be even at the
6 miserably low interest rates that Karl is able
7 to earn on investments?
8 A. Yes. These are factored in the
9 interest calculations.
10 Q. If interest rates that we can earn on
11 investments go up, that will be a positive
12 impact on the interest earnings of MSD?
13 A. Yes, it would.
14 Q. Going back to Exhibit MSD 1, I'll
15 refer to Table 3-6 on page 3.10, and if we can
16 kind of review the components of this table
17 which relates to other operating revenue that
18 MSD earns and generates on an annual basis and
19 what you're forecasting for the period 2011
20 through 2016. The first is a category called
21 billing adjustments and I think the footnote
22 explains that very clearly, so you don't need
23 to get into that. The second is the bad debt
24 provision which starts at $10.9 million, then
25 drops to a minus $6.8 million, and then starts
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1 growing annually a bit up to in 2016 to $12.6
2 million. I believe this ties generally with
3 what shows again with the consolidated annual
4 financial reports and the income statements as
5 far as revenues that essentially the bad debt
6 expense for recent years had climbed to about
7 $10 million, so it appears that your
8 forecasting continuation of that in 2011 of
9 about $10.9 million, that would be considered
10 bad debt expense and it would be recognized by
11 the District, either then confirmed by the
12 auditor?
13 A. Yes.
14 Q. Then it does decrease to $6.8 million
15 as an expense, a reduction -- it's an expense,
16 you're showing it as a reduction in --
17 A. Operating revenue.
18 Q. You have that going down. What
19 causes that to go down?
20 A. I believe it's noted in here that
21 during this two year period, the District has
22 implemented enhanced collection efforts and a
23 lot of that collection will be for older debt,
24 and the consideration here is that the various
25 collection firms and the legal firms that have
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1 been contracted by the District will be
2 successful enough to collect that. There will
3 be a point in time when you can't get any more
4 and at that point in time, then the bad debt
5 will more or less increase basically at prior
6 levels and then in relationship to the
7 percentage of increase of the sewer service
8 returns.
9 Q. I believe and I apologize, I don't
10 have the page in Exhibit M4A directly, but my
11 recollection was that I saw about a four and a
12 half million dollar recognition in 2012 that
13 the collection -- increased collection efforts
14 would generate an additional four and a half
15 million dollars and then that dropped to two
16 and a half million in the subsequent years?
17 A. Right. That's based on those
18 enhanced collection efforts.
19 Q. But that -- so that as Ms. Zimmerman
20 explained in the presentation of the response
21 to our initial data request, there was at the
22 end of the fiscal year 2010, our total
23 receivables that were, I believe, older than
24 one year stood at about $58 million which is
25 what the enhanced collection coverage will be
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1 focused on initially, but then will be --
2 you're expecting to continue to increase that
3 by these bad debt expense amounts each year but
4 that as the enhanced collection -- until they
5 actually go into place and we start seeing
6 results, we don't really know what is going to
7 happen?
8 A. That's correct.
9 Q. So, it might be possible that instead
10 of just four and a half million next fiscal
11 year and followed by two and a half million in
12 the subsequent years, they may be more
13 successful than that?
14 A. That's a possibility. It's also a
15 possibility they could be less successful.
16 Q. But until we get some experience, we
17 won't know?
18 A. That's correct.
19 Q. This was your best estimate of what
20 you, in consultation with MSD staff, what you
21 believe would be a reasonable recognition of
22 those results that may happen?
23 A. Yes.
24 MR. STANNARD: Okay.
25 MR. ARNOLD: Thank you, Mr. Chair.
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1 COMMISSIONER TOENJES: Thank,
2 Mr. Arnold, thank you, Mr. Stannard. Does any
3 of the Commission have questions for -- yes,
4 Mr. Tomazi.
5
6 EXAMINATION
7 Questions by: GEORGE TOMAZI
8 Q. Two questions that Ms. Zimmerman
9 thought Mr. Barber might best answer and one of
10 them has to do with the question about what is
11 the maximum annual bill that could be assessed
12 against a customer of the District? I
13 understand based on median income in the St.
14 Louis City and median income in the St. Louis
15 County. What are those out of curiosity?
16 A. Page 5.11 of our report.
17 Q. Page what?
18 A. 5.11. I think that addresses your
19 question. And basically I think what you've
20 been referring to --
21 Q. Paragraph now?
22 A. Pardon? The whole Section 5.6.
23 Q. Okay. That's about the 30 -- okay.
24 It looks to me like at the current proposed
25 rate out in 2015, that we are going to be
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1 pushing those limits, is that right? Did I
2 read that correctly?
3 A. That what is presented in this
4 section is affordability analysis as of 2009
5 which is --
6 Q. Pardon?
7 A. The mean household incomes in this
8 Section 5.6 is based on 2009 projections. At
9 the writing of this report, the 2010 data has
10 not been compiled but I don't expect it to be
11 that much different, and at this time, I think
12 we made a reference to $389 per year as being
13 the upper limit, which if you divide that by
14 12, I suppose you get around $135 per inside
15 city.
16 Q. Okay. The other question I have is,
17 how much is in the proposed rate increase for
18 low income families? How is that sorted out?
19 Is it in dollars or is it a fixed amount or how
20 did that come up with that?
21 A. Whatever increase residential
22 customers have are also the increases for low
23 income customers except they pay half the
24 amount. So, if we are increasing inside the
25 city by 13 percent, then low income also gets
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1 increased by 13 percent but instead of paying
2 the full bill, they are paying half the bill
3 but the increase is still 13 percent.
4 Q. Okay. But is that in your forecast,
5 pick a year, 2013, does that come out to $5
6 million or $55 million?
7 A. As far as low income credits?
8 Q. Right.
9 A. I believe we are talking around
10 $800,000 a year.
11 Q. Where?
12 A. $800,000.
13 Q. $800,000, okay.
14 A. I can get you that.
15 MR. TOMAZI: That's all I have.
16 COMMISSIONER TOENJES: Thank you,
17 Mr. Tomazi. Yes, Mr. Koenen.
18
19 EXAMINATION
20 Questions by: GLENN KOENEN
21 Q. Back in the summer of 2006 we've been
22 trying to project what is going to be happening
23 in the summer of 2011. Anybody who has it
24 right would be driving a Bentley right now.
25 Looking now at 2011 to 2016, how wide do you
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1 think is the cone of probability where these
2 numbers are going to fall? Do you think
3 they're in the middle, do you think they're on
4 the conservative end, or do you think you're
5 reaching for the fences?
6 A. It's really hard to say. I mean, if
7 you look back at five years before that, it was
8 a much greater drop than what we are looking at
9 now. Personally I think we might be a little
10 optimistic. I know we have nearly a 2 percent
11 decrease in revenues under the existing rates.
12 To me that could be right. I mean, but I think
13 it's in the range of reasonableness and I think
14 what's important and may not have been brought
15 forth so far in these proceedings, we are
16 dealing with a municipal utility, not an
17 investor-owned utility. You can do all kinds
18 of analysis and try to narrow this down to $1
19 if you want, but in the end, really all the
20 money that comes into the utility stays in the
21 utility.
22 So, if for whatever reason we end up
23 with more revenue than we projected at the end
24 of 2013, all that really means is that we are
25 going to have more money to cash finance
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1 improvements in 2014 and less debt. If it goes
2 the other way and we underproject revenue, that
3 means we have less cash and we will have to
4 bond finance more.
5 So, right now we are still going to
6 pay all the O and M costs and everything else
7 that we have to. We are going to maintain debt
8 service but really the variable is how much of
9 our CIRP is cash finance versus debt finance.
10 MR. KOENEN: Thank you.
11
12 EXAMINATION
13 Questions by: GEORGE LIYEOS
14 Q. Let's just take your hypothetical for
15 a moment and step further as it relates to
16 projection that is made in terms of the revenue
17 stream. There is a gap. How would that gap be
18 made up?
19 A. You mean the shortfall?
20 Q. Yes.
21 A. We do have money, I think we
22 mentioned before, that is used for liquidity
23 purposes and that would probably be the first
24 call. Other than that, the only other thing we
25 can do if we have adequate bond authority would
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1 be to leverage more with debt on a short-term
2 basis.
3 So, I mean, I guess the safety net
4 there, instead of asking for exactly $945
5 million, you might want to ask for $1 billion
6 just to have that little cushion, but in the
7 end, the District is going to use that and
8 likely more since they are facing 4.7 CIRP in
9 the next 23 years.
10 Q. Let's say the number you say is $1
11 billion and I think 9475 is what you were at?
12 A. $945 million, yes.
13 Q. $945 million, okay. Does it make
14 sense to ask for a billion if that can't be
15 supported?
16 A. That's a policy decision. I mean,
17 yeah, if you want to go exactly for 945, I
18 mean, that's up to the District. In the past
19 it was $500 million and 275, so there has been
20 a semblance of rounding, I think, at least in
21 my mind.
22 Q. And I understand that but based upon
23 what we are experiencing, it seems we are in
24 unique circumstances, if not unchartered
25 waters, and I just fear if there is a gap
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1 there, then some of the revenue stream may have
2 to be tapped into to get additional funds for
3 the work that you want to do, and we are
4 drawing down upon reserves or something, some
5 other revenue stream to do that.
6 Now, again, I agree with you, it's a
7 policy decision but it's a difficult decision
8 to make when we have numbers that seem to be a
9 moving target.
10 A. Well, in addition, you have to
11 realize that the 945 is only through 2016.
12 After that, there is going to be more bond
13 authority needed.
14 MR. LIYEOS: Okay.
15 COMMISSIONER TOENJES: Mr. O'Connell.
16
17 EXAMINATION
18 Questions by: MIKE O'CONNELL
19 Q. The question 336 and 338 in your
20 exhibit talking about the compliance charges
21 and the different tiers. That is what my
22 questions are about. You mentioned how -- can
23 you go over a little bit of how they are
24 calculated? I'm looking specifically at
25 Table 3.2, it talks about the monthly unit cost
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1 per tiers, Tier 1 through Tier 5, and I'm
2 comparing that to the actual charges that would
3 be incurred -- I know there is a year
4 difference but looking at 2013 versus 2000, and
5 then looking at the unit cost. If I'm reading
6 this correctly, I'll give you an example, and
7 tell me if I'm reading correctly here, your
8 monthly units cost for Tier 5 is $145 per
9 month. In 2013 you're going to charge at Tier
10 5, $165.50. Is it fair to say you're charging
11 more for the actual unit cost for that tier in
12 terms of what it costs to comply with the
13 services?
14 A. I'm not following your numbers.
15 Q. I'm on Table 3.22, the reading column
16 for Tier 5, monthly unit cost?
