HomeMy Public PortalAboutExhibit RC 99 - Rate Commission's Fourth Discovery Request to MSD April 27, 2015Exhibit RC 99
BEFORE THE RATE COMMISSION
OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT
For Consideration of a Wastewater
and Stoiinwater Rate Change Proposal
by the Rate Commission of the Metropolitan
St. Louis Sewer District
FOURTH DISCOVERY REQUEST
OF THE RATE COMMISSION
Pursuant to §§ 7.280 and 7.290 of the Charter Plan of the Metropolitan St. Louis Sewer
District (the "Charter Plan"), Operational Rule 3(2) and Procedural Schedule §§ 1, 17 and 18 of
the Rate Commission of the Metropolitan St. Louis Sewer District ("Rate Commission"), the
Rate Commission requests additional information and answers from the Metropolitan St. Louis
Sewer District ("District") regarding the Rate Change Proposal dated February 26, 2015 (the
"Rate Change Proposal").
The District is requested to amend or supplement the responses to this Discovery
Request, if the District obtains information upon the basis of which (a) the District knows that a
response was incorrect when made, or (b) the District knows that the response, though correct
when made, is no longer correct.
The following Discovery Requests are deemed continuing so as to require the District to
serve timely supplemental answers if the District obtains further information pertinent thereto
between the time the answers are served and the time of the Prehearing Conference.
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FOURTH DISCOVERY REQUEST
1. The Charter Plan provides that the Board of Trustees shall, by ordinance, identify
the Rate Commission Representative Organizations, and that each Representative Organization
shall designate an individual to represent it and serve on the Rate Commission. See Charter Plan
§ 7.230. Please (a) provide copies of all ordinances identifying the current Rate Commission
Representative Organizations; and (b) provide a copy of the designation letter from each Rate
Commission Representative Organization stating the individual representing the Organization
during these proceedings.
RESPONSE:
2. During the Technical Conference for Direct Testimony and Rate Setting
Documents, Commissioner Stein requested information regarding the intergovernmental
agreements among the District and municipalities within or adjacent to the District. Please
provide copies of each such agreement currently in force.
RESPONSE:
3. During the Technical Conference for Direct Testimony and Rate Setting
Documents, Richard L. Unverferth testified that seven levee districts are located within St. Louis
County. See p. 60,1. 24; p. 61,11. 1-3. Please (a) name each such levee district; and (b) provide
a copy of any current agreement between the District and any such levee district.
RESPONSE:
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4. During the Technical Conference for Direct Testimony and Rate Setting
Documents, Commissioner Tomazi requested information concerning the extent of District debt.
Please provide (a) the total bond debt which may be issued by the District while maintaining a
AA credit rating; (b) state the extent to which the District intends to use debt as a major
component of future CIRP funding; and (c) when the District expects that continued use of debt
as a major component of CIRP finding will become no longer prudent.
RESPONSE:
5. The Stormwater CIRP Project List in the Rate Change Proposal identifies projects
scheduled for completion in FY2017 through FY2023. See MSD Exh. Appendix 7.5.2. Figure
5-2 in the Rate Change Proposal describes the Stormwater Capital Improvement & Replacement
Program for FY2015 through FY2020. Please quantify (a) the CIRP projects to be completed; (i)
FY2015 and FY2016, (ii) in FY2017 through FY2020 inclusive, (iii) in the following fiscal
years; and (iv) the remaining backlog of Stormwater CIRP; and (b) provide a schedule for the
issuance of the remaining existing bond authorization.
RESPONSE:
6. On page 37 of the District's 2014-2015 Budget (MSD 19), the District states the
"Debt Capacity per MSD Co -Financial Advisors" of $1,400. Please indicate (a) current debt
capacity used by the District in determining CIRP financing, and (b) information supporting the
current debt capacity limit.
RESPONSE:
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7. For each of the bond issuances included in MSD 94M, please provide a summary
of Outstanding Par during FY2015-FY2020.
RESPONSE:
8. For each of the bond issuances included in MSD 94N, please provide a summary
of Outstanding Par during FY2015-FY2020.
