HomeMy Public PortalAboutExhibit MSD 90- The District's Prehearing Conference Summary 08012023Exhibit MSD 90
THE DISTRICT’S
PREHEARING CONFERENCE SUMMARY
August 1,2023
Good Morning, my name is Susan Myers and I am the General Counsel for The
Metropolitan St. Louis Sewer District. I will provide the District's summary statement regarding
the proceedings to date. The District's Rate Change Proposal submitted to you on March 24,2023
proposes wastewater rates for fiscal year 2025 through fiscal year 2028 and a proposed plan to
fund stormwater capital improvements to help mitigate flooding and erosion within our district.
The District developed the proposal to meet all five critena outlined in Section 7.270 of
the MSD Charter Plan. You will see that this is supported by the record, including the testimony
of District witnesses, Rate Commission witnesses and exhibits. Without reiterating all 5 criteria,
I would like to use this opportunity to remind the Commission that the 5th criteria requires the
financial impact on all classes of ratepayers be considered in detennining a fair and reasonable
burden. The Proposal before you, does just that. The Rate Commission is tasked with providing
a recommendation to the MSD Board of Trustees, this recommendation must be accompanied by
a statement that the proposed Rate change meets all the criteria. We feel you have all the evidence
needed to support such a statement.
Based upon the evidence previosly presented there seems to be a few topics that warrant
further discussion
Topic #1 - Extra Strength Surcharge Rates
Extra strength surcharge rates, are the rates applied to momtoied non-residential customers
who generate extra strength pollution. This extra strength pollution requires additional resources
and cost to treat to safe levels. To account for these extra costs the District applies an “extra
strength surcharge rate” to those non-residential entities that produce such waste The rates
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Exhibit MSD 90
proposed by the District are based on what it will cost the District to treat such waste Ms.
Lemoine, the Rate Commission’s Consultant, proposes ‘phasing-m’ thepioposed increases to the
extra strength surcharge rates over a period of at least two years If the Rate Commission were to
recommend a phased in approach it will cause other customers, not subject to those extra strength
surcharges, including residential customers, to pay more and subsidize those customers actually
generating the extra strength pollution. The impact of the proposed phase-in would shift
approximately $1 2 million in total over 2 years from extia strength surcharges to all customers,
of which $750,000 would be charged to residential customers.
Topic 2 - Stormwater Grant Program
We have heard a lot of discussion regarding the Stonnwater Grant Program. The
Stonnwater Grant Program is part of the overall expenditure model proposed in the Stonnwater
Capital portion of the Rate Proposal. That model consists of 50% of all revenues being used by
MSD district-wide on a benefit/cost prioritization model, 10% being used by MSD only in
Environmental Justice areas on a benefit/cost pnontization model, 10% being reserved foi any
important stormwater initiative not addressed in the previous funding pots, and 30% being
available to the municipalities as stonnwater grants based on the relative populations of the
municipalities. The allocation and methodology was a policy directive by MSD’s Executive
Director, developed with input by senior staff, to be used as a basis for the Stormwater Capital
portion of the Rate Proposal.
The 30% grant program is proposed to be distributed by population with a minimum
distribution of $30,000 per year to any individual municipality. MSD’s experience through the
OMCI Municipal Giant Program demonstrates that $30,000 per year is the needed amount to
perform even the smallest stormwater initiative. Municipalities will have the opportunity to notify
MSD if they desire to accumulate funds over a couple of years to fund a larger project m the future
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Exhibit MSD 90
Municipalities will also have the opportunity to pool funds for a stormwater project that multiple
municipalities find beneficial.
A suggestion has been made that the amount of impervious area in a municipality also be
a positive factor in determining the amount of grant per municipality We would like to make two
points here. First, as MSD has testified, population is a common method of determining fund
distribution for a program such as this. It also accomplishes MSD’s goal to make the funds
available as directly as possible to the public through then- local elected officials Second, the
concept of providing additional funding to a municipality because it has decided to allow more
impervious area than another municipality seems contrary to the purpose of the program. A
municipality should not be allowed to obtain a larger grant through the construction of more
impervious area.
There was also some discussion on the municipal grant allocation chart provided by MSD
in the Rate Proposal. MSD’s development of that chart was based on three objectives 1) the
distribution be driven by population, 2) a minimum annual grant of $30,000 be made available to
all municipalities regardless of population, and 3) annual grant amount should not be determined
by the ever-changing exact calculation by exact population, but municipalities should be grouped
with other municipalities of similar populations to accommodate the management of the program.