17 A. Okay. Tier 5.
18 Q. My question is if my definition is
19 right. If I -- do I understand it correctly
20 that your definition of monthly unit cost is
21 the cost it takes to comply with the
22 environmental -- the testing and the
23 environmental regulations, the cost for Tier 5
24 users is $145. Am I correct on that?
25 A. For 2010, that is correct.
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1 Q. And by 2013 you're going to charge
2 this tier $165, is that correct?
3 A. Yes.
4 Q. So, there is a little bit of
5 inflation factor for the three year difference
6 but --
7 A. Yes.
8 Q. It's fair to say that -- is it fair
9 to say that Tier 5 users, I'm comparing Tier 5
10 and Tier 1 tiers. It looks like Tier 5 is the
11 only tier that pays more in than receives back
12 in terms of the cost of service, is that a fair
13 assessment?
14 A. Tiers 2 through 5 go directly from
15 the uniform compliance charge to cost of
16 service charges. So, what you see on
17 Table 3-21 is not only the charge but the cost
18 of service that is charged. Tier 1 doesn't get
19 to their cost of service charge until 2016.
20 Q. Right. But the other tiers, the
21 other tiers already get to that point, right?
22 A. Yes. They go to that point
23 immediately in 2013.
24 Q. Is that what you were saying -- when
25 you were asked in your testimony if it was the
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1 rate -- let's see here. You were asked --
2 excuse me here. You were asked in the
3 testimony, I can't find the exact page, I
4 apologize, but you were asked is this a fair
5 and equitable and you said yes because of the
6 transition time. Is that what you mean by that?
7 A. Yes.
8 Q. Okay. My other question concerned
9 going back to the allocation of residential
10 usage. You said you basically use historical
11 averages from the past. You're using 2006 kind
12 of deal, 2006 data. I want to make sure I'm
13 clear. You do not account for any economic
14 factors, you do not account for any demographic
15 factors, you do not -- is that correct?
16 A. Not separately. Any economic -- any
17 change in usage due to economic conditions are
18 already factored into the unit usage changes
19 over that historic period.
20 Q. Over that historic period. So the
21 past is prologued is kind of what you're
22 saying?
23 A. Yes.
24 Q. Then my other final question, you
25 compare residential rates under the NACWA
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1 survey. You compare them to residential rates.
2 I think you said residential rates were ranked
3 32 among the top 50 cities. Where under non
4 residential usage is the NACWA survey to non
5 residential usage, and where does St. Louis MSD
6 rank for non residential usage in terms of
7 rates?
8 A. I'm not sure NACWA does a non
9 residential rate.
10 Q. Does Black and Veatch do a non
11 residential rate?
12 A. Yes, Black and Veatch does. That
13 information is not available in our rate report
14 but it is available in the bond feasibility
15 report which is in draft form but I can tell
16 you something about that. It's very
17 interesting how this works.
18 In the Black and Veatch survey, we
19 delve in five different classes. Small
20 residential is users with 3.75 thousand
21 gallons, mean residential is seven and a half
22 thousand gallons which is essentially 10 CCF,
23 large residential is 15,000 gallons, commercial
24 is 100,000 gallons, and industrial is
25 considered to be 10,000 gallons per month. In
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1 the small residential category, MSD -- keep in
2 mind this is back in 2009 -- MSD ranked No. 32
3 lowest, where 1 is the lowest and 50 is the
4 highest rate. When that moves to medium
5 residential, MSD moves up to No. 27. When that
6 moves into large residential, MSD moves up to
7 22. When it goes into commercial, MSD moves up
8 to 18. When it goes into industrial, MSD
9 ranked as No. 14, the lowest in those 50 cities
10 which implies that the other 50 cities have
11 higher volume charges than MSD and that is why
12 MSD is improving in their ranks as it moves
13 forward.
14 COMMISSIONER TOENJES: Anything else
15 from the Commissioners? I have one question in
16 the tiers question that Eric asked just a
17 minute ago.
18
19 EXAMINATION
20 Questions by: LEONARD TOENJES
21 Q. Is it accurate to say Tiers 2 through
22 4 are basically supporting Tier 1 until 2016
23 when the rates are all --
24 A. No, it's actually the opposite. Tier
25 1 has been supporting Tiers 2 through 5 for
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1 decades, ever since the charge was imposed,
2 because their service requirements were so much
3 lower than the ones that had more sample points
4 and more monitoring, so Tier 1 are the
5 customers that are more or less still carrying
6 the load more or less and helping to moderate
7 residential rates and keeping them at the 13
8 percent level that is just fixed. But as of
9 2013, Tiers 2 through 5 are no longer supported
10 by Tier 1 as they have in the past.
11 Q. One other question. You're looking
12 at, you know, $1.6 billion program and $945
13 million of bonding, so you're basically bonding
14 94 percent of the overall program. How does
15 that compare with other districts?
16 A. I would say that's probably on the
17 high side but that's just an opinion, but
18 really --
19 Q. Do you have comparative data?
20 A. No. I mean, at this point, because
21 of the lower increases in the past and moving
22 from a PAYGO in 2007 to more or less minor
23 increases and more debt in 2008, you got to the
24 point where you really don't have a choice.
25 Once you raise rates as much as you think it
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1 could be accepted by the public, which is the
2 13 percent level, the rest has to be debt, and
3 that's basically what you have once if the
4 capital improvement program is fixed by the
5 Consent Decree.
6
7 EXAMINATION
8 Questions by: ERIC SCHNEIDER
9 Q. Can you just expand on that 13
10 percent number? You said in your testimony
11 that you kind of -- your proposed schedule can
12 only -- holding future rate increases to
13 residential customers at approximately 13
14 percent per year. Why is 13 percent the magic
15 number, not 15 or 10?
16 A. That was a decision by the senior
17 management of the District to hold it at 13
18 percent.
19 Q. What were some of the factors to get
20 to that 13 percent? The median household
21 income or --
22 A. I would defer that question to
23 District staff.
24 COMMISSIONER TOENJES: Further
25 questions from any Rate Commissioners? Ms.
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1 Myers, do you have questions for the witness?
2 MS. MYERS: I just have a couple.
3
4 EXAMINATION
5 Questions by: SUSAN MYERS
6 Q. In regard to the Consent Decree, do
7 you have any firsthand knowledge regarding the
8 flexibility of the schedule which was
9 negotiated in the Consent Decree?
10 A. I have no firsthand knowledge of what
11 flexibility there actually is other than
12 knowledge that they may be able to shift some
13 cost and that is all I know. I have no
14 knowledge of any order of magnitude.
15 Q. Okay. And in regard to the Black and
16 Veatch survey data that you were just speaking
17 to, do all the surveyed communities provide
18 retail service to the customers?
19 A. Yes.
20 Q. Okay. So, some of those entities
21 that were surveyed don't have other charges
22 that are associated with the service charge?
23 A. They likely have charges but the
24 survey was only based on the wastewater service
25 charges, not other charges.
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1 Q. Okay. So, is it fair to say that
2 MSD's charges are all in?
3 A. As far as wastewater, I would say
4 yes.
5 MS. MYERS: Okay. Thank you. That's
6 all I have.
7 COMMISSIONER TOENJES: Thank you, Ms.
8 Myers. Thank you, Mr. Barber. Are there any
9 other matters for the Rate Commission prior to
10 our adjournment?
11 MS. STUMP: May I just remind the
12 Rate Commission that since we will be changing
13 the schedule, that you will need to set a new
14 meeting after the 29th, so I assume Pam will
15 try to get -- it will have to come pretty
16 quickly after the 29th in order to get the new
17 notice out and proceed with the new schedule.
18 And the other thing I would like to
19 remind you all is that in listening to the
20 testimony and the questions, when the Rate
21 Commission issues its report, it will make a
22 decision on the rate that's proposed and what
23 that will be, but the Rate Commission also has
24 the authority in its report to make
25 recommendations on different issues. So, you
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1 may end up approving a rate but you still may
2 want to comment on something and that you will
3 have the authority to make recommendations and
4 that regarding the report. So, just keep that
5 in mind as you're looking at the materials.
6 COMMISSIONER TOENJES: I think this
7 will conclude our technical conference. There
8 will be -- our next meeting will be on-call
9 based on what happens on the 29th at the
10 Trustees meeting if the Trustees grant our
11 request for 45 additional days at either prior
12 to or at that point, the intervenors and our
13 counsel and District staff will meet to
14 finalize the new schedule and it will be
15 incumbent upon the Rate Commission to meet and
16 approve and adopt that schedule as soon as
17 possible after those two steps occur. So,
18 right now there is no further meeting of the
19 Commission scheduled until at least after the
20 29th.
21 COMMISSIONER KOENEN: Move to adjourn.
22 COMMISSIONER TOENJES: All in favor,
23 signify by saying aye. Thank you to all the
24 Rate Commissioners and intervenors and
25 District.
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1 (WHEREIN, the technical conference
2 was concluded at 4:04 PM.)
3
4 * * * * * *
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1 CERTIFICATE OF REPORTER
2 STATE OF MISSOURI ) ss:
COUNTY OF ST. LOUIS)
3
4 I, KIMBERLY A. GANZ, a Certified
5 Court Reporter in and for the State of
6 Missouri, qualified and authorized to certify
7 to this Meeting of the Rate Commission of the
8 Metropolitan St. Louis Sewer District, and the
9 officer before whom the foregoing Meeting was
10 taken, do hereby certify that the foregoing was
11 taken by me to the best of my ability and
12 thereafter reduced to typewriting under my
13 direction; that I am neither counsel for,
14 related to, nor employed by any of the parties
15 to the action in which this was taken, and
16 further that I am not a relative or employee of
17 any attorney or counsel employed by the parties
18 thereto, nor financially or otherwise
19 interested in the outcome of the action.
