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HomeMy Public PortalAboutExhibit MSD 83A- MSD's Response to Rate Commission's Sixth Discovery RequestExhibit MSD 83A 1 22BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT MSD’S RESPONSE TO THE SIXTH DISCOVERY REQUEST OF THE RATE COMMISSION ISSUE: 2023 STORMWATER & WASTEWATER RATE CHANGE PROCEEDING WITNESS: METROPOLITAN ST. LOUIS SEWER DISTRICT SPONSORING PARTY: RATE COMMISSION DATE PREPARED: JUNE 26, 2023 Exhibit MSD 83A 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 ) SIXTH 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”), Restated Operational Rule § 3(7) and Procedural Schedule §§ 16 and 17 of the Rate Commission of the Metropolitan St. Louis Sewer District (the “Rate Commission”), The Metropolitan St. Louis Sewer District (the “District”) hereby responds to the June 15, 2023 Sixth Discovery Request of the Rate Commission for additional information and answers regarding the Rate Change Proposal dated March 24, 2023 (the “Rate Change Proposal”). Exhibit MSD 83A 3 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 ) SIXTH 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”), Restated Operational Rule § 3(7) and Procedural Schedule §§ 16 and 17 of the Rate Commission of the Metropolitan St. Louis Sewer District (the “Rate Commission”), the Rate Commission requests additional information and answers from the Metropolitan St. Louis Sewer District (the “District”) regarding the Rate Change Proposal dated March 24, 2023 (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. Exhibit MSD 83A 4 DISCOVERY REQUEST 1. Please explain the District’s methodology for identifying stormwater customers as residential or non-residential. RESPONSE: The District utilized the classifications provided by the City and County Assessor’s Offices. See the District’s response to the Rate Commission’s First Discovery Request (Exhibit MSD 68A, question 14). 2. Appendix 8.9 of Ex. MSD 1 (Rate Change Proposal) categorizes impervious surface features as Building Main Structure Footprints, Paved Roads, Driveways, Sidewalks, and others. Please provide examples of “other” impervious surface features. RESPONSE: “Other” impervious surface features considered billable include fields named: Buildings-out-buildings, Parking-Paved, Patio-Concrete-Slabs, Recreation-Areas (tennis or basketball courts), and Sheds. 3. Please state whether the proposed non-residential impervious area rate is based on the 2020 or 2022 aerial photography. RESPONSE: Rate proposal is based on 2020 aerial photography; however, before billing customers this will be updated with 2022 aerial photography and then updated every 2 years thereafter. 4. Please state whether tax-exempt residential properties will be assessed the proposed stormwater capital tax. RESPONSE: Properties classified by the City and County Assessors as “Residential” and tax exempt will not be assessed the proposed stormwater capital ad valorem tax. There’s a total of approximately 25,400 properties designated as residential tax-exempt by the City of St. Louis (11,700 properties) and St. Louis County (13,700 properties) Assessor’s Offices. Of the 11,700 properties classified as residential tax exempt by the City of St. Louis, approximately 8,600 or 74% are owned by the Land Reutilization Authority (LRA) and approximately 1,050 or 9% are owned by other City agencies (i.e., St. Louis Housing Authority). Approximately 11,500 or 84% of the residential exempt properties within St. Louis County are listed as vacant. 5. Please state whether tax-exempt non-residential properties be assessed the proposed stormwater capital charge. RESPONSE: Yes, tax-exempt non-residential properties will be assessed the proposed stormwater capital charge (see Exhibit MSD 3B - Direct Testimony of Susan Myers, question 8). 6. Please provide the total gross area at the parcel level for all non-residential parcels currently designated as “vacant”. Exhibit MSD 83A 5 RESPONSE: The total gross area for non-residential parcels designated as “vacant” is 17.3 square miles from 4,425 parcels. 7. Appendix 8.15 of Ex. MSD 1 indicates that the proposed stormwater capital tax ($0.0745 cent) would apply to residential personal property. Does the District currently bill the Regulatory ($0.02 cent) tax and O&M ($0.1000 cent) tax to personal property as well? RESPONSE: Yes, the District currently bills the Regulatory ($0.02 cent) tax and O&M ($0.1000 cent) tax to personal property. 