Thank you. In accordance with the requirements of the Tennessee Open Meeting Act, Madam Clerk, please go ahead and call our role if you would.
Here, here, here, here, there you go.
Yes sir, I am here.
Alright, great. Do we have anyone joining today? We do not. All right, great.
I'm I'm not able to hear completely like when the attendees were being asked for the for the presence.
Okay, that's for lionstone.
Yep.
Does the court reporter need to get that because I didn't understand what he said. Okay, ok, we're good. Thank you sir. Alright, before we begin the agenda, I want to remind the parties to turn their microphones off when speaking. The green lighter on the microphone indicates when it's active, we can only have four microphones.
That's going at one time, so I think you were somewhat familiar with that process and thank you for your patience on that. So Madam Clerk, would you please call the agenda?
Section four.number.
250009.
No.
You will.
Sounds weird.
Thanks.
October 12024.
With 3 September of 2025 considered staff.
Count's natural gas company counts filed its required annual report of the actual cost adjustment.
The picking.
Excuse me, ACA component of the purchase gas adjustment rule PGA rule covering the period October 12024 through September 3020 25. Audit staff completed its audit of the filing on 3 March 2026. Audit staff reviewed the company's tariff gas supply.
Invoices supplier account balances, supplemental schedules, and other source documentation provided by counts, as well as prior audit reports and commission orders. From this information, out of staff reported three findings and made recommendations to assist counts with its bill.
And reporting. I move approval of the March 32026 staff audit report as filed, including the recommendations contain their in. I find that the correct ending balance in the ACA account as of September 30.
2025 is $2516.40 in under collected gas costs, which will become the beginning balance in the company's next ACA filing. Council's directed to file a revised tariff.
To implement its new ACA surcharge of zero points 1686 since per per MCF as soon as possible. Additionally counselors directed to file these revised tariffs.
Of the new billing rates was staffed prior to the 1st billing and electronically file its ACA account. Summary with staffed on a quarterly basis for review. Finally in accordance with the PGA rule, directed to file a tariff at least 30 days prior.
To implementing any change or adjustment to its PGA rate.
Open seconds in votes yes. Proud votes yes.
Your works here.
Section eight Commissioner Good Jones number 20 four-000.
Row four.
Four Limestone utility operating company, LLC partition of Limstone water utility operating company, LLC to increase charges fees, and rates, and for approval of a general rate increase in consolidated rates. Here in consider phase two of the rate case, this item is being moved to the hill or the agenda.
Yes, we are gonna move that to the call next week.
Section twelve commissioners Crowl Jones Hill, high, and Marson, docket number 20 five-00070. Chatter Nuca gas company. Chatter Nuga gas company, actual cost adjustment for parentheses ACA filing for the period of July 12024 through 30 June 2025.
China good gas company CGC filed its required annual report of the actual cost adjustment ACA component of the purchase gas adjustment PGA rule covering the period of July 12024 through June 3020 25. Staff audit completed their audit of the.
Filings on 25 March 2026. Audit staff reviewed the company's tariff gas supply invoices, and other supplemental schedules and source documentation provided by CGC. Based on this information, audit staff reported two immaterial findings and determined that aside from the findings, the PGA mechanism appears to be working properly.
And in accordance with commission rules, I move approval of the 25 March 2026 staff compliance audit report as filed. I find that the correct inning balance in the AA ACA account of June 3020 25 is $2036206.42 and over collected gas cost as corrected by staff in its audit report. Also find that CGC is correctly implementing the PGA mechanism as calculated in the ACA in accordance with commission rules as so moved.
A second hold on.
He'll go die.
Section 14 Commissioners Good Crowd Jones Hill and Heliard, docket number seventeen-00014 integral water, Tennessee LLC. Petitioner of integrar Water Tennessee.
LLC for a CCN and authority to charge rates in Casey Cobb's subdivision located in Decab County Tennessee. Consider CCN termination under Tennessee rules and regulations twelve twenty-04-13- .09.
On 27 February 2026 commission party staff in this document.
That terminates certificate of public convenience and necessity most.
In its motion, party staff requested that the commission declare.
Other certificate of public convenience and necessity CCN to be automatically expired and terminal.
ID.
Or in the alternative to enter an order CCN and.
Accordance with 1220-04.
Yeah.
I'm sorry.
Alright, we breached the hill of the agenda. Before we take up the limestone phase two hearing in docket 20 four-00044, which we expect is gonna be lengthy, we will move to general public comment period. After general comments, we will take a brief break, so anyone who wishes to leave can do so. Public comment on docket 20 four-zero.
00044 will be taken at the beginning of the hearing upon our return from the break. Please note this public comment period is for general comments on manners related to the commission's work, documented cases are subject to the uniform administrative Procedure Act as formal adjudications or contested cases. Case specific comments are.
Not permitted. Each comment is limited to 3 min. When your time expires, please conclude your remarks. With that, I believe we're ready to proceed. Has anyone signed up to speak?
Kelly.
Grahams chairman, there has NO.
Please.
Yeah.
All right?
Okay hands went up on.
Yeah.
Yes, NO, this is, this is public comments not related to limestone. You'll have your chance during the limestone hearing. Okay, NO one's signed up, so we'll let the record reflect that. So let's go ahead.
We'll take a break to allow the parties adopted 20 four-00044 to set up for the hearing. The recording will be stopped during the break and resume when we reconvene to hear the final item on our agenda. I've got 1012, so let's see if we can be back at 1020.
E five.
Thank you. Alright, we're back on the record and the recording has been started. This hearing will be held live and the transcripts can be ordered from the court report. I will remind the parties to make sure your microphone's on when you're speaking and to turn it off when you're finished so that we can make sure everyone in the room.
Again, and those remotely attending can hear the proceedings. Madam Kurt, would you please call the item that we'd moved to the hill of the agenda?
Section eight Commissioners Good Crowl Jones Hillyard and high, docket number 20 four-0044. Limstone Utility operating company LLC petition of Limstone Water Utility operating Company LLC to increase charges, fees, and rates and for approval.
Of a general rate increase.
And consolidated rates. Here in consider phase two of the rate case.
Alright, before we get started with a hearing, we're gonna give the public an opportunity to comment on this matter. We have a sign in sheet here and I think there's three people signed up and one online. And we'll ask you to come up to make your comments. For this public comment, we will call the names from the sign in sheet and when your name is called.
Please come forward to the table and state your name and spell your 1st and last name and indicate if you're speaking for yourself on behalf of someone else. Also, please let us know your interest in these proceedings, whether you're a customer, et cetera, and then we'll give you an opportunity to make your comments. Please speak clearly for.
The court reporter who will be recording your comments. We ask that you keep your comments brief hopefully three to 4 min. Thank you all for your comments. We will now proceed with the hearing. And I guess at this point we'll go ahead and, and do the public comments. And I think the 1st person is, and it's hard to read something writing I'm sorry, is a Miss Turner. Is that correct?
Taylor, Taylor.
Right, right there and you have a little microphone that you need to push and should go green. All right. Thank you, sir. You may proceed.
Thank you. My name is Glenn Taylor. I'm here as a customer representing old Natches country club, commercial customer. I'm the general manager, I'm an owner at old Natches country club, and I have been since 2008. I've also got a master's degree in public policy from Vanderbilt University. I've mentioned that only because to try to lend some credence to the work I've done analyzing the commercial rate design component of the plan and also offering up an alternative to that.
The, our story, the reason that I've ended up on a multi month journey on this matter is that our bill went from $37 a month to $14000 a month.
As part of the commission's approval and Limestone's implementation of phase one rate design. That gets your attention in a big way. Our bill previously prior to Limestone's ownership of Cart Right Creek was $609 per month.
It's not an exaggeration to say that twelve months at $14000 per month would exceed basically our aggregate wastewater expense for the prior 25 years. As I started down the path of trying to figure that out, I assumed it was some kind of clarical or computer error. Mostly what I got initially was.
Feedback from Limestone that it had been approved, it had been approved, had been approved. So I jumped in, did the work, came to understand, the ERU methodology that underlied the setting of the commercial rates in phase one and it's before you now for phase two. And, I'm here to tell you that it is not accurate and it is not equitable in all likelihood by conception and design and certainly not in its implementation.
The heart of the matter is I think is all you understand the the commission which we wholly support approved the revenue increase so that Limestone could bring capital investment to cart right and other utilities were supportive of that. We have NO objection to that.
But the heart of the matter is that the commission, when they bifurcated that revenue increase between commercial and residential and then by utility district, well I'm still job at that point is to set the the rate and they do that by dividing the approved amount of revenue.
By the total ERUs. The commission gave Limestone you know I would I would say broad discretion in how those ERUs are gonna be determined. And and that's the heart of the matter, is that in determining ERUs or someone has to take up the task of accurately deciding this is how many seats people et cetera, are at various businesses. That didn't happen. We're testaments.
Yeah.
Our bill was, was ultimately lowered to our efforts from 14000 to $3300 per month, and it's still not accurate. And the reason it's not accurate is because the ERUs that underly the process were not accurate in phase one, they're not accurate in phase two. They're flawed in conception because if they rely on a process of saying hey if if we made a mistake, then.
And somebody's gonna ask us to review it.
Well.
When the when the mistake costs the customer money as it did us, then obviously we're motivated to review it. When the mistake.
Results in a customer being, having their ERUs undercounted and they're paying less, they have NO incentive. And that's really the the while the the errors and implementation that affected us that affected Hampton Inn, that affected Stonebrook in what you're gonna hear about from mr. Patel, those were egregious errors, and I, and I and I think the commission has to ask itself, how did a customer get sent a bill for $14000 per month when.
There when their history was $609 a month and Limestone had previously been charged in $37 per month. And that question could be asked over and over and over again, but this point is the idea that the I can go in my neighborhood and I can demonstrate that there are businesses there.
That on a prima facy basis and they continue to belisted as one ERU. And it is literally across the street from the treatment plant in shallow falls.
And it's not even listed, and it's a long dramat, which is one of the highest users of wastewater should probably be 20 ERUs, not even listed in the plant. So the the math just compounds the inaccuracy and the inequity that's embedded in that. So, my, my ask today is that the commission just take up the really hard questions and.
And.
That what I think will lead you obviously to the conclusion that this is in NO position to be implemented. As I've said, I've offered an alternative to it. I think there's other things to do. My strong request really as somebody who's been through this is that you disapprove the commercial rate design component of phase two and, and that you request that it be replaced with something that delivers on accuracy.
And equity. And last thing I would say in closing is just that I, I think this how the commission handles this because the error and the inaccuracy is so easily identified, makes a strong statement to every rate payer, to every citizen that that's, you know, subject to, to your commission that.
Thank you very much.
Okay, thank you. Alright, next on the list I think is Douglas Turner. Is that correct?
Okay.
Good morning. My name is Doug Turner. I reside at 1507 blue Springs Road Franklin Tennessee three seven oh 69I am an individual homeowner in river rest of states. I'm representing both, well I'm representing my.
I've also been on the board of the Riverwest Homeowners Association and I'm also an advocate of the Riverrest Condo Association, which is across the street. We are all serviced by Limestone.
I will try and keep this short. One thing is I've submitted a document which I will also submit electronically. I've got multiple copies if you gentlemen want them for later review, but I will be submitting this online.
My rates have gone from $42 a month plus a $7.50 surcharge up to currently $70 per month. And based on what information we can glean from limestones filings, because there's a lot that is listed in their filings.
As confidential information that we as homeowners and the general public do not have access to. And that's not, that's not open, ok? That's not transparency. So we really don't know what's going on. I've got a lot of issues. I've testified before this committee. Last year I've testified before TDAC, the whole system is, is, is a big issue from the.
Plant to the rates because we as rate payers are basically covering somebody else's grand plants. Limestone came in in 2021 and promised a lot of things and said we would just get a nominal rate increase. They promised a new plant. They have not.
Done anything other than band aid repairs on the current plant. My document references some of the prior issues that I have raised. One of the problems with all this is that when it's transparency, when things are confidential, is that we really don't have.
Of, we really don't have a trust in the process because a lot of this is hidden from us. We don't have trust in Limestone because they have provided false or misleading information to this commission. The consumer Affairs people thankfully have been support.
Portive and on our side and appointed some of this out. Last year at this time, the commission limited the rate increase to just 50 % because you folks also found that there were various voids and information provided by Limestone. I'm here today.
Needed to request that they not be given the balance of their increase because there's still many many open questions and Limestone continues to provide false and misleading information. Our plant is old. It needs to be replaced.
Okay, we've had so many sewage spillages over the past year. T Deck is well aware of this. You guys should be as well, ok? But this all comes down to one key question that I've got, ok? And it raises the question of T Pock's involvement in this whole process.
Okay, it is generally not a state agency's responsibility to make a private utility company financially whole especially if financial distress results from mismanagement, imprudent decisions or market competition. Limestone is.
As part of a larger organization, central state's water system, which is part of a multi billion multinational company known as science. They've got over 600 utilities and properties around the country.
They have been going into every one of these states just like they've done here and they've made proposals. They're giving you a solution, but a solution that goes way beyond what is reasonable, and we as the rate payers are supposed to just accept their proposal.
Propose a plant that is twice as large, three times as large as what's actually needed. It's it's not a neighborhood plant. It's an industrial plant. That's a whole separate matter right now that's before T deck. But it comes back to the fact that.
Science, central States, Limestone is a private investor backed company, ok? You guys are here to go ahead and provide a determination regarding reasonable rates, ok?
We already know that Limestone's target Central State's target, science target is the increase the average utility rate for sewer to a hundred and $20 a month, ok? That's up from.
What may have been ungodly low rates at 40 some odd dollars per month and there's a certain amount of catch up, but it's it's something that people can't afford. I look at what all Natches is talking about, ok, our own clubhouse for river rest.
Went from the same base rate of about 4240 $3 to about a hundred and 70. I hope that we go back and ask for a rate adjustment as well. Rus are an important factor that I raised about a year ago because it.
It was not discussed. It was not on the table, even though it was referenced in Limestone's documents. There's been a long outstanding issue that the two schools in Grasslyn both under the Williamston County School system. The middle school and the elementary.
Have been given the same rates per month, ok, as of three or four bedroom house. There are over 1400 students, teachers, and staff at those two schools and and they are paying less, ok, than all the.
Residential properties combined. Do ERUs need to be implemented? Yes, for all commercial entities, but also for the institutional entities. It's like a balloon squeezing the balloon, and if the, if the commercial and industrial or institutional are charge.
Our charged too low, ok, then us as residential homeowners have to pay the difference. We're subsidizing corporate and institutional, ok? There's a lot of inequity here, ok? One of the things that I've discovered and it's in my document.
There is a proposal, model legislation that's been done by the American Economic Liberty Project called The Just in Reasonable utility Prices for Consumers and Business Act. That's part of my attachment. Basically, what it's pointing out is, is that.
These private investor companies basically, I don't want to say they're given a cart blash, but you all have a particular word for it now I've got it in here someplace.
Sorry, is that private utilities are granted monopoly rights to operate in a specific area in exchange for government supervision of their rates and services.
They're given a monopoly. Limestone has, if I'm not mistaken, three or four other properties within Williamson County. They've got it down at College Grove, Thompson Station, Spring Hill, ok?
Why this all doesn't become part of a countywide system in Williamson County and is out from under private investment, which is basically can come before this commission, any other state commission in any other state, and basically say, Well, we're gonna.
Build something and we're gonna have the rate payers pay for it even though it maybe beyond what is really needed. They come, they build or they don't bill, they've jacked up the rates, they leave, they flip it, they depart. And here we are, we're still screwed paying high rates and not getting the proper services. Basically, what this proposed legislation does is it goes back.
Back and says, ok, ok, enough is enough. The private investor companies really need to be under control 1st, ok? And secondly, why can't Williamson, ok, the largest, the highest demographic county in Tennessee tenther eleven.
In the whole country. Why can't they do the infrastructure and do a countywide water and sewer system? I was told at a hearing that I was at in 2012 when it was owned by cartright. And I talked to a Franklin water Department rep, and I said, Why can't this become a cohesive.
Unified countywide system. And he said, you don't know anything about sewer and water. I said, you're right. I'm just a regular citizen. And he's saying, well, we've got to deal with pumps, we've got to deal with terrain, we've got to deal with, with rock, we've got to deal with all sorts of things. And I paused and I said, So Williamson can't figure out in 2012, what Davidson figured out.
As part of the metro consolidation back in the early sixties. That was 1014 years ago. Here we are in 2026 and we're still basically relying on public investor supported companies to provide what should indeed be public utilities.
That's a problem. I really urge this commission to go back. I know that you guys have said you're under the gun, you're trying to make a determination in the next couple of days because the next go round of rates take effect 1 May.
I think that that's basically a time clock that's ticking too soon. I really would appreciate y'all to go back and take a look. Talk to T Deck, talk to consumer affairs.
Look at the information that Limestone is actually submitted. Is, has the information that they've submitted fully supporting the justification for the balance of their rate increase request? I think not. Thank you very much.
Thank you. Appreciate it. The next person is Richard Porton.
Yes.
Thank you for hearing me. Sure. I'm Richard Horton. I live at 1614 Ashrow Court Franklin Tennessee, 37069.
Which is part.
For the river Rest subdivision, that Doug lives in and Doug just spoke to. I'm here speaking for myself. I am familiar with what has been going on with T Deck and obviously I'm interested in more.
That's happening here.
Here with the with the rates. I'm not gonna reiterate what Doug said, you know, everything he said is is very correct and I agree with it, you know, wholeheartedly. And I I think the issue here and I think this commission really needs to, to think about there's a lot going on with Limestone. You're gonna hear and you've heard from Doug and you'll hear from a few more. And the whole process has has happened very quickly with with TDAC, and I know that the.