20
21 _________________________
22 Certified Court Reporter
23
24
25
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A
AA 130:23 131:1,2
131:3 143:24
148:24 149:2,3,9
149:20,22
AAA 143:24 148:8
148:24 149:2,3,19
abated 92:10
abating 36:15
ability 7:21 8:2
47:19 48:1 88:9
89:8 109:24
110:11 111:17
117:22 129:2,5
171:12 184:20
200:5 259:11
able 18:16 42:11
43:5 48:6 59:15
61:13,14,23 63:14
63:16 70:15 78:3
79:6,11 80:25
88:22 93:15 96:13
103:16 108:13,16
110:8,19 111:25
128:11 147:2
151:5 155:7,9
173:15 175:19
187:16,17 188:14
191:23 194:21
218:20 223:8
227:23 237:6
255:12
about 22:17 25:24
26:3,6,6 27:16,19
29:9 30:23 40:1
42:23 43:17 47:7
49:6 52:6,13,20
53:24 54:7 57:14
59:8,9 60:3 63:1,4
64:19 66:15 67:13
70:4,10,13 73:14
79:9 80:12 83:5
83:24 85:16 86:9
91:12 94:8,14
97:2,16 100:18
101:3 106:13
108:9,18 109:20
110:19 112:10
113:15 115:2
116:20 117:5,7,15
120:8 121:2
122:23 123:17
127:10,12 132:11
133:2,5 137:3,24
141:9,22 144:12
144:13 147:15,21
152:4 153:14
164:4,7,24 166:4
166:8 171:22
172:9,20 173:14
173:17,23 180:9
182:20 188:13
193:1 194:9,11
196:1,2 201:17
210:24 215:25
216:7 217:23
220:20 236:4
238:6,9 239:11,24
241:10,23 247:20
247:22,25 251:16
above 123:15
143:14,20,23,25
187:1 236:8
absorbed 34:9
148:24
accelerate 95:22
acceptable 33:8
accepted 39:4 150:3
153:5 224:2 254:1
accepting 31:9
accepts 29:3
accompanied 7:17
accomplish 16:8
37:22 218:12
accomplishing
219:4,7
account 94:13,16,17
173:6 174:6,12,22
176:11 178:24
183:20 185:12
186:2,7 190:25
191:13,24,25
192:10 207:3
222:23 250:13,14
accounting 134:4
accounts 170:20
171:16 172:23
173:8,23 174:25
175:1,2,8,13
177:25 178:2
179:17 180:7,14
181:8 182:19,19
182:20,24 189:4
189:14,20,22
199:23 204:14,18
206:24 207:2,6
accurate 30:12,18
30:20 108:5
202:24 207:20
252:21
accurately 75:12
accused 221:19
achieve 35:11 36:4
36:7,12 104:11
across 143:9 153:6
155:25 159:2
act 34:22 35:12 36:5
37:22 45:21 46:13
48:3 72:20,21
74:11,13
acted 29:2
action 29:17 33:1
34:20 57:15 58:17
59:2 65:9,10
69:12 80:22
103:14 259:15,19
actions 45:22 80:1
89:5
activities 54:22 89:2
89:6 175:24
209:20 218:13
219:9
activity 176:10
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burden 8:6 38:3
50:5 52:7 142:17
145:6
bureaucrats 72:25
ButcherMark
132:7,9,15,19
button 110:24
buy 94:25
byproduct 48:24
C
C 3:2 98:14 124:18
161:9 221:16
cable 200:1,3
calculate 185:17
196:24
calculated 63:12,20
90:23 198:8
231:15 247:24
calculates 151:11
calculations 144:13
184:17 189:25
215:17 237:9
calendar 204:8
205:6 209:20
210:4
call 4:2,5 5:14 39:23
54:17 100:19
125:23 142:3,8
171:25 172:3
174:4 184:14
185:11,20 191:21
200:6 201:14
245:24
called 47:24 58:12
99:25,25 141:18
179:14 185:9
216:12 237:20
calls 173:3
came 20:10 87:14
104:20 107:8
109:6 160:20
187:7 218:2 220:4
227:7
campaign 27:24
capability 199:17
capacity 36:16
100:3 113:18
147:9
capita 140:13
capital 16:6,19 36:6
37:6,7 41:12 55:5
86:24 92:20 96:8
96:23 102:3
116:23,25 120:17
134:6 193:18
216:19 217:15,19
218:9,18 219:3,4
219:21 224:16,17
234:25 236:16,24
236:25 254:4
capture 94:12
235:17
captured 207:11
cards 148:9
care 14:11 20:22
30:23 33:14,15
carefully 16:4,12
carries 31:9
carry 146:2
carrying 145:3
253:5
cars 185:13
case 13:5 14:23 15:9
20:15 21:1 41:4
46:20 55:7 59:5
64:23 69:15,17
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82:22 83:18,22
84:4,6,9,10,17,24
85:1 93:12,13,21
94:12 104:20
106:10 107:3
108:7,19,22,23
109:2 111:14
112:16 134:5
136:6,25 137:22
146:23 153:3
155:2 158:24,24
162:8,17 184:11
221:20
cases 17:1 76:2 91:1
92:4,5,21
Casey 4:8
cash 102:23 103:18
116:3,20 118:6,8
118:9 125:18,20
125:24 126:2,4,13
127:24 128:4,9,9
128:14,16,21
131:17 138:11,14
141:4,5,8,12,13
141:13 143:14,16
146:25,25 147:1,3
163:8 164:11
165:24 166:2,7
168:12 234:18
235:7,20 236:5,6
236:12 244:25
245:3,9
catch-up 218:22
categories 143:24
158:8 167:16,18
194:16 215:11
226:8,22 233:2
categorize 218:24
category 167:5,10
225:25 237:20
252:1
cause 49:16 100:7
causes 238:19
Cave 2:21 11:14
CCF 192:17,17
251:22
CCR 3:22
CD 45:1,8 52:12
96:3 162:1,2,12
CDs 168:16
cell 5:8
certain 14:18 23:19
48:2 52:12 55:9
89:2,3 164:11,12
186:25 227:15
certainly 16:13 23:1
23:10 26:15 52:12
62:1 118:17
CERTIFICATE
259:1
Certified 259:4,22
certify 259:6,10
cetera 77:7 167:13
184:15
Chair 5:12 21:9
71:23 114:22
201:5 202:7
240:25
chairman 2:3 5:10
56:4 72:8 77:20
103:23 147:4
169:7 201:25
230:19
chairs 13:14
challenges 159:10
challenging 49:12
50:18
Chamber 6:17 7:1
chance 15:1 19:23
124:8
change 1:17 7:5,18
8:8,11,19 13:25
22:5 23:21 28:3
28:13,18,19,20
31:10 38:1 41:1,7
41:7 44:9 45:13
45:15,19 46:15
49:13 50:3 51:13
64:15 66:23 68:11
70:7 71:14 76:7,9
76:12 81:7,8
94:12,14 95:14,16
95:16,18 97:19
104:14 109:13
140:7 166:18
189:11 214:14,22
216:17 221:22
222:10 250:17
changed 22:24
76:24 84:9,20,25
88:11 89:9 130:16
168:1 213:3
224:13 233:18,25
changes 5:23 7:7,15
22:20 26:18 45:18
69:21,22 70:7
71:19 87:2 109:4
109:24 232:7,12
233:19 250:18
changing 23:19
29:23 86:12
167:18 256:12
characterize 75:16
charge 153:1,11,12
154:3,4 155:10
156:1 216:12
224:5,9,12 228:4
228:17 248:9
249:1,15,17,19
253:1 255:22
charged 184:13
249:18
charges 155:12
174:18 180:11
191:13,17,18
228:14,18 247:20
248:2 249:16
252:11 255:21,23
255:25,25 256:2
charging 248:10
chart 28:23 184:25
Charter 5:16,21,25
16:22 22:10,17,25
23:6 24:22 29:16
41:6 69:21,22
70:7 129:3,4
134:9
check 79:14 84:15
124:25 125:4
160:9 167:20
177:5 188:4
235:17
Chesapeake 49:19
choice 193:20
253:24
chosen 35:9
chunk 166:7
Church 7:2
Cincinnati 35:15
Circuit 80:2
circumstances
28:15 78:8 246:24
CIRP 88:1 89:13
90:20 91:20,25
102:17,21 108:20
115:24 161:25
162:10 163:2,6
165:13 166:1,4,12
166:14 167:12
193:21 194:2
223:1,18 235:3,8
235:9 245:9 246:8
cities 35:14 45:20
45:25 46:4 140:19
145:16 200:13
215:10,19 251:3
252:9,10
city 34:14 35:15
45:24 142:14
183:12 184:1,11
184:13,16,19,23
184:24 185:24
186:6,8 191:25
192:4 241:14
242:15,25
civil 34:20 36:21
69:12 80:1
claim 36:25 80:4
claims 62:3 63:2,5,8
63:13,17,21 74:18
80:21 82:2 83:2,3
83:14
clarification 33:9
38:11 98:11
101:19 104:19
122:20 151:21
clarify 29:1 60:5
178:10
class 229:16
classes 8:6 38:3
153:1 205:1 215:9
229:17 251:19
classification
157:14
clause 129:3,4,16,17
134:8
clean 34:21 35:12
36:5 37:22 45:21
46:12 48:2 64:19
66:9 74:10,12
154:14
Cleaning 87:12
clear 73:11 224:24
250:13
clearly 184:4
237:22
Cleveland 141:21
143:6
client 203:17
climate 50:3 66:23
95:21 107:24
climbed 238:6
close 106:4 157:2
168:2 170:19
214:20 234:23
closely 78:18 155:20
closer 117:16
138:19
Club 6:18
CMOM 58:12
101:8 113:17
coalition 7:3 34:25
35:6 36:25 41:19
60:14 71:20 73:17
78:14,19 100:23
code 135:14
cold 74:4 136:6
collaborative 18:5
colleagues 55:20
collect 170:19,23
171:22,23 172:5
172:22 173:13
174:16 176:17
178:14 179:23
183:25 217:7
239:2
collected 160:5
collecting 199:25
collection 36:18
170:21 171:24
172:15,17,19,24
173:4,9,10 174:1
174:5 175:9,14,17
175:25 176:8,12
176:20 177:4
180:20 181:10,14
181:16 190:18,20
199:17 238:22,23
238:25 239:13,13
239:18,25 240:4
collections 16:3
Collision 55:12
column 179:13
204:20 248:15
columns 179:9
combination 67:2
115:25 170:22
171:13 187:2
combine 197:17
combined 34:2
37:13 46:5,5 48:9
48:13 58:2 91:21
211:8 219:16
come 13:2,10 15:4
19:16 22:10 24:2
26:14 32:1 50:24
52:20 66:20,24
88:21 106:11
109:13 110:16
128:9 131:20
136:2 141:25
150:8 157:25
159:13 183:18
206:8 228:13,25
229:5 242:20
243:5 256:15
comes 23:5 131:21
134:6 140:8 145:8
146:17 151:14
183:8 195:12
223:2 244:20
coming 26:4 88:8
89:5 94:2 97:11
142:20 163:23
220:19 228:7
comment 39:16
71:6 72:21 104:6
257:2
commented 45:9
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comments 13:23
20:22 21:8 22:1
28:6,6 33:10
39:12,18 57:12
71:7,9 72:23 97:2
145:11
Commerce 7:1
commercial 6:6
14:19 153:14,21
154:8,12,23 155:8
155:11 157:10
182:19,21 199:23
215:13 251:23
252:7
commission 1:3 2:2
2:12 4:3 5:10,15
5:22 6:3,5,14 7:6
7:17 8:7,9,14,15
8:18 9:2,7,14,18
9:20,22 10:6,11
10:20 12:6,8,15
15:13,14 16:17,23
17:2,16 18:1,3
21:13 22:7 23:11
23:18 24:8,24
27:10 28:14 29:4
31:19 33:2 37:24
37:25 39:5 42:12
45:16 51:16 53:9
53:16 54:12 56:6
64:19 65:14 66:6
67:17 72:17 76:18
78:5,16,21 79:3
79:12 84:14,16
85:5,21 90:15
115:6 126:15
144:7 150:3 152:9
164:9 173:12
177:7 181:2
182:10 187:8
201:3,13,21 230:5
241:3 256:9,12,21
256:23 257:15,19
259:7
Commissioner 4:1
4:6,7,8,10,11,12
4:13,14,15,16,17
4:19,20,22,23,24
4:25 5:1,2,3,4,6
11:9,16,24 12:3
13:8,23 14:6
20:16 21:7,25
24:12,16 25:9,17
25:23,24 26:20,22
27:3,18 28:5,25
30:10,21,24 31:3
31:5,6,16 32:5,21
32:24 33:7 39:6
39:17,22,25 40:5
40:10,14 51:2,7
52:24 55:4 56:5
56:24,25 58:19
63:22,23 64:25
65:4 67:6,11,16
67:23 71:24 72:4
72:7 74:2 77:21
85:10,14,20 98:7
98:25 101:15
102:7 103:24
104:23 106:16
111:3 112:4,9,14
112:21 114:5,10
114:13,15,19
115:5,11 124:11
129:20,24 139:9
139:14 142:23
144:5 147:5
148:12 151:1,16
152:1,8,14 161:3
169:2,6 178:19
180:23 181:1
182:13 186:17
188:11,16 192:21
194:25 197:24
198:12,16,23
199:8 201:6,12,20
202:1,10 221:10
230:14,18,21
241:1 243:16
247:15 252:14
254:24 256:7
257:6,21,22
Commissioners
5:13 13:19,24
20:17 24:13 30:11
30:22 40:12 69:7
77:23 104:1
106:17 112:15
114:16 139:18
148:14 151:2
199:10 252:15
254:25 257:24
Commissions 84:20
Commission's 12:9
116:13
commitment
105:16
committee 31:13
common 7:20 41:3
76:8 93:14
communicate 184:4
communicates
184:3
communication
26:7
communications
31:13
communities