8. In Ex. MSD 73I, the cost of the Fluidized Bed Incinerator (“FBI”) project was estimated to be $477,300,000 in 2018. In Ex. MSD 73K, the estimated cost is listed as $951,200,000. Please explain the factors contributing to the increase in total project cost. How certain is the District that the current cost estimate will not increase further? RESPONSE: The two main factors that affected the increase in total project cost are (1) scope modifications to address production capacity and operational needs, and (2) inflationary impacts. MSD staff is in the process of developing a comprehensive packet of information that will be provided in the future as a supplement to this answer. MSD does not anticipate further cost increases in the project, barring unforeseen conditions or changes that are out of the control of MSD. 9. Please state the amount that the District has spent to date on the FBI project? RESPONSE: To date a total of $16,230,000 has been appropriated. $12,731,000 has been appropriated for Owner’s Representative Black and Veatch for pre-design and design services, $2,000,000 for Design-Build stipends for losing proposers, $1,500,000 for the original 2011 Solids Handling Study. 10. Please provide a layman’s summary of all sludge management options evaluated in Ex. MSD 73G (Tech Memo 3), along with a summary of why each solution was or was not selected. RESPONSE: Exhibit MSD 73G is a 530-page document with several technical memorandums addressing several areas. At a high level, there are essentially three (3) approaches to treatment and disposal of biosolids: Anerobic digestion (to make fertilizer) with subsequent land application or landfilling, landfilling of raw solids, and incineration. MSD looked at various options for all of these and evaluated them across a triple bottom line matrix based on social, environmental, and economic factors. MSD considered several versions of anaerobic digestion technologies to treat biosolids. Anaerobic digestion is a biological process that works best with consistent feeds rates and fuel content. For all of these, the variability in biosolids quantity and chemical makeup of the biosolids currently produced at the Bissell and Lemay plants would make treatment operations with digesters difficult. The chemical makeup of the biosolids that MSD must process at these two plants is significantly Exhibit MSD 83A 6 affected by the flow of the Mississippi River and grit and soil received in the combined sewer system. When the river is high, inflow from the river comes to the wastewater treatment plants impacting the variability in the biosolids. This variability causes biosolids quantities to go up, and the amount of organic material (or fuel content) in the biosolids to go down. This impacts the key biological components of the digestion process. This was a major factor, among others, in MSD’s decision not to pursue this option. Additionally, a more significant consideration, one that is not considered in Exhibit MSD 73G, is future regulation on disposal of biosolids containing Per- and Polyfluoroalkyl Substances (PFAS). The anaerobic digestion technology will not remove PFAS from biosolids, adding uncertainty to future disposal options. For example, regulatory requirements for using biosolids as a fertilizer and land application will soon be much more stringent due to changes that EPA is making to address PFAS. MSD staff also considered biosolids landfilling but concluded that was not a good alternative. MSD doesn’t own the land where an appropriately sized landfill could be located. Assuming the land could be acquired, MSD would need to haul 40-60 trucks per day of raw solids. MSD would be storing undigested and odorous solids for extended periods at the Bissell Point and Lemay plants. Trucking raw solids also represents an odor and nuisance hazard. Also, there is significant concerns about the long-term viability of landfilling raw solids due to future PFAS regulation. The solution that the team selected was replacing the existing biosolids incineration equipment at Bissell Point and Lemay with fluidized bed incineration (FBI) facilities. These new facilities are designed to handle the variability in biosolids quantity and chemical makeup, without other facility changes. Fluidized bed incineration is also a promising PFAS destruction technology. Additionally, included emission control processes, like granular activated carbon, should remove PFAS from the exhaust. Finally, MSD will be able to continue to dispose of ash in its existing landfill. The FBI approach also scored highest in the TBL assessment. MSD staff is in the process of developing a comprehensive packet of information that will be provided in the future as a supplement to this answer. 