HomeMy Public PortalAboutExhibit MSD 84A - MSD Response to First Discovery Request of the Rate CommissionExhibit MSD 84A
BEFORE THE RATE COMMISSION OF THE
METROPOLITAN ST. LOUIS SEWER DISTRICT
MARCH 17, 2015 FIRST DISCOVERY REQUEST
OF THE RATE COMMISSION
Metropolitan St. Louis Sewer District Response
ISSUE:
WITNESS:
SPONSORING PARTY:
DATE PREPARED:
WASTEWATER AND STORMWATER RATE
CHANGE PROCEEDING
METROPOLITAN ST. LOUIS SEWER DISTRICT
RATE COMMISSION
MARCH 27, 2015
Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, Missouri 63103
BEFORE THE RATE COMMISSION
OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT
For Consideration of a Wastewater
and Stormwater Rate Change Proposal
by the Rate Commission of the Metropolitan
St. Louis Sewer District
MARCH 17, 2015 FIRST DISCOVERY REQUEST
OF THE RATE COMMISSION
Metropolitan St. Louis Sewer District Response
Pursuant to §§ 7.280 and 7.290 of the Charter Plan of the Metropolitan St. Louis Sewer District
(the "Charter Plan"), Operational Rule 3(5) and Procedural Schedule §§ 17 (b)(i) and (ii) of the
Rate Commission of the Metropolitan St. Louis Sewer District ("Rate Commission"), the
Metropolitan St. Louis Sewer District ("District") hereby responds to the March 17, 2015 First
Discovery Request Of The Rate Commission for additional information and answers regarding
the Rate Change Notice dated February 26, 2015 (the "Rate Change Notice").
MARCH 17, 2015 FIRST DISCOVERY REQUEST
OF THE RATE COMMISSION
Metropolitan St. Louis Sewer District Response
1. A Commissioner has requested that the District provide a map of Capital
Improvement and Replacement Program ("CIRP") projects included in the FY13-FY16
Wastewater Rate Change Proposal, similar to the map provided in 2015 Wastewater and
Stormwater Rate Change Proposal Summary presented by Brian Hoelscher on March 4, 2015.
See MSD Ex. 80, p. 15.
RESPONSE:
This map has been provided as Exhibit MSD 84B - Rate Commission FY13-16 Wastewater Map
2. The Rate Change Proposal contains a residential bill comparison prepared by
Raftelis Financial Consultants Inc. ("RFC"). See MSD Ex. 1, Figure 6-2, p. 6-5. A
Commissioner has requested that the District provide a bill comparison for non-residential rate
payers.
RESPONSE:
See Exhibit MSD 84C- Bill Comparison for Non-residential Rate Payers
3. Richard L. Unverferth states in Direct Testimony that the $971 CIRP is required
to comply with the Consent Decree in United States of America v. Metropolitan St. Louis Sewer
District (MSD Ex. 47) or other regulatory requirements. See MSD Ex. 3C, p. 2, 11. 16-23. A
Commissioner has requested that the District identify (a) any CIRP project described in
Appendix Sections 7.2 and 7.5 not required for compliance with the Consent Decree or other
regulatory requirements; and (b) any other CIRP project not described therein.
RESPONSE:
(a) The majority of the wastewater program is required by the Consent Decree or other
regulatory requirements. MSD has identified four wastewater project budget items totaling
$1, 380, 000 that are not required by a regulatory requirement which are shown in Exhibit MSD
84D Wastewater not required for compliance.
The majority of the stormwater program is not required by the Consent Decree or other
regulatory requirement. MSD has identified stormwater projects totaling $40,361,200 that are
not required. Note that ten stormwater budget items are considered related to Consent Decree
requirements, as they construct storm sewers needed to enable removal of stormwater runoff
from properties that have private stormwater inflow connections to the sanitary sewer. The
connection removal work is funded as part of the wastewater program. See Exhibit MSD 84E
Stormwater not required for compliance" for projects not required for compliance with the
Consent Decree or other regulatory requirements.
(b) None
4. During the March 4, 2015 presentation of the Rate. Proposal Summary (MSD Ex.
80), Brian L. Hoelscher referred to 'the Combined Area." A Commissioner has requested that
the District provide a map of the Combined Area.
RESPONSE:
This map has been provided as Exhibit MSD 84F - Combined Sewer Boundary Only
5. The Rate Change Proposal Summary sets forth the current stormwater service
levels by utilizing a map which identifies the various levels of existing services in colors yellow,
green or red. See MSD Ex. 80, pp. 29-30. A Commissioner has requested that the District state
the percentage of sewers existing in the red area in 1989 when the District assumed
responsibility for stormwater.
RESPONSE:
NASD does not have the amount of sewers that existed in the annexed area in 1989. Early in the
1990s MSD began digitizing hand drawn maps of the storm sewers into Microstation. From the
Policy and Standards Report of the MSD Stormwater System Master Improvement Plan, dated
October 1995, the engineering consultant stated that the mileage of storm sewers was unknown,
and that many data gaps existed in the annexed area at that time. The earliest complete
inventory of the storm system found was from 1997 in Microstation listing 2,382 total miles of
storm sewer at that time, compared to 3,027 miles today, but the amount located in the annexed
area was not tabulated. From the oldest data in the District's current GIS mapping system, we
estimate that as of April 2011, 1,356 miles of storm sewers existed in the red area, which
represented 45% of the total storm sewers in the District. From current data in GIS, we estimate
that as of 2015, 1,385 miles of storm sewers exist in the red area, which represents 45% of the
total storm sewers in the District
6. Jonathan C. Sprague states in Direct Testimony that stormwater services are
comprised of the effective collection and transport of stormwater within the District in a manner
that protects the public's health and welfare. See MSD Ex. 3D, p. 5, 11. 14-17. A Commissioner
has requested that the District clarify what portion of the expense of operation and maintenance
of the Stormwater System is governed by the Clean Water Act.
RESPONSE:
None
7. During the March 4, 2015 presentation of the Rate Proposal Summary (MSD Ex.
80), Brian L. Hoelscher referred to "regulations related to quantity" and "regulations related to
quality." A Commissioner has requested that the District explain the difference between such
regulations.
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RESPONSE:
The Engineering Department's Planning Division reviews new development plans to ensure
compliance with MSD's Rules and Regulations and Engineering Design Requirements for
Sanitary Sewage and Stormwater Drainage Facilities (February 2006). These Rules and
Regulations contain performance criteria for stormwater management design that address the
quantity and quality of runoff.
The regulations addressing "quantity" are generally also referred to as flood detention design
requirements and as flood plain requirements. Flood detention involves holding and releasing
stormwater runoff from a site at rates not to exceed allowable 2-year and 100-year 24-hour
runoff rates. Detention basins are generally the type of stormwater management facility that
accomplishes this purpose. Meeting flood plain requirements involves ensuring that changes to
areas, streams, and culverts subject to flooding do not exacerbate flood conditions. Managing
stormwater "quantity" ensures that new or re -development of property does not create adverse
conditions or flooding downstream from the development.