255:17
community 6:11
34:12,17 37:8
150:12
company 155:19
168:19 200:1,1
comparability
214:2
comparable 34:5
219:12
comparative 253:19
compare 108:10
158:12 159:1
188:21 204:9
215:11 219:18
250:25 251:1
253:15
compared 111:1
143:3,5 200:17,18
214:4 220:25
comparing 200:22
219:6 248:2 249:9
comparison 131:24
188:23 200:21
211:4 228:2
comparisons 214:7
compensated
173:11 176:24
competitive 136:18
137:20
compiled 242:10
complaint 36:2
73:21,23 74:18
complaints 74:19
complete 63:10 88:8
completed 12:19
89:13 107:18
108:8 139:16
completely 135:9
174:2
completion 87:25
compliance 35:11
36:4,7,12 37:22
38:14 59:23 61:25
111:10 153:11
154:4 155:11,15
156:1,7 161:18,23
162:7,25 228:4,14
228:17 247:20
249:15
Compliant 153:12
compliment 104:22
comply 8:3 80:25
81:11 129:3 162:1
166:15 248:12,21
complying 81:17
component 154:18
184:13
components 153:16
154:19 158:3
165:23 187:4
229:17 237:16
composition 136:14
compounded 182:5
comprehensive
101:10
concentrated
145:15
concept 164:10
conceptual 137:7
concern 26:9 78:10
109:1,10
concerned 135:6
137:24 226:24
250:8
concerning 14:7
31:13 49:20
concerns 21:12
conclude 257:7
concluded 258:2
concludes 39:3
concluding 11:1
conclusion 20:5
75:9,12 76:1
124:4 150:2
concrete 58:18
concurred 132:25
concurrent 136:9
conditions 95:11,14
97:4 99:9,11,12
99:13 118:6
207:11 250:17
conducted 10:25
19:9
cone 244:1
conference 9:11,15
9:21 10:1,4,9,14
10:17 18:18,25
19:10,12 26:13
257:7 258:1
conferences 25:1
37:3
confident 185:6
186:4
confidential 70:11
78:25
confidentiality 43:2
43:6 78:17
confirmed 238:11
confused 29:18 60:3
82:16 83:5,16
confusing 22:23
25:4
Congress 66:12
120:1
connection 208:23
consent 16:14,16
35:5,9,19,21 37:4
37:20 38:15 41:9
41:16 42:4,12,19
42:25 44:20 45:4
45:5,17,23 46:1,9
47:13 52:19 53:17
55:10,15 56:15
58:24 60:4,6,9,12
60:24 65:9,16,18
70:10,14,23,25
71:10 72:14 73:3
73:7,8,15,16,21
74:14,17 78:4,11
81:1,12 82:5,10
82:13 89:11,23
90:2,5 91:9 92:11
105:3 110:3
111:11 113:16,25
161:24 162:25
166:15,16 226:25
227:8 254:5 255:6
255:9
conservative 244:4
consider 22:8 23:18
23:18 26:16,16
31:20 97:9,11
123:10 125:16
145:8,9 153:8
167:21 191:20
214:8
considerable 50:5
146:12 172:10
considerably
146:15 197:22
consideration 20:12
82:8 189:9 238:24
considered 32:3
47:3 82:5 108:7
120:12 135:22
136:24 166:11
167:7 168:7 226:1
238:9 251:25
consistent 7:19,24
35:13 41:2 76:7
130:22 217:20
consists 6:15
consolidated 34:11
234:13 238:3
constant 185:18
205:22
constantly 136:20
constitutes 68:16
97:24
Constitution 34:8
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constitutional 7:19
41:2 76:7,13
84:23
constrained 118:4
constraint 136:4
constraints 116:7
117:25 122:9
construct 68:12
97:20 140:19
constructed 37:16
57:19,22 58:6,10
90:22 91:2,4,5,8
91:13 106:2
109:20 185:3
construction 6:24
36:11 48:13 57:25
59:20,23 94:11
96:7,23 107:13
195:8 235:21
consult 79:8
consultant 39:2
87:24 88:5,7,15
202:6
consultants 2:9 9:23
10:10,11 12:5,6
consultation 240:20
Consumers 2:20
6:21,24 8:23
11:11,15 14:8,16
67:21
contact 122:3
contacted 121:13,19
215:19
contained 76:19
78:5
contaminants 50:3
66:23
contemplate 24:1
contemplated 27:11
continuation 37:5
203:22 205:10
238:8
continue 43:14
60:15,22 72:13
82:16 90:7 109:1
146:8 148:1 173:4
174:19 181:22
183:14 192:9,10
192:15,17 240:2
continued 146:9
continues 109:9
191:25
continuous 108:1
185:6
continuum 150:21
contracted 239:1
Contractors 6:16
contractual 233:8
contrary 87:9
contribute 158:7
contribution 198:4
198:6 213:5
contributions
121:14 231:20
233:7
control 36:13 48:11
48:17 50:17 56:19
57:24 58:13 78:9
104:21 181:20
184:20
convenient 18:24
conversations
121:10 162:13
Conversely 154:11
cooperating 6:25
copies 13:4,7,11,17
13:22 14:5 75:24
113:23 132:21
Cops 172:25,25
copy 17:5 42:11
73:23 74:21 75:9
76:5 77:5 78:25
90:2 116:14 217:9
corporate 138:8
220:24,25
corporation 6:20
14:17
corporations 14:18
Corps 121:18,24
correct 27:1,2,7,8
27:15 41:19,20
43:25 53:18,19
61:5 70:2 85:1,2
86:21,22 94:15
95:18 98:20
100:14 107:4
109:8 111:12,13
111:16 116:2,3
122:19 127:1,11
129:17 142:22
148:3 150:22
151:24 160:8
163:13 164:2
170:7 171:17
172:23 179:20
180:21 186:10
193:14 203:14
204:1 205:2,9,18
209:12,13,17,23
209:24 210:14
213:14 214:23
231:25 240:8,18
248:24,25 249:2
250:15
correctly 137:19
153:20 169:24
177:25 188:24
192:2 193:6 213:2
242:2 248:6,7,19
correlation 134:14
correspond 212:6
correspondence
22:3
cost 7:11 16:9 22:16
36:8,25 48:15
49:23 59:5,21
61:11,18 87:25
89:1 92:22 93:9
93:20 94:10,12
96:6,17,22 106:23
107:21 108:2
126:10 127:18
128:2,3 132:12
134:5 137:3,10
154:17 155:11,17
155:21,22 156:3,5
156:21 197:8
203:1 214:3 217:4
217:5 218:12
219:6 224:18
229:9,16 233:12
247:25 248:5,8,11
248:16,20,21,23
249:12,15,17,19
255:13
costs 41:12 46:13
52:17 59:17,19,22
62:9 96:8,24
132:23 152:25
154:21,21 155:6
155:19 156:7,17
156:22 157:2,5
158:5 196:8,20
197:4 212:24
216:18,19 220:3
222:9 234:2 245:6
248:12
cost-to-service
203:25 204:4
211:15
Council 6:24 7:2
counsel 2:12,17
9:19 10:8,21 11:6
12:8,17,19 20:20
33:19 38:22 79:14
257:13 259:13,17
count 118:16
233:17,24 234:3
counterclaim 53:23
81:3,9
counterclaims
43:12,13,17,22,23
54:2 61:4,6,7,9,15
61:17 69:8,11,12
69:13,16,18 79:21
80:14,16,17,18,22
80:23 81:5,15,19
81:20,24 82:20,24
83:6
counties 206:19
country 33:25 34:4
66:11 143:4 153:6
159:2 200:19
county 5:18 6:23,25
142:14 183:10
184:7,8 241:15
259:2
couple 40:24 53:2
53:10 68:7 86:9
89:10 101:18
111:6 149:1 193:9
193:14 195:1
231:2 255:2
coupon 123:11
138:20
course 16:1 18:2
236:14
court 35:21 38:8
42:17 43:14,17
45:5,7,10 60:11
60:18 62:16 69:14
71:5,11 72:24
73:5,18 76:2
79:17,22 80:1,2
84:17 259:5,22
courts 153:7
court's 62:19
covenant 7:25 130:6
130:15,17
cover 7:13 41:12
83:8 144:19 166:6
coverage 140:25
141:1,2 144:13,14
144:16 239:25
coverages 130:22
covered 70:19
Covidien 8:23 11:17
11:18 15:1
co-authored 14:21
14:23
crafted 45:16 46:7
54:20
create 113:12
194:16
created 48:23
creates 49:1
credible 142:1
credit 131:4,6,7,8,9
131:10,12,18
138:11 140:4
144:20 145:2,4
146:3,4,22 148:4
148:6 149:10,18
150:10
credits 243:7
Creek 64:6
criteria 140:23
cross 164:13
crossing 164:22
CRR 3:22
CSO 36:13,15 37:14
56:16 87:11 92:3
167:13
CSO's 91:22 92:1
92:10
CSR 3:22
cubic 214:24
cumbered 134:10
cumulative 225:17
curiosity 241:15
current 29:5 32:25
37:5 65:13 105:5
119:2,22,23 125:5
126:8 131:13
148:7 171:7 173:6
174:18 189:1
203:10,13 204:19
208:6,12 211:24
241:24
currently 6:14
48:23 97:8 117:16
132:3 140:5
143:10 159:11
222:17 226:15
228:15
cushion 146:19,21
246:6
customer 127:13
153:2 154:7
155:16 156:17
203:22 204:14
222:22 229:16,17
241:12
customers 46:24
154:8,12,24,24
155:9 156:7 157:6
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intervenors 9:22
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15:3 17:17 20:18
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involve 61:17
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issuance 8:15 127:9
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issue 8:10 23:9,10
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101:1,19 107:14
110:1,5 124:21
130:7 134:25
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January 172:7
Jeff 25:17 38:20
39:24 40:18 70:19
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Jeffrey 9:3
jeopardizing
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Journal 139:4
Judge 83:18
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judgment 53:17
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jump 127:21
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knew 162:6 185:22
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114:8 124:12,14
124:18 129:18,21
151:4,15 161:4,6
161:9 168:25
169:3 221:11,13
221:16 230:12,15
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203:19 204:9,20
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late 123:13 191:17
later 23:5 79:15
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lateral 36:23 46:24
latitude 110:7
law 7:20 11:22 41:3
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84:24 176:10,15
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lawful 40:19 68:2
86:2 112:25
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learn 183:4
learned 162:3
least 16:13 19:9
32:15 57:9 103:12
116:13 123:22
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leave 167:9
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legislative 69:21
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length 170:24
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lengthy 18:2 44:17
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letterhead 176:4
let's 26:10 29:2 32:8
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81:6 136:17
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156:18 164:8
172:17 179:11
198:9 205:16,17
206:12 208:9
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levels 113:13 154:23
155:7 164:18
167:3 204:5 206:6
208:18 209:11
224:11 225:23
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leverage 118:5
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liberty 35:23 39:11
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life 122:17 149:7
light 32:9 96:3
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68:17 70:16 71:13
71:18 72:13 75:4
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lobbyist 120:6
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lodge 71:5
