MSD Rate Commission continues discussion of proposed ’08 rate hike

Commission hopes to present recommendations Aug. 13 to Board of Trustees

By BURKE WASSON

The Metropolitan St. Louis Sewer District Rate Commission last week approved a handful of determinations tied to the district’s proposed 2008 rate hike, but still is undecided if the proposal is “fair and reasonable to all classes of ratepayers.”

The Rate Commission will further discuss the proposed raises from 2 to 4 p.m. today — July 19 — at MSD headquarters, 2350 Market St.

The commission tentatively is scheduled to present its final recommendations for rate increases on Aug. 13 to the MSD Board of Trustees.

The district’s proposal would provide $661 million in financing for projects tied to the MSD’s Capital Investment and Replacement Plan, or CIRP.

That plan essentially would be carried out through a pay-as-you-go system paid with funds generated from rate increases in both wastewater and stormwater services.

The district plans to spend an estimated $671.5 million on those CIRP projects.

But Rate Commission member Steven Sullivan, who represents the Regional Chamber & Growth Association and also works as a senior vice president to the Ameren Corporation, said he would to like to consider using debt financing to pay for half of the sewer district’s CIRP project costs.

“You’re going to get a lot of rate shock out there from a lot of people,” Sullivan said during the Rate Commission’s July 12 meeting.

He also indicated he would prefer to see the district pursue “bonds to reduce rates rather than bonds to do construction.”

But fellow Rate Commission member Virginia Harris, who represents the Sierra Club, said she prefers to have the district proceed with CIRP projects to benefit future ratepayers.

“Even though future generations might benefit, the current generation hasn’t paid what it should pay for,” Harris said. “The current generation should be willing to bite the bullet.”

MSD officials earlier this year proposed rate increases that could go into effect as soon as January to update sewer and stormwater systems and prevent additional government regulation or lawsuits.

But the sewer district was slapped June 11 with a lawsuit from the U.S. government, acting on behalf of the Environmental Protection Agency, and the state of Missouri alleging unlawful dumping of raw sewage into area waters and lands.

The lawsuit alleges that MSD has “discharged pollutants,” including raw sewage, into waters including the Mississippi River, Missouri River, Meramec River, River Des Peres and their associated tributaries, including creeks.

Specifically, the suit alleges that on roughly 500 occasions from 2000 to 2005, more than 500 million gallons of raw sewage was dumped into the Mississippi River, River Des Peres and their tributaries.

The federal and state government also allege that on more than 7,000 occasions between 2001 and 2005, MSD discharged pollutants containing raw sewage “onto public and private property, including without limitation, streets, yards, public parks, and playground areas, and into buildings, including homes, located in the city of St. Louis and St. Louis County, where persons have or may have come into contact with such sewage.”

The sewer district covers all of the city of St. Louis and 90 percent of St. Louis County.

Both the state of Missouri and the U.S. are seeking numerous damages from MSD for alleged discharges in violation of the federal Clean Water Act. They are seeking penalties not to exceed $27,500 per day for each violation that occurred between Jan. 30, 1997, and March 14, 2004, and penalties not to exceed $32,500 per day for each violation that occurred on or after March 15, 2004.

The plaintiffs also are seeking several permanent injunctions to ensure that MSD will prevent any future violations.

As proposed earlier this year and scheduled to be presented in August, MSD customers in 2008 would see a 64-percent increase in wastewater-service rates. That 64-percent rate hike would be done in incremental increases from January at the earliest through 2012.

The average MSD customer would go from paying $22.38 per month for sewer service to $36.79 per month by the district’s 2012 fiscal year, which begins on July 1, 2011.

In some cities where the EPA has taken legal action to repair sewage problems, monthly residential rates are in excess of $50, according to MSD spokesman Lance LeComb.

And instead of a 24-cent monthly flat fee paid by all district customers for stormwater service, the district has proposed a system based on the amount of impervious — or non-absorbent— property on an owner’s lot.

Impervious property includes non-absorbent property like driveways, roofs, garages and parking lots.

The proposal calls for the district to begin charging 12 cents for each 100 square feet of impervious property and then gradually raise that level in increments to 19 cents per 100 square feet of non-absorbent land by July 1, 2011.

The average residential customer then would pay $4.76 per month for stormwater service, according to the district.

If the stormwater-service rate increase is approved by the district’s Board of Trustees, MSD then would eliminate two existing property taxes totaling seven cents per $100 of assessed valuation that go toward stormwater projects.

While the Rate Commission still is undecided whether the proposed rate increases are fair to all ratepayers and also whether they provide funds necessary to pay for emergencies and anticipated delinquencies, its members did approve some criteria for the proposed rate hikes.

The Rate Commission voted last week to recommend that the proposed rate raises:

• Provide the funds needed to pay interest and principal due on bonds issued to finance district assets.

• Provide the funds needed to pay costs for operations and maintenance.

• Are consistent with constitutional, statutory or common law as amended from time to time.

• Are consistent with and do not violate any provisions tied to the district’s outstanding bonds or indebtedness.

• Do not impair the district’s ability to comply with applicable federal and state laws or regulations as amended from time to time.