RESPONSE:
9. Exhibit MSD 1, Table 4-8 of the Rate Change Proposal provides projections for
the Capital Improvement and Replacement program during FY2015 through FY2020. Please
state (a) the total amount of outstanding debt on June 30, 2021; (b) the ratio of debt to operating
revenues; (c) total outstanding long-term debt per ratepayer; (d) total outstanding long-term debt
per capita; and (e) the ratio of debt to equity.
RESPONSE:
10. The Master Bond Ordinance requires the District to provide wastewater rates that
are sufficient to pay all operating and maintenance expenditures and provide net operating
revenues together with investment earnings that will at least equal 125% of the annual debt
service requirement on all senior bonds and at least equal 115% of the annual debt service
requirement on all outstanding bonds, loans and other obligations. Table 4-9 — Projected
Wastewater Debt Service Requirements (MSD Ex. 1, p. 4-19) describes the Proposed Debt
Service Requirements for FY2015 and FY2016 and the Projected Debt Service Requirements for
FY2017-FY2020. Please provide (a) the ratio of the projected level of Net Wastewater
Revenues (revenue less operation & maintenance expense) to the annual debt service obligation
for each fiscal year from FY2015 to FY2020 inclusive; (b) the projected ratios for debt service
coverage on senior lien debt and all outstanding debt for each fiscal year from FY2015 to
FY2020 inclusive; (c) the projected minimum level of net revenues to meet the minimum debt
service requirements for the Additional Bonds test on Total Debt and the annual Rate Covenant
Debt Service requirement for each fiscal year from FY2015 to FY2020 inclusive; and (d) the
projected amount and percentage of cumulative cash financing and current debt authorization at
the end of each fiscal year from FY2015 through FY2020 inclusive.
RESPONSE:
11. Please provide a summary of assumptions regarding term, interest rate, issuance
costs, bond reserve requirements, etc. for the Debt Service Requirements shown in MSD Ex. 1,
Table 4-9, page 4-19.
RESPONSE:
12. Please state whether the District's Financial Advisor and/or Rate Consultant
believe that the relative proportion of debt and cash financing of the CIRP proposed by the
District is reasonable.
RESPONSE:
13. During the Technical Conference for Direct Testimony and Rate Setting
Documents, Bethany Pugh testified that the financial plan provides for minimum cash on hand of
550 days. See page 6, lines 22-23.Please describe (a) how 550 was determined to be the
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minimum; and (b) how does the model incorporate this criteria to ensure that the financial plan
meets or exceeds the minimum, compared to the calculations in the Rate Model, and as described
in William Stannard's testimony regarding minimum operating fund balances. See page 10, line
22 and page 19, line 8. Please state (a) each revenue source and beginning balance at FY2015;
and (b) the current day's cash on hand as of the most recent date.
RESPONSE:
14. Exhibit MSD 75 is a delinquency Agency Schedule for FY2012 to FY2014.
Please provide a schedule for the period FY2000 to FY2012.
RESPONSE:
15. Please provide a copy of the Approval of the State Fiscal Year 2015 Clean Water
State Revolving Fund Intended Use Plan.
RESPONSE:
16. The Rate Change Proposal, Ex. MSD 1, compares wastewater bills with and
without the authorization of $900 million in revenue bonds. See Figure 4-9, p. 4-41. Please
provide for each alternative the projected (a) average monthly residential wastewater bill on July
1, 2016; (b) the average annual residential wastewater bill as a percentage of median household
income on July 1, 2016; and (c) the percentage average annual increase for residential
wastewater bills for July 1, 2017, 2018, 2019, and 2020.
RESPONSE:
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17. During the Technical Conference for District Testimony and Rate Setting
Documents, William Stannard testified that the proposed Wastewater Revenue increase was
10.75%. Please (a) state the proposed percentage increase in Residential and Tier One ratepayer
bills for each year from FY2015 to FY2020; (b) provide copies of any memorandum, report,
work paper, summary, analysis, or schedule that supports the District's determination; and (c)
state the amount of the median residential bill for each such year.
RESPONSE:
18. Table 4-4 — Wastewater User Charge Revenue Under Approved Rates, Exhibit
MSD 1, pp. 4-9, shows the historic growth in user charge revenue for FY2013 and FY2014 and
the projected growth in user charge revenue for FY2015 to FY2020. The District conducts a
program for customers to apply for a reduction of sewer charges for non-sewered water. Please
state for each fiscal year from FY2005 to date the sanitary charges waived under this program.
