HomeMy Public PortalAboutExhibit MSD 92 Transcript August 22, 2011 Public Hearing 1
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METROPOLITAN ST. LOUIS SEWER DISTRICT
PUBLIC HEARING
AUGUST 22, 2011
(Hearing start time, 6:01 p.m.)
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PAGE
Introduction by Mr. Koenen 5
Presentation by Mr. Theerman 9
Public Hearing Session 22
Conclusion 95
(No Exhibits Marked)
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PUBLIC HEARING FOR METROPOLITAN ST. LOUIS SEWER 1
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DISTRICT, produced and examined on AUGUST 22, 2011,
between the hours of 6:01 in the evening and 8:09 in
the evening of that day, at the Florissant Valley
Branch Library, 195 South New Florissant Road, St.
Louis, Missouri 63031, before Suzanne Zes, Certified
Court Reporter.
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APPEARANCES 1
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For the MSD Rate Commission:
Glenn Koenen
West County Chamber of Commerce
Mike O'Connell
Greater St. Louis Labor Council
George D. Tomazi
The Engineers' Club of St. Louis
Brad Goss
Home Builders Association of Greater
St. Louis
Ida Casey
St. Philip's Lutheran Church
Also present:
Jeff Theerman
Jan Zimmerman
Pam Bells
Lance LeComb
Brian Hoelscher
Jonathon Sprague
The Court Reporter:
Suzanne Zes
Midwest Litigation Services
711 North Eleventh Street
St. Louis, MO 63101
314.644.2191
314.644.1334 Fax
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MR. KOENEN: Good evening. Welcome to 1
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tonight's hearing of the MSD Rate Commission. I want
to thank you for coming. If you would like to speak
tonight, please make sure you get and complete one of
the blue cards they have outside. We will be taking
speakers in the order in which we get the cards. Now
I wasn't supposed to be the lead for this meeting but
I think I have been drafted. My name is Glenn Koenen,
I am one of the Rate Commissioners. With us here
tonight are George Tomazi, another Rate Commissioner,
Brad Goss, another Rate Commissioner and Michael
O'Connell, another one of our Rate Commissioners. We
are expecting a few more to walk in, in the next few
minutes. The charter plan of the Metropolitan Sewer
District was amended in a general election on
November 7th, 2000 and established the Rate Commission
to review and make recommendations to the District
regarding changes in wastewater rates and tax rates
proposed by the District. The charter plan requires
an MSD Board of Trustees to select organizations to
ensure a fair reputation of all users of the District
services on the Rate Commission. The Rate Commission
representative organizations are to represent
commercial industrial users, residency users and other
organizations interested in the operation of the
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District including organizations focusing on 1
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environmental issues, labor issues, socioeconomic
issues, community neighborhood organizations and other
nonprofit organizations. The MSD Rate Commission
currently consists of 14 members from organizations
and institutions throughout St. Louis City and St.
Louis County. Page 2. On May 10, 2011, the Rate
Commission received a rate change notice for the
proposing changes in the District's wastewater rates.
The Rate Commission adopted operational rules and a
procedural schedule to govern the proceedings on May
17th, 2011 and amended its procedural schedule on
July 8th, 2011. Under the procedural schedule adopted
by the Rate Commission, as amended, the MSD Rate
Commission has until October 21, 2011, to review and
make a recommendation to the MSD Board of Trustees as
to whether the proposed rate should be approved, not
approved or modified with suggested changes and then
approved. The MSD Rate Commission has engaged legal
counsel and a rate consultant independent of those
used by the MSD staff. Under procedural rules adopted
by the Rate Commission, as amended, any person
affected by the rate change proposal have an
opportunity to submit an application to intervene in
those proceedings. Applications to intervene have
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been filed by the Barnes Jewish Hospital, Covidien, 1
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Missouri Industrial Energy Consumers, Mr. Robert A.
Mueller, AARP, and Consumers Council of Missouri.
These applications have been granted. Since May 10th,
2011, the MSD Rate Commission has received testimony
from MSD staff, the intervenors and the rate
consultant. The parties have also engaged in
discovery requests. Technical conferences were held
on June 13th, 2011 and August 8th, 2011 and another is
planned for September 6th, 2011, where the
participants and the Rate Commission are given an
opportunity to ask questions of those submitting
testimony. A prehearing conference for the purpose of
identifying any issues raised by the rate setting
documents and prepared testimony previously submitted,
will be conducted on the record on September 15th,
2011. All persons submitting testimony may
participate in the prehearing conference and each
participant in the prehearing conference shall submit
on or before September 22nd, 2011, a prehearing
conference report describing the issues raised by the
rate setting document and the prepared testimony
together, with a brief description of such
participant's position, if any, on each issue and the
rational thereof. Rate payers who do not wish to
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intervene are permitted to participate in these on the 1
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record public hearings conducted in six sessions
beginning on August 16th, 2011 and concluding on
September 26th, 2011. The Rate Commission published a
public notice regarding these proceedings in the St.
Louis Post Dispatch on May 20th, 2011, May 23rd, 2011
and May 24th, 2011 and July 20th, 2011, July 21st,
2011 and July 22nd, 2011. And in the St. Louis
American on May 26th, 2011 and July 21st, 2011. These
notices contain the time, date and location of each of
these conferences and hearings. The public hearing
tonight is for the purpose of permitting the District
to present its wastewater rate change proposal and to
permit any rate payer an opportunity to comment. We
will begin with a presentation by the District,
followed by a public comment period. Those wishing to
speak should sign in on the sheet provided and the
blue cards and will be called on in the order the
names are listed. Each rate payer should -- each rate
payer should identify themselves and any organizations
they are representing. A few housekeeping things,
please, again, if you wish to speak, please fill out a
blue card. If we have too many people and normally we
will only permit a speaker to go on for ten minutes,
it is my discretion, the chair's discretion, to
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shorten that time because we do have a time limit to 1
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get out of the building. That has not been an issue
at the previous meetings but please we may ask you to
hurry up. We have restrooms outside the hallway. We
will go without a break. So are there any questions
before we proceed? Hearing none, we will ask Mr. Jeff
Theerman, executive director of MSD, to give us a
presentation.
MR. THEERMAN: I am going to try and do
this, so I am not blocking you. I am going to move
this microphone a little out of the way here. Okay.
What I am going do is go through the rate proposal
that we presented to the Rate Commission in May and
kind of cover that and that will allow everyone to
sort of get up to speed on what has been proposed for
the rate change.
First of all, a little bit about MSD. We are two
utilities in one, a stormwater and a wastewater
utility. We serve 525 square miles, that is all of
the City of St. Louis and about 80 percent of St.
Louis County. We were created in 1954 and at that
time we served St. Louis out to roughly Lindbergh
Boulevard and then in 1977 voters of St. Louis County,
outside of the district elected to have the District
annexed another 200 square mile area or so. We are
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now 525 square miles. We serve about 1.4 million 1
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customers, about 428,000 wastewater accounts. So we
are a large utility. We are the combination of 79
different sewer systems. Prior to there being an MSD,
there were 79 different private and publicly operated
sewer systems and treatment plants that served the
region. A lot of the region had no treatment at all
and since the '50s MSD has assembled those into a
single large system. While St. Louis is certainly not
one of the biggest cities in the country, we have the
fourth largest sewer infrastructure in terms of miles
of pipe in the ground. We are behind New York,
Chicago and L.A. And roughly we are the same as L.A.
in terms of miles of sewers buried in the ground. And
that is a problem for us because we are not nearly
that size, that scale. So where L.A. has about five,
a little more than 5 million people they save to cover
those costs, St. Louis with 1.4 million customers has
a disproportionately large sewer system to maintain.
About 6,700 miles of the pipe in the ground is
wastewater system. This is separated into two
different kinds of systems. There is a combined sewer
system, that is the way sewers were built in 1800s,
stormwater and wastewater flow together in one pipe
system. This is what exists in the City of St. Louis
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and in 22 neighboring municipalities. And then there 1
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is 4,700 miles of sanitary sewer system. This is the
more contemporary design, where you have wastewater
flowing in one pipe system and stormwater flows in a
separated system, a different set of pipes. MSD
operates seven treatment plants and we treat about
370 million gallons of wastewater a day. To give you
an idea of what that means, consider a box whose base
is a football field, to fill it up with 370 million
gallons of water would make that box taller than the
Gateway Arch. So we are treating a lot of sewage each
and everyday in our seven treatment plants. We also
operate about 3,000 miles of stormwater system. This
is in the area where the sewers have been separated.
Those stormwater pipes take drainage away from the
area and into neighboring creeks and rivers. The
wastewater -- the rate change proposal we have given
to our Rate Commission is a wastewater rate change
only. So we are going to be dealing with the combined
sewer system and the wastewater part of the separated
sewer system. There is no change in the stormwater
rates in this proposal because our stormwater rates
are presently in litigation and it didn't make any
sense to do anything with those while this litigation
continues until it gets resolved. So the wastewater
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-- the change we are making, we are proposing, is only 1
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about the wastewater charges. It is a four year rate
plan that goes from July 1st, 2012 through June 30th
of 2016. There would be a rate increase in 2012 on
July 1st and every July 1st after that through July of
2015 with no additional increases proposed during the
year after July of 2015 through June 30th of 2016.
Currently the average single family bill is $28.73 and
everyone's bill is different. It is based on your
winter quarter water consumption. We do that in order
to try and eliminate lawn watering or car washing that
will make your water bill higher but doesn't really
mean the amount of water that gets in your sewer
system. Your winter quarter water use, that data is
provided to us by Missouri American Water, City of St.
Louis and the City of Kirkwood and we use that to
generate wastewater bills for our residential
customers. Commercial customers pay by volume as
well, they pay on a monthly basis, a very similar rate
design as the residential.
There are five drivers that are really the reason
for this rate change proposal and the largest one is
right on top. Our regulatory requirements and I am
going to discuss that quite a bit in a minute are our
driving cost for capital improvements that are
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necessary in the MSD system. There is also the 1
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increase use of debt financing. We are proposing to
use debt financing for these capital improvements to
try and keep wastewater more manageable. There are
still steep increases that are proposed but the debt
helps keep those more manageable. We have lost some
customer base. As time goes on St. Louis City and
County's number of customers is declining at a 1
percent rate. There is declining water usage
primarily because of water conservation and then, of
course, everyone understands the economic conditions
we live in. The rate proposal would be for a four
year period, 2013 through '16 and we are talking about
our fiscal year '13 through '15 that starts July of
'12 and so forth. A billion dollars, a little over a
billion dollars of capital improvements on the
combined and separate wastewater sewer systems. We
are proposing using $949 million of debt financing in
terms of using revenue bonds. And all proceeds of
that debt financing would be used for capital
improvements. We are not proposing to use any debt
for day-to-day operations of MSD. Also during that
four year period, we have an estimated $364 million of
operations and maintenance cost. And $359 million of
debt service. That is debt service not only to cover
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interest and principle payments on the debt we are 1
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proposing to use, but also on the debt we already
have. We have about $630 million of bonds currently
outstanding right now.
