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Home My Public Portal AboutExhibit RC 101 - Rate Commission Rebuttal Testimony of Pamela LemoineBEFORE THE RATE COMMISSION OF THE ST. LOUIS METROPOLITAN SEWER DISTRICT WITNESS:Pamela R. Lemoine, P.E. Black & Veatch Corporation SPONSORING PARTIES: Rate Commission of the Metropolitan St. Louis Sewer District DATE PREPARED:May 11, 2015 Black & Veatch Corporation 16305 Swingley Ridge Road, Suite 230 Chesterfield, MO 63017 Exhibit No. ____ Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 1 Q1. Please state your name and business address.1 A. My name is Pamela Lemoine. My business address is 16305 Swingley Ridge Road, Suite 230,2 Chesterfield, Missouri 63017.3 Q2. By whom are you employed and in what capacity?4 A. I am a Principal Consultant in Black & Veatch’s Management Consulting business.5 Q3. Please describe the firm of Black & Veatch Corporation.6 A. Black& VeatchCorporation(“B&V” or“Black& Veatch”)hasprovidedcomprehensiveengineering7 andmanagementservicestoutility,industrial,and governmental entitiessince1915. B&V’s8 ManagementConsultingpractice delivers solutionsinthewaterandenergy sectors andincludes a9 broadarrayofstrategic,regulatory,financial, andinformationsystems consulting. Inthe water10 sector,B&VManagement Consultingdelivers avarietyof services forcompaniesinvolved inthe11 generation,treatment,anddistribution drinkingwater,as wellas thecollectionandtreatment of12 wastewater. Through its Management Consulting practice, Black & Veatch offers assistance in13 utility rate, valuation, financial planning, economic feasibility, and organization-management14 matters to water, wastewater, stormwater, electric, gas, telecommunications, and solid waste15 utilities. Black & Veatch services include utility cost of service studies and rate design, property16 inventory, property valuation for rate base or other purposes, organization and management17 studies, financial feasibility studies, standardized cost studies and manuals, operating reports,18 market studies, depreciation expense studies, statistical analyses, bond prospectuses and expert19 testimony before courts and regulatory bodies.20 Q4. Please describe your educational background and work experience.21 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 2 A. I received a Bachelor of Science in General Engineering from the University of Illinois –1 Urbana/Champaign in 1986. I joined Black & Veatch in 1987 as a consultant in Black & Veatch’s2 Management Services Division in Kansas City, Missouri. During this time I conducted a variety of3 analyses related to water, wastewater, electric and gas cost of service and rate design studies. In4 1989, I was hired by R. W. Beck and Associates in Seattle, Washington, as a project manager in5 R. W. Beck’s Seattle Consulting office. While in this capacity, I managed water, wastewater and6 solid waste strategic financial planning, cost of service, and rate design studies. In addition, I7 conducted valuation studies related to street light utility assets and landfill, transfer station, and8 material recovery facility development and acquisition studies, as well as financial analyses9 related to nuclear decommissioning studies and mergers/ acquisitions. In 1995, I rejoined Black10 & Veatch, serving as Northwest Regional Manager of the Management Consulting Division. I11 currently serve as a Principal Consultant in Black & Veatch’s Management Consulting practice,12 serving clients primarily in the eastern two-thirds of the United States. I serve as Project13 Manager or Project Director for strategic financial planning studies, cost of service and rate14 design studies, as well as financial capability analyses and affordability assessments associated15 with long term control plan development required as a result of federal consent decrees. I have16 has assisted utilities in developing strategies to address affordability in negotiations with state17 and federal regulators. I have also assisted in the development of stormwater utilities, including18 policy development, financial planning, rate and credit program design, and implementation,19 providing clients with a stable source of revenue to fund necessary stormwater activities as20 required by NPDES permits and other wet weather related issues.21 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 3 In the past decade, I have been involved in studies regarding water, wastewater and stormwater1 rates and related matters for clients including Sanitation District No. 1 of Northern Kentucky;2 Metropolitan Sewerage District of Greater Cincinnati, Ohio; Greater Cincinnati Water Works,3 Ohio; Allegheny County Sanitary Authority, Pennsylvania; Shreveport, Louisiana; Springfield,4 Ohio; and Jefferson County, Alabama. A summary of my work experience is attached as Exhibit5 A.6 Q5. Are you a registered Professional Engineer?7 A. Yes, I am a registered Professional Engineer in the state of Washington.8 Q6. Do you belong to any professional organizations or committees?9 A. Yes. I am a member of the Water Environment Federation and the American Water Works10 Association. I formerly served as Secretary/Treasurer of the Pacific Northwest Section of the11 American Water Works association, as well as served as a member of the American Water12 Works Association’s Consumer Confidence Report Workgroup. I am a representative for Black &13 Veatch to the National Association of Clean Water Agencies, serving on the Utility & Resource14 Management Committee and Legal Affairs Committee.15 Q7. Have you previously testified before the Rate Commission of the St. Louis Metropolitan Sewer16 District?17 A. No, I have not.18 Q8. Please describe your role in this proceeding?19 A. The scope of my assignment in this proceeding includes the review of the District’s 2015 Rate20 Proposal, to assist the Rate Commission to gain a better understanding of the District’s rate21 proposal, to advise the Rate Commission on cost of service and rate setting practices, to assist22 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 4 legal counsel in the examination of witnesses, and to prepare testimony and exhibits setting1 forth my findings and recommendations.2 The scope of my assignment is limited to relying on the record in this proceeding, statements,3 data, information and reports provided by the District and intervenors and their respective4 consultants and advisors as well as data and information available in the public domain.5 Q9. Please summarize your findings and recommendations to the Rate Commission in this6 proceeding.7 A. The following is a summary of my findings and recommendations in this proceeding.8 1. I concur and support the District’s proposal to seek authorization from voters within the9 District to issue additional bonds to finance the Capital Improvement and Replacement10 Program (CIRP) during the period Fiscal Year (FY) 2017 through FY 2020.11 2. The District’s proposed financing plan, which includes approximately 30 percent cash12 funding of the CIRP, is appropriate.13 3. I concur with the District’s policy to establish a financial plan that allows for debt service14 coverage of 2.5 times or greater for senior lien bonds and 1.6 times or greater for total15 coverage.16 4. The District is expected to incur significant debt over the Rate Proposal period in order to17 finance necessary improvements. Beyond the current Rate Proposal period, the District18 should consider any options available to incorporate the United States Environmental19 Protection Agency’s (US EPA) Integrated Planning Framework into future capital planning to20 determine whether it could provide some relief to the District and its customers.21 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 5 4. It is my opinion that the District’s proposed Stormwater Tax Change does not provide a clear1 nexus between customer charges and services provided, as charges are based on property2 valuation and not based on the level of service provided. A charge based on runoff, whether3 an impervious area fee or an alternative fee structure that estimates runoff, would provide4 a more clear nexus between stormwater funding and services provided and would be more5 equitable than the proposed ad