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MSD Exhibit No. MSD 3J
2023 Wastewater Rate Change Proceeding
WILLIAM STANNARD
Direct Testimony
Metropolitan St. Louis Sewer District
March 24, 2023
Table of Contents
Page
Witness Background and Experience ........................................................................................... 1
General Matters ............................................................................................................................. 3
Inflow and Infiltration (I/I) Cost Recovery ................................................................................................... 4
Pollutant Strength Loadings in Cost Recovery Analyses.............................................................6
Direct Testimony of William Stannard, Raftelis March 24, 2023
2023 Wastewater Rate Proceeding 1 MSD Exhibit No. MSD 3J
Witness Background and Experience 1
Q1 Please state your name, business address, telephone number, and email address. 2
A. William Stannard, 3013 Main Street, Kansas City, Missouri, 64108, (816)285-9020, 3
wstannard@raftelis.com 4
Q2. By whom are you employed and in what capacity? 5
A. I am Chairman of the Board of Raftelis Financial Consultants, Inc. (Raftelis) and have 6
more than 40 years of experience providing financial and management consulting services 7
to municipally owned utilities throughout the United States and Canada. Raftelis was 8
established in 1993 in Charlotte, North Carolina to provide environmental and management 9
consulting services to public and private sector clients. Raftelis is a national leader in the 10
development of water, wastewater, and stormwater rates and employs more than 130 11
consultants providing financial and management consulting services to municipal utilities 12
throughout the United States and Canada. I have served as an expert witness in rate 13
litigation matters in federal and state courts and before arbitration panels and state public 14
service commissions. 15
Q3. Please describe your educational background and work experience. 16
A. I obtained a Bachelor of Science, Business Administration and a Bachelor of Science, Civil 17
Engineering from Kansas State University in 1975. I joined Raftelis in 2002 after a 28-18
year consulting career at Black & Veatch where I was head of that firm’s management 19
consulting division. I have extensive experience in the development of ordinances and 20
financial procedures for complying with the Clean Water Act and the Safe Drinking Water 21
Act, comprehensive cost of service studies, bond feasibility reports, project financial 22
feasibility analyses, organizational and management reviews, and utility competitiveness 23
studies. During my career I have conducted more than 250 water, wastewater, and 24
Direct Testimony of William Stannard, Raftelis March 24, 2023
2023 Wastewater Rate Proceeding 2 MSD Exhibit No. MSD 3J
stormwater financial planning, cost of service, and rate studies. I have also prepared more 1
than 100 consulting engineers reports/financial feasibility studies in support of more than 2
$7 billion of water and wastewater revenue bonds. 3
Q4. Are you a registered Professional Engineer? 4
A. Yes, I am a registered Professional Engineer in the states of Kansas, Ohio, Massachusetts, 5
and Michigan. 6
Q5. Do you belong to any professional organizations or committees? 7
A. Yes. I am a member of the American Water Works Association (AWWA) where I have 8
served in a number of leadership positions including Chair of AWWA’s Management and 9
Leadership Division, a Trustee of AWWA’s Technical & Education Council, and Chair of 10
AWWA’s Finance, Accounting and Management Controls Committee. I am a member of 11
the Water Environment Federation (WEF) where I am a member of the Government Affairs 12
Committee and previously served as the Chair of the Task Force responsible for the 13
development of the Manual of Practice No. 27, Financing and Charges for Wastewater 14
Systems. I also authored a chapter entitled, “Selecting the Optimal Capital Financing Plan 15
and Pricing Structure,” for the Fourth Edition of the industry guidebook, Water and 16
Wastewater Finance and Pricing: The Changing Landscape. In 2018 I was appointed to 17
the United States Environmental Protection Agency’s Environmental Finance Advisory 18
Board and continue as an active member. I also am an emeritus member of the Kansas 19
State University College of Engineering Advisory Council. 20
Q6. Have you previously testified before the Rate Commission of The Metropolitan St. 21
Louis Sewer District (District or MSD)? 22
A. Yes. I testified as the Rate Consultant to the Rate Commission in the 2007, 2008, and 2011 23
Wastewater Rate Change Proceedings and as the Rate Consultant to the District in the 2015 24
Direct Testimony of William Stannard, Raftelis March 24, 2023
2023 Wastewater Rate Proceeding 3 MSD Exhibit No. MSD 3J
and 2019 Wastewater Rate Change Proceedings. 1
Q7. Please describe your role in this proceeding? 2
A. The scope of my assignment in this proceeding is as Project Director for Raftelis’ 3
assistance to the District in preparing the Wastewater Rate Change Proposal which 4
recommends means of financing MSD’s wastewater activities for fiscal years ending June 5
30, 2025 (FY25) through June 30, 2028 (FY28). As project Director I provided leadership 6
