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HomeMy Public PortalAboutExhibit MSD 97- August 7, 2023 Pre-Hearing Conference ReportExhibit MSD 97 BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT AUGUST 7, 2023 PRE-HEARING CONFERENCE REPORT OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT ISSUE: WASTEWATER AND STORMWATER RATE CHANGE PROCEEDING WITNESS: METROPOLITAN ST. LOUIS SEWER DISTRICT SPONSORING PARTY: METROPOLITAN ST. LOUIS SEWER DISTRICT DATE PREPARED:AUGUST 7, 2023 BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT For Consideration of a Wastewater and Stormwater Rate Change Proposal by the Rate Commission of the Metropolitan St. Louis Sewer District ) ) ) ) AUGUST 7,2023 PRE-HEARING CONFERENCE REPORT OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT Pursuant to §7.280 and §7.290 of the Charter Plan of The Metropolitan St. Louis Sewer District (the "Charter Plan"), the Procedural Schedule, Section 8, of the Rate Commission of The Metropolitan St. Louis Sewer District (the “Rate Commission”), and the Restated Operational Rules, Regulations and Procedures, Section 3(11) of the Rate Commission, The Metropohtan St. Louis Sewer District ("District") hereby submits its Pre-heanng Conference Report (Exhibit MSD 97). 1 AUGUST 7, 2023 PRE-HEARING CONFERENCE REPORT SUBMITTED BY THE METROPOLITAN ST. LOUIS SEWER DISTRICT INTRODUCTION The Metropolitan St. Louis Sewer District ("District") submitted the Wastewater and Stormwater Rate Change Proposal notice to the Rate Commission on March 24,2023. This is the eighth rate change notice submitted by the District smce the Rate Commission was formed, by voter approval onNovember 7, 2000, pursuant to Section 7.040 of the District's amended Charter Plan. Per the Rate Commission's Operational Rules, Regulations and Procedures, the first of three technical conferences was held on April 26, 2023 to question District staff, Raftelis Financial Consultants, Inc. (“RFC”), the District's rate consultant, Public Financial Management, Inc. (“PFM”), the District’s financial advisor, and Stantec Consulting Services, Inc about their respective submitted direct testimony. The second technical conference was held on May 30, 2023 to allow questioning by all parties of the rebuttal testimony submitted by the Rate Commission's consultants. On May 10,2023 the Missouri Industrial Energy Consumers ("MIEC") filed an application to intervene out of time under the Rate Commission’s procedural schedule, the deadline for applications was April 14,2023. MSD filed a Response to the application to intervene out of time on May 11, 2023. At the May 30, 2023 Technical Conference the Rate Commission voted to allow MIEC to be an intervener to the extent that MIEC would be able to cross-examine witnesses at the surrebuttal conference but not be able to submit any testimony or discovery. The third technical conference required by the Rate Commission's Operational Rules, Regulations, and Procedures was held on July 10, 2023 to allow questioning of the surrebuttal testimony submitted by the District. No other parties submitted surrebuttal testimony. MIEC did not ask any questions during the surrebuttal conference. A pre-hearing conference was held on August 1, 2023 at which MSD and the Rate Commission Legal Consultant read a pre-hearing conference summary report. The District submitted its summary as Exhibit MSD 90. PURPOSE The purpose of this report is to identify and describe the various issues raised by the prepared and oral testimony submitted during this late change proceeding and present the position of the District relative to each issue. It should be noted, the positions outlined in this report represent the opinions of District staff and do not represent acceptance or approval by the District's Board of Trustees 2 ISSUES The Wastewater and Stormwater Rate Change Proposal ("Rate Proposal") submitted m support of the FY2025 - FY2028 proposed rate change addiesses several issues related to wastewater and stormwater funding. During the discovery process, additronal informatron regarding these and other issues has been requested by the Rate Commissron. During the technrcal conferences all parties have testified to their specrfic issues that directly and indirectly affect a rate change. Based on the rate proceedings to date, the District believes that the pending issues to be considered by the Rate Commission are as follows: 1. A Phased Approach For Extra Strength Surcharge Rates Requires Subsidy By Other Customers 2. The Stormwater Grant Program Proposed by The District Considers the Financial Impact on all Classes of Ratepayers in Determining a Fair & Reasonable Burden 3. The District is Willing to Implement a Stoimwater Credit Program 4. The Contract for the Bissell & Lemay WWTP Fluidized Bed Incinerators was approved by the MSD Board of Trustees 5. Not charging a stoimwater impervious rate to non-residential properties with no impervious area is in compliance with the Missouri Constitution Uniformity Clause 6. The Stormwater ad valorem property tax and impervious area-based charge are legal and consider the financial impact on all classes of ratepayers in determining a fair and reasonable burden 7. Charging an ad valorem property tax to those properties subject todefined in RSMo §204 700 is legal 8. The Rate Proposal meets all five criteria of Section 7.270 of the MSD Charter Plan ISSUE 1.: A PHASED APPROACH FOR EXTRA STRENGTH SURCHARGE RATES REQUIRES SUBSIDY BY OTHER CUSTOMERS Rate Consultant’s Position - Issue 1 In Exhibit RC 78, p. 27,11. 