11. Kansas City’s sludge management solution is Thermal Hydrolysis. Did the District consider this technology? If so, what factors led the District to not select it? If not, why did the District not consider it? RESPONSE: Yes, the District considered the Thermal Hydrolysis Process, or THP. THP is not a standalone treatment process, but rather a component of an anerobic digestion process. Several factors led MSD to not select anaerobic digestion, see 10 above. Additionally, THP relies on high pressure steam reactors to help the anaerobic digestion process. Not only is this operationally more complex, but inorganic grit and soil, major components of the low-volatile solids produced at Bissell Point and Lemay, can create hazardous safety issues in the THP’s high-pressure steam reactors. The same limiting factors regarding PFAS and potential land application would apply to this process as well. Different situations and problems require different solutions. We want to point out that other cities and sewer districts use fluidized bed incineration. For example, the only other comparatively sized wastewater treatment facility in the Mississippi River basin is in Minneapolis-St. Paul, MN, and that facility uses fluidized bed incineration. And in the Kansas Exhibit MSD 83A 7 City area, both Little Blue Valley Sewer District and the City of Independence use fluidized bed incineration. MSD staff is in the process of developing a comprehensive packet of information that will be provided in the future as a supplement to this answer. 12. Since the District selected the FBI technology for sludge handling, there have been developments such as federal incentives for energy recovery, potential regulation of PFAS, etc., that would have impacts on a sludge management program. Has the District conducted any recent review of the selected technology and plan to confirm that the FBI solution remains the best alternative for the District, given the many technical, financial, and environmental considerations? RESPONSE: Yes. The District has evaluated these additional developments and confirmed the FBI solution to be the best solution. MSD staff is in the process of developing a comprehensive packet of information that will be provided in the future as a supplement to this answer. 13. What risk would the District take if it were to move away from the FBI project to a different solution at this time? How much time would be required to undertake the necessary studies and design to reach the stage the District is currently at with the FBI project? How much cost would be incurred in conducting the necessary studies and design to reach such stage? RESPONSE: The existing biosolids equipment at Bissell Point has 3-5 years of working life remaining. We estimate Lemay has 5-10 years remaining. When the life of the current equipment is expired, then those facilities wastewater treatment capacities will be reduced (at best) and/or wastewater clarifiers can no longer be operated (at worst). When these processes fail, then MSD will not be able to treat wastewater and bypassing of wastewater into area rivers and streams will occur. Bypassing would also cause MSD to be out of compliance with its NPDES permits and its Consent Decree, and bypassing is subject to Consent Decree penalties. As such, MSD needs new facilities to be constructed and operating by 2028. To move away from FBI technology and then to re-evaluate alternative solutions, plan, design and be ready for construction of an alternate solution would take at least 5 years, and likely longer because the District would need to purchase land to build the alternative facility. The cost of design and land acquisition for the alternative approach, just to get to a point where the project is ready for awarding a design-build contract, is likely $20-50 million. Executing an aggressive design and construction schedule, the alternative facilities would not likely begin operation for at least 10 years. MSD’s existing biosolids incineration facilities could not operate that long and comply with the Clean Air Act. Therefore, interim facilities would need to also be constructed to keep MSD’s wastewater treatment facilities operating, at additional to-be-determined cost. MSD may also incur costs for negotiating and executing enforcement orders needed to allow MSD to operate. This response is based upon staff’s best evaluation of the existing facility conditions, regulations, and compliance schedules. Exhibit MSD 83A Respectfully submitted, Susan M. Myers / Brian Stone THE METROPOLITAN ST. LOUIS SEWER DISTRICT 2350 Market Street St. Louis, Missouri 63103 Tel: (314) 768-6366 smyers@stlmsd.com bstone@stlmsd. com 8 Exhibit MSD 83A CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing was sent by electronic transmission to Lisa O. Stump and Brian J. Malone, Lashly & Baer, on this 26th day of June, 2023. Lisa O. Stump Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 lostump@lashlybaer.com Brian J. Malone Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 bmalone@lashlybaer.com Susan M. Myers / Brian Stone THE METROPOLITAN ST. LOUIS SEWER DISTRICT 2350 Market Street St. Louis, Missouri 63103 Tel: (314) 768-6366 smyers@stlmsd.com bstone@stlmsd.com 9