Has gotten involved with helping us, work through this process. But.
It's just.
It's happening too quick and there's not enough information and the utility that the facility is supposed to be for a residentiality. And their intent is to take on many more customers and this was originally designed for and it's just not fair to the homeowners that have supported.
In this facility for for 40 years. So I really asked the commission to take a step back and just pause and look at what's going on and see how the rate payers in that subdivision are really are being asked to pay for things that we really don't use and don't need.
That's all, that's all. I'm against the increase. I ask you to deny it. Thank you, thank you sir. Thank you. All right, I think last in person's Automore.
Good morning.
My name is Autumn Moore spelled A U T U M N M O O R E and I live at 1005 Boxwood Drive in Franklin Tennessee in the river Rest subdivision in the Grasslyn community, and I am here speaking on behalf of both my.
Myself as a homeowner and as the riverest homeowners association, of which I currently serve on the board. I can hardly believe, I was here about a year ago with my two children, gave them a civic's lesson and hear him again, so thank you very much. Hopefully I've come a long way in understanding how the process works, what your role is, felt very green last February.
As a community, we want transparency, accountability, and fair pricing for a safe and functioning plant, of which we don't believe we are currently getting from Limestone. I'm looking to you as a commission to help support that.
I'll speak specifically the two issues regarding the river rest homeowners association and our costs. Regarding our long care fee, the backfield, the lower back, the lower back soccer field that we have currently not been able to use due to excessive leaks and sewer leaks and the manholes that that field.
Was essentially useless and that gets mowed every other week by our long company. I spoke to Bob Bruce with perfect lawn, and it's estimated that for a it's it's a nominal fee. It's about 600 a year to have that lower portion mode, but we're not, we don't have a large budget. We don't have a lot of margin, and that's $600 we're wasting for a field that NO one wants to use because they're afraid of, we call it the boop field.
Just for the record. That's gonna become the nickname. We've looked at how to remediate that, understand like how can we make it safe, and also protect our investment as a community. Secondly, the sewer, system at our clubhouse, as Doug alluded to, how.
Has been $44.50 since 2022 and it went to a hundred and $71.75 from the the 1st part of the rate increase. We on the average, I checked with our property management company, we maybe get two to three rentals a month. That's, what, 306a year.
Year if we max it out at three for the use of that bathroom, and then our pool, which is adjacent to the clubhouse is only open for five months out of the year. I do wonder if that rate is not commensurate to the amount of use that the clubhouse bathrooms actually.
Use. Again, we don't have a lot of margin in our budget. We have utilities that we start, we have amenities to to look after and we keep our assessments for the neighborhood low, and I think we do a pretty good job of that. Alright, so those are the two main concerns regarding river rest. Regarding the the general concerns.
With Limestone as a company, oh sorry let me let me say this here, we are here to express river rest subjections to the current rates which are already higher than anywhere else in the area when this doesn't reflect, these rates don't reflect the cost of a new plant that we're gonna be subsidizing.
Attorney fee recovery it's by understanding that can come back and ask the commission for a a rate adjustment or a rate increase or whatever the correct term is to recover their attorney fees. This also does not include the road, our road that leads back to the plant passes right by our clubhouse, our pool, our playground, it's all of our community space that they use to get.
With their plant. They're proposing for T deck with their new plant, two heavy trucks a day, five days a week. So that's a lot of big axle vehicles on our road. That's gonna cost us money to repair. We've approached them about maintaining some kind of agreement and the response I got back was it's gonna be a hundred and $14000 to repair this road, which by the way, we were we were not asking for them to do on the front end before construction. And they said we could, we could do that, but it's gonna require.
Require probably gonna require a new rate case and a rate increase, which means that we're gonna be paying for the road that they're damaging. So this current rate doesn't even reflect that, which I imagine in what three to five years they can come back and recoup those costs. So already we're gonna be at 90 for a three bedroom.
It's gonna go up. So that's a general concern regarding that. And then as a company, again, they've promised safety, they've promised that they're gonna keep the rates reasonable. They've promised a lot of transparency I have a newsletter here from 2025 where they're attempting to inform the community.
Of what they're doing, it basically says in addition to upgraded upgrades completed last year, Lionstone water has advanced several major projects in 2025 that significantly improved both the day to day operation and long term reliability of the grass and the wastewater system. There's NO information. They basically say a lot of nothing in this newsletter, and it's hard to know what's actually been done. This is sent before we had another leak super bowl.
Sunday weekend, Christmas day. So, again, transparency, accountability, reasonable rates for a safe and functioning plant. I thank you so much for your time and I, we are opposed to the proposed rate and I I trust you're doing the absolute best to determine the best schedule for commercial and residential so thank you.
Alright, thank you miss Moore. I think we have Jay Patel on the phone, and as I understand, you've provided a written comment, your, your comments have been written as well and provided, so mr. Patel, would you like to go ahead and give us your comments, please, sir?
Yes, I'm here. Just wanted to know everybody can hear me clearly.
We can hear you yes sir.
Dear commissioners. My name is J. I'm representing Stonebook team at 20 Ones Tennessee, and I'm here today to formally operase and object a recently approved weight design that assigns sewer charges based on a fixed number of years.
Use without consideration of actual new water usage. This change reproduces a system that was accurate, measurable and fair with one that is arbitrary and based on assumptions.
An theoretical approach and fundamentally disconnected from real recorded water usage consumption and discharge for sanitation service for which we get charged and we pay for delivered service.
It was transparent, it was reliable, it was defensible, and it aligned with basic principles of utility rate making as indicated in the documents of docket. Let me explain why this new ERU assignment system is based on.
And assumptions and based on the statement provided by the utility that we have been assigned with correct use of eight for billing and details of calculations provided as.
Using the estimated capacity of 50 days, the result is approximately 80 years that is 50 in 2.167. Limestone also states that your account is built for 80 rus and the charges are correct as rendered.
In fact, limestone water has never rendered service for eight year use that is like 72000 gallons per month in last eleven months billing cycles since May 2025.
Because our average monthly water usage for eleven month was only 13182 gallons per month and maximum was 21000 gallons per month. Typically, this type of calculation is used for theoretic.
So analysis, design, and construction for one time costing purpose and not for recurring billing purpose. Now, let me provide our realistic business model. We have only 1920 people units at 21 recently pounds.
And we can accommodate only 19 guests at a time. Not to mention, we do not have any permanent guests and our occupancy wears daily. Sometimes we have NO guests at all.
Our average annual occupancy is about 30 % and this can be matched with our average verifiable water meter readings submitted for last 31 monthly water utility invoices from 1st utility utility District of Harden County.
I would like to walk you through a simple comparison that clearly shows why the proposed toward rate structure is not fair, not reasonable, and not based on usage. Under the previous system, our billing was based on measured water usage.
Which is the most accurate and industry accepted matter. Our average monthly water usage is about 14500 gallons. Our waste water discharge close closely matches that at 14500 gallons.
Based on this, our average monthly water bill was hundred $96.64, and our average monthly sewage bill was like approximately $264.30. Our sewage weight per thousand gallon was $18.23 and water to sewage rate.
There was one is to 1.34. This reflects a system that is data driven, transparent and proposal to actual usage. Now let's look at what happened under the proposed changes. In phase one, the billing method ships away from usage to a flat assignment of eight years.
Values. Even though our actual usage remains essentially the same, our sewage bill jumps from $264 to $444.80 per month. That is 68 % increase without any increase in water usage.
Our up to $30.50 and water to sewage ratio increased from one is to 2.31. Moving to phase two, still based on the same eight year use.
The sweet will skyrockets further to $1311.36 per month. That is nearly 400 % increase from the original bill. Again, with NO change in actual wastewater discharge.
Our thousand gallons will drastically increase from $89.92 to water and water to sewage ratio will skyrocket to one is to 6.56.
No other business in our community has been affected to the extent of extent of 400 % billing increase. The root cause of this imbalance and inequality is failure of current ERU based rate design or assignment, which is the test for.
Under usage. With this ERU rate design, the same customer with similar operation is being charged wildly inconsistent, effective rates solely due to an imposed ERU assumption that ignores real data.
Well, I know I'm more than like 3 min allocated, but please bear with me. I'll be finishing shortly. Now, the core problem here is we are being charged for wastewater that we do not produce.
And the shift from a metered and usage based system to a flat ERU based system, which ignores actual consumption data overestimates discharged by a wide margin.
Imposes excessive and unjustified financial burden. In reality, following formula can be used to calculate the ERU. The EARU should be calculated.
By dividing commercial average monthly consumption in gallons with a single family averagement to consumption in gallons. If this considered, the ERUs are tied to actual usage and discharge.
The problem with current ERU based assignment when not when not too tied to actual usage is three four. 1st, it is inherently inaccurate. Erus are estimates, they are averages, they do not reflect the operational realities of individual businesses.
Especially those with fluctuating or below average usage pattern. If I have to give you an example, let's say if we compare car wash station versus other hotel, the and the assigning are use are two.
And eight respectively, but the actual used use will be eight and two respectively. This creates imbalance among businesses. Second, it creates inequality. Two businesses with vastly different water usage can.
We charged the same amount, that violates the principle of fairness and results in some customers subsidizing the others. I have done an extensive research research for this and let me provide real use cases for inequality.
I noticed there are two businesses listed in this docket in our area which is as shopping center and assigned one year you each. In one of the shopping center, there is a longtermad.
And others from Londonment have eleven washing machines and each machine consumes 550 gallons of water each day. That is equivalent to 1.83 ERUs. So the shopping centers should have been assigned more than eleven multiplied by one point.
Day three that is 20.17 years plus for the restaurant. In this case, they are paying much less than what they are putting in the sewer system.
For other use cases are car wash stations, gas stations and restaurants not listed in lionstone's commercial list.
Who are using lots of water but enjoying the residential rates persuage. We have several of these types of businesses and and that is why they do not have to complain about commercial rate increase. Another good example of inequality is our neighbor that is also a business and in fact, I do not see their name and address on the.
List of commercial proper.
In in this pocket, upon further research, we found out that their sewage bill for Limestone is less than their water bill.
I would like to mention here that we have more than 50 businesses in our area that is 38326, but only nine of those are listed as commercial in this docket. Some of these 50 are newly established and not on the list of limestone's commercial.
Billing. These businesses are classified as residential billing rates and that is why they are not affected by the commercial rate increase, and it contributes towards limstone's revenue deficit. That has impacted.
Listed commercials only. I have included an image of DR 02:18 ELU summary to support this page this on page nine. Now if you have access to my page nine image in which I have clearly highlighted.
Only nine businesses are listed in Tennessee silo false area with my important note regarding our business.
Moving on to page ten. 3rd, it removes accountability. When billing is NO longer tied to measurable consumption, there is NO incentive for conservation, efficiency or operational discipline. The system becomes detached from actual service provided. E.g., we have invested a sum of money in renovation for low flow toilets.
Low for low flow facets, showers hoping for resource conservation and save some money on water and sewage billing. But with this new fixed ERU based rate design, we are going backwards.
It ignores the basic principle of conservation. All our investments is now envoid. In my case, my data clearly shows that actual water usage is consistently lower than what is implied by the assigned ERUs.
That I am being billed as if I am consuming and discharging far more than I actually do. This is not just unfair. It is unjustifiable. Utility rate structure must meet basic regulatory standards. They must be just reasonable and based on cost of service.
A flat ERU assignment that ignores actual usage fails all three tests. I want to emphasize here, this is not a request for a special treatment. This is a request for accurate treatment.
If metered water data exist, and it does, then it should be used. It is the most reliable indicator of waste water generation. Ignoring that data in favor of a legit classification system is a step backwards.
Unfair, unjustified. We are providing last five years usage data for your validation, please refer to last two pages number 13 and 14. With this.
I respectfully urge the commission to consider our return to metered usage weight seriously or an ERU assignment that reflects actual historical water usage data?
And discard the use of fixed ERU assignments without usage validation. Allow customers to be built based on actual metered water consumption where available or at minimum.
Please provide a clear adjustment mechanism when ERU assignments materially exceeds real usage. Because without such safeguards, the system will continue to produce inflated bills.
That do not reflect reality. We know that this is not the last rate increase. Coupling any future rate increases with the current inflated ERU assignment will drive switch expenses to an unsustainable level.
Making it nearly impossible to maintain profitable operations like us small business. In closing, I ask you to restore fairness, accuracy, and accountability to this rate structure.
Billing should reflect what is used, not what is assumed. I would like to add a message to the commission and utility. We do not want to underpay. At the same time, we do not want to get all charged. Thank you for your time and consideration.
Thank you mr. Patel.
You're welcome.
I think that concludes all of our comments, and we'll go ahead and proceed with hearing.
Are they.
Are they removed?
I have a public comment. I have a public comment. All right. Yes. Can you hear me?
Yes, just hang on 1 s if you would, please.
This call will be recorded.
Hello?
Yeah, hang on, we're just trying to get organized here cause we did not have these names on our list. So bear with us 1 s if you would.
Can you, can you give us your name, please?
Yes, my name is Pamela Moses. I'm with America.
Hang on just a second.
Miss Moses, do you have a comment about the limestone hearing?
I thought I got more than a comment. I have a concern about the functionality of this board and this commission and as to where your bylaw.
Because we're getting Rob down here in Methods Tennessee and I've been trying to be placed on the agenda for this meeting and for some reason I can't find anybody that knows how to do that. I even spoke with your general council and they.
We're not very helpful to me and this is a public utility commission that's being funded by tax dollars and people have NO mechanism to file a complaint or agreement. So I wanna know the functionality of this commission.
Miss Moses, we are in the middle of a limestone hearing. We had a general public comment session earlier that would have been the appropriate time for you to make any comments you wanted to make. You did not show up on the, on the call or in person to do that, and we've now closed that session out. So we're not going.
Because there was.
There's one person.
On there speaking and you said that concludes and I let you know that I was there and according to the public notice that you gave, that says upon the conclusion of the agenda members of the public will be invited to address the commission. So you're not following your own rules and I won't I don't have to speak at this meeting, but I want to be placed on the agenda for the next meeting and I want to copy other bylaws and whatever policies that this commission has.
It's cause I'm so sorry about functionality I think.
All right, I understand what you're asking. We're in the livestone hearing, we're past the the general public comments. Your comments are not about the livestone hearing, and so we'll have to.
So have you concluded your.
Yes, we have. We're we're in the middle of the limestone hearing and we're having people comment who are related to the limbstone hearing which you are not. So that that section of of our hearing has concluded, and if you want to try to.
Before I told you that I.
I was here, so I'm concerned how are you how are you talking about he hadn't concluded when I just heard the landing said that you were convoluting and you I let you know that I had been here and I was on the phone.
If you want to get on the, make comments at our next conference, you're welcome to do that. I want to make comments I want to be placed on.
The agenda because it was a concern with the functionality and the legitimacy of how this board and this commission is operating.
Today if you wanna bring that up at the next conference somehow, we'll be glad to have you work with staff, but I don't think you'll be on the agenda, but we will allow you to make.
So are you refusing to place me on the agenda for this.
Yes, I am. And that.
And what is your name?
Jones and I'm the chairman.
Okay, so you got my emails that never responded yet.
The staff responded and you would not tell us why you wanted to comment or what your objective was to address, this group. So, with that we're gonna move on to hearing.
I think that would be proper when it's a public meeting and a public concern so I have to do that on the record as violates the Tennessee open meetings at everything has to be done on the record so I don't have to tell your staff what I want to talk about. I just asked to be placed on the agenda.
We will. Please hearing.
Okay, well, go ahead. You have a good day, sir. I'll see you all in proper.
We appreciate that. Thank you, madam Moses. Good day. Alright, is there someone else that we're trying to get on the limestone hearing? Which 01:00 a.m. I calling? Kevin alright Kevin Patel, are you on the phone?
Sir.
Alright, would you, are you I assume you're wanting to make some comments related to Liamstone hearing?
Yes sir. We I.
Would you go ahead and identify yourself for the court reporter, please?
Yes sir. My name is Kevin Patel. I am representing Stonebrook in at 21 wasten Lane. My concerns with the phase two price increase similarly mimic those of mr. J Patel who spoke earlier.
It was an unjust and unfair amount of increase due to the inaccurate ERU measuring of our business ASSIGNED unit, sorry.
And due to this, we are wholly and completely opposed to the phase two price increase. Everything else that I have to mention was already covered by mr. Jay Patel and I urged the council to deny this phase two price increase. Thank you.
Alright, thank you mr. Patel for your comments.
See here.
Are there others, I show two more patels. Are there two more patels that would like to make comments?
Let's ask.
Anyone else want to make comments related to the limestone hearing that's on the phone? Alright, I'm not hearing anyone, so I'm assuming that means there are NO one else to comment. Alright, Hang on just a second.
Call, I need to call these two names just to verify. Yeah, go ahead and.
All the names and we'll see if, if they respond. Apparently the phone numbers that were.
Yeah, one name is D E D E P I don't know if that's Deb or Deep Patel. Are you on the phone? And 2nd name I show is P R I w Y A N K A Priyanka.
Pertail? A tail are you on the phone and would like to comment. Okay I'm not hearing anyone, so just not. All right.
So I, I think that now concludes our comments. Hopefully it does, but I do want to thank everyone that has commented, so we will go ahead and proceed with the hearing. I'll call the hearing to order and state for the record. This Meredith was duely noticed for hearing on April the 17th 2026 and has been conducted in the court.
With the uniform of Administrative Procedures Act to see the parties are at the table, so would you please identify identify yourself for the record and we'll start on my left and your right. And make sure your mics are on, please.
Melbourne alone with butter snow and rush Mitton with a limbstone.
John Darren.
The him.