21-23, Ms. Lemoine proposes ‘phasmg-in’ the proposed increases to the extra strength surcharge rates over a period of at least two years mstead of in the first year of the rate proposal.. In addition, Ms. Lemoine agrees that such a phase-in approach will require the District to adjust other late components, including the Base Charges, Volume Charges, and Compliance Charges, to provide full revenue recoveiy. District's Position - Issue 1 3 The District has determined the proposed extra strength surcharge rates to be the most fair for all customers because these rates will be paid by the entities that produce such waste and will not require subsidizing by any other customer. The “extra strength surcharge rates” are the rates applied to monitored 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 “extia strength surcharge rate” to those non-residential entities that produce such waste. The rates proposed by the District are based on what it will cost the District to treat such waste. MSD and the Ms. Lemoine agree that if the Rate Commission were to recommend a phased in approach it will cause other customeis, not subject to those extra strength surcharges, including residential customers, to pay more and subsidize those customers actually generating the extra strength pollution. MSD has determined this would shift approximately $1.2 million in total over 2 years from extra strength surcharges to all customers, of which $750,000 would be charged to residential customers. ISSUE 2.: THE STORMWATER GRANT PROGRAM PROPOSED BY THE DISTRICT CONSIDERS THE FINANCIAL IMPACT ON ALL CLASSES OF RATEPAYERS IN DETERMINING A FAIR & REASONABLE BURDEN Rate Consultant's Position - Issue 2 In Anna White’s written testimony (Exhibit RC 77 question 28 page 15), she stated “The District should consider a methodology based on a blend of both population and impervious area for allocating grant funding to municipahties.” Ms. White suggest ranking municipahties by population and impervious area. By using this method about 40% of the municipahties as shown in Exhibit MSD 1, Appendix 8.18 would move to a different range or ranking. Most of them either moved up or down one ranking. There were only two that moved more than one ranking. She uses an example of a bedroom community that is mostly residential will most likely have less impervious area than a more industrial municipality. When asked directly by the Rate Commission, Ms. White was unable to articulate what the blend of both population and unpervious area methodology should look like. See Exhibit MSD 82 District's Position - Issue 2 The Stormwater Grant Program allocation and method bemg proposed by the District considers the financial impact on all classes of ratepayers in determining a fair & reasonable burden. 4 The Stormwater Grant Program is part of the overall expenditure model proposed m the Stormwater Capital portion of the Rate Proposal. That model consists of 50% of all revenues being used by MSD district-wide on a benefit/cost pnoritization model, 10% being used by MSD only in Environmental Justice areas on a benefit/cost prioritization model, 10% bemg reserved for any important stormwater initiative not addressed in the previous funding pots, and 30% being available to the municipalities as stormwater grants based on the relative populations of the municipalities. The allocation and methodology was a policy directive by the 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 Grant 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 in the future. Municipalities will also have the opportunity to work together and “pool” funds for a stormwater project that multiple municipalities fmd beneficial. A suggestion has been made that the amount of impervious area in a municipality should also be a positive factor in determining the amount of grant per municipality. MSD testified, that 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 thiough their local elected officials. In addition, the concept of providing additional funding to a municipality because it has decided to allow more impervious area than anothei municipality seems contrary to the puipose of the program. A municipality should not be allowed to obtain a larger grant through the construction of more impervious area. MSD’s development of the municipal grant allocation chart was based on three objectives a) the distribution be driven by population, b) a minimum annual grant of $30,000 be made available to all municipalities regardless of population, and c) annual grant amount should not be determined by ever-changing 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 5 stated above are met. See Exhibit MSD 91, as an example for consideration by the Rate Commission, of a revised grant distribution table. This table is similar to the original table provided in Exhibit MSD 1, Appendix 8.18. This revised distribution provides for a maximum annual grant and provides a more refined distribution. 