HomeMy Public PortalAboutExhibit MSD 92- Transcript of July 10, 2023 Rate Commission MeetingPage 1
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·4· · · · ·MEETING OF THE RATE COMMISSION
·5· ·OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT
·6· · 2023 STORMWATER AND WASTEWATER RATE CHANGE
·7· · · · · · · · · · PROCEEDING
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·9· · · · · · · ·TECHNICAL CONFERENCE
10· · · · · · · · · JULY 10, 2023
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Exhibit MSD 92
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·1· · · · · · · · · · TABLE OF CONTENTS
·2· ·Page Roll Call· · · · · · · · · · · · · · · · · · ·5
·3· ·Rich Unverferth
· · · ·Examination by Mr. Malone· · · · · · · · · · · ·18
·4· · ·Examination by Mr. Palans· · · · · · · · · · · ·24
· · · ·Examination by Mr. Goss· · · · · · · · · · · · ·35
·5· · ·Examination by Mr. Toenjes· · · · · · · · · · · 59
· · · ·Examination by Mr. Malone· · · · · · · · · · · ·60
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·7· ·Thomas Beckley
· · · ·Examination by Mr. Malone· · · · · · · · · · · ·61
·8· · ·Examination by Mr. Toenjes· · · · · · · · · · · 69
·9· ·Adjournment· · · · · · · · · · · · · · · · · · · ·72
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·1· · · · ·MEETING OF THE RATE COMMISSION
·2· ·OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT
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·8· · · · ·STORMWATER AND WASTEWATER RATE COMMISSION
·9· · TECHNICAL CONFERENCE, taken on July 10, 2023,
10· · at the Metropolitan St. Louis Sewer District,
11· · 2350 Market Street, St. Louis, Missouri 63103,
12· · before Colin Wallis.
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·1· · · · · · · · · A P P E A R A N C E S
·2· ·RATE COMMISSIONERS:
·3· · · Leonard Toenjes, Chair
· · · · Matt Muren, Vice-Chair
·4· · · Bill Clarke, Secretary
· · · · Paul Ziegler
·5· · · Patrick Moynihan
· · · · Brad Goss
·6· · · Stephen Mahfood
· · · · Jack Stein
·7· · · Lisa Savoy
· · · · Mark Perkins
·8· · · Lou Jearls
· · · · Mickey Croyle
·9· · · Lloyd Palans
· · · · Jim Faul
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11· ·RATE COMMISSION COUNSEL:
12· · · Lisa Stump
· · · · LASHLY & BAER
13· · · 714 Locust Street
· · · · St. Louis, Missouri 63101
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· · ·INTERVENOR COUNSEL:
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· · · · Diana Plescia
16· · · CURTIS, HEINZ, GARRETT & O’KEEFE,
· · · · PC 130 S Bemiston, Suite 200
17· · · St. Louis, Missouri 63105
18· ·METROPOLITAN SEWER DISTRICT:
19· · · Susan Myers, General Counsel
· · · · Rich Unverferth, Director of Engineering
20· · · Brian Hoelscher, Executive Director
· · · · Bret Berthold, Director of Operations
21· · · Marion Gee, Director of Finance
· · · · Tim Snoke, Secretary-Treasurer
22· · · Thomas Beckley, Raftelis (Consultant)
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24· ·Court Reporter:
· · ·Colin Wallis
25· ·Lexitas Legal
· · ·711 N 11th St, St. Louis, MO 63101
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·1· · · · · · · · ·*· *· *· * *
·2· · · (Proceedings commenced at 9:30 a.m.)
·3· · · · CHAIRMAN TOENJES:· Good morning.· Being
·4· ·9:30, we will call the meeting of the Rate
·5· ·Commission of Metropolitan Sewer District to
·6· ·order for July 10th, 2023.· Mr. Secretary,
·7· ·would you please take the roll?
·8· · · · COMMISSIONER CLARK:· Leonard Toenjes?
·9· · · · CHAIRMAN TOENJES:· Present.
10· · · · COMMISSIONER CLARK:· Lou Jearls?
11· · · · COMMISSIONER JEARLS:· Here.
12· · · · COMMISSIONER CLARK:· Lloyd Palans?
13· · · · COMMISSIONER PALANS:· Present.
14· · · · COMMISSIONER CLARK:· Paul Ziegler?
15· · · · COMMISSIONER ZIEGLER:· Here.
16· · · · COMMISSIONER CLARK:· Patrick Moynihan?
17· ·Brad Goss?
18· · · · COMMISSIONER GOSS:· Present.
19· · · · COMMISSIONER CLARK:· Steve Mahfood?
20· · · · COMMISSIONER MAHFOOD:· Present.
21· · · · COMMISSIONER CLARK:· Jack Stein?
22· · · · COMMISSIONER STEIN:· Present.
23· · · · COMMISSIONER CLARK:· Lisa Savoy?· Mark
24· ·Perkins?
25· · · · COMMISSIONER PERKINS:· Present.
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·1· · · · COMMISSIONER CLARK:· Ryan Barry?
·2· · · · COMMISSIONER BARRY:· Present.
·3· · · · COMMISSIONER CLARK:· Bill Clark is here.
·4· ·Mickey Croyle?
·5· · · · COMMISSIONER CROYLE:· Present.
·6· · · · COMMISSIONER CLARK:· Matt Muren?
·7· · · · COMMISSIONER MUREN:· Present.
·8· · · · COMMISSIONER CLARK:· Jim Faul?
·9· ·Mr. Chairman, we have a quorum.
10· · · · CHAIRMAN TOENJES:· Thank you, Mr. Clark.
11· ·My name is Leonard Toenjes, and I'm a
12· ·commissioner of the Rate Commission of the
13· ·Metropolitan St. Louis Sewer District, and will
14· ·serve as chair of this proceeding.
15· · · · The Charter Plan of the District was
16· ·approved by the voters of St. Louis and St.
17· ·Louis County at a special election on
18· ·February 9th, 1954, and amended at a general
19· ·election on November 7th, 2000, at a special
20· ·election on June 5th, 2012, and, again, at a
21· ·special election on Tuesday, April 6th, 2021.
22· · · · The amendment to the Charter Plan in 2000
23· ·established the Rate Commission to review and
24· ·make recommendations to the District regarding
25· ·changes in wastewater rates, stormwater rates,
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·1· ·and tax rates proposed by the District.· The
·2· ·Charter Plan requires the Board of Trustees of
·3· ·the District to select organizations to name
·4· ·delegates to the Rate Commission to ensure a
·5· ·fair representation of all users of the
·6· ·District's services.
·7· · · · The Rate Commission representative
·8· ·organizations are to represent
·9· ·commercial-industrial users, residential users
10· ·and other organizations interested in the
11· ·operation of the District, including
12· ·organizations focusing on environmental issues,
13· ·labor issues, socioeconomic issues, community
14· ·neighborhood organizations, and other
15· ·non-profit organizations.
16· · · · The Rate Commission currently consists of
17· ·representatives of Associated General
18· ·Contractors of Missouri, St. Louis Realtors,
19· ·the City of Florissant, St. Louis Council of
20· ·Construction Consumers, Greater St. Louis Labor
21· ·Council, North America's Building Trades
22· ·Unions, Mound City Bar Association, the League
23· ·of Women Voters of Metro St. Louis, Home
24· ·Builders Association of St. Louis, the
25· ·Municipal League of Metro St. Louis, the
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·1· ·Missouri Coalition for the Environment, the
·2· ·City of Ladue, the Engineers Club of St. Louis,
·3· ·Missouri Industrial Energy Consumers, and
·4· ·EducationPlus.
·5· · · · Upon receipt of a rate change notice from
·6· ·the District, the Rate Commission is to
·7· ·recommend to the Board of Trustees changes in a
·8· ·wastewater, stormwater, or tax rate necessary
·9· ·to pay interest and principal falling due on
10· ·bonds issued to finance assets of the District,
11· ·the cost of operations and maintenance, and
12· ·such amounts as may be required to cover
13· ·emergencies and anticipated delinquencies.
14· · · · Further, any change in a rate recommended
15· ·to the Board of Trustees by the Rate Commission
16· ·is to be accompanied by a statement that the
17· ·proposed rate change is consistent with
18· ·constitutional, statutory, or common law as
19· ·amended from time to time; enhances the
20· ·District's ability to provide adequate sewer
21· ·and drainage facilities or related services; is
22· ·consistent with and not in violation of any
23· ·covenant or provision relating to any
24· ·outstanding bond or indebtedness of the
25· ·District; does not impair the ability of the
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·1· ·District to comply with applicable federal or
·2· ·state laws or regulations as amended from time
·3· ·to time; and considers the financial impact on
·4· ·all classes of ratepayers in determining a fair
·5· ·and reasonable burden.
·6· · · · The Rate Commission received a rate change
·7· ·notice from the District on March 24th, 2023.
·8· ·Under the District's Charter Plan, the Rate
·9· ·Commission must, on or before September 5th,
10· ·2023, issue its report of the proposed rate
11· ·change notice to the Board of Trustees of the
12· ·District.
13· · · · Under procedural rules adopted by the Rate
14· ·Commission on March 24th, 2023, any person
15· ·affected by the rate change proposal had an
16· ·opportunity to submit an application to
17· ·intervene in these proceedings no later than
18· ·April 14th, 2023.· The Rate Commission received
19· ·no applications to intervene by this deadline.
20· · · · On March 24, 2023, the District submitted
21· ·to the Rate Commission prepared direct
22· ·testimony of Brian L. Hoelscher, Susan M.
23· ·Myers, Richard L. Unverferth, Bret A. Berthold,
24· ·Marion M. Gee, Tim R. Snoke, Bethany Pugh,
25· ·William Stannard, Thomas A. Beckley, and
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·1· ·William Siebert.
·2· · · · On April 4th, 2023, the Rate Commission
·3· ·submitted its first discovery request to the
·4· ·District.· On April 14th, 2023, the District
·5· ·filed its responses.· On April 7th, 2023, the
·6· ·Rate Commission submitted its second discovery
·7· ·request to the District, to which the District
·8· ·responded on April 17th, 2023.· On April 14th,
·9· ·2023, the Rate Commission submitted its third
10· ·discovery request to the District, to which the
11· ·District responded on April 20th, 2023.· On
12· ·April 26th, 2023, a technical conference was
13· ·held on the record regarding the rate setting
14· ·documents and the direct testimony filed with
15· ·the Rate Commission by the District.
16· · · · The purpose of the technical conference
17· ·was to provide the District an opportunity to
18· ·answer questions propounded by members of the
19· ·Rate Commission, and by Lashley and Baer, legal
20· ·counsel to the Rate Commission.· On May 1st,
21· ·2023, the Rate Commission submitted its fourth
22· ·discovery request to the District, to which the
23· ·District responded on May 11th, 2023.
