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HomeMy Public PortalAboutExhibit MIEC 95 - Request By Intervenor MIEC to Seek Modification of the Procedural Schedule and to Stay Current ProceedingsExhibit MIEC 95 Wastewater and Stormwater Rate Change Proceeding — 2015 MIEC Proposal to Revise Procedural Schedule Trustees that the 120 days be extended by an additional forty-five (45) day period. Historically, in other rate cases, the Rate Commission has recommended and the Board of Trustees has approved similar intervenor requests for a forty-five day extension. Metropolitan St. Louis Sewer District ("MSD") submitted the Rate Change Notice on February 26, 2015. Without the 45 day extension, the Rate Commission will need to submit the Rate Commission Report to the Board of Trustees on June 26, 2015. If the additional 45 days is included in the schedule, the Rate Commission will need to submit the Rate Commission Report to the Board of Trustees on August 10, 2015. In preparing this document, MIEC has carefully reviewed the Charter, the Procedural Schedule of the Rate Commission of the Metropolitan St. Louis Sewer District for Consideration of a Wastewater Rate Change Notice ("Procedural Schedule"), and the Operational Rules, Regulations, and Procedures of the Rate Commission of the Metropolitan St. Louis Sewer District ("Operational Rules"). To the best of MIEC's knowledge, the following proposed schedule adheres to the regulations and provisions outlined in the Charter, the Procedural Schedule, and the Operational Rules. Ultimately, the goal of this proposed schedule is to provide all parties with additional time to better understand the issues in this rate case and hopefully reach agreement on some of the outstanding issues. II. Summary of the Proposed Revisions to the Schedule The schedule proposed by MIEC is as follows: 2 Wastewater and Stormwater Rate Change Proceeding — 2015 MIEC Proposal to Revise Procedural Schedule Event Current Scheduled Date Proposed Scheduled Date Rebuttal Testimony Due April 17, 2015 May 11, 2015 Rebuttal Technical Conference Apri129, 2015 — May 1, 2015 May 20, 2015 — May 22, 2015 Public Hearings May 12, 13, 16, 19, 20 and 27, 2015 June 9, 2015 No change proposed other than one public hearing must be changed to be held after June 26, 2015 Surrebuttal Testimony Due May 8, 2015 June 3, 2015 Surrebuttal Technical Conference May 20, 2105 — May 22, 2015 June 17, 2015 — June 19, 2015 Prehearing Conference May 29, 2015 June 26, 2015 Prehearing Conference Reports Due June 5, 2015 July 3, 2015 Rate Commission Report Due June 26, 2015 August 10, 2015 The proposed schedule is designed to build -in additional time for all parties (the Rate Commission, MSD, and the Intervenors) to have a full and fair opportunity to evaluate testimony and engage in necessary discovery. The proposed schedule also enables the Rate Commission to take more time to deliberate and/or draft the Rate Commission Report. With respect to the key changes proposed to the original schedule, MIEC states as follows. 1. Submission of Rebuttal Testimony. As discussed in more detail in Section III below, due to the magnitude of the rate proposal, the extensive capital program, consideration of consent decree implementation needs, and many other issues, it is imperative that the Parties be allowed the additional time to review and evaluate MSD's testimony. By allowing more time between the Technical Conference and the submission of the Rebuttal Testimony, the parties will be able to engage in essential discovery, which, in turn, will focus and potentially resolve some 3 Wastewater and Stormwater Rate Change Proceeding — 2015 MIEC Proposal to Revise Procedural Schedule of the issues in this rate case. Therefore, the proposed schedule extends the time period from April 17, 2015 (or the date the rebuttal testimony was originally due) to May 8, 2015. 2. Technical Conference for Rebuttal Testimony. By extending the deadline for the submission of rebuttal testimony, the technical conference for the rebuttal testimony must also be shifted. The Rate Commission was already planning on meeting from May 20 through 22, 2015, for the surrebuttal technical conference. The proposed schedule recommends that the Rate Commissioners conduct the rebuttal technical conference (and not the surrebuttal technical conference) on those same dates. 