HomeMy Public PortalAboutExhibit MSD 134 - Transcript of June 26, 2015 Prehearing Conference (revised) PRE-HEARING CONFERENCE 6/26/2015
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6 THE METROPOLITAN ST. LOUIS SEWER DISTRICT
7 CAPITAL IMPROVEMENT & REPLACEMENT PROGRAM
8 PRE-HEARING CONFERENCE
9 JUNE 26, 2015
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1 I N D E X
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1 A P P E A R A N C E S
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Commissioners:
3 Steven Chodes
George Tomazi
4 Mark Schoedel
Mike O'Connell, III
5 Russell Hawes
Leonard Toenjes
6 Eric Schneider
John L. Stein
7 Nancy Bowser
Paul Brockmann
8 Chan Mahanta
Steve Mahfood
9 Kennard Jones
10 Representing Metropolitan Sewer District:
11 Susan Myers
12 Representing Rate Commission:
13 John Fox Arnold
Lisa O. Stump
14 Lashly & Baer
714 Locust Street
15 St. Louis, MO 63101
16 Representing Missouri Industrial Energy
Consumers (MIEC):
17 Brandon Neuschafer
Bryan Cave, LLP
18 One Metropolitan Square
St. Louis, MO 63102
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Representing Homebuilders' Association:
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Brad Goss
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Court Reporter:
22 Jeanne M. Pedrotty, CCR/CSR
Missouri CCR #618
23 Illinois CSR #084-003893
Midwest Litigation Services
24 711 North Eleventh Street
St. Louis, Missouri 63101
25 (314) 644-2191
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1 (Starting time of the hearing: 7:57)
2 MR. TOENJES: Let's go ahead and call the
3 meeting to order for the Metropolitan St. Louis Sewer
4 District Rate Commission. Let's start with the role
5 call, Mr. Schneider. Just a roll call of who is
6 present.
7 MR. SCHNEIDER: Ms. Bowser? Mr. Brockmann?
8 MR. BROCKMANN: Here.
9 MR. SCHNEIDER: Mr. Hawes.
10 MR. HAWES: Here.
11 MR. SCHNEIDER: Mr. Chodes?
12 MR. CHODES: Here.
13 MR. SCHNEIDER: Ms. Kelling? Mr. Stein?
14 MR. STEIN: Present.
15 MR. SCHNEIDER: Mr. Schneider, present.
16 Mr. Toenjes?
17 MR. TOENJES: Present.
18 MR. SCHNEIDER: Mr. Tomazi?
19 MR. TOMAZI: Here.
20 MR. SCHNEIDER: Mr. O'Connell?
21 MR. O'CONNELL: Here.
22 MR. SCHNEIDER: Mr. Schoedel? Mr. Jones?
23 MR. JONES: Here.
24 MR. SCHNEIDER: Mr. Mahfood? Mr. Williams?
25 Mr. Mahanta? We have a quorum.
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1 MR. TOENJES: Thank you, Mr. Schneider.
2 The Chair would entertain a motion to go into closed
3 session to discussion legal matters pursuant to
4 Missouri Revised Statute number 621.021 (1).
5 UNIDENTIFIED SPEAKER: So moved.
6 UNIDENTIFIED SPEAKER: Second.
7 MR. TOENJES: Any discussion on the motion?
8 I'd like to take a roll call vote.
9 MR. SCHNEIDER: Ms. Bowser? Mr. Brockmann?
10 MR. BROCKMANN: Yes.
11 MR. SCHNEIDER: Mr. Hawes?
12 MR. HAWES: Yes.
13 MR. SCHNEIDER: Mr. Chodes?
14 MR. CHODES: Yes.
15 MR. SCHNEIDER: Mr. Stein?
16 MR. STEIN: Yes.
17 MR. SCHNEIDER: Mr. Schneider, yes. Mr.
18 Toenjes?
19 MR. TOENJES: Yes.
20 MR. SCHNEIDER: Mr. Tomazi?
21 MR. TOMAZI: Yes.
22 MR. SCHNEIDER: Mr. O'Connell.
23 MR. O'CONNELL: Yes.
24 MR. SCHNEIDER: Mr. Jones.
25 MR. JONES: Yes.
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1 MR. TOENJES: Okay. We will now go into
2 closed session.
3 (Whereupon, closed session was entered at
4 8:01.)
5 MR. TOENJES: Good morning. My name is
6 Leonard Toenjes, and I am the Chairman of the Rate
7 Commission of Metropolitan St. Louis Sewer District
8 and I will serve as Chair of this proceeding. I would
9 like for each rate commissioner to announce their name
10 as being present, starting at my far left.
11 MR. CHODES: Steve Chodes.
12 MR. JONES: Kennard Jones.
13 MR. STEIN: John Stein.
14 MR. TOMAZI: George Tomazi.
15 MR. HAWES: Russ Hawes.
16 MR. SCHNEIDER: Eric Schneider.
17 MR. BROCKMANN: Paul Brockmann.
18 MS. BOWSER: Nancy Bowser.
19 MR. MAHANTA: Chan Mahanta.
20 MR. MAHFOOD: Steve Mahfood.
21 MR. TOENJES: Thank you. These are all
22 delegates of the Rate Commission. The charter plan of
23 the District was approved by the voters of St. Louis
24 City and St. Louis County at a special election on
25 February 9th, 1954, and amended at a general election
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1 on November 7th, 2000. The amendment to the charter
2 plan established the Rate Commission to review and
3 make recommendations to the District regarding changes
4 in waste water rates, storm water rates, and tax rates
5 proposed by the District. Upon receipt of a rate
6 change notice from the District, the Rate Commission
7 is to recommend to the Board of Trustees changes in
8 waste water, storm water, or tax rate necessary to
9 one, pay interest and principal falling due on bonds
10 issued to financed assets of the District. Two, the
11 cost of operation and maintenance. And three, such
12 amounts as may be required to cover emergencies and
13 anticipated delinquencies.
14 Further, any change in a rate recommended
15 to the Board of Trustees by the Rate Commission is to
16 be accompanied by a statement that the proposed rate
17 change, one, is consistent with constitutional,
18 statutory, or common law as amended from time to time.
19 Two, enhance the District's ability to provide
20 adequate sewer and drainage systems in facilities or
21 related services. Three, is consistent with and not
22 in violation of any covenant or provision relating to
23 any outstanding bonds or indebtedness of the District.
24 Four, does not impair the ability of the District to
25 comply with the applicable federal and state laws or
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1 regulations as amended from time to time. And five,
2 impose as fair and reasonable burden on all classes of
3 rate payers.
4 The Rate Commission received a rate change
5 notice from the District on February 26th, 2015. Under
6 the procedural schedule adopted by the Rate
7 Commission, any person affected by the rate change
8 proposal had an opportunity to submit an application
9 to intervene in these proceedings. Applications to
10 intervene have been filed by the Home Builders
11 Association of St. Louis and Eastern Missouri and
12 Missouri Industrial Energy Consumers. These
13 applications have been granted. The Rate Commission
14 originally had until June 26, 2015, to issue its
15 report on the proposed rate change notice to the Board
16 of Trustees of the District. The Rate Commission
17 requested an additional 45 days to issue its report.
18 And on May 14th, 2015, the District's Board of
19 Trustees granted the Rate Commission's request. The
20 Rate Commission must now issue its report on or before
21 August 10th, 2015.
22 Since February 26, 2015, the MSD Rate
23 Commission has received testimony from MSD staff, the
24 interveners, and the rate consultants. The parties
25 have also engaged in discovery requests. Technical
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1 conferences were held on April 8th, 2015, May 20th,
2 2015, and June 17th, 2015, where the participants and
3 Rate Commission were given an opportunity to ask
4 questions of those submitting testimony. The charter
5 plan of the Metropolitan St. Louis Sewer District and
6 operational rules and procedural schedule of Rate
7 Commission of the Metropolitan St. Louis Sewer
8 District provides for pre-hearing conference to
9 identify, define, resolve, or settle the issues raised
10 by the prepared testimony, and to ensure orderly and
11 expeditious proceeding. Each intervener may
12 participate in the pre-hearing conference conducted on
13 the record to permit counsel for the District, each of
14 the interveners, and the Rate Commission to briefly
15 describe the participant's position, if any, on each
16 of the criteria and factors identified in the charter
17 plan.
18 In the event participants are able to
19 resolve or settle any issue or issues raised in the
20 prepared testimony, such participants shall also
21 include as part of the pre-hearing conference report,
22 a joint recommendation describing each such issue, the
23 recommended resolution of the issue, and the rationale
24 therefore. The Rate Commission is interested in the
25 views of the participants on the extent to which the
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1 District's rate change proposal and any alternative
2 proposed by the participants meets or fails to meet
3 the criteria or factors for recommendations contained
4 in the charter plan.
5 To that end, and without requiring any
6 participant to act in a particular manner, each
7 participant is requested to make an oral presentation
8 of the participants respective position. The parties
9 may also submit a short written summary of the
10 presentation, if desired. The Commission's procedural
11 schedule as amended provides that each participant in
12 the pre-hearing conference shall submit on or before
13 July 8th, 2015, a pre-hearing conference report
14 describing the issues raised by the prepared testimony
15 together with a brief description of such
16 participant's position, if any, on each issue and the
17 rationale therefore.
18 The Rate Commission has established a
19 public hearing session for the participants to be held
20 on July 10th, 2015 at nine a.m. at the District's
21 offices. The purpose of this public hearing session
22 will include, number one, permitting rate payers to
23 testify. Number two, receiving into evidence any
24 prepared testimony submitted to the Commission subject
25 to any valid objections together with discovery
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1 requests -- I'm sorry -- together with discovery
2 responses and transcripts of the technical
3 conferences. Number three, permitting the Commission
4 members to ask questions regarding any issues
5 addressed by the prepared testimony or any other
6 elements of the proposed rate change. And four,
7 permitting closing statement by the District, the
8 interveners, and legal counsel of the Rate Commission.
9 In preparation for the July 10, 2015 hearing, the
10 District will distribute a current list of exhibits to
11 all parties by July 8th, 2015.
12 Are there any procedural matters at this
13 time, Mr. Arnold?
14 MR. ARNOLD: Mr. Chairman and members of
15 the Commission, I'm very embarrassed. When we were
16 last together, we spoke about the date by which
17 additional materials should be filed. And I very
18 carefully wrote down Wednesday. I was incorrect. The
19 date on which things should have been filed was
20 Monday. Nevertheless, on Wednesday, without knowing
21 my error, I filed with the District three exhibits;
22 some materials from the U.S. Census Bureau in the city
23 and county of St. Louis and Mr. Stannard's testimony
24 in the 2011 proceeding. Ms. Myers very generously
25 directed them to assign exhibit numbers and they are
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1 now contained in the exhibit list. But with
2 apologies, and unless there is an objection, I request
3 that they be considered part of the record.
4 MR. TOENJES: Are there any objections from
5 the District.
6 MS. MYERS: No, there is not.
7 MR. TOENJES: Any objection from
8 interveners?
9 MR. NEUSCHAFER: No.
10 MR. GOSS: No.
11 MR. ARNOLD: Thank you, Mr. Chairman.
12 MR. TOENJES: Don't let it happen again.
13 There being no further procedural matters, Ms. Myers,
14 would you like to address the Rate Commission on
15 behalf of the District?
16 MS. MYERS: I would. Thank you.
17 MR. TOENJES: Please proceed.
18 MS. MYERS: Tim is going to hand out a copy
19 of my statement that I'm going to make. I'll give him
20 a chance to do that and I'll get started.
21 Good morning. My name is Susan Myers, and
22 I am the general counsel for the Metropolitan St.
23 Louis Sewer District. I will provide the District a
24 summary statement regarding proceedings to date. The
25 District's rate change proposal submitted on February
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1 26th, 2015, complies with all the required criteria
2 contained in section 7.270 of the MSD charter. This
3 has previously been demonstrated by testimony of the
4 District's witnesses and exhibits. There seems to be
5 little or no disagreement regarding criteria one
6 through four for both the storm water rate change and
7 the waste water rate change proposal. With that in
8 mind, I will address those criteria briefly and then
9 discuss criteria five in more detail.
10 Section 7.270 paragraph one of the charter
11 requires the proposed rate change to be consistent
12 with constitutional, statutory, or common law as
13 amended from time to time. The proposed storm water
14 rate change complies with this criterion and will be
15 taken to the voters to be voted on in FY2016. The
16 proposed waste water rate change complies with this
17 criterion and will follow the methodology approved by
18 the Missouri courts and procedures outlined in the MSD
19 charter. Section 7.270 paragraph two of the charter
20 states, "Will the proposed rate change enhance the
21 District's ability to provide adequate sewer and drain
22 and system and facility or related services?" Based
23 on the rate change proposal submitted by the District
24 and witness testimony, the answer to this question is
25 yes.
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1 The main driver for MSD's rate proposal for
2 storm water is to provide a funding source via ten
3 cent ad valorem property tax for operation and
4 maintenance of public storm water system
5 district-wide. Any minimal funds that may be
6 available after accounting for O and M of the public
7 storm water system district-wide will be used for
8 capital projects to address storm water problems not
9 involving the infrastructure. Such as storm water
10 flooding or erosion. MSD's rate change proposal for
11 waste water is to provide a funding source financed
12 with a combination of cash financing and debt to
13 support the capital improvement and replacement
14 program, which will move the District's waste water
15 system towards environmental compliance. Section
16 7.270 paragraph three of the charter states, "Is the
17 proposed rate change consistent with and not in
18 violation of any covenant or provision relating to any
19 outstanding bonds or indebtedness of the District?"
20 The answer is "Yes."
21 Regarding the rate change proposal for
22 storm water, the district is not proposing the use of
23 bonds or other indebtedness. Therefore, the proposed
24 rate change will not violate any covenants or
25 provisions of the existing bonds or indebtedness. The
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1 rate change proposal for waste water is consistent
2 with all outstanding bonds and indebtedness and will
3 not cause the District to violate any of those
4 provisions or covenants. Section 7.270 paragraph four
5 states, "The proposed the rate change must not impair
6 the ability of the District to comply with applicable
7 federal or state laws or regulations as amended from
8 time to time." The District's rate change proposal
9 for both storm water and waste water will not impair,
10 but rather will support the District's ability to
11 comply with federal and state laws and regulations.
12 The rate change proposal for waste water specifically
13 provides for the ability for the District to meet the
14 requirement outlined in the consent decree. The hot
15 topic during these rate proceedings has been does
16 MSD's rate change impose a fair and reasonable burden
17 on all classes of rate payers. MSD has determined
18 that it does. In section 7.270 paragraph five of the
19 charter, it states, "Does the proposed rate change
20 impose a fair and reasonable burden on all classes of
21 rate payers?" In my discussion below, I will address
22 how MSD's storm water rate change proposal meets the
23 criteria of this section, the disagreement between the
24 parties and MSD's position regarding the storm water
25 funding structure being proposed. Then I will discuss
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1 how MSD's waste water rate change proposal meets
2 section 7.270 paragraph five of the charter.
3 As discussed in Brian Hoelscher's and
4 William Stannard's testimony, numerous discovery
5 responses, and supplemental information provided by
6 the District, the District has shown that the proposed
7 rate change consisting of a District-wide ten cent ad
8 valorem property tax to be used for operation and
9 maintenance of the public storm water system imposes a
10 fair and reasonable burden on all classes of rate
11 payers. Because of the proposal being made by some of
12 the interveners involved in this case, the discussion
13 of fair and reasonable has not centered on just
14 whether MSD's proposal is fair and reasonable as MSD
15 feels it has proven, but invariably has resulted in a
16 comparison between MSD's storm water proposal of ten
17 cent ad valorem property tax and the use of a voted on
18 impervious fee. MSD feels that discussion is
19 important in deciding what is fair and reasonable.
20 Specifically for the rate change proposal for storm
21 water, MSD believes that the use of a voted on
22 impervious fee would result in up to a 40 percent
23 increase in cost to MSD customers for the same level
24 of service and fewer customers participating in the
25 funding of the program due to current statutes and
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1 possible future state legislation when compared to the
2 propose ten cent ad valorem tax for the same level of
3 services. This was for the District and should be for
4 the Rate Commission an important consideration in
5 determining a fair and reasonable burden. It appears
6 from the testimony and information provided during
7 these proceedings that there is a lack of
8 understanding of the proposal placed before the Rate
9 Commission for consideration.
10 Using the following information for
11 illustration purposes, MSD believes that the best
12 method to clear up any misunderstanding is to, again,
13 address each of the four statements made in both of
14 the supplemental supporting evidence provided with
15 Exhibit HBA 124 and the memorandum of considerations
16 filed as HBA Exhibit 124C. In statement number one,
17 the HBA states, "Reductions in runoff volume reduce
18 the amount of runoff requiring treatment." This is
19 not accurate. MSD does not currently treat storm
20 water runoff as part of our operation and maintenance
21 the public storm water system responsibility.