24· · · · On May 10th, 2023, an application to
25· ·intervene out of time was filed by the Missouri
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·1· ·Industrial Energy Consumers, MIEC.· On
·2· ·May 30th, 2023, the Rate Commission heard
·3· ·arguments in support and against MIEC's
·4· ·application to intervene out of time.· After
·5· ·discussion, the Commission approved the
·6· ·application to intervene with the condition
·7· ·that MIEC shall not be permitted to submit
·8· ·testimony or make discovery requests.
·9· · · · On May 12th, 2023, the Rate Commission
10· ·consultants, Anna White and Pamela Lemoine
11· ·submitted rebuttal testimony.· On May 15th,
12· ·2023, the District submitted its first
13· ·discovery request to the Rate Commission, to
14· ·which the Rate Commission responded on
15· ·May 18th, 2023.
16· · · · On May 18, 2023, the Rate Commission
17· ·submitted its fifth discovery request to the
18· ·District, to which the District responded on
19· ·May 24, 2023.· On May 30th, 2023, a technical
20· ·conference was held on the record regarding the
21· ·rebuttal testimony by the rate consultants.
22· ·The purpose of the technical conference was to
23· ·provide witnesses submitting rebuttal testimony
24· ·an opportunity to answer questions propounded
25· ·by the District and by members of the Rate
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·1· ·Commission.
·2· · · · On June 15th, 2023, the Rate Commission
·3· ·submitted its sixth discovery request, to which
·4· ·the District responded on June 26th, 2023.· The
·5· ·District submitted a supplemental response on
·6· ·July 5th, 2023.· On June 21st, 2023, the
·7· ·District witnesses, Richard L. Unverferth and
·8· ·Thomas A. Beckley, submitted surrebuttal
·9· ·testimony.
10· · · · Ratepayers who do not wish to intervene
11· ·are and have been permitted to participate in a
12· ·series of on-the-record public hearing
13· ·sessions, which began on June 21st, 2023.· This
14· ·technical conference will be held on the
15· ·record, regarding the surrebuttal testimony
16· ·found.· The purpose of this technical
17· ·conference is to provide each person submitting
18· ·surrebuttal testimony an opportunity to answer
19· ·questions propounded by Lashley & Baer, legal
20· ·counsel to the Rate Commission, the intervenor,
21· ·and then by members of the Rate Commission.
22· · · · Who is here on behalf of the Metropolitan
23· ·Sewer District?
24· · · · MS. MYERS:· Susan Myers.
25· · · · CHAIRMAN TOENJES:· Who is here on behalf
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·1· ·of the Missouri Industrial Energy Consumers?
·2· · · · MS. PLESCIA:· Diana Plescia.
·3· · · · CHAIRMAN TOENJES:· Also present are Pamela
·4· ·Lemoine of Burns and McDonnell, and Anna White
·5· ·of Black & Veatch, consultants to the Rate
·6· ·Commission, and Lisa Stump and Brian Malone of
·7· ·Lashley & Baer, legal counsel to the Rate
·8· ·Commission.
·9· · · · The rate change proposal consists of a
10· ·stormwater and wastewater rate change.· Under
11· ·the Rate Commission's operational rules, no
12· ·person shall be required to answer questions
13· ·for a total period of more than three hours.
14· ·Are there any procedural matters to be
15· ·addressed at this time?
16· · · · MS. STUMP:· Mr. Chair, not related to this
17· ·conference today, but I think we skipped over
18· ·approval of the minutes.· We can do it
19· ·afterwards, but I just don't want to forget
20· ·so --
21· · · · CHAIRMAN TOENJES:· We will deal with that
22· ·procedural matter immediately.· Is there any
23· ·discussion on the minutes of the May 30th,
24· ·2023, meeting?
25· · · · COMMISSIONER CLARK:· Motion to approve.
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·1· · · · COMMISSIONER MAHFOOD:· Seconded.
·2· · · · CHAIRMAN TOENJES:· There is a motion made
·3· ·and seconded to approve the May 30th minutes as
·4· ·provided.· Any discussion on the motion?· All
·5· ·in favor signify by saying aye.
·6· · · · · · · · (Multiple ayes.)
·7· · · · CHAIRMAN TOENJES:· Opposed?· Abstained?
·8· ·Motion carries.· Thank you.· Any other
·9· ·procedural matters?
10· · · · MS. STUMP:· There was also a report of the
11· ·Public Affairs Committee, would you like to do
12· ·that now or wait until after the --
13· · · · CHAIRMAN TOENJES:· We will allow the
14· ·Public Affairs Committee to provide their
15· ·report immediately.
16· · · · COMMISSIONER MAHFOOD:· Thank you,
17· ·Mr. Chairman. I think it's pretty clear in the
18· ·reports and in the e-mails of June 6 --
19· ·July 16 -- sorry, June 16th and June 29th, a
20· ·good summary from AHC Consulting about where
21· ·the progress is in publicizing the Rate
22· ·Commission's work.
23· · · · We feel like all of the meetings that
24· ·up-to-date, the attendance seems to be, you
25· ·know, at 3, 5, 7, range.· Not much different
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·1· ·than it's been in the past.· So, pretty clear
·2· ·that more information, and the more information
·3· ·we can get out to the public, the better off
·4· ·that we are.· And it should be noted, that we
·5· ·did receive testimony from the Consumer Affairs
·6· ·Council, and a number of other people that
·7· ·submitted information separately from the
·8· ·process, either by voicemail, as you probably
·9· ·would see in these reporting e-mails from AHC;
10· ·and -- well, also wanted to note that the
11· ·summary that was put together, cooperation with
12· ·MSD about the project, the two-page summary was
13· ·an excellent piece of work that I have a number
14· ·of people respond to me and say that they
15· ·finally understand what the heck we're talking
16· ·about after reading that particular piece.
17· · · · Judging by the thoroughness of the report
18· ·and judging by the attendance at the meetings
19· ·to date, I think things -- they're on target
20· ·and moving ahead.
21· · · · CHAIRMAN TOENJES:· Thank you, Mr. Mahfood.
22· ·Are there any questions for Mr. Mahfood or
23· ·comments before we move on?· Ms. Croyle?
24· · · · COMMISSIONER CROYLE:· On -- we still need
25· ·a commissioner for the 27th to represent, so
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·1· ·volunteers would be appreciated.
·2· · · · COMMISSIONER MAHFOOD:· Thanks.
·3· · · · CHAIRMAN TOENJES:· We will ask someone to
·4· ·step forward for the 27th and contact Mr.
·5· ·Mahfood --
·6· · · · COMMISSIONER MAHFOOD:· Sure, that's fine.
·7· · · · CHAIRMAN TOENJES:· -- or Ms. Croyle.
·8· · · · COMMISSIONER MAHFOOD:· Yeah, either one of
·9· ·us.
10· · · · CHAIRMAN TOENJES:· And thanks to those
11· ·commissioners who have participated or are
12· ·going to participate.· Thanks very much.
13· · · · COMMISSIONER MAHFOOD:· And I forget,
14· ·Mr. Chairman, I know there's an additional
15· ·information sheet about the upcoming public
16· ·hearing schedule and commissioner assignments
17· ·at your -- might have been slipped underneath
18· ·your agendas and information and minutes so
19· ·just note that that piece of information was
20· ·given to all of us as a future schedule and
21· ·information.· Thank you.
22· · · · CHAIRMAN TOENJES:· So, July 27th at
23· ·3:00 p.m. is the open time --
24· · · · COMMISSIONER MAHFOOD:· Yeah.
25· · · · CHAIRMAN TOENJES:· -- right?
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·1· · · · COMMISSIONER MAHFOOD:· That's the open one
·2· ·for the moment.
·3· · · · COMMISSIONER CROYLE:· One more?
·4· · · · CHAIRMAN TOENJES:· Yeah, Ms. Croyle?
·5· · · · COMMISSIONER CROYLE:· I would encourage
·6· ·you to forward to your contacts the remaining
·7· ·meetings to try to drum up, you know, interest.
·8· ·You know, when you're talking to people, remind
·9· ·them that -- where the hearings are.· The
10· ·ladies may try to get it on their webpage
11· ·today, so it would be good to -- if you can,
12· ·send out or whatever to your contacts, thank
13· ·you.
14· · · · CHAIRMAN TOENJES:· Good reminder.· I know
15· ·we distributed it to all the board members in
16· ·our newsletter, and I would encourage everyone
17· ·here to do the same.· Mr. Muren?
18· · · · COMMISSIONER MUREN:· Mr. Chair, I just
19· ·want to thank you for all your -- you've been
20· ·working the media circuit and all the different
21· ·interviews you've done, you certainly put the
22· ·Rate Commission in a wonderful light. I
23· ·appreciate that.· Thank you for all your extra
24· ·work on that.
25· · · · CHAIRMAN TOENJES:· Thank you, Mr. Muren.
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·1· · · · I appreciate your kind words.· Any other
·2· · · · procedural matters?· There being no further
·3· · · · procedural matters, Ms. Meyers, are you ready
·4· · · · to present those persons for whom you filed
·5· · · · surrebuttal testimony on behalf of the
·6· · · · District?
·7· · · · · · ·MS. MYERS:· Yes, we are ready.· Our first
·8· · · · witness will be Rich Unverferth.
·9· · · · · · ·CHAIRMAN TOENJES:· Mr. Unverferth, would
10· · · · you come forward?· I don't think we need any
11· · · · sort of oath here, do we?· We do need an oath.
12· · · · · · · ·(Mr. Rich Unverferth sworn.)
13· · · · · · ·CHAIRMAN TOENJES:· Mr. Malone, do you have
14· · · · any questions for Mr. Unverferth on behalf of
15· · · · the Rate Commission?
16· · · · · · ·MR. MALONE:· Yes, I do.
17· · · · · · ·CHAIRMAN TOENJES:· Please come forward and
18· · · · bring your microphone with you.
19· ·QUESTIONS BY MR. MALONE:
20· · · · Q· · Good morning, Mr. Unverferth.
21· · · · A· · Good morning.
22· · · · Q· · Do you have your surrebuttal testimony
23· ·with you this morning?
24· · · · A· · I do.
25· · · · Q· · All right.· I'd like to talk about
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·1· ·question 1 of your testimony, which relates to the
·2· ·municipal grant funding program.· With regard to the
·3· ·District's decision to allocate 30 percent of the
·4· ·stormwater revenue to municipal grants, does the
·5· ·District anticipate -- does the District anticipate
·6· ·that some of the communities will receive less than
·7· ·they currently do from the OMCI Districts?
·8· · · · A· · Yes, we do.
·9· · · · Q· · Do you know which communities?
