HomeMy WebLinkAboutMINUTES - 05191998 - SD4 Contra
TO: BOARD OF SUPERVISORS Costa
FROM: DENNIS M. BARRY, AICP QCounty
COMMUNITY DEVELOPMENT DIRECTOR
DATE: Mely 19, '1998
SUBJECT: Accept the Rate Setting Methodology Manual Developed for Residential Solid
Taste Charges as Applied to Browning-Ferris Industries, Inc.
SPECIFIC REQUEST{S} OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATI NS
Accept the rate setting methodology manual developed by NewPoint Group for
residential solid waste charges in unincorporated areas outside of the Central Contra
Costa Solid Waste Authority (CCCSWA) jurisdiction which are served by Browning-
Ferris Industries (BFI).
FISCAL IMPACT
None to the County General Fund. Board action on June 3, 1997 authorized the costs
of developing the manual to be funded by future Franchise Fees.
BACKQROUND/REASONS- RJECQMMENDAIIONS
On June 3, 1997, the Board of Supervisors directed the Community :Development
Director to execute a contract with NewPoint Group to develop a solid waste rate setting
CONTINUED ON ATTACHMENT: YES SIGNATURE A4
RECOMMEN57TION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD CCDM TTEE
APPROVE OTHER
SIGNATURES . `�
ACTION OF BOARD ON May 12 , 1998 APPROVED AS RECOMMENDED X OTHER—
VOTE
THER—VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
_., UNANIMOUS (ABSENT w - - ) AND CORRECT COPY OF AN ACTION TAKEN
AYES:.i,,23 ,. NOES: AND ENTERED ON THE MINUTES OF THE
ABSENT:_ _ABSTAIN: BOARD OF SUPERVISORS ON THE DATE
SHOWN.
Contact: Linda Moulton (5101335-1238) ATTESTED may,.-_19^1998
cc: Community Development Department (CDD) PHIL BATCHELOR, CLERK OF
THE BOARD OF SUPERVISORS
AND COUNTY ADMINISTRATOR
A. . .OK
B , DEPUTY
axateset.bo ._
process and methodology manual. The timing of the process was determined by the BFI fiscal year and
the availability of data. The fiscal year for BFI is October through September and data was not mailable
for the past year until late January.
The bate Setting Manual is divided into five sections.
Section I. The rate setting overview outlines the goals of the rate setting process and policies guiding
the rate setting manual. The rate change application process and allowable and pass-through
costs are outlined.
Section II. This section outlines the rate setting process in the base years from the preparation and
submission of the rate change application through the implementation of new rates in a step-
by-step order.
Section III. The rate setting methodology is also a step-by-step process. Section III outlines the
preparation of the base year rate change application and data.
Section: IV. The interim year rate setting process outlines the provisions for applications which provide
for CPI increases in the three years between base years. There is also provision for projected
changes in tipping fees and regulatory charges and adjustments for franchise fees if revenues
change.
Section V. This section outlines the methodology and worksheets used for interim year rate changes.
.A copy of the Board Order of June 3, 1997 authorizing the development of the Rate Setting Methodology
Manual is attached as Exhibit 1 and a copy of the rate setting manual is attached as Exhibit 2.
The presentation of the results of the rate setting review, approved by the Board on.August 12, 1997,will
be presented to the Board as soon as it is completed.
_...._ . .._........... _.._.. _... . .._... .
_.... ....... ....... .. ... .. .._ ....... ....... ....... ....... .. .
EXRIBIT 1
Corti
TO: BOAR'S OF SUPER\ASORS � � 3'''� '� Ptd 4: ' ! Costa
CO^
FROM: HARVEY BRAGDON
DIRECTOR OF COMMUNITY DEVELOPMENT ,LN T DEPT
DATE: JUNE 3, 1997
SUBJECT: APPROVE ANIS AUTHORIZE THE COMMUNITY DEVELOPMENT DIRECTOR TO
EXECUTE A CONTRACT TO DEVELOP A SOLID WASTE RATE SETTING PROCESS
AND RATE SETTING METHODOLOGY MANUAL FOR UNINCORPORATED AREA
OF THE COUNTY
SPECIFIC''REQUEST(S)OR RECOMMENDATION(S)'&BACKGROUND AND JUSTIFICATION
MCOMMENDAEONS,
AUTHORIZE the Community Development Department Director or his designee to execute
a contract with NewPoint Group to develop a solid waste rate setting process and
methodology manual. The amount of expenditure will be $25,000.
EINANCIAL IMPACT:
The County General Fund may need to advance funds to accomplish the project. Costs
will be funded by future Franchise Fees or pass through costs to be paid by rate payers.