22 Therefore, we do not incur any cost for that activity.
23 By allowing a credit for this reason, cost for the
24 operation and maintenance of the public storm water
25 system would simply require other customers to pay the
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1 difference with no change in operational cost to the
2 District.
3 In statement number two, the HBA states
4 that, "Increases in the quality of runoff allow the
5 District to more easily meet water quality standard
6 requirements." This is an accurate statement,
7 although, the rate proposal being considered by the
8 Rate Commission is only for operation and maintenance
9 of the public storm water system. Water quality issue
10 related to the storm water program are currently fully
11 funded by an existing two cent ad valorem property
12 tax. No proposed change in the rate or structure of
13 this two cent tax is being considered, and, therefore,
14 has not been presented to the Rate Commission for
15 consideration.
16 In statement three, the HBA states that,
17 "Reducing the need for drainage infrastructure by
18 reducing the cost to the District." This statement
19 seems to imply that a reduction in storm water
20 involving a reduction cost for O and M of public storm
21 water system because MSD's public storm water system
22 works almost exclusively on gravity and because MSD
23 does not treat storm water, reduction in flow does not
24 reduce the District's cost to operate and maintain the
25 infrastructure. Developers are required to provide
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1 detention as part of their development to ensure that
2 they do not increase peak flows above existing
3 conditions to protect downstream property and streams.
4 They are also required to install best management
5 practices to mitigate the pollutant load caused by
6 these developments. However, again, allowing a credit
7 when there is no change in cost to the District for
8 the operation and maintenance of the public storm
9 water system would just transfer cost to other
10 customers with no change in operational cost to the
11 District.
12 In statement number four, the HBA claims
13 that the District could benefit from potentially
14 increasing tax revenues by encouraging best management
15 practice that in turn increase property values. MSD
16 has seen no evidence that this is the case. We have
17 experienced instances where property owners find green
18 infrastructure a plus and other occasions where
19 property owners find green infrastructure a detriment
20 to their property.
21 After a lengthy court battle over the
22 impervious storm water fee implemented in 2008, the
23 District is faced with an immediate need of getting a
24 storm water funding source in place. Upon evaluation
25 of the current funding source, it was determined that
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1 the regulatory requirement or water quality issue
2 related to the storm water program are currently fully
3 funded by the existing two cent ad valorem property
4 tax. And capital work can continue in those areas of
5 the District that currently have OMCI funds. So the
6 operation and maintenance of the infrastructure
7 District-wide is what needs immediate funding.
8 Therefore, the rate change proposal for storm water
9 before you today is primarily for the operation and
10 maintenance of the public storm water system
11 District-wide.
12 During these proceedings there has been a
13 lot of confusion about why the District did not
14 propose an impervious fee similar to that implemented
15 in 2008, and why we did not propose a storm water
16 credit like we did in 2008. To try and clarify, I
17 will simply reiterate what has been provided many
18 times before in these proceedings. The storm water
19 tax being proposed is for operation and maintenance of
20 the infrastructure. The previous impervious fee was
21 funding for all storm water services which included
22 operation and maintenance, capital work, and
23 regulatory requirement. As stated previously, the
24 regulatory requirements for water quality issues
25 related to storm water programs are currently fully
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1 funded by the existing two cent ad valorem property
2 tax, which at this time we are not proposing to
3 change. Capital work in certain areas of the District
4 will be funded with remaining OMCI funds. If in the
5 future there are additional regulatory requirements
6 placed on the District or our customers decide they
7 want to fund additional capital work District-wide,
8 then we will come back to the Rate Commission with a
9 proposal to meet those needs, but for now we are
10 proposing to fund operation and maintenance of the
11 infrastructure District-wide with an ad valorem tax.
12 When funding operation and maintenance there
13 is no equitable reason to apply a credit program. If
14 we did, it would simply cause our customers to pay the
15 difference for those receiving a credit with no
16 reduction in the operation and maintenance cost of the
17 public storm water system. For the proposed waste
18 water rate change, the District has shown that the
19 proposed rate change imposes fair and reasonable
20 burden on all classes of rate payers. MSD has
21 retained the same general methodology used in the
22 past. This rate structure has been in place since
23 1993 and has been upheld by the Missouri courts and
24 has been approved as fair and equitable in all prior
25 rate recommendation records and Board of Trustees
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1 determinations.
2 During these rate proceedings, there have
3 been disagreements on several issues that affect
4 revenue requirement and cost allegation regarding the
5 proposed waste water rate change. I will summarize
6 the District's position on each of these issues.
7 Issue number one, revenues do tie to rates and cost of
8 service. It is common for utilities to perform cost
9 of service analysis every three to five years to
10 ensure their charges are equitable and apply uniform
11 percentage increases in between those years to meet
12 annual revenue needs. In the same manner, the
13 District's total revenue requirement for the test year
14 of FY2017 as presented in the financial plans, are
15 used to calculate fair and equitable rates according
16 to cost of service principals. The cost of service
17 process ensures that each customer class will be
18 charged an equitable portion of the total system cost.
19 It should be noted that rather than applying a
20 straight, across the board increase to each of the
21 components of the FY2017 rate schedule, as proposed by
22 the interveners, the District recognizes that future
23 years' cost related to compliance and the industrial
24 surcharge program would not increase at the same rate
25 as the overall revenue requirement, which is more
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1 driven by the capital cost associated with financing
2 of the CIRP. Since a compliance charge and extra
3 strength surcharge are primarily related to operation
4 and maintenance expense, the proposed rates for these
5 two facets of the rate schedule have been increased at
6 the same rate as operation and maintenance expense.
7 Issue two, economic assumptions used in the
8 waste water rate analysis. The District had made
9 reasonable assumptions related to the future of
10 economic conditions and markets in the service area.
11 These assumptions were made while relying on existing
12 data, analytical data, and indices to make reasonable
13 predictions, which by the very nature of economic
14 forecast are uncertain. The District's assumptions
15 are supported by data and serve as the foundation
16 which allows the District to meet its known and
17 anticipated needs for the next four years. The
18 assumptions advanced thus far by interveners failed to
19 take into account the risk associated with the present
20 state of the economy and volatility of financial
21 markets.
22 As provided in testimony regarding the
23 interveners' proposed assumptions from the previous
24 rate case, if MSD had adopted these assumptions, it
25 would have underfunded the required CIRP in a broad
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1 view given that no person can precisely predict future
2 economic trends. It is likely that some mixture of
3 conservative and optimistic economic assumptions, as
4 discussed during these proceedings, will represent
5 reality.
6 If in the aggregate, MSD collects revenue
7 in excess of its forecast, the District will move
8 forward and expedite the federal consent decree
9 compliance related work or continue the stated program
10 with reduced use of debt, which would then allow
11 additional debt to be available for other projects in
12 future years. On the other hand, if the assumptions
13 provide to have overstated availability of revenues in
14 the aggregate, the District may have revenue
15 shortfalls leading to inability to meet regulatory
16 requirements and subjecting the District to stipulated
17 penalties, fines, and other possible legal action.
18 Overall, the rate payer is better served if the
19 capital program is slightly over-funded as opposed to
20 underfunded.
21 Economic assumptions; waste hauler
22 revenues. During the previous rate period the
23 District experienced a decrease in hauled waste
24 revenue due to the opening of a private waste hauling
25 station within the St. Louis area and Bridgeton
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1 landfill discharging directly to MSD's collection
2 system. In fiscal year 2013 through fiscal year 2014,
3 Bridgeton landfill hauled waste made up of -- the
4 Bridgeton landfill hauled waste made up approximately
5 30 to 88 percent of MSD hauled waste revenue.
6 Currently, during fiscal year 2015, the Bridgeton
7 landfill has put into place a leachate pre-treatment
8 facility and pumping facility and this pumping flows
9 directly to the District's collection system tributary
10 to the Bissell waste water treatment plant. Taking
11 all of this into account, the District feels its
12 projection for hauled waste revenue is appropriate.
13 Economic assumption utility expense escalator
14 and user volume. The intervener states that MSD's
15 utilities expense annual escalation factor should
16 generally coincide with outlooks by utilities' cost
17 the services they will provide. They state Ameren
18 Missouri projected growth in its cost of service is
19 largely tied to its rate-based investments which
20 Ameren projects to grow at a CAGR of 2.0 percent
21 through 2014 through 2019. However, the three percent
22 utilities expense escalation factor increases every
23 other year as proposed by the interveners' assumes
24 utilities cost will rise even more slowly than Ameren
25 is projecting its rate base to rise.
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1 Data shows that the rates charged by Ameren
2 to MSD have increased by a much more significant
3 amount and average of more than four percent per year
4 or approximately double the rate of growth of Ameren's
5 rate base. There have been six Ameren Missouri rate
6 increases since the beginning of 2007, and the average
7 rate hike has exceeded six percent per occurrence. As
8 indicated in MSD's testimony, one cannot assume one
9 percent decline in sewer volumes would equate to a one
10 percent reduction in electricity usage. There are a
11 number of factors including infiltration and inflow,
12 electricity rate structure, and consent decree project
13 work that impact the relationship between MSD
14 customers' volume and electricity usage. MSD has
15 considered all of these factors when it assumed a
16 utility expense annual escalation factor of 5.5
17 percent. While electricity is the largest utility
18 cost for MSD, we also expect other utility costs will
19 also increase more than projected by the intervener.
20 In conclusion, the District continues to believe that
21 its recommendation of 5.5 percent annual utility
22 expense escalation factor is reasonable.
23 We also believe that the District's
24 proposal is better supported by the outlooks and
25 expectations of the utilities in question than the
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1 alternative proposed by the interveners. Economic
2 assumptions, positive economic forecast versus change
3 in accounts or billed usage. The District does not
4 fine a correlation between positive economic forecast
5 and changes in accounts or billed usage. The
6 interveners are making the same assumption argument in
7 2015 that they made in 2011 regarding a positive
8 economic outlook as a reason to hold customer and
9 sales forecasts constant.
10 The data provided in this rate change
11 proposal makes it clear that customer accounts and
12 volume sales declined from fiscal year 2011 to fiscal
13 year 2014, despite the positive economic outlook. Had
14 the Rate Commission followed the intervener's
15 recommendation in 2011 to keep customer and sales
16 projection at the 2011 level. The District would have
17 secured a $7.3 million greater deficit than what's
18 actually experienced using the District's proposed
19 usage levels. The assumptions made by the District
20 using historical data and other factors from previous
21 rate case have proven to be much more accurate than
22 those recommended by the interveners. It is important
23 to realize that while the number of housing permits
24 increased year over year. In some instances, MSD
25 experienced declines in both the number of customers
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1 and build volumes for those same years. This
2 indicates no direct correlation exists between housing
3 starts and MSD customers and volume movements over
4 that time period.
5 Economic assumption; usage per customer.
6 As part of this rate proposal, the District has
7 provided appropriate assumptions for the future billed
8 volume and water usage. The assumptions are based on
9 two factors first, it is well-documented that
10 national water consumption rates are decreasing. And
11 secondly, water conservation efforts for both
12 residential and nonresidential users is a major factor
13 which contributes to a steady decline in billed volume
14 for water usage at water and waste water utilities
15 nationwide. The Rate Commission should appropriately
16 consider this trend and adopt the assumption provided
17 by the District in its rate change proposal. The
18 intervener claim that MSD is significantly overstating
19 the decline in unmetered waste water volumes and
20 encourage Rate Commission to carefully consider the
21 accuracy of MSD's volume projections. A significant
22 amount of data was developed and was provided by the
23 District in appendix 7.1.3 of the rate change proposal
24 to support our volume projections.
25 The methodology presented provides
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1 evaluation of the per fixture water usage volume
2 figures and results in proposed nine percent decrease
3 in the per fixture water usage volumes. This supports
4 the District's proposal.
5 Economic assumptions, bad debt, and late
6 charge revenues. The interveners recommend that the
7 District reduce forecasted bad debt provision from one
8 and a half percent of user charge to one percent of
9 user charge based upon the District's historical
10 average being one percent. The District's assumption
11 of 1.5 percent is based upon the fact that the
12 District made a one time credit adjustment. The
13 District also recognizes that through more robust
14 collection effort, the bad debt provision as
15 percentage of sewer service charge revenue is trending
16 downward. It is for this reason that the District
17 uses 1.5 percent in the rate modelling calculation
18 rather than a higher historical average. The
19 intervener's assumption is the District's projected
20 related charges should increase in accordance with the
21 increase in projected customer bills. The District's
22 assumption is based upon the general expectation that
23 late charges and bad debt provision as a percentage of
24 sewer service charges will move in the same direction.
25 This will not always hold true. However, it is not
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1 logical to expect the bad debt provision as a
2 percentage of sewer service charges would decline, an
3 indication of improved collection efforts while
4 projecting late charges to increase, an indication of
5 declining collection results, at a rate of nearly 11
6 percent each year. Therefore, the two adjustments
7 recommended by the intervener related to bad debt
8 provision and late charges are contradictory.
9 Issue number three, avoiding a negative
10 credit rating. The rate proposal effect on the
11 District's bond rating and ability to maintain a
12 target of AA credit rating are of great concern to the
13 District. The District's position is that larger
14 amount of debt as supported by at least one of the in
15 interveners could increase the District's cost of
16 funding and/or restrict the District's access to
17 funding. This could translate to tens of millions of
18 dollars of extra debt service cost for the District
19 rate payers or threaten the District's capital plan
20 time line. Based on the positions taken by the credit
21 rating agency in the past, the District's experience
22 with rating agency actions, and consultation with
23 MSD's financial advisor, we believe that reductions to
24 the proposed revenue and/or increases in future debt
25 service cost could reasonably lead to lower credit
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1 ratings. We have specifically chosen a mix of
2 debt/PAYGO financing and cash balance target that we
3 believe is consistent with maintenance of current
4 ratings. This concludes the District's official
5 summary statement. A copy of our statement will be
6 filed as Exhibit MSD 131 later today. Thank you.
7 MR. TOENJES: Thank you. Are there
8 questions from any of the rate commissioners for Ms.
9 Myers?
10 MR. BROCKMANN: On Page 3 of your testimony
11 in the first paragraph you say that storm water -- MSD
12 believes use of the impervious fee resulted in 40
13 percent increase in cost to users to same level, et
14 cetera. Can you give me some numbers to back that up?
15 MS. MYERS: I'll let Brian answer that.
16 MR. HOELSCHER: We had details in some
17 previous ones, but the numbers come from assured tax
18 deductibility for many of our customers on property
19 taxes from their bill. That's how it translates to
20 reduced cost to our customers. The cost of
21 maintaining our basis was the current pervious system
22 we proposed eight years ago. The cost of maintaining
23 primarily a lot of responding to customer issues and
24 questions regarding how that charge worked out for
25 them. So we submit annual cost of that of about a
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1 million dollars per year. And right now, under the
2 current state legislation which restricts us from
3 collecting monies from residential customers -- let's
4 see, residential customers who are not waste water
5 customers and whose storm water doesn't go through the
6 public storm sewer system does not allow us to collect
7 a fee. Right now that's about one percent of the
8 anticipated folks that we would collect from. So that
9 cost would have been translated or made up for by the
10 rest of the paying customers. And I think we do make
11 a statement that we have every reason to believe there
12 is no reason that kind of logic could not be extended
13 by the state legislature and potential fewer customers
14 having participated in that. If you add those up,
15 that's where you come up with the 40 percent. It's 30
16 to 35 percent for tax deductibility on state and
17 federal tax, the cost of maintaining the system which
18 is about five percent, and right now one percent of
19 the customer base who would participate in the tax but
20 not participate in voted on impervious. We did have
21 those detailed in previous testimony.
22 MR. TOENJES: Does that answer your
23 question, Mr. Brockmann.
24 MR. BROCKMANN: Yes.
25 MR. JONES: The five percent annual
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1 utilities expense escalation. That's an estimate or
2 outlook with regard to utilities expense. With regard
3 to utilities expense, MSD is estimating a 5.5 percent
4 increase. It's a two-part question. Is there any
5 recommendation for over or underestimation? For
6 instance, if you underestimate that increase do you
7 have a way to recover? And if you overestimate it,
8 either way is there a pass-thru between MSD and the
9 customer if you don't hit it on the mark? And have
10 you all considered simply passing through that cost
11 rather than even having to estimate what the cost
12 might be.
13 MR. HOELSCHER: Answering the second
14 question first. No, we cannot considered actually
15 passing on electrical cost as a specific line item on
16 our bill. We have not done that. With regard to the
17 first item, the way the process is set up, we will go
18 through four years of revenues and expenses, and as
19 you have done this year, and as the benefit was this
20 year, if there are additional monies left out of the
21 operating budget, revenues above our expenses, that
22 money goes into the pool that is the test year. So
23 the rate payers benefit from that in the future four
24 years. If there is ten million dollars left, that ten
25 million dollars gets available to fund service over
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1 the next four years. We don't have stockholders. We
2 don't have profit margins. The money just simply
3 rolls over. And that is same with capital expense. I
4 think that's what, as you see, as trying to explain if
5 the revenues collected for capital expense while we
6 try to take advantage of prices and do these cheaper,
7 if available. Any of those revenues left over don't
8 get spent, anything else, they are in the pot for the
9 next four year period, and rate payers benefit from
10 decrease expenses because of the balance that starts
11 at the start of rate process.