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 districts. 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-district are often financially and economically very similar to each other. That no longer applies with a District- wide program A Rate Commissioner calculated that 19 municipalities would have smaller annual grants available to them under this new formula. 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 cun-ent taxes on the active sub-districts 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 municipal officials in the active sub-districts to see if a large majority of those municipalities in any of the sub-districts 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 puipose (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. 6 ISSUE 3.: THE DISTRICT IS WILLING TO IMPLEMENT A STORMWATER CREDIT PROGRAM Rate Consultant's Position - Issue 3 In Arma White’s written testimony (Exhibit RC 77, question 34) and verbal testimony (Exhibit MSD 82), she recommended the District consider implementing a stormwater credit program to help mitigate business impact on large non-residential customers. She recommends such a credit would offer non-residential customers an opportunity to reduce their stormwater fee by implementing an onsite best management practice stiuctures to control volume and peak flow reduction of stormwater and water quality. District's Position - Issue 3 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. There were several factors in this decision. Those factors were specifically outlined in the Surrebuttal Testimony of Rich Unverferth (Exhibit MSD 84A). MSD realizes that theie 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 (Stormwater shall be detained on site and released at a rate not to exceed the allowable release rates for the 2-year and 100-year 24-hour events, as determined by the District for the watershed in question. MSD Rules and Regulations, February 1, 2018). This piogram would apply to non-residential customers only. The 50% credit is appiopriate 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 for customeis to be incentivized to implement green practices. For residential customers, the District has available a Small Grant Ramscapmg Program that allows for the reimbursement of up to $4000 for constructed Green Infrastructure (GI) improvements or Best Management Practices (BMP). Detailed information on the Small Grant Program is available on the MSD Project Clear website. Although not part of the current Small Grant Program or this Rate Proposal, the District is open to adjusting this program 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 7 cun-ent 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. ISSUE 4.: THE CONTRACT FOR THE BISSELL & LEMAY WWTP FLUIDIZED BED INCINERATORS WAS APPROVED BY THE MSP BOARD OF TRUSTEES Rate Consultant’s Position - Issue 4 The Rate Commission’s Legal Consultant mentioned in their Pre-Hearing Statement that the cost and timing of the Bissell & Lemay WWTP Fluidized Bed Incinerators may not be appropriate. District's Position - Issue 4 At the MSD Board of Trustees meeting held on July 13, 2023 the MSD Board of Trustees adopted Ordinance No. 16090 appropnating $101M and authorizing execution of a contract with Kokosing/Plocher, LLC. This contract has been executed and the contractor is moving forward to construct new incinerators. The Bissell and Lemay WWTPs process 100% of the sludge generated in MSB’s original service area which includes generally the City of St. Louis, St. Louis County east of 1-270, and North County East of Lindbergh Road. Because of the chemistry of the sludge at the time these plants were constructed, incinerators were appropriately used to process the sludge. Today, MSD is required to replace those incinerators to continue to meet current regulatory requirements and to continue to have a working incineration system. The facts, most importantly the sludge chemistry, have not changed since the plants were first constructed in the late 1960’s. Due to the expansion of MSB’s service area to now include almost all of St. Louis County, the Bissell and Lemay WWTPs still process approximately 80% of MSB’s sludge, or 1/3 of all sludge processed in the State of Missouri. The issue of the chemistry of the sludge has not changed. In fact, the work scheduled to be done during the last half of the Consent Decree to capture and treat combined sewer overflows will only make the sludge chemistry more of a factor. Based upon significant evaluation by MSD staff and its consultant experts over the last decade, including additional reviews with the MSD Board of Tiustees over the past several months, the appropriate method of sludge disposal continued to be incineiation. Our region needs newer technology that will be more efficient, more environmentally friendly, and more cost-effective. 