Okay. So regulatory requirements. Four years ago
in June of 2007, the Environmental Protection Agency
and the State of Missouri sued MSD for alleged water
violations of the Clean Water Act and those manifest
themselves into really two things. Combined sewer
overflows and separate sewer overflows. Over that
four year period we have negotiated a settlement
agreement and that settlement agreement includes a 23
year schedule for compliance, an estimated $4.7
billion of required capital improvements, the
elimination of sanitary sewer overflows, the abatement
of combined sewer overflows, and I am going to get to
more of that in a minute, that will take an
explanation. Additional sewer system maintenance and
repair, reductions in basement backups and continued
investment in the infrastructure. And that's
important because if we don't reinvest in this
infrastructure, it's like any other infrastructure,
like roads and bridges and other forms of
infrastructure, if we don't reinvest it will fall
apart and will lead us right back into the situation
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we are in right now. There is also regulatory 1
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requirements that are not related to the settlement
agreement and those take the form of additional
treatment at our treatment plants that is required by
the regulators. We are having to add disinfection at
our treatment plants and those bring with
them additional operating costs. I want to point out
that this settlement agreement is not final yet. It
is in a period of a 30 day public notice period and
you can weigh in with comments about the settlement
agreement, the Consent Decree is what it is called, on
the Department of Justice website, it is a federal
settlement. And what I have shown you there on the
bottom of this slide is our website, if you go to
www.stlmsd.com, you can get to a link to their
website, it is a little easier address than the
Justice Department website. You can look at the
Consent Decree itself, the settlement and also learn
how to comment on it if you like. Tonight is really
important for our Rate Commission process and for the
Rate Commissioners to know how you feel about things
but commenting tonight does not mean you're commenting
to the Department of Justice about the settlement
agreement, that has to be done through their process.
Okay, a little bit about the overflows. And this
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is not intended to be any eye test for you. This is a 1
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map of St. Louis City and County and the green shaded
area is the city and near county and that is a
combined sewer system, that system again, is a series
of pipes that are designed to carry stormwater and
sewage in one pipe. During dry weather flow all the
flows in that area go to a treatment plant and get
treated completely. But in wet weather, the amount of
rain that comes into the system overwhelms the
capacity of the system and there is 199 different
locations where sewage overflows from that sewer
system. It overflows into the Maylene Creek, into
the River Des Peres and into the Mississippi River.
And you have that presentation with you at your seat.
You'll see, if you look closely, a 199 green dots.
Those are all combined sewer overflows. They are
permitted under the Clean Water Act but they have to
be abated and that means you don't have to go and
separate the whole system out because that is
prohibitively expensive but instead you have to
construct measures that will reduce the amount of
sewage that is overflowing into those water bodies.
And so our proposal has about a $2 billion program for
dealing with combined sewer overflows and that takes
the form largely of storage tunnels that will capture
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the water so it doesn't overflow into rivers and then 1
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when the rains are over we will pump it out of the
tunnel and take it to treatment plants and completely
treat the sewage. That program will reduce the number
of overflows from those 199 locations from about 50
times a year, down to about four, for all the
receiving streams except the Mississippi River. The
Mississippi River we are trying to tackle with green
infrastructure improvements in the city and that is a
different approach. Trying to the reduce amount of
impervious area and trying to build features that will
hold water back from the sewer system and keep it from
rapidly getting into sewers and causing overflows.
And there is a lot happening with green
infrastructure. We can talk about that if you would
like more on it. It is sort of taking advantage of
the vegetation and green approaches and porous
pavement to try and hold water back in the system.
Okay, outside that green area, you see a whole lot of
red dots and this is now the separated area, there is
a wastewater system and a stormwater system. During
dry weather all the wastewater in that unshaded area
is going to complete treatment at our treatment
plants. But when it rains, imperfections in our sewer
system and inappropriate connections in the private
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system, allow additional rainwater to get into that
system and it is not designed to carry a lot of
stormwater. What ends up happening, we have large
rains and water is getting in there and the capacity
is taken up and you have overflows. So on that map
you see about 200 little red dots. And the Clean
Water Act says all of those have to eliminated, they
are illegal and they have to come out. So that is in
essence the other half of the program. And so this is
sort of like a shotgun. We have problems everywhere,
not just in the city, it exists throughout the area.
And you either have a combined system that needs be
abated or a separate sewer overflow problem that has
to be stopped, eliminated. This is a shot of sort of
a general table of our capital improvements over those
four years that we are proposing and it's roughly a
quarter billion dollars of capital improvements each
year on average. There is a lot behind this slide,
all of the projects have been identified, all of the
projects have been estimated and scheduled. And that
has been provided to the Rate Commission as material
to this rate case and you're certainly entitled to see
any of that. This was done just to sort of streamline
the presentation because there is a lot of detail
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behind this. There is also operating costs. These 1
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are our operating costs for each year, that fiscal '11
is the year we just finished. It costs about $134
million to run the day-to-day operations of MSD and we
are trying to keep those costs as stable as possible.
We have increases in our costs, primarily with the
asterisk years, those increases are occurring
because of additional requirements from a regulatory
perspective that are influencing what we do as a
utility. We do some of this work ourselves, with our
in-house staff and also some one time projects that
are included in those estimated budgets. This gives
you an idea of what is happening with wastewater
bills, the blue bar chart is MSD's historic bills and
those are monthly costs in dollars per month. And
again, the current average residential customer is
paying $28.73 a month. The red line is the National
Association of Clean Water Agency's survey of major
utilities in the country and what they pay on a
monthly basis. And you can see the same dynamic
happening throughout the country, additional
investment is needed in infrastructure, utilities are
raising rates and you see that curve start climbing
more and more rapidly to cover those costs. This is
the proposed residential bill and there is companion
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material in the rate proposal about commercial. So I 1
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don't want anybody to walk out of here thinking
commercial is not included, all of our customers will
pay any increase that gets imposed. For the average
residential customer you see how these rates go up
each successive year. This is on the commercial side,
not only do they pay a volumetric rate, similar to
what residential pays, but if they are discharging a
higher strength wastewater there is a surcharge
because their wastewater is more difficult to treat
and there are additional charges to commercial and
industrial customers because we regulate them. We are
a regulator to those customers and so we have costs
that we pass along strictly to the commercial and
industrial customers and that is included in the rate
proposal.
Okay, this slide is intended to give you sort of
the two ends of the spectrum in terms of how to fund
this program. On the left side, actually your left,
is the proposal I have already talked about. So a
billion dollars of capital improvements, using
$945 million of debt financing and well, you see what
happens with the average residential bills, what I
already showed you earlier. And that is what we
proposed, using debt financing helps mitigate the
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rapid rise in rates. I know from where you sit it 1
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doesn't look like it is mitigating much but let me
show you the right side. You can also fund this
program strictly with cash. We are not recommending
that. A cash finance approach would immediately raise
rates to $73 month and then after that rates would
tick up sort of in an inflationary pace. And that is
the difference between using debt to finance these
improvements and not. Now, the right side in the long
run, in pure dollars, is cheaper, you don't pay
interest. But the left side is really, in our minds,
manageable or at least more manageable than what you
see on the right. And there are an infinite number of
possibilities in between, you are just changing the
mix of how much you borrow and how much you pay in
cash.
Okay, real quick next steps. Our Rate Commission
will be presenting a rate report to our Board of
Trustees in late October, so this process isn't done,
there is a lot of deliberation that still remains.
The Board of Trustees, when they get that rate report,
is not able to take any action at all for 45 days.
And that is intended to allow them to deliberate on
the report, its contents and review the report in
context of some requirements that our required in our
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charter. There are five tests that have to be 1
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satisfied by the rate report. After that, if those
five tests are met, and these are things like, is the
rate sufficient to cover bond covenants, is the rate
sufficient to deal with regulatory requirements, is it
fair and equitable, those kind of things. If those
five tests are passed, then the board is obligated to
implement the rate that has been recommended by the
Rate Commission. And they could take that measure,
that tentative authorization in December at the
earliest. In Missouri, in order for a municipality to
issue debt, you have to go to a vote, a debt
authorization vote. If we were to move forward with
what we have recommended with 945 million, we would be
coming to the voters, asking permission to use that
much debt. And depending on the outcome of that
election, then you would see the board making
decisions about which way to go. The debt is
authorized, you can use the rate structure that is
appropriate for that debt authorization. And the
first rate increase would occur in July 2012. This is
based upon what we propose, certainly the outcome of
the Rate Commission process is undetermined, so some
of this could change. Now with that, I am done. And
I am available to answer questions if you like.
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MR. KOENEN: Let me point out that all of 1
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the testimony, all the things we hear tonight, are
being recorded and they will be transcribed. And I
also apologize there is a very good chance I will
mispronounce your name when I say it. When I say your
name if you could please stand up and we will bring a
microphone to you. That will make it easier for
everyone else to hear and for the young lady doing the
transcription. Mr. Charles Meador?
MR. CHARLES MEADOR: Yes, sir.
MR. KOENEN: If you could stand and we will
bring a microphone to you.
MR. CHARLES MEADOR: Thank you very much. I
have several questions but some of them have been
answered already in your presentation. I guess the
other questions I have are this -- you want to use
profits to pay for the new infrastructure?
MR. THEERMAN: MSD is not a profit-making
enterprise. We're a government created special
district. We are chartered under the Missouri
constitution, so there is no profit, there is no --
nothing that you would see in an investor or utility
like Ameren or Laclede Gas. We are a government
entity and we operate on a balanced budget.
MR. CHARLES MEADOR: So there is no --
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MR. THEERMAN: There is no profit margin to 1
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work within.
MR. CHARLES MEADOR: No bonuses paid to the
executives, any of that?
MR. THEERMAN: No.
MR. CHARLES MEADOR: At the end of the five
year term or four year term, will this increase be
eliminated?
MR. THEERMAN: The sad answer to that is no.
In fact, we would anticipate by the end of the decade
wastewater rates would be in today's dollars somewhere
in the $80 a month range because there is again, $4.7
billion of improvements to make on the system, so
rates will have to continue to rise to pay for these
capital improvements.
MR. CHARLES MEADOR: So isn't this limit
sort of a false leader?
MR. THEERMAN: No, it's a four year window
but understand, for us to predict what rates should be
for a longer period involves lots of assumptions that
may or may not prove to be true. So about a four year
body of time for rate cases is appropriate in our
minds.
MR. CHARLES MEADOR: So it will never drop
again?
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never is a long time but there hasn't been a period in
my career where the number of requirements have
declined, so I think it is reasonable to assume over
time you will see more environmental regulation and
not less.
MR. CHARLES MEADOR: All right, thank you.
MR. LANCE LECOMB: Hi folks, I am with MSD.
I apologize, we ran out of copies and we went upstairs
to make some more copies of the presentation and we
have had issue with the copier there, so if you did
not get a copy of the presentation and you would like
one as soon as possible, either see more or someone at
the table before you leave and we will get that to you
either through email or the postal service or if you
wish, as well there is a copy of the presentation on
our website, www.stlmsd.com. And they have some notes
that Jeff was speaking from on there as well. So I
just wanted to clear that up first and for most and we
apologize for not having enough.
MR. KOENEN: We also apologize for the lack
of chairs, we have more people at this meeting than at
the first three combined. Mr. John Turner?
MR. JOHN TURNER: Yes. Good evening. I
guess my concern is that I'm not sure that MSD is
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doing an adequate job with the resources they have 1
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now, let alone entrusting them with a bunch of more
money. As an example, I am a resident of Fox Lake
subdivision. 35 years ago it was built and the sewers
all go into the, quote, lake, which is made out of
concrete. It is roughly -- well, bigger than a
baseball field, smaller than a football field.