12 MR. JONES: That raises another question.
13 When you say "do things cheaper" has MSD researched
14 any alternatives to electric needs like solar energy,
15 using storm water runoff to power facilities, anything
16 like that?
17 MR. HOELSCHER: I'll have John Sprague,
18 Director of Operations. The answer is yes, not for us
19 directly, but everything we do. I think John can give
20 you some ideas that we looked at in the past and we're
21 looking at in the future.
22 MR. SPRAGUE: John Sprague, Director of
23 Operations. We've looked at -- I'll start with one of
24 the impeding factors to using alternative sources of
25 energy than just the electric company is Missouri has
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1 cheap energy. Our average relative to the rest of the
2 country -- Our average kilowatt hour is roughly six to
3 seven cents. So there is no alternative energy
4 generation that we looked at that can provide energy
5 any cheaper than the electric company can provide to
6 us. And we look at solar, and because we run pumps
7 24/7 solar is more expensive, and the intermittent
8 nature doesn't provide us any advantage. We also
9 looked at running cost recovery -- looking at cost
10 recovery turbines like on discharge from treatment
11 plants, but by the time you put implement cost, the
12 operations and maintenance, it turns out to be cost
13 prohibitive. So we have looked at a number of
14 alternatives, and we haven't found them to be viable.
15 MR. JONES: Thank you.
16 MR. HOELSCHER: I'll add one other item we
17 are currently researching. There is always question
18 what we do with our solid waste. And there are
19 currently potentially regulatory changes occurring in
20 the country that will not allow the use of the fly ash
21 that's currently used in production of concrete. We
22 create ash off our incineration process and we
23 reviewed that in the past to see if there is
24 commercial use that's financially viable in the past,
25 but with that current change in the regulation we are
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1 talking with some groups in cooperation with the city
2 of St. Louis, is there possibly a better use or better
3 way to dispose of ash that comes from incineration
4 that would save our cost on operating expense. It's
5 an example of something we're doing right now that
6 we're kind of insidiously reviewing that issue for
7 lower operating cost.
8 MR. SPRAGUE: You know, I discussed
9 alternative energy uses. It doesn't mean we haven't
10 put an effort in the last number of years to be more
11 energy efficient in the District. Ameren has put a
12 number of credits and rebates in place. I'll cite a
13 number of examples. We almost in all our locations
14 put variable speed driver controllers for our motors.
15 Which variable speed drive is an efficient way to
16 allow to vary the speed of electric motors in a very
17 efficient fashion. So you're matching flows with
18 motor speed and operating efficiently. We've taken
19 advantage of rebates and put variable speed drives in.
20 We switched out lighting in most of our plants to more
21 energy efficient T8 fluorescent lighting instead of
22 the older T12, which our plants were built with. We
23 used Ameren energy credits in all those locations for
24 taking advantage of that. We've done a number of
25 different energy efficiency initiatives in that case.
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1 Also putting in -- even in this building in our
2 conference rooms, automatic on/off lights, electronic
3 controllers, HVAC. So we've done a number of normal
4 things that any place would do to get energy efficient
5 and take advantage of energy credits where we can.
6 MR. TOENJES: Does that answer your
7 question, Mr. Jones.
8 MR. JONES: Thank you.
9 MR. TOMAZI: I have a few question, Ms.
10 Myers. On the top of Page 3, you indicate in your
11 testimony that the District-wide ten percent ad
12 valorem property tax imposes fair and reasonable
13 burden on all, and I underline "all", classes of
14 taxpayers. Does that include or exclude non-profits
15 such as schools, hospitals, churches, et cetera.
16 MR. HOELSCHER: He is not here, I think
17 Bill Stannard would answer that, but I guess I'll let
18 you know I think our current assumption is based on
19 the last Supreme Court ruling is that those entities
20 would not participate in the funding of storm water
21 under either scenario; either voted on impervious fee
22 or property tax. And that's based on our risk
23 analysis of the decision that came from the Missouri
24 Supreme Court on evaluating previous impervious rate.
25 MR. TOMAZI: From a legal perspective, your
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1 indication is that, including those nonprofits would
2 in fact still impose a fair and reasonable burden on
3 all of the rate payers; is that correct?
4 MS. MYERS: Yes, it is.
5 MR. TOMAZI: Jumping down a little bit
6 further on Page 3, you indicate that use of an
7 impervious fee would result in up to a 40 percent
8 increase in the cost of MSD customers for the same
9 level, and fewer customers participating in the
10 funding of the program, et cetera, et cetera. As I
11 recall, you instituted an impervious program about
12 four years ago and it lasted until about six months
13 more or less -- until, I guess, the state passed a law
14 and you couldn't do it. Well, in fact, I guess until
15 the case was filed is that 40 percent is a reasonable
16 number considering fact that you already, in fact,
17 done this once before.
18 MR. TOMAZI: I'll go in a little more depth
19 to, I think, the answer I answered to Mr. Brockmann, I
20 think. Let's think back to what we imposed for
21 impervious eight years ago where the specific service
22 we talked about are talking about now was about 30
23 percent of the revenue what we projected back then for
24 impervious fee. So, there were then still those costs
25 per year to maintain impervious system. Quite
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1 honestly, responding to customer service component of
2 that billing to the customers was more than we
3 expected, but you add all that together that's where
4 we come up with the million dollars per year to run
5 the system. Running a million dollar system to
6 generate less than 25 million dollars of revenue is
7 different than a cost of a system of million dollars
8 per year to generate what ultimately would have been
9 80 million dollars a year for much different storm
10 water services. So that's five percent of that 40
11 percent number. I agree it didn't come up eight years
12 ago; the idea if you do storm water by a property tax
13 it is tax deductible as opposed to imposing impervious
14 fee. That is not an issue I recall coming up eight
15 years ago. It is now, and we feel it's significant
16 and it's an important thing to consider. You mention
17 state laws, there is the decision by the Supreme Court
18 about implementing impervious fees without a vote.
19 And some doubt as to what that means. But the other
20 part was after we implemented impervious fees, almost
21 nine months later is when state legislation started
22 going in place to take those individuals who we
23 thought would be in that paying pool and start
24 eliminating them by legislation. If they met certain
25 parameters, they don't have to pay the impervious fee.
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1 It was originally -- we made the quote somewhere -- it
2 was House Bill 661 resulted in state statute that
3 eliminated over 3500 customers who originally in the
4 proposal did not have to pay. So we're adding all
5 those together and we compare those impacts to what we
6 believe is a reasonable assumption of what would
7 happen to voted on impervious fee. If you add those
8 together like I kind of broke down, you end up with
9 total cost to our customer base of 40 percent more to
10 fund the same storm water services if you're using
11 voted-on impervious fee than if you use a property
12 tax. And I think -- if you don't mind, I'll go on.
13 We make a lot of our things here. As Susan described,
14 we are specifically going after a small component of
15 when compared to the services we planned eight years
16 ago. We're going after just operation and maintenance
17 of the public storm sewer system. Especially that
18 portions that located mostly outside of 270 that has
19 no funding to operate and maintain. Hopefully, all
20 that together answers the question you asked.
21 MR. TOMAZI: It's getting close. As I
22 recall, I didn't put it up in front of me, if you
23 divided the storm water situation into three major
24 components; yellow, red, and blue or something like
25 this. And there was a different ad valorem tax
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1 proposed for two of those Districts and one of them
2 you eliminated it all together; is that right?
3 MR. HOELSCHER: When you see yellow, red,
4 green map, you are seeing the results of various
5 individual taxing burdens that are based on residents
6 of different levels and covering different geographic
7 areas currently. So, if you're in the area, if you
8 recall the map which is red, which is outside 270,
9 there is a two cent District-wide tax that everybody
10 is paying for regulatory issues. So everybody is
11 still paying that. The difference in what everybody
12 is paying right now is because there are then other
13 taxes that are layered in more discreet areas of the
14 District that both is increase services and thus
15 increase the cost they pay. So what we're proposing
16 to change when it's all said and done, everybody would
17 pay two-cent property tax for storm water rate issue
18 and everybody would pay ten-cent property tax for
19 primarily the operation and maintenance of public
20 storm sewer system District-wide. And we have
21 mentioned we want to make sure there is a provision
22 that the additional dollars in O and M, we had
23 something designated to use. The rest of the
24 expenditures that you see in there are just the
25 spend-down of balances and current taxes that we put
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1 in place. The seven-cent tax goes away. This
2 basically replace a seven-cent tax that currently pays
3 operation and maintenance for some operation and
4 maintenance inside 270. Without public input for
5 existing O and M tax, we are going to set at zero and
6 allow that for the rate proposal. So that's why you
7 see the changes how everybody is impacted. We are
8 taking what's in place and what's been in place since
9 and prior to 1980, and trying to find a way to level
10 that all out.
11 MR. TOMAZI: But that which is already in
12 place is not going to change; is that correct?
13 MR. HOELSCHER: There is a 24-cent per
14 month charge to all waste water customers that goes --
15 that will go away, and seven-cent property tax for all
16 property within the original District boundary is
17 yellow and green area inside the map -- inside 270.
18 Those will be replaced by the ten-cent District-wide
19 property tax. That is the change we're proposing.
20 And two-cent tax would stay in place for now as we are
21 proposing the OMCI tax, the green area. We're not
22 proposing any change in structure. We are going to
23 set it as zero, and we informed all the cities what
24 we're going to do, and we won't be collecting the tax.
25 We are going to allow the District-wide tax to run for
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1 the next four years.
2 MR. TOMAZI: In your testimony, Ms. Myers,
3 you indicated the proposed tax credits, credit
4 program, has sort of suggested or inferred by the
5 Homebuilders Association, would result in some costs
6 being shifted to other folks. I guess my question is
7 more along the fair and reasonable line. Would it be
8 -- is it fair and reasonable based upon your legal
9 assessment of our mission, that providing the
10 residential rates for new construction favors one
11 group of rate payers over another, or should such a
12 credit program in order to be, if you will, legal or
13 based upon our criteria, would it have to be offered
14 to all rate payers -- not just residential, but all
15 rate payers.
16 MS. MYERS: So you're asking me what would
17 make the credit program fair and reasonable?
18 MR. TOMAZI: Right.
19 MS. MYERS: In our proposal, I'd rather
20 answer that that our -- we feel like the proposed ad
21 valorem tax that we are recommending without a credit
22 program is more fair and reasonable to all of the --
23 all of our customers. So we don't get into the fact
24 of whether who we would allow a credit to and who we
25 would not -- whether that affects the fair and
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1 reasonableness of it. Bill Stannard in his testimony
2 has testified to the fair and reasonable necessary of
3 the proposed storm water funding source that we have
4 proposed.
5 MR. TOMAZI: That didn't quite fully answer
6 my question to my understanding.
7 MS. MYERS: Okay.
8 MR. TOMAZI: The question, again, is if a
9 credit was extended to new home buyers, would that be
10 fair and reasonable prima facie, or would it have to
11 be extended to all rate payers. This is just --
12 MR. HOELSCHER: I will tell you the
13 District's position is a credit program for what we're
14 proposing -- the way we are proposing it would not be
15 fair and reasonable with what we're proposing. As far
16 as I'll extend that to other proposals we make in the
17 future for other types of services and other ways to
18 pay for those, a credit program may be. But for what
19 we're proposing, I think it's safe to say we don't
20 feel a credit program would be fair and reasonable.
21 MR. TOMAZI: Thank you.
22 MR. SCHNEIDER: Mr. Schneider?
23 MR. SCHNEIDER: You mention discussion
24 between impervious charges and ad valorem tax.
25 Previously, the District made impervious service fee.
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1 What year was that proposal done?
2 MS. MYERS: I believe it was brought to the
3 Rate Commission in 2007.
4 MR. HOELSCHER: It's for 2008 to 2012 rate
5 cycle, so we brought it in 2007.
6 MR. SCHNEIDER: Will the District be
7 willing to provide an exhibit for this Rate Commission
8 proposed rate change proposal for 2008 to 2012
9 proposal as an exhibit?
10 MS. MYERS: Certainly, it's already been
11 supplied as an exhibit. I'll find out an exhibit
12 number for you. It's Exhibit MSD number 6.
13 MR. SCHNEIDER: Thank you.
14 MS. MYERS: I'm sorry. It's Exhibits 5 and
15 6.
16 MR. SCHNEIDER: Okay. I'll find that.
17 MR. TOENJES: All right. Mr. Mahfood?
18 MR. MAHFOOD: When talking about the whole
19 discussion between the impervious fee and what's being
20 proposed, one of the things looking at this and
21 looking out into the future, the ad valorem tax
22 approach, which is tried and proven, that's one that
23 doesn't go back and reopen the Court case and take us
24 back into that, but it doesn't provide any kind of a
25 foundation for kind of training the public or moving
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1 the public towards a different attitude about storm
2 water unless it's accompanied by a fairly arduous
3 educational side. And that's why I speak for the
4 other commissioners that's why things like credits and
5 incentives, although maybe not quantifiably
6 justifiable in the short term and in this rate, it
7 would seem to have the ability to kind of train people
8 and move them in the direction that would be very
9 valuable for the District later on as you're trying to
10 comply with more regulations and more onerous kinds of
11 things. I don't know. I know that's more of a softer
12 question, but does that ever come into the thinking?
13 MR. HOELSCHER: That's a good opinion on
14 our strategic thinking that's all in the back of our
15 mind. I think rates is just one way to try to change
16 folks opinions. I will tell you right now in the
17 whole area of storm water impact or rain water run you
18 have impact on other ones in our world that's kind of
19 are dividing we take care of waste water rates every
20 where else we take care of storm water revenue. If
21 you use the example in the combined sewer system,
22 right now at no time types of benefits we are seeing
23 just yesterday was at the opening of the first roof
24 garden, roof farm in St. Louis. It's over 1335
25 Convention Center place, and that came through a grant
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1 program, that comes out of a 100 million dollar green
2 program for combined sewer areas. We have seen a lot
3 of benefits from offering grants as well as doing our
4 own work where we're installing green infrastructure
5 throughout the city in order to reduce storm water
6 that's coming no and resulting in overflows in the
7 presiding sewer system. So we're seeing the combined
8 area a lot of progress and a lot of results from
9 offering those types of factors. Now, where we're at
10 on funding and where we're at on regulatory
11 perspective, we don't really have the ability for a
12 lot of reasons to do that in separate sewer area, but
13 that hasn't kept us from teaming with primarily
14 Botanical Garden and other areas where we're using
15 OMCI money for storm water issue. We are having them
16 assist, sometimes via grants or something like that,
17 where folks -- one of the biggest things about this
18 is putting -- you want to put it in places where
19 people want it. You don't want to put it in places
20 where people don't want it, and don't want to maintain
21 it. Working with Deer Creek Water shed group. That's
22 primarily. We're taking our storm water issues take
23 are mostly erosion and flooding issues with the money
24 in the grown areas we're depending those through our
25 assistance to outside funding to put green
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1 infrastructure as part we're not using our funds to do
2 that we're making sure we say revenue neutral, but in
3 teaming with other folks where we're putting examples
4 out there and identify those who really find this
5 important. And I will tell you we don't have any
6 evidence we haven't submitted anything like that. We
7 are seeing a lot of positive impact from various, we
8 have steering committee groups that our capital
9 program to see what's going on with green
10 infrastructure and how folks are talking about it and
11 how it's funded, and more importantly how our
12 particular piece of what green infrastructure means,
13 and start matching up with our needs. I mention roof
14 farm, and got plenty of rain today. They are taking
15 care of heat island issues. They are taking care of
16 distribution of natural foods throughout area for
17 folks who don't have access to that either by donation
18 or by purchase. So we're finding that operating with
19 all those types of folks is a real benefit. One Of
20 the concerns, I guess, one of the items we brought up
21 when we were talking about impervious rate and let's
22 go outside credits. Let's talk about impervious
23 service. You would never -- the easiest way to
24 eliminate your impervious service, so let's say you
25 want to take a driveway, rip it out, and put a
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1 pervious driveway in. That's a 100 percent credit for
2 impervious area. There is no way it would be a
3 financial driver for folks to do that unless they are
4 oriented to do it because a reduction in cost the
5 individual owner would in no way ever come close to
6 seeing the benefit of that. So I would put it to you,
7 -- our experience has been, yeah, that is one tool and
8 it is something at an appropriate time we would not be
9 opposed to. Let's say you start addressing water
10 quality issue of storm water runoff in the services,
11 those might be a component. Might be in the proposal
12 in 2007, but specifically for all the reasons we've
13 outlined in the testimony and document we submitted
14 where this particular piece of the funding, and those
15 particular issues that we're trying to address, which
16 we think of most immediate ones, this isn't the time
17 to have that discussion for this particular piece.
18 But we will continue all the similar past activities.
19 If that's good enough soft answer.
20 MR. MAHFOOD: That's good. I wanted to hear
21 your thinking and how it's working. Thank you.