10· · · · A· · I do not have the report.· I think in the
11· ·initial -- I think we did provide that as a
12· ·discovery request, and I don't have that table with
13· ·me, though.
14· · · · Q· · Okay.· How does the fact some of those
15· ·communities will receive less funding under the new
16· ·proposal, how does that impact the determination of
17· ·whether the rate change proposal considers the
18· ·financial impact on all classes of ratepayers in
19· ·determining a fair and reasonable burden?
20· · · · A· · Could you repeat that?· I'm not sure I
21· ·understand.
22· · · · Q· · How does the fact that some communities
23· ·are going to get less revenue under the new
24· ·proposal, how does that impact the Rate Commission's
25· ·determination about whether or not the proposal
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·1· ·considers the financial impact on all classes of
·2· ·ratepayers?
·3· · · · A· · I guess it's, basically, a different
·4· ·source of revenue.· The OMCI rates will be turned
·5· ·off or back to zero.· That's where the grant revenue
·6· ·was coming from that.· It was a policy decision, and
·7· ·we turned those rates back on to provide that to the
·8· ·municipalities.· Within the OMCIs, there are
·9· ·multiple municipalities within the OMCIs, and that
10· ·was a favorable aspect to the program going forward.
11· ·When we spoke with municipalities, there was an
12· ·interest of having a grant program.
13· · · · · · · · · It isn't a requirement of the rate
14· ·proposal to have a grant program.· We feel like it
15· ·is beneficial to the municipalities to have that
16· ·program.· So, it wasn't something we took into
17· ·consideration that some municipalities would get
18· ·less under this scenario.· They were -- just happen
19· ·to be calculated differently.· Under the OMCI
20· ·scenario, to utilize population, which is what we're
21· ·recommending now, was difficult.
22· · · · · · · · · There was -- municipals overlap in
23· ·multiple subdistricts and things like that, so
24· ·population was problematic in the initial, so -- but
25· ·we were able to determine the amount of revenue, tax
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·1· ·revenue, generated within the OMCI and within a
·2· ·municipality, and that's what we used the first
·3· ·time.
·4· · · · · · · · · But we did not take that into
·5· ·consideration that one would get less and one would
·6· ·get more when we did this analysis.
·7· · · · Q· · I see.· So, when the Rate Commission
·8· ·considers whether the proposal adequately considers
·9· ·the financial impact on all classes of ratepayers in
10· ·determining a fair and reasonable burden, is it the
11· ·District's position that that should be measured
12· ·against the status quo, where you have the OMCI
13· ·districts generate certain amounts of revenue, and
14· ·they may get less moving forward?
15· · · · A· · I -- we would look at it as though it's
16· ·from status quo.· Even under the OMCI, there are
17· ·areas of the District that have no funding.
18· · · · Q· · I see.· With regard to question 2 of your
19· ·testimony, you state the District did not consider
20· ·applying a runoff factor in order to assess the
21· ·stormwater charges in the vacant non-residential
22· ·parcels based on effective impervious area.
23· · · · A· · We did not in our initial.· I do
24· ·understand, although, I wasn't directly involved,
25· ·that when the District originally considered an
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·1· ·impervious rate back in 2008, that we looked at all
·2· ·aspects, gross area, effective impervious area, but
·3· ·landed on straight impervious area.· It was able to
·4· ·be measured, utilizing our GIS, we then presented
·5· ·that same methodology in 2018, the rate proposal,
·6· ·and we stuck with it for the non-residential parcels
·7· ·in this rate proposal.· It's a common methodology.
·8· ·It's a -- you know, it's a technology that we have
·9· ·and have available to us at this point.
10· · · · Q· · I see.· But you'd agree that parcels with
11· ·no impervious area can potentially contribute to
12· ·stormwater that will run into the District's system,
13· ·correct?
14· · · · A· · That is correct.
15· · · · Q· · In your testimony, you identified four
16· ·reasons why charging the capital charge to vacant
17· ·non-residential property would be problematic; is
18· ·that correct?
19· · · · A· · Yes.
20· · · · Q· · And in some, I guess -- to summarize,
21· ·though, number one, was that it would be equitable
22· ·to have this effective impervious area rate for
23· ·vacant -- vacant property but not to do so for
24· ·occupied property; is that a fair statement?
25· · · · A· · Yes.
Page 23
·1· · · · Q· · And also that it's more subjective and
·2· ·subject to dispute?
·3· · · · A· · That is correct.
·4· · · · Q· · Then also there would be a high
·5· ·administrative cost to administer; is that correct?
·6· · · · A· · That is correct.
·7· · · · Q· · And it would be difficult to communicate
·8· ·the hybrid-billing method to the public; is that
·9· ·correct?
10· · · · A· · That is correct.
11· · · · Q· · Does not assessing such vacant
12· ·non-residential properties have any bearing on the
13· ·rate, whether the rate change proposal considers the
14· ·financial impact on all classes of ratepayers in
15· ·determining a fair and reasonable burden?
16· · · · A· · We do not feel it does.
17· · · · Q· · Okay.· Do you feel that those issues,
18· ·given the issues with the difficulty of charging
19· ·non-residential parcels with no impervious area, do
20· ·you feel these could be explored or resolved in a
21· ·future rate change proposal?
22· · · · A· · Again, I think you'd still have some of
23· ·the same issues with actual properties that have
24· ·structures on them, so there's some inequities that
25· ·I would -- inherently exist.· I think I used the
Page 24
·1· ·example in a previous testimony that you can have a
·2· ·parcel, a large parcel, with just a small structure
·3· ·on it, that could be charged a rate smaller than
·4· ·that of using effective impervious rate, and, again,
·5· ·that depends on the amount of runoff you would apply
·6· ·to that vacant parcel.
·7· · · · Q· · I see.· So, it is fair to say, as to the
·8· ·current rate change proposal, it's the District's
·9· ·position that the potential equity concerns from
10· ·assessing vacant non-residential property are
11· ·outweighed by the practical or administration burden
12· ·of doing so?
13· · · · A· · That would be a correct statement.
14· · · · · · ·MR. MALONE:· Okay.· I don't think I have
15· · · · any further questions at this time.
16· · · · · · ·CHAIRMAN TOENJES:· Ms. Plescia, do you
17· · · · have any questions for the witness on behalf of
18· · · · the MIEC?
19· · · · · · ·MS. PLESCIA:· No questions, thank you.
20· · · · · · ·CHAIRMAN TOENJES:· Does any member of the
21· · · · Rate Commission have any questions for
22· · · · Mr. Unverferth?· Mr. Palance?
23· ·QUESTIONS BY MR. PALANS:
24· · · · Q· · Thank you.· Mr. Unverferth, as we sit as a
25· ·rate commission, we are required to make findings
Page 25
·1· ·that the proposed rate change, and all components of
·2· ·the proposed rate change, consider the financial
·3· ·impact on all classes of ratepayers in determining a
·4· ·fair and reasonable burden.· That's -- you
·5· ·understand that's our task, correct?
·6· · · · A· · Correct.
·7· · · · Q· · And as we sit here today under our present
·8· ·rate structure on stormwater, projects are
·9· ·prioritized based upon cost benefit.· In other
10· ·words, the benefit to the most people at the lowest
11· ·cost increases priority; is that your understanding?
12· · · · A· · Yes, that's how we prioritize our
13· ·projects.
14· · · · Q· · And that's fair, is it not?
15· · · · A· · Correct.
16· · · · Q· · And it's ascertainable based upon a --
17· ·I'll call it an MSD scorecard, ranking various
18· ·problems vis-a-vis stormwater and certain
19· ·categories.
20· · · · · · · · · · ·(Device falls.)
21· · · · · · ·MS. MYERS:· Sorry.
22· · · · A· · Yes, that's how our prioritization system
23· ·works.
24· ·QUESTIONS BY MR. PALANCE:
25· · · · Q· · And that's how all the projects are
Page 26
·1· ·prioritized at present, correct?
·2· · · · A· · That is correct.
·3· · · · Q· · And under your current proposal on
·4· ·stormwater, you proposed to retain that ranking
·5· ·system, cost-benefit prioritization, for 50 percent
·6· ·of the revenues, correct?
·7· · · · A· · Correct.
·8· · · · Q· · So, 50 percent of the revenues are, as we
·9· ·have it today, correct?
10· · · · A· · Yeah, the entire district-wide revenue.
11· · · · Q· · And in addition today, we have OMCI
12· ·districts, correct?
13· · · · A· · Well, we only have OMCI districts right
14· ·now.· That's our only source of revenue.
15· · · · Q· · And for OMCI, for those municipalities
16· ·that are funding the OMCI, those municipalities
17· ·receive funds back to use in their representative
18· ·municipalities, do they not?
19· · · · A· · That is correct.· When we -- when the 2019
20· ·election failed, our board determined to turn --
21· ·we actually went out into the public, engagement
22· ·with the municipalities within all 13 of the OMCIs
23· ·to see if there was interest in actually turning
24· ·those back on to generate revenues for stormwater
25· ·work.· And we ended up turning six on initially but
Page 27
·1· ·seven total, and part of that discussion was, was
·2· ·there an interest in a grant-type program where some
·3· ·of those funds could be turned back to the
·4· ·municipalities.· But that was purely -- it
·5· ·wasn't actually necessary we chose -- we felt like
·6· ·it was important to do that to allow municipalities
·7· ·to take care of some of their issues.
·8· · · · Q· · So just to recap, 50 percent of the
·9· ·proposed revenues generated by this rate proposal
10· ·for stormwater continue as they presently are, with
11· ·the priority-based cost benefit, right?
12· · · · A· · Current district-wide, yes.
13· · · · Q· · And 30 percent are going to be based upon
14· ·revenues sharing with municipality, correct?
15· · · · A· · Correct.
16· · · · Q· · And 10 percent are going to be on
17· ·stormwater capital projects within environmental
18· ·justice areas using MSD's cost-benefit analysis,
19· ·correct?
20· · · · A· · Correct.
21· · · · Q· · And 10 percent are based on projects
22· ·identified by MSD with the assistance of an
23· ·area-wide advisory committee, right?
24· · · · A· · Correct.
25· · · · Q· · So, you go from prioritization based upon
Page 28
·1· ·cost benefit to these various categories, right?
·2· · · · A· · Correct.
·3· · · · Q· · And you indicate in your testimony that
·4· ·this is all based upon a policy decision?
·5· · · · A· · Again, yeah, there -- there's no -- I
·6· ·mean, we felt like through the public engagement
·7· ·prior to presenting the rate proposal, what -- what
·8· ·was the public interest in having, you know, us
·9· ·rather than just do cost benefit, take 100 percent
10· ·of the projects, we do the highest priority.