The MSD regulations addressing "quality" are generally referred to as the water quality and
channel protection criteria, and are components of MSD's plan to comply with Missouri State
stormwater operating permit requirements (See Exhibit 84L10 - MO-R040005 for the MSD
Small MS4). These requirements are intended to protect water quality by treating the
stormwater runoff to remove solids and other pollutants with the goal of protecting water quality
and preventing streambank erosion. Structural Best Management Practices (BMPs) are the
stormwater management facilities that accomplish this purpose. The water quality BMPs
capture and "treat" the 90th percentile daily rainfall depth (P=1.14 inches). Water quality
BMPs installed on new development projects are required to reduce the volume of discharged
rainfall to the site's pre -construction condition to the maximum extent practicable. Water quality
BMP designs can fall into a number of dfferent categories, as defined by MSD Rules and
Regulations: ponds, wetlands, infiltration, rain gardens (bioretention), pervious pavement,
filtering and open channel practices.
8. Pursuant to the last Rate Change Proposal approved by the Board of Trustees in
2008, the District imposed a stormwater user charge based upon the square footage of
impervious area ("Impervious Area Fee") on each owner's property. A Commissioner has
requested that the District disclose how many sewer districts across the country use impervious
area fees rather than taxes to fund stormwater services?
RESPONSE:
To the best of our knowledge there is no national database containing information on the
number of stormwater systems funded through property taxes versus parcel based rates. The
transition of stormwater management from general fund activities to a utility type funding
structure has been occurring throughout the United Sates since the mid 1970's, but there
continues to be a large number of cities and counties that continue to fund stormwater
management through property taxes. According to the 2014 Black & Veatch survey, 90% of the
respondents have a user fee based on some form of parcel area such as gross and/or impervious
area. See Exhibit MSD 84G - 2014 Stormwater Utility Survey.
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9. Pursuant to the last Rate Change Proposal approved by the Board of Trustees in
2008, the District imposed a stormwater user charge based upon the square footage of
Impervious Area Fee on each owner's property. Please provide (a) an analysis of the process to
calculate (i) each landowner's Impervious Area Fee and (ii) the total square footage of
impervious area throughout the District; (b) maps and schedules identifying the total square
footage of impervious area throughout the District for (i) nonprofit landowners, and (ii) other
landowners; and (c) copies of any memorandum, report, work paper, summary, analysis or
schedule used to (i) calculate or identify the materials requested in this Discovery Request and
(ii) to determine which landowners would be exempt from the imposition of an Impervious Area
Fee.
RESPONSE:
(a)(i) MSD calculated each landowner's impervious area fee using impervious data obtained
for each parcel. MSD determined the impervious area from aerial orthophotography and
planimetric delineation of the footprints of impervious surface areas using these aerial
photographs. MSD then combined this impervious data with the parcel data for both St. Louis
city and county parcels obtained from local government. MSD then removed the unbillable
impervious data, and determined the remaining impervious data by parcel, assigning a billing
address to each individual piece. The detailed rules describing this process can be found in
Exhibit 84H - Impervious Processing Rules.
(a)(ii) The total square footage of impervious area throughout the District as of 2009 data was
approximately 144 square miles. The sum of the billable impervious area was approximately 97
square miles as of 2009 data.
(b)(i) & (ii) The Metropolitan St. Louis Sewer District's Stormwater Rate was a user charge
based on the amount of impervious area a parcel contained. Because this was not a tax, the
nonprofit status of a particular parcel was never taken into consideration. Parcels were split
into two groups, residential or non-residential, based on the land use code given to it by the city
or county. The land use code only determined how the impervious area on the parcel would be
processed.
(c)(i) See Exhibit 84H - Impervious Processing Rules.
(c)(li) The only landowners that would be exempt from the Impervious Area Fee would be those
identified in Exhibit 84H — Impervious Processing Rules and Exhibit 841 — RSMo Section
204.700.
10. Brian L. Hoelscher states in Direct Testimony that in nis opinion the Stormwater
Tax Change imposes a fair and reasonable burden on all classes of taxpayers for three reasons,
one of which is "the ad valorem taxing method is the most cost-efficient method to collect
stormwater revenues and avoids annual costs included in methods like a voted impervious area
fee." See MSD Ex. 3A, p. 3, 11. 8-12. Please (a) describe the analysis that was performed to
reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary,
analysis, or schedule that supports this conclusion; and (c) describe the rationale for such
conclusion.
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RESPONSE:
(a) The cost associated with acquiring an impervious surface data set that is suitable for Billing
purposes requires (i) Aerial Orthophotography of the District and (ii) Planimetric delineation of
the footprints of impervious surface areas using the aerial orthophotography. This process
would be repeated every other year. In addition, MSD would incur costs to maintain this
information and respond to customer requests concerning it. The incremental and ongoing costs
for this are identified in Exhibit MSD 84J - Incremental for Impervious Fee Type.
(b) This response to the Discovery Request provides our analysis. The budget and actual costs
for administering an impervious fee are part of the operating budget process.
(c) The cost of calculating a Storm water tax based on a simple property value calculation and
adding it to the bill is minimal compared to the cost of acquiring, processing, and administering
an Impervious Area fee. Under the tax scenario there are. no MSD costs associated generating
the impervious area fee, nor are there costs with resolving disputes based on disagreements with
area calculations, or land ownership.
11. Susan M. Myers states in Direct "Testimony that the Wastewater Rate Change
Proposal is consistent with constitutional, statutory or common law as amended from time to
time. See MSD Ex. 3B, p. 1, 11. 22-24. Please (a) describe the analysis that was performed to
reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary,
analysis, or schedule that supports this conclusion; and (c) describe the rationale for such
conclusion.
RESPONSE:
a. The precedent was set by the Missouri Growth case and the methodology of measuring
and billing MSD's wastewater rate has not changed since this ruling.
b. Other than the authorities outlined in the testimony, the only other written materials that
support MSD's conclusion consist of confidential and privileged attorney -client
communications and attorney work product.
c. Same as a.
12. Susan M. Myers states in Direct Testimony that the Rate Change Proposal will
not impair the ability of the District to comply with applicable federal or state laws or regulations
as amended from time to time. See MSD Ex. 3B, p. 3,11. 10-12. Please (a) describe the analysis
that was performed to reach this conclusion; (b) provide copies of any memorandum, report,
work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the
rationale for such conclusion.
RESPONSE:
The core of MSD's business is regulated by the Clean Water Act (CWA). The Rate Change
Proposal was developed by reviewing all of the known regulatory needs that will have to be met
over the next four years. That includes compliance with existing regulations and the consent
decree. See Exhibit MSD 3C and MSD 3D which outline the regulatory and consent decree
needs for wastewater. Also see response to Question 17.