22 MR. TOENJES: Mr. Mahanta?
23 MR. MAHANTA: Brian, I'm going to build on
24 what Steve touched upon, and I have a similar interest
25 on that. It is commendable that you are doing the
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1 things you have been doing in that regard. But how
2 can we extend that to bigger areas or larger area of
3 your responsibility, not just areas where, the yellow
4 area is sort of combining storm and waste is combined
5 because it's positive thing and we would like to see
6 some efforts as far as to extend it farther. I don't
7 know how we are going to do that, but that's something
8 I would like to see, too. Now, come back on Page 3,
9 that 40 percent increase in cost, can you give us a
10 handle on the magnitude of, let's say, that you are --
11 our commission decides to recommend that that the
12 impervious area is considered and it's obviously going
13 to cost you extra to keep the same amount of money
14 because of expense for administering all that. What
15 would be the order of magnitude increase that you will
16 have to earn or obtain to get the same amount.
17 MR. HOELSCHER: The second part I would
18 like to comment on first thing, but on the second item
19 in doing quick math in my head, so you can't hold me
20 to this. We're looking at about $25 million of
21 revenue that we want to collect under proposed tax
22 assuming what we've laid out is accurate we would be
23 asking rate payers to pay $35 million a year for some
24 areas or about ten million dollars more per year using
25 impervious rate. We feel that's significant, and as
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1 we stated, a significant enough difference -- enough
2 of an extra amount it really needs to be considered
3 when you consider what is fair and reasonable versus
4 alternative that are all ton landfill. So it's about
5 $10 million. On the first item, MSD right now has not
6 attempted to do anything beyond current regulatory
7 requirement. If can you imagine, we get a lot of push
8 back about doing anything extra. We're being real
9 creative when we work with Deer creek Water Shed
10 that's within the green areas that's doing some things
11 with green infrastructure right now the current plan
12 we have in place, the program that the two cent tax is
13 funding is meeting storm water quality requirements.
14 MSD has not asked to do something to go beyond current
15 regulatory requirement. My opinion is it's not the
16 right time to ask people if they want to pay more than
17 what is the minimum regulatory requirement. All those
18 things we have to get some programs in place that will
19 do that, get people thinking about things. And very
20 specifically to that and I think in our testimony we
21 discussed this briefly about -- when the issue of
22 integrated planning came up, one of the arguments we
23 made in discussions with primarily MDNR and what we
24 need to do with our storm water program is that one of
25 the biggest, most immediate impacts on the quality of
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1 local creeks and streams is proper execution of the
2 waste water program, the consent decree, the overflows
3 from the system, basement backups, those types of
4 things. We are seeing benefits of those in storm
5 water quality. We are seeing benefits in the creek
6 water quality from one program we have in place right
7 now to police and govern runoff on storm water. So
8 right now we're in a place where, and we've had folks
9 check up. They want to make sure we weren't
10 overreaching. We went through a pretty arduous
11 process. Folks claim we were going past that. We're
12 very cognizant at this point if you think we're asking
13 folks to pay, not for us to pay -- not for us to
14 propose to do something what is beyond the regulatory
15 minimum. You need to do it in smart way and we need
16 to keep the future in mind and I think a lot of things
17 that are coming out of efforts to combine sewer
18 system, not just the city. There is 20 square miles
19 adjacent to that and some of the efforts as we do
20 storm water projects, I will tell you, for instance,
21 every time there is a development or storm water out
22 in the red area or green area, the first things our
23 folks talk is hey, you got may be a volume issue here.
24 Some green alternative take a look at information on
25 our web site, take a look at other source we have as
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1 ways to resolve, make it green solution rather than
2 having big detention basis to hold water back, let's
3 think of the water quality a little bit. I don't
4 disagree that we eventually have got to think about
5 it, but I right now MSD isn't in a place to recommend
6 that. That goes beyond the regulatory requirement and
7 cost associated to that.
8 MR. TOENJES: Any of the other rate
9 commissioners have any questions for Ms. Myers or the
10 District at this point. I have one question -- two
11 questions. And maybe this is nothing you're prepared
12 to answer right now, but you mentioned House bill 661,
13 and the changes that had in the folks that would be
14 subject to an impervious fee. Could you briefly
15 describe what House Bill 661 did and how that changed
16 from 2007 and 8 rate case to where we are today?
17 MR. HOELSCHER: So after the 2007 rate case
18 that we implemented the impervious fee structure that
19 went through the Rate Commission process, there was a
20 -- we view the situation as an outcry -- however, you
21 connect these. From individuals who have always been
22 paying a storm water ad valorem property tax to us,
23 our property tax -- the two cent property tax being
24 such a small part of the property tax. Many of them
25 didn't realize they were paying that. And the
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1 legislature response while we were implementing the
2 impervious fee was that any residential, this is HB.
3 661, which has a resulted in status that's referenced,
4 anybody who is a residential customer who doesn't
5 receive waste water service from MSD and whose runoff
6 does not enter part of the public storm system manhole
7 inlet pipe, does not have to pay a fee. The language
8 in that was they don't have to pay any fee rates or
9 taxes. So when that went in place and this is while
10 we're implementing it, we took those folks off the
11 rolls back when we had the original impervious rate
12 prior to the Ford action that caused us to stop
13 collecting that. That is still on the box. I think
14 we have testified in either Ms. Myers' testimony or
15 someone else, we feel there is constitutional
16 authority for us to -- regardless of that legislation
17 that allows us to collect property taxes because of
18 some constitutional guarantees, but it is pretty
19 obvious that any kind of fee, rate, however a Court or
20 somebody would interpret that, what we would have the
21 same impact that we wouldn't collect from those. I'm
22 saying at least 3500. It's like 3630 customers who
23 stopped paying the impervious fee after the rate case
24 when the courts -- our reaction to the court was to
25 stop the impervious fee and go back to taxes. We did
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1 put them back on the tax rolls and they had to pay
2 property tax since then. So that is the last that's
3 in place. And now I'm just imaging, I don't know if
4 it's long leap for some legislature to believe that
5 even though in our testimony we found we think it's
6 important for those to use the public sewer system
7 whether there is one on the street or not to
8 participate with that infrastructure within the
9 boundaries. They can do that with folks that do
10 receive waste water service from and maybe all the
11 runoff on the back of their property to the creek or
12 somewhere else. So when we talk about over extending
13 that, based on our experience and discussions with
14 certain individuals and legislators you might see
15 something like that come in the future. We think this
16 issue is important enough for this particular piece
17 that we want to fund MSD, another reason to avoid
18 doing any kind of impervious fee -- if I answered
19 your question.
20 MR. TOENJES: The final legislation that's
21 passed is that part of the record?
22 MR. HOELSCHER: It is part of the record
23 and it is in one of our surveys, but at that time we
24 mention HB 661 and go and mention exact statute, give
25 the exact statutes that's currently in Missouri
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1 statute.
2 MR. TOENJES: My last question has to do
3 with you talked about the difference in service levels
4 of storm water between prior rate case and this case.
5 And it's primarily capital improvements.
6 MR. HOELSCHER: It was -- in general it was
7 about 30 percent O and M, ten percent storm water
8 regulatory, and about 60 percent capital. That was
9 the scope of the previous proposal.
10 MR. TOENJES: Any other questions of the
11 rate commissioners for Ms. Myers? Ms. Bowser?
12 MS. BOWSER: You're saying that the Court
13 case leads you to believe that the impervious fee
14 would be challenged again, am I correct?
15 MS. MYERS: What we're saying is that in
16 our opinion the Supreme Court did not give real clear
17 direction. What they did give us direction on was the
18 impervious fee that we were trying to implement at the
19 time it needed to be voted on. We don't feel that
20 they went as far to say that that actual fee was a
21 tax.
22 MS. BOWSER: But the impression you feel at
23 this time an ad valorem tax will not be challenged or
24 less likely to be challenged?
25 MS. MYERS: Correct.
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1 MS. BOWSER: Is there a specific part of
2 the constitution that you are citing to make that
3 determination?
4 MS. MYERS: Yes, in one of my testimonies
5 or on maybe a discovery request, I went through what
6 we feel gives you authority to tax it has to do with
7 our charter. It has to do with the constitution, and
8 has to do with tax laws. And I believe one of the
9 rate commission's discovery request. I don't remember
10 which one.
11 MS. BOWSER: Thank you.
12 MR. TOENJES: Any further questions for Ms.
13 Myers? Thank you very much. Mr. Neuschafer, would
14 you like to address the Rate Commission on behalf of
15 Missouri Industrial Energy Consumers?
16 MR. NEUSCHAFER: I would.
17 MR. TOENJES: Please proceed.
18 MR. NEUSCHAFER: Thank you for the
19 opportunity to represent MIEC on the rate change
20 proposal. As you're aware I represent the Missouri
21 Industrial Energy Consumers, which is a group of large
22 industrial energy consumers of MSD waste water and
23 storm water service who will be impacted by the rate
24 change proposal. We appreciate the significant amount
25 of work put into this process by all parties and
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1 recognize it's not always been an easy process. It's
2 also one that is filed with a lot of data and
3 information. However, we strongly believe that it has
4 been and continues to be a beneficial process for both
5 MSD and its customers. For example, in the last two
6 rate cases, the Rate Commission has consistently
7 recommended five to ten percent less than those
8 proposed by MSD. But you recall MSD reports its on
9 track and even below budget for meeting its obligation
10 under the consent decree. The net result is that
11 because of the careful review of MSD rate change
12 proposals, the Rate Commission has been able to reduce
13 the rate impact on consumers while still allowing MSD
14 to meet its operational needs and legal obligation.
15 We believe there is similar and significant
16 opportunities here to scrutinize the rate change
17 proposal in a manner that accomplishes the same dual
18 goals of reducing rate impact on consumers while still
19 providing the revenue necessary for MSD to meet its
20 operational needs and legal obligations.
21 In summary, MIEC has four main points.
22 Each will be outlined in more detail in pre-hearing
23 conference report to be filed by MIEC and which have
24 been discussed in the rebuttal testimony and discovery
25 responses filed by MIEC. First, MIEC believes MSD has
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1 understated its forecasted revenue. MSD has taken
2 aggressive approach to projections about shrinking
3 customer base and waste water volumes and at the same
4 time has understated future revenue from other
5 service. This means MSD has requested a rate that is
6 higher than needed. The ultimate impact of
7 understating forecasted revenue is unnecessarily
8 increased rates imposed upon the customers.
9 Second, MSD has overstated concerns to O
10 and M, namely utility cost projections. If one uses
11 forecast based on utilities only projections and not
12 just based on historical rates, we see an opportunity
13 to further reduce the rate burden on users.
14 Third, MIEC supports MSD's efforts to fund
15 a significant portion of the capital improvement and
16 replacement program through the use of bonds and
17 proceeds from state revolving funds although we
18 believe there an ample opportunity to modify the bond
19 proposal to increase the amount of bonds issued and/or
20 extend the life the bonds issued.
21 Fourth, MIEC agrees that the storm water
22 rate increase proposed by MSD is not equitable and
23 balanced approach to charge customers for storm water
24 services. Putting these in terms of the charter plan
25 factor that the Rate Commission must consider, we
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1 think these points are directly related to, one, the
2 District's ability to provide adequate sewer and
3 drainage systems and facility or related services; the
4 District's ability to comply with applicable federal
5 or state laws or regulations, and most significantly
6 whether the proposed rates impose a fair and
7 reasonable burden on all classes of rate payers.
8 I first want to dive into the
9 understatement of revenue in a bit more detail. As I
10 mentioned, MSD has understated forecasted revenue from
11 other sources. The first of these sources is waste
12 hauler user fees. MSD projects a decline in revenue
13 from waste hauler permits down to $670,000. However,
14 in its annual report for year ending in June 2014, MSD
15 indicated that quote licenses, permits, and other fees
16 increased 3.8 million or 140.3 percent due primarily
17 to increase in waste haul permits. This suggests that
18 recent data shows decrease in waste haul permit fees
19 is not likely. The total amount MSD projects to
20 collect over the four year course of rate proposal is
21 essentially equal to the same amount projected to be
22 collected in 2015 alone and only about 60 percent of
23 the amount collected in 2014. Accordingly, MIEC
24 recommends adjustment to other revenue associate with
25 waste hauler permits that approximately double MSD's
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1 projections. And returns the revenue projects to
2 level more consistent with data over the last five
3 years.
4 With respect to bad debt, MSD has increased
5 it's bad debt provision from historical one percent to
6 1.5 percent. However, actual collections from fiscal
7 year '10 through '14 show that bad debt provision has
8 actually declined to one percent. Additionally, MSD
9 indicates that it has made investments in a program to
10 recover bad debt, which have been successful, and thus
11 customers should see the benefit of these investments
12 in recovering bad debt. MSD's projection has the
13 effect of significantly increasing its bad debt
14 provision, which is regarded as a negative against
15 other revenue. The net effect of modifying this
16 projection as proposed by MIEC is increases in other
17 revenue of approximately $2 million per year on
18 average. With respect to late charges or late penalty
19 fees, late payment charges are based on penalty
20 applied to unpaid bills. It's a logical conclusion
21 that as MSD rates increase, the dollar amount of
22 unpaid bills will increase a similar amount and late
23 payment charges will increase in line with the rate
24 increase, correcting MSD's projection of late charge
25 penalty revenues will increase over other revenue
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1 sources about three and a half million dollars per
2 year on average during the forecast period. MIEC also
3 believes MSD's projection understated the number of
4 customers and volume of waste water treated. With
5 respect to the number of customers, we point the Rate
6 Commission to several factors, first the number of
7 connection permits issued annually is on the rise. In
8 2010 this number was 763. In 2014, it was 1764, an
9 increase of one thousands permits. MSD has attempted
10 to explain this increase away, but has provided no
11 real data showing this is anything other than two and
12 a half times increase in the number of permits issued
13 in four years. Taking into account the intervening
14 year, the data clearly shows the number of connection
15 permits is on the rise. Add into this, MSD data
16 indicating that the rate of decline in total number of
17 customers has slowed even to the point that total
18 number of customers actually increased in 2014, which
19 is the same year that MSD issued over 1700 new
20 connection permits. We believe that this data shows
21 that MIEC will at worst maintain flat level of
22 customers and, in fact, may be entering a period of
23 customer growth. This is consist with the Moody
24 analytical report that we have previously provided,
25 which indicates the number of new single family
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1 housing permits is expected to more than double in
2 each of 2016 through 2019 over 2014 numbers. While
3 the geography covered by that report includes part of
4 southern Illinois, the vast majority of the population
5 and thus the expected housing construction is within
6 MSD coverage area.
7 Next MIEC does not disagree with MSD's
8 assumption of a modest decrease over time in waste
9 water volume received from metered users. However,
10 MSD's projection of volume received from unmetered
11 customers present an anomalous one time decrease in
12 unmetered volume in fiscal year -- in fiscal year '17
13 over fiscal year '16, an almost ten percent decrease
14 in one year. MSD's projections appear to be based on
15 assumptions without corresponding verification and
16 costs of other operating data that the volume used by
17 unmetered customers will decline in fiscal year '17
18 relative to fiscal year '16. However, considering
19 certain facts, the notion that this decrease will
20 occur is refuted. First, the level of pumped volume
21 as reported by MSD in its annual reports for fiscal
22 year '12 through '14 has not actually declined.
23 Second, MSD's projection for reduced volume sales to
24 unmetered customers is inconsistent with the St. Louis
25 Water District projections for water sales. Third,
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1 MSD has not accounted for any expense offsets for
2 inputs like electricity cost or chemicals. Fourth,
3 there does not appear to have been any tests of actual
4 volume treatment, volume flow in the water treatment
5 process or water collection process. Operational data
6 to support the assumption is simply not there. And
7 finally, as discussed previously, the number of
8 customers may actually been increasing.
9 I want to turn to the next major point,
10 which is that MSD has overstated its future O and M
11 costs. MSD has proposed a five percent increase --
12 approximately five percent increase in utility cost
13 where MIEC proposed three percent increase every other
14 year. MIEC's number is based on future projections by
15 the utilities themselves. Ameren's own projections
16 are for two percent growth per year during the term of
17 rate proposal, an amount very similar to MIEC's
18 proposed three percent increase every other year
19 during the term of rate proposal. MSD, on the other
20 hand, appears to have based its projection solely on
21 historical costs. A critical factor though is that
22 these historical costs occurred during a period of
23 significant capital expenditures by Ameren, which
24 period is winding down. As such, MIEC asserts that
25 the utilities' own projections are a much better
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1 predictor of MSD's anticipated utility cost than past
2 cost.
3 So for its recommendation, MIEC has
4 proposed the following; in its last rate case, MSD
5 increased internal PAYGO from $20 million to $40
6 million. Now, MSD seeks an increase of up to $70
7 million to $114 million during the forecast period
8 fiscal year '17 through fiscal year '20. MSD's
9 proposal to more than triple internal PAYGO funding
10 will create unnecessary price pressures on its
11 customers. Starting in fiscal '20 MIEC recommends
12 that the amount of PAYGO funding be limited to $100
13 million per year and additional debt should be used to
14 fund the peak of MSD's capital program. We
15 acknowledge soon after fiscal year '20 the amount of
16 PAYGO funding is going to be by the need to meet that
17 service coverage requirement and target level of days
18 of cash on hand.