11· ·Because our cost benefit may not be a priority for a
12· ·municipality or for some individual property owner,
13· ·and there are other needs out there.· So, the
14· ·District determined, in our discussions with the
15· ·public, you know, what some -- I'll call it
16· ·enhancements to the program that would be beneficial
17· ·to municipalities.
18· · · · · · · · · Some municipalities absolutely have
19· ·nothing that they can use for stormwater.· This
20· ·provides their public that's paying into the overall
21· ·program an opportunity to do what might be a
22· ·priority for a municipality.· In other words, they
23· ·may have different priorities than our straight
24· ·benefit cost ratio of priorities.
25· · · · Q· · So, this was a policy decision, right?
Page 29
·1· · · · A· · Correct.
·2· · · · Q· · Who made that policy?
·3· · · · A· · The District.· The District as a whole.
·4· · · · Q· · Did you --
·5· · · · A· · Prior to the --
·6· · · · Q· · Did you participate --
·7· · · · A· · Oh, I did.
·8· · · · Q· · -- in making that policy?
·9· · · · A· · Yes, we felt like the grant program in --
10· ·within the OMCI municipalities, we were encouraged
11· ·by it.· We were able to do projects that would not
12· ·necessarily get funded and was being funded by their
13· ·ratepayers --
14· · · · Q· · Did you have a meeting where this policy
15· ·was enacted?
16· · · · A· · I am sure we sat down and di- -- it would
17· ·be prior to the rate proposal.· I mean, this entire
18· ·rate proposal was formulated by the District and
19· ·what we would propose.
20· · · · Q· · You have testified that this was a policy
21· ·decision.· I want to know who made that policy
22· ·decision.
23· · · · · · ·MS. MYERS:· Objection.· He's already
24· · · · answered that question.
25· · · · · · ·COMMISSIONER PALANS:· No, he hasn't.
Page 30
·1· ·BY COMMISSIONER PALANS:
·2· · · · Q· · Who made that policy decision?
·3· · · · A· · MSD, the District staff.
·4· · · · Q· · And who participated on that decision with
·5· ·the staff?
·6· · · · A· · The same staff that put together the rate
·7· ·proposal.· I guess -- you want me to name -- I
·8· ·mean --
·9· · · · Q· · Yes --
10· · · · A· · -- I'm not going to sit here and name
11· ·individuals --
12· · · · Q· · -- tell me.· Tell me who participated in
13· ·making that policy decision.
14· · · · A· · The executive staff of the District.
15· · · · Q· · And who does that consist of?
16· · · · A· · The people represented here today.
17· · · · Q· · Everybody in this room?
18· · · · A· · District staff.
19· · · · Q· · How many meetings did you have?
20· · · · · · ·MS. MYERS:· I'm going to object.· I mean,
21· · · · what does that have to do with his surrebuttal?
22· · · · He's -- you've asked the question; he's
23· · · · answered it; and now you're just badgering him.
24· · · · · · ·COMMISSIONER PALANS:· I'm not badgering
25· · · · him.· He is the one who has testified that he
Page 31
·1· · · · made a policy decision to allocate moving from
·2· · · · cost benefit entirely into various categories.
·3· · · · · · ·CHAIRMAN TOENJES:· I will accept the
·4· · · · objection and just ask Mr. Unverferth to recall
·5· · · · to the best of his ability the steps that went
·6· · · · into developing the policy that was part of the
·7· · · · rate proposal.
·8· · · · A· · I mean, when we looked at the total
·9· ·revenues that we were looking to generate and to get
10· ·the most benefit to our ratepayers beyond just
11· ·taking $34 million in highest cost benefit projects;
12· ·which in some cases, there will be areas that will
13· ·not get any projects at all.· And, again, because
14· ·it's strictly by that, but this -- by breaking down
15· ·the revenue into the areas we have, provide
16· ·10 percent for the underserved areas, we felt like
17· ·was appropriate.
18· · · · · · · · · Providing 10 percent for
19· ·district-wide issues that don't necessarily have the
20· ·ability under the current cost benefit system to get
21· ·done, particularly the areas of floodplain,
22· ·floodplain buyout, floodplain management, that a lot
23· ·of municipalities don't have the resources to take
24· ·care of, and then finally because of the success of
25· ·the grant program that we had with the OMCIs, we
Page 32
·1· ·didn't have to do that.
·2· · · · · · · · · It was something that when we had
·3· ·discussions from the public, it was something of
·4· ·interest by the municipalities.· And it still is. I
·5· ·mean, the fact, you know, we get more and more
·6· ·participation all the time.· It's taken -- it didn't
·7· ·take off immediately.· Once municipalities realized,
·8· ·hey, that money is available to me; I've got this
·9· ·pain in the rear problem that I want to take care
10· ·of, that the District is never going to be able to
11· ·take care of for me, I can utilize those funds to do
12· ·to it.
13· · · · · · · · · So, we felt like some portion -- I
14· ·mean, it could have been 10 percent.· It could have
15· ·been 20 percent.· We chose 30 percent, because it
16· ·gave what we felt like was a fair amount of dollars
17· ·to the municipalities that they could actually do
18· ·something.
19· ·BY COMMISSIONER PALANS:
20· · · · Q· · You could have kept 60 percent of the
21· ·revenues on a priority basis -- as it is now,
22· ·correct?
23· · · · A· · We could.· We could have kept 100 percent.
24· · · · Q· · You could have put 20 percent in a grant
25· ·program, correct?
Page 33
·1· · · · A· · Correct.
·2· · · · Q· · And we are required to make a finding that
·3· ·the proposed rate change and all components thereof
·4· ·consider the financial impact on all classes of rate
·5· ·payers in determining a fair and reasonable burden,
·6· ·correct?
·7· · · · A· · Yes.
·8· · · · Q· · And that's all classes of ratepayers,
·9· ·correct?
10· · · · A· · Correct.
11· · · · Q· · And at the present time, you understand
12· ·that those districts in OMCI, if this proposal is
13· ·approved, are going to receive less funds under this
14· ·program?· Do you understand that?
15· · · · A· · I do.· I do understand that.
16· · · · Q· · And I count -- based upon your response to
17· ·discovery, one -- I'll list them.
18· · · · · · ·MS. MYERS:· What exhibit number --
19· · · · · · ·COMMISSIONER PALANS:· I don't -- I
20· · · · don't --
21· · · · · · ·MS. MYERS:· -- can I ask you where you're
22· · · · reading from?
23· · · · · · ·COMMISSIONER PALANS:· I don't have a --
24· · · · provide that for you.· Florissant, City of
25· · · · Creve Coeur, City of Manchester, City of
Page 34
·1· · · · Clayton, City of Richmond Heights, City of Des
·2· · · · Peres, City of Ladue, City of Olivette, City of
·3· · · · Brentwood, City of Berkeley, City of Frontenac,
·4· · · · City of Green Park, City of Huntleigh, will all
·5· · · · receive less funds under this proposal if this
·6· · · · rate is approved, correct?
·7· · · · A· · That is correct.
·8· ·BY COMMISSIONER PALANS:
·9· · · · Q· · And your testimony is that this rate
10· ·proposal considers the financial impact on all
11· ·classes of ratepayers in determining a fair and
12· ·reasonable burden when all of those municipalities
13· ·will be receiving less than they currently have?
14· · · · A· · There are some municipalities that have no
15· ·revenue right now.· Actually, it's a majority of the
16· ·District that has no revenue right now.· So,
17· ·those -- there are some municipalities that
18· ·are actually going to get some that get nothing. I
19· ·mean, we're here today because we have inequities in
20· ·our stormwater funding.· The OMCIs are only in
21· ·25 percent of the overall District, and that's our
22· ·reasoning for going to a district-wide.· So, I would
23· ·say that's very similar to what you're talking
24· ·about, for municipalities that actually get nothing
25· ·now.
Page 35
·1· · · · Q· · Tell me what the incentive is for each of
·2· ·the cities that I identified to vote to approve this
·3· ·rate change proposal when they will receive less?
·4· · · · A· · If -- then -- as far as district-wide
·5· ·revenue, I mean, it's the same for -- I mean, I
·6· ·guess -- repeat the question.
·7· · · · Q· · What is the incentive for each of the
·8· ·cities that I have identified to vote in favor of
·9· ·this rate proposal when those cities will receive
10· ·less funds for stormwater remediation?
11· · · · A· · I guess that's their -- whatever they want
12· ·to vote on, I guess.· It's their opinion on how they
13· ·want to vote, but what we're trying to do is provide
14· ·equity throughout the District, not for individual
15· ·OMCIs.
16· · · · · · ·COMMISSIONER PALANS:· Thank you.· I have
17· · · · no further questions.
18· · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr. Palans.
19· · · · Are there other questions for Mr. Unverferth?
20· · · · Mr. Goss?
21· ·QUESTIONS BY COMMISSIONER GOSS:
22· · · · Q· · Mr. Unverferth, just to follow up on
23· ·Mr. Palans' questions about the OMCI, did you folks
24· ·do an analysis of how much revenue the cities that
25· ·were going to lose revenue in the OMCI
Page 36
·1· ·restructuring, if you will, if this rate passes, did
·2· ·you do any analysis of that?
·3· · · · A· · The OMCIs right now, the plan is that
·4· ·those OMCIs would be turned back to zero, and I
·5· ·guess if there was an -- and I'm not -- maybe I'm
·6· ·not answering your question.
·7· · · · Q· · No, you're not, but that's okay.· That's a
·8· ·follow-up, so we'll get there --
·9· · · · A· · Yeah, there's a -- I mean, there could be,
10· ·similar to the public engagement we had after the
11· ·loss in the 2019 election, there could be public
12· ·input that the municipalities would have an interest
13· ·of turning those back on again, in addition to the
14· ·district-wide rate.· But there's no -- to leave
15· ·those on now, and somebody getting it, it's the same
16· ·thing.· Why would I vote for it, I'm already paying
17· ·it.
18· · · · Q· · Well, I think they'd vote for it because
19· ·they already recognize that they have a stormwater
20· ·problem.· Those cities that you kept the OMCIs
21· ·turned on, I think there were five of them is what
22· ·you said.· I think there are 13 total in --
23· · · · A· · They were -- they were -- they were to
24· ·be -- they were actually turned off in 2016.
25· · · · Q· · Right, and you turned five of them back
Page 37
·1· ·on?
·2· · · · A· · Yes, at the request of those
·3· ·municipalities.
·4· · · · Q· · Precisely.· Those municipalities said we
·5· ·have a problem, please turn the OMCIs back on.· Now,
·6· ·the other -- is it eight OMCIs?· How many total --
·7· · · · A· · I think there's 13 --
·8· · · · Q· · That's what I was just saying.