and direction to our team of consultants engaged in this work for the District as well as 7
technical advice during the conduct of our work. 8
General Matters 9
Q8. What requirements are you aware of that any proposed changes in wastewater rates 10
by the District must meet? 11
A. Pursuant to Section 7.040 of the Charter Plan of the District, any proposed changes in 12
wastewater rates must be necessary to pay (i) interest and principal due on bonds issued or 13
to be issued to finance assets of the District, (ii) the costs of operation and maintenance, 14
and (iii) such other amounts as may be required to cover emergencies and anticipated 15
delinquencies. 16
Q9. How is it determined whether the District’s Wastewater Rate Change Proposal is 17
necessary? 18
A. This determination begins with the development of the District’s Comprehensive Financial 19
Plan, which is a major component of the Wastewater Rate Change Proposal. As the Rate 20
Consultant to the District, our work included the development of this financial plan in 21
collaboration with District Staff and the District’s other consultants. The forecasts set forth 22
in the Wastewater Rate Change Proposal form the foundation of the level of revenues 23
needed to achieve the District’s operational and capital investment objectives. The Rate 24
Direct Testimony of William Stannard, Raftelis March 24, 2023
2023 Wastewater Rate Proceeding 4 MSD Exhibit No. MSD 3J
Commission will examine the District’s projected revenue requirements to ensure that such 1
revenue requirements are necessary and reasonable to meet the District’s near-term 2
financial needs, that such revenue requirements do not overstate the District’s near-term 3
financial needs, and that such revenue requirements are being recovered in a fair and 4
equitable manner. 5
Inflow and Infiltration (I/I) Cost Recovery 6
Q10. Was I/I an issue raised in the 2019 Wastewater Rate Change Proceeding? 7
A. Yes. After considering the issues surrounding the determination of the volume of I/I and 8
the methodology used to allocate I/I responsibility, the Rate Commission directed the 9
District to undertake studies to evaluate the methodologies for estimating the trends in I/I 10
volumes, the forecasting of I/I volumes, and the allocation of I/I responsibility among the 11
customer classes. Accordingly, the District retained the services of Stantec to undertake 12
the I/I study. Stantec issued a report dated October 10, 2022. See Exhibit MSD 66. The 13
findings of Stantec regarding the I/I matter are covered in the testimony of Mr. William 14
Zieburtz. 15
Q11. How is the relative amount of I/I determined? 16
A. Total wastewater volume reaching the treatment plants is comprised of contributed 17
wastewater volume (i.e., wastewater entering the system from customers’ water usage) and 18
I/I. Consistent with the recommendations of Stantec, we examined the District’s 19
operational data for the five most recent fiscal years (2018-22). This approach normalizes 20
the impacts of rainfall. 21
Q12. What is the relative amount of I/I used in the current Wastewater Rate Change 22
Proposal? 23
A. After examining and analyzing the District’s historical treatment plant and billed 24
Direct Testimony of William Stannard, Raftelis March 24, 2023
2023 Wastewater Rate Proceeding 5 MSD Exhibit No. MSD 3J
consumption data, we have estimated that District-wide I/I will be approximately 62.4% of 1
the total wastewater flow reaching the treatment plants during the period covered in this 2
2023 Wastewater Rate Change Proposal. 3
Q13. How does this compare with the I/I percentage used in the District’s 2019 Wastewater 4
Rate Change Proposal? 5
A. In the District’s prior rate case, the percentage of I/I was estimated to be 59.4% of the total 6
wastewater flow on an annual basis. 7
Q14. Did you expect this increase in the I/I percentage? 8
A. Yes. The data show that a key driver in the total volume of I/I collected and transported to 9
the wastewater treatment plants is precipitation, both in terms of rainfall and snowfall. The 10
District has also been making significant investments in its infrastructure to reduce 11
combined sewer overflows (CSO) and separate sewer overflows (SSO), which result in an 12
increase in the total wastewater volumes conveyed and treated at the wastewater treatment 13
plants, especially during wet weather periods. The District is also working diligently with 14
customers to remove sources of I/I entering the collection system from private property. 15
Overall, the increase in the percentage of I/I shown in the data is consistent with my 16
expectations. Based on my experience with other major wastewater utilities, I believe that 17
the 62.4% factor for I/I is reasonable. 18
Q15. How is responsibility for I/I determined? 19
A. Each customer class should bear its proportionate share of the costs associated with I/I 20
because the District’s wastewater system must be adequate to convey and process the total 21
volume of wastewater that is conveyed to the District’s wastewater treatment plants. The 22
proportionate share of costs should reflect the responsibility of the appropriate customer 23
classes for the amount of I/I that is generated to the extent reasonably practicable. It is 24
Direct Testimony of William Stannard, Raftelis March 24, 2023
2023 Wastewater Rate Proceeding 6 MSD Exhibit No. MSD 3J