valorem tax.6 5. I recommend that the District revise its capital spending plan for Stormwater to reflect the7 timing of the Stormwater Tax Change.8 GENERAL MATTERS9 Q10. What is the role of the Rate Commission in this proceeding?10 A. Pursuant to Section 7.040 of the Charter Plan of the District, the role of the Rate Commission is11 to review and make recommendations to the District’s Board of Trustees regarding the12 proposed changes in wastewater charges, stormwater charges or tax rates necessary to pay: (i)13 interest and principal due on bonds issued or to be issued to finance assets of the District; (ii)14 the costs of operation and maintenance; and (iii) such other amounts as may be required to15 cover emergencies and anticipated delinquencies.16 Q11. How should the Rate Commission determine whether the District’s rate change proposal is17 necessary?18 A. The Rate Commission should examine the record in this proceeding, including the District’s19 projected revenue requirements to ensure that such revenue requirements are necessary and20 reasonable to meet the District’s near term financial needs, that such revenue requirements do21 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 6 not overstate the District’s near term financial needs,and that such revenue requirements are1 being recovered in a fair and equitable manner.2 Q12. Upon what criteria must the Rate Commission base its recommendation?3 A. In accordance with Section 7.270 of the Charter Plan of the District, any proposed rate change,4 and all portions thereof, recommended by the Rate Commission must:5 (1) be consistent with constitutional, statutory or common law as amended from time to time;6 (2) enhance the District’s ability to provide sewer and drainage systems and facilities, or related7 services;8 (3) be consistent with and not in violation of any covenant or provision relating to any9 outstanding bonds or indebtedness of the District;10 (4) not impair the ability of the District to comply with applicable Federal or State laws or11 regulations as amended from time to time; and12 (5) impose a fair and reasonable burden on all classes of ratepayers.13 Q13. How should the Rate Commission determine if the rate change proposal is consistent with14 constitutional, statutory or common law as amended from time to time?15 A. The Rate Commission should evaluate Charter Plan authority, environmental improvement16 agency regulations, constitutional and statutory provisions and applicable case law.17 Q14. How should the Rate Commission determine whether the rate change proposal enhances the18 District’s ability to provide sewer and drainage systems and facilities, or related services?19 A. The Rate Commission should consider the record in this proceeding including the District’s20 submittal as well as the testimony of its staff and other intervenors to determine if the District’s21 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 7 proposal enhances its ability to provide adequate sewer and drainage systems and facilities, or1 related services.2 Q15. How should the Rate Commission determine if the rate change proposal is consistent with and3 not in violation with any covenant or provision relating to any outstanding bonds or4 indebtedness of the District?5 A. Such a determination requires an analysis of the record in this proceeding, including the6 covenants or provisions contained in the resolutions or ordinances and bond documents or7 other documents issuing any such obligations. The Rate Commission can determine that this8 condition is met by examining the District’s submittal as well as the testimony of its staff.9 Q16. How should the Rate Commission determine whether the rate change proposal impairs the10 ability of the District to comply with applicable Federal and State laws or regulations as11 amended from time to time?12 A. The Rate Commission should consider the record in this proceeding including the testimony13 provided by District staff and others, including intervenors, to determine whether the rate14 change proposal impairs the ability of the District to comply with applicable Federal or State15 laws or regulations. This is accomplished by evaluating the proposal to determine whether the16 proposed rates are projected to operate the utility in compliance with applicable Federal or17 State laws or regulations, and to provide sufficient revenue to allow completion of capital18 projects necessary to meet Consent Decree obligations while maintaining current assets.19 Q17. How should the Commission determine if the rate change proposal imposes a fair and20 reasonable burden on all classes of ratepayers?21 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 8 A. The Rate Commission should determine whether the rate change imposes a fair and reasonable1 burden on all classes of ratepayers by considering the record in this proceeding, including the2 District’s submittal and the testimony of its staff and intervenors.3 WASTEWATER RATE PROPOSAL4 Q18. Is the burden imposed on each class of ratepayers by the District’s Rate Proposal “fair and5 reasonable?”6 A. The District’s projected costs to provide wastewater service and complete anticipated capital7 projects required under the Consent Decree over the Rate Proposal period appear to be8 reasonable and are projected to provide the District with adequate funding to maintain the9 financial health of the utility. The District has calculated proposed wastewater rates based on10 cost of service principles that are commonly used in the industry, as outlined in the Water11 Environment Federation’s Manual of Practice No. 27, “Financing and Charges for Wastewater12 Systems.”13 Capital Financing14 Q19. How much has the District proposed to be expended on wastewater capital improvements in15 its rate change proposal?16 A. The District states that there will be $1,492,877,045 (MSD1, page 4-16, Table 4-7) in total CIRP17 needs and $16,303,683 (MSD1, page 4-14, Table 4-6) in routine capital improvements for the18 wastewater system for the period FY 2017 through FY 2020; and in addition significant19 additional capital improvements beyond FY 2020 to comply with the requirements set forth in20 the District’s Consent Decree with the United States Environmental Protection Agency (US EPA).21 Based on the testimony of District staff and consultants during the First Technical Conference,22 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 9 the timing and magnitude of the expenditures necessary to comply with these regulations has1 been agreed to in the Consent Decree with the US EPA, which was lodged with the District Court2 on April 27, 2012. Projected total CIRP needs for FY 2021 through FY 2024, as outlined in the3 District’s Rate Model (MSD79, Tab ‘RP Tables’, line 149) is expected to be an additional4 $1,718,705,574, with additional capital spending under the consent decree remaining after FY5 2024.6 Q20. Based on your experience with other large wastewater utilities do you have an opinion7 regarding the reasonableness of the District’s CIRP?8 A. Yes, I do. I have worked for several large wastewater systems who are facing significant capital9 expenditures to comply with consent decrees regarding sanitary sewer overflows (SSOs) and10 combined sewer overflows (CSOs) and have reviewed the consent decrees of numerous others.11 Based upon information provided by the District, the CIRP and the District’s long-term control12 plan is consistent with that agreed to by other major wastewater systems throughout the13 United States.14 Q21. How has the District proposed to fund the wastewater capital improvements?15 A. For the period FY 2017 through FY 2020, the District proposes to issue $1,008,373,622 (including16 premiums) of revenue bonds and $100,000,000 of State Revolving Loan bonds. In addition, the17 District forecasts receiving $2,466,912 from grants and contributions. The District plans to fund18 the majority of the remainder of the CIRP, $382,031,511, with current revenues from rates19 and/or miscellaneous revenue, often referred to as “cash financed capital” or “PAYGO”, and20 interest income.21 Q22. May the District issue long term indebtedness to finance capital improvements?22 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 