Proposed rate hikes for MSD will reduce future cost, officials say

New rate plan could be submitted to Rate Commission in February


Raising customer rates for needed projects will reduce the future cost and urgency for those improvements, according to Metropolitan St. Louis Sewer District officials.

MSD Executive Director Jeff Theerman told the district’s Board of Trustees last week that if the district does not begin to make improvements to its wastewater and stormwater systems soon, it faces the possibility of government enforcement actions — which would result in more expensive projects and perk the attention of the Environmental Protection Agency.

“We don’t want to go down the path of some cities that didn’t continue to make progress and didn’t continue to try and meet regulatory requirements,” he said. “The reality in this country is that EPA’s approach to getting large metropolitan areas into compliance is an enforcement approach. And there’s a long list of communities that are already under consent-agree and are being forced to do projects that are very expensive in a short amount of time. Missouri is no exception to that. And it’s unrealistic to think that we can continue to not fund this issue sufficiently and avoid regulatory enforcement.”

Theerman said MSD officials could submit a final proposal to raise customer rates at the Board of Trustees’ next meeting in February. The proposal would then go to the MSD Rate Commission, which then would have 165 days to schedule public hearings and technical meetings to discuss and possibly alter the proposed rate hike. The earliest the new rates could go into effect would be next January.

As proposed, 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. That wastewater-service raise would total a 64-percent increase in rates spread across incremental increases from 2008 to 2012.

Rates for wastewater service would climb by 15 percent in 2008, 12.2 percent in 2009, 10.9 percent in 2010, 9.1 percent in 2011 and 5.2 percent in 2012.

Stormwater service also would go from its current flat fee of 24 cents per month to 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 would pay $4.76 per month for stormwater service by fiscal year 2012.

The district also is considering whether to later divide its 23 taxing subdistricts into five subdistricts for enhanced stormwater service that could levy its own taxes of up to 10 cents per $100 of assessed valuation. The district currently generates an estimated $1.2 million per year from its flat 24-cent stormwater fee and $13 million from two administrative stormwater taxes totaling 7 cents per $100 of assessed valuation.

If the stormwater-service rate system based on impervious property is approved, the district estimates it would see $57.6 million in revenue from impervious-area charges by 2012. In turn, MSD would drop the two administrative taxes charging customers a combined 7 cents per $100 of assessed valuation.

Basic stormwater service that would benefit from the new rates would be pipe and structure repair, inlet cleaning, removal of creek obstructions, concrete channel cleaning and repair and creek inspections. Enhanced stormwater service that each subdistrict could decide upon would be new stormwater systems, erosion control, residential detention basin maintenance, creek maintenance and backyard ponding.

But whether the service is basic or enhanced, Theerman said the district has a dire need to improve its stormwater system if it does not want to face regulatory action.

“The reality of the stormwater issue is that there is 2,500 miles of infrastructure that is receiving little or no maintenance,” Theerman said. “It’s receiving Band-Aids. And there are a wide variety of customer issues and customer desires in terms of service. That user fee is inequitable. It does not have a basis on how the system can be used or how the system is sized. And 85 percent of our stormwater-customer complaints that we received over the last 10 years are dealing with our existing infrastructure.”

Theerman said the district also faces EPA pressure on its wastewater side and estimates that MSD has $3.7 billion in needed regulatory wastewater projects alone.

Those wastewater regulatory improvements would include projects like increasing wet-weather capacity at plants, better understanding system defects, reducing extraneous water entering sewers from inappropriate connections, reducing combined sewer overflow events and eliminating constructed overflows in a separate system.

MSD Board of Trustees Chairman Dee Joyce-Hayes asked Theerman about the consequences if the district does not move forward with regulatory projects that would be funded by the proposed rate increase.

“I’m afraid that now is the time for two reasons,” Theerman replied. “There is no question that we’re going to spend billions of dollars on the wastewater system. And there is no question that our rate payers are going to pay for it. And there is little doubt that there will be any substantive federal funding to help with the pain.”

“When you say that, do you mean because of regulatory requirements?” Joyce-Hayes said.

“Because of regulatory requirements,” Theerman said. “And as the wastewater rate continues to rise, I think this community will find it harder and harder to be able to deal with the stormwater issue. I think the stormwater issue needs to be addressed. We’ve been wrestling with it for 15 years, but we’ve had it in our mission for 54 years and have yet to deal with it.”

“Why would the public find it harder and harder to deal with stormwater as the wastewater rates increase?” Joyce-Hayes said.

“Well, it’ll just be an additional cost,” Theerman said. “I’m saying that the wastewater rates we’re showing here aren’t the end of the line. They’re going to continue to rise as we continue to go after the capital needs required for the regulatory requirements. The other thing is that you look forward 15 to 20 years, stormwater is going to look more like wastewater.

“We will get into treatment. We will undoubtedly get into some of the very same things we do with the wastewater side today. Stormwater pollution is one of EPA’s priorities. So from where I sit, I think you’re going to be faced with a regulatory problem some day in the future.”