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13. Susan M. Myers states in Direct Testimony that the Rate Change Proposal
imposes a fair and reasonable burden on all classes of ratepayers. See MSD Ex. 3B, p. 4,11.6-8.
Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies
of any memorandum, report, work paper, summary, analysis, or schedule that supports this
conclusion; and (c) describe the rationale for such conclusion.
RESPONSE:
When this Rate Change Proposal was developed the District retained the same methodology as
used since 1993. Regarding the methodology, see Exhibit MSD 3G and Section 4 of the MSD
Rate Change Proposal, February 26, 2015.
14. Susan M. Myers states in Direct Testimony that the Stormwater Rate Change
Proposal is consistent with constitutional, statutory or common law as amended from time to
time. See MSD Ex. 3B, p. 5, 11. 22-24. Please (a) describe the analysis that was performed to
reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary,
analysis, or schedule that supports this conclusion; and (c) describe the rationale for such
conclusion.
RESPONSE:
(a) and (c) MSD was created under the Missouri Constitution and derives all powers from the
Constitution and the Charter Plan of MSD, specifically Article VI Section 30(b) of the
Constitution and Section 3.020(20) of the Charter Plan. The District analyzed these provisions
along with Article X Section 22(a) of the Constitution when developing the Stormwater Rate
Change Proposal.
(b) Other than the MSD Charter and the Constitution, the only other written materials that
support MSD's conclusion consist of confidential and privileged attorney -client communications
and attorney work product
15. Susan M. Myers states in Direct Testimony that the Stormwater Rate Change
Proposal does not impair the ability of the District to comply with applicable federal or state laws
or regulations as amended from time to time. See MSD Ex. 3B, p. 6, 11. 13-16. Please (a)
describe the analysis that was performed to reach this conclusion; (b) provide copies of any
memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion;
and (c) describe the rationale for such conclusion.
RESPONSE:
In development of the Stormwater Rate Change Proposal the District considered its obligations
for Stormwater Regulatory Service. See MSD Exhibit 3C and the response to Question 20.
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16. Richard L. Unverferth states in Direct Testimony that the District has the
resources to successfully manage, construct, and complete the portions of the Capital
Improvement and Replacement Program ("CIRP") presented in the Rate Change Proposal, and
that the Engineering Department has developed a program delivery model that utilizes eight
multi -year consulting contracts to assure proper resources are maintained to provide engineering,
design, and construction management services based on various watershed locations, facility
types, and engineering disciplines. See MSD Ex. 3C, p. 4, 11. 8-13. Please (a) provide a copy of
the Program Delivery Model, or (b) describe the implementation of the Program Delivery Model.
RESPONSE:
This item has been provided as Exhibit MSD 84K - Program Implementation.
17. Richard L. Unverferth states in Direct Testimony that the Wastewater Rate
Change Proposal enhances the District's ability to provide adequate sewer and drainage systems
and facilities or related services. See MSD Ex. 3C, p. 5, 11. 20-22. Please (a) describe the
analysis that was performed to reach this conclusion; (b) provide copies of any memorandum,
report, work paper, summary, analysis, or schedule that supports this conclusion; and (c)
describe the rationale for such conclusion.
RESPONSE:
MSD's determination as to the adequacy of sewer and drainage systems and services is largely
defined by meeting regulatory obligations under environmental laws. Regulatory agencies have
reviewed and approved Plans that encompass nearly every aspect of the MSD system and its
services. For the combined sewer system, our CSO Long Term Control Plan (Exhibit MSD 47A)
was approved by the Missouri Department of Natural Resources. Our SSO Control Master Plan
(Exhibit MSD 47B) was approved by EPA. For the operation of these systems, MSD operates
under an EPA approved Capacity Management Operation and Maintenance Plan as required by
the Consent Decree (Exhibit MSD 47) and reports on activities annually. Note that the CMOM
Plan and annual reporting evaluates performance in accordance with defined service level
goals. All wastewater collection and treatment activities, as well as stormwater management
activities are regulated by Missouri State Operating permits. Agencies also oversee and
regulate MSD facilities under air regulations and solid waste regulations. Refer to Exhibit MSD
84L for a copy of these permits. The proposed wastewater and stormwater rate change will fund
the projects necessary to maintain compliance with these obligations to provide adequate sewer
and drainage systems and facilities and services.
In addition, MSD continuously focuses on effective asset management and proactively evaluating
regulatory requirements as outlined in the District's annual Strategic Business and Operating
Plan (SBOP). These two items are part of Strategies 4 & 5 of the SBOP. The plan can be found
as part of the District Annual Budget document, Rate Commission Exhibits 15, 17, and 19.
MSD also evaluates the adequacy of systems and services based on customer input, and is
currently receiving scores over 90%, as shown in the Rate Proposal Appendix 7.3.1.
18. Richard L. Unverferth states in Direct Testimony that additional future
wastewater regulatory requirements may be anticipated. See MSD Ex. 3C, p. 6, 11. 23-24; p. 7,
11.1-12. Please identify the anticipated future regulatory requirements and describe how each
might affect the ability to provide adequate sewer and drainage systems and facilities.
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RESPONSE:
Anticipated future regulatory requirements that would significantly impact MSD's wastewater
operations include the following:
a) Should the USEPA decide to classify the Mississippi River along the St. Louis riverfront
as protected for swimming, then additional CSO controls could be required. The cost of a
tunnel for providing those controls is estimated to cost over $1.5 Billion.
b) New national recommended water quality criteria for ammonia will result in lower
ammonia effluent limits at MSD's wastewater treatment plants. Additionally, MDNR has
stated it intends to adopt new "rivers and streams" water quality criteria for nitrogen
and phosphorous. Meeting these new limits will require improvements at MSD's
wastewater treatment plants, operational changes to existing plant processes, and/or
revisions to inspections and permits MSD issues to industrial users that discharge into
MSD 's sewer systems. The cost of these upgrades is estimated at over $500 million.
c) Replacement of Sewer Sludge Incinerators (SSTs) at the Lemay and Bissell treatment
plants, when needed, will require MSD to install new incinerator technology that meets
more stringent emission requirements. The conceptual cost of these upgrades is
estimated at over $270 million.
d) USEPA is developing new water quality criteria for viruses and other pollutants which
will likely require changes in capital and operations at MSD's wastewater treatment
plants. The cost of complying with these future criteria is uncertain at this time.
19. Richard L. Unverferth states in Direct Testimony that MSD is a co permittee in a
State -issued Municipal Separate Storm Sewer System (MS4) permit. See MSD Ex. 3C, p. 7, 11.
15-17. Please identify the other co-permittees.