·9· · · · A· · Seven of them -- seven of them went back
10· ·on.· One of those went back on, but there's no grant
11· ·program.· The municipalities within that area in
12· ·the -- OMCI decided not to have a grant program
13· ·because they didn't have the ability to administer
14· ·the program on their end.
15· · · · Q· · And when you say they didn't have the
16· ·ability, what was different about those communities
17· ·and the communities that did --
18· · · · A· · They --
19· · · · Q· · -- have it turned back on?
20· · · · A· · They don't have a staff or a stormwater
21· ·plan in order to do that, and those are --
22· · · · · (Unidentified speaker on Zoom spoke.)
23· · · · · · ·COMMISSIONER GOSS:· Hello?
24· · · · A· · -- generally, in the underserved areas.
25· ·QUESTIONS BY COMMISSIONER GOSS:
Page 38
·1· · · · Q· · So -- and the -- go back to my first
·2· ·question: the amount of revenue that those
·3· ·communities are going to lose by having those OMCIs
·4· ·turned off and instead received a portion of the
·5· ·overall revenues generated by the stormwater rate if
·6· ·it passes, how much is that?
·7· · · · A· · I think -- there -- we did provide the
·8· ·discovery.· I don't know which one that showed the
·9· ·difference.· I think we had them side by side.· It
10· ·was a table that showed the revenue we were
11· ·proposing versus the other, and I don't know it off
12· ·the top of my head.· I think Mr. Palans mentioned
13· ·that the municipals did see an impact, but -- no,
14· ·that's not it.
15· · · · · · ·MS. STUMP:· Susan?· It is maybe 73-D?
16· · · · · · ·THE WITNESS:· I know it was a request as
17· · · · to a side-by-side comparison I think we did.
18· · · · It's very similar to a table that's in the rate
19· · · · proposal, but then offered the -- we have got a
20· · · · check mark in the rate proposal of those
21· · · · participating in the OMCI grants.· You know it
22· · · · might be an attachment.· It's probably -- it's
23· · · · probably a table that's probably --
24· · · · · · ·MS. STUMP:· This?· (Indicating)
25· · · · · · ·CHAIRMAN TOENJES:· Come on up, Ms. Stump.
Page 39
·1· · · · · · ·THE WITNESS:· Yes, that's it.
·2· · · · · · ·COMMISSIONER CLARK:· 73-D, I think.
·3· · · · · · ·THE WITNESS:· Yeah.
·4· · · · · · ·COMMISSIONER GOSS:· That's what it looks
·5· · · · like.
·6· · · · · · ·THE WITNESS:· It is.· But -- but other
·7· · · · than providing this table, we didn't do like
·8· · · · any individual analysis.
·9· ·BY COMMISSIONER GOSS:
10· · · · Q· · So is there -- is there any plan in place
11· ·to -- I think she wants her computer back.
12· · · · · · ·MS. STUMP:· No, no, no.· I thought
13· · · · something else popped up.· I was, like, what?
14· ·BY COMMISSIONER GOSS:
15· · · · Q· · Is there any plan to reach out to these
16· ·municipalities that's in place that are part of the
17· ·OMCI program now if this rate passes --
18· · · · A· · Well, I think --
19· · · · Q· · -- to say, hey, I want this turned back
20· ·on, as opposed to just saying, hey, we think we
21· ·might want to do it --
22· · · · A· · No, I -- I --
23· · · · Q· · -- is there something --
24· · · · A· · We -- I think we'll have a continuous
25· ·dialogue.· One, we're going to have to go out and
Page 40
·1· ·discuss with all the municipalities about the
·2· ·program itself, the grant program, how it works,
·3· ·because a lot of municipalities haven't participated
·4· ·or have a similar format.· So, we reach it out to
·5· ·even more municipalities this time around.
·6· · · · · · · · · But, yeah, I would envision we
·7· ·will -- we will be going out, and if there is an
·8· ·interest in those municipalities, and they have a
·9· ·willing to pay, either turn the OMCI taxes on
10· ·completely back to the levels that they're at now,
11· ·or even a portion of those, I -- I would assume if
12· ·the municipalities were favorable, our board would
13· ·then be favorable, we would make that recommendation
14· ·to our board to turn those back on, if that was it.
15· ·There's -- for us to say I'm going -- we're going to
16· ·add this on to your own OMCI, may be detrimental to
17· ·us, as well as those not voting, if it because
18· ·it's -- it's already on.
19· · · · Q· · How will this work with communities that
20· ·are receiving money under the OMCI tax now that have
21· ·ongoing programs, how will this be transitioned?
22· ·Because they were anticipating that revenue for some
23· ·of these projects that they have in place.
24· · · · A· · I mean, by the time we -- it's like almost
25· ·two fiscal years by the time this rate actually gets
Page 41
·1· ·implemented.· So there will be funds within the
·2· ·OMCI, at least for another almost a year and a half
·3· ·to two years.· So, I mean, we would work with them
·4· ·to say, here's what's going to be available.· We let
·5· ·them know every year how much revenue is available
·6· ·to them each fiscal year and in future fiscal years.
·7· · · · · · · · · There are some that have larger scale
·8· ·projects that they're anticipating, and there are
·9· ·some that have projects they'll save up their two
10· ·years worth of revenue that's coming to them, but
11· ·keep in mind prior to us turning them back on, there
12· ·was no revenue for them to be able to do projects on
13· ·their own without a grant program, unless it was a
14· ·project that we were doing.
15· · · · Q· · So, did the municipalities approach MSD
16· ·and ask for the OMCI to be turned back on, or is
17· ·that just something MSD decided to do on its own?
18· · · · A· · Like, initially, we went back to the
19· ·municipalities.· In other words, we -- we didn't
20· ·recommend to our board to have those OMCIs turned
21· ·back on without the majority of the municipalities
22· ·within the OMCI having an interest to do so.· And,
23· ·like I said, seven of them or six of them preferred
24· ·not to turn those back on.· And those were generally
25· ·smaller ones that did not generate a lot of revenue,
Page 42
·1· ·so the value of turning back on, you know, for --
·2· ·for smaller dollars.
·3· · · · Q· · So, the communities that don't have the
·4· ·administrative staff to administer a stormwater
·5· ·program they're within the OMCIs now, how are they
·6· ·going to be able to administer the stormwater
·7· ·program for the stormwater revenues that are
·8· ·generated by this new rate?· How's that going to
·9· ·work?
10· · · · A· · One of the things we've been approached
11· ·and talked there -- there -- there's an area called
12· ·24:1.· It's 24 small municipalities approached us
13· ·about the potential for pooling their dollars and
14· ·pooling their resources in order to take advantage
15· ·of that.· Obviously, it would be administrative work
16· ·on our end, but we'd be receptive to that.
17· · · · · · · · · So, when you have groupings of
18· ·municipalities potentially, and then you have
19· ·mun- -- you have projects that cross municipal
20· ·boundaries, so you would have that potential as
21· ·well.
22· · · · Q· · Where would that revenue come from for the
23· ·greater administrative that MSD will have to
24· ·undertake to help these small municipalities?
25· · · · A· · It would come from the rate.
Page 43
·1· · · · Q· · And would that come from the rate from the
·2· ·grant program, or would that come from the
·3· ·50-percent cost benefit --
·4· · · · A· · It would --
·5· · · · Q· · I assume not the 50-percent cost benefit
·6· ·--
·7· · · · A· · It would -- it would -- in other words, it
·8· ·would come from the overall rate.· In other words,
·9· ·our internal costs come off first, and then that
10· ·leaves the remaining dollars for the breakdown that
11· ·you're speaking of for projects.
12· · · · Q· · And I know MSD was sensitive to the amount
13· ·of the rate that was going to be proposed from a
14· ·standpoint of the public -- electoral accepting it?
15· · · · A· · Correct.
16· · · · Q· · So, you limited the amount to a low
17· ·amount, I think is a fair --
18· · · · A· · Yes, approximately, two dollars per
19· ·residential home per month.
20· · · · Q· · Yeah, per month, right.· So, if you're
21· ·sensitive to setting the rate in order to get
22· ·passage by the voters, which I think is prudent, was
23· ·there any consideration given to the flip side for
24· ·those communities that recognize they have a serious
25· ·stormwater problem and are spending money and
Page 44
·1· ·resources to address it through the OMCI program,
·2· ·now they're losing all of that; and they're getting
·3· ·less money, instead saying, well, this is not a fair
·4· ·deal, we're going to reject it and we're not going
·5· ·to vote for this rate?
·6· · · · A· · Well, prior to the grant program, they
·7· ·weren't receiving any funds --
·8· · · · Q· · Yeah, but they were not prior to or now?
·9· · · · A· · But they're -- again, I'll come back,
10· ·there are areas of the District that have received
11· ·no stormwater money.· In other words --
12· · · · Q· · Absolutely get it.
13· · · · A· · -- the folks in the OMCI have had the
14· ·ability --
15· · · · Q· · Absolutely get it.
16· · · · A· · -- to develop stormwater plans.· There are
17· ·areas of the District that they haven't been able to
18· ·develop stormwater plans.· In other words, they're
19· ·not even aware of what their issues are.
20· · · · Q· · Right.· I understand --
21· · · · A· · With these grant dollars, they'll be able
22· ·to do that.
23· · · · Q· · I understand it's a benefit to those
24· ·communities that don't have a stormwater program.
25· ·You made that really clear.· So, answer my question,
Page 45
·1· ·which is the communities that are going to lose
·2· ·money, there's a lot of them, and that seemed to me
·3· ·to be a large population.
·4· · · · · · · · · Isn't there a concern that those
·5· ·members of that population will say, well, I'm not
·6· ·going to vote for this rate, I'm -- I'm losing
·7· ·something.· I'm better off with the OMCI rate.
·8· · · · A· · Well, I'll go back.· We're -- we chose to
·9· ·have a grant program with the OMCI rate.· We were
10· ·not obligated to do that.· We're still not
11· ·obligated.· We could -- we could go to our board and
12· ·recommend, hey, we feel like we've got enough
13· ·projects identified in that area and we could not
14· ·have a grant program.· We chose to do that to allow
15· ·municipalities to benefit from the dollars collected
16· ·in their area.
17· · · · Q· · So, are you suggesting this if this rate
18· ·doesn't pass that MSD is going to go and take away
19· ·the OMCI program?
20· · · · A· · No, I -- no, I -- we would -- again, we
21· ·would -- if this rate failed, we would do the same
22· ·thing that we did after the last one failed.· We go
23· ·to the municipalities and say do you want the OMCI
24· ·rates turned on in your municipalities?
25· · · · Q· · And you'd keep the ones where they already
Page 46
·1· ·exist?
·2· · · · A· · Well, they would be -- you know, our --
·3· ·our -- our plan is to turn those back to zero.