19 Taking all the above into account, MIEC has
20 proposed waste water rates that are approximately ten
21 percent lower than the rates sought by MSD. This
22 proposal is outlined in Mr. Gorman's rebuttal
23 testimony, and will again be outlined in MIEC's pre-
24 hearing conference report. Such reduction is
25 consistent with prior analyses of recommendations from
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1 the Rate Commission on MSD's proposal, given MSD's
2 otherwise conservative revenue forecast will still
3 provide MSD necessary operational flexibility to meet
4 its obligations. At the same time it will help
5 protect MSD's customers from the hardships and burdens
6 of utilities cost that increase at unnecessary and
7 unjustifiably high rate.
8 I would like to take a moment to respond
9 one point made by Ms. Myers in her presentation. It's
10 on page 7 of her written statement. She indicated
11 that if MSD collects revenue in excess of its
12 forecasted, the District will move forward and
13 expedite the consent decree compliance related work or
14 continue other work. And while that's fine, I would
15 like to note that this doesn't take into account the
16 impact on consumers of unnecessarily high rates at
17 this point in time. Instead, what that does is create
18 new base line for the next rate case. Rather than
19 giving consumers the benefit of having lower rates
20 than necessary for the next four year period, it
21 increases their current rates, create new baseline
22 which will serve as a base line for the next rate case
23 presumably will lead to increase rates at that point
24 in time. So the goal might be admirable, but we can't
25 disregard the impact that will have on rate payers in
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1 the interim.
2 Although, most of our testimony has been
3 focused on waste water, we do -- I do want to make a
4 comment on storm water, but we will largely reserve
5 our comments on storm water for the testimony that's
6 already been introduced for pre-hearing conference
7 reporter. I do want to point out MIEC believes the
8 significant changes to storm water rates proposed by
9 MSD do not present a fair or reasonable burden on all
10 class of rate payers as evidenced by the testimony
11 introduced by the Rate Commission by the intervener
12 Home Builders Association and as supported by MSD's
13 own consulting firm a uniform tax based on property
14 value has no relation to cost causation and is not
15 equitable. MIEC recommends that the current storm
16 water rate system be retained. Although, we also
17 recognize even a rate system based on user fees
18 impervious area is more fair and equitable than MSD's
19 proposal which is linked solely to property values.
20 That concludes our prepared statement. As
21 I indicated, we will provide a pre-hearing conference
22 report, which will contain significantly more detail
23 than the brief statement we have provided today.
24 MR. TOENJES: I would ask any of the Rate
25 Commission if they have any questions for Mr.
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1 Neuschafer at this time. Hearing none, thank you, Mr.
2 Neuschafer.
3 MR. NEUSCHAFER: Thank you.
4 MR. TOENJES: Mr. Goss, would you like to
5 address the Rate Commission on behalf of the Home
6 Builders Association?
7 MR. GOSS: I would, Mr. Chairman. Prior to
8 making our statement, I would ask also the
9 Commission's indulgence, as Mr. Arnold just asked for
10 their indulgence a little earlier. We were also
11 confused on the deadline. And we did submit two EPA
12 publications this week. The EPA funding storm water
13 program and EPA publication reducing storm water cost
14 through low impact development strategies and
15 practice. And ask if those could be admitted as
16 exhibits into the record as well.
17 MS. MYERS: Yes, I would like to object.
18 HBA provided information on Monday, which was the
19 deadline that the Rate Commission had given everyone
20 to submit supplemental information. So when the
21 District received HBA's additional information late
22 yesterday after we reached out to the Rate
23 Commission's legal counsel for guidance and had not
24 gotten a response back from them. So those two
25 documents have got put in the record as exhibits and I
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1 would object to them being added now at this late
2 date. Since the Commission extended the date for
3 supplemental information to begin with to June 22,
4 which was last Monday. And all the other parties
5 seemed to comply with that date. Well, John asked for
6 forgiveness. And I would just object at this point.
7 MR. TOENJES: Mr. Arnold, Ms. Stump, any
8 comments?
9 MR. ARNOLD: Mr. Chairman, members of the
10 commission, I have no objection to admitting the
11 information which Mr. Goss has described. I am
12 informed on that decision by my service for the
13 various stock exchanges and FINRA and NASD, the one
14 way you can get your award overturned is by not
15 permitting a party to fully present their case. So I
16 would suggest to the Commission that this information
17 be admitted. And if Ms. Myers on behalf of the
18 District wants to respond, she may be permitted to do
19 so.
20 MR. TOENJES: Mr. Neuschafer, any comments?
21 MR. NEUSCHAFER: No objection.
22 MR. TOENJES: Well, based on that, as
23 Chair, I think to be full and transparent in our
24 hearing, we will admit those and assign exhibit
25 numbers to those two. So, Mr. Goss, proceed.
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1 MR. GOSS: Yes, sir. Thank you.
2 MS. MYERS: Can I ask a question? Did the
3 Rate Commission's counsel offer for us to be able to
4 respond to that?
5 MR. TOENJES: Yes.
6 MS. MYERS: What are the parameters on that
7 response?
8 MR. TOENJES: I would suggest and I will
9 open this for discussion that since our next public
10 hearing session is scheduled for July 10th, that I
11 would recommend that any response be received prior to
12 July 10.
13 MS. MYERS: And is that the District is the
14 only one that has the ability to respond or is all of
15 the parties have the ability to respond?
16 MR. TOENJES: All of the parties.
17 MR. GOSS: Mr. Chairman, just to clarify
18 all, we're doing is submitting two publications from
19 the Environmental Protection Agency that one dates
20 from 2007 and one dates from 2009 relating to storm
21 water program and strategies for funding. I'm not
22 quite sure what the response would be other than this
23 is what the EPA has put forward.
24 MR. HOELSCHER: The response would have to
25 be the proper application of that information and not
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1 just throwing it out without context. We feel it's
2 appropriate for to us be able to respond.
3 MR. TOENJES: Okay. July 10 prior to 9
4 a.m. on July ten. Proceed, Mr. Goss.
5 MR. GOSS: Thank you, Mr. Toenjes, members
6 of the Commission. The Home Builders Association of
7 St. Louis and Eastern Missouri thanks you for your
8 service and appreciates the opportunity to be able to
9 present testimony into evidence in connection with
10 these proceedings. We have intervened in this 2015
11 rate change proceeding not to make the District's
12 already difficult task more difficult, but to assist
13 in ensuring that the funding methodology satisfies the
14 charter requirement. In particular, there are two
15 requirements we think are really at issue with this
16 rate. One is the fairness and equitable nature of the
17 rate. And second is the ability of this rate to
18 enhance the ability of the District to provide
19 enhanced sewer and drainage systems and facility
20 related service to the rate payers of St. Louis. We
21 believe that the proposed ad valorem property tax is
22 deficient in these two areas, and we have approached
23 this rate looking at two primary concerns. The first
24 concern is over arching issue whether ad valorem
25 property tax can be implemented in a manner that's
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1 fair and equitable when there is seemingly no nexus
2 between property value and storm water service
3 provided by the District. The same concern was in
4 fact articulated by the District in its -- during the
5 Zweig case. That is 2013 Missouri Supreme Court case
6 in which the District defined use of funding
7 methodology based on impervious area. At that time
8 the District insisted that "a tax based on the
9 assessed valuation of a property has no relation to
10 storm water services". In the two years since the
11 Zweig decision, the District has seemingly done a
12 180-degree change in its position as it's now arguing
13 property based tax is fair and equitable, but that
14 there is a nexus between property value and proposed
15 tax because the tax is directed solely to the
16 operation and maintenance of public storm water
17 system. The District's new position is at odds with
18 its previous position, and with that of the United
19 States Environmental Protection Agency. The EPA has
20 consistently taken a position that the cost of storm
21 water service and management bears no relationship to
22 the assessed value of the property and, therefore, the
23 method is not equitable. In addition, the District
24 provided the Commission with testimony from William
25 Stannard. Mr. Stannard has testified that the use of
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1 property tax funding cost of a storm water system is a
2 common method used by cities and counties throughout
3 the United states, and alternative methods based on
4 impervious ground would be cost prohibitive. Mr.
5 Stannard's positions are at odds with both the Black
6 and Veatch 2014 storm water utility survey produced by
7 the District and MSD 84G and opinions of George
8 Raftelis, the founder of the company. Mr. Stannard
9 works for and encourages the Commission to review the
10 Black and Veatch study that provides that only four
11 percent of utilities used ad valorem tax to fund storm
12 water. Hardly what I would call a common methodology.
13 I also encourage the Commission to review the excerpt
14 from water and waste water financing pricing authored
15 by George Raftelis that provides many of the technical
16 barriers to implementing storm water has far and away
17 making it more cost effective to implement funding
18 methods, for example, of cost effective method. The
19 commission can review the funding storm water program
20 published by the EPA experts, from Mr. Raftelis's book
21 and EPA publications that have been provided by HBA
22 for you review in Exhibit HBA 124C.
23 We've also submitted as part of our
24 testimony a response to this notion that there would
25 be 40 percent increase in the fees for rate payers if
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1 the impervious surface were used for the calculation.
2 And in fact, that overstates and misstates what would
3 occur, in our opinion, given that what that
4 calculation is based important is individual
5 calculations of each parcel of property to determine
6 what the impervious surface is for each parcel of
7 property. That, in fact, is not what most District
8 use in order to determine what the impervious surface
9 really is and what the fee should be. Instead, the
10 most common method used by utilities is calculation
11 single family home is a uniform flat fee structure
12 often referred to as equivalent residential unit or
13 equivalent service unit method. Under this method,
14 representative sample parcel is reviewed to determine
15 if this parcel with the average amount being used
16 residentially. Unless utilities charge flat rate
17 defined as based on multi or one equivalent
18 residential unit alternative, some utilities have
19 established a tiered structure. So they have served
20 tiered rates based on equivalent residential units.
21 So the number of utilities that are using an
22 individual calculation is very small, perhaps six
23 percent of the utilities that were surveyed. And if
24 you use an individual calculation of every parcel out
25 there in this District, your costs are going to be
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1 very high to administer if you use the equivalent
2 residential unit, which is what most utilities use.
3 That's not the case. Most utilities don't have ad
4 valorem tax rate system for storm water. They use
5 imperious surface. If this were so cost prohibitive,
6 how are these other utilities able to implement that
7 kind of system. It simply doesn't add up. And the
8 reason they are able to implement it is they use
9 different methodology that in fact works.
10 The second concern that the HBA has is
11 addressed in these proceedings has been lack of storm
12 water credit program and storm water rate change
13 proposal. HBA introduced item of continued storm
14 water credit program into the storm water proposal in
15 an effort to address the HBA's first concern. In
16 other words, credit program would provide possible
17 means implementing ad valorem property tax in matters
18 that is fair and more equitable. However, we also
19 introduced that credit because we believe the credit
20 system will enhance the District's ability to provide
21 adequate sewer and drain and system and facility or
22 relate service which is another one of the criteria
23 that the Rate Commission should examine under the
24 charter. Under the current proposed structure,
25 property owners are being charged twice for storm
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1 water management once through ad valorem property tax,
2 and once through maintaining better management
3 practice on their property. For those property owners
4 who have installed some form of O and M such as rain
5 guarding or retention basins. HBA has illustrated
6 various options for storm water credit programs and
7 illustrating in fact these storm water credit programs
8 work. And this in fact enhances the management of
9 storm water in those various areas. Storm water
10 credit programs are not a new concept to the District
11 and could offer several equitable and practical
12 advances over current structure. The District agreed
13 credit programs in past rate proposals and currently
14 offers a form of offsetting the cost of BMP
15 installation on small scale through MSD project clear
16 rain-scaping small grants program.
17 None the less the District has responded to
18 HBA's suggestion by arguing essentially two points.
19 The first being BMP have no relation to impose talks
20 because water quality issues related to storm are
21 currently funded by regulatory tax. And second credit
22 program associated with installation of BMP to factor
23 costs to other customers because BMP address quality
24 and quantity of storm water runoff with no effect on
25 the District's operation and maintenance cost. Given
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1 what we experience in last two weeks and articles that
2 have appeared in the Post Dispatch of MSD responding
3 to various problems in the area of customers and
4 addressing various problems with storm water over
5 flow. The idea that those costs are being paid for
6 from operation and maintenance belies belief. There
7 is impact on operation and maintenance by storm water
8 impact. I think we all know that. And by
9 implementing these kinds of credit programs to better
10 address storm water volume and reduce volume, we
11 believe that will also better reduce cost overall for
12 the District. It's true the primary BMP is to reduce
13 storm water runoff and improve water quality while I
14 hope the Commission will encourage them to take an
15 active role in reducing storm water runoff and
16 considering that the District is mandated to address
17 those under the EPA consent decree, existing storm
18 water system, thereby reducing cost of storm water
19 management.
20 Storm water credit guides produced by HBA
21 along with publications by the EPA will illustrate the
22 connection between BMP in reducing operation and
23 maintenance cost while the District continues to rely
24 on and to discourage inclusion of storm water credit
25 program under storm water rate change proposal. HBA
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1 encourages the commission to review evidence as
2 submitted, which is benefits of such program creating
3 fair and equitable rate structure and applicable such
4 programs in cost effectiveness while enhancing the
5 services that the District will provide with respect
6 to storm water management. That concludes our
7 prepared remarks. We will be submitting more detailed
8 remarks into evidence at the final pre-hearing
9 conference.
10 MR. TOENJES: Thank you, Mr. Goss.
11 Questions from any of the Rate Commission?
12 MR. SCHNEIDER: Mr. Goss, you mention tax
13 credits may be a way to meet the equitability
14 projection you submitted as part of 124C, a small
15 grants program. MSD small grants is similar. Do you
16 feel that's a similar way to make more equitable, I
17 would say, the storm water usage fees and stuff?
18 MR. GOSS: I do think that's one way to do
19 that. We're not mandating any particular credit
20 program, but we do think that is an interesting
21 approach. We also like the idea of using third party
22 administrator to implement the credit programs is an
23 interesting program and can again help reduce cost for
24 the District and rate payers.
25 MR. TOENJES: Other questions for Mr. Goss?
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1 Mr. Brockmann.
2 MR. BROCKMANN: Mr. Goss, do you feel the
3 requirement that MSD imposes -- imposes is not the
4 right word -- requires new construction sites
5 specifically residential to exceed storm water
6 requirements -- not exceed -- exceed the runoff
7 requirement that presently exist on undeveloped land?
8 MR. GOSS: Yes. That's one of the --
9 developers are mandated to restore the property to its
10 pre-development condition. There are three things
11 that developers are required to do. They are required
12 to provide stream protection, water quality, and to
13 reduce the storm water runoff to its pre-development
14 condition. That's in MS4 permit.
15 MR. BROCKMANN: But what you just said was
16 to not exceed. You said to meet existing storm water
17 runoff.
18 MR. GOSS: No pre-existing. We have to
19 bring it back to where it was before prior to
20 development. So it's not simply what MSD has said in
21 their testimony is that we only address peak flows.
22 That's not accurate. We're doing volume reduction.
23 And so again for that reason that would be a basis
24 because we're improving the condition to provide for
25 that credit, but I'm not limiting the idea of the
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1 credit to simply something that a residential
2 homebuilder or developer would be providing. It seems
3 this credit should be to your question earlier,
4 available to any customer, homeowners' association,
5 goes in and puts in BMP and storm water controls. We
6 should be encouraging that. I tried to drive through
7 Green Trails subdivision last night coming back from
8 some friends' house, I couldn't get through it. It
9 was flooded. The idea that we would encourage that
10 subdivisions to go in and put in BMP and controls
11 through a credit program, I think is a good thing. I
12 think it would help this District and help us over
13 all. I think that's something that would enhance our
14 ability to provide storm water services to the overall
15 area.
16 MR. BROCKMANN: Let me just say do you
17 feel MSD is asking you to exceed the pre-existing
18 condition requirement for runoff?
19 MR. GOSS: Yes, I do.
20 MR. BROCKMANN: And I guess I feel -- not
21 addressing that, but all the rain that's happening
22 these last couple days, what they call storm events,
23 and whether that piece of property was improved or not
24 improved storm events exceed normal runoff conditions.
25 So all the talk that we have been having and
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1 everything like that about excessive rain -- whether
2 the property was developed or had best management
3 practice or not; correct?
4 MR. GOSS: I'm not sure I understand the
5 question. I apologize.
6 MR. BROCKMANN: Are you familiar with storm
7 events, five year storm, 100 year storm?
8 MR. GOSS: Yes I, am.
9 MR. BROCKMANN: So my point is a
10 pre-existing piece of property that was not developed
11 and has natural runoff is also applicable to storm
12 events. So you have five-year storm or 100-year
13 storm, there is going to be flooding off that property
14 whether you came in and developed it and put best
15 management practices in place or not; correct?
16 MR. BROCKMANN: There could be. Yes.
17 MR. SCHNEIDER: I want to go back to your
18 testimony, because I'm not sure I heard it correct.
19 Did you say US EPA said in a document that impervious
20 fees were better than ad valorem tax?