10 A. The District has the authority to issue debt under Section 3.020(13) of its Charter Plan. The1 Charter Plan requires that general obligation bonds may not be issued without the voter2 approval required by Article VI, Section 26(b) of the Constitution of Missouri. Section 7.170 of3 the District’s Charter Plan requires approval of a simple majority of the voters of the District to4 issue revenue bonds. Most recently, on June 5, 2012, the District received approval from voters5 to issue $945,000,000 in debt to finance capital improvement projects. Prior to that, on6 August 5, 2008, the District received approval from voters to issue $275,000,000 in debt to7 finance capital improvement projects, and on February 3, 2004, voters approved the issuance of8 $500,000,000 in debt to finance capital improvement projects.9 Q23. Do you agree with the District’s plan of finance for its Capital Improvement and Replacement10 Program (CIRP)?11 A. Yes. The District’s proposed issuance of revenue bonds and state revolving loan bonds to finance12 a substantial portion of the CIRP is a sound capital financing approach. Financing the CIRP from a13 mix of long-term debt and cash financing (PAYGO) is reasonable, and helps spread the cost of14 improvements over a longer term, allowing future customers receiving the benefit of the15 improvements to help pay for the improvements. In addition, bond rating agencies favorably16 view a meaningful amount of cash financing of a utility’s capital program. The District’s policy of17 30 percent cash financing (MSD 3F, Bethany Pugh Testimony, page 4, line 16), provides for a18 reasonable mix of cash and debt financing, and is consistent with the policies of other similar19 utilities. The District’s proposed financing plan, assuming that voters authorize the District to20 issue additional bonds, will help minimize the impact of the CIRP on wastewater rates during the21 projected four year planning period.22 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 11 Q24. How will the District finance the CIRP if the voters fail to approve the issuance of additional1 revenue bonds?2 A. If the District fails to obtain voter authorization for issuance of additional revenue bonds, it will3 be necessary for the District to cash finance nearly all of the CIRP during the period FY 20174 through FY2020 as set forth in Section 4.11 of the FY 2017-2020 Rate Proposal. The only debt5 financing possible will be through a small amount of authorization remaining from the prior6 voter authorization. This would require rates to increase substantially to provide cash funding of7 the CIRP.8 Q25. Do you have any concerns about the District’s proposed financing plan for the CIRP?9 A. The District’s rate proposal requires substantial additional debt to be incurred over a short10 period of time, with continued issuance of debt in FY 2021 through FY 2024 and beyond in order11 to continue to fund the projects required by the Consent Decree. As shown in Exhibit PRL2, The12 District’s total outstanding debt, as outlined in the District’s Rate Model (MSD 79), is expected13 to increase from $1,126,611,100 in FY2015 to $2,821,292,412, an increase of 250 percent over14 the nine year period. This results in an overall Debt Per Capita level that increases from $854 in15 FY 2015 to $2,139 in FY2024. Bond rating agencies consider the overall debt burden of a utility16 as one of several factors when determining a utility’s debt rating. As an example, Fitch issued its17 updated rating criteria on July 31, 2013, in which it categorizes various criteria as “Stronger,”,18 “Midrange,” or “Weaker.” Fitch considers debt per capita of $500 or less to be “Stronger”,19 around $550 as “Midrange” and $600 or greater as “Weaker.” While no single criteria drives a20 utility’s credit rating, the high level of debt required by the District to complete the CIRP is a21 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 12 concern. It is recommended that the high level of debt be balanced with strong ratings in other1 important criteria, such as debt service coverage and liquidity (cash on hand).2 3 In addition, overall annual debt service, as a percent of the District’s total operating budget4 (Operation & Maintenance expenses plus Debt Service, excluding cash financed capital), is5 projected to increase from 27.9 percent in FY 2015 to 50.3 percent in FY 2024, as shown in6 Exhibit PRL3. This is a concern, as the higher a utility’s debt service requirements, the less ability7 the utility has in reducing costs if revenues decline. Additionally, it is more difficult to maintain8 desired debt service coverage levels. Based on the District’s debt service schedule for existing9 and proposed debt issuances through FY 2024, as summarized in the District’s Rate Model, the10 level of annual debt service is not anticipated to drop substantially until many years after FY11 Exhibit PRL1 (a)(b)(c)(d)(e)(f) Existing Proposed Total Population (2) Debt per Capita FY2015 1,076,611,100$50,000,000$1,126,611,100$1,318,610 854$ FY2016 1,056,358,900$232,395,000$1,288,753,900$1,318,610 977$ FY2017 1,026,770,900$430,695,312$1,457,466,212$1,318,610 1,105$ FY2018 993,732,200$667,035,312$1,660,767,512$1,318,610 1,259$ FY2019 959,976,400$918,312,312$1,878,288,712$1,318,610 1,424$ FY2020 925,252,600$1,223,117,312$2,148,369,912$1,318,610 1,629$ FY2021 889,312,000$1,479,467,312$2,368,779,312$1,318,610 1,796$ FY2022 852,238,900$1,745,013,312$2,597,252,212$1,318,610 1,970$ FY2023 813,839,600$1,977,268,312$2,791,107,912$1,318,610 2,117$ FY2024 774,339,100$2,046,953,312$2,821,292,412$1,318,610 2,140$ (1) Per MSD 79, District Rate Model. (2) Per MSD 25, 2014 CAFR. Total Outstanding Debt (1) Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 13 2024, which means that additional bond issuances to finance the remainder of the LTCP will1 result in a further increase in the overall debt burden of the District.2 This is an even greater concern given the remainder of requirements the District is expected to3 incur beyond FY2024, including additional storage projects and nutrient removal projects, along4 with continued, on-going capital projects that the District can be expected to incur related to5 on-going system renewal and replacement.6 7 Q26. What do you suggest the District should do to address the issues you raise regarding the8 District’s CIRP Financing Plan?9 A. Because the District is required, under the Consent Decree, to complete the projects within the10 schedule outlined in the Consent Decree, there is little the District can do, in the short-run, to11 mitigate the impact of the CIRP on debt and rates. However, I recommend that the District12 Exhibit PRL2 (a)(b)(c)(d)(e) Debt Service (1)O&M (1)Total DS as % of Total FY2015 65,498,198$169,363,203$234,861,401$27.9% FY2016 80,399,270$178,481,265$258,880,535$31.1% FY2017 95,140,966$176,389,110$271,530,076$35.0% FY2018 109,595,199$180,102,367$289,697,566$37.8% FY2019 126,382,173$186,374,873$312,757,046$40.4% FY2020 146,103,295$193,091,871$339,195,166$43.1% FY2021 166,405,000$198,001,386$364,406,386$45.7% FY2022 185,773,600$204,129,067$389,902,667$47.6% FY2023 204,901,345$210,897,756$415,799,101$49.3% FY2024 218,743,039$216,122,087$434,865,126$50.3% (1) Per MSD 79, District Rate Model. Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 14 consider evaluating the potential for relief in terms of schedule and/or program components, by1 working with Regulators to allow incorporation of the concepts outlined in the US EPA2 Integrated Planning Framework memorandum, released in June 2012, and the US EPA Financial3 Capability Framework, released in December 2014. The integrated planning approach,4 complemented by the expanded financial capability framework, provides a framework to better5 recognize the impact that long-term control programs such as that required by the District have6 on ratepayers. The integrated planning framework would allow the District to evaluate all7 requirements under the Clean Water Act, including both wastewater and stormwater8 requirements, in such a way that ensures continued investment in the basic infrastructure9 serving the community while prioritizing limited financial resources to maximize improvements10 to water quality. Other utilities that have, or are undertaking this approach include Baltimore,11 MD; Philadelphia, PA; Seattle, WA; Springfield, MO; Lynchburg, VA; and Lima, OH.12 Wastewater Revenue Requirements13 Q27. As part of your review of the District rate change proposal did you analyze the District’s14 projection of contributed wastewater volume?15 A. Yes, I did. The projection of contributed and billed wastewater volume is an integral component16 of the wastewater rate setting process. The District charges its customers based on metered17 water consumption for most customers within the District’s service area. Residential customers18 outside the City of St. Louis are billed based on a Winter Quarter Average, which is the average19 actual water consumption for a 90-92 day period between November and April of the preceding20 winter period. This is common practice in wastewater rate setting, as it reflects the amount of21 wastewater entering the District’s system, and avoids including outdoor water usage during the22 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 15 summer months. Residential customers within the City of St. Louis are billed on the basis of1 Fixture Units (number of rooms, water closets, baths and separate showers), as such customers2 do not have water meters.3 The District undertook a detailed evaluation of historical and projected demand and resulting4 contributed volume for customer classes, as outlined in Appendix 7.1.2. The results of that5 analysis provided the basis for the District’s projected contributed wastewater volume by6 customer class, as summarized in Table 4-3 of the District’s Rate Proposal. The analysis reflects7 the fact that District has experienced declining wastewater volume that is expected to continue8 throughout the Rate Proposal period (MSD 1, Appendix 7.1.3, Graph 1.1 MSD Projected Usage).9 This is a phenomena being experienced across the country, and is due to a number of factors,10 including installation of high efficiency appliances, faucets, toilets, etc., as well as other potential11 factors such as economic conditions, environmental awareness, etc.12 Q28. Based on your experience, do you have an opinion regarding the District’s forecast of13 contributed wastewater volume?14 A. Yes, I do. The District’s experience of declining contributed wastewater volume (per customer) is15 consistent with wastewater utilities across the United States. This decline is due to several16 factors, including enhanced efficiency of appliances and plumbing fixtures, economic conditions,17 and general awareness regarding the efficient use of water (conservation). Based upon my18 review, it is my opinion that the District’s forecast of continued decline in wastewater volume19 throughout the Rate Proposal period is reasonable.20 Q29. Did you examine the District’s proposed operating and maintenance expense escalation21 factors?22 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 16 A. I have reviewed the District’s assumptions regarding the escalation of various cost categories, as1 summarized in Bill Stannard’s direct testimony (MSD3H, page 9, line 13), as well as historical2 rates of change as presented in MSD99I. Historically, total spending under the certain categories3 presented has varied substantially, due to not only inflation but for many other operational4 reasons. The variation in operational needs year over year, as well as uncertainty regarding the5 overall economy in the future, makes it difficult to forecast actual future escalation rates.6 Therefore, it is important, particularly for utilities that establish a multi-year rate schedule, to be7 somewhat conservative in projecting future costs. In the event that costs do not escalate as8 planned, the rates adopted would provide for better debt service coverage, additional cash to9 improve liquidity (cash on hand), both of which would help maintain the District’s financial10 health, and/or provide additional cash funding of capital projects, which would help to reduce11 the District’s debt profile. For these reasons, I believe that the escalation rates are reasonable.12 Q30. Did you examine the impact of the District’s assumptions regarding participation in the13 Customer Assistance Program?14 A. Yes, I did. Currently, approximately 2,200 customers (MSD 1, page 4-37) participate in the15 Customer Assistance Program (CAP).While the number of customers in the program has16 fluctuated, as shown in Table 4-8 of the District’s Rate Proposal, it has remained fairly level for17 the past three years. The District recently expanded the program to include customers in multi-18 family complexes of six units or less, which will likely increase the number of participants. The19 District’s financial plan includes an assumed increase in the number of single family and multi-20 family households in the program of 19 percent per year for FY 2015 through FY 2020. This21 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 17 results in a forecasted low income credit in the District’s financial plan growing from $447,333 in1 FY 2014 to $1,600,326 in FY 2020.2 While the District has stated that it is undertaking a continued effort to increase the number of3 eligible customers in the program, it is not clear whether the District can achieve this level of4 participation, even with current and planned outreach efforts. It is important for the District to5 plan for increased participation in order to ensure that adopted rates provide sufficient revenue,6 and as such, it is more conservative to overestimate the participation in the program. However,7 it seems as though the assumption of a 19 percent increase year over year for six years may be8 high.9 Q31. How do the increased rates in the Rate Proposal, along with anticipated future rate increases10 beyond the proposal, affect the average residential customer?11 A. As expected, residential customers will necessarily pay more for wastewater service each year of12 the study period and beyond. Exhibit PRL4 summarizes the projected annual bill for an average13 residential customer (7 CCF/month). As shown, based on the weighted median household14 income for the Service Area, as estimated by the District, an average residential customer is15 anticipated to pay 1.36 percent of MHI by FY 2020, and just over 2 percent by FY 2024. As a16 frame of reference, the US EPA considers 2 percent of MHI as a threshold beyond which they17 consider a utility “heavily burdened.”18 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 18 1 In addition, the anticipated double digit increases in all but one year result in a cumulative2 increase of 88.1 percent at the end of the Rate Proposal Period (FY 2020), and nearly 1813 percent by FY 2024. This rate of increase can be expected to be difficult for low income and4 lower middle class income families to absorb into their budgets. While certain low income5 customers will have access to the District’s Customer Assistance Program, it is expected that6 there will be customers who are not eligible for the program who will have difficulty paying their7 bills over time, as overall rates and monthly bills increase.8 32. Will the District’s rate change proposal help achieve adequate fund balances for the District9 during the rate proposal period?10 Exhibit PRL3 (a)(b)(c)(d)(e)(f)(g)(h) Monthly Volume Monthly Bill (1)Annual Bill MHI (2) Annual Bill as % of MHI % Increase over prior year Cumul. % Increase FY2014 7 CCF 32.35$388.20$53,801$0.72% FY2015 7 CCF 35.99$431.88$53,801$0.80%11.3%11.3% FY2016 7 CCF 40.72$488.64$53,801$0.91%13.1%25.9% FY2017 7 CCF 44.72$536.64$53,801$1.00%9.8%38.2% FY2018 7 CCF 49.56$594.72$53,801$1.11%10.8%53.2% FY2019 7 CCF 54.91$658.92$53,801$1.22%10.8%69.7% FY2020 7 CCF 60.86$730.32$53,801$1.36%10.8%88.1% FY2021 7 CCF 67.30$807.60$53,801$1.50%10.6%108.0% FY2022 7 CCF 74.38$892.56$53,801$1.66%10.5%129.9% FY2023 7 CCF 82.21$986.52$53,801$1.83%10.5%154.1% FY2024 7 CCF 90.88$1,090.56$53,801$2.03%10.5%180.9% (1) MSD 79, District Rate Model. (2) Per MSD 99A, American Community Survey 2013 5 year estimate, weighted average of City and County based on number of customers. Average Annual Single Family Bill Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 