CONTINUED ON ATTACHMENT: _X_YES SIGNATURE:
—RECOMMENDATION OF COUNTY ADMINISTRATCJR , RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATUREtS)
ACTION OF BOARD ON --June 3. 1937 APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS
UNANIMOUS{ABSENT - I HEREBY CERTIFY THAT THIS IS A TRUE AND
AYES. NOES: CORRECT COPY OF AN ACTION TAKEN AND
ABSENT: ,ABSTAIN: ENTERED ON THE``MINUTES OF THE BOARD
OF SUPERVISORS ON TIME DA'V'E SHOWN.
Contact: Unde Moulton(510)338-1288
cc; Community Development Depadment(CDO) ATTESTED_ dune 3. 1997
P141L BATCHELOR,CLERK OF THE
BO D OF SUPERVISORS AND
ADMINISTRATC3
Attachment
BY
LM:tw s #ne Wampier
RLMI:manual.7bo
Board Order
Execute a contract to develop a solid waste manual
June 3, 1997
-Page 2-
BACKGROUN /REASONS.FOR RECOMMMEN12ATIONS:
Since the County does not have an adopted solid waste rate setting methodology and
process to facilitate possible rate reviews and because Browning-Ferris,Industries (BFI)
has requested a rate review, the County Ad Hoc Solid Waste Committee directed the
Community Development Department to ask for a proposal from a consultant to prepare
a rate setting process and methodology manual that can be used in unincorporated areas
of the County.
The City of Concord had a rate setting process and methodology manual for residential
Solid Waste Fees prepared in February, 1993 and recently completed a rate'review for
Garaventa Enterprises using the process and manual. Ernst & Young created the
process/manual for the City in 1993 and NewPoint Group/Ernst & Young used the
procedures to complete the rate reviewing in March of 1997.
NewPoint Group/Ernst&Young has submitted a proposal for creating a methodology and
manual which would be adapted to the County's needs. They have presented us with a
project work plan which would include the following tasks:
Task 1 Initiate and Administer the Project
Task 2 Review Current Rate Setting Policies & Practices
Task 3 Clarify Rate Setting Objectives and Policies
Task 4 Develop Rate Setting Process and Methodology
Task 5 Develop Rate Setting Procedures and Tools
Task 6 Prepare Draft and Final Rate Setting Manual
A copy of the NewPoint Group's proposal and a copy of BFI's letter requesting a rate
increase are attached. The proposal discusses the proposed tasks in detail.
At their April 30, 1997 meeting the County Ad Hoc Solid Waste Committee directed the
Community Development Department to present the proposal to the Board of Supervisors
and to obtain authorization to enter into a contract with NewPoint Group.
LM.rw
RLMi.manual.7bo
EXHIBIT 2
sta County
evetopment Department
•
•'w
rid. =� .•��
Rate Setting Process
and Methodology Manual for
Residential Solid Waste Charges
As Applied to
Browning-Ferris Industries, Inc.
Pleasant Kill Bayshore Disposal, Inc.
f
N'14tr•ch 27, 1998
NewP61hf Grou��
Management Consultants
Rate Setting Process and
Methodology Manual
for Residential Solid Waste Charges
Prepared,for
Contra Costa County
Browning-Ferns Industries, Inc. -
Pleasant Mill Bayshore Disposal, Inc.
Prepared by
NewPelht Group, Inc°
2555 Third Street, Suite 215
Sacramento, California 95818
(91 E) 442-0508
March 27, 1998
Rate Setting Process and Methodology Manual
for Residential Solid Waste Charges
Table of Contents
Page
I. Rate Setting Overview............................................................................................. I-1
A. Introduction to the Manual ............................................................................... I-1
B. Goals of Rate Setting Process........................................................................... I4
C. Policies guiding Rate Setting Manual.............................................................. I-7
D. Rate Change Application Process.............................................................. . I-11
E. Allowable and Pass Through Costs................................................ ................. I-13
F. Use of the Manual............................................................................................. I-21
G. Future Enhancements to the Manual................................................................. I-23
II. Base Year Rate Setting Process.............................................................................. II-1
A. Overview of Base Year Rate Setting Process................................................... II-1
B. Timing of the Base Year Rate Setting Process................................................. II-2
C. Steps of Base Year Rate Setting Process.......................................................... II-2
1. Preparation and Submission of Rate Change Application..... ................. II-5
2. Verification of the Completeness of Rate Change Application .............. 1I-10
3. Review of Rate Change Application and Preparation of Responses....... II-11
4. Response to Additional Information Requests from County................... II-14
5. Survey of Rates in Similar Service Areas................................................ II-15
6. Preparation of Draft Report and Recommendations................................ II-17
7. Review of Draft Report and Recommendations...................................... II-19
8. Conduct Public Hearing........................................................................... II-20
9. Preparation of Final Report and Recommendations................................ I1-24
10. Presentation of Final Report and Recommendations to
the Board of Supervisors.......................................................................... II-24
11. Implementation of New Rates............................................... ................. II-25
III. Base Year Rate Setting Methodology..................................................................... III-1
A. Preparation of the Base Year Rate Change Application................................... III-1
1. Entry of Operating Costs and Profit......................................................... III-9
2. Determination of Residential and Commercial Revenues....................... III-12
3. Calculation of Allowable Operating Profit and Revenue