In discussions with some Rate Commissioners, MSD staff has indicated that they are very open to
any proposed changes m the municipal grant allocation chart as long as the three objectives as
stated above are met. Exhibit MSD 91 has been provided to you as an example for your review.
It indicates how Appendix 8.18 of the Rate Change Proposal Document, Exhibit MSD 1, maybe
revised and still meet the three objectives discussed earlier. Exhibit MSD 91 provides a maximum
annual grant and a more refined distribution range/grouping. As I previously stated, Exhibit MSD
91 is being provided as an example and MSD staff will continue to be open to any proposed
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Exhibit MSD 90
changes provided our initial objectives are met
Another idea brought forward through the Rate Commission was to make the grant awards
based on a competitive selection process While MSD’s position is that the grant program coming
from the 30% Municipal Grant pot needs to be equally distributed by population, we do see an
opportunity to add additional municipal grant awards through a competitive grant program using
part of the 10% pot for regional initiatives. Using the example of the Municipal League serving as
the partner to provide community feedback on how these funds are spent, they could easily be used
to help determine if a competitive awards process was desired by the municipal community as a
whole, the desired level of funding for that program, and the parameters to be used in the
competitive selection process MSD would commit to making sure this idea is presented for
consideration.
Finally, MSD would like to address the status and plans for the 7 active OMCI taxing sub-
distncts. These sub-districts have been in existence for 50-60 years, depending on the sub-district.
As a result of the negative stormwater capital vote in 2019, MSD developed a plan to allow 50%
of the revenues collected within each sub-distnct to be available to the individual municipalities
based on their financial contribution to annual revenues. MSD staff believed this was a fair way to
distribute funds since municipalities within an individual sub-distnct are often financially and
economically very similar to each other. That would no longer apply with the proposed District
wide program. A Rate Commissioner calculated that 19 municipalities would have smaller annual
grants available to them under the current proposal. If that number is correct, then 33 municipalities
will have a greater distribution. The point is that these are simply two different programs with
different goals and different overall benefits. That being said, MSD does plan on setting the taxes
on the active sub-distncts to $0.00 for calendar year 2025 when the new proposed program would
go into effect if approved. As part of that process, MSD is again willing to poll the elected
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Exhibit MSD 90
municipal officials in the active sub-distncts to see if a large majority of those municipalities m
any of the sub-distncts would like to propose some level of continued OMCI taxing. The proposal
could be for any amount of taxing up to the regulatory limit and for any purpose (municipal grants,
or MSD capital projects, or both). Any proposal with sufficient support would be brought by staff
to the MSD Board of Trustees for consideration.
To summarize, the stormwater rate, the allocation and the method being proposed by the District
is fair & leasonable across the District, for all classes of late payers
Topic 3 - Stormwater Credit Program
We have had several discussions regarding the District’s initial decision not to propose
credits for stormwater BMP’s (Best Management Practices) with its Stormwater Proposal. Several
factors were considered when making this decision Those factors were specifically outlined in
the Surrebuttal Testimony of Rich Unverferth, Exhibit MSD 84A. MSD realizes that there is
public support for stormwater quality and stormwater quantity BMPs as an approach to introduce
nature into the built environment to assist in stormwater management. This may justify the
implementation of a credit program for stormwater BMPs, when not otherwise required by
regulations. Therefore, MSD supports a recommendation of a 50% credit program of captured
impervious area for detention basins managing stormwater quantity when sized for the MSD
regulatory volume criteria. This program would apply to non-residential customers only. The
50% credit is appropriate in that the impervious area still exists and will impact downstream
drainage, but with the benefit of detention.
We would also like to reiterate other ways that MSD currently provides incentives to
implement green practices. For residential customers, the District has available a Small Grant
Rainscaping Program that allows for the reimbursement of up to $3000 for constructed Green
Infrastructure (GI) improvements or Best Management Practices (BMP). Detailed information on
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Exhibit MSD 90
the Small Grant Program is available on the MSD Project Clear website. Although not part of the
current Small Grant Program or of this Rate Pioposal, the District will adjust this progiam to allow
for multiple homes to pool grants for a more regional BMP approach. Again, providing that the
Small Grant proposal is not required to meet current regulations For non-residential customers,
constructed GI or BMPs that are designed and constructed to be pervious will be 100% excluded
from the billable impervious area Examples include green roofs and pervious pavement.
This concludes the District's official summary statement A copy of our statement will be
filed as Exhibit MSD 90. Thank You
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