19 A. Yes. Available cash balances are a very important element of a wastewater utility’s financial1 plan. Adequate fund balances are necessary to ensure adequate working capital and funds for2 unanticipated events. Table 4-10 of the District’s Rate Proposal (MSD1, page 4-22, line23)3 presents the District’s forecasted combined operating reserve. As shown, the District projects4 that at the end of FY 2020 there will be a balance of $40,752,786 in Combined Operating5 Reserves, equating to approximately 77 days of operation and maintenance expenses. This is6 consistent with the targets of other wastewater utilities and provides the District with adequate7 working capital to provide for any unanticipated expenditures or emergencies.8 Q33. Did you consider the appropriateness of the District’s debt service coverage policy?9 A. Yes, I did. District’s policy to maintain senior debt service coverage of 2.5 times or greater and10 total debt service coverage of 1.6 times or greater is a valid and important metric, particularly in11 light of the District’s current and anticipated future heavy debt profile.12 Failure of Voter Authorization of Additional Revenue Bonds13 Q34. What is your recommendation if the District’s voters do not authorize the issuance of14 additional revenue bonds?15 A. If the voters reject the District’s request for authority to issue additional debt, the District’s Rate16 Plan outlined in Section 4.11 of the District’s Rate Proposal, which includes rates that are higher17 than those included in the District’s recommended rates, should be adopted by the Board of18 Trustees.19 STORMWATER RATE PROPOSAL20 Q35. Does the District’s proposed funding of the stormwater utility provide sufficient revenues over21 the Rate Proposal Period.22 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 20 A. Based upon the Rate Change Proposal, it appears that the proposed funding method would1 generate sufficient revenue to fund the District’s projected stormwater costs, including2 operation and maintenance costs as well as capital projects.3 Q36. Do you agree with the District’s position that the proposed tax-based funding is equitable?4 A. From an equity perspective, I do not. The proposed Stormwater Tax Change will charge5 customers based on the value of the property, which has no relation to the property’s burden6 on the stormwater system. Under the proposed Stormwater Tax Change, two single family7 properties with the same square footage of impervious area and lot size, in different parts of the8 County, will pay a different amount for stormwater service, due only to a difference in property9 value and not due to the level of service received.10 Q37. Are there any positive elements to the District’s Proposed Stormwater Tax Change?11 A. The District’s Proposed Stormwater Tax Change is easy to explain and administer, and will12 provide increased revenue to allow the District to begin to address maintenance issues and13 system inadequacies in parts of the Service Area that have not been served in the past.14 Q38. Does the District’s proposal properly reflect the timing of the increased revenue from the15 proposed Stormwater Tax Change?16 A. Based upon my review of the District’s Rate Model, I believe that the District is projecting a full17 year of the increased revenue from the Stormwater Rate Change in FY 2017. Because the18 County assesses taxes as of January 1 (calendar year), I believe the District will receive revenue19 under the current tax structure for six months, and the proposed Stormwater Tax Change for six20 months. This will result in less revenue in FY 2017 than that shown in the Rate Proposal.21 Q38. Does this conclude your testimony?22 Rebuttal Testimony Pamela R. Lemoine, P.E. Black & Veatch Corporation 16305 Swingley Ridge Road Suite 230 Chesterfield, MO 63017 21 A. Yes.1 BLACK & VEATCH | Pamela Lemoine 1 Pamela Lemoine Ms. Lemoine’s experience encompasses a diverse range of financial, engineering, and economic studies for wastewater, water and stormwater utilities and solid waste systems. She has extensive experience in the conduct of strategic financial planning studies, cost of service and rate design studies, as well as financial capability analyses and affordability assessments associated with long term control plan development required as a result of federal consent decrees. She has assisted utilities in developing strategies to address affordability in negotiations with regulators. Ms. Lemoine has also assisted in the development of stormwater utilities, including policy development, financial planning, rate and credit program design, and implementation, providing clients with a stable source of revenue to fund necessary stormwater activities as required by NPDES permits and other wet weather related issues. Ms. Lemoine’s experience also includes the development of policies that address a utility’s objectives while meeting customers’ needs. She has also developed performance measures to allow utilities to better track efficiency and level of achievement of established goals and objectives. She is also experienced in the determination of the economic feasibility of proposed projects or property as well as major expansions to projects. She regularly presents utility issues and study results to city councils, board of commissioners and other stakeholders. REPRESENTATIVE PROJECT EXPERIENCE City of Columbus | Blueprint Columbus Affordability Analysis, Ohio | On‐ going Ms. Lemoine is serving as Project Manager in the completion of a comprehensive affordability analysis for the City’s Division of Sewerage and Drainage. The work is required under the City’s consent decree with the Ohio Environmental Protection Agency (OEPA). Black & Veatch is leading a multi‐disciplinary team in the evaluation of economic, demographic, financial and policy issues related to the City’s implementation of Blueprint Columbus. As part of the affordability analysis, Black & Veatch will be evaluating the impact of alternative schedules for the completion of Blueprint Columbus, as well as the impact of alternative schedules for a “gray” solution. The work will result in a final report that the City will deliver to OEPA in September 2015. Sanitation District No. 1 of Northern Kentucky | Affordability Analysis, Kentucky | On‐going Ms. Lemoine is assisting the District with an evaluation of affordability concerns related to the District’s consent decree and on‐going negotiations with federal and state regulators. Issues being addressed include the economic condition and impact of the wet weather program within the service area and specifically for vulnerable populations within the service area, the impact annually and over time on the District’s financial condition, and overall impact within the service PRINCIPAL CONSULTANT Specialization: Strategic Financial Planning, Water and Wastewater Rates, Consent Decree Negotiation, Affordability, Stormwater User Fees, Funding and Bond Feasibility, Organizational Efficiency, Citizen Work Groups, Public Information Education  B.S., General Engineering, University of Illinois – Urbana‐Champaign Professional Registration Professional Engineer: Washington Professional Associations WEF AWWA NACWA – Utility & Resource Management Committee member, Legal Affairs Committee AWWA – Consumer Confidence Report Workgroup member PNWS/AWWA past secretary Financial Management Committee Year Career Started 1987 Year Started with B&V 1995 EXHIBIT A BLACK & VEATCH | Pamela Lemoine 2 area due to the combined effect of wastewater, stormwater and drinking water requirements. City of Springfield, MO | LTCP Affordability Analysis, Missouri | On‐going Ms. Lemoine is serving as an advisor in the completion of a financial capability and affordability assessment related to the City’s Overflow Control Plan (OCP), required as part of the City’s Amended Consent Judgment with the Missouri Department of Natural Resources. The OCP reflects the City’s integrated planning approach. The affordability analysis includes both long‐term financial planning to assess the impact the program could have on the utility’s financial condition, and projected rate increases that would be required, as well as a detailed analysis of the