21 MR. GOSS: Yes.
22 MR. SCHNEIDER: Are you referring to
23 document -- funding storm water programs document that
24 you submitted, where did you find that statement?
25 MR. GOSS: That's part of one of the
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1 documents we've already submitted. I will get you the
2 reference to that.
3 MR. SCHNEIDER: I'm looking at Exhibit 124C
4 that you submitted EPA funding storm water documents
5 and that document talks about funding alternatives. So
6 my question is was it in that document or another one.
7 MR. GOSS: I believe it is in that document
8 but I want to verify that. I don't want to tell you.
9 MR. SCHNEIDER: If you can tell us where in
10 the document it is, that would be helpful also. Thank
11 you.
12 MR. TOMAZI: I read through all six or
13 seven of the supporting documents that you provided on
14 residential credits or residential incentive in
15 various communities. And five of the six, the best I
16 can recall all dealt with impervious area matter s.
17 They did not go into the level of detail in terms of
18 calculating actual runoff from every property, but
19 they typically classify into three different levels
20 and then put a charge or an equivalent runoff unit on
21 particular property size in an amount. That probably
22 is an easier way to put together a program as compared
23 to the one that the District put together a number of
24 years ago which went down to calculation of individual
25 runoffs from individual properties. And from an
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1 engineering standpoint, I liked that one. I question
2 whether any of these other incentives that have been
3 offered at any of the exhibits that you provided have
4 been challenged by people in Court as to whether or
5 not they were fair or an appropriate based upon there
6 actual or their perceived amount of runoff?
7 MR. GOSS: I'm not aware of any challenges
8 to those programs. They have been -- through the
9 survey I did and we didn't include all the documents,
10 but virtually every one of these programs that I found
11 was using this equivalent residential unit, and it's
12 based on statistical model, which given the
13 sophistication of GPS systems today, we're just light
14 years ahead of where we were eight years ago when the
15 impervious charge was being proposed by MSD. It was
16 based on individually looking at every property and
17 that's simply not what other districts do. I'm not
18 aware there has been any kind of challenge to those.
19 MR. TOMAZI: My idea is these are all
20 focused on residential, and I come back to one of the
21 criteria that we have to face is whether or not it's
22 fair and reasonable to all categories of rate payers.
23 And so if we have commercial and we have industrial,
24 whatever the case may be, that it would almost infer
25 that such an incentive would also have been offered to
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1 all those categories because it may or may not be fair
2 to them based upon their storm water runoff and so
3 forth. So that is my observation on what you
4 submitted.
5 MR. GOSS: I don't disagree with that. I
6 think there are some problems that take the -- for
7 the commercial property. They take an equivalent
8 residential unit and adjust it to come up with, I
9 guess, equivalent commercial unit. So they do this
10 with statistical analysis to accomplish that. But I
11 don't disagree with the philosophy of that. And,
12 again, I think it goes back to the criteria of
13 enhancing our ability to provide better storm water
14 service to the entire district. These kinds of
15 programs work, we should be encouraging the
16 implementation of these programs; not saying this
17 that's under a different tax, we're just not going to
18 look at that.
19 MR. TOMAZI: I want -- I am a recipient of
20 one of the earlier programs that the District put on
21 regarding storm water runoff, and that was your rain
22 barrel program. And I offered to provide -- this is
23 tongue in cheek now, of course -- a royalty-free use
24 of the design of the system that I have for modifying
25 the rain barrel. So that offer still stands, Mr.
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1 Goss.
2 MR. GOSS: You can give a seminar at HBA,
3 I'm sure, on that.
4 MR. TOENJES: Mr. Tomazi, any other rate
5 commissioner have any questions for, Mr. Goss. I'll
6 ask one. You mentioned a couple times in your earlier
7 part of your testimony the advantage of impervious
8 area that Mr. Raftelis talked about, putting that in
9 context of current Missouri statute and current court
10 rulings related to use of an impervious area. I'd
11 just like to get Homebuilders' take on what the legal
12 environment is that we live in related to that
13 particular issue.
14 MR. GOSS: We live in a contentious legal
15 environment. In all seriousness, I think Zweig, as
16 really clear. Zweig held that the impervious "fee"
17 was a tax. You don't get to the holding of Zweig that
18 election is required unless what the District was
19 proposing is a tax. You just don't get there. So
20 clearly what was offered before was a tax and there
21 would need be a vote. I look at whether it's -- to me
22 it's similar to a red herring to say, "Well, gee, that
23 was impervious, therefore, that caused a problem." I
24 don't think the basis of whether there would be a
25 statutory constitutional problem. I think you can
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1 have an impervious-based system in Missouri whereby
2 you impose charges on tax payers. And that may be a
3 tax in the way that it's offered because it's
4 system-wide, which is what the District was proposing.
5 You may be able to tailor it to a user fee. But again
6 based on what the District had proposed, it was
7 clearly a tax. And, therefore, it needed a vote. To
8 me, it's really -- that's not controversial. It's
9 fairly straightforward. I think you can make the case
10 for it. I think you can make a case as to why it's
11 good policy, and make a case as to why it's fair
12 because there is some kind of relationship between the
13 burden that you're imposing on the overall storm water
14 system and what you're paying, which isn't true with
15 the ad valorem tax. And we talked about that a fair
16 amount in our testimony and evidence that's been
17 presented about having two properties when the
18 equivalent value one of which produces no storm water
19 and other which produces storm water, and yet they are
20 both being taxed the same amount. That inherently
21 doesn't seem fair to me, and seems problematic.
22 Whereas, impervious surface approach is based on some
23 kind of statistical modelling of equivalent
24 residential units. I think can you come up with fair
25 tax that is supported particularly if you add a credit
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1 system to that. I think it becomes one that's even
2 more equitable.
3 MR. TOENJES: Thank you. Any other
4 questions for Mr. Goss. Thank you very much.
5 MR. GOSS: Thank you.
6 MR. TOENJES: Mr. Arnold, would you like to
7 address the Rate Commission as the Rate Commission's
8 legal counsel.
9 MR. ARNOLD: Yes, sir.
10 MR. TOENJES: Please proceed.
11 MR. ARNOLD: Mr. Chairman, members of the
12 commission, we thank you for your last four months.
13 We've been at it that long, and I'd love to tell you
14 it will be over in the next day or two, but that would
15 not be true. We've got a little more work to do. But
16 I join the others in expressing appreciation for your
17 service. The charter plan suggests that -- requires
18 you report to the Board of Trustees' counsel this
19 morning and in prior hearings has referred to five.
20 There are actually eight. So, when we file our
21 written report of my summary this morning, we will
22 refer to all eight. There is some overlap. So it's
23 not as though anyone needs to redo the transcript for
24 any purpose. This morning I really want to talk about
25 two issues. One is rate payer impact, and the other
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1 is impervious area. Even in connection with the fair
2 and reasonable standard, which is the last of the five
3 requirements in the -- actually, the last of the eight
4 requirements in the charter plan. You found already
5 and you have demonstrated with us this morning. There
6 are competing public policies, which inform you how to
7 how you might sort out these issues. And they are not
8 easy choices. The elephant in the room is the consent
9 decree. To enforce a public policy with which none of
10 us disagree. That's clean water. But the cost of
11 providing for that elephant raises at issue with
12 respect to affordability the proposal is contingent
13 upon an additional $900 million in revenue bonds to be
14 approved by the voters. We already have $740 million
15 currently outstanding. I don't know, but that has an
16 impact on rates which go forward well beyond the four
17 years we're speaking about this morning. If approved,
18 and if as the District suggests, additional bonds will
19 be required after 2020, indeed after 2024. We have a
20 substantially increasing debt burden, which will
21 strain not only the District, but its rate payers in
22 in the proposal. The District has provided us with
23 the guideline, the information from the credit
24 agencies with respect to the metrics which must be met
25 in order to maintain the AA credit rating. The
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1 District's suggestions for meeting those metrics are
2 frankly slightly greater than the metrics themselves.
3 Now, I understand that because that's on the safe
4 side, but that has an impact on what the rate payers
5 are asked to pony up while the bonds are outstanding.
6 One of the other metrics which the credit agencies
7 worry about is what is the ratio of the annual debt
8 service to the operating budget. It will be 28
9 percent in 2015, and 50 percent in 2024 and growing.
10 Now, significant debt does a couple of things.
11 It drives up the cost of the rate payers, and it
12 reduces the ability of the District to deal with costs
13 if revenues decline. Now, let me use resident rate
14 payers as a marker, but this applies to multi-family,
15 to commercial, industrial, not necessarily in the same
16 way, but in each case the rates are driven up. The
17 2011 rate change proposal told us that the typical
18 residential waste water bill in 2011 was $27.56.
19 We've been told in this rate proposal that the 2014
20 rate is $32.25. If you go to the metrics,
21 particularly the Fitch -- Fitch says the rate ought
22 to be about $35, but Fitch counts waste and storm. So
23 we're not counting all of the rate paid by other rate
24 payers because some of this cost is funded by tax.
25 The typical residential waste water bill for 2020 will
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1 be $60.86 so it's more than doubled in ten years. If
2 the voters reject bond authorization and we have to
3 pay for the consent decree without the benefit of
4 spreading the cost over 20 or 30 years, the rate will
5 go to $96. So it will have more than tripled.
6 Now, let me focus right now particularly on
7 residential. The EPA considers a water and sewer bill
8 in excess of two percent of median household income as
9 a threshold beyond which a utility is described as
10 heavily burdened. Median -- not average. Median. A
11 ordered set of values below and above, and equal
12 number of values above and below. So, in the city of
13 St. Louis which has 140,000 households, 70 of them are
14 going to be below the median. In St. Louis County
15 with 404,000 households, 202 will be below the median.
16 That's 270 households, which are below what EPA says
17 is heavily burdened. July 1, 2017, as a percentage of
18 median households income would be 1.1 percent. 1.65
19 percent , if the voters don't approve the bonds.
20 Fitch says .9 for both water and sewer as a percentage
21 of median household income in 2020, it will be 1.36
22 and by 2024 we will have reached two percent. We will
23 have run out of map. Now, if revenues decline due to
24 rate shock -- if revenues decline on account of
25 reduced volume. And keep in mind the commercial --
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1 the larger rate payers are better able than the
2 residents to deal with waste water in a way that
3 reduce their waste water bill to the District, we're
4 running out of revenue to pay for the bonds for which
5 we have been obligated.
6 Now, choices aren't easy. If we lower the
7 rates, we increase the debt. If we increase the debt,
8 we raise the rates because we raise the cost of
9 borrowing. The management issues have been referred
10 to a couple of times this morning. I believe it was
11 Mr. Hoelscher who told us this morning that if the
12 revenues in a particular rate setting construct are
13 over or under, that has an impact on what happened to
14 the rate going forward. But that's not the testimony
15 in the record until this morning. Section 4.6.1, the
16 use of other operating revenues in the externarum will
17 be used for bond financing. And that's what Ms. Myers
18 said this morning. It will jeopardize compliance with
19 the consent decree or it will reduce the time to
20 permit additional debt later on. But no one has
21 really said it will be applied to reduce the rates.
22 Mr. Neuschafer spoke this morning about
23 whether or not the O and M expenses are overstated.
24 If they are -- and clients whom he reps have
25 testified in earlier proceedings -- that that reduces
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1 the incentive of the District to manage costs. I
2 don't know whether that's true or not, but it is
3 certainly true that the District ought to be diligent,
4 ought to be interested in reducing O and M, and
5 managing the debt so that the -- while the benefit
6 accrues to the District and to the rate payers, the
7 cost is not excessive. Because that's what reasonable
8 means. Reasonable means not extreme or excessive.
9 And it's in all of our best interests to ensure that
10 the cost are not excessive.
11 Storm water; retain the almost two cents --
12 we all call it the two cents on $100 ad valorem to
13 provide for regulatory services, to replace the O and
14 M. That's the original district, and some has yellow
15 and then we've got green. Then we've got red moving
16 west. Get rid of the O and M area, get rid of OMCI
17 sub-district and there is some extraneous other fees;
18 get rid of all of those and replace those with ten
19 cent for $100 ad valorem tax. And this is to meet O
20 and M capital projects and associated operations and
21 maintenance and meet the operating requirements of the
22 expanded service levels. That's language from the
23 rate change proposal.
24 Now, the District objects to the impervious
25 area because it costs too much and it may result in
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1 fewer tax payers. Let's consider -- I'm sorry.
2 Fewer rate payers. That argument is based on a
3 statute which was adopted by the John Will assembly
4 shortly after implementation of the 2008 rate change
5 proposal. What that -- and let's be careful about
6 what it actually says. What that language says is if
7 we don't provide them waste water, and if their storm
8 water goes naturally into other streams, we cannot
9 charge them a rate, a fee, or a tax because we haven't
10 provided them any service, have we? And what the
11 District is suggesting is we'll go forward with the
12 tax because the word "tax" in there is probably
13 unconstitutional -- and I happen to agree with the
14 District. We will charge these people for a service
15 which they don't receive. And the response to that
16 question was well, it will help dealing with storm
17 water in the adjoining sidewalks and street. Is that
18 fair and equitable?
19 Rate design traditionally and nearly
20 uniformly is based on cost causation. I won't go over
21 this. I went over this with Mr. Stannard and you
22 heard a little bit about that this morning, but
23 everybody links service cost with the fee. Cost
24 causation; we have evidence that ad valorem tax would
25 be uniform for all classes of rate payers. We have
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1 evidence that it's cheaper to administer, but we have
2 no evidence that it is based on cost causation. Mr.
3 Stannard in the 2011 rate proposal put a question in
4 the context of utilities rates stating what do the
5 words fair and reasonable mean to you. Answer in the
6 context of utilities rate setting the word "fair"
7 means to me that the rates recover revenues from
8 customer classes in relation to the costs incurred in
9 providing utility services to those customer classes
10 and be free from self-interest, prejudice, or
11 favoritism. In the context of utilities rate setting,
12 the word "reasonable" means to me that the revenue
13 requirement upon which the rates are based reflect an
14 appropriate level of funding to enable utilities to
15 provide adequate and sustainable service and support
16 the financial health of the utility. First sentence
17 was "cost causation" which is something which we don't
18 have here. There is no evidence I submitted that the
19 ad valorem tax is fair and reasonable District wide.
20 Further, the way the tax levy is proposed to be
21 implemented is not going to be fair and reasonable to
22 the rate payers in the yellow or the green zones. For
23 35 years the yellow and green zones have paid for
24 operation and maintenance and this includes asset
25 maintenance. That is repairing the capital projects
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1 that are already in existence. Or OMCI, operation
2 maintenance construction improvements in the green
3 zone, but the proposal is that all new revenues
4 generated by the two cent tax above and beyond
5 operation and maintenance needs to be applied to
6 projects in the red zone. So yellow and green have
7 paid for services for 35 years, but if there is
8 anything left over for O and M, it all goes to the red
9 zone west of 270. You need to consider whether that's
10 fair and reasonable. Zweig has come up a couple times
11 this morning, and Mr. Goss responded quite accurate,
12 the only claim in this case and only issue you decided
13 here is whether section 22A, that's the
14 constitutionally prohibits MSD from leveeing storm
15 water user charge without prior voter approval. Now,
16 Ms. Stump and I would be a lot more comfortable if it
17 ended there. But the Court added a footnote, and the
18 Court went back to article ten of the constitution and
19 then decided that because the storm water user fee --
20 this is their footnote, their discussion, they said
21 that because the storm water user fee related to
22 property, it didn't make a distinction between
23 impervious or to the property, they just said
24 impervious is property, property is property, but if
25 it's related to property under article ten, that's got
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1 to be a tax. Now, that's not the law. But, this
2 Court at least has suggested that there is a risk if
3 we eliminate the value factor from the property tax
4 that we will be faced with a challenge. I'll be happy
5 to respond to questions.
6 MR. TOENJES: Questions for Mr. Arnold?
7 MR. SCHNEIDER: Can we go back to some of
8 the statistics you mentioned about the burden, you
9 were talking about median value, you mentioned EPA
10 threshold two percent and you mentioned Fitch at 0.9
11 percent, can you go back to explain what the -- where
12 did that criteria come up and go back on that?
13 MR. ARNOLD: Okay. The two percent number
14 comes from the EPA, the 0.9 percent comes from I'm
15 going to say -- I don't know. We've got an exhibit --
16 I'm sorry -- I don't have it clear. We filed an
17 Exhibit with the Commission which has all of the Fitch
18 standards in it. And the left hand column is the
19 criteria and you have got AAA, AA, all of the grades.
20 If you go down the AA column and you cross it for
21 water and waste water median, average bill you get the
22 0.9 percent.
23 MR. SCHNEIDER: That's their guideline if
24 you're an AA rating agency -- that's your guideline
25 0.9 or lower for your user?
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1 MR. ARNOLD: That's correct.
2 MR. TOENJES: Other questions for Mr.
3 Arnold?
4 MR. MAHFOOD: One of the things, and I'm
5 sure it's embedded in the thinking, talking about
6 front end loading of over the term of the consent
7 decree, these cues and how the debt would potentially
8 be billed. I think you described all that very well.