8 Incineiation remains the only solution to accomplish all these goals. The fluidized bed incmerators will produce much cleaner air and support MSD’s mission to protect public health and the environment by responsibly addressing future emerging contaminants such as PFAS. See Exhibit MSD 83B for the detailed information shared with stakeholders. ISSUE 5.: NOT CHARGING A STORMWATER IMPERVIOUS RATE TO NON- RESIDENTIAL PROPERTIES WITH NO IMPERVIOUS AREA IS IN COMPLIANCE WITH THE MISSOURI CONSTITUTION UNIFORMITY CLAUSE Rate Consultant's Position - Issue 5 In Anna White’s written testimony (Exhibit RC 77, question 30 and RC 80A, question 6) she testified that MSD should have considered estimating an effective impervious area by applying a reasonable low runoff factor to the parcel lot size. She states that a residential property with no stracture(s), improvements, or impervious area, will be charged the ad valorem tax based on the property’s assessed valuation. However, a non-residential property with no improvements or impervious will not be charged the stormwater impervious rate. She states that this is similarly situated properties not being treated similarly. District’s Position - Issue 5 The District is following the direction of the Missoun Constitution, that is real property is a “class” and lesidential and non-residential are “subclasses” of real property. When determining whether similar properties are bemg treated similarly, the Rate Proposal considered each subclass of properties individually. Therefore, as proposed the residential and non-residential properties are all being treated similarly within then- subclass. In Exhibit MSD 3B Susan Myers testified that the proposed ad valorem property tax would be levied only on the residential subclass of real property within the District, while the impervious area-based charge will be charged only on the non-residential (i e., commercial and agricultural) subclass of real property within the District. Within each subclass, the rates will be uniform and, therefore, in compliance with the Missouri Constitution’s Uniformity Clause. Uniformity does not mean that the same rate must be levied upon all subjects, but once the subjects are classified the rate must be uniform upon all subjects of the same class or subclass. MSD is only required to levy the same rate on all property in a class or subclass. See Exhibit MSD 3.B.I. 9 In developmg the stormwater user charge that was the subject of the 2007 and 2008 Rate Commission proceedings, the District considered several different types of stormwater charges or combinations of charges based on many different factors, including impervious area, gross lot sizes, relative amounts of pervious and impervious areas, and the like. For many reasons, including cost to administer and implement, simplicity and objectivity, ability for our customers to better understand, and because additional runoff beyond that occurring naturally is a direct function of impervious area, the District decided then to base the stormwater user charge solely , on the amount of impervious area on a property. During its 2007, 2008, and 2018 proceedings, the Rate Commission approved stormwater charges based solely on impervious area. Indeed, impervious area methodology is used by approximately 87% of respondents in the Black & Veatch 2021 Stormwater Survey referenced in Ms. White’s testimony. Proposing a rate to charge non-residential parcels with no impervious area could be problematic for several reasons. First, calculating an effective impervious area rate only for vacant non-residential parcels and not all non-residential parcels would arguably create unequal treatment within the non- residential customer class in that only completely vacant properties would be charged based on their pervious area. Effectively you could have a vacant parcel with an effective impervious area higher than a similarly sized parcel with limited billable impervious area. This proposed modification would also impact the overall impervious area ratio between the residential and non-residential classes that was used to determine the appropriate impervious area rate Ms. White’s recommendation was based in part on vacant residential parcels still being taxed while vacant non-residential parcels were not being billed. However, the Black & Veatch survey references numerous