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mains 100:18
maintain 34:16 37:9
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maintaining 68:13
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making 218:17
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marketplace 138:9
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219:13 220:11
222:12 225:17
226:5 233:20
234:18 242:7
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246:3,16,18 250:6
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meaning 164:11
means 94:25 143:25
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meant 189:10
measure 110:6
measurement
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media 123:2
median 131:19
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144:25 146:2,3
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medians 143:9
mediation 43:3
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medium 66:10
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memoranda 75:24
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mentions 105:4
Meramec 159:22
mess 170:8
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meter 184:10 192:3
metered 184:1
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metering 192:5
meters 184:9,10,12
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method 37:24 84:18
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milestones 226:10
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million 15:25 16:10
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103:12,15 105:7
105:10,10,14,16
105:22,22 107:1,2
107:7 108:6,9,10
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237:24,25 238:2,7
238:9,14 239:12
239:15,16,24
240:10,11 243:6,6
246:5,12,13,19
253:13
millions 49:24
mind 37:4 45:17,25
136:18 150:9
173:2 246:21
252:2 257:5
minds 18:6
mine 109:10
minimizing 18:9
minimum 192:16
minor 253:22
minus 237:25
minute 67:8 92:7
178:17 252:17
miserably 237:6
Miss 4:5,8 5:7
missing 100:12
227:24
Mississippi 47:15
47:17,21 48:5,10
48:14 50:15 67:1
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Missouri 2:20 6:19
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11:10,14 14:8,16
34:8,20,25 35:6,7
36:24 38:8 41:18
42:1,22,24 43:11
46:11 48:18 55:12
56:14 60:8,14
64:7,13 67:21
76:13,16 79:19
92:17 104:7
116:12,15,22
117:18 118:18,25
119:21 153:7
159:23 259:2,6
misunderstood
185:25
mitigating 92:4
mitigation 110:5
168:13
MO 3:22,23
model 87:24 88:11
89:9 204:1,4
211:15 231:5
modeled 45:23
moderate 253:6
modest 222:21
modestly 131:18
modified 31:24
moment 56:22 59:7
75:18 245:15
money 21:23 51:20
103:15 137:8,11
138:21 165:14
176:17 178:13
183:24 193:24
194:6 226:7 235:5
244:20,25 245:21
monitor 154:19
monitoring 108:1
153:25 154:13
155:7,25 156:4,5
253:4
month 21:16 64:20
66:16 128:11
154:2,9,11 164:4
164:7 214:25
228:24,24 248:9
251:25
monthly 142:12
228:18 247:25
248:8,16,20
months 135:3,3,15
170:12,23 174:15
174:20,21 178:3
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67:7 81:4 88:9,10
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94:21 96:16
107:23 110:14
117:2 119:18
123:23,25 126:4,9
126:10 127:25
131:5 135:25
137:20,24 141:23
143:16 144:1
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146:20,21 148:8
149:1,10 154:5,10
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225:13 226:18
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137:2
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59:8 87:1 90:4
91:5 93:6 94:7
99:23 122:8 134:9
158:1,9 171:5
183:9 184:9
mostly 175:4
motion 31:3,7,7,8
33:2
move 19:12 30:24
31:9,17 32:6
33:11 67:18 110:1
124:15 157:14
167:16 172:24
173:3 231:21
257:21
moved 87:9
movement 157:18
moves 103:19 252:4
252:5,6,6,7,12
movies 173:2
moving 29:23
131:16 136:20
165:2 247:9
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MSD 14:4,19 15:23
16:9,15 25:11
31:2 33:24 34:7,9
34:15 35:2,24
36:1 37:10,21
39:5 41:18 42:11
44:1,8 45:14
46:12 47:15 48:21
49:9 51:13 54:23
54:24,24 57:5
60:14 61:4,11
62:3 64:5 66:2
67:3 69:11,22
71:13,18,20 73:6
78:3 80:5,24 81:9
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86:11,16 89:15,19
90:24 92:20 110:7
110:18 113:14
116:5 118:14
119:18 120:12
126:24 127:3,8
151:23 153:10
154:15 155:13,18
158:13 163:11,23
169:15 177:22
179:2 183:4 192:9
199:17 206:14
213:3 217:25
218:13 220:1
227:7,25 231:4
237:12,14,18
240:20 251:5
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MSD's 17:18 19:19
20:2 34:4 37:5
38:13,19,20,21,22
38:23,24,25 45:23
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80:14 90:20 91:20
91:25 121:5 156:6
156:17 159:7,21
163:6 190:7 219:6
233:11,24 234:13
236:12 256:2
much 88:9,10,21
89:7 104:20 110:7
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142:11 143:8
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158:6 166:4
168:13 171:24
172:14 176:20
179:22 188:22
194:6 195:11
206:11 211:24,25
212:12 218:25
221:8 225:9
232:10 242:11,17
244:8 245:8 253:2
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Mueller 3:4,5 8:24
11:25 12:1,2,2
15:2 21:5 39:16
51:7,9,12 52:22
52:25 72:4,6 99:1
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114:10,12 129:21
129:22 169:3,4
230:15,17
multiple 52:6
multiply 140:15
228:11,12,19,24
multiplying 228:5
multi-decade 34:15
35:12
multi-family 157:10
157:11 182:23
183:1 187:10,14
multi-year 129:8
134:11 136:5
municipal 6:23
134:4 220:22
221:1 244:16
must 8:9 103:9
113:14 135:1
mutual 14:17
Myers 2:17 9:4 11:5
11:5 14:2,3 33:15
33:17,18 38:21
39:7,18,21,23
45:20 51:18 53:14
56:12 63:15 65:1
65:3,7 67:5,12,12
67:15,18,20 68:1
72:3,13 77:23
85:11,13 97:14,17
97:24 111:5,6,9
112:2 114:17,18
151:3,16,17,20,25
199:11,12,15
200:8 255:1,2,5
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myriad 47:8 50:1
myself 11:5 38:21
124:6
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N
NACWA 66:2,6,14
66:15,21,24
214:17 215:25
216:11 250:25
251:4,8
name 5:9 6:2 11:13
14:14 53:7 176:3
203:19
Nancy 2:4
narrow 89:12
244:18
national 66:8,17,22
67:4
nationwide 140:18
nature 54:2 64:8
98:3 102:9 118:20
136:1 182:22
near 190:9
nearly 16:6 74:3
135:3 244:10
necessarily 82:4
117:3 173:3 174:9
191:11 226:8
necessary 7:8 13:12
16:19 36:4 38:13
56:21 68:11 77:16
87:23 97:19
161:17 218:14
219:25
need 23:23 24:9,21
26:5 41:13 49:8
54:16 65:25 71:9
78:22 81:23 84:21
89:22 91:9,14
92:10,13 125:11
128:14 129:2
154:25 164:20
166:3,7,15 187:11
219:23 222:16
226:10 237:22
256:13
needed 20:7 39:13
61:25 88:11
111:22 155:15
203:7 222:1
247:13
needing 42:2
needs 45:11 52:9
64:21 162:15
negative 137:24
145:25
negotiate 195:9,10
negotiated 44:13
195:12 199:5
227:13,14 255:9
negotiating 41:23
59:4
negotiation 65:17
negotiations 34:23
35:8 41:25 79:9
87:15 130:13
218:4,6
neighborhood 6:11
117:24
neither 259:13
net 28:17 132:11
138:15 151:8,13
246:3
never 191:17
nevertheless 90:11
new 23:25 24:3,11
32:2,14,19 33:3
47:2,5 49:5,12
50:11 77:3 82:25
110:14 143:4
181:25 209:1,3,19
209:24 210:6
229:4 235:9
256:13,16,17
257:14
next 16:7 21:18
32:9 33:4 49:14
49:21 52:3,6 54:1
67:11 85:14 87:19
96:8 97:6,11
112:5 122:15,16
124:2 132:3 146:8
146:11 152:2
174:23 178:16
181:15 188:3
201:14 216:24
218:14 240:10
246:9 257:8
nine 74:13
nitrogen 49:15
NOCWA 214:19
215:5 216:5
non 69:17 83:1,2
156:7 157:13
190:7 229:10,15
251:3,4,6,8,10
none 13:18 14:1
33:14 67:19 77:23
85:12,23 114:18
130:11 152:11
201:22
non-profit 6:12
normal 137:16
144:1,2
normalized 123:23
normally 188:2
north 3:23 175:13
Northeast 141:20
notches 149:1
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201:4
noted 238:20
notes 235:18
nothing 40:2 67:5
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154:18 200:8
201:18
notice 7:5 8:8,11
22:18 24:23 28:13
41:2,7,7 45:6,13
45:15,19 51:13,15
51:19 71:4 139:2
139:3,7 191:3
205:11 235:23
256:17
notices 51:23
notifying 192:8
not-for-profit 14:17
November 5:20
25:13
number 16:11 36:9
37:16 50:8 52:13
52:16 57:8 58:1
70:9 74:24 92:6
93:8 104:14,20
116:4,9 119:14
125:21 126:7,11
136:1,15 140:21
140:22 141:4,13
143:13 145:9,15
147:22 150:9
154:25 155:1,14
177:25 181:7,18
182:1 184:14,15
186:23 189:3
201:3 204:21
209:7 211:6 215:8
226:14 227:7,8,15
227:17 228:6,16
228:17,24 231:20
232:16 234:12
246:10 254:10,15
numbered 98:19
numbers 92:7 125:4
141:22 148:25
149:8 163:16
168:20,22 174:8
181:12 189:13
190:3 196:23
198:18 209:1
212:22 213:11,13
227:24,25 228:7
228:13 229:22
233:22 244:2
247:8 248:14
numerous 35:14
47:2 118:17
nutrient 49:15,20
50:23 52:19
nutrients 49:14,23
50:10 66:23
110:11
O
O 2:14 209:19 210:3
210:5,10,12,14,15
211:4 212:22
245:6
Obama 117:2
objectives 219:7
236:18
obligation 107:7
140:9 147:11
obligations 38:14
131:11
obtain 111:23 122:8
obviously 19:5
20:24 119:20
125:18 127:20
135:13 182:3
185:3 196:25
199:20
occur 21:18 92:13
100:10 257:17
occurred 28:19 52:1
87:3 107:6 108:25
123:12 229:24
occurring 52:4
occurs 99:21 155:25
190:8
October 17:24 27:1
27:7 28:13,17
oddball 100:13
off 5:9 50:22 68:20
108:14 110:2
139:16 141:25
158:10 170:10,11
170:14 178:5,7,10
179:18 180:19
183:18 184:22
188:5 190:11
191:16 192:1
199:18 200:2,3,5
206:11,12
offered 187:8
officer 13:14 259:9
official 212:18
officially 42:8
183:18
often 199:24
Oh 102:15
okay 31:15 32:7,24
33:8 41:21 42:14
44:14 54:1 65:16
66:1 68:24 69:5
69:10 71:22 75:14
75:19 76:22 89:19
90:13,19 91:7,12
92:25 93:22 96:6
97:13 98:4 100:15
101:13 103:4
106:15 107:2
111:17 112:2
119:7,25 120:21