9 But I also I think we all know that the concept behind
10 this in that way is the fact that we're spreading a
11 long term benefit to a lot of people that will benefit
12 a lot of people over a very long period of time,
13 spreading these costs out over a much longer period of
14 time as opposed to charging folks all up front in cash
15 for something that won't benefit them 40 years from
16 now or 30 years from now or 50. And I think that's
17 one of the key things that was dealt with in that two
18 percent number from EPA, I was actually involved with
19 the environmental and financial advisor to EPA for
20 years where affordability and that number was derived
21 and a lot of that discussion there was always juggling
22 that number with the concept of societal benefit over
23 a longer period of time. So, I don't disagree with
24 anything that you have said, but there is another
25 factor for to us consider is that benefit who is going
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1 to benefit from this over that longer period of time
2 as we contemplate this potential change in bond
3 rating, indebtedness, and what we're hanging on future
4 generations. But we also have to factor in in my mind
5 what are the benefits also for the future generations?
6 MR. ARNOLD: Nor do I disagree with
7 anything you just said.
8 MR. TOMAZI: Just a quick question, Mr.
9 Arnold. Did you say, I didn't get to the number, the
10 number of homes total in St. Louis city and county
11 combined that fall below the median household index.
12 MR. ARNOLD: No. The median number of
13 households comment, which I made was unrelated to the
14 two percent. I was setting that up in order to talk
15 about the two percent. There are 525,000 homes in St.
16 Louis, 140 are in the city, 404,I guess are in the
17 county. So that the median number of households in
18 the city would be 70 and in the county would be
19 202,000.
20 MS. BOWSER: Are you saying that the
21 application of the new state law would be the same
22 whenever we used the impervious or ad valorem in terms
23 of the number of people?
24 MR. ARNOLD: Let me assume, Commissioner,
25 that you're referring to the case rather than the
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1 statute. The statute only applies to, I believe, Mr.
2 Hoelscher said about 3500 rate payers. What I'm
3 saying about the Zweig case is that if the matter is
4 contested and if the Court construes the matter in the
5 same way as the footnote in Zweig, which is not the
6 law, that might be the law.
7 MS. BOWSER: Okay.
8 MR. TOENJES: Further questions for Mr.
9 Arnold. Hearing none. Are there any other matter
10 before we adjourn?
11 MS. MYERS: Yes. I'd like to provide the
12 Exhibit reference that were requested earlier.
13 MR. TOENJES: Please do.
14 MS. MYERS: House bill 661 is now RSMO
15 204.700. And that is Exhibit MSD 84. And my answer
16 to our authority to tax is Exhibit MSD 114 A.. It's
17 the response to question ten.
18 MR. TOENJES: Thank you very much. We will
19 adjourn now until 9 a.m. on July 10th, 2015, for final
20 public hearing session for the rate commissioners. I
21 want to remind you this will be your final opportunity
22 to ask questions of any of the parties including the
23 District prior to the beginning of our deliberations.
24 Thank you. Meeting adjourned.
25 (WHEREIN, the deposition was concluded at
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1 11:41 am.)
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1 CERTIFICATE OF REPORTER
2 STATE OF MISSOURI )
) ss.
3 CITY OF ST. LOUIS )
4 I, Jeanne M. Pedrotty, a Certified Court Reporter (MO)
5 and Certified Shorthand Reporter (IL), do hereby
6 certify that the witness whose testimony appears in
7 the foregoing deposition was duly sworn by me; that
8 the testimony of said witness was taken by me to the
9 best of my ability and thereafter reduced to
10 typewriting under my direction; that I am neither
11 counsel for, related to, nor employed by any of the
12 parties to the action in which this deposition was
13 taken, and further that I am not a relative or
14 employee of any attorney or counsel employed by the
15 parties thereto, nor financially or otherwise
16 interested in the outcome of the action.
17
18 ____________________________
19 Jeanne M. Pedrotty
20
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A
AA 30:12 88:25
96:19,20,24
AAA 96:19
ability 7:19,24
13:21 15:6,10
15:13 30:11
46:7 47:11 60:2
60:4 70:14,15
71:17,18 75:20
80:14 84:13
89:12 101:9
able 9:18 58:12
70:3 71:2,8
75:6,8 86:5
91:1
access 30:16
48:17
accompanied
7:16 46:2
accomplish
84:10
accomplishes
58:17
account 23:19
25:11 62:13
65:19 66:15
90:24
accounted 64:1
accounting 14:6
accounts 27:3,5
27:11
accrues 92:6
accuracy 28:21
accurate 17:19
18:6 27:21
50:22 79:22
95:11
acknowledge
65:15
act 10:6
action 24:17
54:12 101:12
101:16
actions 30:22
active 77:15
activities 49:18
activity 17:22
actual 56:20 61:6
64:3 82:18 83:6
ad 14:3 16:7,17
17:2 18:11 20:3
21:1,11 37:11
40:25 43:20
44:24 45:21
53:22 56:23
71:21,24 73:11
75:3,17 76:1
81:20 86:15
92:12,19 93:24
94:19 98:22
add 32:14 35:16
39:3 40:7 62:15
75:7 86:25
added 69:1 95:17
adding 40:4
addition 72:23
additional 8:17
11:17 21:5,7
24:11 33:20
41:22 65:13
68:21 88:13,18
91:20
Additionally
61:8
address 12:14
13:8 14:8 15:21
17:13 49:15
57:14 68:5
75:15 76:23
77:10,16 79:21
87:7
addressed 11:5
75:11
addressing 49:9
77:4 80:21
adequate 7:20
13:21 60:2
75:21 94:15
adjacent 52:19
adjoining 93:17
adjourn 99:10,19
adjourned 99:24
adjust 84:8
adjustment
29:12 60:24
adjustments 30:6
administer 75:1
94:1
administering
50:14
administrator
78:22
admirable 66:24
admit 69:24
admitted 68:15
69:17
admitting 69:10
adopt 28:16
adopted 8:6
23:24 93:3
advanced 23:18
advances 76:12
advantage 34:6
35:8 36:19,24
37:5 85:7
advisor 30:23
97:19
affect 22:3
affordability
88:12 97:20
agencies 88:24
89:6
agency 30:21,22
70:19 72:19
96:24
aggregate 24:6
24:14
aggressive 59:2
ago 31:22 38:12
38:21 39:12,15
40:16 82:24
83:14
agree 39:11
93:13
agreed 76:12
agrees 59:21
ahead 4:2 83:14
allegation 22:4
allow 18:4 24:10
32:6 35:20
36:16 42:6,25
43:24
allowing 17:23
19:6 58:13
allows 23:16
54:17
alternative 10:1
27:1 34:24 35:3
36:9 51:4 52:24
73:3 74:18
alternatives
34:14 35:14
82:5
amended 6:25
7:18 8:1 10:11
13:13 15:7
amendment 7:1
Ameren 25:17,20
25:24 26:1,5
36:11,23 64:23
Ameren's 26:4
64:15
amount 17:18
26:3 28:22
30:14 50:13,16
51:2 57:24
59:19 60:19,21
60:23 61:21,22
64:17 65:12,15
74:15 82:21
83:6 86:16,20
amounts 7:12
ample 59:18
analyses 65:25
analysis 22:9
23:8 37:23
84:10
analytical 23:12
62:24
and/or 30:16,24
59:19
announce 6:9
annual 22:12
25:15 26:16,21
31:25 32:25
60:14 63:21
89:7
annually 62:7
anomalous 63:11
answer 13:24
14:20 31:15
32:22 34:18
37:6,17 38:19
43:20 44:5
49:19 53:12
94:5 99:15
answered 38:19
55:18
Answering 33:13
answers 40:20
anticipated 7:13
23:17 32:8 65:1
anybody 54:4
apologies 12:2
apologize 81:5
appear 63:14
64:3
appeared 77:2
appears 17:5
64:20 101:6
appendix 28:23
applicable 7:25
15:6 60:4 78:3
81:11
application 8:8
70:25 98:21
applications 8:9
8:13
applied 61:20
91:21 95:5
applies 89:14
99:1
apply 21:13
22:10
applying 22:19
appreciate 57:24
appreciates 71:8
appreciation
87:16
approach 45:22
59:2,23 78:21
86:22
approached
71:22
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appropriate
25:12 28:7 49:8
71:2 83:5 94:14
appropriately
28:15
approval 95:15
approve 90:19
approved 6:23
13:17 21:24
88:14,17
approximately
25:4 26:4 60:25
61:17 64:12
65:20
April 9:1
arching 71:24
arduous 46:2
52:10
area 23:10 24:25
41:7 42:17,21
46:17 47:8,12
48:16 49:2 50:2
50:4,12 52:22
52:22 63:6
67:18 72:7 77:3
80:15 82:16
85:8,10 88:1
92:16,25
areas 20:4 21:3
41:7,13 47:2,14
47:24 50:2,3,24
51:10 71:22
76:9
arguing 72:12
76:18
argument 27:6
93:2
arguments 51:22
Arnold 3:13
11:13,14 12:11
68:9 69:7,9
87:6,9,11 96:6
96:13 97:1,3
98:6,9,12,24
99:9
article 95:18,25
articles 77:1
articulated 72:4
ash 35:20,22 36:3
asked 40:20
51:14 68:9 69:5
89:5
asking 43:16
50:23 52:12
80:17
assembly 93:3
asserts 64:24
assessed 72:9,22
assessment 43:9
asset 94:24
assets 7:10
assign 11:25
69:24
assist 47:16
71:12
assistance 47:25
associate 60:24
associated 23:1
23:19 53:7
76:22 92:20
association 3:19
8:11 43:5 67:12
68:6 71:6 80:4
assume 26:8
98:24
assumed 26:15
assumes 25:23
assuming 50:22
assumption
25:13 27:6 28:5
28:16 29:10,19
29:22 37:18
40:6 63:8 64:6
assumptions
23:7,9,11,14,18
23:23,24 24:3
24:12,21 27:2
27:19 28:7,8
29:5 63:15
assured 31:17
attempted 51:6
62:9
attitude 46:1
attorney 101:14
August 8:21
authored 73:14
authority 54:16
57:6 99:16
authorization
90:2
automatic 37:2
availability
24:13
available 14:6
24:11 33:25
34:7 80:4
average 26:3,6
29:10,18 35:1,2
61:18 62:2
74:15 90:10
96:21
avoid 55:17
avoiding 30:9
award 69:14
aware 57:20 83:7
83:18
a.m 10:20 71:4
99:19
B
back 21:8 31:14
38:20,23 45:23
45:24 46:14
50:8 51:8 53:2
54:11,25 55:1
55:11 68:24
79:19 80:7
81:17 83:20
84:12 95:18
96:7,11,12
backups 52:3
bad 29:5,7,14,23
30:1,7 61:4,5,7
61:10,12,13
Baer 3:14
balance 31:2
34:10
balanced 59:23
balances 41:25
barrel 84:22,25
barriers 73:16
base 25:25 26:5
32:19 40:9 59:3
66:18,22
based 13:22 28:8
29:9,11,22
30:20 37:18,22
41:5 43:8,13
55:13 59:11,12
61:19 63:14
64:14,20 67:13
67:17 69:22
72:7,8,13 73:3
74:4,17,20 83:5
83:12,16 84:2
86:6,22 93:2,20
94:2,13
baseline 66:21
basement 52:3
basically 42:2
basins 76:5
basis 31:21 53:2
79:23 85:24
battle 19:21
bears 72:21
beginning 26:6
99:23
behalf 12:15
57:14 68:5
69:17
belief 77:6
belies 77:6
believe 26:20,23
30:23 31:3
32:11 40:6 45:2
55:4 56:13 57:8
58:3,15 59:18
62:20 71:21
75:19 77:11
82:7 91:10 99:1
believes 16:21
17:11 31:12
58:25 62:3 67:7
beneficial 58:4
benefit 19:13
33:19,23 34:9
48:19 49:6
61:11 66:19
90:3 92:5 97:11
97:11,15,22,25
98:1
benefits 46:22
47:3 52:4,5
78:2 98:5
best 17:11 19:4
19:14 81:2,14
82:15 92:9
101:9
better 24:18
26:24 36:2,2
64:25 76:2 77:9
77:11 81:20
84:13 91:1
beyond 51:6,14
52:14 53:6
88:16 90:9 95:4
big 53:2
bigger 50:2
biggest 47:17
51:25
bill 31:19 33:16
37:17 40:2 44:1
53:12,15 89:18
89:25 90:7 91:3
96:21 99:14
billed 27:3,5 28:7
28:13 97:8
billing 39:2
bills 29:21 61:20
61:22
Bissell 25:10
bit 38:5 53:3 60:9
93:22
Black 73:5,10
blue 40:24
BMP 76:14,19,22
76:23 77:12,22
80:5,10
board 7:7,15
8:15,18 21:25
22:20 87:18
bond 30:11 59:18
90:2 91:17 98:2
bonds 7:9,23
14:19,23,25
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15:2 59:16,19
59:20 88:13,18
89:5 90:19 91:4
book 73:20
borrowing 91:9
Botanical 47:14
boundaries 55:9
boundary 42:16
Bowser 3:7 4:7
5:9 6:18,18
56:11,12,22
57:1,11 98:20
99:7
box 54:13
Brad 3:20
Brandon 3:17
Brian 16:3 31:15
49:23
Bridgeton 24:25
25:3,4,6
brief 10:15 67:23
briefly 9:14 13:8
51:21 53:14
bring 79:19
broad 23:25
Brockmann 3:7
4:7,8 5:9,10
6:17,17 31:10
32:23,24 38:19
79:1,2,15 80:16
80:20 81:6,9,16
broke 40:8
brought 45:2,5
48:20
Bryan 3:17
budget 33:21
58:9 89:8
build 28:1 49:23
Builders 8:10
67:12 68:6 71:6
building 37:1
built 36:22
burden 8:2 15:16
15:20 16:10
17:5 21:20
37:13 38:2
59:13 60:7 67:9
86:13 88:20
96:8
burdened 90:10
90:17
burdens 41:5
66:5
Bureau 11:22
buyers 44:9
C
C 3:1
CAGR 25:20
calculate 22:15
calculating 82:18
calculation 29:17
74:1,4,10,22,24
82:24
calculations 74:5
call 2:2 4:2,5,5
5:8 73:12 80:22
92:12
capital 1:7 14:8
14:13 20:4,22
21:3,7 23:1
24:19 30:19
34:3,5 48:8
56:5,8 59:15
64:23 65:14
92:20 94:25
care 46:19,20
48:15,15
careful 58:11
93:5
carefully 11:18
28:20
case 16:12 19:16
23:24 27:21
36:25 38:15
45:23 53:16,17
54:23 56:4,4,13
65:4 66:18,22
69:15 72:5,5
75:3 83:24 86:9
86:10,11 89:16
95:12 98:25
99:3
cases 58:6
cash 14:12 31:2
65:18 97:14
categories 83:22
84:1
causation 67:14
93:20,24 94:2
94:17
cause 15:3 21:14
caused 19:5
54:12 85:23
Cave 3:17
CCR 3:22
CCR/CSR 3:22
Census 11:22
cent 14:3 16:7,17
17:2 18:11,13
20:3 21:1 41:9
51:12 53:23
92:19 95:4
Center 46:25
centered 16:13
cents 35:3 92:11
92:12
certain 21:3
39:24 55:14
63:19
certainly 45:10
92:3
CERTIFICATE
101:1
Certified 101:4,5
certify 101:6
cetera 31:14
37:15 38:10,10
Chair 5:2 6:8
69:23
Chairman 6:6
11:14 12:11
68:7 69:9 70:17
87:11
challenge 83:18
96:4
challenged 56:14
56:23,24 83:4
challenges 83:7
Chan 3:8 6:19
chance 12:20
change 7:6,14,17
8:4,7,15 10:1
11:6 12:25 13:6
13:7,11,14,16
13:20,23 14:10
14:17,21,24
15:1,5,8,12,16
15:19,22 16:1,7
16:20 18:1,12
19:7,10 20:8
21:3,18,19 22:5
27:2,10 28:17
28:23 35:25
41:16 42:12,19
42:22 45:8
46:15 57:19,24
58:11,16 71:11
72:12 75:12
77:25 89:17
92:23 93:4 98:2
changed 53:15
changes 7:3,7
27:5 35:19 42:7
53:13 67:8
charge 23:2 29:6
29:8,9,15 31:24
42:14 59:23
61:24 74:16
82:20 83:15
93:9,14 95:15
charged 22:18
26:1 75:25
charges 22:10
29:20,23,24
30:2,4,8 44:24
61:18,19,23
86:2
charging 97:14
charter 6:22 7:1
9:4,16 10:4
13:2,10,19,19
14:16 15:19
16:2 57:7 59:24
71:14 75:24
87:17 88:4
cheap 35:1
cheaper 34:6,13
35:5 94:1
check 52:9
cheek 84:23
chemicals 64:2
Chodes 3:3 4:11
4:12 5:13,14
6:11,11
choices 88:8 91:6
chosen 31:1
churches 37:15
CIRP 23:2,25
cite 36:12
cities 42:23 73:2
citing 57:2
city 6:24 11:22
36:1 47:5 52:18
90:12 98:10,16
98:18 101:3
claim 28:18
52:11 95:12
claims 19:12
clarify 20:16
70:17
class 22:17 67:10
classes 8:2 15:17
15:20 16:10
21:20 37:13
60:7 93:25 94:8
94:9
classify 82:19
clean 88:10
clear 17:12 27:11
56:16 76:15
85:16 96:16
clearly 62:14
85:20 86:7
clients 91:24
close 40:21 49:5
closed 5:2 6:2,3
closing 11:7
cognizant 52:12
coincide 25:16
collect 32:6,8
50:21 54:17,21
60:20
collected 34:5
60:22,23
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collecting 32:3
42:24 54:13
collection 25:1,9
29:14 30:3,5
64:5
collections 61:6
collects 24:6
66:11
column 96:18,20
combination
14:12
combine 52:17
combined 46:21
47:2,7 50:4
98:11
combining 50:4
come 21:8 31:17
32:15 39:4,11
46:12 49:5 50:8
55:15 83:20
84:8 86:24
95:10 96:12
comes 36:3 47:1
96:14,14
comfortable
95:16
coming 39:14
47:6 52:17 80:7
commendable
49:25
comment 50:18
67:4 98:13
comments 67:5
69:8,20
commercial
35:24 83:23
84:7,9 89:15
90:25
commission 3:12
4:4 6:7,22 7:2,6
7:15 8:4,7,13
8:16,20,23 9:3
9:7,14,24 10:18
10:24 11:3,8,15
12:14 17:4,9
18:8,14 21:8
27:14 28:15,20
45:3,7 50:11
53:19 57:14
58:6,12 59:25
62:6 66:1 67:11
67:25 68:5,19
69:2,10,16 71:6
72:24 73:9,13
73:19 75:23
77:14 78:1,11
87:7,12 96:17
commissioner
6:9 85:5 98:24
commissioners
3:2 31:8 46:4
53:9 56:11
99:20
commission's
8:19 10:10 57:9
68:9,23 70:3
87:7
committee 48:8
common 7:18
13:12 22:8 73:2
73:12 74:10
communities
82:15
company 34:25
35:5 73:8
compare 40:5
compared 17:1
40:15 82:22
comparison
16:16
competing 88:6
compliance
14:15 22:23
23:2 24:9 66:13