instances where residential customers (tiers, flat rates, etc.) are dealt with somewhat differently than non-residential customers. So long as customers within the same subclass are treated the same, and all customers on the whole are treated fairly, then we believe the charge is appropriate. Second, while an “effective impervious area” can be determined and justified, it is a matter of degree and it would be more subject to dispute, depending on the level of vahdation made for each parcel. An application of a runoff factor can make a calculation complicated to the point of not being an effective administrative or billing mechanism. For example, a runoff factor calculation can include variables for soil type, soil slope and topography, vegetative cover, flow path, curve numbers, etc., and then applying a percentage of the rate to the overall or partial parcel size. This could potentially create two levels of dispute within a single parcel (effective 10 impervious area and impervious measurement). This again would all be exacerbated by a regular re-calculation at every new aenal update (typically every two years). Third, implementing an “effective impervious area” rate on vacant non-residential customers would come at a significant administrative cost. There are approximately 32,000 non-residential parcels, of which approximately 4,400 (~13%) are vacant. The anticipated revenue for such vacant parcels is estimated to be approximately $360,000 annually (based on a 10% universal runoff factor). Performing effective impervious area calculations, along with the potential for customer appeals and on-site validations on 4,400 or possibly 32,000 parcels would be unduly burdensome and add disproportionate cost to the administration of the program. It is estimated to require a minimum of 2-3 FTEs to coordinate, validate, and effectively manage this implementation. We believe that challenges and disputes would add additional costs that would effectively offset this potential increased revenue. Additionally, we anticipate difficulties in identifying and tracking ownership and billing information for these vacant parcels, as these parcels are not receiving current billing from the District. In sum, we believe the cost to implement this approach would exceed the value of any overall benefit. Finally, another factor to consider would be our ability to effectively communicate this hybrid billing methodology to the general voting public. We have found that even explaining impervious area measurements to be challenging, and this is far more technical to address with customers In conclusion, the rate methodology proposed is commonly used, treats customers within each subclass equally, and allows for efficient administration of the program. ISSUE 6.: THE STORMWATER AD VALOREM PROPERTY TAX AND IMPERVIOUS AREA-BASED CHARGE ARE LEGAL AND CONSIDER THE FINANCIAL IMPACT ON ALL CLASSES OF RATEPAYERS IN DETERMINING A FAIR AND REASONABLE BURDEN Rate Consultant's Position - Issue 6 The Rate Commission’s Legal Consultant mentioned in their Pre-Hearing Statement that the proposed stormwater fundmg may not be legal or fail-. District's Position - Issue 6 11 The proposed stormwater funding is legal and fair. As stated previously, in Exhibit MSD 3B Susan Myers testified that the proposed ad valorem property tax would be levied only on the residential subclass of real property within the District, while the impervious area-based charge will be charged only on the non-residential (i.e., commercial and agricultural) subclass of real property withm the District. Within each subclass, the rates will be uniform and, therefore, in comphance with the Missoun Constitution’s Uniformity Clause. Uniformity does not mean that the same late must be levied upon all subjects, but once the subjects are classified the rate must be uniform upon all subjects of the same class or subclass. MSD is only required to levy the same rate on all property in a class or subclass. See Exhibit MSD 3.B.I. As provided in Exhibit MSD 1, Rate Proposal March 24,2023, page 5-9 the proposed Stormwater Capital rate considered the financial impact on all classes of rate payers in determining a fair and reasonable burden. The ad valorem property tax being charged to residential properties will allow the use of property valuation in determining the share of revenue to be provided by each individual customer. This will allow those who reside in lower valued properties to have a smaller annual payment. The use of an impervious area-based rate only for non-residential customers was determined by comparing the ratio of impervious area attributable to the residential customer subclass versus the impervious area attributable to the non-residential customers. To provide a fair burden for the subclass of non-residential customers all non-residential customers, including tax exempt, will be charged. The use of an impervious area-based rate only for