Requirement............................................................................................. III-15
4. Calculation of Percent Change In Rates.................................................. III-17
5. Preparation of Summary Form................................................................ III-18
B. Survey of Rates in Similar Areas................................................... ............... III-19
Contra Costa County i
Rate Setting Process and Methodology Manual
for Residential Solid 'Waste Charges
Table of Contents (continued)
Page
IV. Interim Year Rate Setting Process........................................................... IV-1
i. Preparation and Submission of Rate Change Application....................... IV-4
2. Preparation of Rate Adjustment Indices.................................................. IV-5
3. Review and Response to County Analysis and Calculations................... IV-7
4. Preparation of Final Report and Recommendations................................ IV-8
5. Presentation of Final Report and Recommendations to the
Boardof Supervisors................................................................................ IV-9
6. Implementation of New Rates ................................................................. IV-10
V. Interim Year Rate Setting Methodology................................................................ V-1
A. Preparation of the Interim Year Rate Change Application............................... V-1
1. Report of Changes in Uncontrolled Costs............................................... V-4
2. Explanation of Changes in Uncontrolled Costs....................................... V-5
3. Application Certification......................................................................... V-6
B. Preparation of the Interim Year Rate Change Worksheet................................. V-7
1. Determination of Base Year costs and Weighting................................... V-11
2. Projection of Change in Consumer Price Index....................................... V-13
3. Calculation of Percent Changes in Uncontrolled Costs........................... V-15
4. Calculation of Weighted Change in Residential Rates............................ V-16
5. Presentation of Summary Form............................................................... V-18
Appendices
Appendix A Franchise Agreement
Appendix B Comparison of Franchise Agreement Terms and Conditions with
Rate Setting Process and.Methodology Manual for Solid Waste
Charges
Appendix C Blank Forms and Worksheets
Contra Costa County ii
Rate Setting Process and Methodology Manual
for Residential Solid Waste Charges
List of Exhibits
Exhibit Page
I-1 Browning-Ferris Industries, Inc. -Pleasant Hill Bayshore Disposal, Inc.
Unincorporated Contra Costa County Refuse Collection Service Area.................... 1-3
I-2 County/Hauler Solid Waste Rate Setting Philosophy................................................ I-6
I-3 County/Hauler Solid Waste Rate Setting Policies..................................................... I-9
I-4 Timing and Financial Statement Requirements of Contra Costa County
RateSetting Process................................................................................................... 1-12
1-5 Definition of Financial Terms................................................................. ............... I-14
1-6 Organization of Each Step...................................................................... ............... I-22
II-1 Base Year Rate Setting Process Overview ................................................................ 11-3
II-2 Timing of the Base Year Rate Change Process......................................................... 11-4
1I-4 Sample Public Hearing Announcement..................................................................... II-21
III-1 Preparation of the Base Year Rate Change Application............................................ III-2
I1I-2 Sample Base Year Rate Change Application............................................................. 111-3
III-3 Sample Solid Waste Fee Survey................................................................................ 111-20
IV-1 Interim Year Rate Change Process............................................................................ IV-2
IV-2 Timing of the Base Year Rate Change Process......................................................... IV-3
V-1 Preparation of the Interim Year Rate Change Application........................................ V-2
V-2 Sample Interim Year Rate Change Application......................................................... V-3
V-3 Preparation of Interim Year Rate Change Worksheet................................................ V-8
V-4 Sample Interim Year Rate Change Worksheet.......................................................... V-9
Contra Costa County iii
I. Rete Setting Overview
This introduction chapter provides an 1. Alhambra 5. Morgan Territory
overview of the rate setting process and also Valley 6. Mt. View
details significant guiding policies which are 2. Bay Point 7. Pacheco
used throughout the manual. The process for 3. Canyon/ g, Pleasant Hill-
how rates are changed is described. Also Tassajara Uninc.
included is a description of how the refuse 4. Concord- Uninc. 9. Rodeo.
collection hauler's costs are treated for rate
setting purposes. These nine areas are depicted in Exhibit 1-1,
This chapter reviews how to use the on page I-3.
manual and identifies what future The manual provides a formal structure
enhancements might be made as the County for establishing residential solid waste
and hauler gain experience with the process. charges. Prior to adoption of this manual,no
The chapter includes the following seven(7) formal rate setting process or methodology
sections: existed for this portion of the County. The
A. Introduction to the Manual manual was developed with input and
B. Goals of"Rate Setting Process direction from the County's Community
Development Department, and was calibrated
C Policies Guiding Rate Setting Manual and tested using actual BFI-PHBD data.