Our camel, our national analysts with the consumer advocate.
It.
Bans from.
Okay.
Oh, push that in. Karen Stecosky with the consumer advocate Division in the Tennessee Attorney General's office.
This hearings will be conducted with the pre ordering hear pre hearing order issued by the Ministry of judge. During the hearing there maybe confidential information discussed.
Individuals not covered on the protective order will need to leave the hearing room or will have the Webex feed muted while the confidential information is discussed. Once the confidential information is completed, those individuals may rejoin the hearing. While the Webex stream is muted, you won't be able to hear anything and it maybe for an extended period of time.
We ask that you be patient and the fee will be unmuted when it's appropriate. Are there any preliminary matters that we need to discuss before we begin the hearing? Alright, seeing none hearing none, we'll go ahead and begin with opening statements. If mr. Malone, you may proceed with your opening statement.
Good good morning chairman and commissioners. My name's John Dollarhead of snow law firm. I represent Limestone in this case. Limstone water utility operating company LLC provides water service to 573 water connections served by two systems and 1914 sewer connections served by eight systems in Tennessee. On 16 July 2024, Limstone filed its petition seeking to increase rates for water service by 450.
$2561 and to increase his rates for wastewater service by $1223275. The company asserted that the rate increase was necessary because several of the systems it purchased had significant long term compliance and operational issues. Most of the systems had not had rate increases in years. Limstone maintained that its then current rates did not provide for an adequate recovery of operating costs and capital investment, and thus prevented the company.
From the opportunity to earn a fair return. After a contested hearing, the commission found a revenue deficiency of $432751 for limestone's water operations and a revenue deficiency of $929573 for sewer operations. In its order setting utility rates, the commission ordered that the overall revenue defici.
Efficiency be recovered in two phases. Approximately 50 % recovered in phase one effective 1 May 2025, and the remainder of the revenue deficiency and associated carrying charges to be recovered in phase two effective 1 May 2026. Phase one has been completed and approved by the commission as acknowledged in its 22 May 2025 tariff acknowledgement letter. We are here today on phase two of the implementation of the commission's order.
Understating utility rates. As directed by the commission, Limstone has submitted a proposed phase two filing for consideration. Limestone's phase two filing has I'm sorry limestone's phase two submission is consistent with the commission's order, including the company's ERU methodology for commercial wastewater customers. As noted by the commission in its order, the goal of overall rate design is to establish a system of rates that will enable a utility to generate sufficient revenues to cover expenses needed to operate the utility plus an equity return for investors.
There are many factors and considerations involved in rate design. In our general rate case, we propose consolidated rates for two water systems and eight wastewater systems. For affordability and to avoid extreme fluctuations in customer rates, the commission rejected the company's a consolidated rates proposal. Moreover, the commission also.
Rejected the consumer advocates across the board rate increase proposal because it could result in disparate rates for the same basic utility service. So as to set forth, so as set forth in the prevailing motion, the commission developed the rate design framework applied in phase one, including the use of the ERU methodology for commercial waste.
Water customers. The commission's phase one rate design quote prioritize maintaining affordable residential rates and shifting a higher portion of the additional rever revenue increase to commercial sewer customers. The commission's deliberation coupled with the order, approved a rate design framework for limestone to apply in phase one.
Consistent with the order and the commission's 22 May 2025 terrific acknowledgement letter, limestone's phase two filing provides the requested updated information and applies the same commission directed phase one rate design framework.
In closing and asked for the ERU methodology, testimony in support of this approach is set forth in the evidentiary record in the general rate case. Further, the parties in the general rate case were provided the opportunities to submit post hearing briefs.
Including the then proposed ERU methodology. When Limestone submitted its phase one filing in May of last year, the company made it conspicuous and abundantly transparent that it was applying the commission approved rate design framework, which included the ERU methodology for commercial sewer customers.
Phase two is rather straightforward. It is Limstone's position supported by the evidence that it's phase two filing, just like it's phase one filing, is consistent with the commission's order setting utility rates. Limstone therefore asked the commission to approve the phase two rate design for the recovery of the phase two revenue deficiency. Thank you.
I give it to opening statement, please.
Yes, thank you. So.
And transparent.
But it's a real blow to consumers. We have experts who can dig into it, create spreadsheets and try to predict what's gonna happen with a proposed rate.
Gives you maybe 9000 gallons per month. The game of monopoly I think you've all played that where you you know if you get control of certain properties, you can put a little greenhouse on there. And somebody lands on it they owe you money.
To. Okay.
And, I think we've heard this morning from you don't have to go with theory.
So what we would like you to do today.
Logically.
I mean, what kind of price signal is it when you're being charged for something that you didn't even use? I mean you you got.
There.
Working.
Thank you.
Thank you. Thanks for the opening comments from both parties. It's 1134, so we're gonna take a break now and and let everybody go have lunch cause it maybe a long afternoon I'm not sure. So we'll reconvene, let's reconvene around 1230 and continue the hearing and we'll be back on record at that point. Back on the record. I think everybody's here. Yep. Before we begin testimony.
With the company you'd like to move all docket file anything to the record? Yes. All right, without objection so moved. Limestone, you may call your 1st witness. Are we were Kelly, we're gonna do witnesses back up here again today?
Yeah.
That way we.
You can see that.
Alright, we're gonna have to, we're gonna have to move you Madam Clerk. Yeah, she's got a mic, so she's gonna just scoot over, I think.
So.
U.
You're safe with us. She's a smart woman. Alright, call your witness.
Chairman, thank you. Lymestone calls Aaron Gosalis.
Alright, please raise your right hand. Your 1st one, do you swear from testimony you're about to give will be truthful. All right, thank you. Council, please proceed.
Thank you. Good afternoon, this is Alice.
Good afternoon.
Please state your name, business address and title for the record.
Aaron Silus business address is 1630 Depair Road that's in depairre Missouri 63131. My title is assistant Vice President.
Thank you. Mr. Sylus, did you cause a pre file testimony to be submitted in this case.
Do you have any.
A corrections to your testimony.
If I ask you the questions that are set forth in your pre file testimony this afternoon, would your answers be the same?
Yes.
Good morning. My name is Aaron Cylis, assistant vice President of Customer Experience and regulatory Operations for CSWR, the company that provides operational oversight for Limstone water utility operating company. My prefile testimony addresses Limstone water's Phase two compliance filing, as well as the testimony submitted by the consumer advocate division.
The purpose of Limestone water's phase two filing is narrow and driven entirely by the commission's 10 July 2025 order. In that order, the commission approved a revenue deficiency and authorized recovery to be phased in over two years to mitigate customer rate shock.
Phase one rates became effective 1 May 2025 and implemented approximately one half of the commission approved revenue increase using the revenue requirement, billing determinants, and rate design framework adopted by the commission. Phase one did not reopen or modify cost of service, rate based allocation methodology or rate design discussion.
Phase two simply completes that phased in recovery consistent with the commission's order. The company is not proposing any changes to the approved revenue requirement, cost of service, rate base, allocat allocation methodology or rate design framework. Instead, the phase two filing applies the same commission approved rate design to updated information.
As expressly directed by the commission. To support that effort, Limstone Water submitted three components. 1st, a summary of revenues collected by month and by system since implementation of phase 1 s, updated billing determinants by system, including updated customer counts, usage data were applicable and commercial ERU assignments. And 3rd, a proposed phase two.
The design that recovers the remaining portion of the approved revenue deficiency, including commission authorized carrying charges. Phase two rates continue to be applied on a standalone system specific basis. The remaining revenue deficiency is allocated using the same methodology approved by the commission in phase one. No new rate structures are introduced, NO costs are reallocated among customer classes and NO policy changes are proposed.
With respect to commercial wastewater customers, Limestone continues to apply the commission approved equivalent residential unit or ERU methodology. Erus are used to express expected wastewater system impact in a standardized administerable way where reliable customer specific sewer usage data is unavailable or inconsistent.
Since phase one Limstone has reviewed ERU assignments when customers provided updated information and issued credits or refunds where appropriate. As part of the phase two filing, the company also completed a general review of commercial ERUs using the most current available data. Any proposed ERU assignments reflected in phase two.
Who are subject to commission review and approval and have not been implemented unilaterally. In my prefile testimony, I testified that the consumer advocate division's prefile testimony goes well beyond the limited scope of phase two established by the commission. The commission's 2025 order to find phase two as an implementation proceeding. The rate design adopted in phase.
This one was to continue and the only issues reserved for phase two were the rates necessary to recover the deferred portion of the approved revenue deficiency using updated information. Nevertheless, the consumer advocates phase two testimony attempts to relitigate rate design decisions that were fully considered and decided in the general ray case. Those witnesses proposed alternative.
Rate designs and Limstone's general rate case. The commission rejected both Limestone's proposals and the consumer advocates proposals and adopted a different framework. Phase two is not an opportunity to reopen or revisit those decisions. In addition, several claims raised by the consumer advocate are unsupported. Limestone did exactly what the commission directed in phase two by using updated billing determinants. Updating billing determinants does not reopen cost of service or alter rate design, it simply applies the approved frame framework to current data. In fact, in some systems using.
Updated determinants mitigated customer rate impacts rather than increasing them. Claims that limstone failed to provide ERU calculations are also incorrect. The company provided system level ERU calculations supporting data and narrative explanation as part of the phase two filing and in discovery responses. Eru's are not derived from a static index, but from design basis criteria applied to customer specific facilities.
Characteristics consistent with standardized wastewater engineering guidance. While I'm so disagrees with the consumer advocates objections, the company has proposed modest tariff enhancements to improve transparency, including an ERU appendix and a formal ERU review process without altering the commission approved rate design or delaying recovery of the approved revenue deficiency.
Finally, I would like to address several themes raised and customer comments submitted in phase two. I personally attended each customer comment hearing and have read every written comment filed in the docket. A number of residential customers expressed concern that the ERU methodology affects their residential sewer rates. As stated in my testimony, residential customers.
Are by definition not affected by the ERU methodology because each residential connection is assigned one residential unit. The ERU ERU methodology is used solely to assign relative billing units among commercial sewer customers and does not apply to residential rate design. The residential rates applicable to four to five bedroom properties in the grassons system are a continuation of the cart Rate Creek rate design previously approved by the commission and our new.
Not a byproduct of limstone water's commercial ERU methodology. Several customers also requested that sewer rates be based on water usage. As I explained in my original direct testimony, flat monthly sewer rates are appropriate because the vast majority of wastewater system costs are fixed and do not fluctuate materially with short term changes in usage. Wastewater infrastructure is designed to accommodate accommodate.
Variation efficiently and reliable sewer usage data is often unavailable or not representative, particularly for commercial customers. We heard from a few residential customers today supporting ERUs. Limestone's rate design was developed in an effort to stay true to the commission's direction in its final order by signing a greater share of.
The additional revenue responsibility to commercial sewer customers and ensuring that larger commercial customers such as hotels, country clubs, and schools pay higher portion than small one person offices. In summary, limstone water's phase two filing implements the commission's 2025 order. It completes the phase in recovery using the same approved rate design, applies that framework to updated information as directed and does not reopen or relitigate matters already decided by the commission. That concludes my summary. Thank you.
I thank you.
Good afternoon commissioners. My name is Karen Stecosky. I'm with the consumer advocate division, with the Tennessee Attorney General's office, and afternoon mr. Silis, I know we've met several times.
So it's obvious that the consumer advocate and Limestone disagree about what exactly was said and the phase one written order for this docket, and so that's where I'm gonna start with.
If we I'm ready to, we're gonna hand out the chairman's motion in phase one, that was filed on 11 April, and it was presented to the commission on 14 April and that, that motion passed.
This will be exhibit one. Thank you. Sorry, this will be exhibit one.
If you turn to page six of seven, it will be the last paragraph in the rate design section, so it's right above other items. And it starts the exhibit does not contain, and so it's referring to the exhibit to the motion that is identified as rate design. Mr. Cylis, have you read it?
Yes.
So in the chairman's motion, it states that the attached exhibit, which is the rate design, does not have rates for commercial customers, correct?
Correct.
And the reasoning was that it stated that Limestone's billing data did not provide a clear picture of the impact on individual customers. Is that correct?
Yes, for individual customers.
So if we go to 2nd to last page of this motion, that is the table I was discussing the exhibit. There is a column marked proposed rate design, rate, proposed rate. It's the 3rd column from the right.
And you can clearly see down in 2nd half of the table that Aqua, commercial, cart Rate Creek, commercial, and shallow Falls and lake Side of state commercials, there's NO rates set there, correct?
Correct.
Now, Einstein has repeatedly stated to customers and also during this hearing that the ERRU protocol had been approved by the commission. So could you tell me where the ERU protocol or even the term ERU is mentioned in this motion?
I don't see it in this motion, what Limstone is referring to when we direct customers with that response is the approved tariff and the compliance filings made by Liamstone. Yeah.
We'll be getting to that. So next I'm going to talk to you about the 2044 rate case in phase one written. And it's, I called a collective exhibit because the two pages I will be discussing are numbered and then behind it is the full order. So in case someone wants to see that full order.
It's one collective exhibit.
This will be exhibit two. Thank you.
So this is going to be page one oh seven lines five and six. Do you see that?
I do.
And just as the chairman stated in his motion, the order states the panel did not have enough underlying data for sewer billing determines to set commercial rates. Is that correct?
Yes.
And just as I did with the motion, I reviewed the written order and, also did the easy route, like Vance was talking about search terms. I could not find references to ERUs. Are there any references to ERUs in this order?
Not from my recollection, NO.
So at the end of the order, they're second second to last page of the order, there is what they call an attachment for, and this is the same type of attachment that was in the exhibit. Do you see it? Second to last page. Yeah, I do. Okay. So in this.
Attachment for under proposed rates. We now have rates assigned to Aqua utilities commercial, which is 35. Cart Rate Creek commercial is $168.96. Shilo Falls is $55.60 and lake side of States, which is also DSH, is $55. Is that correct?
Yes.
I do not see any reference to ERUs in this exhibit. Is that correct?
I I do not either.
So if a customer would look at this exhibit, they would believe that they had a flat rate of whatever it is for their particular customer. So like Aqua utilities Commercial would think their rate is $35. Would that be reasonable?
I I don't think that there's enough information to say, you know, this, this doesn't also say flat rate either. I mean it's based on the billing determinants, the attrition determinants. So, I I don't know that I would phrase it exactly the way.
Okay.
So I'm gonna go back, go back to the chairman's motion, back to that second to last page, and I want to look at a different column. It is the column before proposed rates rates, which is the attrition determinants and where I'm going with this is that there was quite a change in the determinants from the exhibit in the motion and the exhibit in the commissioner's order.
And so that's what I want to talk about.
So with Aqua water, the determinants were 96. Heart Rate Creek was 06:12. Charlotte Falls was one oh eight and Lakeside, which is DSH, is 600, correct? Correct.
Yeah.
Again that exhibit four The occurates which were 62 are now 432. Is that correct?
Correct.
And Cart Rate Creek which was 612 is now 2496.
Correct.
And which was 108 is now $1664, correct?
Not, not dollars at determinants.
But I mean yeah determinants. Lakesided states, it was 600, now it's 1715 determinants, correct?
Yes.
So those are pretty big changes from, 14 April until the order was issued, which was in July. Now I want to discuss the the time period from the chairman's motion when it was approved and when the written order was issued on 10 July, that was 80.
Seven days, Subject to chat, but when I did the date difference on the computer, it said 87 days. And so I want to look a little bit further into that because that's a lot of changes in 87 days. So we're gonna hand out another exhibit and this is a demonstrative exhibit that was on my demonstrative exhibit list.
This will be exhibit three.
Thank you.
Okay.
Okay, got it.
Okay, so.
The columns in this document are the the systems that were acquired, the docket, when it was filed, verbal decisions written orders. But the columns I'm gonna be focusing on are highlighted in yellow, and the 1st column in yellow is the letter from Limestone to T Deck stating when they took.
Take Possession and ownership of the system. And then the date of the rate case petition, which was 16 July for these. And then the 3rd yellow highlighted column is about how many days from date of ownership to the date of the 1st petition. And I'm comparing this to that 87 days between the motion and the commission's written order and the changes that happened with the.
Terminates and trying to understand that what did Limestone do during those 87 days they didn't do during the time that they retained ownership of a system because aqua utilities.
You've had that for over three years. And yet your determinants when you filed were 96, and within three months that then it was 432. And cart Rate Creek, you've owned that system for two, two and a half years, and.
When you filed your petition, it was 612 and then in three months later it was 2400. Same thing for shylow falls. You own that system for a little over.
A year, and it went from one oh eight determinants to 1664. Now, what I call lakeside, which is DSH, you've had that for just, five months, so a brief time, and within three months it went up to 1000.
In 715. So what happened between this time period because you had some of these systems for a number of years, but within the three month period between the motion and the order, the determinant's changed quite significantly for a few of them.
Yeah, I can I can definitely speak to that. So I wouldn't characterize it as the determinants changed in the 87 days that you calculated. So, the way that these attrition determinants were filed were based on the bill count, right? So the number of bills.
Limestone proposed the ERU methodology in my testimony and in DR responses, and in specifically a DR response to the consumer advocate, we laid out our proposal for the number of ERUs for individual commercial connections. So in the most.
The smaller numbers were based on bill count that did not use an ERU multiplier that we had proposed and then in the order the ERU multiplier was applied. So nothing happened in the 87 days where we came up with these, you know, updated billing determinants. We had proposed that methodology.
We filed it in the case and responded to to data requests and all that information was, was in there. So it was, it was throughout the pendency of the case that those billing determinants were in front of the commission and the consumer advocate.
So when you say, you multiplier, did you say for, for instance mr. Patel, he has eight ERUs. So did you multiply his bills by eight to get his amount? Is that what you're saying?
