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Home My Public Portal AboutExhibit RC 80A- Rate Commission's Response to MSD's First Discovery RequestBEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT RATE COMMISSION’S RESPONSE TO FIRST DISCOVERY REQUEST OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT TO THE RATE COMMISSION ISSUE: 2023 STORMWATER & WASTEWATER RATE CHANGE PROCEEDING WITNESS: RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT SPONSORING PARTY: MSD DATE PREPARED: MAY 18, 2023 Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 Exhibit RC 80A EXHIBIT RC 80A 2 BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT For Consideration of a Stormwater & ) Wastewater Rate Change Proposal ) by the Rate Commission of the ) Metropolitan St. Louis Sewer District ) RESPONSE OF THE RATE COMMISSION TO THE FIRST DISCOVERY REQUEST OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT TO THE RATE COMMISSION REQUEST NO. 1: Regarding Pam Lemoine’s testimony in Q. 41 page 27, would the phasing in of the District’s proposed surcharge rate result in additional charges to custom ers that did not generate these costs? If so, would this impact the Rate Commission’s objective to determine if the Rate Change considers the financial impact on all classes of ratepayers in determining a fair and reasonable burden? RESPONSE: Phasing in the District’s proposed surcharge rate would result in the need for other rate components to be slightly higher to provide the revenues necessary to fully recover the District’s revenue requirements. Table 1 presents a summary of the annual change over the prior year of each rate component, as outlined in the District’s Rate Proposal. As shown, substantial increases are indicated for Surcharge rate components as well as Compliance charges. STL MSD FY 25-28 Rate Model FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Approved Proposed Proposed Proposed Proposed Base Charge ($/Bill) Billing and Collection 3.6%24.3%7.5%7.5%6.6% System Availability 3.6%-2.2%7.5%7.5%6.5% Total Base Charge (Residential)3.6%2.9%7.5%7.5%6.5% Compliance Charge ($/Bill) Tier 1 3.0%53.4%4.3%3.1%2.8% Tier 2 2.8%64.8%4.2%3.0%2.7% Tier 3 2.8%64.1%4.2%3.0%2.7% Tier 4 2.8%92.4%4.2%3.0%2.7% Tier 5 2.8%106.2%4.2%3.0%2.7% Total Base Charge (Non-Residential Tier 1)3.5%10.1%6.9%6.7%5.8% Volume Charge Metered ($/ccf)3.7%11.4%7.6%7.5%6.6% Unmetered ($/Bill per fixture) Per Room 3.8%-4.6%7.6%7.7%6.6% Per Water Closet 3.6%-4.0%7.6%7.5%6.6% Per Bath 3.7%-1.5%7.6%7.6%6.5% Per Separate Shower 3.7%-1.5%7.6%7.6%6.5% Extra Strength Surcharges ($/ton) Suspended Solids over 300 mg/l 2.8%105.0%7.5%7.5%6.5% Biochemical Oxygen Demand over 300 mg/l 2.8%17.9%7.5%7.5%6.5% Chemical Oxygen Demand over 600 mg/l 2.8%17.9%7.5%7.5%6.5% Rate Schedule EXHIBIT RC 80A 3 The Following is an example of how a 2-year phase-in to cost of service for Surcharge and Compliance Charges could look. Our recommendation for phasing in the charges applies to all the charges noted in the table below. There is a very large (percentage-wise) increase proposed for the Compliance Charge in FY 2025 and modest increases thereafter. Given the magnitude of the increase, we have also included it as part of the phasing effort. In this example, the increase in Compliance Charges and Suspended Solids is 50% of the increase necessary in FY 2025 to reach Cost of Service. The increase in BOD/COD is 33% less than the increase necessary in FY 2025 to reach Cost of Service. In FY 2026, the indicated rates are the same as in the District’s Rate Proposal. The reduction in Compliance Charges and Surcharges in FY 2025 results in an approximate revenue loss of $2 million that would be recovered by increasing other rate components by approximately 0.43% in FY 2025. REQUEST NO. 2: Regarding Anna White’s testimony in Q. 7 page 5, please provide the analysis of the inflated costs related to the Consent Decree that was provided to the Rate Commission. RESPONSE: Please see Exhibit RC 80B, submitted contemporaneously herewith. FY 2025 FY 2026 FY 2025 FY 2026 FY 2025 FY 2026 FY 2025 FY 2026 Base Charge ($/Bill) Billing and Collection 7.06$ 7.59$ 7.09$ 7.59$ 0.03$ -$ 0.425%0.000% System Availability 23.08 24.82 23.18 24.82 0.10 - 0.433%0.000%------ Total Base Charge (Residential)30.14$ 32.41$ 30.27$ 32.41$ 0.13$ -$ Compliance Charge ($/Bill) Tier 1 7.44$ 7.76$ 6.15$ 7.76$ (1.30)$ -$ -17.406%0.000% Tier 2 111.55 116.28 89.61 116.28 (21.94) - -19.668%0.000% Tier 3 237.97 248.06 191.48 248.06 (46.50) - -19.538%0.000% Tier 4 371.82 387.59 