121:12 125:13,16
127:7 128:20
129:10 130:19
133:20,21 140:5
147:16 150:17
155:13 156:16
157:6,20 158:11
160:14 161:1,15
162:17 166:2
167:20 170:3
184:16 194:24
198:23 201:1
203:12,24 206:5
206:17 207:9
209:5 210:2,16
211:13 212:17,20
213:22 214:7
216:15 217:2
218:1 221:2
222:19 223:13
225:6 227:6,14,20
229:2,18 230:4,10
230:12 234:5,10
234:22 236:7
240:24 241:23,23
242:16 243:4,13
246:13 247:14
248:17 250:8
255:15,20 256:1,5
old 176:12
older 170:13,20
238:23 239:23
omitted 70:12
once 16:10 20:11
35:20 56:14 70:25
71:3,5 73:4,15
82:10 107:8
185:16 253:25
254:3
one 11:17 12:18
13:1 16:25 19:9
19:13 30:6,11
31:18 43:20 56:22
57:4 59:3,8 65:22
65:23 87:4,7
90:18 92:15 98:10
98:22 100:16,17
100:18 104:6
119:1,19 121:3
123:3 127:21
130:10 134:17
135:5 136:7
140:24 141:3
150:18 151:17
153:15 154:10
156:4 157:7 169:8
173:9 178:6 179:9
184:18,23 186:22
190:18 195:1
199:12,24 206:1
216:25 217:2
226:17 228:23,24
233:23 234:24
236:3,15,18
239:24 241:9
252:15 253:11
ones 70:1 77:15
91:3 106:10
107:11 119:4
218:20 253:3
one-45 23:1,4
ongoing 38:18
41:14 58:11,25
59:2 60:19 65:21
74:10 82:15 87:14
only 19:8 21:20
22:25 27:22 38:17
75:4 90:18 98:23
100:9 115:22
131:7 144:19,22
149:21 157:9
160:17,23 166:1
174:16 176:2
185:10,14 187:8
188:9 189:22
191:11 211:9,18
211:23 219:15
226:22 227:10
228:13 229:5,12
245:24 247:11
249:11,17 254:12
255:24
on-call 257:8
on-line 193:25
open 59:11 93:5
192:1
opening 33:15,21
39:3,4,8,10,12,18
53:14 145:11
openly 52:13
operating 41:12
141:18 143:17
159:18 193:2,18
208:19 216:16,18
218:22 234:2
236:13,17,20,22
236:23 237:17
238:17
operation 6:8 7:11
34:9 58:12 151:12
172:15 174:1
209:15 210:17
231:3,9 236:21
operational 12:10
19:8 101:1
operations 36:16
38:24 41:14
113:18,20 141:19
211:23 223:25
opinion 38:2 135:7
138:4 166:24
171:1 222:10
226:17 253:17
opportunities
157:13
opportunity 8:20
9:16 15:11,13
33:21 40:9 173:6
opposed 31:8 98:3
opposite 126:1
252:24
opposition 13:25
optimally 36:17
optimistic 119:15
244:10
option 65:18
options 96:2 126:5
order 4:3 16:8
38:19 112:5 152:2
201:15 223:10
255:14 256:16
ordinance 29:23
30:3 35:3 42:5
44:6,24 45:1
70:22 130:7,9,14
144:17
ordinances 44:24
organization 66:3
233:20
organizations 6:2,5
6:7,9,12,13 145:1
oriented 155:19
original 18:13 21:11
originally 18:18,22
25:20 27:5,17
87:10 108:4
157:15
other 6:7,12 10:7
13:18 20:18,21
24:19 26:7 28:6
30:11 31:18 33:9
33:12 34:5 35:14
37:19 39:7,18
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50:1 51:18 52:17
57:19 63:24 64:7
64:25 69:6 70:8
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95:25 100:8 101:1
101:2 106:17
107:11,14 110:1
110:20 116:24
118:19 120:2,10
120:14 121:24
122:2 126:16
136:11 140:11
143:3,6 145:16
148:11 150:7,18
150:25 151:1
155:22 159:1,1
160:18 167:24
168:7,8 177:15
180:15 183:5
186:7 188:11,21
188:23 194:25
197:3 199:9
200:13,17,18,19
200:22 208:16,19
213:19 214:9,22
215:11 216:3
217:3,11 219:8
226:18 229:16,20
235:6 236:7
237:17 242:16
245:2,24,24 247:5
249:20,21 250:8
250:24 252:10
253:11,15 255:11
255:21,25 256:9
256:18
others 15:19 35:17
43:15 55:17
143:18 158:9
163:16 236:9
otherwise 59:21
61:20 259:18
out 21:20 23:9,15
24:19 25:12,25
26:6 30:16 53:13
56:17 69:15 78:9
84:17 90:8 92:25
94:21 95:12 96:20
103:12 104:21
105:9 106:11
110:23 123:19
135:16,18 136:2
136:17,21 141:21
143:12 151:11,14
158:8 164:8,19
165:15 174:7
179:22 183:23
191:21 195:11,13
206:25 207:24
212:12 216:16,22
216:25 220:19
222:13 227:23,23
228:7,11,13 229:6
229:15 230:1
236:6 241:15,25
242:18 243:5
256:17
outcome 259:19
outfalls 106:2
outlay 236:24,25
outlined 37:4
111:11,19
outside 79:14
143:22
outstanding 8:1
61:3 69:8 117:17
140:6 143:11
236:16
over 15:25 16:7,10
34:1,9,13 37:15
37:17 46:9,22
52:6 86:11,17
95:2 96:8 97:6
116:7 121:15
122:15,16,17
126:10 127:23
134:14 135:24
136:10,12 147:17
148:10 149:6
152:25 154:11
163:19 171:3
174:1 181:15,20
189:15 190:15
194:1,3 197:14
209:10 210:8
218:14 226:16
231:21 233:9,18
233:25 234:3
235:12 236:2
247:23 250:19,20
overall 27:23 93:18
94:1 96:17 195:10
197:21 233:23
253:14
overflow 56:13
57:16 90:25 99:20
100:4,7
overflows 37:16
48:9 57:20,22
58:7,14 65:24
90:22 91:2,4,6,8
91:14,22 100:20
101:12 106:8
overtime 198:17
overview 66:6
overwhelming
184:9
owned 34:10
owner 183:17
187:21,23
O'Connell 2:4 4:15
4:16 247:15,18
P
pack 143:9 149:14
149:16,17
package 196:12,14
196:17
packages 88:15
packets 176:14
page 17:14 24:5
52:2 54:16,19
74:6,6 75:15
86:18,20,22 87:21
87:22,22 98:15
101:25 102:25
103:2 113:8
130:19 132:10
133:4 144:17
161:11 167:1,1,11
169:20 173:20,21
179:4 193:1
194:10 195:16,21
195:22 202:23
204:13,21,24
207:15 210:19
214:16 215:2,7
217:12 221:21
222:20 223:3,22
224:14,22,23
225:21 228:2
231:10 232:17
234:6 237:15
239:10 241:16,17
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paid 48:21 138:12
138:19 141:12
165:19,22,23
189:22
pain 109:15
Pam 256:14
paper 76:6 77:6
113:17
papers 75:10,25
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paragraph 54:18
175:7 241:21
parallel 162:24
Pardon 217:25
241:22 242:6
part 22:4 48:12
57:17 65:9,10
69:12 75:4 79:19
82:21 87:14 91:5
120:9 138:25
142:9 156:1 158:1
158:9 162:13
169:23 181:23
184:6 203:21,23
206:3,16 209:6
213:20 226:25
227:8,25 237:3
partial 135:11
170:8 179:8
partially 135:9
175:3
participants 12:13
12:17
participate 10:23
19:5 58:24 126:21
163:4 213:16
particular 17:12
45:24 48:19 76:20
86:18 113:7 160:7
219:23
particularly 182:5
parties 15:7,11,17
16:4,11,17 18:7
19:15 20:6,21
33:4 39:7 41:25
42:18 54:3,6
56:15 59:13 60:7
65:17 70:9 259:14
259:17
parts 44:9 123:14
123:15 200:19
past 34:22 37:7,25
64:20 76:11 86:12
86:17 88:2 123:10
135:19 141:15
174:4 176:21
181:8 206:12
212:17 225:7
246:18 250:11,21
253:10,21
path 176:20
patrons 25:4
pattern 131:9
208:11
Paul 2:7 58:22
pay 7:9,11,12 128:8
129:5,9 154:8,12
165:25 171:13
173:15,16 174:17
187:16 191:23
200:2,4,7 242:23
245:6
payback 116:19
paycheck 146:20
PAYGO 128:6,7
146:25 164:10,14
164:16,23 165:4
165:15 167:7
218:20 224:19,21
225:4,8,9,16
226:2 253:22
paying 61:21
127:23,24 149:6
154:10 182:4,6
228:16 243:1,2
payment 138:23
171:16 175:9
177:15 190:7
191:19,22
payments 103:18
138:5,24 143:12
198:7 236:15
pays 249:11
PC 2:14 3:2
penalties 46:14
73:23
penalty 36:21
penny 193:11
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194:22 195:12,19
196:6,19 197:3,10
198:3,18 213:1,4
213:11,13 231:19
232:8,13 233:7
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184:9,9,19 186:23
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196:20 197:14
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214:25 217:6
222:22 242:12,14
248:1,8 251:25
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117:13,14 118:10
122:14,24 123:5,7
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125:2,2,3,24,24
126:2,2,12,13
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134:18,19,20
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138:13,20 141:22
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percentage 69:1
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146:11 156:20,24
168:3 170:15
176:25 177:2,7,17
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225:8,14 239:7
percentages 158:2
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perform 213:23
214:1
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50:22 64:6 167:23
226:6,23 232:20
period 8:14,16
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44:25 45:6,10
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Personally 244:9
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105:12 172:8
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70:11 81:2 88:4
90:8 99:8 109:4
144:24 148:11
160:22 166:1
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176:13 188:9
190:25 224:5,9
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plaintiff 80:5
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56:16,19 57:18,21
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104:21 106:1,11
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127:9 158:5,23
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198:3 213:4
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118:18,25 119:4
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87:6 90:9
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67:23 69:7,24
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101:24 112:21
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111:22 118:15
120:12,13 121:14
121:23 122:4
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124:10 128:2
136:6 139:18
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164:12,17 176:11
179:19 180:14
190:22,23 191:14
200:25 201:6
219:1 223:4
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48:25 51:24 70:20
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171:15,24 172:18
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186:11 200:13
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68:2 86:2 112:25
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37:4,6,7 58:11
86:24 87:2,10,11
88:2,3 93:18 94:1
96:18 98:2 101:8
102:4,17 105:4,5
105:8,9,13,14
106:22,24 107:6
107:25 108:3,17
109:3 110:9
113:22 116:11,16
116:17,21 118:5,7
119:21 120:11
127:23 128:4,8,12
129:1 135:5
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146:24 148:5
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187:8,13 188:9
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120:17 140:19