economic and demographic conditions in the City and surrounding service area. City of Shreveport, LA | Financial Capability Assessment, LA | 2012‐13 Task Lead/Affordability Analysis. Ms. Lemoine served as Task Lead in the completion of a Financial Capability Assessment and Affordability Analysis for the City. The City proactively engaged in planning and assessment of SSO issues in anticipation of action by the EPA. Ms. Lemoine developed a preliminary financial capability assessment utilizing the guidance documents required by EPA. In addition, she evaluated the long‐term impacts on customers based upon typical average residential bills, to understand the year to year impact on customers and to more accurately understand the true impact of the program. For the preliminary analysis, an estimated capital program was utilized, as detailed studies regarding the ultimate LTCP were not yet available. Ms. Lemoine updated the analysis as the LTCP was developed, allowing the City to utilize the affordability analysis proactively in developing a recommended capital program and schedule. City of Shreveport, LA | Comprehensive Cost Allocation/Rate Study, LA | 2013‐14 Project Manager. Ms. Lemoine led the completion of a comprehensive cost allocation and rate design study for the City’s water and sewer utilities. Issues addressed in the study included customer equity, revenue stability, and conservation. Numerous rate design scenarios were developed to assist policy makers in balancing conflicting objectives. Black & Veatch conducted numerous presentations to policy makers throughout the study to help facilitate the decision‐making process. Sanitation District No. 1 of Northern Kentucky | Wastewater and Storm Water Financial Planning and Rate Study, Kentucky | 2012‐2013 Project Manager. Ms. Lemoine is currently directing the completion of a comprehensive financial plan and rate study for the District. The work requires the evaluation of the revenues and revenue requirements of the wastewater and storm water utilities managed by the District, as well as the financial position of the District as a whole. Key issues being addressed include the appropriate EXHIBIT A BLACK & VEATCH | Pamela Lemoine 3 allocation of wet weather costs between the wastewater and storm water utilities, allocation of all costs, including wet weather costs, to customer classes within each utility, and review and recommendation of appropriate rate structures to recover such costs in an equitable manner. In addition, Ms. Lemoine will be evaluating affordability concerns, particularly related to the wastewater utility, as the District is currently under a federal consent decree and is currently negotiating projects and schedule with federal regulators. Metropolitan Sewer District of Greater Cincinnati | Wastewater Cost of Service and Rate Design Study, Ohio| 2013, 2011, 2009, 2007 Project Manager. Since 2007, Ms. Lemoine has served as project manager for a biennial comprehensive evaluation of the District’s rate schedule. The study includes a detailed projection of revenue requirements, cost of service analysis and rate design. A key issue that has been addressed in each study is the determination of the impact to the District as a whole, and various customer classes in particular, of implementation of the District’s Wet Weather Program, known as Project Groundwork, as required under a consent decree with the federal government. Other important issues have included the impact of declining customer volume, changes in rate structure to address affordability concerns while maintaining equity between customers, and evaluation of the most appropriate manner for recovering costs related to infiltration/inflow. In 2008, Ms. Lemoine led the effort to develop a new user friendly model to allow District staff to evaluate alternative capital programs and year‐to‐date results on an on‐going basis. Greater Cincinnati Water Works | Billing Cost Allocation study, Ohio| 2013 Project Manager. Ms. Lemoine is leading the completion of an analysis of the processes and related costs associated with providing billing and customer service to the Metropolitan Sewer District of Greater Cincinnati (MSD) and the Cincinnati Stormwater Management Utility (SMU). After conducting detailed interviews with staff and evaluation of the existing methodology, Black & Veatch will determine those costs associated with providing billing services and work collaboratively with GCWW and MSD (who also manages SMU) to determine proper and fair allocation of such costs. Metropolitan Sewer District of Greater Cincinnati | Revenue Requirement and Miscellaneous Financial Policy Analyses, Ohio | 2014, 2012, 2010, 2008, 2006 Project Manager. The District performs a comprehensive cost allocation and rate design study every two years. In the alternating years, Ms. Lemoine leads a thorough review of the District’s revenue requirements, developing a 5‐10 year projection of future revenue needs based upon the District’s current operating and capital programs. The District uses this information to implement necessary rate increases and to plan future programs and schedules in a manner that helps ensure continued financial stability and strength. In addition, Ms. Lemoine also worked with District Management in 2009 to evaluate financial policies and EXHIBIT A BLACK & VEATCH | Pamela Lemoine 4 recommend changes to the policies to help improve the District’s financial strength and ensure continued success in light of the significant capital requirements the District is facing. Allegheny County Sanitation District | Consent Decree Oversight Services, Pennsylvania | 2012 Task Lead/Affordability Analysis. Black & Veatch has recently been engaged by ALCOSAN to provide oversight and direction support to ALCOSAN executives in the development of the utility’s long term control plan, as required by the federal government. Ms. Lemoine is leading the evaluation of the Program Manager’s financial and affordability considerations, and providing guidance and recommendations for completing that analysis. In addition, she is providing insight regarding the federal government’s concerns and priorities related to affordability. Jefferson County, Alabama, Environmental Services Department | Cost Allocation & Rate Design Services | 2010‐2011 Project Manager. The Receiver of the sewer utility of Jefferson County, Alabama engaged Black & Veatch to conduct a cost allocation and rate design study for Jefferson County’s Environmental Services Division. This analysis included the development of detailed customer and volume projections and resulting revenue under existing rates, and confirmation of revenue increase projections developed by others, under a separate agreement with the Receiver. Ms. Lemoine led the development of a comprehensive cost allocation and rate design model, allowing for the evaluation of alternative rate structures based upon policy direction provided by the Receiver. The results, and associated final report, were incorporated into the Receiver’s Interim Report to the Court in June 2011. Currently, Ms. Lemoine also led the update of the analysis to reflect a preliminary settlement recently reached by the County Commissioners and bond holders. The update included the development of rates for fiscal years 2012, 2013, and 2014 under two potential scenarios. The rates have not been implemented due to the County bankruptcy filing in November 2011. Greater Cincinnati Water Works | Comprehensive Water Rate Study, Ohio | 2011‐2013; 2014‐2015 Project Manager/Project Director. Ms. Lemoine served as Project Manager for a comprehensive water rate study, including proposed financial planning, cost‐of‐ service analysis and rate design. Key policies evaluated in the study included the need for increased revenue stability in an environment of declining customer usage and limited political support for increasing rates. In addition, Ms. Lemoine oversaw the development of a new user‐friendly financial planning and rate design model to provide further enhancement and ease of use by GCWW staff, along with an accompanying user manual. Rates based upon the analysis were implemented in December 2011. In 2013, as part of the City’s budgeting process and conversion