RESPONSE:
The MS4 permit co-permittees are as follows:
City of Ballwin
City of Bellefontaine
Village of Bed Nor
Village of Bel -Ridge
City of Berkeley
City of Black Jack
City of Breckenridge Hills
City of Brentwood
City of Bridgeton
City of Calverton Park
City of Charlack
City of Chesterfield
City of Clarkson Valley
City of Clayton
City of Cool Valley
City of Crestwood
City of Greve Coeur
City of Dellwood
City of Des Peres
City of Ellisville
City of Fenton
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City of Ferguson
City of Florissant
City of Frontenac
City of Glendale
City of Green Park
Village of Hanley Hills
City of Hazelwood
City of Jennings
City of Kirkwood
City of Ladue
City of Lakeshire
City of Manchester
Village of Marlborough
City of Maryland Heights
City of Moline Acres
City of Normandy
City ofNorthwoods
Town of Norwood Court
City of Oakland
Village of Olivette
City of Overland
City of Pagedale
City of Richmond Heights
Village of Riverview
City of Rock Hill
City of St. Ann
City of St. John
City of Shrewsbury
City of Sunset Hills
City of Town & Country
City of University City*
City of Valley Park
City of Vinita Park
City of Warson Woods
City of Webster Groves
City of Wildwood
City of Winchester
City of Woodson Terrace
St. Louis County
*MDNR determined that University City was no longer exempt from the MS4 permit in 2012.
University City will be a co-permittee upon issuance of the next 11154 permit.
20. Richard L. Unverferth states in Direct Testimony that the Stormwater Regulatory
Services currently provided are sufficient to meet the regulatory obligations for the entire
District. See MSD Ex. 3C, p. 8, 11.1-3. Please (a) describe the analysis that was performed to
reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary,
analysis, or schedule that supports this conclusion; and (c) describe the rationale for such
conclusion.
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RESPONSE:
(a) MSD's regulatory obligations are defined in a Missouri State Operating Permit, see Exhibit
MSD 84L10 MO-R040005 for the MSD Small M54.
(b) As part of the permit obligations, MSD and the co permittees have prepared a St. Louis
County Phase II Stormwater Management Plan, which identifies the activities performed by the
co-permittees to comply with this permit, see Exhibit MSD 84M
(c) As required by the permit, MSD reports annually to MDNR on compliance activities. MSD
has not received any enforcement action from MDNR or EPA regarding compliance with this
permit.
21. Richard L. Unverferth refers in Direct Testimony to a separate agreement with the
Missouri River Levee District. See MSD Ex. 3C, p. 8, 11.15-16. Please provide a copy of (a) the
agreement and any amendments, and (b) any agreements and amendments with other Levee
Districts.
RESPONSE:
MSD does not have agreements with the Levee Distracts at this tame. MSD is currently in
discussions with the Districts regarding an agreement in which MSD will potentially contract
with the Levee Districts to perform routine Operation, Maintenance and Improvements of the
storm sewer system within their respective Districts and MSD would continue Regulatory
Services. When MSD does contract with the Levee Districts to perform Operation, Maintenance,
and Improvement of the public stormwater system, MSD plans on compensating for these
services by not charging the proposed 10 cent property tax in these areas.
22. Richard L. Unverferth states in Direct Testimony that additional Stormwater
regulatory requirements may be anticipated. See MSD Ex. 3C, p. 9, 11.5-12. Please identify the
anticipated future regulatory requirements and describe how each might affect the ability to
provide adequate stormwater systems and facilities.
RESPONSE:
The development and implementation of regulatory Total Maximum Daily Loads (TMDLs) on
streams in the St. Louis region are anticipated to impact the stormwater services MSD provides.
Based on Missouri's 2014 list of impaired waters, as many as 44 TMDLs could be developed
within MSD's service area. For each EPA -approved TMDL, MSD and its co-permittees will be
required to use practices that control stormwater pollutants to the maximum extent practicable.
Four (4) TMDLs have been finalized by MDNR and are awaiting EPA approval. Likely future
activities will include:
a) Additional water quality monitoring and modeling
b) New programs to address stormwater pollution and demonstrate TMDL compliance
Other regulatory changes that could impact MSD's stormwater systems include the following:
a) New national recommended water quality criteria for bacteria, which when adopted
would result in additional streams requiring TMDLs and make compliance with TMDL
implementation more costly.
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b) Waters of the U.S. Rulemaking, which could impact actions MSD takes to comply with
Clean Water Act 401 water quality certifications and 404 permits.
c) National Stormwater Rulemaking, in which EPA could require new steps for controlling
stormwater pollution, including retrofitting existing development with green
infrastructure.
d) New water quality criteria for viruses and other pollutants which flow through MSD's
stormwater sewer system.
23. Richard L. Unverferth states in Direct Testimony that cost estimates for the
Stormwater CIRP are based on historical District bid prices for sewer work, using conceptual
and preliminary design information, and that for channel restoration and green infrastructure
improvements, estimates are based on the technical expertise of consulting engineers and past
data on similar District projects. See MSD Ex. 3C, p. 11, 11. 15-18. Please (a) describe the
analysis that was performed to reach this conclusion; (b) provide copies of any memorandum,
report, work paper, summary, analysis, or schedule that supports this conclusion; and (c)
describe the rationale for such conclusion.
RESPONSE:
(a) A stormwater planning effort was undertaken from 2006 to 2010. This effort included a
conceptual scope analysis of all identified projects. This analysis used cost curves to
determine order of magnitude costs for validated projects, which were developed by the
District's stormwater consultant. Preliminary design information was based on unit cost
data developed from previous bid information.
(b) See Exhibit MSD 84N - Stormwater Conceptual and Preliminary Design Information.
(c) The method of estimating order of magnitude costs using cost curves when a detailed
engineering analysis has not yet been performed is an accepted industry practice.
24. Theresa A. Bellville states in Direct Testimony that no customer resistance
allowance was considered in the Rate Model or the Rate Change Proposal to compensate for a
potential decrease in the collection rate due to rate increases, and that a bad debt provision of
1.5% has been applied to revenue projections. See MSD Ex. 3G, p. 5,11.2-5. Please provide (a)
the District's (i) actual bad debt expense; (ii) actual write-offs; (iii) an aged receivables report for
the end of each fiscal year ending in 2010 through 2014; and (iv) end of year bad debt balances
for the fiscal years ending in 2010 through 2014; (b) a description of the District's process for
securing payment of receivables from delinquent accounts; (c) the forecasted expense related to
the Low -Income Assistance Program; and (d) the actual expense related to the Low -Income
Assistance Program for the fiscal years ending in 2010 through 2014.
RESPONSE:
See Exhibit MSD 840- Collection Process and Bad Debt Expense.