282.56 387.59 (89.26) - -24.006%0.000% Tier 5 498.23 519.36 369.93 519.36 (128.30) - -25.751%0.000% Total Base Charge (Non-Residential Tier 1) Volume Charge Metered ($/ccf)6.18$ 6.65$ 6.21$ 6.65$ 0.03$ -$ 0.430%0.000% Unmetered ($/Bill per fixture) Per Room 3.14 3.38 3.15 3.38 0.01 - 0.430%0.000% Per Water Closet 11.74 12.63 11.79 12.63 0.05 - 0.430%0.000% Per Bath 10.05 10.81 10.09 10.81 0.04 - 0.430%0.000% Per Separate Shower 10.05 10.81 10.09 10.81 0.04 - 0.430%0.000% Extra Strength Surcharges ($/ton) Suspended Solids over 300 mg/l 675.38$ 726.04$ 502.41$ 726.04$ (172.98)$ -$ -25.612%0.000% Biochemical Oxygen Demand over 300 mg/l 1,043.05 1,121.28 990.82 1,121.28 (52.23) - -5.007%0.000% Chemical Oxygen Demand over 600 mg/l 521.53 560.65 495.42 560.65 (26.11) - -5.007%0.000% Rate Schedule Rate Proposal 2-yr Phase-In Change ($)Change (%) EXHIBIT RC 80A 4 REQUEST NO. 3: Regarding Anna White’s testimony in Q. 17 page 9, what is the basis of your statement that “These operation, maintenance and construction improvement (“OMCI”) property tax rates are currently set to zero at the request of the OMCI communities?” RESPONSE: Page 5.4 of the Rate Proposal (See Ex MSD 1) indicated that the OMCI tax rates were set all set to zero in 2016; however, it seems that the District may have been collecting some amounts in several OMCI districts since then and therefore, my statement may not reflect current OMCI property tax rates. REQUEST NO. 4: Regarding Anna White’s testimony in Q. 18 page 10, you reference the March 2023 MARIS Housing Report. Please explain why the appraised values reported by St. Louis City and St. Louis County for tax purposes is not the appropriate data to use for the purpose of calculating property taxes. RESPONSE: The appraised values reported by St. Louis City and St. Louis County for tax purposes is an appropriate data source for the purpose of calculating property taxes. In my testimony, I provided an example of the current (March 2023) median sales price to support the District’s statement that the proposed ad valorem property tax considers the financial impact on ratepayers. REQUEST NO. 5: Regarding Anna White’s testimony in Q. 27 page 14-15, will the inclusion of a reserve increase stormwater capital rates or reduce the amount of capital projects that could be constructed? RESPONSE: The District has indicated that it will only fund a level of CIRP that can be financed under the proposed stormwater capital funding plan. The inclusion of a reserve that required additional deposits into the reserve to reach a certain level, would reduce the amount of funding available for CIRP. REQUEST NO. 6: Regarding Anna White’s testimony in Q. 30 page 17-18, and considering the information provided in Black and Veatch’s 2021 Stormwater Survey (specifically survey results 28, 37, 42, and 47), is Anna White recommending the use of parcel lot size charge for “parcels that do not have any impervious area features but may have surfaces including compacted dirt, …”? If so, why? RESPONSE: Yes, I recommend that the District consider adopting a policy to assess a stormwater charge to non-residential properties with no improvements or impervious areas. We understand that the proposed residential ad valorem property tax will apply to all residential properties that are not tax-exempt. As such, a residential property with no structure(s), improvements, or impervious area, will be charged the ad valorem tax based on the property’s assessed valuation. However, with the District’s proposal, a non-residential property with no improvements or impervious will not be charged the stormwater impervious rate. In that case, this is inconsistent as two properties that are similarly situated are not being treated similarly. EXHIBIT RC 80A 5 Respectfully submitted, /s/ Brian J. Malone Lisa O. Stump Brian J. Malone LASHLY & BAER, P.C. 714 Locust Street St. Louis, Missouri 63101 Tel: (314) 621-2939 Fax: (314) 621-6844 lostump@lashlybaer.com bmalone@lashlybaer.com CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing was sent by electronic transmission to Stephanie DeJarnette, Office Associate Senior, Metropolitan St. Louis Sewer District; Susan Myers, Counsel for the Metropolitan St. Louis Sewer District, on this 18th day of May, 2023. Ms. Stephanie DeJarnette Office Associate Senior Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103 sdejarnette@stlmsd.com Ms. Susan Myers General Counsel Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103 smyers@stlmsd.com /s/ Brian J. Malone Brian J. Malone