recognized in the wastewater utility industry that there are two principal sources of I/I: (1) 1
private property service lines and other connections; and (2) leaks within the collection 2
system pipes and manholes. It is important to note that there is not a national standard 3
methodology used for allocation of I/I responsibility among customer classes. The 4
District’s cost of service analyses have consistently used I/I allocation percentages of 40 5
percent to customers and 60 percent to volume since the 2007 Wastewater Rate Change 6
Proceedings. As described in the Stantec I/I Report, ten alternative methods were 7
examined to estimate relative responsibility of I/I. The results of these ten alternatives are 8
presented in Figure 4 of the Stantec I/I Report and range from 0% allocated on the basis of 9
number of customers (100% to volume) to 70% allocated on the basis of number of 10
customers (30% to volume). Stantec also benchmarked the I/I allocation approaches used 11
by 13 other wastewater utility systems across the United States. Based on their analysis 12
and review of approaches used by other wastewater utility systems, Stantec recommended 13
that the District maintain the 40% customer/60% volume allocation. Therefore, the amount 14
of I/I costs to be recovered directly from wastewater service charges is assigned to customer 15
classes on the premise that 40 percent of the total cost is distributed on the basis of the 16
number of customers within each class and 60 percent allocated on the basis of contributed 17
wastewater volume. This allocation of I/I costs can be seen in Table 4-16 of the 2023 18
Wastewater Rate Change Proposal. 19
Pollutant Strength Cost Recovery 20
Q16. Does the 2023 Wastewater Rate Change Proposal continue to recognize the 21
strengths of pollutants in the wastewater? 22
A. Yes, it does. Consistent with MSD’s previous rate change proceedings the 2023 23
Wastewater Rate Change Proposal incorporates the strengths of the two principal 24
Direct Testimony of William Stannard, Raftelis March 24, 2023
2023 Wastewater Rate Proceeding 7 MSD Exhibit No. MSD 3J
pollutants which are removed by the District’s wastewater treatment plants, total 1
suspended solids (TSS) and Biological Oxygen Demand (BOD). TSS are solid material 2
that are suspended in the wastewater that are settled in the wastewater treatment process. 3
BOD is a measure of the organic material present in the wastewater which causes a 4
depletion of oxygen levels in the rivers receiving the discharge from the wastewater 5
treatment plants. The reduction in oxygen levels adversely affect the aquatic life and 6
biologic health of the rivers. 7
Q17. Can you explain why pollutant strengths should be recognized in wastewater rates? 8
A. The District’s wastewater treatment plants are designed and constructed to handle the 9
volume of wastewater as well as the TSS and BOD included in the wastewater. In 10
addition, the annual operation and maintenance expenses incurred by the District in the 11
operation of the treatment plants are directly and indirectly related to the TSS and BOD. 12
The components of wastewater in the District’s system include sanitary sewage from 13
Single Family Residential, Multi-Family Residential, Non-Residential Normal Strength, 14
Non-Residential Extra Strength customers, and I/I. Differentiating the pollutant loadings 15
from these components of wastewater flow provides a more equitable distribution of the 16
District’s cost of service among the customer classes. 17
The cost-of-service analyses identify the costs for transporting, treating and disposing 18
the wastewater from these three components. The direct and indirect costs for treating 19
and removing TSS and BOD are incorporated in the volume charge and the Extra 20
Strength Surcharge, which is applied to the large industrial customers whose wastewater 21
is sampled and analyzed on a regular basis. 22
Q18. What process is used to determine the TSS and BOD in wastewater? 23
A. It is important to note that it is not economically feasible to obtain pollutant loading data 24
Direct Testimony of William Stannard, Raftelis March 24, 2023
2023 Wastewater Rate Proceeding 8 MSD Exhibit No. MSD 3J
for every District customer. However, there is substantial volume and pollutant strength 1
data for each of the District’s wastewater treatment plants and the Non-Residential Extra 2
Strength Surcharge customers that can be used in the cost of service analyses. 3
Conducting a mass balance using the available data provides the basis for estimating the 4
pollutant strength loadings for the Residential and Non-Residential customers for whom 5
data is not available. The following table presents the mass balance for the FY 2025 Test 6
Year for the Wastewater Rate Change Proposal. 7
8
9
The pollutant strength concentrations and loadings for the wastewater contributed by the 10
Single Family Residential, Multi-Family Residential and Non-Residential Normal 11
Strength Classes resulting from the mass balance analysis are 285mg/l for TSS and 265 12
mg/l for BOD. These pollutant strength concentrations were used in the cost of service 13
analyses in the Wastewater Rate Change Proposal to determine the cost of service for 14
each customer’s class and the proposed rates. 15
Q19. Does this conclude your direct testimony in this matter? 16
A. Yes, it does. 17