Anyway, I went to the association meeting last fall
because I looked at the lake and where the water
enters it's about 6 inches deep. On the other end it
is like 12 feet deep and if the lake gets up high
enough the water overflows in the Cold Water Creek. I
asked them about that and they said, you know, the
dues that everybody is paying, $125 a lot of them
can't afford that being senior citizens. We asked
them, MSD about it, even though we gave them a
stormwater treatment plant they refuse to maintain it
and their answer at least was hearsay to me, was
because it is your lake, so you maintain it. As far
as stormwater, not stormwater, wastewater, they have
been out to my house in 35 years one and a half times
to empty out the -- I guess what is the polite word, I
don't know but two guys brought out the honey wagon
one day and then there was another guy who came out
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because it was all overgrown with grass and everything 1
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else. Well, I planted a Scotch pine there so instead
of having to dig the sod up, you can just move the
needles. The next day there was an X on it, that was
the last I saw it, but a street of flooding homes I
think they might have gotten two or three. But
basically, I mean, I am wondering if we owe them
anything. They are doing no service. They are not
even maintaining, you know, a stormwater overflow that
we gave them for free. My proposal is if they want to
refund the 35 years that the homeowners and I have
paid them every month and through taxes, we would be
happy to take over it ourselves, if you don't care to
do anything about it or if you tend to leave it for
what, you said you got stuff, you know, well, another
35 years, another 125 years then have a bond issue and
do something about it when it is beyond repair. That
is my statement. I think basically, I mean, they
haven't exhibited, at least in North County, that they
are doing the job adequately, we don't even have --
necessarily want to trust that management group with a
billion dollars. Thank you.
MR. THEERMAN: I guess I will just point
out, again, there are wastewater and stormwater rates.
And the stormwater rate structure right now is what it
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has been in the past. We attempted to impose a new 1
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rate structure that has been struck down by the courts
and it is presently in litigation. So it is important
not to mix the two. You pay relatively little for
stormwater, 24 cents a month on your bill for
stormwater and you pay some taxes. And we have pared
down our stormwater efforts to fit with what the
revenue stream is. With respect to detention basins
in subdivisions, I don't know about your particular
case but in general, they were always deeded to the
subdivisions for maintenance and we can certainly talk
about your particular situation before we leave and
see what we have there. And just for clarity, the
wastewater and stormwater funding is separated.
MR. KOENEN: Next, Patty DeGonia?
MS. PATTY DEGONIA: Right here. Can
everyone hear me? I usually talk so loudly. Anyhow,
I just have a little story to tell you. I was about 5
year old, I am walking with my mom and she has my hand
and we are going to a building and inside, the outside
of this building there is a man and he is standing
there with a brown suit and a brown brimmed hat and he
is smoking a cigar and right beside him is a tall,
thin man. As we entered the entrance of the door, the
man had a big piece, a big ball of dollar bills in his
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hand and he took one off and he handed it to me. And 1
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the man in the brown suit said a dollar for your vote
and my mom said, she took the bill from my hand and
she gave it to the man and she said you don't have
enough money for my vote. So this will come up a
little bit later in the story, into my speech but I
have gone to many of these meetings, I have met this
gentlemen, I met this gentlemen, I have talked to a
number of them. And this is window dressing folks,
nothing is going to happen, it doesn't matter what
kind of impact we have. No matter what we say, we
were at the water runoff thing, we had lawyers there,
we had people there, we had poor people there, we had
rich people there, it didn't matter, it went through
and we had nothing to say about it. So this is just
window dressing for us. And such is the case and
you'll probably say why is she talking about this but
I will bring it up at the end, we just did this for
Ameren UE. We went to all the meetings, they showed
all the programs, all of what they were going to do,
the repairs they were going to make. And unanimously,
by Public Service Commission, they got their $8.00 a
month increase. This is where your $8.00 is going.
Now we are in a public library, everybody can trot
upstairs and find this on the internet, it is under a
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number of different places but I will get right 1
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straight to it. If you pull up the St. Louis Post
Dispatch on August 5th, then you put in groups
potential influence on bills is scrutinized. Under
that, this is just the end of it, Americans -- excuse
me -- Ameren's contribution to the American
Legislation Exchange Council, the right wing group
that crafts free market legislation and republic
control states, this is where your money is going, to
the man in the brown suit. This money isn't going for
repairs, I haven't seen any repairs around my house.
I haven't seen any repairs when I drive down the
street but you can bet that these people have
certainly seen our $8. Now, you'll hear them say that
there is a special fund that this money comes from and
I have never seen an Ameren UE pickwick or a
(inaudible) so the special funds is coming from the
rate payers, me and you. It is time we start paying
attention folks. Ameristar, Ameren UE, pays their
taxes in protest, which means that it goes into escrow
at the end of the year and they negotiate how much tax
they pay. I don't know if that goes for MSD, I
haven't found that out, apparently this is coming in.
Maybe I will find this out at the end of the year.
Small companies are paying more and you and I are
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paying more than some of these big companies. It is 1
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time we start acting as smart as we think we are and
paying attention to what is going on around us. Only
our arrogance will let us think that the world of
greed in the business world has changed. It is time
we start paying attention as the outcry is getting
stronger. Everyday, if you listen, you will hear we
have had enough of the greed. Are we smart enough to
see the signs and make changes before the disaster
happens, I don't think so. Thank you.
MR. KOENEN: Let me make three quick points.
One, MSD is essentially a unit of government. The MSD
Board of Trustees are appointed by the county
executive and the Mayor of St. Louis. You are all
stockholders in MSD, just like you're all stockholders
in the community college and other area wide
organizations. The Rate Commissioners, we are not
part of MSD, we get sewer bills too. We are
representing different groups in the community. I
represent the West St. Louis County Chamber of
Commerce. We have people from the League of Women
Voters, we have people from the Associated General
Contractors, RCGA, and other groups in the community.
And it is our job to weigh all the information we get
and make our best recommendation as to what is fair
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and reasonable to MSD, that is what we will be doing. 1
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Thank you. Mr. Johnnie Greenlaw?
MS. JOHNNIE GREENLAW: It's a Miss.
MR. KOENEN: I'm sorry, Ms. Johnnie
Greenlaw, my mistake.
MS. JOHNNIE GREENLAW: Good evening. Two
points that came up when you were speaking is, that if
you're a government agency, than do we need to
streamline your organization to make it more effective
like society is doing our regular jobs and laying off
people claiming they are streamlinin, making it more
leaner and meaner but that is just on the side, I
thought you would appreciate that. Right. Well, what
they use -- my former job they said they were
empowering the people and that usually means more work
and less money. But what I have a complaint about, I
have been in my house for over 20 years, I was not
having any sewage backup in the basement, they are
doing so much construction in North County and hooking
up to the old systems like you said and now I start
having backup, sewage backup, not storm drain. Okay.
And that is not fun. What I am wondering is, to help
the financial situation since each subdivision is
supposed to take care of themselves, you got this
agreement, we supposed to do so much, but why can't
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these new subdivisions, crowding out an area that was
once a wooded area that could soak up a lot of stuff,
why aren't they given the costs to improve the hook
up, so that it can handle the volume, you know, you
have a suggestion?
MR. THEERMAN: I would love to respond, I
don't want to step on you, so go ahead.
MS. JOHNNIE GREENLAW: No, you can go ahead
and respond.
MR. THEERMAN: Okay. New development within
this region is permitted by MSD. And new development
has stringent stormwater requirements, so to the
extent something new is going in, in your area, there
is a whole lot more required of those new developments
than there used to be in the past. And that is not
only for stormwater quality -- or quantity but
quality. If you're having basement backups of sewage,
you're not responsible in your subdivision to do the
maintenance of that, you own the lateral from your
home to our pipe. And then after that it is MSD, so
we want to know about those problems and try to
address them. This program is designed to address
those kinds of problems but there also maybe something
that has happened recently that is causing you to have
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backups that we need to investigate. So again, there 1
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is a difference between stormwater and wastewater. A
wastewater system is not your responsibility, other
than your home lateral, we have the rest of the system
start to finish. On the stormwater side there are
differences in who is supposed to maintain what and
depends on the area of concern.
MS. JOHNNIE GREENLAW: Well, three times
this spring I have had the plumber out and he did
that, what you call the snake thing, all the way to
the street. He said he went all the way, it was
supposed to have been clear. The next time it rained,
backup again.
MR. THEERMAN: Maybe before you leave we can
talk with you before you leave and get your address
and look into that.
MS. JOHNNIE GREENLAW: Okay. Now, I am in
that section that is right here, the river and 270,
Riverview over there where that water plane is but a
little north of that, are we a part of that city one,
where it is combined or are we in the section where we
are separate? I am right at Lindbergh and 367, right
over there.
MR. THEERMAN: That should be separate,
should be a storm system separate from the wastewater
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MS. JOHNNIE GREENLAW: Okay.
MR. THEERMAN: You're north of 270?
MS. JOHNNIE GREENLAW: Mm-hmm.
MR. THEERMAN: Yeah, it's a separate system.
MS. JOHNNIE GREENLAW: So our subdivision is
supposed to maintain that pipe up underground, if I
understand you, correct?
MR. THEERMAN: On the stormwater side, the
gentlemen here was talking about a lake, a basin for
the subdivision --
MS. JOHNNIE GREENLAW: Well, we got creeks
all around there supposed to be getting those
overflows.
MR. THEERMAN: Typically those detention
basins are maintained by the subdivisions. The
stormwater pipes, the inlets in the street, those are
MSD's to maintain typically.
MS. JOHNNIE GREENLAW: Okay. Thank you.
MR. KOENEN: And folks we have a few seats
on the far side of the room if you would like to sit
down. Mr. Richard Dorsey?
MR. RICHARD DORSEY: Thank you. My name is
Richard Dorsey, I'm an attorney. And one of the
things I want to know is, before the Rate Commission
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looks at the MSD proposal to raise rates, would you 1
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please make them more effectively collect the
delinquent accounts. Every Wednesday I sit in court
next to the lawyer for MSD, one of the lawyers,
because there are several who represent them both in
the county and in the city. This Wednesday there are
46 delinquent account cases on that docket. In
talking to the gentlemen, he says that MSD handcuffs
him in his ability to collect the debt. First of all,
when an account is placed with him, he is only
entitled to collect the amount that is placed, if the
case goes on two, three, four months and there are
more delinquencies, he is not allowed to collect those
additional delinquencies. He is only allowed to
collect the amount placed. Further, when he gets a
judgment, if he cannot collect that from the people
voluntarily or through a wager bank account
garnishment, he is not allowed to execute on the
property and have the property sold to pay the bill.
Now, those judgments are good for ten years, yes and
that lien is good for ten years but he is not allowed
to revive those judgments either. So if the property
is not sold or refinanced during that ten year period,
that judgment goes away. MSD, on its own website, has
over $35 million in delinquent accounts as of
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June 30th, 2010. Also, they have a reserve for 1
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provision for doubtful sewer service charge accounts
of $10 million, as of that date. If MSD would just
more effectively collect the amounts that are due to
them, they would not have to raise the rates as much
to those of us who do pay our sewer bills. And that
is my comment and I think they have to more
effectively collect their delinquencies before they
come to those of us who do pay their sewer bills and
ask us for more.
MR. KOENEN: Joe Blasingame? (several people
from the audience asking for a response)
MR. THEERMAN: If you want me to comment I
will. Well, the gentlemen makes a good point, we do
have difficulty collecting sewer bills. And the
difference, of course, is the nature of the utility.
If you don't pay your water bill, your gas bill, you
get the service turned off.
MR. RICHARD DORSEY: You have that right
under state statute.
MR. THEERMAN: Let me finish. Logistically,
it is very difficult to turn off wastewater service.
