HomeMy Public PortalAboutExhibit MSD 87 - MSD Opening StatementRate Commission Technical Conference – April 8, 2015 Exhibit MSD 87
MSD Opening Statement
Good Afternoon, my name is Susan Myers and I am the General Counsel for the
Metropolitan St. Louis District. I would like to thank you all for serving on the Rate
Commission in this rate setting process and allowing me the opportunity to provide an
opening statement on behalf of the District. For the record, I would like to provide a
brief summary of the District’s history. MSD is the 4th largest sewer District in the
country based on miles of pipe, with responsibility for over 6300 miles of sanitary and
combined sewers and over 3,000 miles of stormwater pipes. Although being the 4th
largest sewer District in the country, MSD’s ratepayer base is approximately half the size
of other comparable entities. MSD was formed pursuant to the Missouri Constitution in
1954 and began operation in 1956. Over time MSD has absorbed 79 public and privately
owned sewer systems thereby providing consolidated regional sewer treatment to the St.
Louis community. Based on miles of pipe, the District is over two times as large as
Kansas City. The large size of the MSD system will require a massive multi-decade
reinvestment effort to maintain and improve the community’s wastewater sewer
infrastructure and a uniform stormwater tax rate throughout the District to provide an
appropriate, uniform level of stormwater services.
As most of you are aware, in June 2007 the United States and the State of Missouri filed
a civil suit against the District for alleged violations of the Clean Water Act. The
Missouri Coalition for the Environment was allowed to intervene. Following four years
of negotiations, the Consent Decree was lodged with the court on August 4, 2011. An
extended public comment period ended on October 10, 2011. On April 27, 2012 the
court entered the consent decree, thus concluding the litigation. The State of Missouri,
in spite of being involved in these negotiations since 2007, chose not to sign the Consent
Decree. The Court also entered an order on April 27, 2012 in which the court realigned
the State of Missouri as a defendant and reaffirmed the 2009 decision by the 8th Circuit
Court of Appeals that the State had waived its sovereign immunity. The Consent Decree
required the District to spend approximately $4.7 billion, in 2011 dollars, over a 23-year
implementation period.
I am happy to say today, that the Consent Decree is available to the public and the
District is in full compliance with the Consent Decree. To date, the District has
implemented the Consent Decree on-schedule and under budget. The wastewater portion
of our Rate Change Proposal is based upon the clear direction outlined in the Consent
Decree in the form of many approved plans, including the Combined Sewer Overflow
Long Term Control Plan, the Sanitary Sewer Overflow Master Plan and the Capacity
Management Operations and Maintenance Plan, and reflects the capital projects and
related O&M needed over the next 4 years to continue to comply with the Consent
Decree. The District has also taken advantage of many efficiencies while successfully
completing the work required by the Consent Decree, these are identified in detail in the
direct testimony of Rich Unverferth and Jon Sprague.
On the Stormwater side, everyone is probably aware of the Zweig v MSD lawsuit that
concluded with the Missouri Supreme Court ruling that MSD’s impervious based fee
needed to be voted on by the people. Based upon that ruling the Rate Change Proposal
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Rate Commission Technical Conference – April 8, 2015 Exhibit MSD 87
MSD Opening Statement
proposes the use of a District-wide assessed value property tax structure to replace the
flat rate charge and the multi-layered taxes we currently have in place.
Through out these technical conferences the following should be kept in mind:
1) The program outlined in the Consent Decree is a continuation of MSD’s current
wastewater capital program that has been underway for the past several decades;
2) The capital program is a reinvestment in the St. Louis Community to maintain and
improve its wastewater infrastructure;
3) The Stormwater portion of the proposal addresses service level inequalities;
maintains funding for stormwater regulatory requirements; uses a funding method
currently being used for MSD’s stormwater services; and allows for a District-
wide tax that will facilitate additional stormwater capital work District-wide.
The rate being proposed to the Rate Commission is the same wastewater rate method
approved by the Rate Commissions in the past four rate change proceedings and the same
stormwater taxing structure that has been in place since the mid 1980s.
It is the District’s opinion that the wastewater portion of the Rate Change Proposal
imposes a fair and reasonable burden on all classes of ratepayers as the proposed rates
were determined using an industry accepted wastewater rate design methodology, a
methodology that has been determined to be fair and equitable by the Missouri Supreme
Court in 1997. The stormwater assessed value property taxing methodology has been
used by MSD since the mid-1980s and is allowed by the Missouri Constitution and
MSD’s Charter Plan.
The District’s testimony today will provide clarification regarding the detailed aspects of
the District’s Rate Change Proposal and demonstrate how the proposed rates are
necessary to MSD’s future obligations including compliance with the Consent Decree
and stormwater regulatory requirements.
The order of appearance of MSD witnesses will be: Brian Hoelscher, MSD Executive
Director, myself, MSD General Counsel; Rich Unverferth, MSD Director of
Engineering; Jon Sprague, MSD Director of Operations; Tim Snoke, MSD
Secretary/Treasurer; Bethany Pugh of Public Financial Management, Inc. serving as the
District’s Financial Advisor; Theresa Belleville, MSD Assistant Director of Finance and
William Stannard of Raftelis Financial Consultants serving as the District’s Rate
Consultant.
This concludes my opening remarks.
I ask that my opening remarks be accepted by the Rate Commission as Exhibit MSD 87.
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