to a fiscal year, GCWW requested that Black & Veatch evaluate the feasibility of an alternative rate structure. Ms. Lemoine led the completion of EXHIBIT A BLACK & VEATCH | Pamela Lemoine 5 an update to the model and design of a rate structure that recovers a portion of costs associated with the collection system through the base charge. The rates were adopted, and became effective January 2014. Ms. Lemoine is currently serving as Project Director in the completion of a comprehensive update of the model in support of GCWW’s FY2016 budget submittal. Greater Cincinnati Water Works | Litigation Support Services, Ohio | 2011‐ 2012 Project Manager. Ms. Lemoine led an interdisciplinary Black & Veatch team in providing expert witness analysis and testimony related to a service area dispute, wherein a separate party had begun to install infrastructure and serve customers in an existing GCWW service area. Work included the development of a detailed report that provided information concerning the operational and financial issues resulting from the duplication of services within the disputed service area, as well as evaluation of the other party’s rate structure, financial plan and capital financing. Ms. Lemoine provided deposition testimony, and assisted GCWW counsel in preparing for depositions of the other party’s witnesses. In early 2013, the court ruled in GCWW’s favor. City of Cincinnati, Ohio Stormwater Management Utility | Stormwater Rate Study | 2011 Project Manager. Ms. Lemoine served as Project Manager in the completion of a comprehensive stormwater rate study for the City’s Stormwater Management Utility. The analysis included the evaluation of projected revenue requirements and anticipated system‐wide revenue increases due to the anticipated need for a large capital program over the study period to rehabilitate and/or replace components of the City’s Barrier Dam, which is operated by the stormwater utility and funded by the stormwater user fee. Rates based upon the analysis were implemented in December 2011. Reading, Pennsylvania | Comprehensive Revenue Requirement and Affordability Analysis | 2009‐2010 Project Manager. Ms. Lemoine served as Project Manager in the preparation of a comprehensive revenue requirement and affordability analysis for the City’s wastewater utility. The City is under a consent decree to eliminate all Separated Sewer Overflows, and the results of this study provided essential information concerning the affordability of the program required. Based upon the results of the analysis, City officials began working with regulators to revise their consent decree to accommodate a lower cost solution. City of Springfield, Ohio | Stormwater Utility Development | 2009‐2011 Technical and Policy Advisor. The City engaged Black & Veatch to assist with the implementation of a stormwater utility. Project elements included all activities required for the successful implementation of a utility, including organization and financial analysis, parcel analysis, rate structure and fee development, credit program and appeals process development, development of the draft ordinance, EXHIBIT A BLACK & VEATCH | Pamela Lemoine 6 and billing database. All activities were conducted with a strong focus on public involvement, through a citizens’ advisory committee and development of a public outreach program. Ms. Lemoine assisted with the development of all policies, parcel analysis and billing database. Metropolitan Sewer District of Greater Cincinnati | Capital Program Feasibility Study, Ohio | 2005‐2009 Project Manager. Ms. Lemoine conducted a detailed evaluation of both the short‐ term and long‐term effects of implementation of significant capital costs associated with the District’s Long Term Control Plan, as required by a global consent decree that MSD entered into with the U.S. Environmental Protection Agency, U.S. Department of Justice, and the State of Ohio. The study evaluated the impact of both the capital costs as well as associated additional operating costs on the utility’s revenue requirements, and the resulting rates that could be necessary to fully fund revenue requirements, and the effects on affordability based on an analysis of the residential share of costs compared to median household income. Ms. Lemoine worked closely with the District and the District’s attorneys throughout the negotiation process to help ensure that the final program would allow the District to remain in a sound financial position and that customer costs could remain as affordable as possible. City of Arnold, Missouri | Stormwater Utility Development | 2003‐2006 Task Leader and Senior Consultant. Ms. Lemoine served as a Task Leader and Senior Consultant developing the framework and fees necessary for implementing a stormwater utility within the City. The work was completed as part of a larger stormwater master plan project. Her work included the development of alternative sources of funding followed by the development of numerous rate structures that would be feasible for the City to implement. Based on approval by the City Council, rates were developed for three alternative levels of operation for the new utility. Identification of additional data needs, database development and implementation procedures were also included in the study. Southeastern Public Service Authority | Strategic Financial Advisory Services, Virginia | 2004‐2005 Senior Consultant. Ms. Lemoine served as a Senior Consultant for the Southeastern Public Service Authority, a regional authority serving the greater Chesapeake, Norfolk, and Virginia Beach area. Ms. Lemoine and the Black & Veatch team provided a comprehensive long‐term financial analysis of the entire system, which comprises solid waste transfer and disposal, recycling, and steam and electricity production from a waste‐to‐energy facility. Based on the analysis, several recommendations were presented to the Board of Directors. Ms. Lemoine also conducted a cost‐benefit analysis of the waste‐to‐ energy system and evaluated numerous options concerning long‐term disposal options in the region. Ms. Lemoine conducted an activity‐based cost analysis for EXHIBIT A BLACK & VEATCH | Pamela Lemoine 7 all major activities within the Authority and also provided assistance to the client’s Executive Director during the budget preparation and approval process. Seattle Public Utilities | Drainage Policy Study, Washington | 2000‐2001 Task Leader and Senior Consultant. Ms. Lemoine served as a Task Leader and Senior Consultant in assisting the City with a comprehensive review of the City’s Drainage Utility. She was responsible for all issues associated with financial and economic policy development, including rate development. She also led a comprehensive benchmarking effort. Other issues addressed in the study by other team members included system design requirements, landslide issues and coordination with other City departments. Sydney Water Corporation | Survey of United States Stormwater Utilities, Australia | 1998 Project Manager. Ms. Lemoine served as Project Manager in the completion of a survey of six regional stormwater utilities throughout the United States. The purpose of the survey was to aid Sydney Water in more fully understanding key attributes of successful regional utilities in the United States. Key components evaluated included organizational structure, inter‐local agreements and funding sources. This information was included in the development of Sydney Water's Stormwater Strategy and used to better inform the state government as to the options available for improvements in stormwater management. Steilacoom, Washington | Water/Sewer Strategic Operations Study | 2001 Project Director. Ms. Lemoine served as Project Director in the completion of a Water/Sewer Strategic Operations Study. The objective of the study was to develop a recommended strategy for providing water and sewer service in a manner that would best serve the town, residents and customers. The project involved several phases, including: a preliminary industry assessment in which viable alternative means of providing water and sewer service were identified, and high level feasibility assessment conducted; evaluation of comprehensive alternatives, and