It involves blocking a sewer and then having to
reestablish it as soon as it gets paid. So we use
other methods, we employee collection agencies, we
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employee attorneys, we use liens. Those are 1
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admittedly not a very effective means of getting some
of this paid. So we are continuing to try and improve
the process of getting bills paid. The issues you
have raised with the attorneys you have spoken to, I
don't know that I can address those offhand at this
time but we are trying are level best and it has been
raised in the Rate Commission process that more
effective means of collecting past due sewer bills is
in order.
MR. RICHARD DORSEY: You have statutory
authority to shut off the water to the property by
state statute to collect your unpaid sewer bills, so
you don't have to go out and dig them up then. You
also have a statutory authority that makes your lien
the equivalent of a tax lien on the property, which
puts you in a priority situation over the mortgage.
And if you started the execution process and notified
the mortgage holder, chances are the mortgage holder
would, in fact, pay that bill, so that they didn't
lose their lien on the property. You have the
statutory authority. Now, one statutory you had, you
lost. Your lobbyist slept at the switch and that is
that apartment owners and owners of rental property
are no longer responsible for the entire bill, they're
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only responsible for 90 days of the bill. Whereas 1
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they used to be responsible for the entire bill of the
property. A state representative from St. Charles,
who owned rental property, snuck that through two
years ago and was able to get it through. But MSD
could go back to the legislature and get that statute
repealed. You have authority, it is the question of
whether you have the backbone to use the authority or
not.
MR. KOENEN: The Rate Commission is looking
at that but also remember there is a public health
issue, if you start turning off water and sewer system
in too many homes, that's creating a health hazard not
just for the family in that home but for neighbors.
That is something we are very aware of. Mr. Joe
Blasingame?
MR. JOE BLASINGAME: Yes. My name is
Joseph Blasingame and if the Commission doesn't mind I
would rather sit to read this here. I call it a
battle of fairness and who should pick up the pieces.
The following several paragraphs are all taken from
local media entities and sources. Tying them together
will help give an overview for the Commission to
consider. Because the Metropolitan Sewer District
failed to upgrade its system for decades, it has been
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forced by the U.S. Environmental Protection Agency to 1
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spend more than $4 billion in the next couple of
decades doing what it should have done all along.
Between 1999 and 2008, the median household income in
Missouri dropped by 14.6 percent, the steepest drop
amongst all 50 states. The national drop in median
household income was 2.5 percent. Missouri dropped
nearly six times faster. The median household income
figures were compiled from Census Bureau data by the
Robert Wood Johnson Foundation as part of the report
barely hanging on middle class and underinsured. That
is the end of the direct verbiage of others. It's
easy to see who dropped the ball. With at least 7,000
occurrences between 2001 and 2005 of the overflow of
raw sewage in homes, yards, streets, parks and even
playgrounds, the EPA had to get involved. I fully
realize that St. Louis MSD has the fourth largest
sewer system in the United States. I fully realize
they have an area of 525 square miles to contend with.
I know their executive director last year received a
salary of over a $193,000. I fully realize too, they
are leeched to every homeowner and are guaranteed that
never ending flow of cash. As a small business
operator I envy that position. But what I don't
understand is, why didn't they budget into their
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accounting practices the concept of continual upgrade? 1
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Did they not realize that funding infrastructure would
just continue to erode, to decay without reinvestment
and to their own arteries would have a cost at the
end? If this was a small community sewer district
that provided for but a smattering of people, then I
would be more forgiving but this is a major company in
the St. Louis area and they should show they have
community responsibility to not only their
shareholders, which is us, but all of us customers.
So now they want to give us a 64 percent increase over
the course of 4 years, who dropped the ball, they did.
These increases they are wanting just seem to be over
the top at this time in our economy. I don't begrudge
any individual or company for making a fair profit and
that's a driving force in our country but I do
challenge those that overstep their bounds and are
willing to reach too deep in the pockets of others,
especially when the pockets they desire to rob, have
little left to give. Thank you.
MR. THEERMAN: I am in complete agreement
that our sewer rates should have risen in the past and
they should have risen significantly. In the 1970s,
in the 1980s sewer bills were single digits per month,
$3, $4 a month and that shouldn't have happened, those
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improvements all along the way. We litigated our
rates through the late '80s all the way up to '99.
Our wastewater rate was in litigation for over ten
years and we were unable to effectively raise rates
during that period. Since that time, we changed our
charter, we created a Rate Commission, we have the
ability to issue district wide revenue bonds and that
all occurred in 2000, those charter changes, and since
that time you have seen the District do over a billion
dollars of improvements in the system itself. You
have seen the District issue over $600 million of
revenue bonds in order to pay for the those
improvements. So I don't disagree with what you're
saying with respect to that, to the past, there is a
lot of reasons why rates didn't rise the way they
should have in the past. Since 2000, after the rate
issue had been resolved, we steadily tried to get
caught up on the infrastructure. And I might add,
this is not unique to St. Louis. These infrastructure
issues that exist with overflows and sewer system
required investment, is a national problem.
MR. KOENEN: Mr. Steve Fink?
MR. STEVE FINK: Oh, I would like to waive
my concerns because they have already been addressed.
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MR. KOENEN: Okay. Sharon Wells?
MS. SHARON WELLS: Good evening, I am Sharon
Wells and I am an AARP congressional district
coordinator for congressional districts one and three
which would be Congressman Clay and Congressman
Carnahan. I am here tonight representing
approximately 746,000 Missouri residents who are
members of AARP. AARP believes that this proposed 60
percent rate increase could result in a significantly
negative impact on residential customers. Many of
whom are over the age of 50 and on fixed incomes.
This proposed rate increase will add to their already
financially strained situation. Far too many are
already having to choose between taking necessary
prescribed medications and purchasing groceries. And
that is not taking into account the overall costs of
rising gas prices, as well as the cost of living cap
on their social security benefits. The rate sewer
proposal assumes, includes assumptions that the St.
Louis economy is going to get worse. These
assumptions shield MSD from another economic downturn.
At the expense of making the rate increases even
higher. Struggling households would face a double
whammy. The recently signed consent agreement with
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the EPA would require several specific projects to be 1
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completed over the next year or two. But after that
period, the regulatory mandates are subject to
feasibility studies and plans that are still to be
developed and refined before submittal to the EPA.
Thus, MSD sewer rates should only be raised in
recognition of specific projects that the public can
be assured will be completed in the next year. When
rates could be raised so dramatically, transparency,
and accountability, require tying the increases closer
to the actual completion of the specific projects. A
five year rate plan stretches the assumptions too far
in the future. AARP is interested in working together
with MSD and other intervenors to help fashion a
compromise in this matter that will be more acceptable
to the public. Thank you.
MR. THEERMAN: She is behind the column.
Just make a couple of comments. One of the things
that -- those issues have been raised to the Rate
Commission, I know that is part of the consideration
and there are early action projects that if you go to
the Justice Department website and look at that the
Consent Decree, you'll see there is early action
projects that are included and those early action
projects that are already funded in a prior rate
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increase. So those projects are already defined and 1
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funded. The reason we are coming forward with a rate
proposal that is four years in length is because we
are not going to deliver a -- per the Consent Decree,
we are not going to deliver a series of projects to
eliminate all of those constructed sewer overflows
until the end of 2013. And then EPA will have to
approve it. And so delaying starting all of these
numbers that we have shown you have real projects with
estimates and schedules behind him. So those already
exist and those are already identified and we know
with certainly they have to be built to get rid of the
overflows. By delaying, we have the prospect of
stacking work on top of each other and increasing the
risk of either we don't get things done in time or
that costs are even less manageable in the future
because this is a 23 year program that is full of
construction for all 23 years. So we are certainly
mindful of the level of clarity in the rate case and
making sure that are assumptions are reasonable
assumptions but we don't want to delay getting going
because it has the effect of sort of compressing that
schedule and putting it off for tomorrow is somewhat
the reason we are in the situation we are in today.
MR. KOENEN: I might point out the Consent
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Decree includes penalties if MSD doesn't get certain 1
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jobs done by certain times.
UNIDENTFIED SPEAKER: Who is going to pay
it?
MR. KOENEN: That is a huge incentive to get
it done. Verlene Mullen?
MR. VERLENE MULLEN: Thank you and good
evening everyone. Most of my concerns have been
addressed but one thing I want to mention is it cost
me more to flush my doggone toilet then it does for me
to take a bath and I think that is just plain old
irresponsible on your part. It took you three years
to have a sewer backup that was behind my house. I
had to call the health department, I had to call our
municipality, I called the sewer department, I finally
called Channel Four, after calling Channel Four your
people came out. And that is absolutely ridiculous
and irresponsible. There was a time when I first
started, when I first bought a home it cost me $11 and
something every three months, now it is costing me
almost $30 a month and you want to charge me a $100 --
when you get through it is going to wind up $100 a
month. And I personally cannot afford it. I am
retired, I am on a fixed income, my medication cost --
I am just so angry right now I could spit and this job
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you all are talking about doesn't even make good sense 1
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to me. Now, one thing one woman said is cut your
salaries, I had to take a freeze in pay, my insurances
were hiked, hike your own, pay your own debt. Excuse
me, I am so sorry. Pay your own insurance, you know,
don't dig in my doggone pocket to do what you should
have done years ago. And that's all I have to say
because I'm too mad to keep talking and if I keep
talking I'm going to say something I might be put in
jail for.
UNIDENTFIED SPEAKER: Your response, your
response?
MR. THEERMAN: My response is MSD is doing
its very best to operate efficiently, you waited too
long for us to take care of your issue.
MR. VERLENE MULLEN: I did not -- it took my
three years for you all to --
MR. THEERMAN: No, no, you misunderstand.
I'm taking that on, that is our responsibility, you
shouldn't have had to wait that long.
MR. VERLENE MULLEN: At all.
MR. THEERMAN: You had to wait too long.
MR. VERLENE MULLEN: I had to call the
health department.
MR. THEERMAN: Obviously, I don't know the
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circumstances of your particular situation. 1
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MR. VERLENE MULLEN: I didn't know your
name.
MR. THEERMAN: But three years is too long
to wait. But MSD has been making adjustments in how
we operate and our costs. And, you know, the same
things that happens in private sector companies has
been happening at MSD. We changed our pension, that's
a big deal right now. Defined benefit pension plans,
we changed that at the beginning of this year for new
employees. They have more of a private sector style
pension. We are trying to reduce costs by controlling
our staff and making sure our staffs don't get too
big. So our treatment plants operate in a highly
automated and highly effective manner with low costs.
The collection system is a tough thing to crack. I
mean, it takes a lot of people and a lot of effort to
improve these sewers and to stop basement backups and
for overflows. The very same things you see happening
in private sector and probably in the places you work,
are happening at MSD trying to control costs.
MR. VERLENE MULLEN: Can you address the
fact that I flush my toilet and it costs me more to do
that than it does to take a bath?
MR. THEERMAN: Well, I can tell you that
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water rates and sewer rates are going to track 1
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together and be lower, there will be another increase.
Water providers go through a rate increase similar to
what we do. (audience talking over one another)
MR. KOENEN: Folks, folks.
MR. THEERMAN: I can tell you that
maintaining sewers is often more costly and providing
sewage treatment services is often times more costly
for a couple of reasons. We tend to be the deepest
infrastructure. When we walk into a sewer we have to
get everybody else out of the way to get into it.
Everything flows by gravity through these pipes. We
tend to operate on the treatment side with a product
coming from you that requires a lot further to go to
be treated and released back into the environment than
the water side, who is taking water out of a river and
treating it to make it ready for public use. So, I
mean, there is a lot of differences and over time you
will see water bills rise above sewer and vice versa
and there is lots of reasons why.