25. Tim R. Snoke states in Direct Testimony that there is currently $518 million
remaining under the $945 authorization to finance capital improvements in FY15, FY16, and
into the new rate cycle. See MSD Ex. 3E, p. 2, 11.9-13. Please state the amount of funds
appropriated from the bond authorization for each of FY12, FY13, and FY14.
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RESPONSE:
Voters approved the $945 million bond authorization on June 5, 2012. The District issued $225
million of senior lien bonds under the new authorization in FY13 (August 2012). In FY14, the
District received a $52 million SRF loan (November 2013) and issued $150 million of senior lien
bonds (December 2013). The total of $427 million issued in FY13 and FY14 reduced the
available bond authorization amount to $518 million for issuances in FY15 and beyond.
Appropriations for debt funded projects are not made from the bond authorization or from bond
issuances but from the Capital Project Funds (also called Construction Funds). Bond proceeds,
net of reserve amounts, are added to the Construction Funds balance available for
appropriations. In FY13, proceeds of $212.9 million were added to the Construction Funds
along with an additional $35.1 million of bond premium. Construction and Engineering
expenditures (appropriations) from the Construction Funds totaled $157.4 million in FY13. In
FY14, $192.5 million was added to the Construction Funds from the debt issuances along with
an additional $9.9 million of bond premium. Construction and Engineering expenditures from
the Construction Funds totaled $1769 million in FY14. See Exhibit MSD 84P
26. William Stannard states in Direct Testimony that in the past, legal counsel has
advised that issues regarding consistency with Constitutional, statutory, or common law should
be evaluated. See MSD Ex. 3H, p. 4, 11. 16-20. Please (a) describe any analysis prepared by
legal counsel and who evaluated the analysis; and (b) provide copies of any memorandum,
report, work paper, summary, analysis, or schedule containing this analysis.
RESPONSE:
There is no specific analysis associated with this statement, rather it is based on multiple
discussions with various legal counsel over the course of not just this current Rate Change
Proposal, but also those conducted in 2007, 2008, and 2011, for which Mr. Stannard served as
the rate Consultant to the Rate Commission. The legal counsel referred to in his testimony
includes not only the District's General Counsel, but the Counsel to the Rate Commission in the
prior rate change proceedings noted above.
27. William Stannard states in Direct Testimony that a determination whether the
Rate Change Proposal is consistent with and not in violation of any covenant or provision
relating to any outstanding bonds or indebtedness of the District requires an analysis of
covenants or provisions contained in the Resolutions or Ordinances issuing such obligations.
See MSD Ex. 3H, p. 5, 11. 5-11. Please (a) describe any analysis that was performed for this
purpose; and (b) provide copies of any memorandum, report, work paper, summary, analysis, or
schedule containing the analysis
RESPONSE:
The District's ability to access the bond market to secure long term financing of its CIRP at
competitive interest rates is, in part, based on the various covenants that the District has made
with its bond holders. These covenants are set forth in the Master Bond Ordinance (See exhibit
MSD 27) adopted by the MSD Board of Trustees. MSD's financial plan which is the basis for
this Rate Change Proposal was developed to comply with these covenants. There are four
covenants that are of particular relevance to this Rate Change Proposal as described below:
12
Rate Covenants
The majority of all District wastewater and stormwater revenues are deposited into and
accounted for by separate wastewater and stormwater operating funds. Portions of these
revenues are transferred to the General Fund, as required, to pay each utility's portion of
operation and maintenance expense and routine capital expenditures.
Section 6.1 of the Master Bond Ordinance requires the District to operate the System on a
revenue producing basis and at all times to prescribe, fix, maintain, and collect rates, fees, and
other charges for the services, facilities, and commodities furnished by the System fully sufficient
at all times to pay annual operation and maintenance expense, provide a reasonable operating
reserve, produce net revenues in each fiscal year equal to at least 1.25 times the Debt Service
Requirement on all Senior Bonds currently outstanding and 1.15 times the Debt Service
Requirement on all Bonds then outstanding and accumulate sufficient funds to meet the costs of
major renewals, replacements, repairs, additions, betterments, and improvements to the System
to keep it in good working condition. In addition, Section 3.020(16) of the Charter requires the
District to establish fair and reasonable schedules of charges and Section 7.130 of the Charter
requires a balanced budget.
Based on a detailed analysis of the System's revenue and revenue requirements, as presented in
Section 4 — Proposed Wastewater Rates section of the Rate Change Proposal, the District will
continue to meet the rate covenant requirements throughout the proposal time period fiscal year
2017 through 2020). In addition, the proposed wastewater rates to be in effect for fiscal years
2017 through 2020 are projected to provide sufficient user charge revenues, together with other
available revenue sources, to meet all projected revenue requirements related to the proposed
CIRP and remain in compliance with the rate covenants throughout the Rate Proposal forecast
period
Reasonable Charges
Section 6.7 of the Master Bond Ordinance requires that:
"None of the facilities or services afforded by the System will be furnished to any user
without a reasonable charge being made therefor."
Current and future rates for the System are based on detailed cost of service analyses to provide
reasonable assurance that each customer class pays its proportionate share of the costs required
to provide utility service. All users of the System are paying their proportionate share of
operating and maintenance expenses in compliance with the Master Bond Ordinance
requirement and Federal user charge requirements. No free service is being provided by the
District.
Adequate Maintenance
Section 6.2 of the Bond Ordinance requires the District to operate the System in an efficient and
economical manner and maintain the System at all times in good repair and sound operating
condition. The System has historically been adequately maintained and found to be in good
working order. Although costs are considered reasonable and result in rates comparable to
similar sized utilities, the District is continuously looking at ways to reduce costs and keep utility
rates as low as possible.
13
Additional Bonds Coverage Tests
In order to issue additional revenue bonds on parity with prior Senior Bonds, the District must
have sufficient revenues to meet either a preceding year or ensuing year additional bonds
coverage test. Section 5.3 of the Master Bond Ordinance requires historical Net Operating
Revenues and Investment Earnings ("net revenues ") for a period of 12 consecutive months of the
most recent 18 consecutive months prior to the issuance of the proposed Senior Bonds to be at
least equal to (i) 1.25 times the Maximum Annual Debt Service Requirement on all Senior Bonds
which will be Outstanding immediately after the issuance of the proposed Senior Bonds, and (ii)
1.15 times the Maximum Annual Debt Service Requirement on all Bonds which will be
Outstanding immediately after the issuance of the proposed Senior Bonds.
For the ensuing year additional bonds test, the Master Bond Ordinance requires the forecasted
net revenues for each fiscal year in the Forecast Period (the three consecutive fiscal years
commencing with the fiscal year in which any proposed Senior Bonds are to be issued) to be at
least (i) 1.25 times the Maximum Annual Debt Service Requirement on all Senior Bonds that will
be Outstanding immediately after the issuance of the proposed Senior Bonds, and (ii) 1.15 times
the Maximum Annual Debt Service Requirement on all Bonds which will be Outstanding
immediately after the issuance of the proposed Senior Bonds.