91:18
complies 13:1,14
13:16
comply 7:25 15:6
15:11 46:10
60:4 69:5
component 39:1
40:14 49:11
components
22:21 40:24
concept 76:10
97:9,22
concern 30:12
71:24 72:3
75:10,15
concerns 48:20
59:9 71:23
concluded 99:25
concludes 31:4
67:20 78:6
conclusion 26:20
61:20
concrete 35:21
condition 79:10
79:14,24 80:18
conditions 19:3
23:10 80:24
conducted 9:12
conference 1:8
9:8,12,21 10:12
10:13 37:2
58:23 65:24
67:6,21 78:9
conferences 9:1
11:3
confused 68:11
confusion 20:13
connect 53:21
connection 62:7
62:14,20 71:9
77:22 88:1
consent 15:14
24:8 26:12 52:2
58:10 66:13
77:17 88:8 90:3
91:19 97:6
conservation
28:11
conservative
24:3 66:2
consider 28:16
28:20 39:16
51:3 59:25 93:1
95:9 97:25
consideration
17:4,9 18:15
considerations
17:15
considered 12:3
18:7,13 26:15
33:10,14 50:12
51:2
considering
38:16 63:18
77:16
considers 90:7
consist 62:23
consistent 7:17
7:21 13:11
14:17 15:1 31:3
61:2 65:25
consistently 58:6
72:20
consisting 16:7
constant 27:9
constitution 57:2
57:7 95:18
constitutional
7:17 13:12
54:15,18 85:25
constitutionally
95:14
construct 91:12
construction
43:10 63:5 79:4
95:2
construes 99:4
consultants 8:24
consultation
30:22
consulting 67:13
consumers 3:16
8:12 57:15,21
57:22 58:13,18
66:16,19
consumption
28:10
contain 67:22
contained 10:3
12:1 13:2
contemplate 98:2
contentious
85:14
contested 99:4
context 71:1 85:9
94:4,6,11
contingent 88:12
continue 20:4
24:9 49:18
66:14
continued 75:13
continues 26:20
58:4 77:23
contradictory
30:8
contributes
28:13
controllers 36:14
37:3
controls 80:5,10
controversial
86:8
Convention
46:25
cooperation 36:1
copy 12:18 31:5
correct 38:3
42:12 56:14,25
81:3,15,18 97:1
correcting 61:24
correlation 27:4
28:2
corresponding
63:15
cost 7:11 16:23
17:22,23 18:1
18:18,20,24
19:7,9,10 21:16
22:4,7,8,16,16
22:18,23 23:1
25:16,18,24
26:18 30:15,18
30:25 31:13,20
31:20,22,25
32:9,17 33:10
33:11,15 35:9,9
35:11,12 36:4,7
38:8 39:7 40:9
41:15 49:4 50:9
50:13 53:7
59:10 64:2,12
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65:1,2 66:6
67:14 68:13
72:20 73:1,4,17
73:18 75:5
76:14,25 77:11
77:18,23 78:4
78:23 88:10
89:11,24 90:4
91:8 92:7,10
93:20,23,23
94:2,17
costs 26:18 38:24
43:5 63:16
64:11,21,22
74:25 76:23
77:5 89:12 92:1
92:25 94:8
97:13
counsel 9:13 11:8
12:22 68:23
70:3 87:8,18
101:11,14
counties 73:2
counting 89:23
country 35:2,20
counts 89:22
county 6:24
11:23 90:14
98:10,17,18
couple 80:22
85:6 89:10
91:10 95:10
course 60:20
84:23
court 3:21 19:21
37:19,24 39:17
45:23 54:19,24
56:12,16 72:5
83:4 85:9 95:17
95:18 96:2 99:4
101:4
courts 13:18
21:23 54:24
covenant 7:22
14:18
covenants 14:24
15:4
cover 7:12
coverage 63:6
65:17
covered 63:3
covering 41:6
create 35:22
65:10 66:17,21
creating 78:2
creative 51:9
credit 17:23 19:6
20:16 21:13,15
29:12 30:10,12
30:20,25 43:3
43:12,17,21,24
44:9,13,18,20
49:1 75:12,14
75:16,19,19
76:6,7,10,13,21
77:9,20,24
78:19,22 79:25
80:1,3,11 86:25
88:23,25 89:6
credits 36:12,23
37:5 43:3 46:4
48:22 78:13
82:14
creek 47:21 51:9
52:5 55:11
creeks 52:1
criteria 9:16 10:3
13:1,5,8,9
15:23 43:13
75:22 83:21
84:12 96:12,19
criterion 13:14
13:17
critical 64:21
cross 96:20
CSR 3:23
cues 97:7
current 11:10
16:25 19:25
31:3,21 32:2
35:25 37:18
41:25 51:6,11
51:14 66:21
67:15 75:24
76:12 85:9,9
currently 17:19
18:10 20:2,5,25
25:6 35:17,19
35:21 41:7 42:2
55:25 76:13,21
88:15
customer 22:17
27:8,11,15 28:5
29:21 31:23
32:19 33:9 39:1
40:9 54:4 59:3
62:23 80:4 94:8
94:9
customers 16:23
16:24 17:25
19:10 21:6,14
26:14 27:25
28:3 31:18,20
32:3,4,5,10,13
38:8,9 39:2
40:3 42:14
43:23 54:22
58:5 59:8,23
61:11 62:4,5,17
62:18,22 63:11
63:17,24 64:8
65:11 66:5
76:23 77:3
cycle 45:5
D
D 2:1
data 23:12,12,15
26:1 27:10,20
28:22 58:2
60:18 61:2
62:11,14,15,20
63:16 64:5
date 11:16,19
12:24 69:2,2,5
dates 70:19,20
day 87:14
days 8:17 65:17
80:22
deadline 68:11
68:19
deal 89:12 91:2
dealing 93:16
dealt 82:16 97:17
debt 14:12 24:10
24:11 29:5,7,14
29:23 30:1,7,14
30:18,24 61:4,5
61:7,10,12,13
65:13 88:20
89:7,10 91:7,7
91:20 92:5 97:7
debt/PAYGO
31:2
decide 21:6
decided 95:12,19
decides 50:11
deciding 16:19
decision 37:23
39:17 69:12
72:11
decline 26:9
28:13,19 30:2
60:12 62:16
63:17 89:13
90:23,24
declined 27:12
61:8 63:22
declines 27:25
declining 30:5
decrease 24:23
29:2 34:10
60:18 63:8,11
63:13,19
decreasing 28:10
decree 15:14
24:8 26:12 52:2
58:10 66:13
77:17 88:9 90:3
91:19 97:7
deductibility
31:18 32:16
deductible 39:13
Deer 47:21 51:9
deficient 71:22
deficit 27:17
define 9:9
defined 72:6
74:17
delegates 6:22
deliberations
99:23
delinquencies
7:13
demonstrated
13:3 88:5
depending 47:24
deposition 99:25
101:7,12
depth 38:18
derived 97:20
describe 9:15
53:15
described 40:13
69:11 90:9 97:8
describing 9:22
10:14
description
10:15
design 84:24
93:19
designated 41:23
desired 10:10
despite 27:13
detail 13:9 58:22
60:9 67:22
82:17
detailed 32:21
78:7
details 31:16
detention 19:1
53:2
determination
57:3
determinations
22:1
determine 74:5,8
74:14
determined
15:17 19:25
determining 17:5
detriment 19:19
developed 28:22
81:2,10,14
developer 80:2
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developers 18:25
79:9,11
development
19:1 52:21
68:14 79:20
developments
19:6
difference 18:1
21:15 41:11
51:1 56:3
different 36:25
39:7,9 40:25
41:6,6 46:1
75:9 82:19
84:17
difficult 71:12,12
diligent 92:3
direct 28:2
directed 11:25
72:15
direction 29:24
46:8 56:17,17
101:10
directly 25:1,9
34:19 60:1
Director 34:18
34:22
disagree 53:4
63:7 84:5,11
88:10 97:23
98:6
disagreement
13:5 15:23
disagreements
22:3
discharge 35:10
discharging 25:1
discourage 77:24
discovery 8:25
10:25 11:1 16:4
57:5,9 58:24
discreet 41:13
discuss 13:9
15:25
discussed 16:3
24:4 36:8 51:21
58:24 64:7
discussion 5:3,7
15:21 16:12,18
44:23 45:19
49:17 70:9
95:20 97:21
discussions 51:23
55:13
Dispatch 77:2
dispose 36:3
disregard 66:25
distinction 95:22
distribute 11:10
distribution
48:16
district 1:6 3:10
4:4 6:7,23 7:3,5
7:6,10,23,24
8:5,16 9:5,8,13
11:7,10,21 12:5
12:15,23,23
13:23 14:19,22
15:3,6,13 16:6
16:6 17:3 18:2
18:5,18 19:7,11
19:13,23 20:5
20:13 21:3,6,18
22:22 23:8,16
24:7,14,16,23
25:11 26:20
27:3,16,19 28:6
28:17,23 29:7
29:12,13,16
30:13,18 36:11
41:14 42:16
44:25 45:6 46:9
53:10 63:25
66:12 68:21
69:18 70:13
71:18 72:3,4,6
72:8,11,23 73:7
74:7,25 76:10
76:12,17 77:12
77:16,23 78:5
78:24 80:12
82:23 84:14,20
85:18 86:4,6
88:18,21,22
89:12 91:3 92:1
92:3,6,14,24
93:11,14 94:19
99:23
districts 41:1
83:17
District's 7:19
8:18 10:1,20
12:25 13:4,21
14:14 15:8,10
18:24 22:6,13
23:14 25:9
26:23 27:18
29:4,9,10,19,21
30:11,13,15,16
30:19,21 31:4
44:13 60:2,4
71:11 72:17
75:20 76:25
89:1
district-wide
14:5,7 16:7
20:7,11 21:7,11
37:11 41:9,20
42:18,25
dive 60:8
divided 40:23
dividing 46:19
document 49:13
81:19,23,23
82:5,6,7,10
documents 68:25
82:1,4,13 83:9
doing 36:5 47:3
49:25 50:1,19
51:8,10 55:18
70:18 79:22
dollar 39:5 47:1
61:21
dollars 30:18
32:1 33:24,25
39:4,6,7,9
41:22 50:24
62:1
donation 48:17
double 26:4
60:25 63:1
doubled 90:1
doubt 39:19
downstream
19:3
downward 29:16
drain 13:21
75:21
drainage 7:20
18:17 60:3
71:19
drive 36:15 80:6
driven 23:1
89:16
driver 14:1 36:14
49:3
drives 36:19
89:11
driveway 48:25
49:1
dual 58:17
due 7:9 16:25
24:24 60:16
90:23
duly 101:7
E
E 2:1 3:1,1
earlier 68:10
80:3 84:20 85:6
91:25 99:12
earn 50:16
easier 82:22
easiest 48:23
easily 18:5
Eastern 8:11
71:7
easy 58:1 88:8
91:6
economic 23:7,10
23:13 24:2,3,21
25:13 27:1,2,4
27:8,13 28:5
29:5
economy 23:20
educational 46:3
effect 30:10
61:13,15 76:24
effective 73:17
73:18
effectiveness
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expense 23:4,6
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kept 47:13
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kilowatt 35:2
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leading 24:15
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leap 55:4
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34:7 95:8 96:18
legal 5:3 11:8
24:17 37:25
43:8,12 58:14
58:20 68:23
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legislation 17:1
32:2 39:21,24
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legislators 55:14
legislature 32:13
54:1 55:4
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let's 4:2,4 32:3
38:20 48:21,22
48:24 49:9
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licenses 60:15
life 59:20
light 83:13
lighting 36:20,21
lights 37:2
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limited 65:12
limiting 79:25
line 30:20 33:15
43:7 61:23
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linked 67:19
links 93:23
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list 11:10 12:1
Litigation 3:23
little 13:5 38:5,18
53:3 68:10
87:15 93:22
live 85:12,14
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load 19:5
loading 97:6
local 52:1
located 40:18
locations 36:13
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logical 30:1
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long 55:4 87:13
97:11,12
longer 97:13,23
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major 28:12
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majority 63:4
making 27:6 48:2
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manage 92:1
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76:1,2,8 77:19
78:6 81:2,15
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managing 92:5
mandated 77:16
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mandating 78:19
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marker 89:14
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48:13
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11:22
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matter 82:16
99:3,4,9
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48:12 59:5
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median 90:8,10
90:10,14,15,18
90:21 96:9,21
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meet 10:2 15:13
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66:3 78:13
79:16 92:19,21
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99:24
meets 10:2 15:22
16:1
members 11:4,14
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memorandum
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mention 39:16
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mentioned 41:21
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28:25 71:13
72:7 73:12 75:9
methods 73:3,18
metrics 88:24
89:1,2,6,20
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3:10,18 4:3 6:7
9:5,7 12:22
Midwest 3:23
MIEC 3:16 57:19
58:21,23,25,25
59:14,21 60:23
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63:7 64:13,24
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million 27:17
32:1 33:24,25
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72:5 85:9 86:1
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moment 66:8
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N 2:1 3:1
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35:8 71:16
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note 66:15
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notice 7:6 8:5,15
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82:23 90:12
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numerous 16:4
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66:4
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88:25 98:14
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33:2
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26:24
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14:19 15:2
88:15 89:5
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52:2
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overstating
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P
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13:19 14:16
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31:11
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74:15,24
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39:20 48:1
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54:6 55:21,22
57:1 63:3 73:23
78:14 81:25
85:7
participant 10:6
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participants 9:2
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70:15,16 99:22
101:12,15
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pay 7:9 17:25
21:14 39:25
40:4 41:15,17
41:18 44:18
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55:1 90:3 91:4
payer 24:18
87:25
payers 8:3 10:22
15:17,21 16:11
21:20 30:19
33:23 34:9 38:3
43:11,14,15
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67:10 71:20
73:25 78:24
83:22 86:2
88:21 89:4,11
89:14,24 91:1
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94:22 99:2
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paying 32:10
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63:1
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49:1
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76:18
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59:15
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10:8,16 15:24
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72:18,20
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73:5
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27:13 48:7 50:5
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Post 77:2
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98:2
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81:15
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22:14 28:25
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12:24 15:15
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proceeds 59:17
process 22:17
33:17 34:11
35:22 52:11
53:19 57:25
58:1,4 64:5,5
produced 73:6
77:20
produces 86:18
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production 35:21
profit 34:2
program 1:7
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83:8,10 84:15
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76:15
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projecting 25:25
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projection 25:12
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projections
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52:20 60:12,19
61:1 92:20
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19:3,15,17,19
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quote 40:1 60:15
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41:10 47:10
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6:16,16 44:22
44:22,23 45:6
45:13,16 78:12
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81:17,22 82:3,9
96:7,23
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