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202:25 204:18
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208:20 209:20
212:11 214:8,13
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217:19 220:2
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206:23 207:8
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212:18 215:22
216:1,6,9,13
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214:12 215:15
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167:5,19 193:22
193:23,25 205:6
209:22,25 210:6
216:14 219:5
222:9,17 225:24
226:15 235:8,21
prologued 250:21
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97:21 99:22
properties 191:5
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187:21,23
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156:25
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152:24
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50:13 55:25 61:19
61:21 65:11 68:20
76:9,20,23,25
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105:19 106:4
109:19 119:8
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157:4,19 161:16
163:9 164:3 189:1
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231:25 236:9
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23:13 24:4 27:17
37:23 38:4,13
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87:10 97:19
152:23 164:16
188:1 212:13
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224:15 227:21
228:3 241:24
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125:25
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33:23 38:10 42:11
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104:18 168:12
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113:24 169:21
171:14 179:1
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221:3 230:7
232:19 233:6
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83:23 84:7 86:18
86:20,21 87:19,20
91:23 92:2 96:21
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105:24 106:18
110:14,22 113:8
113:12 120:5
124:2 131:14
132:3,10 136:23
141:6 142:9,19
144:11 150:18
160:1,15 166:23
170:24 179:4
180:16 185:24,24
186:22 188:13
193:1 194:13
195:1 196:7
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208:8 213:24
221:7 223:20
225:2,19 230:2
241:10,19 242:16
247:19 248:18
250:8,24 252:15
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51:1,4,8,12 52:23
53:1,6,11 56:6,10
57:2,3 58:22 60:2
63:15,24 64:2
65:1,7 67:7,18,20
68:6,8 70:10,13
70:17 71:23 72:1
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77:20,22 78:2
80:12,15 85:11,22
85:23 86:6,9
89:11 98:6,8,14
99:1,5 101:14,16
101:22 103:25
104:5 105:2
106:16,21 111:4,5
111:9 112:15,17
113:4,5 114:4,6
114:11,12,16
115:7,8,19 124:10
124:12,18 129:22
130:1,4 133:18
139:19,23 142:24
143:2 144:6,10
147:8 148:13,17
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152:11,21 161:2,5
161:9 163:21
169:4,12 178:16
178:22,24 180:24
181:2,6 182:17
186:21 188:12,19
192:24 195:1,2,5
198:2 199:2,10,15
200:11 202:8,19
221:9,11,16
230:13,16,17,25
231:2 234:24
241:3,7,8 243:20
245:13 247:18,22
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raise 119:24 129:12
196:4 253:25
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43:23 81:16 90:14
235:6
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182:17
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random 90:6 91:3
range 104:10
106:25 108:16
244:13
rank 251:6
ranked 251:2 252:2
252:9
ranks 252:12
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ratcheted 176:6
rate 1:3,17 2:2,12
4:3 5:10,13,15,21
6:2,4,14 7:5,6,8
7:15,17,18 8:7,7,9
8:11,13,15,18,19
9:2,7,12,14,17,19
9:22 10:6,11,19
12:6,8,9,15 13:8
13:19,24 14:23
15:9,12,14 16:16
16:21,23 17:1,2
17:16,25 18:3
20:15,17 21:13
22:7 23:11,17
24:7,13,24 27:9,9
28:10,13,20 29:4
29:7,10,17,23
30:2,3,11,22
31:19 33:1 34:4
37:23,23,24,25
38:1,2,6,12 39:2,5
40:12 41:1,6,7
42:12 45:13,15,16
45:18 46:14,20
50:12 51:13,15
53:9 54:20 55:6
55:25 61:19,21
62:12,24 65:11,14
67:17 68:11,20
69:7 72:16 76:7,9
76:12,20,23,25
77:22 78:16,20
79:3,12 83:22
84:9,10,16,19,20
85:21 87:3 90:15
93:1,21 94:12,14
96:12 97:5,6,11
97:19 104:1 105:5
105:11,12,15,19
106:4,10,17 107:3
108:7,19,22,23
109:2,14,18
110:14 111:2,14
112:15 115:6
116:13 118:11
119:8 122:14,18
122:23 123:5,10
123:25 124:4
126:8,10 130:6,15
130:15,17 137:16
137:19 138:16
139:17 140:25
141:10 144:6
146:8,10,11
148:13 150:3
151:2 152:9 153:4
153:8 156:22
157:4,22 160:20
161:16 162:4,8,15
163:9,12 164:3,9
164:19,24 166:3,9
167:11 168:13
171:5 181:1,25
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184:8 185:9 186:2
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188:25 189:1,15
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195:12,23,24
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200:14 201:2,13
201:21 202:23
203:7,14 204:11
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214:1,7,12 220:23
221:22 225:10
227:21 230:5
231:25 235:13
236:9 241:25
242:17 250:1
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254:12,25 256:9
256:12,20,22,23
257:1,15,24 259:7
rated 130:23 131:3
131:6
ratepayer 142:18
ratepayers 8:6
10:22 38:4 48:21
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196:16 199:9
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168:10 172:17
174:23 176:15
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taken 94:13,16,17
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tax 7:8 160:5
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taxes 160:15,22,24
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39:13 40:5,16
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119:25 122:11,19
124:2,9,11 129:19
129:23 132:18
139:8,9 144:4
148:12 151:15,25
152:1,8 153:10
159:19 160:14
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169:7 175:6
177:11 178:23
180:23 186:17
192:20 201:8,20
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23:12 25:3 29:6
29:16 30:4 31:23
33:13 34:9 35:18
36:4 40:13 44:15
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today's 131:17
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11:24 12:3 13:23
14:6,14 20:16
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64:25 65:4 67:6
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102:7 103:24
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112:21 114:5,10
114:13,15,19
115:5,11 124:11
129:20,24 139:9
139:14 142:23
144:5 147:5
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151:16 152:1,8,14
161:3 169:2,6
178:19 180:23
181:1 182:13
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192:21 194:25
195:5 198:12,16
198:23 199:8
201:6,12,20 202:1
202:10 221:10
230:14,18,21
241:1 243:16
247:15 252:14,20
254:24 256:7
257:6,22
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56:25 57:2 104:2
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188:12,13 241:4,7
243:15,17
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top 54:19 87:22
108:14 116:22
173:21 188:5
190:10,11 251:3
topics 159:19
total 12:11 28:11
37:10 61:25 119:3
125:7 127:23
139:25 141:20
151:8,10 156:21
165:25 170:16
179:17,24,25
182:20 193:2
196:7,12,14,17
204:22 210:2,21
212:7 226:14
228:16 233:24
239:22
totals 231:10
touching 175:20
toward 74:5 107:17
towards 225:12,13
tracking 107:20
trade 195:11,11
trades 195:14
traditional 92:22
traditionally 93:5
140:12
transfer 173:8
transition 250:6
treasury 137:9
treated 131:1
treatment 34:12
48:24,25 49:3,22
52:20 58:1 87:6
90:8 118:18,25
trend 222:23
tried 156:21
trouble 140:3
173:19 192:8
true 85:5 181:9
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trust 190:16 191:4
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8:12,13 16:24
17:3 22:11,14,14
23:2,22 24:10
27:6 29:2,15
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44:5,8,23 70:15
71:13 130:8,25
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236:19 257:10,10
truth 40:2,2,3 67:13
67:14,14 85:17,17
85:18 112:11,11
112:12 114:25
115:2,3 152:5,5,6
201:17,18,18
try 22:23 75:3 95:22
121:22 158:10,19
158:22 168:14
176:16 179:23
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trying 110:23 146:5
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229:6,23 243:22
tunnels 48:14,16
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turns 94:21 222:13
two 24:16 29:18
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55:13,18 57:3,8
72:9 96:1 99:12
100:6,7 109:4
110:13 125:23
126:5,6,17 130:10
130:11,12 132:5
132:11 141:2
143:24 145:7
147:12 150:25
158:7 159:21,25
160:7,22,25 171:4
171:13 178:16
181:15 187:3
191:22 194:3
197:8 228:10
238:21 239:15
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115:4,7,9,14,20
120:25 122:21
124:13,19 139:15
139:19 144:6
148:13 151:3,5
152:2 163:22
167:22 168:8,18
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type 69:17,21 70:6,7
93:5,23 95:20
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187:12 192:18
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types 81:19 89:2
101:10 120:10
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unanticipated 87:7
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uncertainty 123:15
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92:14 99:9,12
101:8 106:12
109:17,18 128:6
128:18 140:23
142:5 159:14
193:7,9,10 203:10
203:12,13 204:6
204:24 228:1,14
229:4 244:11
250:25 251:3
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76:15,15 78:20