Revenue adjustments are allowed for the preceding year test for any rate increase enacted prior
to the delivery date of the proposed Senior Bonds and not fully reflected in the historical Net
Operating Revenues actually received during the 12-month period. A similar adjustment is
allowed for the ensuing year test if the rates were actually adopted by ordinance prior to
issuance of the bonds. Without a future rate adjustment provision for the ensuing year test, the
normal inflationary increases in operation and maintenance expenses could outpace the
revenues obtained from a relatively stable customer base such that future net revenues and
ensuing year debt service coverage may significantly decrease towards the end of the Forecast
Period. This may require the District to enact multiple year rate increases prior to issuance of
the Bonds, set rates at a current year debt service coverage level of 1.50 times the Debt Service
Requirement or higher to account for the expected coverage deterioration, or only rely on the
historic year test to issue additional Senior Bonds.
The Master Bond Ordinance also specifies additional bond tests for the issuance of any
Subordinate Bonds. These tests are identical to the additional Senior Bond tests.
The District has never defaulted on any District -wide or subdistrict revenue bond payment and is
expected to be able to issue additional revenue bonds throughout the study period. Table 1
presents the results of the rate covenant and additional bond coverage tests through fiscal year
2020. As indicated by Line 4 of Table 14, the indicated annual rate covenant coverage ranges
from 2.52 times annual debt service to 3.06 times annual debt service, exceeding the 1.25
minimum requirement. Likewise, the additional bond coverage levels for Senior Bonds, as shown
on Lines 11 and 16 of Table 1, exceed their 1.25 minimum requirements throughout the study
period Coverage indicated for total debt is also above the 1.15 minimum requirement
throughout the study period, as shown on Lines 5, 12 and 17 of the following Table 1.
14
Table 1. Debt Service Coverage under Projected Revenue l.ewrs
Pro'ected
1'rnj,�r�rd
FY2015
Projected
FY2016
Projected
Rate Covenant Coverage
1. Projected Net Revenue (1) $ 117,155,82S $ 138,223,824
Projected Debt Service to Bondholders (2)
2. Senior lienBonds
3. Total Debt (3)
Debt Service Coverage Levels
$ 38,344,215 $ 48,292,590
$ 62,431,026 $ 77,273,373
FY2017 FY2018
Projected Projected
$ 168,357,525 $ 199,136,504
$ 61,058,590 $
$ 93,123,693 $
pY2019 $Y2020
Projected Projected
$ 230,743,012 $ 266,020,716
73,328,590 $ 88,174,340 $ 105,720,178
107,221,590 $ I23,830,519 $ 143,160,871
4. Senior Lien Bonds (4) 3.06 2.86 2.76 2.72 2.62 2.52
5. Total Debt (5) 1.88 1.79 1.81 1.86 1.86 1.86
Millions! Parity Test Coverage
Projected MeaiwumAnnualDebt Service (6)
6. Senior Gan Bonds $ 55,686,100 $ 65,753,350 $ 77,248,850 $ 91,520,600 $ 107,354,475 $ 127,390,625
7. Total Debt 77,712,568 89,721,110 102,914,802 118,874,726 136,438,221 158,194,501
Preceding Year Test
8. Net Revenue for Prior Fiscal Year $ 99,313,116 $ 1I7,155,828 S 138,223,824 $ 168,357,525 $ 199,136,504 $ 230,743,012
9. Net Revenue Adjustment (7) 10.676.16Q 12.594.25Z 14 51350( 17.677.540 14.935.238 2.307.430
10. Adjusted Net Revenue $ 109,989,275 $ 129,750,080 $ 152,737,325 $ 1E6,035,065 $ 214,071,742 $ 233,050,442
pecedne Year Debt Service%overaee Levels
11. Senior Lien Bonds (8) 1.98 1.97 1.98 2.03 1.99 1.83
12. TotalDebt(9) 1.42 1.45 1.48 1.56 1.57 1.47
Ensuing Year Test
13. Net Revenue for FasuingFiscal Year $ 138,223,824 $ 168,357,525 $ 199,136,504 $ 230,743,012 $ 266,020,716 $ 306,545,991
14. Net Revenue Adjustment (10)
15. Adjusted Net Revenue $ 138,223,824 $ 168,357,525 $ 199,136,504 $ 230,743,012 $ 266,020,716 $ 306,545,991
Ensuing Year Debt Service Coverage Levels
16. Senior Lien Bonds (11) 2.48 2.56 2.58 2.52 2.48 2.41
17. Total Debt (12) 1.78 1.88 1.93 1.94 1.95 1.94
(1) Net revenue as shown on Line 8 of Table 4-10 in Rate ProposaL Includes the impact of proposed rate increases each year.
(2) Projected actual payments to of principal and interest fromthe sinking fund to bondholders.
(3) Includes seniorrevenue bonds and subordinate debt obligations.
(4) Line 1 ! Line 2. The Bond Ordinance requires net revenue to equal or emceed 125 times actual senior lien debt service.
(5) Line 1 ! Line 3. The Bond Ordinance requires net revenue to equal or emceed 1.15 times actual total debt service.
(6) Marimumfuture debt service for all series of revenue bonds issued in previous years or during the current fiscal year.
(7) Adjustment for revenues increases to be fully operative July 1 of the current fiscal year as allowed by the Bond Ordinance.
(8) Line 10 / Line 6. The Bond Ordinance requires adjusted net revenue fnr the preceding fiscal year to equal or emceed 1.25 times
the maronnm annual debt service on all then outstanding senior lien obligations.
(9) Line 10 / Lane 7. The Bond Ordinance requires adjusted net revenue for the preceding fiscal year to equal or exceed 1.15 tires
the mru®rm annual debt service on all then outstanding debt obligations.
(10) Adjustment forrevenues increases not permitted for ensuing year coverage test unless already approved by the Board.
(11) Line 15 / line 6. The Bond Ordinance requires net revenue for the ensuing three fiscal years to equal or emceed 1.25 times
the mammm um annual debt service on all then outstanding senior lien revenue bonds.
(12) Line 15 / Line 7. The Bond Ordinance requires net revenue for the ensuing three fiscal years to equal oremceed 1.I5 times
the maximum annual debt service on all then outstanding bonds.
28. William Stannard states in Direct Testimony that the cost of service analysis was
from an approach used in "this Study" based on principles endorsed by the Water Environment
Federation. MSD Ex. 3H, p. 11, 11,22-24; p. 12,11.1-4. Please provide a copy of "this Study."
RESPONSE:
This statement in Mr. Stannard's testimony referred to the cost of service analysis that was done
for MSD in support of the Rate Change Proposal. A clearer statement in Mr. Stannard's
testimony would have been, "The approach used in the cost of service analyses conducted in
support of this Rate Change Proposal is based on principles endorsed by the Water Environment
Federation ((WEF); which allow the District to demonstrate that rates have not been set in an
arbitrary manner and one class of customer is not subsidizing another to an unjustifiable extent,
or in a manner that is not approved and supported by the District."