·4· · · · Q· · But if the rate fails --
·5· · · · A· · If the rate fails, correct.
·6· · · · Q· · -- you would turn them back on?
·7· · · · A· · Yeah, we would leave them --
·8· · · · Q· · And that's my point.· That those people
·9· ·who think they have a stormwater problem and are
10· ·spending money to address it, under this rate, are
11· ·going to receive less money to address their
12· ·stormwater problems.
13· · · · · · · · · And, so, those folks may make the
14· ·rational decision to vote against this rate because
15· ·of that, and if your sensitivity was, well, I don't
16· ·want the rate to be more than two dollars a month
17· ·because I don't want to burden people that don't
18· ·think stormwater is a problem, I'm not sure that we
19· ·thought about the flip side, which is, well, when
20· ·that rate goes -- when that money goes away, you're
21· ·going to have less money to deal with these
22· ·stormwater problems.
23· · · · · · · · · I would encourage the District to
24· ·think about that, and how you might address that,
25· ·because I know in communities like Ladue, it's --
Page 47
·1· ·they've taken that pretty serious.· They have Deer
·2· ·Creek running through their community.· They're a
·3· ·large community in terms of geography, but they're
·4· ·small in terms of population.· And this
·5· ·restructuring will have a big impact on a community
·6· ·like that, and I am sure there are others in the
·7· ·area as well.· So, I just encourage the District to
·8· ·think about that further.
·9· · · · · · · · · I want talk to you about the credit
10· ·program, which I think was the third question that
11· ·you --
12· · · · A· · Correct.
13· · · · Q· · -- responded to.
14· · · · A· · Yes.
15· · · · Q· · Initially, you -- MSD had not proposed a
16· ·credit program for the non-residential customers or
17· ·residential customers, no credit program at all,
18· ·correct?
19· · · · A· · That is correct.
20· · · · Q· · But then in -- you -- in your answers
21· ·said, well, we think a 50-percent credit program
22· ·would be okay; is that fair?· You came out to that
23· ·conclusion?
24· · · · A· · I -- we looked and said what -- what
25· ·would -- what could be done that would benefit the
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·1· ·overall program, you know, and -- and to help
·2· ·address stormwater issues throughout the District.
·3· ·And, obviously, our regulations, which require
·4· ·stormwater detention, stormwater quality
·5· ·improvements, is what we do, in other words, lack of
·6· ·a better term, not make matters worst.· If you go
·7· ·develop a property, we don't want you to impact
·8· ·adjacent.
·9· · · · · · · · · So, if there were -- but there are a
10· ·lot of properties that were developed prior to us
11· ·having regulations.· So, if an entity -- say that
12· ·they had a huge parking lot that was built, you
13· ·know, in the '70s and '80s that didn't have
14· ·stormwater detention, but, yet, were going to be
15· ·paying an impervious bill and felt like, hey, I
16· ·could see some benefit by building stormwater
17· ·quality and quantity VFPs up to the District's
18· ·standards and receive a credit for that, we felt
19· ·like that was -- that would be beneficial enough.
20· · · · · · · · · In other words, first of all, a
21· ·credit takes away from our revenue.· So, we -- then
22· ·we want some benefit from providing that credit.· So
23· ·we felt like if there was a certain part of our
24· ·regulation that would provide that benefit, it would
25· ·be for someone to develop stormwater detention to
Page 49
·1· ·our current regulatory levels and provide them with
·2· ·a 50-percentage credit on that impervious area.
·3· · · · Q· · And why 50 percent as opposed to
·4· ·75 percent or 25 percent?· Why was 50 percent deemed
·5· ·to be a fair number or a reasonable number?
·6· · · · A· · We just -- it was -- it was something that
·7· ·we had looked at before.· I mean, we didn't feel
·8· ·like a 100 percent credit, but, again, even with
·9· ·detention and all those -- things put into place,
10· ·that's still an impact to the downstream property
11· ·owners.· That's why we just -- and I'm not saying it
12· ·was random, but we just felt 50 percent was
13· ·appropriate.
14· · · · Q· · Now, you have not -- but you did not agree
15· ·to provide any credit for residential customers; is
16· ·that right?
17· · · · A· · Correct.· I mean, the amount of impact
18· ·that a residential customer could -- whether they
19· ·put in a rain garden or whatever, again, those
20· ·aren't -- what a rain garden captures during a rain
21· ·event isn't the issues that we have.· Our issues are
22· ·caused by rain events typically above the 15-year
23· ·design level --
24· · · · Q· · Right.
25· · · · A· · -- or storm level.
Page 50
·1· · · · Q· · I understand that.· And I represent as,
·2· ·you know, the Home Builders Association, and West
·3· ·County, whose detention basins were put in under MSD
·4· ·regulations in the '70s and '80s, have deficient
·5· ·designs.· I think you would admit that.
·6· · · · A· · Correct.
·7· · · · Q· · And yet in your answer to me with the
·8· ·non-residential customers, you cited as a reason to
·9· ·give a credit, that they have an absent of detention
10· ·basins or deficient designs.· So, in that instance,
11· ·a credit is appropriate.· But yet for residential
12· ·customers, you don't think a credit would be
13· ·appropriate.
14· · · · A· · Well, on the residential side, they're --
15· ·again, that was one of our initial reasonings for
16· ·not providing is -- our inability to provide
17· ·credit -- a tax credit.
18· · · · Q· · Right.· Because it --
19· · · · A· · Which it --
20· · · · Q· · -- doesn't place a fair and reasonable
21· ·burden on all ratepayers when you do this, does it?
22· ·Because you're giving a credit to the
23· ·non-residential customers but the residential
24· ·customers?· You're giving them the ability to obtain
25· ·that credit?· And that doesn't seem fair and
Page 51
·1· ·equitable to me.
·2· · · · · · · · · And I'll give you a way you might
·3· ·think about doing that, which you put in the last
·4· ·rate proposal, and I don't see it in this one.· You
·5· ·allowed residential customers to pool the credits
·6· ·and to apply them to allow the Homeowners
·7· ·Association, who has the unfortunate responsibility
·8· ·of trying to fix these detention basins and maintain
·9· ·them when they were inadequately designed, and allow
10· ·them to use that money for that purpose.
11· · · · A· · I -- I guess, I don't recall that
12· ·particular aspect to the previous rate proposal.
13· · · · Q· · Well, that was something Mr. Hoelscher and
14· ·I talked about, and he agreed that MSD would do
15· ·that.· And I remember that very distinctly because I
16· ·thought, well, great.· That's a good solution; it
17· ·seemed to make the rate fair and equitable.· So,
18· ·again --
19· · · · A· · But that was -- but that was when we were
20· ·charging an impervious rate district-wide.
21· · · · Q· · Well, here you're giving a credit to folks
22· ·to fix inadequate detention basins who are
23· ·non-residential.· You're not giving --
24· · · · A· · No -- no --
25· · · · Q· · You're not giving that credit --
Page 52
·1· · · · A· · We're asking someone to construct a
·2· ·totally new -- where something doesn't exist.
·3· · · · Q· · Well -- so, if it's inadequate and it's
·4· ·failing, you wouldn't allow them the credit?
·5· · · · A· · Well, actually, they're -- by obligation,
·6· ·they're required to make those.· If it was -- if it
·7· ·was a regulatory-required detention basin by
·8· ·statute, they're required to make those repairs.
·9· · · · Q· · I understand they're supposed to by
10· ·statute.· As to whether they do and whether they
11· ·have the resources is another story.· And, again, I
12· ·would encourage the District to look at this option
13· ·as a way, because I want to address the stormwater
14· ·problem.· And I think it's something that we all
15· ·share, that goal, and I think you're falling short
16· ·of it when you don't create those kind of
17· ·incentives.
18· · · · · · · · · Let me ask you one last question.
19· ·For residential customers, what credit programs are
20· ·available for them as far as homeowners associations
21· ·are concerned?· I'm not concerned about the
22· ·individual customer getting a rain garden or getting
23· ·a rain barrel or something like that.· I know you
24· ·have those programs.· I'm talking about --
25· · · · A· · There's none that I'm aware of.
Page 53
·1· · · · Q· · Okay.· Again, I would encourage the
·2· ·District to look at that.· Thank you, that's all I
·3· ·got.
·4· · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr. Goss.
·5· · · · Mr. Perkins?
·6· ·QUESTIONS BY COMMISSIONER PERKINS:
·7· · · · Q· · Yes, thank you.· I would like to go back
·8· ·to the municipal grant program for a minute.· And,
·9· ·specifically, the MSD Exhibit 73-D, that was
10· ·referenced just a few minutes ago.· That Exhibit
11· ·provides, I believe, what appears to be kind of a
12· ·plan or distribution of these grant funds to the
13· ·municipalities based on the population, et cetera.
14· ·And, so, I wanted to talk about or hear a little bit
15· ·about, you know, how this -- how the application
16· ·formula was developed in terms of -- you know, I see
17· ·Florissant, 52,000 population, $300,000 annual grant
18· ·allowance.· Webster Groves, 24,000, same -- you
19· ·know, same amount available.
20· · · · · · · · · Could you speak a little bit about
21· ·how that was determined, and also just so I
22· ·understand, is this actually the -- just to be
23· ·clear, is the proposed distribution formula under
24· ·the rate proposal?
25· · · · A· · It's currently the one we have proposed.
Page 54
·1· ·We did -- I mean, we looked at initially prorating
·2· ·it totally on population.· In other words, we felt
·3· ·like, one, we needed to start -- we need to have a
·4· ·minimum amount of dollars available to the
·5· ·municipalities, because that is one of the reasons
·6· ·why some of the municipalities opted out the last
·7· ·time.· It might be $350 was their allocation.· So,
·8· ·we felt like there needed to be a minimum.
·9· · · · · · · · · We wanted to allow for -- for --
10· ·again, in the administration, if we put them into
11· ·buckets, a little more easier to administer.· But I
12· ·think the way it's allocated now, 300 -- we took
13· ·ranges based on these populations.· I think we would
14· ·be open to suggestions if that allocation -- if the
15· ·Rate Commission felt that allocation needed to be
16· ·adjusted.· Maybe instead of 10,000 -- or 20,000 to
17· ·100, maybe that range changes a little bit.· I think
18· ·we would be flexible in that.· Again, we feel like
19· ·population base is, from our ability to manage that,
20· ·is something that's readily available.
21· · · · · · · · · By having the ranges, I'm not arguing
22· ·with somebody that says, hey, I'm over 5,000 now
23· ·instead of 4,999, to do that but -- so, I mean --
24· ·this was what we felt breaking it when we initially
25· ·set it up.