Kind of yes, so instead of being, if, if we count one customer as one billing determinant, then yes, if, if mr. Patel's situation was eight ERUs, then you would replace that one with eight. Now, with billing determinants usually it's one customer is twelve because they're billed monthly so you would multiply it by the twelve. But, but yes.
Okay.
So I'm gonna ask about process that had occurred, be after phase one or within phase one. So what happened is the motion was filed, it was approved, a written order came out, but we still had an ongoing case because phase two was.
Decided that it was gonna happen starting on March second, correct? So, so 2044 was still not a complete case.
Correct. Yep.
So, after the chairman's motion was approved, did Limestone file in the docket the proposed changes in the determinants and the supporting documentation for those changes?
That.
That would be, give me 1 s.
So what I have in front of me is filing made on 19 May 2025 that gave a revised rate design in tariff in the, in this docket. In that filing we provided a, a number of info a bit of information, including the billing determinants utilized and some specific commercial customer information as well. That was, that part was submitted confidentially.
Let's see, let's see, gosh I don't Sorry, I don't have that confidential filing with me. Yeah, I have the public.
I think I have the public filing but I I don't believe I have the confidential in front of.
Yes, because in the public filing there's NO information about changes in the ERUs.
There's billing, there's billing determinate information.
And where is that in the public filing?
So, I believe it is exhibit one to the public filing is the it looks very similar to the exhibit four in the commission's order. It lists the attrition determinants that the company utilized.
Okay, but this document also does not show, the use of ERUs.
So it, if you look at the 1st page of that filing, it's the 6th point, the last, the last paragraph. It reads 6th to ensure that the per ERU commercial wastewater rates do not fall below the residential equivalents Limpston water has made targeted revenue reallocations.
In in these filings that show our rate design ERUs are, are listed a few times.
But you're listening, is that in the cover letter you say.
Yeah, and the cover letter and then 2nd to last paragraph it it reads as with the 1 May 2025 filing, Lampstone water continues to apply the ERU methodology outlined in the evidentiary record to determine commercial wastewater rates. We are submitting both a clean and highlighted version of the revised.
Phase one rate design for ease of reference. Additionally, inconsistent with the tariff, the company remains available to receive and evaluate information from customers seeking a review of their assigned ERUs.
Yes, but that's in the cover letter, and the tariff itself, which is what customers are supposed to be able to look at and determine their rates. There is only on like pages four.
Five, and let's see and six, which original sheets it's at the top right hand corner, it mentions per equivalent residential unit and then it has a star. So where in this tariff does it explain what the ERU methodology is and what is the methodology equation?
So the the stars are asterisks. If you go to original sheet seven, the asterisks is, and I'll read it out loud. Equivalent residential units or ERUs have been assigned to each commercial customer utilizing typical wastewater flow rates derived from the Tennessee Department of Environment and conservation. Plans, review and approval of sewage, works, construction plans, and documents. So that is, that is the reference to the ERUs and the tariff.
But what we'll be getting to the T T Deck document. So you're thinking that that statement will explain to a commercial customer on how they are supposed to determine their ERUs and from the T Deck document. That's a TDAC document that you named but there's NO link to it. Is that what you're saying?
Yes, this explains the methodology and the the rate says per eru. So yes.
But there's NO, there's NO explanation of how the ERU is determined. It just says they'll be assigned an ERU. So, how is a customer supposed to know what their ERU will be?
Yeah, and I think, you know, in the DR responses that that were responded to in phase two, we had a number of commercial customers reach out to to question and and the ERU methodology was explained to them then. In my rebuttal testimony after reading the consumer advocates testimony, I.
Submitted a, a proposed appendix to the tariff that kind of goes a little further, shows the full table, the multiplier kind of a methodology to all of that. So, you know, if the commission approves that, that appendix, then I think that gives, you know, a little bit more detailed explanation.
But I I do believe that if a commercial customer had questions, they were able to reach out and and to get this methodology explained to them in as clear terms as, as, you know, Limestone could, could provide.
It, ok. I'll, I will state that you your belief is that it's clear enough in your version of the current tariff, and I know this had a few more edits afterwards, that the consumer, a commercial consumer could figure out what their ERUs are and therefore what their rates were gonna be. Is that your statement? Yeah.
Okay, and we'll be discussing two consumers that spoke this morning mr. Patel and mr. Taylor, both of who have spoken to Limestone and in particular, mr. Taylor who had multiple emails, and we'll, and we'll discuss how that, that worked. And I, I know you're the one, one of the ones who spoke to him.
Now you do understand that the consumer advocate is formerly intervened in this docket, correct? So we're a party.
Yes.
After, the filing, after the chairman's motion was approved, and before the final order was issued, is there any documentation in the record that the panel that was assigned to this docket that they reviewed and deliberated in public about the changes in the determinants and the use of the ERU method?
I am not aware.
If we go back to page one oh six of the written order these will be line 17 through 23, so if you could read that and let me know when you're ready.
I've read it.
Okay. Now, I believe it's your position that the limestone's position is that this phase is only limited to updating information. Is that correct?
Yes, updating information, implementing the the rest of the revenue deficiency into the rates Yes.
But if you look on line starting on line 19 according, accordingly and going on to 20, it states that yes, Limestone shall file this information what is the updated information a proposed rate design. So, the commission was expecting a rate design for collection of the remaining amount of money, correct?
Yes, my my interpretation of that is that the updated billing determinants going into the framework would be the proposed rate design would be my understanding. Yes.
But that's not what the commission said. The commission didn't say put your, updated information, run it through your, your rate design and tell us what it is. It said, accordingly, they shall file this information and including a proposed rate design.
That is what it said. Yep.
So if we go to page one oh seven line six through eight.
So have you read line 608I have. Okay. In those lines it said the commission expressed its concern that basing a rate design on the questionable data could result in extreme rate increases to certain groups of the commercial customers, correct?
Yes especially small customers such as small offices.
Yes. And so I want to talk about some impact to some specific customers. And this will be ok.
Okay, this is redacted, so it's a public version.
Alright, this is the exhibit four.
And that's because I altered it.
What is highlighted in orange at the headers? I put line numbers, so that would be easier for us to know what we're talking about and in the same spot. And then also I added the two last columns, and that is a, to show the percentage difference between May 2025, which.
Which was the last bill before the rate increase, and that 1st orange column would be in for to June 2025, which is the 1st month after the rate increase. Now the last orange column is from May 20 point 25, which is before the 1st increase to the proposed phase two increase. Does, does that make sense? Yeah.
Okay.
And so I would like to let you know that there's also some lines that are highlighted in yellow, and those are lines that indicate that there was more than a thousand percent increase. So a thousand percent or more. I did not highlight the ones from 100 to 999, just the ones over a thousand.
Okay on page one line six.
This cut commercial customer, in its 1st bill after the rate increase was 2420 %. And then with the proposed rate increase for phase two, it's going to increase 7317 %.
In your mind, does this fall within the commission's concern that of extreme rate extreme rate increases for commercial businesses?
I think I would have to get, you know, the, the specific commercial customers information. I think that the commission's order goes on to explain that, that it wanted to avoid those for small commercial customers, not, you know, hotels that serve hundreds of guests or country clubs that have hundreds of members. So I think I would need to, for this specific customer, get that information to see if my opinion is that it falls into those concerns.
Okay, can we then can go back to it during the confidential section which I have at the end of the discover at the end of this discussion So I want to go back to, I wanna go back to the statement that the commission has approved.
At the ERU protocol and usage of ERU as a multiplier, because I think as we discussed, it's not listed in the commission chairman's motion and it's not specifically listed in.
The commission's order for phase one. And you actually pointed to terrifings as where this was addressed.
2025 terrifying. I think we can hand that out. You probably already have it, but just in case.
Thank you. Actually I've got things a little bit out of order. This is gonna be the next exhibit. So this will be six. I have a number five that also needs to be handed out.
Alright, this is exhibit five.
Should be six, yeah.
Yes. Sorry.
Sorry, I was looking at your last one.
Yeah I've got one. So exhibit five should be mr. Cylus's rebuttal testimony, which I definitely know he has.
And that's what you're handing out now. Yes. Okay, gotcha.
My apologies for the confusion silence, this will be we'll be talking about page five.
Thank you.
Page five of which.
Of which 1E5 or E six.
The aaron silence rebuttal testimony should be five and the staff acknowledgement receipt of the Limestone water tariff is six. I've got you asked him a question.
Good, alright, which is fine.
Which is page five, but it's also on page five.
E five page five bill. I think we're all on the same page five.
I should follow my list a little better.
And it's lines nine through twelve. In that those lines it says the rate design and allocation included continued.
Use of flat monthly wastewater rates and the adoption of ERUs for commercial wastewater customers, correct? Yes. And in that testimony, you saw either's a footnote. Usually a footnote means that's the support for the statement. Is that how you understand footnotes? Yes, ok. And so the footnote cites to, it says commission's acknowledgement letter on 20 August 2025.
Is that correct?
Yes.
And so when you state that the commission approved the ERU methodology, this is the document that you're basing it on.
Yes.
So now if we go to exhibit six, which is the staff's acknowledgement letter.
Handed out, didn't you? Yeah. Do you have it? Okay.
Just sorry to interrupt. The six I believe was what we filed, not staff's acknowledgement letter. So this would be our compliance file.
Oh, this will be seven. Why is it seven though? Okay.
This is exhibit seven, right?
Right? That's what they say. It's this wasn't the order on my list, but.
So in this, fortunately it's only a one page letter. In the last, I'd say multi sentence paragraph, so before the please refer.
It states that the recorded tariff is consistent with the commission's decision on April 1420 25 in in this docket 2444. And so that's what you're basing, your statement that the ERU methodology had been approved, correct? Yes. And I'm asking, did the chairman or one of the commissioners on the panel sign this letter?
No, the Deputy Director of Utilities Division appears to have sign the letter. Okay.
So, so in essence, what happened is a staff person, here that works at the commission that signed the letter, you're saying that they have the authority to set rates that are not explicitly spelled out of order.
Testimony she can ask him if that's what he thinks, but she said that's what he was saying and that witness didn't testify to them.
Objection is substantial rephrase.
So going back to your statement that the commission has approved, the ERU methodology and your statement is that it's in the filed tariff, correct? The ERU methodology and language is in the tariff, correct? Correct.
Yeah.
And so, you used in your testimony as the footnote to to support your statement that the commission approved the ERU methodology that was set out in your tariff, you cited to this 20 August letter that was signed by a commission staff person.
Correct, correct.
And to confirm again, ERU methodology was not addressed in the commissions of the chairman's motion that was approved by the commission, correct?
Correct. I I think my interpretation of the final order is that the final order directed limestone to update the rate design with the appropriate billing determinants, which we did in.
The exhibit six, I believe, which was our our compliance filing with tariff and the information and then the acknowledgement letter from the commission affirmed that is, is my interpretation. Yes.
But it's the commission that has the authority to set rates, correct?
Yes, the commission has the authority to set rates and and approve tariffs.
But the commission did the commissioners did not approve this tariff. A staff person approved this tariff, correct?
They did not sign the letter. I cannot speak to what the commissioners reviewed or.
Yes, that's what I'm saying.
They signed the letter, correct?
And as we spoke before, there was NO hearing on the changes of the determinants and discussion of the ERU methodology that were placed in the tariff.
There was a hearing on the determinants and the ERU methodology as it was part of the general Ray Case so that there was a hearing on the general Ray case, so there I think it was a hearing on the methodology and the billing determinants.
Yes, but the ERU methodology and the term ERU does not show up in the written order.
That's my understanding.
And you stated that the ERU methodology is part of the tariff, which was signed as signed by a staff person, not a commissioner.
Correct. It was signed by a staff, the Deputy Director of utilities division. Correct.
And then there was NO public hearing on that tariff, that resulted in that acknowledgement letter to discuss the commissioners have looked at this. The witness has answered the other question. He's answered this question three times. So this has been answered on both whether there was a hearing and on the staff signing the load. He's covered that girl.
Okay, withdrawn.
Now between the emotion and the order that was issued, there were changes in the determinants and rates were set. So were there discussions between Linestone and staff about those changes?
Yes, Limestone filed the, the tear of compliance filings that that address those changes in billing determinants. Yes.
In fact, there were a couple of revised filings of the tariff. Correct. So there were additional conversations with the staff about that, the changes.
Correct. If if an issue with the filing was determined, so e.g. limestone, myself cause I'm the one who did the compliance tariff, I misunderstood the rate design to have kept.
The Aqua sewer rate as a usage based rate. It was brought to my attention that the intention of the commission was to have that reflected as a flat sewer rate for Aqua utilities. So that was brought to my attention via email and and made it into an updated compliance filing.
As the consumer advocate is a party to this docket, was the consumer advocate invited to these conversations between Limestone who's a party and staff who advised the commission?
I was not the one who set up those conversations. I do not recall if the email chains included individuals from the consumer advocate, I, I don't recall.
So I would like to talk about a specific customer. He spoke this morning, mr. Patel, and so I would like to look at, again, this is exhibit one six, which should be.
Oh, excuse me. Mr. J Patel. They're both with Stone Brooke in.
And this should be exhibit four.
That's your spreadsheet, correct?
Yes. Okay. Where did it go?
Now mr. Patel has made himself known and has explained his eight ERUs and such, and so I can tell you that online line five of this document is mr. Patel. And in it, it shows that.
From the invoice prior to the 1st rate increase, and to the rate increase, he had a 456 % rate increase for his business. And then the proposed increase to phase two, it actually goes down a bit, it's 387 %. Does That's Subject to check because I am a biology major, so math is not my subject.
Yeah, subject to check, that is what line five says. Yep.
So if we can go to, this is a redacted email, that came to me on 13 April, we filed it in the docket on 14 April.
And this should be exhibit eight.
Thank you.
I will explain that at the bottom in the right hand corner, we did something called bait stamping. We did this because he had an email and then he had multiple attachments. And so the only easy way to discuss his email with his attachments is to bait stamp at the bottom of the page. And so it goes one through however many pages he has for his email. And that's the number I will use when I'm referring.
On page one, it shows that this customer requested an investigation into his flat rate of eight ERUs, is that correct mr. Saz?
Correct.
And if you can turn to page two.
He actually he actually sent two letters to limestone. One was seven two and then there's a table and then the next one is 30 August. Do you see those two letters?
I do see these two letters. Okay.
Let's see, so in.
The 3rd bullet statement, it actually has little dots, so the 3rd bullet statement halfway down. His complaint is that because of how he's classified, he's paying three to four times higher than the sewage that he is.
Causing. Now, he provided a number several years actually of his billing determinants. I don't know, not billing determinants, his bills from his water company. And so he came up with the three to four times higher than based on his water bill usage. Is that, is that how you read his explanations?
Mr. chairman, I have to object mr. Patel, the author of these documents, is not testifying, so we object to this document being entered as into evidence as hearsay.
You want to respond to that?
Well, these are documents that are in the record, and I'm just reading with what's in the record. Mr. Patel is on the line, and we can have him confirm that this is correct to his knowledge, if you would like to do that.
I believe he's on the witness list, so to the extent that this is being offered as accurate, anything that mr. Patel is saying in these letters, to the extent that the consumer advocate is offering and it's accurate, we object to that.
What I'm offering it is his experience with Limestone in the ERUs as he sees it. Now, you might dispute that his equations that he uses are incorrect and I'm And I would be fine with that.
Well, he's not here for me to cross examine is what I'm that's the issue is that we can't cross examine anything that mr. Patel put in these letters. That's the real, I mean that's the hearsay objection.
And so you're not, so even if mr. Patel's on the line, you're not willing to let him participate by answering your questions. I'm sorry what? I said mr. Patel, if mr. Patel's still on the line, you're not willing to let him answer any of your questions that you might have.
Not on the witness list, we're not prepared to do that.
And so what you're saying is I can't bring any information from a customer that has filed information in this docket to show that their experience with this ERUs. I don't belie.
I don't believe there's any limitation on the consumer advocate having mr. Patel filed pre filed testimony and being on the witness list.
Well, I understand that, but what I'm saying right now is what you're saying is that you're not willing for the consumer advocate to bring up a document that is in the public record.
But let's do this. I think we're gonna allow it to be entered, but we'll give it the appropriate weight.
Okay. I'd also like to point out that these are business records that the company has these, they're they're inter exchanges and a business record exception to hearsay would prevail here. Sure.
If I can respond to that, the business records reception of exception of course has to have someone from the business testify. Okay, the issue is that the.
So the 1st page bake stamp number one of exhibit eight, is not a limestone document. This is what the consumer advocate was using.
It's good.
We're content to go on at this point and you could consider it for what it's worth. Karen, let's go ahead and proceed, please.
So we heard from mr. Patel this morning and he was talking about how he feels that he's paying for more wastewater than the water that he actually receives from his water utility, that's how he's doing his calculations.
That is what he said, correct?
So let's go to, and it's specifically appendix.
Can you can you point out the exhibits since you've got quite a few out here?
That is exhibit five.
Thank you.
And it is his exhibit, is it, is it exhibit ASR T exhibit one and it's an appendix A.
Now I think you've already explained earlier in your testimony that this exhibit is not currently in the limestone tariff.
Correct, ok.
So I want to, kind of go through the process because it has a nice four step process that is quite easy to follow. And so, and, and with regards to mr. Patel. And, we know mr. Patel, it says identify the facility type. He stated he he owns stonebrooke in, so it's a hotel.
Correct.
So if you go to the next page after exhibit one, there's a section called A four. It's the reference table for ERUs, right?
Correct.
And so it states for hotels, the design basis. So once you, you figure out what the type is, the facility type, then you look at the design basis. And the design basis is guests.