evaluation of proposals received in response to the town’s request for proposals. Portland, Ore. | Stormwater Cost Allocation Study | 2000 Project Manager. Ms. Lemoine served as Project Manager in the completion of a study supporting the Bureau of Environmental Services (BES) in the development of a credit program for customers with on‐site detention facilities. The project was part of the City’s overall rate reform effort initiated in 1999. Issues addressed in the study included the determination of estimated costs associated with handling stormwater from streets and public rights‐of‐way compared to stormwater from private properties, as well as an evaluation of potential methodologies that could be used to estimate the value to the BES of on‐site detention facilities. EXHIBIT A BLACK & VEATCH | Pamela Lemoine 8 Tacoma, Wash. | Storm Drainage Utility Cost Allocation Study | 1999 Project Manager. Ms. Lemoine served as Project Manager in the completion of a comprehensive review of the City’s Storm Drainage utility’s cost allocation policies and practices. The study was initiated in order to address certain equity issues that had been raised over the past few years. Ms. Lemoine led the workshops held with the Sewer Utility Customer Advisory Panel (SUCAP) and presented the final study results to the SUCAP and City Council at the conclusion of the study. Portland, Ore. | Capital Cost Allocation Study, Bureau of Environmental Services | 1997 Project Manager. Ms. Lemoine served as Project Manager in the completion of a study to evaluate the methodology used to allocate capital‐related costs of the wastewater utility between sanitary and storm functions, as well as between customer classes. The information was to be used by City staff in the completion of their annual rate review. Ocean Shores, Wash. | Water, Wastewater and Storm Drainage Rate Study | 1998 Project Director. Ms. Lemoine served as Project Director in the completion of a comprehensive cost‐of‐service and rate design study for the City. Issues involved in the study included the ability to maintain rate stability while financing a large capital improvement program and the development of rates that provide for the equitable allocation of costs. Tacoma, Wash. | Water System Development Charge Study | 1997 Project Manager. Ms. Lemoine served as Project Manager in assisting the City with an update of its System Development Charges (SDCs). The City’s current Water SDCs were developed in 1991, and since that time, the utility has seen a significant increase in capital requirements necessary to serve growth. This study included the evaluation of several different methodologies to determine the approach that best meets the needs of the utility, while adhering to all state legislation associated with SDC development. Tacoma, Wash. | Water System Development Charge Study| 1997 Project Manager. Ms. Lemoine served as Project Manager in assisting the City with an update of its System Development Charges (SDCs). In the time since the then current SDCs were developed, the utility had experienced a significant increase in capital requirements necessary to serve growth, and wished to ensure that their SDCs reflected such capital requirements in order to facilitate a “growth pays for growth” policy. The study included the evaluation of several different methodologies to determine the approach that best meets the needs of the utility, while adhering to all state legislation associated with SDC development. EXHIBIT A BLACK & VEATCH | Pamela Lemoine 9 City of Yakima, Washington | Water & Irrigation Utility Rate and Management Services | 1996‐2001 Project Manager. Ms. Lemoine has provided numerous studies and services to the City’s Water & Irrigation Division since 1995. She served as Project Manager in assisting the city in the development of usage rates for its water utility. The need to encourage conservation was a critical issue that was addressed in the study. The work included a phase‐in plan to allow for increased conservation pricing each year without causing an undue burden on any particular customer class in a given year. Ms. Lemoine also directed the completion of the City's first‐ever water connection charges, designed to recover backbone system costs due to serving new customers. The charges were designed in accordance with Washington state law. Ms. Lemoine also expanded the existing revenue requirement model to include cost allocations and rate design and provided several upgrades to the existing model to allow for easier use by City staff. Ms. Lemoine most recently managed the utility’s first‐ever strategic planning effort, resulting in a program for utility and staff development over the next five years. She also completed a division‐wide analysis for the purpose of assisting the division in evaluating alternative capital programs. King County Solid Waste Division | Competitiveness Project; Wash. | 2000 Project Manager. Ms. Lemoine served as Project Manager in the completion of a competitiveness analysis for the County’s Solid Waste Division. The Division is responsible for regional solid waste planning and development of numerous waste reduction/recycling programs. The division also operates numerous transfer stations that serve both commercial and self‐haul customers, a regional landfill and is responsible for monitoring and maintenance activities at a number of closed landfills. The goal of the project was to identify where the division was doing well, where it might have been able to improve and also included possible additional services it might be able to provide. The project was structured in a manner that allowed for a significant amount of employee involvement and was focused on assisting the division in the establishment of performance measures that would allow Black & Veatch to compare the division with others, as well as with themselves over time. Based on the results of the benchmarking, Black & Veatch assisted the division in the process mapping of up to three separate processes and provided recommendations for further study. Seattle Water Department | CIP Evaluation Study; Wash. | 1996 Project Analyst. In conducting an evaluation of the Department’s CIP development and prioritization process, Ms. Lemoine and other team members evaluated the criteria for formulating the CIP; criteria and methodologies for identifying and defining projects; procedures for prioritizing projects; CIP EXHIBIT A BLACK & VEATCH | Pamela Lemoine 10 management process and critical decision points; and integration of CIP planning with financial planning. As Assistant Project Manager, Ms. Lemoine assisted in completing all aspects of the study, including development of recommendations and completion of the final report. The study included a peer review of other water utilities to aid in developing the best management practices. PUBLICATIONS AND PRESENTATIONS “Environmental Regulations: Can They Be Flexible and Affordable for Local Governments?,” National League of Cities, Congressional Cities Conference, Washington D.C., March 2015. (Moderator) “The Great Beyond: Congratulations, You are High Burden – Now What?,” NACWA National Clean Water Law Seminar, St. Pete Beach, FL, November 2014. (Co‐ Presenter) “Trends/Issues in Wastewater Rate Setting,” NACWA Summer Conference, Chicago, Ill., July 2011. “Financing Consent Decrees – Cincinnati’s Approach to an Affordable Solution,” poster presentation, WEFTEC 2006, Dallas, Texas. “The Importance of Long‐Range Financial Planning,” presented at the Pacific Northwest Pollution Control Association annual conference, Portland, Ore., October 1998. “Benchmarking: A Tool for Success,” presented at the Pacific Northwest Pollution Control Association Annual Conference, Seattle, Wash., Oct.1997. “Privatization of Municipal Utilities ‐ What's Happening?” presented at the Northwest Government Finance Institute, Portland, Ore., November 1996. “A Review of the Effectiveness of Conservation‐Oriented Water Rate Structures,” (co‐author) presented at the American Water Works Association Annual Convention, Anaheim, Calif., June 1995. Published in Journal AWWA in November 1996. Presented at the 1998 AWWA Best Conservation Paper Award in February 1998. EXHIBIT A