Page 55
·1· · · · Q· · And to follow up then, so is the
·2· ·per-capita distribution that is proposed in that
·3· ·plan, is that considering cumulative grant awards
·4· ·over time?· So, for instance, if Webster Groves,
·5· ·let's just say, receives a 300,000 grant in 2025,
·6· ·would Webster Groves be eligible for -- under this
·7· ·program, for a $300,000 grant in '26, '27, '28, et
·8· ·cetera?
·9· · · · A· · It'd -- yeah, that's how it works.· In
10· ·other words, they would have -- every year, they
11· ·would be eligible for a $300,000 grant.· So, in
12· ·fact, that's -- the way the OMCI works, there are
13· ·municipals now we'll -- we'll go to them, prior to
14· ·our initial appropriation of the grant dollars each
15· ·year, to our board and say, are you planning on
16· ·using your dollars this year?· And some of them will
17· ·say, I'm not using them this year, but I'm planning
18· ·on using them next year.
19· · · · · · · · · In other words, we keep a bank for
20· ·this municipality.· In other words, they may not
21· ·draw that 3,000 -- 300,000 this year; they may have
22· ·a million dollar project, where they say, well,
23· ·we're going to save up to do that million dollar
24· ·project because MSD you're not going to be able to
25· ·get to that job until ten years from now so --
Page 56
·1· · · · Q· · Yeah, the difference there, though, would
·2· ·be the OMCI funds are actually generated, you know,
·3· ·within that community, within that district.· So,
·4· ·those funds -- and that's a split 50 percent MSD --
·5· · · · A· · Right.
·6· · · · Q· · -- 50 percent community, so all those
·7· ·funds are actually generated through the properties
·8· ·of that particular OMCI district.· Here, of course,
·9· ·it's a· --
10· · · · A· · District wide.
11· · · · Q· · It's a district-wide formula, so that's
12· ·where I have some concerns about the breaking points
13· ·and the accumulative.· One of -- one of the
14· ·follow-up questions then would also be, have we
15· ·considered any other distribution formulas, or have
16· ·we considered looking at the per-capital
17· ·distribution cumulative over time so that we can
18· ·ensure that is fair and distributed equally over
19· ·time, based on the populations of those communities?
20· · · · A· · I'm not sure I understand that last piece.
21· · · · Q· · By -- have -- would the District -- has
22· ·the District considered it, and if not, would it
23· ·consider a formula that would -- that would look at
24· ·the distribution of these funds on a cumulative
25· ·basis?· So --
Page 57
·1· · · · A· · In other words, if there were dollars left
·2· ·that were unused?· I'm -- I'm not sure.
·3· · · · Q· · No, so let's take -- let's take Webster
·4· ·Groves, 24,000.· Their per-capita amount would not
·5· ·be $300,000 here based on their population, okay?
·6· ·It would be something less than that.· So, would the
·7· ·District consider looking at the accumulative
·8· ·per-capita allocation over time so that -- so that
·9· ·those funds even out, okay?· So, that the funds are
10· ·distributed truly on a per-capita basis over some
11· ·horizon?· That horizon might be five years and it
12· ·resets; it might be ten years and it resets; but
13· ·something more than one year?
14· · · · A· · Yeah, I think -- I think like I said,
15· ·we're open to some other distribution formula
16· ·provided it was population based.· In fact, what we
17· ·did -- like I said, initially, we -- it wasn't per
18· ·capita.· You know, we took the total amount of
19· ·dollars based on -- and just divided it up.
20· · · · · · · · · But, again, you know, our
21· ·recommendation at least would have some type of
22· ·lower end value for each municipality, but we did
23· ·not take into consideration, you know, the amount of
24· ·time to utilize those funds.· We did not take that
25· ·into consideration.
Page 58
·1· · · · Q· · Has the District considered approaching
·2· ·the Municipal League of Metro St. Louis who has
·3· ·experience in distributing grant programs such as
·4· ·this?· They have experience with the Municipal Parks
·5· ·Grant funding.· And, in fact, they utilize a formula
·6· ·that considers the distribution based on population
·7· ·for that program, too, and that is considered over a
·8· ·period of time and it resets, I think, on a -- on
·9· ·every ten years, okay?
10· · · · · · · · · So, I guess, I would ask one of
11· ·the -- if the District has considered approaching
12· ·the League about setting up something that might be
13· ·close to that, or at least consider another
14· ·alternative?
15· · · · A· · No, I -- I think we would be open to
16· ·something like that.· Again, we were proposing a
17· ·grant program.· We structured it, you know, again,
18· ·when we structure this, we structure for
19· ·administrative purposes.· You know, obviously that's
20· ·going to -- there'd be more administration to that,
21· ·particularly when you're talking eight, nine
22· ·municipalities.· There is some more work to it.
23· · · · · · · · · But, again, we feel like population
24· ·is definitely the way to go, and that there be some
25· ·minium available to each municipality in order for
Page 59
·1· ·them to be able to do some work, but it's definitely
·2· ·something -- we did not go to the Municipal League
·3· ·or anything like that.
·4· · · · · · ·COMMISSIONER PERKINS:· Thank you.
·5· · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr. Perkins.
·6· · · · Questions from any of the other commissioners
·7· · · · for Mr. Unverferth?· Mr. Unverferth, I'll ask a
·8· · · · question.
·9· ·BY CHAIRMAN TOENJES:
10· · · · Q· · Throughout your testimony, you referred to
11· ·"we did this" and "we did that."· I think it's my
12· ·understanding that the "we" you were talking about
13· ·was the District executive staff, and that
14· ·ultimately what we discussed, goes to the Board of
15· ·Trustees, and the trustees actually look at the rate
16· ·proposal prior to submitting it to the Rate
17· ·Commission, correct?
18· · · · A· · No.
19· · · · Q· · Trustees have not --
20· · · · A· · Trustees do not not --
21· · · · Q· · -- participated in this?
22· · · · A· · They have not.
23· · · · · · ·CHAIRMAN TOENJES:· Thank you.· Any further
24· · · · questions for Mr. Unverferth?· Ms. Myers, do
25· · · · you have any questions for Mr. Unverferth?
Page 60
·1· · · · · · ·MS. MYERS:· I do not.
·2· · · · · · ·CHAIRMAN TOENJES:· Thank you,
·3· · · · Mr. Unverferth.
·4· · · · · · ·MR. MALONE:· One quick follow-up.
·5· · · · · · ·CHAIRMAN TOENJES:· Oh, one quick question
·6· · · · from Mr. Malone.
·7· ·BY MR. MALONE:
·8· · · · Q· · Mr. Unverferth, just to clarify, with
·9· ·regard to the 50 percent of the stormwater capital
10· ·funds that will constitute new sources of revenue
11· ·for the District under the rate change proposal,
12· ·those will be funding projects district-wide,
13· ·correct?
14· · · · A· · Correct.
15· · · · Q· · Including within the OMCI -- existing OMCI
16· ·Districts?
17· · · · A· · Correct.
18· · · · Q· · Including those that might be getting less
19· ·dedicated funding within --
20· · · · A· · Correct.
21· · · · Q· · -- the current rate proposal, correct?
22· · · · A· · Yes.
23· · · · · · ·MR. MALONE:· All right.· No further
24· · · · questions.
25· · · · · · ·CHAIRMAN TOENJES:· Any other questions for
Page 61
·1· · · · Mr. Unverferth?· You have one hour and 45
·2· · · · minutes left.
·3· · · · · · ·MR. UNVERFERTH:· Thank you.
·4· · · · · · ·CHAIRMAN TOENJES:· Thank you.· Ms. Myers,
·5· · · · are you ready to call the next witness?
·6· · · · · · ·MS. MYERS:· Yes, we are.· Our next witness
·7· · · · is Tom Beckley.
·8· · · · · · · · ·(Thomas Beckley sworn.)
·9· · · · · · ·CHAIRMAN TOENJES:· Mr. Malone, do you have
10· · · · questions for Mr. Beckley.
11· · · · · · ·MR. MALONE:· I do.
12· ·BY MR. MALONE:
13· · · · Q· · Good morning, Mr. Beckley.
14· · · · A· · Good morning.
15· · · · Q· · Do you have your surrebuttal testimony
16· ·with you this morning?
17· · · · A· · I do.
18· · · · Q· · All right.· In question 1 of your
19· ·surrebuttal testimony, you indicated that the phase
20· ·in of the extra strength surcharge would result in
21· ·approximately 1.2 million being shifted from extra
22· ·strength surcharges to all customers, and then
23· ·$750,000 of that shift would go to residential
24· ·customers; is that correct?
25· · · · A· · Yes.
Page 62
·1· · · · Q· · What is the estimated impact on base or
·2· ·volume charges per shift?
·3· · · · A· · In general discussion, we haven't decided
·4· ·exactly how those charges would be covered, but it
·5· ·would -- it would impact both base and volume.
·6· · · · Q· · You don't know by how much here today?
·7· ·Okay.· Do you know what the -- it translates to in
·8· ·terms of a monthly impact for residential customers?
·9· · · · A· · I did look at that.· I want to say off the
10· ·top of my head for -- it would be -- since you have
11· ·it right there in front of you, what the -- how
12· ·much -- what's the volume for --
13· · · · · · ·MS. MYERS:· Hang on a minute.· I got it --
14· · · · A· · It is --
15· · · · · · ·MS. MYERS:· What page --
16· · · · · · ·THE WITNESS:· It is 6.5?
17· · · · · · ·MS. MYERS:· What page are you on?
18· · · · · · ·MR. MALONE:· I'm looking at 6.2 of MSD
19· · · · Exhibit 1.
20· · · · · · ·THE WITNESS:· So, I just want make sure to
21· · · · say the right thing.· It's 5 CCF.· Off the top
22· · · · of my head, we did look at that.· I want to say
23· · · · it was, like, 2.2 cents per CCF.· And, so, I
24· · · · would say it would be approximately 11 cents.
25· · · · · · ·MR. MALONE:· 11 --
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·1· · · · · · ·THE WITNESS:· For the typical residential
·2· · · · customer as shown in the rate proposal.
·3· ·BY MR. MALONE:
·4· · · · Q· · They would pay 11 cents more --
·5· · · · A· · Per month.
·6· · · · Q· · So, what would that do referring to this
·7· ·page 6.2 of the rate change proposal, we get down
·8· ·to -- for a single-family residential metered
·9· ·customer for 5 CCF would pay monthly 61.04, which
10· ·would be --
11· · · · A· · About 61.· But, again, that -- I mean,
12· ·plus or minus a few cents but --
13· · · · Q· · Okay.· And you're familiar with the WEF
14· ·Manual of Practice, Financing --
15· · · · A· · Yes.
16· · · · Q· · -- and Charges for Wastewater Systems,
17· ·correct?
18· · · · A· · Yes.