And so, question is how does how did number of guests for mr. Patel's stone brooke in?
Yeah, I I think this is a a great example of the of the ERU methodology, so I'll I'll walk through the whole thing. So mr. Patel did, you know, contact us and ask for a formal review, which I've done three times for, for this commercial customer. So just like you said, you start with the facility type, because it's an in.
It was assigned the hotel facility type. The design basis is the number of guests that that facility type can hold. So the stone Brooken has 19 units and through public information, Limestone was able to go to their website and.
Potentially fill out like a, like a pseudo booking, right? It has the number of guests, the maximum number of guests allowed per room for the stonebroken, which was between three and four. So Limestone took that amount, so between three and four in this particular case, because mr. Patel was disputing, we actually.
Really went a little lower, so 2.5. So 2.5 guests per the 19, and then you multiply that, so you take the 2.5 times the number of units, which is 19, you multiply that by the ERU multiplier and you get the the eight ERUs.
Well, the 25 guests times 19 equals 4475 guests, right?
Sorry, 09:19 rooms times 2.5. Yes.
Oh, is 2.5 times 19 is 475 guests, correct? No. So what is it?
I I don't have the I could pull out my calculator. Okay.
Well, I'm curious because it says, you know, you.
Should be 50.
Yeah, the number the step for step two is determining the number of guests. Correct at this system. And so you had 19 rooms, you decided it was 202.5 %. I had 475. It should not be that.
So we're 47.5.
Correct, so it would be 2.5 guests per room is is what Limestone utilized. Yeah, as an average.
Then your flow is, so step three is ok to identify the typical wastewater flow. So you have your 40 point 75 and the typical wastewater flow according to your table is 50. Is that correct?
Correct.
And so then you multiply 50 there, correct?
No, there's that's a way you could do it. I use the ERU multiplier column, which is like a little bit of a shortcut, but, but yes, what you could do is take the number of guests calculated and then multiply it by the 50. Yes.
Well according to your previous page step three is the typical wastewater flow design basis is applied to the customer's facility characteristics to get the daily wastewater flow. So that's your step three. Correct. Right. So I'm following your.
Yeah, the shortcut, but yes, exactly. Right.
I'm following your protocol that you set out, which is what customers are going to be looking.
Absolutely.
And so then you divide that by 300, what that total day flow is, and then you got two eight ERUs, correct? Correct. Now, I will ask you, you do have this ERU multiplier column. Yeah. Is that explained anywhere in this filing of what that is and how you can use it?
Not in the appendix I don't believe.
Is it anywhere do you know in your chair?
I don't recall. I don't believe so.
Is that something that you'd be willing to explain because right now it's just, it's it's a number there, but we're not quite sure what it means.
Yeah, I would absolutely, you know, if the commission decides to approve the idea of this appendix, I would be more than willing to, to add some language to further explain the ERU multiply.
Now in that last column, it says source, and it says Tennessee design criteria. Now, in this table is, I I don't see an asterisk, so I don't see it a full site to what Tennessee design criteria means is.
It's elsewhere in the tariff. Yeah, it's the asterisk I mentioned earlier, in the rate schedule.
But do you think a consumer, they're gonna come to your table, they'll see your four, your four steps, they come to this table and they see what is Tennessee design criteria. Do you think it would be helpful if that is also explained through a citation so that it's on the same pages that they use to determine ERUs?
Yeah, I mean I think that, if I was a commercial customer and I was going through this step, I would 1st go to the rate schedule I would see the asterisk. I would see the citation there and then I would come to the appendix, but absolutely if you know it.
Anything to improve, help improve the transparency if a, if a second citation would be helpful, the Limstone would definitely be open to doing that.
Let's see, now the consumer advocate in discovery asked about, well, what is the Tennessee source document you kept referring to? And you were and Limstone responded to gave us a link. But I'll have an exhibit.
Now I think it's more appropriate to ask what they ask and what Limestone gave. Okay, then she asked and answered the question. Okay, then what I'll do is we'll go ahead and enter it in evidence. I've got it.
Well, you can you can. Well, we'll just go through and we'll enter that document. So this will be a limestone's response to consumer advocate DR one-seven.
A big exhibit nine.
So it's gonna be on page 13.
And the request to Limestone was to ask about, the statement about tennesssee Department Environment conservation plans review and approval of sewage work construction plans and documents, and we asked you to provide a copy of this report that you cited.
And your response was.
You want me to read the whole?
No, you can.
Yep, so I provided a reference to where it was already located in the docket, which was the exhibits to my original testimony, and then I linked to the tennessee.gov link. Okay.
Now that we can go to the next exhibit, which is the consumer advocate response to limestone's DR one-seven.
And this will be ten.
Yes. Thank you.
On page six is our response to the DR, and the last line of our response was that we attached a copy of the chapter two to our response. Is that correct?
That is what it says, correct?
And so, in our response there's a full copy of the T Deck document. Do you know, are you, are you aware of that? Yes.
Okay.
Now before we discuss the details of the document, I think it's good to understand what is T deck's role. And T Deck is the Tennessee Department of Environment and conservation. It's acronym is T D E C.
I refer to it as T Deck. So, in your interactions with T Deck as a water and wastewater provider, T Deck has reviewed and approved applications for your water or wastewater systems, correct?
Yes, I'm not in the engineering or construction department, but that is my understanding of the process. Yes.
Do you understand that there's two types of wastewater systems permits that are issued by T deck?
I Can you rephrase and say this? I'm aware of like discharging and not discharging, but.
Yes, that is, the non discharging or state operating permits, they're called SOPs, so you'll see that in the permit number, which is probably what you're familiar with. And then there's the NPDES, which is the discharging permits like Grasslands.
Correct, correct. Yeah. That is my understanding.
And are you aware even though you're not in engineering that that T Deck reviews and approves construction plans or if there's any changes to the plant, they app review and approve?
Yes.
Are you aware of T Deck in its oversight that it reviews or approves wastewater rates to any of the systems?
No.
Okay, so let's turn to the document itself.
Okay. And so let's start with the title of the document, which is at the top of the page. And it's the design criteria chapter two-O72 oh two.
Two O design criteria for review of sewage work construction plans and documents, and this is chapter two, is that correct?
Yes.
And I don't know if you've read through this document, I have also did search terms. I could not find any reference to rate making in T decks document for construction of wastewater systems. Are you aware of any?
No.
Now if we go back to your rebuttal testimony on page 17.
And it's that actually that top sentence or a paragraph or beginning. Limestone applies says Limstone applies the T Deck design criteria for their intended purpose as a standardized reference for estimating typical wastewater flows with.
It's in a flat monthly sewer rate structure. So, I'm curious, are you stating that the T Deck design criteria document was intended to be used to determine flows for determining rate structure?
No, that's why I tried to to kind of subsection that sentence out for their intended purpose as a standardized reference for estimating typical wastewater flows. So what I'm saying there is we applied that criteria for their intended purpose, which is estimating typical wastewater flows within a flat monthly sewer rate structure is, is what my intention was. Okay.
But this is a document about the construction of wastewater systems. So, the flows that they are using, they're gonna be looking at peak flows because they want the system to be able to handle peak flow times. Is that correct? Does it make sense?
Correct, yeah, that makes sense.
However, with your customers, say with mr. Patel, all his rooms do not have two oh .5 people in them every day. So he's not having peak flow every day, is that correct?
Yes, that's correct. I Just to add on to that a little bit, I think that, you know, I think about it from a residential customer's perspective as well, right? So residential customers are charged a flat monthly rate for the, what I'll call the ability to use the sewer system. So whether, you know, a customer flushes one time or a thousand times within that month, they are charged the flat monthly rate, because the system had to be designed to accept.
Maximum flow from that residential customer. I think about the ERUs in a very similar way. So, you know, while mr. Patel might only have five rooms occupied, he very well might have all 19 rooms occupied. So in a similar way to that residential customer, that hotel.
People would be charged a flat monthly rate for the ability to use the sewer system as much as they can or need to use is how I would phrase that.
Okay. Now you know the term known and measurable and I do. And rate making good. So what you're doing though with ERUs is you're using an estimation, so it's not based on a particular customer's actual known and measurable flow, is that correct?
Similarly to the residential yes it is an approximation because wastewater flow isn't measured. I mean even water usage is simply a proxy, right? If a residential customer fills a kitty pool and then lets it flow out.
Into their yard, that would be water usage that never touches the sewer system. If a, if a customer hooks up a sprinkler to the system, that would also never touch the sewer system. So because wastewater usage and wastewater flow is not.
Utilized very frequently at all. I mean I I don't, in our eleven state footprint, thousands of systems, I don't think we have any residential wastewater monitoring devices on an individual connection. Because of all that, yes. Similarly to residential, it is a.
A, a ability to use the system, not a known flow from a connection.
I'd like to actually turn to a new exhibit. This is limestone's supplemental response to the consumer advocate. This was a filing that declassified a number of documents that were filed, I think on 17 April. So it is a big document.
That's where I'd like to start next. So I guess this would be exhibit eleven.
Okay thank you.
Okay, I will let you know that you will see a bait stamp at the top right hand corner of this document, and that's because there's so many pages.
And there were different, drs that were responded to, so it was just easier to bate stamp these, this filing because it's just so big. So when I refer to a page number it will be from that right hand corner. Does that make sense?
Does.
So on page five from the bait stamp, just know that page four, this is one, it's C it's a DR one three.
But the answers continue on to, well the questions continue on to five and actually 13D is actually on page six.
Six.
Okay.
Page six and it's D.
The six not.
Yeah stamp number at the top.
Is that again I'm doing that because there's so many pages here. Sorry, and so it says subsection D.
In this statement, you say water usage data is not a preferred method for estimating wastewater volumes and because ERU designs are bases vary by the facility type. E.g., some commercial entities are assigned to eru's based on seats, alleys or other non usage measures, and so usage data is not a reliable estimate, correct?
Correct.
So if we go back to, the CAR CA response to-one-seven, which is the T deck document, the chapter.
Now this is the note, how.
This document is, how they, how they paginated these documents. Since it was chapter two, they go to-and then a page number and it's in the middle of the bottom of the page. So if you go to two-twelve.
Okay. And it's section two-32 which is the section set 2nd to last section of the page, it's basis of design flow rates. Do you see that, mr. silence.
I do.
And in here, T Deck actually says flow data from similar portions of the same system are very similar systems are more credible than generic data from tables.
Yeah.
That's what it says.
It does say that I would, point out that I I don't believe it means water flow data. I, I would assume it means wastewater flow data is more credible. But but yes it does say that sentence.
Now, generally I think you've stated that Limestone normally doesn't have access to customers water utility bills and flow unless the customer prepare provides it.
Correct, ok.
Now I raised this because of mr. Patel, you didn't get access to his flow data. He actually sent you several years of his flow data from his water utility, correct?
He sent yes, his documentation on his water flow data.
But you haven't utilized that flow data to, to determine whether to modify that AERU that he has protested on, correct?
Yes, correct. In my direct testimony in the general rate case or what I'll call kind of phase one and in my direct testimony here, I I believe that I make very clear that the rate design is, is not based on the actual water usage, right? It is It is an approximation of the capacity that a customer may add to the system. So similarly to to that residential example where a residential customer could.
Bush one or I'm even gonna go a little more extreme, a thousand or 10000 times they would pay the the same flat monthly bill every month. The, the equivalent residential unit is meant to do the same thing. It is, it is not supposed to be a proxy for water usage. It is not supposed to be a, something that we use instead of water usage, it is a.
Design of what that commercial company or connection could contribute to the system similarly to the residential customers. So, so yes, although mr. Patel has provided his water usage information, the, the commission in our approved tariff does not have a, a water usage component to it. So it was not.
Considered in the ERU reviews that I conducted for mr. Patel.
Okay, so I'd like to turn to the other customer, mr. Glenn Taylor, who filed an affidavit in, this docket. Yes, this will be exhibit twelve. Okay.
Thank you.
Now I want you to notice again, this is bait stamped. It's up in the right hand corner this time. And so those are the numbers that I'd actually will be referring to, not any page numbers.
Let's see. Hold on, let me check.
Did you know, did you not get off the bait stamp version of his? No, you did not. Okay, sorry they did not print off the bait stamp version, they just printed off the copy from, so this will make it a little bit more difficult.
Okay, so I guess this will be on, page one, it's actually paragraph four. Mr. Taylor states that his sewer rate in December of 2021, before Limestone became his.
Utility, he had a $608 bill, and this is something he actually referenced in his public comments today.
Mr. chairman, I'll reiterate the same objection as to hearsay, to the extent that this is being offered to the extent that mr. Taylor's affidavit is being offered for the, for its truth. You can. We, we submitted this affidavit under provision of the Can you turn your mic on that, please? Yeah.
I'll make it off.
And and this provision of them to challenge this. Would you continue Karen, please?
Yeah.
So if you turn to page two paragraph six, he talks about and and Limstone has talked about that the monthly charge when Limestone begins sending its bills will not.
This one said it was $37.
And I guess I'm asking what happened from the time that Cart Right Creek was assessing the bills which were a few hundred dollars, and then Limestones bills were decidedly lower. What was that change that happened between the utilities and the rate setting?
So from my recollection, this was all discussed in the general Ray case hearing, I believe by witness Donovan. But, from memory of what she testified to, my understanding is that the prior.
Our owner was utilizing water usage, that Limestone was not receiving from the water company, and therefore we charged the minimum, because we did not have the necessary information to charge, a rate based on water usage.
Now, in paragraph seven on that same page, he states that his 1st bill after the rate increase was around 14000, it was 14000 and some change I'd say. And.
Again, this was as stated in his opening, but it's also in the record, about billing. So if we go to.
Okay exhibit.
Exhibit four so it looks like this.
Your your spreadsheet.
Yes.
If you look on page three oh four line 83, even though the address is blacked out, you will see a June invoice of $14000 and in some change, so.
This is actually, the old natchess Trace country clubs billing. And so what happened from the invoice from the bill prior to the phase one change to phase one?
It shows that there, there was a 31420 % increase. However, this has changed because in the proposed phase two, the increase is now not.
9292 %. Is that correct? Does that sound correct?
Yes, that's what says what it says here. Yep.
Now, different limestone employees including you have been have been talking to mr. Taylor.
Correct.
And that he has been talking since the time he received the 1st bill for a few months, ok? Is that correct? You from your back your knowledge of dealing with him? Correct.
Let's see. So this is gonna be am trying to figure out how to kind of do one because we have.
Multiple emails in the bait stamp version here and I'll see if I can find it. And this would be the supplemental responses and that would be exhibit eleven says that's the big one. It has bait stamps.
On page 01:54, bait stamp, type the top right hand corner and it's the one from you, I mean from Glenn to you on 29 July.
You see that?
I do.
And it says after reviewing your response, that's the mr. Taylor states that he was initially told he was assigned 497 guests at 50 gallons per day, but then you had corrected that at 250 customers at a hundred gallons per day. Is that correct?
That's what it says. Yep.
Do you recall that conversation with him about the change?
To be completely honest, I do not remember all the facets of that conversation. I think, you know, what I'll point out is that 497 customers at 50 gallons and 250 customers and a hundred gallons are are extremely close. Yeah yes, so I don't remember that, but I, I remember portions of that conversation.
Sounds good. They came out about the same. Correct.
So you knocked off quite a number of pages from my cross, just so you know. Now if you look on page 83.
Again, upper right hand corner 83 and this is an email between you and and mr. Taylor again. It's on 12 September 2025 at 01:42.
PM.
I'm there.
Okay. And in that you say once HVUD gets back to me, I will provide you a timeline for issuance of credit. So what is HVUD?
I believe it's the Harpeth Valley Utility District.
So that's what.
It's the water provider, correct.
And so it sounds like that you may contact with them and we're awaiting a response from HVUD.
That's correct.
Now is that something that you did on your own or did mr. Taylor have to give permission for the utility to provide you access? Do you know?
Yeah, so mr. Taylor from memory, gave permission for H for HVUD or the Harpeth Value Utility District to provide me with, the country club specific water usage information.
Okay, if you can go to page 92 again bait stamp 92, it is the 1st email from you to mr. Taylor 26 September 2025.
M.
On the, I guess small paragraph after the 1st big one, it says based on this data set. It says you're adjusting old natural traces, country clubs ERUs from 83 to 27. Can you explain how that occurred?
Yeah, absolutely. I I think this is a great example of of how the process worked, has been working the whole time and what's kind of memorialized, I believe in in appendix A of of my proposed appendix A to the tariff.
So, mr. Taylor reached out last year after the rate design went into effect and was disputing his ERU charges, after kind of conversations with our agents of the call center, with my call center manager, Tricia, who reports directly to me.
Which was then escalated to me, we were able to talk to mr. Taylor and kind of explain how, how the EARU methodology is set up. I will point to if I can, in mr. Taylor's affidavit, I don't quite recall what exhibit number that was, I apologize, but page eleven of that, which was point 49.
And I'll I'll read it aloud the 1st sentence. Again, after he again insisted that we needed to submit daily attendance estimates and records, I made a final point that it had to be the case to dividing our metered sanitary water flows by 300, and then I'm gonna summarize the rest, what would be, you know, would produce our headcount because.
If it didn't, then the flow rate was also inaccurate. So, I point that out to to just simply say that throughout the conversations, I repeatedly asked mr. Taylor and the country Club to provide daily headcounts of guests so that we could apply the ERU methodology appropriately. The customer was either unwilling or.
We're unable to provide that information. And so in an attempt to estimate the guest count, which is the design basis for a country club, Limestone worked with the customer to obtain the water usage information. Now, I think it's really important to to point out that a country club is very different than other commercial types. So let's take a hotel, e.g., which is also per guest. For a hotel, there are, you know, publicly available records such as the number of rooms that a hotel has, the guest count per room etc.