MR. VERLENE MULLEN: I am afraid I have
never seen my water bill rise above my sewer. But,
sir, may I have your personal phone number to your
office when this is over with because I have another
complaint, the same one that you all did three years
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ago is still not rectified. 1
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MR. THEERMAN: I would be glad to talk with
you after the meeting.
MR. VERLENE MULLEN: I would appreciate it.
MR. KOENEN: We are going to go by order of
the cards. I am sorry if I mispronounce this name,
Tamm Buzzetta.
MR. TAMM BUZZETTA: Yeah, I want to address
the fact that I have been to a number of meetings like
this with Ameren, with various other utilities and I
am also glad to see KMOX here it looks like, maybe
they will talk to me after this meeting because I have
a news story that they continually try to ignore, any
way we will get into that, it's what I'm talking about
here. Basically, I think most of us have been to
meetings like this, where you have a commission that
is supposed to decide whether or not a rate increase
is worthy of, you know, passing and I think most of us
also can relate to the fact we feel very powerless at
these meetings because we know that whatever comments
we make, will be duly ignored and the rate increase
will be going through.
UNIDENTFIED SPEAKER: Absolutely.
MR. TAMM BUZZETTA: So that being the case,
I just wanted to inform people of another way you can
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actually get some action done, it's something me and 1
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my sister have been working on and it's called
Missouri Utility Consumer Relief Act. This is some
proposed legislation that is on the desk of several
Missouri legislators and it would basically do what
the title says, it would give Missouri utility
consumers some much needed relief from these unending
rate increases, these multiple rate increases that
never seem to end, regardless of what the economic
conditions in the country are. So if anyone here
would like to take a look at this Missouri Utility
Relief Act, it is currently on the internet, you can
find it by going to petitiononline.com, forward slash
the word W-E-D-D-L-E, seven, the number seven and that
should bring it directly up into the internet window
you're looking at give.
UNIDENTFIED SPEAKER: Give it again.
MR. TAMM BUZZETTA: Www.petitiononline.com.,
forward slash W-E-D-D-L-E, the number seven, that
should bring it up. And we are looking for as many
signatures as possible, as a matter of fact, I put
this up on the internet today, so there is only one
signature, mine. And I am hoping we get much more
because currently we need some legislation because
these meetings are basically a joke and I think
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everybody here knows they are. So I just wanted to 1
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pass that on, maybe KMOX will take a listen and maybe
do a news story on us, I hope so.
MR. KOENEN: I would like to point out there
are 14 Rate Commissioners, all of the ones who are not
here tonight will have access to the transcript of
these proceedings and I believe we are recording them
as well. We are listening to you, folks. And again,
we pay sewer bills too.
UNIDENTFIED SPEAKER: Show us by not taking
the bill, show us you're listening. (inaudible,
audience speaking over each other)
UNIDENTFIED SPEAKER: Where is the other
commissioners?
MR. KOENEN: There are 14 commissioners, we
can't all be in the same place at once because of
other obligations, we are all volunteers. We are not
like the Public Service Commission where they get
paid. We are volunteers. So, Mr. Richard Williams?
MR. RICHARD WILLIAMS: Good evening,
everyone. Every couple of minutes I say collect your
money and the reason I say that, I bought a house in
Florissant about nine months ago and I called all the
utilities and had everything changed and everything
taken care of and nine months later MSD won't send me
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a bill. So I called them again to come get my money. 1
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And the thing about it is that when I called them the
people there were like well, that is not what I do or
that is that guy's fault or something like that but
you were able to send a collection notice. You were
able to have collection people call my house and beat
me down about not paying this bill and I have several
times called to pay my bill. Now you'll probably walk
up and want it all at once and I will need an armored
car or have to take out another loan to get -- this is
ridiculous. Thank you -- collect your money. Thank
you. I hate to admit it but it's the truth.
MR. THEERMAN: I'll make sure you get a
bill.
MR. RICHARD WILLIAMS: I don't want it all
at once.
MR. THEERMAN: I understand.
MR. RICHARD WILLIAMS: You know, 1,200
bucks.
MR. THEERMAN: Our Director of Finance is in
the back, Jan, raise your hand. She can talk to you
about making sure you get your bill.
MR. RICHARD WILLIAMS: The attorney tried to
get you to do it, you got a whole lot of other people
other than me, collect your money. (audience talking
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MR. KOENEN: Folks, can we get back to the
cards. We have people who have been waiting in line.
Willie James?
UNIDENTFIED SPEAKER: Cut some of those
salaries.
UNIDENTFIED SPEAKER: Amen.
MR. WILLIE JAMES: Good evening. What I
would like to know from you all that are here today is
that, what will the proposed improvements do for those
areas out in the county that use the septic tank and
when it rains stormwater comes and they are constantly
having to replace their septic pumps and flooding out
their basements?
MR. THEERMAN: You've covered a fair amount
-- a little bit of territory there, so let me try and
be specific. If you're on septic tanks, than you
would not be getting a wastewater bill from MSD.
We're not providing you a service and that septic tank
is there instead of our service.
MR. WILLIE JAMES: Okay.
MR. THEERMAN: If you're in an area that has
storm sewers and you're on a septic tank than storm
sewers are a service we provide but it is not part of
this proposal, that again, is part of litigation that
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stormwater rate right now. If you are on a septic
tank and that septic tank is failing and you need to
be connected to the public sewer, part of the Consent
Decree settlement is a program for -- it is for low
income customers that qualify to get them off of their
septic tanks because that can be a pretty expensive
proposition on to public sewers. So that is an aspect
of the Consent Decree for those who qualify for it.
So, I hope I answered you question. Septic tank
owners don't get wastewater service and should not be
getting a bill from us. If you have a septic tank and
you're getting a wastewater bill from us, then by all
means talk to us and we'll make sure we get that
corrected.
MR. KOENEN: William Kirk?
MR. WILLIAM KIRK: I am William Kirk and I
have a couple of questions for you. It would help me
understand better if you would, given some of the past
funding and how you broke it down and what kind of
money you spent, you talked about how there is $600
million that we still owe on or we're paying interest
on that; is that correct?
MR. THEERMAN: There is about 628 million in
outstanding revenue bonds.
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MR. WILLIAM KIRK: Okay. So my question to 1
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you is, in the proposed rates that we have got for the
future, how much am I paying on the 628 million and
how much am I paying on the 945 as far as interest and
that? And you probably don't have the figure here in
front of you and I'm not expecting you to do math, in
public, okay. But that, I hope, would be something
that the Rate Commission could look at and help them
appreciate what is going on.
MR. THEERMAN: It is certainly broken down
in the rate case in the documentation and we can make
that available to you.
MR. WILLIAM KIRK: The real question, at the
end of the day in 2016 -- in 2012 I got 945 million
and hopefully the 600 million is gone in 2016.
MR. THEERMAN: There is about 16 years
remaining on --
MR. RICHARD WILLIAMS: Sixteen years, okay.
So then on the 945 in 2016, how much is left on that?
MR. THEERMAN: That would be 30 year debt,
so it will be stretching out far into the future.
MR. RICHARD WILLIAMS: Thirty years, okay.
All right. Just concerned, just like we are here in
the country, we got a big debt problem and you're no
different and I understand you're a utility and we're
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going to live and die by what we do. That is all, 1
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thank you.
MR. THEERMAN: I think that is the dilemma
about the use of debt. I mean, when you use debt you
pay interest and, you know, but the flip side, that is
what I tried to show you in the last slide, if you
don't use debt than you really get a whopping increase
to try and get to the same level of capital
investments. But all that is a discussion going on
with the Rate Commission and all that is available to
the public.
MR. KOENEN: Mr. Jule Zach?
MR. JULE ZACH: Here I am. Yeah, I got a
comment. I guess all of the people here are all
homeowners, we own property. So we pay these bills
but some of us who are maybe lucky enough to have
another house that we rent out, then I have to I get
these MSD bills that keep going up. I keep beating
these bills the best that I can but there is a point
where I got to pass these bills, this cost, onto my
renters. And I tried to have the renters in my house
they are senior citizens, they are usually ladies who
are retired and they are on a fixed income, social
security and they don't like to be hassled with the
increases of rent, so I maintain their rent for them.
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increase. So I can only eat some of this stuff so
long then I have to pass it along. That gives me
something to think about, it's just not the homeowners
using wastewater but there is a lot of renters out
there and there is a lot of other people in the senior
homes and retirement homes. They all use the
wastewater, you know, they don't go down to the river
and do their business, they have to use the regular
system. But my thought is this, is there anyway to
take the money or the bills and spread it out over a
greater amount of people because people that do rent
in bigger communities, let's say a hundred unit
apartments, the guy who gets the bill for that, he
raises their rent periodically because people except
it. So I don't know if he gets a hundred times the
bill I would get for my rental property, I don't know
what the ratio is but I have a harder time pressing --
you know, passing on to these retired people. So that
is where I'm coming from, I'm not bragging that I own
property, it's just my retirement plan is to buy a
house here or there and to rent it out. But being a
homeowner until those houses are paid for, that is not
a great investment. So the other comment I want to
make is about the bond issue, I seen that you were
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raising a billion dollars in bonds and the way I 1
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understand bonds is like my little stock broker that
calls me every once in awhile, he says well, A.G.
Edwards or Edward Jones has got a bond issue here.
Okay, what's it for, well you buy a $1,000 bond here
and you're going to get that 4 percent for your bond
and so all the people go and buy $10,000 bond, some
people buy $100,000 bonds, bigger pension plans, so
all that money that they are collecting when I buy
that $1,000 bond, I send a 1,000 bucks to A.G. Edwards
and then they have to -- what do they do with that
money? So see, if MSD is raising a billion dollars
and A.G. Edwards collects a billion dollars and they
send it to you and you have to pay the interest on it,
so why aren't you using that billion dollars right
then that you have collected to put all these funds in
the thing without -- by private investment, instead of
making all of these people cough up all of the time?
MR. THEERMAN: Let's stop for a second
because we are recording and it is time to switch the
disk and I can respond to some of your questions, if
that is all right.
MR. JULE ZACH: Okay.
MSD SPEAKER: We have a website that has all
the documents, everything that was referenced here on
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our homepage, stlmsd.com, there is a link right on our 1
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homepage that takes you to the Rate Commission
information. It's a big link but all of the documents
are there. Thank you.
MR. KOENEN: I might point out the Rate
commission is governed by the Sunshine Law, so we have
to make sure this is a public hearing, that we are
getting a good and accurate recording of it.
MR. THEERMAN: Thank you for your patience
we are back on.
MR. JULE ZACH: Okay.
MR. THEERMAN: So I will try and cover
everything on your question but if I miss something
please let me know and I will try again. MSD is
recommending $945 million debt authorization. We
would not issue all of those bonds at once. It would
probably be done in a series of bond issues. When MSD
gets debt, it does it typically in one of two ways,
either a direct sale of revenue bonds and that gets
sold to large institutional investors, as well as A.G.
Edwards and others who then sell to clients or through
low interest loans through State of Missouri called
the state revolving fund and that is a revolving pool
of money that is used to build wastewater projects
throughout the state. That is federally funded and
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applies to all the states and there is a pool of about 1
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$30 million a year available in the SRF statewide. So
there are times that MSD is a larger borrower in that
and there are times when we don't borrow anything.
So, in essence, you time the issuance of the debt with
the projects because there are laws about how long it
takes to spend that bond proceed on capital projects.