118:7 173:16,22
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227:19 228:8
236:18 241:13
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173:20 179:5,19
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250:18
United 34:19 35:5
43:10 60:13 78:20
units 203:18,20
204:10 205:1,8,11
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values 212:16
variable 245:8
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various 18:14 24:20
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Veatch 2:18 11:8
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214:5 215:18,23
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251:18 255:16
vehicles 120:2
verbally 57:4,10
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128:17 131:12
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168:2 181:7
193:13 201:1
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221:8 228:7
236:10 237:22
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vibrate 5:8
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violations 34:21
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visited 126:15
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volumes 204:18
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voters 5:17 6:18
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voucher 187:13,18
188:9
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W
Wafer 2:8 5:2,3
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wages 195:12,17
196:18 197:10
198:16 199:4
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Wall 139:3
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103:11 105:20
150:22 197:1
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246:5,17 247:3
250:12 257:2
wanted 13:2,16
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120:5 122:7,10
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225:9
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84:19 102:3,17
113:13 120:14
125:8 130:24
151:12 152:23
154:1,20 160:17
160:23,24 183:6
204:17 211:9,11
211:22,25 214:9
215:10 216:3,4
217:3 221:23
223:24 224:3,16
224:19 228:3
231:11,14,24
232:1 234:7
255:24 256:3
water 34:22 35:12
36:5 37:22 45:21
46:13 47:14 48:3
50:9 64:4,15,19
66:9 74:11,12
136:6 153:2
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184:3 185:4 186:6
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165:8,21 186:14
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204:15 211:3
212:15 214:16
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220:10 222:15
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went 95:24,25 96:1
149:9 196:12
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107:20,23 108:13
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215:17 220:1,5
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224:5,11 225:10
234:1 235:12
239:23 246:11
PROCEEDINGS 6/13/2011
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120:7 122:16,23
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135:16 138:13,18
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173:17 174:1
178:6 179:8,11,14
179:21 181:15
185:16,18 193:4
194:5 195:17
196:13 197:14
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216:24 220:13
224:18 226:16
228:12 229:3
232:2,18 234:12
234:15 236:15
238:21 239:22,24
240:3,11 242:12
243:5,10 248:3
249:5 254:14
years 16:8 34:22
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96:9,24 111:12,15
111:18,22 119:6
121:15 122:15,17
123:22 135:4
147:17 164:1
169:23 178:2
179:7 188:3
191:22 193:6,8,9
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197:9 204:10
206:2 210:24
218:14 223:8
231:12,12 233:2
233:25 238:6
239:16 240:12
244:7 246:9
yield 126:8 230:20
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zero 29:8 125:24
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$200 117:15
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$210 207:24
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$389 242:12
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$40 108:9
$400 117:16
$42,444,213 178:4
$47 164:4
$5 103:10,12,14
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$50 108:9,18 109:6
109:14 116:21
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$500 246:19
$51,858,057 180:17
$52 223:14
$55 243:6
$58 180:18 239:24
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$600 143:10
$613 151:9,13
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$630,000 229:6
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$70 16:10 143:12
$73 127:12 164:7
$75 107:1,7 108:6
108:12
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$77 119:3 136:8
$8 228:22 229:11
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$80 117:7 118:10
$800 37:12
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Page 292
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11C 151:23
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15 10:2 44:25 54:19
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73:7 115:25
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223:9,23 225:1
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15th 72:18
15,000 251:23
15,268 173:23
15,768 175:8
150 130:18
155 127:11 163:25
16 11:1 17:24 55:8
64:12 95:11,17,19
95:20 96:19 97:3
118:10 164:4
167:1 209:14
211:6 222:20
225:21 229:4
17 8:18 113:8
131:16 209:14,19
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177,293 178:1
18 135:3 173:14
252:8
18th 32:13,15
185 90:21 91:7,13
1946 34:9
1954 5:19 34:8
199 91:21 92:1,9
1990 37:12
1997 38:9
2
2 7:11,20 75:15
86:18,20,22 87:22
98:15 101:25
106:7 144:17
161:11 192:17
193:5,7,10,15
194:7 207:25
210:21,21 212:1
244:10 249:14
252:21,25 253:9
2nd 27:11 28:11,21
42:9 51:24 52:1
2-1 210:25 211:7,8
211:10 212:8,11
2.25 141:2
2.3 195:16,22
2:45 201:10,12
20 13:4,17,22
116:18 117:13,14
118:10 132:11
144:18 177:20
200 37:17 110:12
189:13
2000 5:20 248:4
2004 130:10 131:7
2005 130:11
2006 130:11 169:23
169:25 177:25
179:7 208:11
210:22 231:12,20
233:9 243:21
250:11,12
2007 34:19 35:9
130:11 205:23
253:22
2008 65:15 123:13
130:11 142:6
160:6,16 205:8
208:11 216:25
253:23
2009 205:13,20
242:4,8 252:2
2010 130:12 169:23
170:5 179:8 180:2
180:4,5,16 205:8
205:12 208:10
210:23 231:13,21
232:11 233:10
234:15,16 239:22
242:9 248:25
2011 1:17,21 8:9,10
8:18 9:1,7,9,23
10:2,12,16 11:1,2
35:1,25 36:8
45:14 144:25
169:24 179:8
195:18 204:9
205:7,20 207:19
210:12 211:4,18
212:16,17 227:18
231:13,15,23
232:1,4,10 234:12
234:17 235:4
237:19 238:8
243:23,25
2011A 132:14
2012 19:20 57:16
106:9 123:21
223:4 228:21
229:11 239:12
2013 55:24 56:1,2
57:20 124:22
127:4,10 209:21
223:7 243:5
244:24 248:4,9
249:1,23 253:9
2014 127:15 245:1
2015 195:18 223:13
228:12 235:24
241:25
2016 55:24 56:1,2
124:23 127:5,16
149:13 195:19
206:12 207:19
208:10 210:4
212:5,9,12 223:7
223:14 228:12
229:12 237:20
238:1 243:25
247:11 249:19
252:22
2023 58:7 91:17
106:3
2033 58:8 91:18
21 132:10 211:1,2
222:20 224:15,23
21st 27:1 28:17
22 9:23 10:12 252:7
22nd 32:16,17
22-year-old 173:1
23 36:3 57:14 58:3
74:6 92:15 111:12
111:15,18 144:18
224:15,23 226:16
246:9
24 11:1 74:6
25 67:9 111:22
169:20 179:4
250 166:4,8
26 9:7 17:13,15
173:21
27 151:11 252:5
270 166:5
275 246:19
28 47:18 48:4 64:22
29 54:15 73:7
111:22
29th 21:16 31:22
44:4 70:23 256:14
256:16 257:9,20
3
3 7:12,23 87:21,22
106:12 167:2
192:16 194:19
195:16 196:9,21
197:17 221:21
227:25
3B 102:13
3B1 98:18
3-1 204:13,25
3-11 202:23 204:23
207:16,22 211:5,9
212:7
3-17 228:1
3-2 204:16 205:3
3-21 228:1 229:21
249:17
3-3 204:19,20
3-5 204:21
3-6 237:15
3-7 210:19
3-8 102:14,15,23
3-9 102:2,4 223:2,3
226:9
3.10 237:15
3.12 210:20
3.15 223:3
3.18 202:23 207:15
3.2 204:13,24
247:25
3.22 248:15
3.36 228:2
3.6 167:11
3.75 251:20
3.9 204:21
30 37:15 45:6 71:6
72:21 122:15,16
122:23 125:2
134:19,21 138:17
140:6 141:23
172:2 180:3
220:12 241:23
30th 151:7,9
30,000 175:13
182:21
314 3:24
3195 228:17,25
32 251:3 252:2
33 125:2
336 247:19
338 247:19
340 138:17
35 75:3 83:25
138:10,13
36 151:14
4
4 8:2 75:16 91:16
130:19 157:16
196:10 205:13
252:22
4A 231:4
4-66 231:19
PROCEEDINGS 6/13/2011
www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334
MIDWEST LITIGATION SERVICES
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246:8
4:04 258:2
40 92:21 93:1,11,14
94:2,2
40,000 189:22
41 197:1
420,000 182:20
45 8:16 17:1 18:9
19:25 22:9,13,15
25:10,20 27:5
28:12,15,18,21,22
29:17,19 30:13,14
30:16 31:2 135:15
257:11
485 131:17
5
5 8:5 93:18,23,25
94:6,8 101:7
113:8 116:18
138:20 156:18
157:15 161:11
193:1 195:20
196:10 248:1,8,10
248:16,17,23
249:9,9,10,14
252:25 253:9
5th 29:21
5.11 241:16,18
5.3 205:13
5.5 124:5 221:4
5.50 122:14
5.6 214:16 217:12
241:22 242:8
50 57:15 106:8
177:14,15 187:16
187:19,23 214:6
214:10 251:3
252:3,9,10
500 37:17
51 179:4 180:16
53 77:11
6
6 8:10 123:12 126:2
144:12 195:18
196:10 221:21
6,300 34:2
6-3 225:21
60 16:2 134:18,21
135:14 141:22
199:6 236:20,23
60,000 49:2
600 143:15
63101 3:23
644-2191 3:24
65 132:13
660 89:20
67 125:1 149:12
698 151:13
7
7 5:20 9:9 75:15
126:2 132:10
161:11 222:20
7th 14:22 15:20
700 143:15
71,791 178:1
711 3:23
73 128:24
75 107:2 149:5
79 34:10
8
8 133:4,5 221:21
8th 10:15 80:2
8.4 195:19 197:18
85 58:4,5 91:17
106:1,4 115:25
9
9 35:1 98:16 132:10
208:18
9B1 89:19 90:1,24
98:18
9th 5:19 35:24
227:11
9.3 195:19
9:00 1:25 4:2
90 161:11 170:17
172:5,20
94 126:1 154:7
253:14
945 143:11 168:1,2
246:17 247:11
9475 246:11
97 105:18