What Limbstone relied on with the country club was publicly available information about the number of courses, the events that they could put on, the fact that there are restaurants, that they do weddings, that it's a a pretty large venue. So I personally, you know, reviewed all that information online. I re.
Viewed information on Yelp, e.g., from customers just as much data as I public as I could publicly to, to derive a, a guest count for the country club, which again is is inherently just harder to do than a hotel. Mr. Taylor.
Unable to verify the guest count, the daily attendance, any kind of sign in sheets. Him and I went back and forth about the fact that, you know, if you're not able to do that, then we're not able to change the design basis, which is the, the guests that, that show up on a daily basis, and for his particular situation.
And because of the size of the bill and because of the fact that there is not an easy kind of assumption to make such as with the guests per room, I worked with mr. Taylor to estimate the guest count, the daily headcount based on the water usage information that he provided. So through that, we were able to reduce those.
Rus from 83 down to what they are today.
And so, initially it was gonna be 83 to 27, and then it went down to 20. Is there something that happened in addition between the 2720 reduction Cause I couldn't find it in the emails. Yeah. I did see something about someone going out and checking meters and when was a pool meter or something like that.
Correct, so similarly to what I said before, water usage information is is simply not in my opinion, a good proxy for wastewater usage. So, what mr. Taylor and I did was we looked at the meters that were associated with the pool and I believe one of the meters.
Was used to irrigate the lawn as well, and, some assumptions were made about what percentage of the water usage data was representative of individual guests. So, I think it, it was a lot of assumptions in there, but that is what changed from memory between the 27 down to the 20. Okay.
So in your direct testimony, you, you discussed the interaction, the interaction with mr. Taylor. Specifically.
Ten at line 25 to page eleven.
Of my direct in in this in phase two. Yeah.
Okay. Apologies, I've forgotten. This oh, this needs to be a new exhibit, I think. Because this is his direct, so it'd be exhibit 13.
That's correct.
I think it was twelve. Yeah.
Send your direct testimony and that last sentence on page ten, it says this was a cooperative yet verified approach to ensure that commercial customers are ultimately billed based on the best available data while preserving the integrity of, I guess, the approved rate design which is ERUs. Is that not correct.
Correct, correct.
Now if you look at your direct testimony at page eleven line 26 though, I think it's.
You state that these proposed ERUs that you're proposing now will not be implemented uilaterally, but are gonna be presented for the commission for review consideration and approval.
Of the phase two compliance filing. And going forward, any changes of the ERU assignments would be subject to the commission's approval and incorporated solely for the purpose of us establishing bill billing determinants for the proposed phase two rates. So my question.
Question is, if after the phase two rates of the year, you method is approved, you will not be able to have the cooperative approach that you've had with, say with mr. Taylor until the, and make a change until you get commission approval to make that change. Is that what you're stating right there in your testimony?
I don't believe so, let me take a look back from, from memory and I can find it if needed. My intent was to say that we have not ever increased a customer's ERUs since we since we started without putting it in front of the commission, which is what we're doing in this filing. So my intention, and I believe it's it's contextually made, but I would have to read a little bit more and take some time, but contextually what I was trying to say.
Is we would not raise any customers ERUs as outside of a commission approved filing and review, we would only be able to lower them and issue the credits per appendix B and as an example, what happened with with mr. Taylor. So if, you know, a commercial customer wanted to work with a company, have me review the ERUs and the design base.
That went into that, then I would do so, and if that resulted in lower ERUs, we would issue that credit and bill them the lower ERU going forward at the expense of the company, really, because we wouldn't be able to to reach our revenue requirement. But if the review resulted in higher ERU.
So let's say, just to use the stoneberg in, if after my review, it would have gone from eight to ten, we would not increase the ERUs without the commission's review is is what my intention was. Okay.
Okay. Okay, so going back to mr. Patel, you made a distinction between a hotel versus the country club because it's the difficulty inherent, inherent in all the activities that happen at a country club versus.
Is staying at a hotel, is, is that I'm paraphrasing, is that what you're.
Yeah, if we're since we're on the page, page ten of my direct testimony in this, in this case I'll I'll read it for the country club. Publicly information, this is starting at page, sorry, line seven of page ten describe the menities such as dining.
The tennis pool facilities and capacity for large social functions, all of which indicate materially higher daily wastewater generating activity than a single residential equivalent. So yes, in the example I gave earlier, a hotel is, you know.
In that example, we were able to identify 19 units from the information in booking a room where it said it allowed for three to four guests. We were able to do a very simple kind of calculation there. But with something like dining, tennis, wedding events, that is signifi.
Significantly more challenging.
And, I believe there's a statement. I can find it if I need to, but you probably will remember this, that, you had expressed the willingness to have updates on his water usage every six months, submitted every six months so that you can then continue to fine tune.
And is that correct?
I, I did, you know, I would say that, that the idea there is again to get a accurate design basis. So the whole point of this is to get an accurate accurate guest count. What I would continue to urge the.
Mr. Taylor and the old Natchess country club to do to remain, you know, really in compliance with, with the ERU methodology is to implement guest count attendance tracking characteristics so that we are able to utilize that, which would be the best.
And most accurate data for our methodology. So, you know, my intention is to continue to have those conversations especially when updated water information is given to try and get the accurate daily guest counts.
Now, with mr. Patel, you estimated number of guests when you found out online that he had 19 rooms and you kind of looked at, you know, what the room said it would accommodate. Have you asked mr. Patel about any sort of registry he has about the number of guests he have per week or per month?
I have not because the the idea again of this rate design and the use of the ERU methodology is to.
Be available for the maximum capacity, the maximum flow obtained from a commercial customer. So in a country club situation, there is NO ability for myself or Limestone to fully understand the maximum flow that would be received from.
From that country club, without again extremely accurate guest count information. In a hotel that is much easier to do because of, again, the, the information that I laid out, the number of units that are available.
And the number of guests per unit, that makes it.
Possible for the company and myself to get the total maximum flow that we could receive from that hotel. So, NO, there was NO reason to do that with mr. Patel because it's two separate situations.
I, I guess I'm just stumped because mr. Patel is a small business, he only has 19 rooms in his stone brooke in. He can provide he's provided wastewater flows which were definitely quite far below what is estimated by ERUs because it's around four.
16000 gallons per month and his ERUs are, are, are being are charged in for 70 like 72000 gallons per month. That's a big difference between his actual usage and what is being used for his capacity. And you said it's state it's be based on guests, but.
Unlike the golf course, I'm sure mr. Patel knows who signed in and how many stays days they stayed. So why isn't that information which is very current and accurate, that you could get and then using that accurate data and real time data, assess his ERUs in essence, to reflect that.
Yeah, I think I'll start again back at the residential example or kind of draw a parallel between a residential customer, right? So, there are many residential customers who will, send my company, my customer experience department a water bill that says, hey, you know, we.
Reduce our, the time it takes for us to shower. We were gone for two weeks this month and so our water usage was really low, so we didn't give that much to your sewer system, right? If we tried to reduce the water, the wastewater bill for those customers for every one off example, that.
That would be impossible to do. And so because of that and because of the characteristics of a sewer facility and the fact that costs are not as variable as they are on the water side, we established a flat monthly charge for residential customers based on the capacity they could get could give to the system. So.
I take mr. Patel's example is very similar to what I just laid out. Yes, he does have smaller water usage than what was calculated, but what is that that is not to say that tomorrow 19 families couldn't sign in to the stone Broken and.
Flush the toilet ten times a piece, right? And so what Limestone has to do as the owner of a, of a wastewater system is we have to treat everything as if we are going to get the maximum possible flow. So we do the same on the residential side as the commercial side. We have to treat and operate as.
If the maximum flow is going to occur. So a flat sewer rate by design is not meant to accommodate a residential customer who flushes less, same on the commercial ERUs. So while mr. Patel has given me that information, I think maybe the disconnect is that we are not trying to do a proxy for water usage.
We are not trying to do that. We are trying to accurately allocate the revenue requirement based on the maximum flow that we might receive from a commercial entity. So, e.g., again, and I I put this in my rebuttal testimony, a bowling alley, the design basis for a bowling alley is not based on the.
Number of guests that they get. It's based on the number of alleys that are in that bowling alley. So a bowling alley with 20 alleys will be assigned a higher ERU than a bowling alley with five alleys. And so, you know, it it's not, it is truly not meant to be a, a proxy for water usage, and I think that might be where the disconnect is a little bit. Did I, did I answer your question?
Yes, I understand. It's the concern I have is that's a small business. It's not a big business. And so the concern that we have is you're charging a small business for quite a lot of.
Gallons per day that they're not using. And so the affordability aspect to mr. Patel, is a concern. And so I don't see the, I don't see.
The three statements. Okay. No, NO question.
Okay.
No, I just I mean my concern is affordability. How about that? Is that fine, Melbourne?
Yes, I I understand your concern. I think it's, it's interesting though in the case of the stone Brooke in that that does have 19 units, right? Another kind of, another kind of rate design could have assigned 19 ERUs. That's not the case of what we did here. The eru's assigned to those 19 units is only eight, right? So.
Understood on the idea of the affordability for small businesses, but what these ERUs also do is it ensures that smaller businesses have a smaller portion of the revenue requirement. So e.g., there are many small businesses on our list where we were able to identify.
Why that they have two employees, right? They were only assigned one EU, not eight, not 16, because they are a smaller business and the capacity they could give to our system is much smaller. And so, in my opinion and and why I did this rate design, which, you know, I.
What I've done in in states where we have more commercial customers like Louisiana and in states where we have smaller commercial smaller amount of commercial customers like Mississippi, I believe this methodology truly accurately allocates the revenue requirement based on the flow that could come from these commercial customers, which is why, you know, another hotel or in that's larger that we have has more ERUs than mr. Patel's. It, it is, in my opinion, accurately assigning a portion of the revenue requirement to commercial customers based on their size.
So, the next phase is confidential documents.
Okay, Kelly, what do we do here because this is confidential and we've got people in the room and on the phone.
Chairman, whoever's not signed the protective order, should leave the room and we will need to pause the recording.
Okay, alright, so if you have not signed the protected order, you do need to leave the room until we get through this discussion, I think.
I'm sorry, we're not gonna pause the recording. We're gonna put anybody online into the.
Love.
Okay. Yeah.
Alright, anyone else need to exit?
We're gonna do both. We're gonna pause the recording and move the people on the phone into the lobby for maintain the confidentiality of the recording that we put on the website.
And who's pausing that recording? Aaron, you've got that.
Okay, you're good to go math.
Thank you know.
Do you remember the deliberations exhibit? We'll see what it's more.
Are you referring to when it's been handed out?
N one that's already been marked. Number one exhibit number.
Okay ok you didn't give the numbers, so.
Yeah, that mr. stowe.
I do.
You remember a series of questions based on this document?
I do.
Can you turn I think you were referred to the right, doesn't have page numbers, the right design and other items page.
I'm there.
Can you.
I think you read portions of one in response to a question, but can you read those last two paragraphs?
Yes, so this is page six oh seven of the chairman's motion. The last two paragraphs reading based on this approach I approve the rate design exhibit attached to this motion. The exhibit contains rates by system for all water.
Customers and residential wastewater customers. Of note for apple water customers, I denied the company's requested flow through charge for purchase water. Instead I include purchase water expense and operation and maintenance expenses for recovery through base rates. This, the exhibit does not contain specific rates for commercial wastewater customers. This is because it.
It's unclear from limstone billing data what the impact would be to individual customers across its wastewater systems. Therefore Limestone is directed to file commercial wastewater rates for each individual system, as opposed to a consolidated rate for all systems to recover the revenue amounts by system as contained in the phase one rate design. I instruct commission staff to provide the parties with an Excel file of the attached phase one rate design exhibit and provide clarification as needed.
Now did, did the, so how did the company use this information or did the company use this information in putting together its response, its file phase one filing?
Yes, we did. So what we did was we used the Excel file that was attached, that the commission staff provided and we updated the billing determinants in the commercial sewer rows to appropriately allocate the revenue requirement to individual ERUs by system.
Now, I I think one of the exhibits, I know one of the exhibits that the consumer advocated was your direct testimony. Do you recall that?
Yeah.
Number 13. Do you have that in front of you?
Just to confirm, the direct test.
I think it was the direct testimony for the original rate case. I could be wrong.
Exit I I have exhibit 13 as the phase two.
That's correct. Let me double check.
I'll move along, I'm sure it'll, it'll come up. So, you refer mr. Stallis to the methodology attached to the deliberations and did the company use that? How did the company use that?
Or did the company use that?
Sorry, can you rephrase, the, the deliberations from the motion?
The motion deliberations you referred to rate design exhibit attached to that. Did the company use that exhibit?
Yes, we use that exhibit as the base for, for our filing.
Yes. I'm handing out the May 12025 filing in this docket.
This will be exhibit 19.
Before we take a look at this exhibit 19 mr. Salas, you remember Kad exhibit number two, I think it was the commissioner.
I do.
And you say page a hundred and four? Yes. I I'm there.
And at the top, there's a section marked rate design. Would you read that 1st paragraph?
The goal of overall rate design is to establish a system of rates that will enable utility to generate sufficient revenues to cover expenses needed to operate the utility plus an equity equity return for investors. Many factors are considered when designing rates including economic and social considerations. The commission has given broad discretion concerning rate design and recognition of the many factors to be considered.
And did you recall from the commission's order, the commission stating why it took the approach it it did in the right case?
I do recall a number of considerations the commission made. One I remember is that the water and sewer revenue requirements were combined in order to lessen the impact on water customers.
And another that stands out for memory is that the commission chose its commercial rate design to lessen the burden on residential customers, to assign a an appropriate portion of the revenue requirement to commercial guy.
Customers. So if you turn a page of one oh seven to the document exhibit number two.
I'm there too.
Top of the page, is that the sentence you were referring to?
That's, that's correct.
In developing the phase one rate design, the panel prioritized maintaining affordable residential rates and shifting a higher portion of the additional revenue increase to commercial sewer customers.
So when the company worked on its May one filing, did the company take into account both of those statements from the commission's order on rate design and economic and social impact than the centers you just read?
Yes.
So if we turn to what's been marked as exhibit 19, I think you responded to a question from the consumer advocate about the company's approach when filing phase one. Can you elaborate on that approach and how exhibit 19 might demonstrate that?
Yeah, absolutely. So exhibit 19 is the original petition or the original filing that was meant to explain the commercial rate design to incorporate our proposed tariff and to give the commission and all the parties as much information as we could about the impact of what it had done.
So in particular, this compliance filing talks about how we utilized ERUs, kind of appropriately allocated them to the different kind of sections, the different rate structures, and then in particular, the, the last kind of.
Whole paragraph talks about limestone waters tariff describing the derivation of assigned ERUs utilizing TDEX construction plans and documents and gave a few commercial examples on on the kind of rate impacts that would occur.
Do you know why Lionston put that information in this filing?
Yes, so I I recall very vividly, that in trying to comply with the exhibit received from the commission.
The, some of the wastewater rates appeared fairly high to me, so I wanted to make sure and Limestone wanted to make sure that the commission in all parties were aware that the methodology that was utilized of ERUs and the proportioning of the revenue to individual kind of classes of customer, how that would impact some connections or some customers.
Thank you Karen I think if I can ask an exhibit number five because miss chairman, I'm trying not to duplicate exhibits. Your number five was.
Was public. Is that correct? Yes. Okay, thank you. Miss chairman, I'd like to pass out May 1920 25 filing and have it marked as exhibit 20. It's exhibit number five, but it's the confidential version. But let's hold on. I don't think I think I can deal with this document without disclosing confidential info.
Okay.
And if I. Yes.
So it will be exhibit 20 and we're going to market confidential, but you're gonna try to avoid making it.
That's ok. The witness will alert me if I'm getting into confidential information. So mr. Sallys, do you recall this this this document?
I do.
From earlier discussions, so.
I do.
So, can you familiarize yourself with the, I don't think the cover letter is confidential, the information at the bottom of that, can you explain why that information, 2nd and 3rd paragraph, why those are in that document if you refer.
No, 2nd and 3rd paragraphs on the 1st page. Yes.
Yes, so, commission staff alerted myself and Limestone that there were some misinterpretations of the order, in our 1 May filing and so these two paragraphs in particular go through and explain what had changed from the May.
1st filing.
So in both one filing and the 19 May filing, if I understand your testimony correctly based on these exhibits, the company pointed out the application of the ERU methodology, is that correct?
That's correct. And, in kind of going through this document, it, it refreshed my memory. The tail end of this document, which was filed confidentially has actually the commercial customers listed out very clearly with the ERUs assigned and, the monthly bill that would result from those ERUs. So all of that information was found in the 19 May 2025 filing.
Thank you. So, you, so you must remember the questions about exhibit five not containing the commercial customers eru. Is that correct?
Correct, and I believe, this is again from memory. I believe the company even made a public version where we redacted the names of the commercial entities and had the commercial customer code, so that, you know, at the very least there could be a public version of this. But but yes, this, this was part of that 19 May filing.
A public version with the ERU.
Correct, by commercial code with the name of the commercial entities redacted for a confidentiality and privacy reasons.
Thank you so while we're on this.
Do you re recall a question from the consumer Advocate Council about, do you recall being directed to the order and the order sent us about a proposed rate design?
I recall.
Is that what this 19 May filing represents?
Correct yes, the, I would say both the 1 May and the 19 May filing represent a, a proposed rate design, in, you know, in practice, the 1 May filing was proposed and in conversations with how the order should have been interpreted is why this 19 May filing even came out, right? So, so yes, this I would refer to it as our proposed rate design to implement the order.
Letter?