15
29. Please provide copies of each contract or Iease for goods or services in which the
payment obligation of the District exceeds $500,000.
RESPONSE:
See Exhibit MSD 84Q —
See Exhibit MSD 84R —
See Exhibit MSD 84S -
See Exhibit MSD 84T —
See ExhibitMSD 84U—
Active blanket contracts and purchase orders over
$500, 000 as of 03/19/2015
Engineering Consultant contracts over $500, 000 as of 3/20/15
Engineering Consultant contracts with an amount remaining
over $500,000 as of 3/20/15
Construction contracts with balance of $500,000 or more
as of 3/20/15
Construction contracts of $500,000 or more regardless of
balance as of 3/20/15
30. Please provide copies of the complaint for any litigation in which the District is
involved in which the prayer for damages exceeds $500,000.
RESPONSE:
See Exhibit MSD 84V - Fred Eppenberger, et al vs. Metropolitan St. Louis Sewer District, Case
No. 08SL-CC05270 Complaint.
31. MSD Ex. 47 is a copy of a Consent Decree entered into by the District in the
matter captioned United States of America v. Metropolitan St. Louis Sewer District. Please
describe any current or threatened enforcement proceeding of the United States EPA or the
MDNR not included in the Consent Decree with respect to (a) combined sewer overflows or
sanitary sewer overflows within the District; and (b) wastewater to which the District is subject
and the current status of any such proceeding.
RESPONSE:
a. EPA none
Without acknowledging that the matter is not included within the Consent Decree, in
December 2013, the MDNR requested the District pay $28,528.77 for MDNR and MDC
staff time investigating SSOs and pay a civil penalty. The District is currently contesting
this request.
b. None by EPA or MDNR
32. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof is necessary to enable the District to provide for
the costs of operation and maintenance and such other amounts as may be required to cover
emergencies and anticipated delinquencies as required by §7.040 of the Charter Plan.
RESPONSE:
There are no additional facts or circumstances.
16
33. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof whether and to what extent the Rate Change
Proposal is necessary to enable the District to comply with any covenant or provision relating to
any outstanding bonds or indebtedness of the District, together with a specific quantification of
the amount of the Rate Change Proposal that is necessary for such purposes, as required by
§7.040 of the Charter Plan and §3(2)(c) of the Operational Rules.
RESPONSE:
The rate changes set forth in the Rate Change Proposal are based upon a holistic review of the
District's needs and rely upon certain assumptions with respect to conditions, events, and
circumstances that may occur in the future. These are detailed in the rate model. The same
revenue dollars that provide debt service coverage are also used for Paygo funding, non -
operating expenses, and reserves. A summary of the financial plan is presented in Table ES-1 of
the Rate Change Proposal
General provisions and covenants of the District's bonds are listed in Article VI of the Bond
Master Ordinance (Exhibit MSD 27). The District is required to provide debt service coverage
equal to at least 125% (>1.25x) of the annual principal and interest payment on all senior
revenue bonds and 115% (>1.15x) of the combined annual principal and interest payment on all
WW senior revenue bonds and all SRF loans (Exhibit MSD 27, Section 6.1.2(a)). The District is
also required to produce revenue that provides for 100% of all O&M expenses and the
accumulation of a reasonable reserve (Exhibit MSD 27, Section 6.1.1). The District's current
reserve policy is to maintain a minimum operating reserve of 60 days (Exhibit MSD 19, pg. 10).
Reliable and cost effective access to the bond market, however, will require liquidity and
coverage, and therefore revenues, far in excess of the minimum requirements established by the
Bond Master ordinance and District policies. As noted in the direct testimony of Tim Snoke
(Q14, Q15, and Q16) and of Bethany Pugh (Q9, Q10, and Q11), the Rate Change Proposal is
structured to exceed the minimum debt service coverage requirements and also to ensure
liquidity standards consistent with credit ratings in the AA -category in an effort to preserve the
District's long-term ability to fund capital improvements with municipal bonds at lower costs.
Reductions to proposed revenues could reasonably lead to lower credit ratings and increase
future debt service costs. Projected Debt Service Coverage levels are shown in the Rate Change
Proposal (Table ES -I, lines 27 and 28).
34. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof is consistent with constitutional, statutory, or
common law, as amended from time to time, as required by §7.270(1) of the Charter Plan.
RESPONSE:
There are no additional facts or circumstances.
35. Please describe any other facts and circumstances which demonstrate that the
Rate Change Proposal and all portions thereof will enhance the District's ability to provide
adequate sewer and drainage systems and facilities, or related services as required by §7.270(2)
of the Charter Plan and §3(2)(b) of the Operational Rules.
17
RESPONSE:
There are no additional facts or circumstances.
36. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof is consistent with and not in violation of any
covenant or provision relating to any outstanding bond or indebtedness of the District, as
required by §7.270(3) of the Charter Plan and §3(2)(c) of the Operational Rules.
RESPONSE:
There are no additional facts or circumstances.
37. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof does not impair the ability of the District to
comply with applicable Federal or State laws or regulations as amended from time to time as
required by §7.270(4).
RESPONSE:
There are no additional facts or circumstances.
38. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on all
classes of ratepayers as required by §7.270(5) of the Charter Plan.
RESPONSE:
There are no additional facts or circumstances.
39. Please describe any other facts and circumstances which demonstrate whether the
Rate Change Proposal and all portions thereof why the Rate Change Proposal set forth in the
Rate Change Notice is necessary, fair and reasonable, as required by §3(2)(a) of the Operational
Rules.
RESPONSE:
There are no additional facts or circumstances.
40. Please describe any other facts and circumstances which demonstrate that the
Rate Change Proposal and all portions thereof are necessary to enable the District to comply with
applicable federal or State laws or regulations as amended from time to time, together with a
specific quantification of the amount of the Rate Change Proposal that is necessary for such
purposes as required by § 3(2)(d) of the Operational Rules.
RESPONSE:
There are no additional facts or circumstances.
18
41. Please describe any other facts and circumstances which demonstrate that the
Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each
class of ratepayers, including whether and how cost of service considerations have been factored
into such determination as required by §3(2)(e) of the Operational Rules.
RESPONSE:
Why the burden imposed on each class of ratepayers by the Proposed Rate Change is fair and
reasonable, including whether and how cost of service considerations have been factored into
such determination, as required by the Operational Rules, Regulations and Procedures of the
Rate Commission Section 3(2)(e) is not defined or explained However, the District's
wastewater rates and rate models have been exhaustively reviewed by the courts and considered
fair and reasonable by the Rate Commission in 2002, 2003, 2007, 2008 and 2011. The
methodology of how the rate is measured and billed for services to all classes of ratepayers has
not changed. The Rate Change Proposal considers the cost of service to all of our customers.