19· · · · Q· · And did you refer to that in coming -- in
20· ·compiling your testimony today?
21· · · · A· · It's always part of our overall, and I
22· ·would say, our -- the term, our overall thinking
23· ·whenever we're developing wastewater rates.· So,
24· ·while we didn't specifically refer to it, in
25· ·general, the way we developed the extra strength
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·1· ·surcharges, the base charge, and the volume charge,
·2· ·are, you know -- was described in that manual.
·3· · · · Q· · Okay.· I'd like to refer to a passage in
·4· ·Chapter 8, Section 6.3 here.· There's one short
·5· ·paragraph I would just like you to read.
·6· · · · A· · Sure.
·7· · · · Q· · 6.3.· If you could read that into the
·8· ·record, please?
·9· · · · A· · "Rate transitioning.· In many instances,
10· ·the implementation of cost-based rates will result
11· ·in significant shift in cost responsibilities within
12· ·and across customer classes.· In this case,
13· ·utilities must weigh the equity gains of an
14· ·immediate shift to cost-based rates with issues
15· ·related to affordability and customer budgeting
16· ·challenges.· A multi-year rate transitioning period
17· ·can generally accomplish both objectives by phasing
18· ·in cost-based rates over a limited time period to
19· ·allow customers time to plan and adjust to the new
20· ·rates and avoid rate shock.· However, such a policy
21· ·will result in rates being below the cost service
22· ·for some users and above cost service for others
23· ·during the transition period, which will perpetuate
24· ·the inequities embedded in current rates."
25· · · · Q· · So, my question for you is: did you
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·1· ·consider this concern about rate shock in concluding
·2· ·that this plan would be inappropriate?
·3· · · · A· · Not just rate shock, but the customer
·4· ·impacts and the impacts on residential bills.
·5· · · · Q· · Okay.
·6· · · · A· · Even if it is only 11 cents a month.
·7· · · · Q· · So, it was your determination that this 11
·8· ·cents or so a month was --
·9· · · · A· · I wouldn't say my determination.· It was a
10· ·discussion among ourselves and MSD staff.
11· · · · Q· · Okay.· What other factors did you consider
12· ·in deciding not to go with the extra strength
13· ·surcharges?
14· · · · A· · It was really a discussion of what's
15· ·described in that short paragraph, equity versus
16· ·cost service recovery versus rate shock, and who
17· ·should bear that cost.
18· · · · Q· · Okay.
19· · · · A· · Which customer should bear that burden.
20· · · · Q· · Moving on to question 2 of your testimony,
21· ·you disagreed with the rate consultants
22· ·determination that the proposed stormwater charges
23· ·are not equitable; is that correct?
24· · · · A· · Yes.
25· · · · Q· · And you based that on the fact that
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·1· ·residential customers pay 57 percent;
·2· ·non-residentials pay 43, and that correlates to the
·3· ·portion of residential/non-residential customers,
·4· ·correct?
·5· · · · A· · Correct.
·6· · · · Q· · The Charter requires the Commission to
·7· ·determine whether the rate change proposal considers
·8· ·the financial impact on all classes of taxpayers in
·9· ·determining a fair and reasonable burden, correct?
10· · · · A· · I don't believe it says taxpayers, but
11· ·yes.
12· · · · Q· · Rate --
13· · · · A· · All classes of customers.
14· · · · Q· · Customers, excuse me.· And then the
15· ·Commission's operational rules require that they
16· ·consider cost of service considerations, cost
17· ·causation principles, customer impact data, economic
18· ·development, other environmental factors in making
19· ·those determinations, correct?
20· · · · A· · Yes.
21· · · · Q· · So, in determining whether these
22· ·stormwater charges are equitable, did you consider
23· ·whether a residential parcel and a non-residential
24· ·parcel with the exact same amount of impervious area
25· ·are going to be paying different amounts?
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·1· · · · A· · That was -- at the end of day, there's
·2· ·different ways that you can assess equity.· And, so,
·3· ·what we're saying is that on an interclass basis,
·4· ·residentials paying their share and commercials
·5· ·paying their share, and then that was how we decided
·6· ·to address equity in this case.· There's more than
·7· ·one approach you can take to look at that, but
·8· ·ultimately that was how -- how we addressed
·9· ·interclass equity in developing the rate proposal.
10· · · · · · · · · And I'm not saying there's not
11· ·other -- other arguments to be made.· There are
12· ·always other approaches.· I mean, part of the
13· ·challenge with rate setting is, if you look through,
14· ·you know, that number 26 there, there's no one right
15· ·answer for any of these -- any of these challenges.
16· ·So, it's always -- something that Rich ended up
17· ·talking to some of you about -- a lot about policy
18· ·decision on how you address some of these things
19· ·like interclass equity.
20· · · · Q· · Okay.· So, when you made your statement in
21· ·your testimony that you disagreed with the rate
22· ·consultants' positions about -- about equity, you
23· ·were basing that considering classes being
24· ·residential, non-residential --
25· · · · A· · Correct.
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·1· · · · Q· · Not just subclasses --
·2· · · · A· · And I'm not saying she's wrong either. I
·3· ·mean, it's just a question of, you can't -- you
·4· ·can't absolutely say they're inequitable.· It's here
·5· ·how we define it, and we've -- we've addressed that
·6· ·through how we design rates.· But there are other
·7· ·approaches you can take to defining that, and they
·8· ·would be correct, too.· There's no single right
·9· ·answer --
10· · · · Q· · Okay.
11· · · · A· · -- when it comes to rate setting, because
12· ·as we sometimes like to say, this is an art, not a
13· ·science.· There's not a single right answer for any
14· ·of these, because a lot of it is policy --
15· · · · Q· · Sure.· And, on that note, so a tax-exempt
16· ·residential parcel, such as a home owned by a
17· ·nonprofit, they're not going to pay the stormwater
18· ·tax, correct?
19· · · · A· · Tax-exempt non-residential?
20· · · · Q· · A tax-exempt residential.
21· · · · A· · That's my understanding.
22· · · · Q· · Okay.· But a non-residential tax exempt
23· ·parcel is going to pay the rate?
24· · · · A· · That's my understanding.
25· · · · Q· · Okay.· And a -- since we're using a tax
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·1· ·based on property value rather than an impervious
·2· ·surface charge, a large -- large but valuable
·3· ·property that doesn't have a lot of impervious area,
·4· ·is going to pay more than a smaller one that has a
·5· ·little bit more runoff, correct?
·6· · · · A· · Yes.
·7· · · · Q· · All right.· I think I have no further
·8· ·questions at this time.
·9· · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr. Malone.
10· · · · Ms. Plescia, do you have questions for the
11· · · · witness?
12· · · · · · ·MS. PLESCIA:· No questions, thank you.
13· · · · · · ·CHAIRMAN TOENJES:· Does any member of the
14· · · · Rate Commission have questions for Mr. Beckley?
15· · · · Mr. Beckley, I have a question.
16· ·QUESTIONS BY CHAIRMAN TOENJES:
17· · · · Q· · During Mr. Unverferth's testimony, he
18· ·talked about the "we" of the group that put this
19· ·together.
20· · · · A· · Yes.
21· · · · Q· · And one of his comments that he made was
22· ·that putting the rate proposal you worked to
23· ·structure it for administrative purposes.· How much
24· ·did the decisions or the percentages or the
25· ·components that went into the proposal from the
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·1· ·staff, what role did current administrative
·2· ·practices or purposes play in that?
·3· · · · A· · I mean, I believe you're talking in
·4· ·general about the concern about the administration
·5· ·of undeveloped properties?· Is that what you're
·6· ·referring to --
·7· · · · Q· · Overall.
·8· · · · A· · -- just in general --
·9· · · · Q· · Overall.
10· · · · A· · So I would caution you, and here's -- and
11· ·actually, I would say Rich -- Rich forget to mention
12· ·that I would say Bill and I were involved in some of
13· ·those discussions but -- in terms of developing the
14· ·rate proposal, MSD would agree with that.· So,
15· ·basically, it was the MSD executive staff, and Bill
16· ·and I were involved in some of the discussions --
17· · · · Q· · Mr. Stannard?
18· · · · A· · Yes, Mr. Stannard and I were involved in
19· ·some of the discussions.· Not all of them, because
20· ·as you can imagine, this was developed over a long
21· ·period of time, MSD staff would meet on occasions,
22· ·I'm sure in smaller groups, and discuss aspects of
23· ·the rate proposal.· We were not involved in many
24· ·discussions about the administrative burden. I
25· ·mean, it occasionally came up in our -- in the
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·1· ·meetings we were involved in, but I would say those
·2· ·discussions were mostly among MSD staff.
·3· · · · · · · · · So, I -- I can't really comment on --
·4· ·I can say that they were considered in meetings that
·5· ·we attended, but I -- my understanding is there were
·6· ·more discussions than we were involved in.· So, I'm
·7· ·not the best person to address that.· And I hope
·8· ·that gives you a little better understanding,
·9· ·because, you know, that was a fair question, I felt
10· ·as exactly what was meant by -- you know, and really
11· ·that would be my characterization is mostly MSD
12· ·executive staff, plus we are the consultants to the
13· ·District.· You know, we used to be consultants to
14· ·the Commission, now we're consultants to the
15· ·District.· So, we were involved in a lot of those
16· ·discussions but not all of them.
17· · · · · · ·CHAIRMAN TOENJES:· Thank you.· Any other
18· · · · commissioners have any questions for
19· · · · Mr. Beckley?· Anyone online have any questions
20· · · · for Mr. Beckley?· Ms. Myers, do you have
21· · · · questions for Ms. Beckley?
22· · · · · · ·MS. MYERS:· I do not.
23· · · · · · ·CHAIRMAN TOENJES:· Are there any other
24· · · · matters to come before the Rate Commission
25· · · · before we adjourn today?· Hearing none, we will
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·1· ·stand adjourned until 1:00 p.m. on August 1st,
·2· ·2023.· Thank you.
·3· · (Ending time of the hearing: 10:52 a.m.)
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·1· · · · I, Colin Wallis, in and for the State of
·2· ·Missouri do hereby certify that the witness
·3· ·whose testimony appears in the foregoing
·4· ·Examination Under Oath was duly sworn by me;
·5· ·that the testimony of the said witness was
·6· ·taken by me to the best of my ability and
·7· ·thereafter reduced to typewriting under my
·8· ·direction; that I am neither counsel for,
·9· ·related to, nor employed by any of the parties
10· ·to the action in which this examination was
11· ·taken, and further that I am not relative or
12· ·employee of any attorney or counsel employed by
13· ·the parties thereto, nor financially or
14· ·otherwise interested in the outcome of the
15· ·action.
16· · · · ______________________
17· · · within and for the State of Missouri
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