I do.
I suppose that process is not new to you given your familiarity in other states.
Correct.
The acknowledgement letter. So from my experience, the acknowledgement letter is, and in other jurisdictions we call it, you know, like a file stamped copy or or some other kind of approval, but in my experience, it is a an approval of the tariff to charge your lawful rate.
So any kind of acknowledgement letter certifying the the proposed tariff would be the commission saying you are allowed to put this tariff into effect, in its entirety.
Have you, you may not have received such a letter from the commission, but have you ever received a letter or correspondence from any of the commissions in which affiliates operate where a tariff is not compliant?
Yes, we have.
And what happens in that circumstance?
In that circumstance, we alter the tariff, so we work with the the commission or the parties who, who are kind of disputing, and we, propose a tariff that would comply in its entirety. That kind of conversation has had and eventually we, we get a fully approved compliant tariff.
As the file testimony in all phases of this document.
Correct.
So are you are you familiar generally with what's been submitted in this docket and so forth?
Generally yes.
Do you recall any filings from the consumer advocate after the commission's acknowledgement letter stating that Limestone's tariff was compliant with the commission's order?
I do not recall any filings from the consumer advocate regarding the, the compliance tariffs from memory.
Thank you.
Do you have an exhibit number five in front of you mr. Solith.
Can you remind me what is.
Said the appendix I believe the tariff appendix to your rebuttal testimony.
I do.
Can you look at, the exhibit to that and the, I think it's the 3rd page.
I'm there?
So do you recall a series of questions I think they were characterized as the process of questioning ERU assignments?
Yes.
So, when you look at this process and you think about the interaction you talked about between Limestone and mr. Taylor, how would you characterize that in light of this, this proposed process?
I would say this proposed process really solidifies what.
That process with mr. Taylor was like. I would say the only change is that, any approve, it's the very, very last sentence of, A .5. It says any approved ERU adjustments shall be applied prospectively from the date the ERU review request was initiated and shall not result in.
Retroactive billing adjustments. That's the only part of the process that changed from what actually occurred. Mr. Taylor's credits and ERU adjustment was applied back to the very 1st business day that the ERUs were implemented as part of phase one. In this case it would be since the review was requested from the commercial entity. But besides that, it, it falls very in line with what the process with mr. Taylor was like.
So accepting that variance that you just explained the process that the company applied with mr. Taylor pretty much this process.
Correct.
So if you look at 2nd line of that re, that 1st sentence, and I think it characterizes what information can be submitted, is that information limited in, in any way or of what the customer could submit?
No, it, it says a commercial sewer customer may request review of its assigned ERU by submitting relevant facility information to the company for evaluation, so that does not put limits on the commercial customer. It just has to be relevant facility information.
So that could be any information that a commercial customer has that they think has a bearing on the ERU assignment.
Correct.
So.
You can refresh my memory on what, that exhibit was.
It was, the 18 March 2026, milestone response to discovery.
Thank you.
I haven't.
You have it So.
You were asked about this document about, what information that the company provided. Do you have your, I think your rebuttal testimony was marked as an exhibit?
I do have my rebuttal testimony as well in front of me.
Oh, if you.
Look at pages, if you look at page 14 of your rebuttal testimony, was, was that question asked exactly? The the question that the consumer advocate was, was asking you about what the company provided? Was that question answered asked and answered in your rebuttal?
Yes, if, if it's regarding the, individual ERU calculations for commercial customers, yes, asked an answer.
So did lines don't provide that, is it your opinion that lines don't provided that information?
Yes. Limestone has provided the design basis for each individual customer, what went into the design basis, the sources, and the ERUs that resulted based on all of that information. So, so yes, it is my opinion that all that information has been provided.
Do you have a exhibit ten in front of you?
I'm gonna ask one more time. Remind me what exhibit ten.
Yeah, that was the T Deck design document.
I do.
Do you recall a series of questions of whether the purpose of this document was making purposes?
I do recall.
So, why did why has the company used this information and how?
Yeah, so I I would relate it to, I'll say like a awa's meter equivalency sizes, right? So that is kind of common rate making practice that dates back to the nineties based on what the AWBA found about, you know, meter sizes and their effect on usage. What we're doing here with these ERUs does something very similar just for the T deck design criteria. So what we're doing here is we're not using this table to do the rate making.
We are using the table found in T Deck's design criteria to assign a, a maximum capacity that we have to be able to treat for, and then we use that maximum capacity to assign ERUs for rate making. So in NO way, in my opinion, are we ta.
Making this table and using that table directly for rate making, we are using it to assign a maximum capacity that our system has to be able to account for and treat and then assigning from that, a portion of the revenue requirement that I believe is, is fair based on what we have to be prepared to do for that commercial entity.
When calculating ERU, when when implementing the ERU methodology, is that TDAC design document the only thing the company considers?
No, it's it's not. And similarly to, you know, the, the appendix that I proposed to the tariff, anything that would affect the design basis is how the ERUs would be altered. So NO.
Thank you.
You remember do you recall a question along the lines of the discussion on this document about whether or not you were familiar with the regulatory term known event measurable.
Oh, I do.
When you think about that term and wastewater, what, what comes, how, how does those two terms relate?
S, so in my opinion, they don't really. So a known and measurable as far as I'm aware in a proceeding like this is some kind of measurable change to either an expense category or a rate based category, right? So e.g., in this docket, we only had about five months of data for one of the systems, and we knew that.
An annualized basis of that would need to be utilized to get the most accurate information. So a known and measurable adjustment to the expense and revenue data for that system was included in our original filing to kind of true up what we knew was gonna happen based on reliable information.
I would not say that there are any known and measurables based on wastewater usage that have any bearing in this case, based on wastewater flow and usage.
There were some questions related to, I think exhibit ten, which were some documents from mr. Patel. Can, can you, there's been a lot of discussion about measurements and water and water usage and so forth and you've talked about how it is or isn't a proxy. Can you elaborate on that?
Yeah, so I I definitely can. So using text design criteria, there, there is NO kind of approximation of what amount of water a, a commercial customer is using.
In the ERU methodology. Rather than being a proxy for water usage data as as I kind of described in, in a little bit more detail, it is based on the maximum capacity that a customer can contribute to our system. So in mr. Patel's example, because his hotel.
Has the ability to accommodate, I believe the exact calculation is 47.5 guests, which again isn't is an average. We have to be able to treat the waste that is flushed, for lack of a better term, from those 47.5 guests on a daily basis, right?
So there is NO kind of a approximation of how much actual usage is occurring. I like to think about it as the the monthly flat rate is calculated for the ability to flush your toilet as many times as you need to flush it, right? So it's not necessarily.
Us going and saying, hey, you flushed one time last month and ten times this month and a hundred times potentially next month, it is more, because we have to be available to treat your waste, as if you flushed a hundred times, that that is the allocation that you.
Your entity is, is receiving as part of this methodology.
So if you don't use the design information, any other information that the company employs in the ERU methodology, and you estimate a hotel for instance, and you get that information wrong and there's not the capacity, what happens?
A lot of, pretty terrible things can happen, sewer backups into the hotel rooms, leakage out into, you know, from the company's pipes overflow of the company's wastewater plants. It is very important that the systems are able to take.
The capacity from its connections.
In your opinion, there's been, there were a lot of questions and dialogue about mr. Taylor's experience and mr. Taylor's experience based on the the result reach with mr. Taylor, could the company take that information and develop some uniform application for all commercial customers?
I think that the process that occurred with mr. Taylor, the uniform application is, is identified in, in what I'm proposing as appendix A to the tariff. And that's, I believe as as granular as something like that can get. Because at.
Every commercial entity is different and because they have different design bases and because they have different types of design bases, so seats versus alleys versus guests versus employees, I don't think that there's a way to take mr. Taylor's specific experience and, and apply it to every single customer, but I think that appendix A does the best possible job at giving customers an opportunity to do so if they, if they choose.
So in in looking at what the company filed in phase one on 19 May and what is proposed here in those situations with mr. Taylor and and mr. Patel, did, would you, did the company learn anything in those processes?
Yeah, I I I think so. I think I I hope I can honestly say that we're always learning, but, but absolutely, I mean it it definitely learns some things, but I I would say that the the filing for phase two as of March second really memorializes what we were already doing well for our commercial customers, which is reviewing the information they provide, working with them to.
Reach an understanding on what their ERU should be and ensuring that they're made whole for any kind of overcharges or you know disputes that that had occurred in the past. So, so yes, I would say that that we have learned and implemented and I, I believe that we've done well by the commercial customers that have disputed their ERUs to us.
So do you recall during the discussion with sort of a example the hotel versus the country called.
Oh, I do.
So, based on what the company filed in phase one and what the company, the experience was mr. Taylor and mr. Patel, and potentially all the commercial customers who raised some issues and what the company has filed in phase two, what would you characterize as the best data?
I think it it varies based on commercial entity. So, e.g., in mr. Patel's instance, the best data is the accommodations per each room for the total guest count multiplied by the total number of rooms. For mr. Taylor, because it is not so apples to apples and because that the country club was unable to provide records on, you know, the, the guest count per day.
Because, e.g., if a, if someone wanted to reach out to the old Natchess country Club and have their wedding there, right? The wastewater flow that would come from that wedding is much, much higher than what would occur if that wedding didn't happen. And so based on mr. Taylor's particular facility type and his parta.
Killer information that he was able to provide, we were able to do a redesign of his ERUs or a reforecast of them. So I don't know that I would specify any one data set as the best data. I would say that, that it really depends on facility type.
So do you recall a series of questions regarding, an address 23 waste and 21 wasten line.
I do.
So what's your title again?
I am the assistant Vice President of customer Operations and regulatory operations.
So if there was an issue such as this, would that fall under your group?
It depends on what issue you're referring to. If it's the ERUs, then, then yes, absolutely. If it's things like addresses in the system that is generally more a billing function, so it depends portions of, of mr. Patel's, you know, situation do fall under me and portions fall under our billing department.
Do you have a, are you familiar enough, do you have an opinion of if there were a billing address issue with the company, what would the company's response be to that?
Yeah, any kind of billing adjustment issue, I get involved with, and I advocate very strongly in the customer's favor, right? So, e.g..
Services.
Oh, the service address. I, again, I, I would be speculating, to be completely honest with you, I don't know how all of those determinations are decided, but I do know that an investigation would occur and data would, would be updated with what is most accurate.
Can you think of a benefit to the company of not trying to have that information as accurate as it could be?
No.
Except 16.
Exhibit 17 is the right case test direct system. Mr. chairman, I alluded earlier to mr. Sallyz's rate case testimony. I think that's exhibit 17, his testimony in the right case docket, the direct testimony.
I.
So, do you remember a series of questions about whether or not, to what extent ERUs was decided by the commission?
I do.
Previous case and in your direct testimony that's been marked here number 17, did you cover ERUs in your testimony in depth in this case? In the right case?
I did. So in the, in the rate design section, which begins on page 17 of my direct testimony, in the the general rate case, the original filing, I talk about a number of things, and actually, within the 1st paragraph, I start to begin talking about ERUs and then it's further kind of, explained later on in the testimony.
Thank you. 6616 in product view?
I do.
Do you, you recall this exhibit?
I do.
Do you recall it being pointed out on page one of the exhibit the Hampton n. The original ERU number and the proposed.
I do.
What what what are those members?
I believe that those are confidential, those specific numbers, but I can speak generally too.
To the big general.
They they decreased.
So what was the basis for that, that increase?
That particular, customer reached out and was able to provide updated information on the design basis which is per guest and using the verified information from that commercial entity, we were able to adjust the ERUs appropriately.
Thank you.
Do you recall series of questions related to.
All right.
Of nine regarding schools.
I do recall those questions.
So in front of you that the order.
I do.
And looking again at page, the top of page one oh four, you don't have to read that again but the where the commissions talks about rate design and well I guess it and that line three. So I'm Can you read that?
Yes, I I believe you're referring to many factors are considered when designing rates including economic and social considerations. Yeah.
Yes, and then we previously had the top of a page one oh seven of that 1st sentence.
In developing the phase one redesign, the panel prioritized maintaining affordable residential rates and shifting a higher portion of the additional revenue increase to commercial commercial sewer customers.
So is do do do those two things from the commission order have anything to do with how the the company initially tried to treat schools?
Yes, so I would say that the the sentence on page one oh four regarding the economic and social considerations.
Were considered in Limestone's 1st filing, as I kind of explained a little bit before, our Louisiana affiliate Magnolia water, actually, ordered the utility to apply that .5 multi.
Supplier as a, I guess what I would call a, a social consideration. And then in reviewing the commission's final order, which prioritize maintaining affordable residential rates and shifting a higher portion of the revenue increase to commercial sewer customers that, I think speaks for itself, that the priority here is, is making sure that residential.
Rates, are, are prioritized. And to do that, the ERU methodology, was, was reviewed again and updated billing determinants were submitted in this filing.
Two questions. Based on your the questions from the council for consumer advocate regarding the number of customers, particularly mr. Taylor and mr. Patel, were there were there any commercial customers that raised the ERU assignment that the company did not engage with?
No, the company engages with every, I mean every customer interaction, including commercial customers. So we engaged every time a commercial customer either asked for an explanation of their ERUs or disputed it.
So a lot of questions today about the, the rates and some of the comments the the increase in rates, what in your opinion, what's the underlying impetus?
Ah that day increases.
Yeah, so, going back to the company's original filing in the drawer rate case, these systems, as outlined in some of the bill details had rates as low as $8, and hadn't had any investment in decades, right? And so without rate increases in decades and without investment.
Been in decades. Limestone and its parent company is CSWR, our mission is to provide safe reliable, and environmentally responsible resources to communities kind of across the country. And so Limestone identified a need in Tennessee for investment for updating of some of these really delapidated and old systems.
And by doing the investment, by modernizing operations, by providing customers with modern ways to pay their bills, 2047 customer experience, a communications department that, that does its best to, to educate customers on why bills may.
Right increase. All of that kind of factored into the company's original request to increase rates, which was, you know, approved in part by the commission and implemented as part of phase one and, and hopefully will be implemented as part of phase two in this docket.
So do you recall from the rate case whether Limestone was operating in Loston Tennessee?
Yes. Limestone had been and continues to operate at a loss in Tennessee.
And even at that, the company has that correct?
Correct. Blindstone has done capital investments in every single system that it's acquired, in an effort to, again, provide safe reliable, and environmentally responsible resources.
We we talked earlier about the, as did the council for consumer advocate, the deliberations to order and the tariff letter. My last question is the company's phase two filing compliant with the commission's directives?
Yes.
Thank you. No further questions, mr. Jim.
Okay, thank you. Do the commissioners or staff have any questions?
Yeah.
The lady earlier talked about her soccer field, are you aware of are there problems at the soccer field because of their operation?
I would characterize it a little bit differently, so that is in, in reference to the Grassland facility. So the Grasson facility was constructed decades ago and has had problems for many decades. Limestone acquired that system a few years ago and we're working very closely with TDAC to approve a full plant replacement because that plant does not have the capacity to serve those customers. So yes, Limstone is aware of the, of the soccer field and what's occurred there.
And in that as a result of your lack of capacity level, but.
Correct.
One last question.
We talk.
But you have to fill the plan and maintain one that would take the maximum capacity that you might get, not what you actually get. Do you also look to have more capacity than you might get just in case of expansion?
So we have to design to the maximum capacity for, the service area, which is a geo geographic region, right? So if our service area includes undeveloped lots, then we would design a system to accommodate some additional residential.
Connections, if, we seek to expand that CCN to additional lots, generally what we do is we enter into developer agreements with those developers so that the developers pay for the additional capacity that the plant would need. Thank you.
Other questions? I've got a few, and I don't remember all the numbers, but if you went back and looked at the average residential customer impacted here with the May 25 invoice.
And I understand that in many cases like Grasson, they've had artificially low rates for a lot of different reasons like the capital investments, like the rate cases, so they've been able to enjoy that. And unfortunately that cannot continue if they won't have water services that are reliable and efficient.
And if you look at what's proposed in, in phase two, how much would the average customer bill go up for a residential customer between May and what would happen if, phase two were approved?
You're talking May 2025, so their original rates. Yeah. It it does vary based on service area quite a bit. I would say that, e.g., the Aqua utility service area had extremely low rates, so, you know, think single digits while the grassling.
Rate, e.g., was a little bit higher. I would say.
My, professional gut feeling is that it would go up probably around about 40 to $50 on a true average from their original rate to what we're proposing in this. But again it does vary wildly based on systems, so that's more of a, of a go.
Answer than anything based on real data.
So like here at Fortyport, well this is commercial, so let's talk about commercial. One thing that's been alluded to is you guys don't really know how many commercial customers you really have in, in the cart right system, that there's some that are classified as residential.
That are truly commercial. Is that the case that you still have not really figured out how many commercial customers you ex you really have?
I would not characterize it that way, at all. I would say that a lot of what was said is speculative based on information that, individuals might see with their eyes, right? So e.g., one situation is that a commercial customer could treat their own wastewater, in which case they would not be our customer. Another example is certain commercial entities share the same connection, and so they'd be billed as one entity.
Rather than two. So, what I can say is that we do conduct audits on all of this information. We conduct audits on whether or not a, a connection is residential versus commercial, and we use kind of all available, I'll call it GIS data, so mapping data to ensure.
Sure that every developed lot in our service area has an account associated with it. And so, in my opinion we do quite a bit of auditing to ensure that we are accurately billing as many customers as we serve.
Okay.
And looking at what the advocate handed out, which I think was the exhibit four, so which is a spreadsheet with the hundred and 15 customers or so. Just looking at what appears to have been there may.