RESPONSE:
19. William Stannard described in Direct Testimony certain cost increases due to
inflation for the District's wastewater expense projections for FY2016 through FY2020. See
MSD Exh. 3H at page 9, lines 8-18. Please provide (a) the annual percentage increase
experienced by the District for each of these items for each of FY2011 to FY2014 inclusive; (b)
the individual components of the index used by the District as a basis for the future inflation
allowances; (c) a detailed estimate of the pension costs for the District under the new defined
contribution plan for each fiscal year from FY2016 to FY2020 inclusive; and (d) the percentage
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increase in annual salary, wages and overtime, and personnel, service expense approved by the
Board of Trustees for FY2012 to FY2015 inclusive.
RESPONSE:
20. Please provide a table summarizing the allocation of the District's fixed assets to
functional cost components, indicating the date of such fixed asset data, as referenced on page 4-
26, first sentence of second paragraph.
RESPONSE:
21. Please provide Appendix 7.2.2 and 7.5.2 in Excel format. In addition, please
provide a) necessary detail to indicate to which category (e.g., SSO, CSO, treatment plant, etc.)
each project is assigned; and breakdown by cost component (e.g., design, construction, property
acquisition, ROW acquisition, etc.).
RESPONSE:
22. Please provide a summary of assumptions used in determining the incremental
additional O&M included in the financial plan (see MSD 1, Table 4-6, line 22).
RESPONSE:
23. A summary of projected wastewater expenses for Operations and Maintenance for
FY2015 through FY2020 is presented in Table 4-6 of Exhibit MSD 1. These projections are
based on certain financial assumptions: (i) Customer and Water Usage growth/Decline; (ii)
Customer Impacts; (Hi) Inflation Rates; (iv) Bad Debt and Collection Efforts; (v) Customer
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Assistance Project; (vi) Overhead Rates; (vii) Basis for cost of service indirect/direct cost
allocation; (viii) Average Water/Wastewater Utility Bill Comparison; (ix) Salary Projection; (x)
Wastewater/Stormwater Segmentation; and (xi) Infiltration/Inflow Assumptions. Please describe
how the District will manage each of these factors if the anticipated conditions, events, and
circumstances do not occur.
RESPONSE:
24. Please indicate when the historical impervious area data included in the Rate
Model was compiled (see MSD79, Tab "Demand -Input", lines 503-586).
RESPONSE:
25. Jonathan C. Sprague testified during the Technical Conference regarding service
level expectations of the ratepayers and identified customer surveys conducted in 2014 (see
MSD 3D, p. 4, 1. 6) and a customer service survey regarding stormwater services in the "Red
Area" (see MSD 3D, p. 6, 1. 20). Please provide copies of each of these and any other customer
surveys conducted since January 1, 2013.
RESPONSE:
26. Please describe (a) the District's policy regarding billing of wastewater services
(e.g., billing in arrears), and (b) the adjustment factor applied in calculating projected revenue
under proposed increases in the first year of the increase.
RESPONSE:
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Respectfully submitted,
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; Susan Myers,
Counsel for the Metropolitan St. Louis Sewer District; Brad Goss, Counsel for Intervener Home
Builders Association of St. Louis & Eastern Missouri; and Brandon Neuschafer and Diana
Vuylsteke, Counsel for Intervenor Missouri Industrial Energy Consumers on this 27th day of
April, 2015.
Ms. Janice Fenton
Office Associate Senior
Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103
JFENTON@sthnsd.com
Ms. Susan Myers
General Counsel
Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103
smyers@stlmsd.com
Mr. Brad Goss
Smith Amundsen, LLC
120 South Central Avenue, Suite 700
St. Louis, MO 63105-1794
bgoss(th,salawus.com
Mr. Brandon W. Neuschafer
Ms. Diana M. Vuylsteke
Bryan Cave LLP
211 N. Broadway, Suite 3600
St. Louis, MO 63102
bwneuschaferna,bryancave.com
dmvuylsteke a,bryancave.coin
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