You have to do that in a relatively short period of
time, a few years. So what has happened in the past,
MSD gets the bond authorization to a vote and then
they will time the issuance of the debt in terms of
authorizing the bonds to coincide with the capital
improvements going on. Did I cover what you're asking
or did I miss?
MR. JULE ZACH: I don't understand.
MR. THEERMAN: Well, think of it this way.
You can take out a loan for a billion dollars but you
don't have to take it all at once. And so you know
you're going to build a quarter of billion dollars of
work every year in the plan we have given, so you
might issue $250 million of revenue in year one or of
revenue bonds in year one, take those proceeds and use
that to pay contractors to build the improvements and
then pay it back with interest over time. Typically,
long bonds, 30 years. And the next year you do
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another bond issue, another $250 million to fund that 1
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year's project list, same things happen. Maybe year
three is a little bit bigger, so you're issuing
$300 million of bonds and then the remaining is issued
to year four to build projects. So you're trying to
time the sale of the bonds that create the money to
build projects, with the construction project's
schedule.
MR. JULE ZACH: I understand that part. But
what I don't understand is that when A.G. Edwards
collects their money for this -- from the guys buying
the bonds, the issued bonds, is that if you do collect
that $250 million for that calendar year, you have
collected -- you have made up the project expenditure
for that, so that money is going to go right to paying
that project off. So the bond length is timed by
whoever sets that timing, so that you can retire that
debt over a period of years. So the 30 year bond or
whatever, 10 year or whatever the issue length is, is
that you pay interest to whoever that bond holder is
--
MR. THEERMAN: That's right.
MR. JULE ZACH: -- over that length of time.
So are all of those things figured into this rate
increase? Obviously, you got to pay the interest, so
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it has got to come from some place, isn't the revenue 1
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collected enough to do that?
MR. THEERMAN: Right.
MR. JULE ZACH: Or you have to keep raising
it all the time?
MR. THEERMAN: The revenue, the rate
proposal includes the cost of the retirement of the
bonds that are included in the rate proposal. So that
is included, the interest payments -- there was a
slide earlier and you may not have been here when it
was up but we have calculated what we believe the debt
service and principle payments will be in the rate
case.
MR. JULE ZACH: Well, I think we are all the
victims of the cheap rates many years ago and we're
paying the piper now. The chickens are coming home to
roost and it is unfortunate that we have more senior
citizens than ever before that have to pay that piper
now. So when they were younger and working they could
have paid more money at that time but now they have
trouble paying it.
MR. THEERMAN: That is one of the positive
sides about using debt because we are building
long-lived assets. Sewers last 75 to 100 years and
the idea of using debt stretches the payments for that
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asset out amongst not only today's customers but 1
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future customers.
MR. JULE ZACH: Thank you.
MR. KOENEN: Bert Atkins?
MR. BERT ATKINS: My name is Bert Atkins, I
am state representative for this 75th district, which
we are in right now. My question in regards to your
debt proposal and the cash proposal and I understand
the philosophy of trying to mitigate the shock of the
rate increase, yet we are going to be, under your
proposal, we are going to be spending $359 million
over that four year period in debt service. Which
would, in itself, probably provide a lot of
construction relief for the various projects. And I
get the 155 percent increase on the cash only basis.
How much has been looked into more of a mix lean
toward cash as opposed to debt, so we could -- that
billion dollars you plan on using over the next four
years, more of it would actually go into the
construction projects rather than having to pay for
the cost of debt?
MR. THEERMAN: We run a number of scenarios
but you can and there will certainly be the
opportunity to do more as the Rate Commission process
continues. In 2007 MSD brought a rate case that was a
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cash funded approach, it was a much smaller rate case. 1
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We didn't have the Consent Decree final, we didn't
know a lot of things that we know today. And that
cash only approach was intended to save debt issuance
for later when we really got hit with more and more to
do. And so, in that particular rate case, we are
talking about moving rates from the middle 20s up to
middle 30's on a cash basis, no debt. And there was a
significant outcry by the public in that case that
caused us to go back to the drawing board and
reexamine the use of debt to try and keep rates down.
And that resulted instead of being a $35 a month rate
with no interest payments, on that particular rate
case, to a $28 rate with $275 million of debt
associated with the case. So, you know, it really is
a matter of how you look at it. The slide I showed in
the beginning and it is in your proposals, right at
the end, it shows you the two differences. There is
all kinds of middle ground where you use a little more
cash a little less debt and that can all be calculated
and determined.
MR. JULE ZACH: And the other thing, I mean,
I think it was a couple of years ago, MSD was going
around with forms similar to that but it had nothing
to do with rates, it was more of explaining what the
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EPA was looking for from MSD, in regards to the 1
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overflows, the combined sewers and the storm sewers
only and a lot of those issues were then being
discussed and it was also being explained that here's
our options, neither of which are good from a rate
payers perspective but one is certainly worse than the
other and this is not really optional. We can choose,
I believe, to not do anything voluntarily in this
Decree but then the problem we have we are going to
have EPA down here, the federal government saying this
is what you're doing, this is how you're going to pay
for and this is what it is going to cost. Because I
know also in the last session we finally renewed the
authorization for you to actually do the regulation of
new construction for retention ponds and what not and
collect the fees necessary to do that. So that's in
addressing our comment about new construction, that
was in place until the end of last year, for you to do
that. Thank you.
MR. KOENEN: I might point out we have had
several people at other hearings who have wanted to
see everything floated on bonds to lower the average
monthly cost even though that adds greatly to the
total cost.
MR. THEERMAN: I guess I'll just say about
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the issue with the EPA is, you're accurate in your 1
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statements, they sued us and this is a settlement
agreement. And we viewed this settlement as a better
situation then litigating to the finale because
litigating with the federal government, they have got
a lot of lawyers and they don't mind paying them. And
so, I think we found a program we can do but it is
hard. And not doing it and telling, you know, the
federal government we are not going to do it, will
make it an entirely different situation.
UNIDENTFIED SPEAKER: Why doesn't somebody
challenge, somebody -- this has come up, it comes up
all the time. Somebody -- 10th amendment issue, the
EPA is not in the constitution, it is not mentioned in
the formation of the constitution, in the Bill of
Rights, okay. We stop sending money to the federal
government for these unfunded mandates. They keep
telling us what to do and we keep doing what they tell
us to do. Is there somebody with the, I'm sorry, the
balls to challenge this, constitutionally, because
they are going to keep telling us we are not doing
stuff good enough for them. You think that this isn't
going to happen in the future again, we are going to
have to be raising our rates again and again and
again. So this is happening more with the IM240
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program and at that time there was Attorney General 1
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Jay Nixon and we got on him about this, challenged him
to take that to court. Unfortunately, he wrote us a
letter saying he took it to the wrong court and it
pretty much died. Let me tell you what federal
regulations are getting me. We are all in the same
boat here, folks, I have no money to spend on this and
neither do you probably.
MR. KOENEN: Ma'am, if we could go back to
the people with blue cards who have already asked to
speak. The other thing to, this is not the first
Consent Decree. I have to believe that if somebody
else thought they could run it by the federal
government, they would have tried.
UNIDENTFIED SPEAKER: They're not trying
hard enough.
MR. KOENEN: Thomas Chatman?
MR. THOMAS CHATMAN: My question, concerns
are more personal, everybody kind of, you know, well,
anyway, I will start. First of all, I was looking at
this low income eligibility and I don't know many
people that could own a house and only make $10,000 a
year, that is just -- I am not real sure but I don't
think so.
MR. THEERMAN: Let me real quick. We have
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recently changed our low income assistance program. 1
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It used to based on homeownership, that has changed.
The beginning of this year we are now offering that
program to tenants, which is something we have been
trying to get done, we have that available now. So I
think your point is well taken. There are an awful
lot of people that are low income rent and didn't have
that afforded to them.
MR. KOENEN: Will you hold the microphone
closer?
MR. THOMAS CHATMAN: Oh, I'm sorry. Well, I
mean, I feel like I'm low income but I own a home but
I make more than that, so I wouldn't get any help.
But my concern was my basement flooded and I am not
sure how you determine which is raw sewage and which
is flood water, I'm not really sure, I mean, if you
look at them they both look about the same and smell
about the same, you're now saying that you are being
sued, you were sued -- you're being sued because the
system was messed up and you need to fix it. Well,
when I sent my letter in saying my basement flooded
and it has got sewage and overflow whatever, it came
back and said well, it wasn't our fault. So now I am
paying -- you're asking me to pay to fix something
that was already broke and, I mean, in my opinion, I
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am not -- you know, I am paying again because 1
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everything in my basement, my water heater, radiator,
because I have radiator steam, all had to be fixed and
replaced. So, I mean, you know, to me, you know, I
don't know. I truly don't have any sympathy for it,
personally.
MR. THEERMAN: I don't know about your
specific situation and what rain event we are talking
about but in general, rain events can cause sewer
backups. Rain events can also cause overland
flooding, which can flood homes depending on where
they sit. MSD has insurance programs for basement
backups related to rain events. We do not insure for
overland flooding. And, so, I am assuming what
happened in your particular case is we made a
determination that your situation was an overland
flooding situation and we denied any claims. You're
nodding, so I am guessing that may be what it was. If
it's -- if we have a difference of opinion in that
determination, we also have the ability for you to let
us know that and appeal that decision and let us look
at it again. And it is not a foregone conclusion that
we are always right, we are going to deny your appeal.
We try and get it right but if, you know, you feel
strongly that it was a backup through the floor drain
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in your basement and not coming through the windows 1
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and doors as an example, that is a water backup, that
is something we try and cover with insurance to the
limits of our coverage. Overland flooding, we do not
insure, we can't insure.
MR. KOENEN: Mr. James Robinson?
MR. JAMES ROBINSON: Hello, everyone. My
concern is about odor that is omitted during certain
times at night during the week, is that something that
MSD is responsible for, sewer odor?
MR. THEERMAN: Depends on the source but it
could be us, sure.
MR. JAMES ROBINSON: Is that hazardous
material that you're treating?
MR. THEERMAN: No.
MR. JAMES ROBINSON: It is not hazardous
material?
MR. THEERMAN: Now, understand we are
treating sewage and there can lots of things coming to
our treatment plants from the sewage.
MR. JAMES ROBINSON: Is that not a safety
concern for people to have to inhale that on a regular
basis?
MR. THEERMAN: Typically not. Odors -- all
of us are sensitive enough to odors that you can smell
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them at concentrations that are far below what is 1
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typically a health concern. Now, I don't know about
-- I don't know where you were, I don't know what you
were smelling, I am speaking just in generalities now.
MR. JAMES ROBINSON: Well, if it is coming
from MSD I am sure you have heard this before because
there has been several complaints about it.
MR. THEERMAN: We from time to time have
problems and odor problems at our sewage treatment
plants, there can also be times when the collection
system has odors.
MR. JAMES ROBINSON: Sewer treatment plants,
is that something that you can correct or that you're
considering correcting in the near future?
MR. THEERMAN: We continue to install odor
control equipment in our treatment plants in an effort
to get at that, we know we have neighbors that are
close by and we also know that we work in a smelly
business and from time to time there are odors form
our plants. We are doing our level best to improve
are facilities so they aren't a nuisance to the
neighbors nearby. I don't know where you are but we
can talk if you like after the meeting, talk about
where you are and what you're experiencing. We can
tell you what improvements we're trying to make.
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MR. JAMES ROBINSON: Just what you said, 1
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different situation at times.
MR. THEERMAN: It can be.
