Our Liquid Assets: Upgrading Water Systems, Telling Our Infrastructures Story

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Our Liquid Assets Upgrading Water Systems,
Telling Our Infrastructures Story

• Frank Kartmann
• President, Missouri American Water
• MEDA Conference
• September 3, 2009

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Liquid Assets in the St. Louis Region

• Like other urban areas, our water infrastructure
  is
• Critical to quality of life safety and economic
  growth.
• Essential to public health -- the only utility we
  ingest.
• Massive in scale
• Serves 1.2 million population -- while the nation
  has 155,000 water systems with 96 percent of them
  serving a population of 3,300 or less.
• Four water treatment plants, with the capacity to
  pump 401 million gallons of water per day.
• 4,200 miles of water mains
• 33 water storage tanks and 30,000 fire hydrants
• Unlike other areas, our infrastructure is aging,
  but not neglected
• Missouri American Water is committed to
  continuous system upgrades.
• We just completed the largest capital program in
  our history investing more than 95 million in
  St. Louis County water system improvements -- or
  almost 14 of our St. Louis County net plant
  investment of 686 million -- from June 2007 to
  December 2008.

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Water infrastructure challenges

• Upgrading our infrastructure Planning and
  delivering improvements and recovering costs
• Setting priorities which water mains are most
  likely to fail and what are the consequences
• Non-customer growth related system components
• Attracting capital in the face of regulatory lag
• Telling our story Water service is easy to take
  for granted.
• Service reliability
• The invisible underground infrastructure
• Do you know how much you pay for quality water
  service delivered 24/7 versus cable TV or
  bottled water?

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Upgrading our Infrastructure ISRS

• Delivering the Improvements Infrastructure
  System Replacement Surcharge (ISRS)
• Passed into law by State of Missouri in 2003
• Enables acceleration of the replacement of aging
  water lines and other eligible distribution
  system components by reducing regulatory lag
• Missouri American Water invested 24.5 million in
  ISRS-eligible improvements from October 1, 2008
  to May 31, 2009
• Adds only 1.46 per quarter to the average
  residential water bill
• ISRS Benefits
• Improves service reliability
• Guards public health
• Enhances fire protection
• Maintains the integrity of our water system for
  current and future generations

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ISRS supports investment by reducing regulatory
lag

• ISRS Surcharge effective no more than 120 days
  from ISRS filing date compared to the
  eleven-month timeline for a typical rate
  proceeding
• Regulatory Requirements
• ISRS qualified investments are obsolete main and
  associated hydrant and valve replacements, main
  cleaning and relining projects, and road
  improvement related relocations
• ISRS surcharge recovers investments over time and
  is rolled into base rates upon the effective date
  of new base rates
• ISRS filing cannot be approved when a general
  rate proceeding has not occurred within past 3
  years unless a general rate proceeding is
  currently in process
• ISRS filing must produce revenue of at least 1m
  and cannot produce revenue in excess of 10 of
  base revenue level approved in most recent
  general rate proceeding
• ISRS surcharge is based on customer usage
  (volumetric rate) and based on cost of service in
  last rate proceeding

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ISRS accelerated system upgrades

• Accelerated program of planning, prioritizing
  and upgrading our distribution system since
  legislation was passed
• Signage is just another way to communicate and
  bring attention to who we are and what we are
  doing to ensure the continued reliability of
  water service

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Telling our story Metro Water Infrastructure
Partnership

• A 501c(6) organization dedicated to public
  education about the importance of
  water/wastewater infrastructure to public health,
  safety and economic growth
• A first-time collaboration among all the regions
  water and wastewater utilities public and
  private plus related professional associations
• An important message, made more powerful as its
  delivered by all the regions water and
  wastewater utilities
• A national model for infrastructure education
• Water Environment Federation

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Partnership Activities

• Underwrote two Liquid Assets broadcasts on
  KETC/Channel 9
• Used utility bill inserts to encourage customer
  viewing
• 25,000 viewers
• Public forum and broadcast screening at KETC
• More than 150 attendees
• 85 percent rated the event excellent or
• very good
• Educational tools website, teachers
• continuing education and classroom
• curriculum development
• A Day Without Water

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Liquid Assets in the St. Louis Region

• ISRS helps us accelerate the pace of
  infrastructure replacement investment
• Metro Water Infrastructure Partnership will help
  us tell our story to the public
• Focusing on watersheds calls all of us to action
• Doing the right thing at our facilities
• Watershed education