The District has no other facts and circumstances to provide.
42. Please describe any other facts and circumstances which demonstrate that the
Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each •
class of ratepayers, including whether and how cost causation principles, have been factored into
such determination as required by § 3(2)(e) of the Operational Rules.
RESPONSE:
Why the burden imposed on each class of ratepayers by the Proposed Rate Change is fair and
reasonable, including whether and how cost causation principles have been factored into such
determination, as required by the Operational Rules, Regulations and Procedures of the Rate
Commission Section 3(2)(e) is not defined or explained. However, the District's wastewater
rates and rate models have been exhaustively reviewed by the courts and considered fair and
reasonable by the Rate Commission in 2002, 2003, 2007, 2008 and 2011. The methodology of
how the rate is measured and billed for services to all classes of ratepayers has not changed.
The Rate Change Proposal considers the cost of causation principles on all of our customers.
Causation may be thought of as connecting conduct with the resulting effect. The District is
constantly evaluating how the conduct of the District and its employees will affect the value of
service we provide. This is identified throughout Exhibit MSD 3C, Exhibit MSD 3D, Exhibit
MO 3E, and Exhibit MSD 3G. The District has no other facts and circumstances to provide.
43. Please describe any other facts and circumstances which demonstrate that the
Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each
class of ratepayers, including whether and how customer impact data has been factored into such
determination as required by § 3(2)(e) of the Operational Rules.
RESPONSE:
Why the burden imposed on each class of ratepayers by the Proposed Rate Change is fair and
reasonable, including whether and how customer impact data has been factored into such
determination, as required by the Operational Rules, Regulations and Procedures of the Rate
Commission Section 3(2)(e) is not defined or explained However, the District's wastewater
rates and rate models have been exhaustively reviewed by the courts and considered fair and
reasonable by the Rate Commission in 2002, 2003, 2007, 2008 and 2011. The methodology of
19
how the rate is measured and billed for services to all classes of ratepayers has not changed.
See Exhibit MSD 3G. The District has no other facts and circumstances to provide.
44. Please describe any other facts and circumstances which demonstrate that the
Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each
class of ratepayers, including whether and how economic development considerations have been
factored into such determination as required by § 3(2)(e) of the Operational Rules.
RESPONSE:
Why the burden imposed on each class of ratepayers by the Proposed Rate Change is fair and
reasonable, including whether and how economic development considerations have been
factored into such determination, as required by the Operational Rules, Regulations and
Procedures of the Rate Commission Section 3(2)(e) is not defined or explained. However, the
District's wastewater rates and rate models have been exhaustively reviewed by the courts and
considered fair and reasonable by the Rate Commission in 2002, 2003, 2007, 2008 and 2011.
The methodology of how the rate is measured and billed for services to all classes of ratepayers
has not changed. The Rate Change Proposal does not consider economic development. The
District has no other facts and circumstances to provide.
45. Please describe any other facts and circumstances which demonstrate that the
Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each
class of ratepayers, including whether and how environmental effects have been factored into
such determination as required by § 3(2)(e) of the Operational Rules.
RESPONSE:
Why the burden imposed on each class of ratepayers by the Proposed Rate Change is fair and
reasonable, including whether and how environmental effects have been factored into such
determination, as required by the Operational Rules, Regulations and Procedures of the Rate
Commission Section 3(2)(e) is not defined or explained. However, the District's wastewater
rates and rate models have been exhaustively reviewed by the courts and considered fair and
reasonable by the Rate Commission in 2002, 2003, 2007, 2008 and 2011. The methodology of
how the rate is measured and billed for services to all classes of ratepayers has not changed.
The Rate Change Proposal is built around the environmental effects that the District must
encounter. This consideration is passed along to the customer in the form of a rate. The
environmental effects on the District are discussed in Exhibit MSD 3B and ilED 3C. The
District has no other facts and circumstances to provide.
46. Please describe any other facts and circumstances which demonstrate that the
Rate Change Proposal and all portions thereof imposes a fair and reasonable burden on each
class of ratepayers, including whether and how any other factors have been factored into such
determination as required by § 3(2)(e) of the Operational Rules.
20
RESPONSE:
Why the burden imposed on each class of ratepayers by the Proposed Rate Change is fair and
reasonable, including whether and how any other factors have been factored into such
determination, as required by the Operational Rules, Regulations and Procedures of the Rate
Commission Section 3(2)(e) is not defined or explained. However, the District's wastewater
rates and rate models have been exhaustively reviewed by the courts and considered fair and
reasonable by the Rate Commission in 2002, 2003, 2007, 2008 and 2011. The methodology of
how the rate is measured and billed for services to all classes of ratepayers has not changed
The Rate Change Proposal is built around the consideration of every factor we have identified
that may affect the cost of service and therefore the rate to provide that service. The District has
no other facts and circumstances to provide.
47. Please (a) describe any other facts and circumstances which demonstrate that the
measures taken by the District to ensure that the cost of constructing and maintaining the
District's facilities and providing related services are being incurred in a reasonable and efficient
manner; and (b) include copies of all internal or external audit reports that address such matters
as required by § 3(2)(f) of the Operational Rules.
RESPONSE:
(a) none
(b) The following internal audit reports have been provided as Exhibit MSD 84W.
The exhibit includes internal audit reports prepared within the current MSD Rate cycle.
Respectfully submitted,
Susan Myers, General Co sel
METROPOLITAN ST. LOUIS SEWER
DISTRICT
2350 Market Street
St. Louis, Missouri 63103
Tel: (314) 768-6366
Fax: (314) 768-6279
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CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing was sent by electronic transmission
to Janice Fenton, Office Associate Senior, Metropolitan St. Louis Sewer District; Lisa Stump,
Counsel for the Rate Commission; Brad Goss, Counsel for Intervener Home Builders
Association of St. Louis & Eastern Missouri, and Brandon Neuschafer,- Counsel for Intervener
Missouri Industrial Energy Consumers on this 27th day of March, 2015.
Lisa O. Stump, Esq.
Lashly & Baer, P.C.
714 Locust Street
St. Louis, MO 63101
lostump@lashlybaer.com
Mr. Brad Goss
Smith Amundsen, LLC
120 South Central Avenue, Suite 700
St. Louis, MO 63105-1794
bgoss@salawus.com
Brandon W. Neuschafer
Bryan Cave, LLP
211 N. Broadway, Suite 3600
St. Louis, MO 63102
John.kindschuh@brvancave.com
Su Myers, General Counsel
METROPOLITAN ST. LOUIS SEWER DISTRICT
2350 Market Street
St. Louis, Missouri 63103
smyers@stlmsd.com
Tel: (314) 768-6366
Fax: (314) 768-6279
22