MR. JAMES ROBINSON: Yes, okay. Inopportune
times, I might say. Sometimes people are entering
their guests outside in the evening, here come MSD,
stinking up the place. You raising our rates but
you're not addressing anything like that.
MR. THEERMAN: Well, no, we are. We are
adding odor control facilities in our treatment plants
and trying to address odors that can be a nuisance
there, yeah.
MR. JAMES ROBINSON: Are you doing it as we
speak or is it something you are going to do in the
future?
MR. THEERMAN: We have been doing it as we
do plant expansions and plant modifications. But
again, we can talk more about your specific case if
you like, before we leave.
MR. JAMES ROBINSON: Okay. That will be
fine. Thank you.
MR. KOENEN: Ramona Burden? Going, going.
Rich Krueger? Rich Krueger? Going twice, third time.
Tim Jones or Jonas?
MR. TIM JONES: Jones. How is everybody
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doing tonight, it's good to see everyone here because 1
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I know if we all come out and speak in numbers people
take a look at us more serious. The questions I have,
are we going to let out-of-town shotty contractors
come into work on this stuff? Another good point I
would like to make, which is a fact, we have a very
educated work force here in the St. Louis area. And I
hope that our money that were paying in is coming back
into the St. Louis area. I hope we do take a look at
the educated people in the construction industry and
we have a lot of people that have went through
apprenticeship programs for this reason. So when we
do a job, we do it once because we do it right. Not
get these shotty contractors from out-of-town with
uneducated people come do these jobs and then have to
re-bid it out again because they was the low number.
I hope we are taking a look at that and like I said it
is very important you guys, we are paying these bills
that money should come back to our people. Not these
out-of-town contractors that come in with these low
bids. Thank you very much.
MR. THEERMAN: You bring up an excellent
point. MSD prequalifies contractors, so we want to
make sure the contractors that work on our
construction are qualified to do that work.
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MR. TIM JONES: And that would be by 1
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apprenticeship programs, correct? A lot of them come
in and say that are educated but we have papers saying
we have went through an apprenticeship program and we
are educated. That is a very smart way, it keeps the
numbers down, makes the jobs go faster and it keeps
the money short, it's the best way to go.
MR. THEERMAN: I can tell you we are working
with the same contractors, St. Louis regional
contractors all the time. It is rare that an outside
contractor comes in and does our work.
MR. TIM JONES: I do see it because I pay
attention, right up in Florissant. I see them come
through and they do do shotty jobs. I stop by and see
what's happening.
MR. THEERMAN: You may occasionally see
outside contractors coming on our work on projects
that are sort of unique where maybe there is only one
or none contractors in town do that specific kind of
work. But we have looked at this and we believe that
this program can be locally designed and locally
constructed. There is adequate capacity, both on the
engineering side and the construction side, to build
this program. There is probably a few exceptions.
There are some very large tunnel, storage tunnels in
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this program and those tend to be specialty 1
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contractors that are not all sitting here in St.
Louis. So when those contractors come to town they
typically higher local labor to do that kind of work,
they're not bringing a whole, huge work force with
them. So, again, we believe the program can be built
locally and should be built locally. The Associated
General Contractors has given us a figure that for
every billion dollars you spend in labor, you produce
28,000 jobs. So, that's not a billion dollars in
program but a billion dollars in labor. So a
significant amount of money getting spent and a
significant amount of money being recycled through the
economy and creating jobs.
UNIDENTFIED SPEAKER: That is not always
true because I just worked on a project out here off
of Telegraph Road, the big project you guys had, MSD,
it was court ordered, it was supposed to be done in
'82 I think it was and most of those contractors were
from out-of-town.
MR. THEERMAN: Well, the contractor you're
talking about on -- where on Telegraph?
UNIDENTFIED SPEAKER: On Telegraph Road.
MR. THEERMAN: Lower Meramec treatment
plant?
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UNIDENTFIED SPEAKER: There you go. 1
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MR. THEERMAN: That was Goodwin Brothers and
they hired local union labor for their construction.
UNIDENTFIED SPEAKER: That was just one side
of it. The other side was done by the out-of-own
contractors.
MR. THEERMAN: The other side of that was
KCI, they are also a local contractor with union
labor, to my understanding.
UNIDENTFIED SPEAKER: Not all of them, I
think the tunneling.
MR. THEERMAN: Oh, the tunneling. Now
that's the example I gave earlier. The tunneling
contract on that site, that boarded tunnel five miles
long --
UNIDENTFIED SPEAKER: Right.
MR. THEERMAN: They were out-of-town
contractors. And at the time, I don't believe there
was a St. Louis tunneling contractor that could do
that work or there may have been one.
UNIDENTFIED SPEAKER: There is two.
MR. THEERMAN: Well, of course, that has
improved. And now that was a 5 mile long, 10 foot
diameter tunnel. We are talking about a 9 mile long,
30 foot diameter tunnel in this, one of these program
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tunnels. So significant amount of tunneling expertise 1
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and large tunnels needed for that one.
MSD SPEAKER: In that case, the out-of-town
firm did team with the (inaudible, speaker has no
mic.) in St. Louis.
MR. THEERMAN: That is pretty typical.
UNIDENTFIED SPEAKER: Well, they weren't the
only ones, there was others.
MR. KOENEN: If we could get back to the
blue cards. Emma James?
MS. EMMA JAMES: Good evening. I have two
questions and a comment. My comment is, I know there
is a lot, I hope I don't offend anybody, older adults
who are also worried about the rate increases but I
just also wanted to put out there, there are a lot of
new homeowners and a lot of people who are just
starting to get families just from talking to some of
my coworkers, we are all concerned about it too. So I
just didn't want it to have the face of just all -- no
offense anybody, but the over 35 crowd, you people
that are in your late, you know, but seriously, you
know, there is a lot of young families that are
starting off. We are trying to get acclimated and
looking at the proposed budget and looking at how we
budgeted things out and looking at the increases that
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are coming, not just from MSD, but from all the 1
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utilities and the trash and the food and the gas and
the mortgage. People are starting to reconsider that,
okay, maybe I don't want a home no more or maybe I
don't want this. I just want to put that other face
out there that it is not just older adults, it is also
affecting younger families and people that are just
starting to purchase homes. Because I had a lady that
just told me she had already went to house and they
had already went to go to closing and then after all
these things came up, they just went to their officer
and told them they just can't do it, they will just
stay in an apartment. I just want to put that comment
out there, so that way you have another faucet to look
at, facet, excuse me. My one question is, I have
heard comments about previous rates and how you said
they were into litigation and you couldn't raise these
rates and so now the rates are going up, with this
proposed rate, will there be some type of oversight to
make sure that the funds are actually be appropriated
to actually do the jobs and some type of quality
control or some type of oversight to make sure that
the funds are actually being used for the jobs and the
jobs are actually being completed. And my other
question is, you have elaborated earlier about certain
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communities people live in or the homeowners, is there
somewhere I can find that information at?
MR. THEERMAN: If you do -- let me do the
last one first.
MS. EMMA JAMES: Okay.
MR. THEERMAN: Why don't you touch base with
this fellow over here, his name is Brian Hoelscher.
He can explain the issue of stormwater retention
basins, that is what I was talking about. If you're
in a subdivision with a stormwater retention basin
they are typically the responsibility of the
homeowner's association.
MS. EMMA JAMES: Okay.
MR. THEERMAN: If you want to learn more
about that, he can assign someone to get back in touch
with you about your specific case.
MS. EMMA JAMES: What if you actually own
the actual home, I am not in a community home, I live
in an actual house?
MR. THEERMAN: Typically, subdivisions were
built, lots of homes, retention basins were built
along with them, depending on how old the home is.
MS. EMMA JAMES: Okay.
MR. THEERMAN: The homeowner's association,
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all those homes share the responsibility of dealing 1
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with that stormwater retention basin. This again, is
stormwater, not wastewater, okay.
MS. EMMA JAMES: Okay.
MR. THEERMAN: Litigation that is going on
is about our stormwater rate. And so that is
different than what we are talking about in this rate
proposal. We are purposely not trying to do anything
with that rate while it proceeds in courts, so that is
a separate issue than what we are talking about with
these overflows in sewer systems. And then finally I
wanted to touch base, we have a track record and it is
a good one. We deliver our capital programs under
budget and on schedule. And we can prove that up in
the rate cases that occurred in 2004 and 2008. We are
coming to you with a very specific list of projects.
Our projects, yeah, there are some projects that have
cost overruns but when you look at the program in
total, it gets built the way we said it would be built
and for slightly under the cost of what we estimate.
So we will stand by our ability to deliver capital
programs that are the right projects and the right
costs.
MS. EMMA JAMES: Now, if there are funds
left over from any of these projects, where would
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those funds go back into? 1
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MR. THEERMAN: Well, there is a whole
continuum of projects, remember we have a 23 year EPA
settlement. So hopefully we can do it smarter and
cheaper and if we do, that is money that can go to
other projects that need to be built for these very
same purposes. And then we won't be coming to you
with quite as much of an increase the next time if
were able to save along the way.
MS. EMMA JAMES: Now, can I go to your
website and pull the information, as far as the other
projects that are going on. You said I can go back
and look at your track record?
MSD SPEAKER: Let me talk with her Jeff and
figure out the best way possible.
MR. THEERMAN: I don't know that we have
that in a way that is easy to decipher.
MR. KOENEN: The annual report.
MR. THEERMAN: The annual report -- our
annual report has some of that. You can see our
capital program on the web and all the projects
associated with it but to actually get behind what
each project came in cost-wise, is a conversation we
should have with you.
MS. EMMA JAMES: Okay, thank you.
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MR. KOENEN: Gary Sargent? If anybody else 1
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would like to submit a blue card, please do so.
MR. GARY SARGENT: My name is Gary Sargent.
I guess one of the things, I think I understood you to
say the Commission was appointed, then later you said
you guys all volunteered?
MR. KOENEN: Let me clarify. Different
organizations applied to have seats on the Commission.
For example I represent the West St. Louis County
Chamber of Commerce. When organizations apply and we
get a seat and then the organization appoints somebody
to fill that seat when there is a rate case.
MR. GARY SARGENT: So you guys are
uncompensated for your times and efforts and --
MR. KOENEN: Yes. We don't even get
mileage.
MR. GARY SARGENT: Okay. And so is like the
AARP representative of the organization that could sit
on that committee?
MR. KOENEN: They could apply the next time
there are openings on the commission, yes. And they
are an intervenor in this case. They asked to
intervene and they were allowed to be one of the
intervenors, which means they are at all the technical
hearings and other things downtown and their lawyer
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has a right to ask questions and so on. 1
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MR. GARY SARGENT: I guess it is kind of
double-edged sword because, you know, let's say I
could be appointed to that Commission, I don't feel
qualified to determine if rate increases are, you
know, would be effective or just or called for. You
know, in other words, you're presenting information to
me that is not in my field of expertise. And I guess
it would be, you know, would help a lot of people feel
more at ease if we knew the qualifications of
everybody on the committee.
MR. KOENEN: We have different backgrounds.
We have lawyers who work for us, we have rate
consultants who work for us, we have the ability to
get information from MSD and other places that we all
absorb. For example, we have three different
committees. We have a committee handling the meetings
like this with a technical committee and so on. It's
not that we are experts but we have become experts
because of all the information we have available to
us. And if you go on to that website you will see
about, probably about two or three thousand pages of
data already received.
MR. GARY SARGENT: Another thing I would
like to say, this is a 61 percent increase, you know,
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actually, it is actually boosting the base of another 1
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increase following in the fifth year right, possibly,
right? So this is quite a substantial increase for --
could this be possibly spread out over a longer period
of time?