Invoice to their proposed 25 phase two, and on average I'd say it's going up for every commercial customer about 400 %. Now, if you, if your, if your electric company told you tomorrow your personal bill at your home was going up 400 % or mine, I'd.
Be I'd be pissed quite frankly, and trying to understand why because my electricity would not have changed from yesterday to today. It looks exactly the same and so what am I getting for that? And I understand the challenges with capital upgrades cause I was the utility industry for 30 years.
But it, but, but that is shocked, you know, that's that's that's that's shock rate to to to so many commercial customers. So if mr. Taylor would say to you, listen, we're arguing over trying to figure out how many guests are coming in, and this maybe totally unfeasible, and if he said I want to put a meter on my discharge.
Pipe for my suitch and let's monitor it for a year. I will allow you guys to approve the type of meter we put on. I'm willing to pay for that, and if it proved after a year that my usage is much lower than what you're calculating based on kind of your assumptions, I assume you would say, ok, we're willing to adjust your rate.
I would that's a that's a great question, so I apologize for the pause. I I would say NO. And the reason why I would say that is because if that was the case, then we would have to do that for every commercial customer and then every residential.
Customer that wanted us to measure individual wastewater flow, and that is not what I have proposed or Limstone has proposed to do here. We have proposed on both the residential and the commercial side to have a, to have a flat bill, based on the capacity that we could take on from a commercial entity, and if that were the case, if.
We wanted to convert to something different, we would have to go, you know, come back in front of the commission to completely alter the rate design. If if it was per, you know, thousand gallons of wastewater flow, that is technically feasible, but it would require a lot of, work to do.
Yeah. Okay, just curious, absolutely. Last question is, I understand you have to design your system for maximum capacity, but the way you're structuring your rates, it's also based on maximum revenues because it's based off of maximum capacity and you know as well as I do, you're never going to hit maximum capacity.
It's just not gonna happen. With every residential customer, every commercial customer gonna max out their system on the same day, it ain't gonna happen. But I realize you still have to kind of plan for that because theoretically it could, but the challenge that becomes saying, ok, we know that's never gonna happen, but what is a reasonable percentage that.
Is it 90? Is it 80? It's 70? And the truth of matter is you would never know without empirical evidence of actually having meters everywhere and over a period of time having factual data to say in a year, this is what really happens, and even that could vary year to year. So I understand the challenge. Unfortunately, there's NO easy answers here. And, and that's why I think we're all kind of struggling to try to make sure we do the right thing and cut with the right answer.
Can I respond to that just very briefly? Yeah. So the the revenue requirement, you know, the, the way that I think about it is the revenue requirement was determined by the commission in, in its order, right? And so the rate design being based on the total amount of capacity doesn't actually impact the revenues at all, right? And so, the way that I think about it is, because that revenue requirement is really set in stone for us to not exceed, the ERU assignment.
Doesn't necessarily say that we expect any commercial customer to hit their maximum capacity. It's just that we have to design our investment and our costs around that. And so it's not necessarily that our revenues go up or down based on the actual capacity that's given. It's just that that is.
Is our way of assigning a portion of that approved revenue requirement to the entities that have the, the most, the biggest likelihood of doing that. And so, I I agree wholeheartedly that that it is very difficult without specific wastewater flow usage, and this is, you know, the the methodology that I've used in other jurisdictions. And so, yeah, this is this is.
Limestones and my kind of attempt to, to do exactly what you said and and make sure that that revenue requirement that's agreed upon and approved is split up as fairly as it as it can be. So yeah, thank you.
Okay, next one more. Sure.
If the.
Give yourself.
Had made the investments necessary to have the systems be compliant in A one systems, you wouldn't be looking at these types of increase of what the rates would have been if they had the right system capacity there. Am I am I correct?
That's correct. If if an owner had been, you know, doing the regular rate cases that they should have done and making the regular investment that they should have, then the issues that the grasson facility wouldn't be happening, right? And these percentage increases you see would not be happening either. It's it is all a malgamation of both the lack of investment and the lack of recurring rate cases.
Okay. All right, thank you. Do you have any questions? Yes.
Solution.
Just.
Out of curiosity.
So cart right Creek, used water usage as part of their.
Why can't you?
Also do that?
We have attempted to get the water information from, the, the water provider on a, on a larger scale, and we have been unable to enter into an agreement with that entity. I would say that the, you know, the cart rate Creek tariff.
Does say that you can use estimations in the in the absence of the actual water data, but we did not Limestone did not have any indication of how those estimations could be done in a fair and repeatable way and that is really what these ERU.
Are meant to do is to kind of take that same approach from the cartright tariff and assign a little structure to it. Of course.
Okay, other questions? Alright, thank you. The witnesses excuse. Alright. Advocate, you may call your 1st witness.
Can't can you put your mic on there?
1st itness.
All right, Yes.
Good stuff.
Documents over here so.
Confidential so how they recollect those processes.
Can you hear me now? The question was, we've got some.
That's a regular.
The document.
Alright, how what's gonna happen?
Because we get up and leave all this paper on.
It's 20 the only one. It's 20 the only one that's confidential so far from the exhibits?
Yeah welcome.
Left those.
And and keep them. Okay, that'd be great.
Or you raise your right hand. You swear from testimony about to give will be truthful? Alright, council, please proceed.
Could you please share your name and.
My name's William Novak. My business address is one nine morning, Arbor Place, the Woodlands, Texas.
Yes I did.
That I'm aware of.
Good afternoon commissioners. I'll be brief because you've already been through a long explanation about all the issues in this case. I've really boiled down my entire testimony to this three points that I want to communicate to you. The 1st one.
Is the rate increase in how the companies changed the billing determinants from what you decided a year ago in phase one. And what there's a good reason why they did cause the rates went up so much, especially on the Awkwa system that the usage went way, way down. So what they're wanting to do is update these billing determinants to get really a higher revenue rate than they otherwise would have.
If you had used the billing determinants from phase one, but.
The billing determinants went down and their revenues went down two on Aqua, so did their purchase water costs, so did their purchase power costs because it's all related. So unless you want to have a one item rate case again that's just related to billing determinants.
I would recommend that you readopt the billing determinants that you used in the phase one rate case and apply that to 2nd part, the phase two rate increase that you determined last year as well.
2nd item I want to talk to you about is the recovery of carrying charges. The company's calculated this in a way, and I feel that they've done it correctly. The only issue I have is the company's proposed to recover these carrying costs over a one year period of time. We typically recover these costs like rate case.
Cost over a three year period of time and that would lessen the impact on customers that are already getting a very high rate increase. The final item I wanna talk to you about is the commercial rate design. And you've heard a lot about this, and your motion a year ago directed the company.
And the staff to get together to come up with a right design to do this. Well, they did that, but the issue was the commission never affirmed this ERU right design.
But it went into effect. No, we're really not being treated fairly with this. What I'm recommending that you do is defer.
A phase two rate increase to commercial customers and open a proceeding to reexamine whether this ERU methodology is the best way. So we can have that debate about the ERU methodology.
For right design for commercial customers. That completes my summary.
Examination.
Yeah.
If you like across the.
I'm sorry would you like to cross the witness?
One moment.
No question.
Alright, do the commissioners or staff have any questions to mr. Novak? Mr. Novak, you're getting off easy. Thank you.
You're excused. Alright dad to get my college next witness.
Okay, we'll call, our next witness mr. Clark Camell.
Good afternoon, mr. Camell.
Would you raise your right hand, sir? You swear from testimony you about to give will be truthful.
Thank you sir. Alright, council, please proceed.
My, my name is Clark Cammell. I'm a financial analyst with the consumer advocate division.
Okay, now?
Yes I did.
Do you have any changes or corrections to that?
Not that I'm aware of.
Could you please give us a summary of your testimony, and I noticed you're have a bit of a cold, so if you ever wanna, you know, have a drink of water up there you know feel free to take a break there.
Thank you. I'm gonna follow up on on previous witnesses comment and that you've heard most of this in great detail already today. So I'm gonna be brief as well. My testimony for the most part focuses on the ERUs themselves and their use for determining a custom.
Or charge. The concept of an ERU I want to make clear is not inherently problematic. They can be used and they can be useful. My concern in this case is the way in which it's applied, and it raises numerous issues from a technical perspective, and a regulatory rate perspective and.
What I would call rate design. At its core, the issue is one of how the customer usage and ultimately cost responsibility is measured and translates into rates. I would like to note that as defined an ERU is equivalent to 300 gallons per day. So right away.
Way we begin with the discussion of gallons and flow and volumes and that might be the cause of some of the concerns when we're going from a thousand minimum gallons to 300 gallons. We're still talking volume. Limestone, having said that, limstone's approach relies on a standardized design criteria.
To estimate the the flows and apply this ERU.
You've heard enough about how those are developed and determined, basically it's a generalized assumption for construction purposes that results in a hypothetical flow and then gets applied to an individual customer.
The three points I'd like to make is that it removes that connection between cause causation and cost recovery where the rates are based on estimated or assumed usage. This reflects neither usage or the capital investment. A lot of the discussion this afternoon would.
Change in analysis that I would do that would focus on that capital investment and have a slightly different discussion. Second, this raises issues of transparency and reproducibility. The company has, has done a lot to explain how these numbers can be rep reproduced. There is still an issue of as discussed earlier.
The exact amounts for the individual customer when you have something that doesn't fit normally within the design. There still are subjectives assessments being made to determine what that ERU is. We mentioned mentioned that the tariff does not provide detailed formulas or methodologies in the tariff for calculating those ERUs, and it didn't provide a clear explanation of how they were gonna be reviewed, verified or challenged.
Without that information, customers and regulators can have difficulty understanding how changes and charges are determined or made. And the, and the 3rd point again is the process introduces that degree of subjectivity in the assessment of ERUs, including identifying facility types, selecting appropriate criteria and estimating usage levels. The number.
The schedule that is used is from 1998I believe, and that was a standard flow design. That doesn't even reflect what exists today or what exists today.
For the previous hundred years and how those were designed. It's a design criteria that creates a different base and standard from what the existing facilities are. I looked at this from a kind of.
Standard rate perspectives articulated by by Bombright and and they really look at simplicity transparency, fairness, and cost allocation, and price signals, and that's a question that is always for the commission. Do you want to send price signals or do you not send price signals? In this one, there would be.
Arguably a clear price signal if it's a flat rate, but it's gotta be understood that that ERU represents a flat charge that is not volumetric, which has been raised by some of the consumer consumers themselves. So to better address some of these issues we, I had several proposals.
They included more detailed and explicit information and the company's responded to some of that and explained some of that with that, I think that'll conclude my summary. I don't wanna go into to bore you with more detail.
Would the company like to redirect? Cross. I mean cross, sorry. It's been a long.
It has been, NO cross examination mr. chairman.
Alright, do the commissioners or staff have any questions? Oh.
So I'm curious, if you were keen for the day, how would you design it if you didn't use the ERU or how would you use ERUs effectively in a way that you think's fair to all all everyone involved?
That's that's really funny if if I were, the way I would decide it would actually allow you to use the ERUs, but it wouldn't use the ERUs because it would convert it to volume. I and I apologize for not having the data in front of me. There is a pretty good correlation between water flows and sewage flows. The company has done a good exp explanation of saying why.
You don't measure those switch flows, you know, the the cost of doing so is almost prohibitive for the value that would be gained and so you don't want to be doing that unnecessarily, but I am still a big proponent of using water flows of as a reasonable example or substitute for it. If you're gonna use.
The ERUs the way they did with the design criteria, then I would look at it much more specifically on the historical data if available for individual facilities, but that gets really detailed and costly as well. I I hope that answers your question. It does. Thank you.
Alright, thank you. The witnesses accused.
Thank you.
Alright, let's move on to our closing statements and we're gonna ask the advocate to go 1st.
Okay.
When we begin this case, I pointed out that it's been almost two years that this has been here and in that time the company has had every opportunity to present as much information as they thought was needed.
Fair number of new things, for instance, this whole argument about capacity was never stressed in, in the order and it's something that I I agree that we need to think about, but we get back to the point again.
We've stressed this in the opening and certainly in the cross examination. This commission never really had the opportunity to address ERUs in its order. And again, that's, as you said you had not enough data to set billing determinants for.
Commercial sewer customers and we've heard from the company that we mentioned I think we put it in a discovery response, but far from.
It wasn't.
System to handle.
They're up against.
Being used and for instance, the commission asked good question about how many commercial customers are there, you know, surely that's something that could be better than it is.
Quite a while now.
Thank you.
Alright, thank you. Alright, company, your closing statement, please?
Thank you, mr. Chairman I'll be brief or at least brief until based on the time that the pre hearing officer allotted. I want to read briefly from the commission's order in this case. It says the goal of overall rate design is to establish a system of rates that will enable a utility.
That generates sufficient revenues to cover expenses needed to operate the utility plus an equity return for investors. Many factors are considered when designing rates, including economic and social considerations. The commission has given broad discretion concerning rate design and recognition of the many factors to be considered. And in announcing this decision, the commission announced.
To the parties that in developing the phase one rate design, the panel prioritize maintaining affordable residential rates and shifting a higher proportion of the additional revenue increase to commercial slower customers. And that is in fact.
What the commission and Limestone work together to achieve. Based on the testimony that mr. Sallys just gave, Limestone knows who his customers are. It characterized, it classifies those customers for a.
Bunch of different reasons, but there's been some nuindo including a statement just made by council that maybe Lionstone doesn't know who his customers are. Mr. Sallis just explained that there are reasons why certain customers may not appear as a commercial customer.
They may not even be on Livestone's system, even though they're near somebody who is on the system. Limestone knows who its customers are.
The the ERU methodology, is using that because stewards aren't needed. We may live in a world one day where stewards.
Are neithered, and that would answer the question that was asked, but we don't live in that world today, and so arguing for a usage based rate design.
It's not here yet. No matter how much we might want it to be here, rate design by its nature is imperfect. Whether it's water rates, gas rates, wastewater rates in the old days telecommunications rates.
Right design is just not perfect. It's the best we can do, as long as it's fair and reasonable. How does the company go about allocating the sewer revenue deficiency among the commercial customers? Do we do it per capita?
Where everybody pays the same. Well, that's what we proposed in the right case. No, we don't want to do it that way, which we accepted. Usage would be great, but we can't do that. So the next best thing is that capacity, how do we design capacity.
Of course not. We don't do that. It's not perfect, but it's a reasonable estimation.
Today statement, the consumer advocates said we're here because the commission did not have sufficient data to develop.
The commissions order.
Dr. Commissioner, here's some more. The Commissioner's says we're here the panel moreover to further alleviate the immediate impact on customers to panel.
Determine that the overall rate increase be spread over two phases. That's why we're here today. We're here today because the commission decided that for affordability matters and to avoid rate shop, this should be put in two phases. That's why we're here today. Not for the reason.
Council for consumer Advocates said we're here today. And closing, I want to adjust a couple of more things in his testimony. Mr. Novat.
Said and reiterated it today in the summary and I'm reading for page six of this testimony. Lines 13 through 15. He said quote, since the use of ERUs for commercial rate design had not been discussed or included as evidence by.
Any party prior to the commission's deliberation in this case, closed call.
That simply is not true. It's not accurate. Mr. Silly set up here and testified that the exhibit he was given that had his direct testimony from the right case had ERU testimony in it.
That's why in the company's post here in briefs, it briefed ERUs because that was evidence in the record. So NO matter how many times.
Novak restated that in response to their, to our data request. They said quote, since the use of the ERU methodology was never presented as evidence by any party. It's just not true. It's in the record. Mr. Novak said, just now that.
The commission should consider freezing the the commercial rates. But but mr. Novak did not address any impact that has on the company. The company had has just been approved. It's debt financing.
And that debt financing was based on the commission's decisions in this case because the company, as that docket will reflect, cannot get that debt financing based on.
The condition of its systems without rate increase. And so that would put the company in the unenviewable position of having committed to continue investing in Tennessee to not being able to do that and not being able to live up to the the commitments of that debt financing.
One last thing, I think mr. Sylus's testimony communicates that the company has been willing to talk to any of its customers who.
Don't understand the ERU methodology or think the ERU methodology is is incorrect as to that customer. But there was also some dialogue that, that, you know, did you talk to this customer about the proposed biling?
Did you talk to that customer about the proposed filing? The commission directed Limestone to have two public comment hearings. In addition to that, the commission directed Limestone to published.
Its current rates and the proposed rates alongside those rates. Liamsault also put that information on his website and the commission went a step further. The commissioner said, I want you to send direct notice to your customers.
It's not good enough that it's published in the newspaper. It's not good enough that it's on the website. I want you to send every single one of your customers direct notice. So we did. And in those direct notices of the public hearing comments, we included.
What the phase one rates are and what the phase two rates were proposed as. And we also sent an additional notice to the customers about the hearing today. And in that notice we repeated that same information and we also included again.
A chart outline what the phase one rates currently are and what the phase two rates were proposed to be. So, those were direct notices. So if our customers received that notice and they wanted to talk about it, like the schools, for instance, that would use.
That's the example they had direct notice of the proposed rate from the commission and also from linestone. Thank you mr. chairman.
Thank you. Alright, is this as a public hearing, is there any member of the public who would like to comment at this time?
All right, let the record reflect. No one is seeking recognition to comment. We've concluded the hearing this matter. I'd like to thank the parties for the presentations today. Due to the statutory deadline as a matter, we're gonna deliberate today. But 1st I'd like to take a ten to 15 min break and then.
We'll get back together Hey, alright, we're back on the record, so I appreciate everybody's patience, so I have a a motion, a move to make.
A move that we defer deliberations to a future commission conference to sus to suspend implementation of the phase two terriff pending deliberations. This will allow staff time to fully evaluate the record with regards to the issues presented as so move.
Grab outside.
All right. Thank you.