3. Public Hearings. Public hearings are already scheduled for May 12, 13, 16, 19 and 20. If the proposed schedule is adopted, these four public hearings are scheduled to occur before the surrebuttal testimony technical conference. Having public hearings earlier in the rate case can only be beneficial; all of the parties will be able to better understand what issues are concerning the public before the last technical conference. Moreover, since the hearings have already been scheduled, MIEC recommends conducting these hearings on these dates. Operational Rule 3(10) requires that at least one public hearing be held after the prehearing conference. Accordingly, if the proposed schedule is adopted, at least one hearing would need to be moved, or an additional hearing added, after June 26, 2015.1 4. Submission of Surrebuttal Testimony. For the same reasons discussed in Section III below, the proposal includes five (5) additional days after the technical conference for rebuttal testimony concludes and surrebuttal testimony has to be submitted. This provides all 1 Per Section 7.280(d) of the Charter, the Rate Commission will need to publish notice of the public hearing on three separate days in one or more newspapers of general circulation in the District at least five business days prior to the date set for the public hearing. If the revised procedural schedule is adopted, MIEC anticipates there should be no procedural problem with MSD fulfilling these publication requirements that need to be met in June of 2015. 4 Wastewater and Stormwater Rate Change Proceeding — 2015 MIEC Proposal to Revise Procedural Schedule parties with critically needed time to finalize testimony and continue responding to discovery, as needed. 5. Technical Conference for Surrebuttal Testimony. The technical conference for the surrebuttal testimony will begin on June 17 if the schedule is adopted. 6. Prehearing Conference and Filing of Prehearing Conference Reports. These dates are simply shifted back in the calendar by a few weeks from the original schedule. 7. Additional Time for the Rate Commission to Deliberate. The remaining extra days are inserted at the end of the process to allow the Rate Commission to evaluate the issues, confer, and/or draft the Rate Commission Report. MIEC anticipates that all parties will see the benefit of giving the Rate Commission additional time to meet. 8. Issue Rate Commission Report. If the additional 45 days is included in the procedural schedule, the Rate Commission will need to submit the Rate Commission Report to the Board of Trustees on August 10, 2015, or one hundred and sixty-five (165) days from the date that MSDsubmitted the Rate Change Notice. III. Rationale for Proposed Additional Time to Evaluate the Testimony Below please find a brief summary of some of the technical and procedural reasons as to why the schedule should be extended to include additional time for the parties to both file technical testimony and submit and respond to discovery: 1. Magnitude of the Proposal. MSD is proposing an increase in wastewater revenues of approximately $144 million to take place over a four-year period, and an increase in stormwater revenue of approximately $91 million to take place over a four-year period. Additionally, the wastewater increase assumes passage of an approximately $900 million bond issue, without which wastewater revenues will increase to approximately $400 million. The 5 Wastewater and Stormwater Rate Change Proceeding — 2015 MIEC Proposal to Revise Procedural Schedule details of this significant increase must be reviewed closely by all parties, including the Rate Commission, to protect the public in setting MSD wastewater rates. 2. Brevity of the Current Schedule. The current 120 day schedule is inadequate to allow for sufficient conduct of discovery and analysis of materials disclosed in discovery prior to preparing and presenting rebuttal and surrebuttal testimony. The short time period between the Technical Conference and the due date for Rebuttal testimony highlights this point. The Technical Conference began on April 8, and rebuttal testimony is due on April 17. This gives the Rate Commission and Intervenors little more than a week to analyze and incorporate MSD testimony into rebuttal testimony, and even less time if one considers that Technical Conference transcripts are not available for some time after the Technical Conference. The brevity of this time period is further highlighted by the fact that should issues be raised in the Technical Conference on which a party desires to seek discovery, the ten-day time period for responding to discovery requests means that discovery responses on Technical Conference testimony is not required to be submitted until after Rebuttal Testimony is due. Meanwhile, during this time period (and including in the days leading up to the Technical Conference and Rebuttal Testimony due date), the record is continually being supplemented with MSD's responses to discovery requests, which supplements must then be analyzed and incorporated into written testimony. While MIEC appreciates the significant effort that MSD puts into responding to discovery requests in a timely manner, the fact of the matter is that MSD has been working on the Rate Proposal and support therefor for many months, during which time it had access to the documents and data that the Rate Commission and Intervenors are only now receiving in the recent days or weeks. Given the magnitude of the proposal and information that 6 Wastewater and Stormwater Rate Change Proceeding — 2015 MIEC Proposal to Revise Procedural Schedule must be absorbed and analyzed, extending the schedule consistent with this proposal is a reasonable and prudent measure. 