MR. THEERMAN: It is the base of a future
increase, there will be undoubtedly be more to get the
program constructed. As I said earlier, we are
anticipating $80 a month size bills by the end of the
decade, so that is the answer to that. Spreading it
has with it the problem of pushing programs and
projects into the future where there are already
programs and projects that need to get done. So one
of the things we want to be careful about is not
putting off and stacking more and more up in years '15
to '23 as an example, because there is a lot of heavy
lifting construction-wise in those years and
cost-wise, so we negotiated a 23 year compliance
schedule and putting off tends to shorten that
schedule.
MR. GARY SARGENT: Okay. Thank you very
much.
MR. KOENEN: Do we have any other blue
cards?
MR. JOHN TURNER: I had a blue card. I am
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still John Turner. And I guess this question I am 1
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asking is for the Commission and since we have a
lawyer in the house I would like him to listen in too.
But as I understand it the prior rate increase that
apparently was pushed down Missouri residents' throats
and turned out it with unconstitutional because it had
to be brought to a vote to be, you know, made to law
and that is the nature as I understand it of the suit.
This current one, is there -- is it structured in a
way to specifically avoid going to a voter requirement
on it? Second question, can it be changed in such a
way that it has to be brought before voters before it
is passed?
MR. KOENEN: Well, first of all nothing has
been decided. The Rate Commission has not begun their
deliberations on the actual rate increase. We are
still gathering information, we are still getting
information from MSD and our consultants that process
comes after the public hearing. If, as it looks like
it could, there is a bond issue that will have to go
to a vote. If we would go with the all paid system,
we could theoretically avoid a vote but I don't think
any one of us wants to see $76 sewer bill. We have
still not yet reached the point where we are actually
deliberating and talking about how the numbers are
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going to fit together. At this point we are still 1
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gathering information and that will be a part of our
deliberations after that September 26th final public
meeting. I have another blue card. Stan Ebersohl?
MR. STAN EBERSOHL: I only have a couple of
little comments and questions. First, it is obvious
to me you don't have the full details of the plans
yet, what's going to be constructed in this, you're
still grasping at exactly what you're going to do to
control the stormwater outflows and I would like to
see public meetings along the way as you're doing this
to keep us advised of what you're doing. Obviously,
you're going to do this, the court's mandated it, it's
going to happen one way or the other. I would like to
see more coordination with the local governments. We
have areas now that are becoming blighted in St. Louis
County. We are going to be like we were 20 years ago
in St. Louis City. Let's starting looking at maybe
using some of those blighted areas for retention
areas, so we don't have to build as many tunnels.
Let's work it together with the problems we have
socially with some of our neighborhoods. I would also
like to see less tunneling and more retention ponds,
more areas to attract recreational use in the county.
Maybe that would help keep some of the people from
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moving out and reduce urban sprawl in this community. 1
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I think we need to think this through a little bit
better than just building pipes and putting in
concrete. I think we need to think a little bit more
about how we are going to fit this into our social
structure and our culture. Thank you.
MR. THEERMAN: You made an excellent point.
And part of our settlement with EPA is what is called
a green infrastructure alternative in parts of the
combined sewer system and that is, in fact, what you
are getting. Holding water back and keeping it from
getting in the sewer system and therefore not blowing
out an overflow. There is opportunities for that to
happen. We did develop and present, at numerous
public meetings, our combined sewer overflow plan. In
2009 we spent an entire eight week period doing public
meetings all around the community and really vetting
with people like yourselves what this program needs to
look like and what are those costs. And quite
frankly, through true public input, that program size
didn't get as big as it possibly could have gotten.
And so, you know, it is always tough, public meetings
there is a lot of them, it is hard to get to them all
and you don't feel like you have a really big say.
But I can tell you, $2 billion of the this program, $2
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billion of this settlement agreement has been vetted 1
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publicly and it is half the cost it could have been
because the public was available to talk to us about
it and we reasoned through the issues of let's do
programs that help the urban streams and deal with the
Mississippi River a little differently. And that way
sewage in people's backyards and in park areas and
community areas gets addressed and that ultimately
helps the Mississippi in the long run. And so there
is always opportunities for more of that. I
completely agree with you. Looking for synergies with
communities and municipalities and redevelopment, that
has to been a part of the this equation. I just want
to point out that we have been doing some of that,
there obviously needs to be more.
MR. KOENEN: Joan Heise? I'm sorry if I
mispronounced you name.
MS. JOAN HEISE: No, your perfect. I live
in Spanish Lake, and I have owned my house for 38
years and you were talking earlier about the insurance
that you have like for backups and things like that.
Well we have had probably at least six or seven
backups in our basement and every time other than one
time and I called MSD and they didn't take
responsibility for it. They said it was our
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responsibility, so I have had to put sewage backup on 1
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my homeowners, which made my homeowners go up because
MSD is not taking, you know, responsibility for the
backups. And then so and lately too, so when it
starts raining they will say it just rained too much.
Well, now when it rains, starts to rain or something,
I hear it in the middle of the night and I fly out of
bed and try to figure out something to put over my
drain so we don't have 3 inches of water in our
basement again. And then now they have been doing
some kind of things in our area where it will just
spew up out of the sewer all of a sudden and I will go
down in my basement and I will have black stink all
over my basement floor from when they have been
putting air through the line or something. But we
don't know that, so then I'm freaking out because we
have all this smell in the basement again.
MR. THEERMAN: Before you leave I would like
for you to talk to this guy in the purple shirt. He
is our Director of Operations and his staff is
involved with investigating sewer backups and so we'd
like to understand a little better about where you
live and what you've experienced. Let me just say,
statistically, about 60, 70 percent of basement
backups are a result of a problem at the home lateral.
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And the way we determine that is we will come out and 1
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I know your shanking your head, now I'm not talking
about when there is a gullywasher out there, just
statistically, 60, 70 percent are related to lateral
problems. And our sewer is not flooded in surcharge
but the person has a backup. If you're encountering
wet weather sewer backups, we need to take a good
close look at what your situation is. You may have
downspouts inappropriately connected and you may have
some other problem in the plumbing of the lateral or
it may be us and we have gotten it wrong and that
certainly happens to. But before you leave let's talk
with you a little bit about what you experienced,
okay.
MR. KOENEN: I have no more blue cards, we
have a couple of comments. Gentlemen in the back you
haven't said anything yet. Keep your comments brief,
please. If you could complete a blue card before you
leave, so we have you for our records.
MR. JOHN ELEK: I just have a couple of
comments. Unfortunately, I think we all have a
problem with budgeting money. I am a senior citizen,
I may not look that way but I am and I am having a
problem with making ends meet. I don't see the
government changing anything or doing anything to help
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because they don't have any money either. We don't 1
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have any money. You know, nobody is going to raise my
social security 60 something percent, so I have a
problem with this whole issue. I understand that
things are going up, I understand that rate increases
are normal but when you look at MSD, you look at the
electricity, you look at Laclede Gas, you look at all
utilities, everybody wants to raise their rates.
Somewhere, somehow, this is going to have to stop.
Because the people who are older and the people who
are younger, the people who are trying to raise
families, they're not going to have this money, so
somewhere, somehow, somebody is going to have to take
a close look at this and see what can be done to
mitigate these increases. There is no way that this
can continue down the road for 10, 20, 30 years
because it is not going to happen, people can't pay
their bills now. Now my situation is somewhat unique
but the issue that I have is not going to go away. I
have to budget very closely every month. Somewhere or
another there is not 61 percent or whatever it is left
in my budget, so I don't know what I am going to do.
But I have a home in South St. Louis it is very, very
close to Oak Hill and Utah, I see some really unique
examples of MSD construction. They have been
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constructing in the same area for almost six to eight 1
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months now. They haven't gotten anywhere, it is just
more and more and more. And I go down to my house
down there and I see people standing around, two
people working and three or four people standing
around. I find that amazing. And I am sorry but all
I have is a complaint, I don't have anything good to
say. I just think somebody needs to take a look at
these rates and I will leave with one other statement.
In retail, there is an idea of beat yesterday. If I
sold a $100 yesterday, I am supposed to sell $110
tomorrow, you extrapolate that out and pretty soon it
becomes an unattainable goal. That is what we are
looking at right now, an unattainable goal. That is
all I have to say.
MR. KOENEN: Sir, can you give us your name?
MR. JOHN ELEK: John Elek.
MR. KOENEN: Thank you. And please fill out
a blue card. And ma'am in the back?
MR. VERLENE MULLEN: Yeah, I just wanted to
--
MR. KOENEN: Can you wait for the
microphone, so we can get it the on the record. And
can you repeat your name, please?
MR. VERLENE MULLEN: Verlene Mullen. The
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question I have is you say you advertise in the Post 1
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Dispatch on such and such date, such and such date,
most people don't even buy the Post Dispatch any more.
You know, the only way I heard about it was on the
five o'clock news. And I got up, put my shoes on and
came out here. If I don't hear it on the news or if
it is not -- I'm sorry, people are not reading the
papers anymore, they're going to their internet, if
they have internet. I have internet but I don't read
the paper on the internet. I do watch the news and if
it's advertised on the new or advertised in
advertisement because I know you spend money for
advertisement for MSD, put it up there that you have
got these town hall meetings, so that more people will
be alerted to it, so that more people could come. And
that is my comment for now.
MR. THEERMAN: We have advertised these
public meetings substantially more than any other time
in our history. We have done it on the radio, we have
done it in the newspapers and a broad variety of
newspapers and we have done it with billboards like
what is sitting out here in front of the building.
Every interstate highway in St. Louis has a billboard
on it about these public hearings, so it is
substantially more. And I understand what you're
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saying about not reading the paper but specifically, 1
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we are required by charter to advertise in a paper of
general circulation. And the only paper that fits
that definition is the Post Dispatch.
MR. VERLENE MULLEN: I mean, I am not really
trying be funny but I don't listen to the radio that
often, I don't drive the highways that much because I
can't afford the gas to be absolutely honest about it,
so the way, like I said, I heard it on the news today.
And I made myself get up and come out here and let you
people know I am not happy with the situation and that
is, you know, what word did you use today, we can try
to bring St. Louis people into our work force. The
word can doesn't satisfy me I want to hear you say we
will.
MR. THEERMAN: All right. We will.
MR. VERLENE MULLEN: Thank you.
MR. KOENEN: Folks, that is going to
conclude our hearing, unless we have any comments from
any of the Rate Commissioners. Thank you all for
coming. If you have any questions the MSD staff will
be around for a few minutes. Our next hearing will be
this Wednesday evening at 6:00 p.m. at the Herbert
Hoover Boys' Club on North Grand in St. Louis. There
will be a meeting on September 26th, at the MSD
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office, basically at Jefferson and Market in St. 1
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Louis. Thank you all for coming and please have a
safe drive home.
(Hearing concluded at 8:09 p.m.)
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CERTIFICATE OF REPORTER
I, Suzanne M. Zes, Certified Court Reporter,
Notary Public within and for the State of Missouri, do
hereby certify that the witness whose testimony
appears in the foregoing deposition was duly sworn by
me; the testimony of said witness was taken by me to
the best of my ability and thereafter reduced to
typewriting under my direction; that I am neither
counsel for, related to, nor employed by any of the
parties to the action in which this deposition was
taken, and further that I am not a relative or
employee of any attorney or counsel employed by the
parties thereto, nor financially or otherwise
interested in the outcome of the action.
______________________________
Certified Court Reporter