non-residential customers will also significantly reduce the annual cost of the stormwater revenue collection process. ISSUE 7.: CHARGING AN AD VALOREM PROPERTY TAX TO THOSE PROPERTIES DEFINED IN RSMo §204.700 IS LEGAL Rate Consultant's Position - Issue 7 The Rate Commission’s Legal Consultant, in their Pre-Hearmg Statement, raised the question of whether the ad valorem property tax being levied upon those properties defined in RSMo §204 700 was legal. District's Position - Issue 7 Yes, the ad valorem property tax being levied upon those properties defined m RSMo §204.700 12 is legal, RSMo §204.700 states “No person who owns real property that is used for residential purposes within the boundanes of any district created under Section 30 of Article VI of the Missouri Constitution shall be assessed any fee, charge, or tax for storm water management services if the district does not directly provide sanitary sewer service to such property and if the storm water runoff from such person’s property does not flow, or is not otherwise conveyed, to a sewer maintained by such district.” The District’s proposal to is to levy an ad valorem property tax on all residential properties within the District. That includes the properties defined m RSMo §204.700. This is legal because under Article X, Section 6.1 of the Missouri Constitution, certain properties are expressly exempted from taxation, while other certain properties may be exempted by general law. Properties expressly exempted by the constitution primarily are those owned by governmental entities. Properties that may be exempted by statue include those owned by religious, school, and other charitable and non-profit entities. This section also declares that “all laws exempting from taxation property other than the property enumerated in this article shall be void.” Thus any law purporting to exempt from taxation any property that is not listed in Article X, Section 6.1 of the Missouri Constitution is void Properties defined in RSMo §204.700 are neither expressly exempted nor among the potentially exempted properties enumerated in this section Therefore, the Distnct can legally assess its stormwater ad valorem property tax on all residential properties. ISSUE 8.: THE RATE PROPOSAL MEETS ALL FIVE CRITERIA OF SECTION 7.270 OF THE MSP CHARTER PLAN Rate Consultant's Position - Issue 8 The Rate Commission’s Legal Consultant, in their Pre-Hearing Statement, raised the question of whether the District’s Rate Proposal meets all five criteria list m Section 7.270 of the MSD Charter Plan. District's Position - Issue 8 Yes, Exhibit MSD 1, Rate Proposal March 24, 2023 complies with Section 7.270 of the MSD Charter Plan. Section 4.11 of Exhibit MSD 1 provides an explanation of how the proposed wastewater rate change meets each of the five criteria. While Section 5.5 of Exhibit MSD 1 provides an explanation of how the proposed stormwater rate change meets each of the five criteria. In 13 addition to these explanations in Exhibit MSD 1, there is also direct testimony and discovery responses provided by the District that support all five criteria being met. CONCLUSION In conclusion, the District believes the issues addressed in this report reflect the most relevant and representative topics requiring consideration by the Rate Commission. The District has submitted a substantial amount of testimony and documentation to support this Rate Change Proposal. The MSD Charter standard is for MSD to implement a rate stracture that considered the financial impact on all classes of ratepayers in detennining a fair and reasonable burden. All evidence and testimony provided by MSD demonstrates that MSD’s proposed Rate Change Proposal meets this standard. MSD beheves that based upon all of the information provided during these proceedings that MSD’s Rate Change Proposal as submitted on March 24, 2023 has been based upon the consideration of the financial impact on all classes of ratepayers in detemrining a fair and reasonable burden and should be brought to the voters of the District for consideration. Respectfully submitted, Brian Stone THE METROPOLITAN ST. LOUIS Myers SEWER DISTRICT 2350 Market Street St. Louis, Missouri 63103 Tel: (314) 768-6366 smyers@stlmsd. com bstone@stlmsd. com 14 CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing was provided to Lisa O. Stump and Brian J. Malone, Lashly & Baer, and Diana Plescia, Curtis, Heinz, Garrett & O’Keefe P.C. on this 7th day of August, 2023. Lisa O. Stump Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 lostump@lashlybaer. com Brian J. Malone Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101 bmalone@lashlybaer.com Diana M. Plescia Curtis, Heinz, Garrett & O’Keefe P.C. 1300 S. Bemiston, Suite 200 St. Louis, MO 63105-1913 Susan M. Myers / Brian Stone THE METROPOLITAN ST. LOUIS SEWER DISTRICT 2350 Market Street St. Louis, Missouri 63103 Tel: (314) 768-6366 smyers@stlmsd .com bstone@stlmsd. com 15