3. Differences from Previous Rate Proposals. The MSD filing in this case reflects a material increase in the annual capital program. This increase capital spending represents most of the request for an material increase in wastewater and storm water rates. MIEC needs time to review the budgeted capital expenditure versus MSD schedule to comply with the Consent Decree, and to review MSD's proposed funding plan for reasonableness. MSD has also made rather pessimistic projections for customers and sales losses, and expense inflation that needs to be thoroughly investigated. The increase in rates is about 10.75% per year over the four year rate period. This material increase in wastewater rates will have a measureable economic impact on customers of the MSD. To protect customers, the process should allow adequate time to review the legitimacy and reasonableness of the Rate Proposal. 4. Consent Decree with EPA. The District has indicated that the Consent Decree with EPA is the driving force behind the vast majority of the wastewater projects to be conducted with revenue raised by the Rate Proposal. This is essentially the first opportunity for the Rate Commission and Intervenors to fully and fairly review the Sanitary Sewer Overflow Control Master Plan (which was not finalized until well after the last Rate Proceeding) and Combined Sewer Overflow Long -Term Control Plan, which together serve as the plan for the capital improvement program supported by the Rate Proposal, and compare them to the revenue and capital expenditure forecasts contained in the Rate Proposal. Because of the importance of Consent Decree compliance, interested parties should be afforded the opportunity to help ensure the adequacy of MSD's proposed program. 7 Wastewater and Stormwater Rate Change Proceeding — 2015 MIEC Proposal to Revise Procedural Schedule 5. Necessary Review of Improvements and Expenses. All parties need the time to conduct a full and fair review of the capital program, the timing, and the funding mechanisms needed to take place in the rate proposal. This review includes a consideration of whether resources are available to appropriately manage the increased capital spending. This review also includes consideration of the Consent Decree's mandated capital improvements, normal recurring improvements, and non -Consent Decree major improvements. Annual recurring operations and maintenance expenses and non -Consent Decree capital programs must be reviewed to determine whether appropriate and reasonable actions have been taken to mitigate the impact on its wastewater and stormwater rates. MIEC believes that the proposed schedule will promote the public interest by allowing a full and fair review of the Rate Proposal. The proposed schedule will also facilitate potential resolution of the issues by allowing the parties to engage in meaningful discussions, discovery exchanges, and negotiations. It is in the interest of all parties to ensure that the procedural schedule in this case provides sufficient time for the Rate Commission to make a reasonable, appropriate, and fair determination regarding the 2015 Rate Proposal. For the foregoing reasons, MIEC requests that the Rate Commission (a) request from the Metropolitan St. Louis Sewer District Board of Trustees (the "Board") a modification from the current rate proceeding schedule to the proposed rate proceeding schedule, and (b) stay the current proceeding until such time as the. Board has .ruled on such request. 8 Wastewater and Stormwater Rate Change Proceeding — 2015 MIEC Proposal to Revise Procedural Schedule Respectfully submitted, BRYA AVE LLP By:.31 Dina M. Vuylsteke, #42419 Brandon W. Neuschafer, #53232 211 N. Broadway, Suite 3600 St. Louis, Missouri 63102 Telephone: (314) 259-2543 (Diana) Telephone: (314) 259-2317 (Brandon) Facsimile: (314) 259-2020 dmvuylsteke@bryancave.com bwneuschafer@bryancave.com ATTORNEYS FOR MIEC Dated: April 10, 2015 Wastewater and Stormwater Rate Change Proceeding - 2015 CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing was sent by electronic transmission to the following on this loth day of April, 2015. Ms. Janice Fenton Office Associate Senior Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103 jfenton@stlmsd.com Ms. Susan Myers General Counsel Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103 smyers@stlmsd.com Mr. John Fox Arnold Lashly & Baer, P.C. 714 Locust Street St. Louis, MO 63101 jfarnold@lashlybaer.com Ms. Lisa O. Stump Lashly & Baer, P.C. 714 Locust Street St. Louis, MO 63101 lostump@lashlybaer.com Mr. Brad Goss Smith Amundsen, LLC 120 South Central Avenue, Suite 700 St. Louis, MO 63105-1794 bgoss@salawus.com 10