D. Rate Change Application Process The manual is based on the current
E. Allowable and Pass Through Costs franchise agreement with BFI-PHBD and
existing BFI-PHBD operating conditions in
F: Use of the Manual the County. As the County and BFI-PHBD
G. Future Enhancements to the Manual. gain more experienceusing the rate setting
methodology,the process should be updated,
revised, and improved in future base years.
A. Introduction to the Manual The manual establishes rate change
This manual provides a step-by-step policies,provides application forms,
guide for Centra Costa County(County)and specifies reporting formats, identifies
one of its four franchise haulers,Pleasant Hill required supporting documentation, and
Bayshore Disposal,Inc.,a wholly-owned describes procedures for requesting,
subsidiary of Browning-Ferris Industries,Inc. reviewing,and adopting residential rate
(BFI-PHBD), to prepare and approve changes. Cost and revenue information is
changes to residential solid waste collection required for all residential and commercial
charges for unincorporated areas of Contra services;however,the intent of the manual
Costa County. The manual details is to regulate charges for residential solid
procedures for setting residential service waste handling service and residential
charges in the following nine central and recycling. Commercial and light industrial
eastern unincorporated portions of the solid waste collection charges are not
County: specifically covered by this manual.
Contra Cosa County Pao 1.1
1. Rate Setting Overview
The rate setting process and methodology U II. Base Year Rate Setting Process
described in this manual is=automatically A detailed discussion of the base year rate
intended for use in other unincorporated setting process is provided in this chapter.
Contra Costa County areas serviced by other This discussion focuses on responsibilities
franchised waste haulers. For example, of participants in the process, describes
Richmond Sanitary Service, the hauler activities performed,and identifies the
providing service to western portions of timing of these activities.
unincorporated Contra Costa County is ❑ III. Base Year Rate Setting
regulated based on a methodology previously Methodology This chapter provides
adopted by the County in the early 1990s. detailed instructions on how to complete
The County may need to modify this manual forms used to establish new residential
in the future to set rates of other franchise rates in base years.
haulers servicing unincorporated County
areas(e.g., areas served by Garaventa U IV. Interim Year Rate Setting Process
Enterprises). A detailed discussion of the interim year
Much of the structure, and many of rate setting process is provided in this
policies in this manual may apply to these
chapter. This discussion focuses on
other haulers' operations. However, other responsibilities of participants in theprocess, describes activities performed,
haulers may provide different services with and identifies the timing of these
different corresponding rates and rate activities,
structures, and may maintain entirely
different accounting and financial records. U V. Interim Year Rate Setting
Methodology In this chapter,detailed
This manual is organized into five instructions are provided for completing
chapters as follows: forms used to establish new residential
d I. Rate Setting Overview rates in interim years.
This chapter provides an introduction to The manual also contains the following
the manual and discusses the policies three appendices:
followed in establishing the rate setting
processes. A. Franchise Agreement
B. Comparison of Franchise Agreement
Terms and Conditions with Manual
C. Blank Forms and Worksheets.
Page 1-2 Contra Costa County
EXHIBIT 1-1
Browning-Ferris Industries, Inc. - Pleasant Hill Bayshore Disposal, Inc.
Unincorporated Contra Costa County Refuse Collection Service Areas
i
{ `s r.,,r r r:,r��•;,r•�:i•tir r�.r. .., ri r•�'+ a..r.
r.�,l r rr r l+br\.r, ryryly,r y J Jr l Jr �.Jr Jj.,ry f,�r�✓�•✓"• ��� �`x
`e.. .+"•.h. h huh.r� '•+J r. "*.+r.,h�!'r^•"+`•.,}r +,h„ r,..
✓^•.�`./ ✓^W^•1 d^W^Wti,t•'.,,^W^.,r-�/'_ J' .. .1✓•✓W^,✓',✓^ ^• ^W^•:r^xW^•✓^W ✓y '
r•,.r r..,,�wf`r.,,r�r..,r�.r•�r•�r r_ti_Q�''� r.,. ..ti r��,r.�r•�. r r `'•r`"r
b r. ✓ 1,:ti,,ti+ry r�.�+^ ,•yr^ 'r xh ,,,r•„ rim~ r rl rtir4.
'r W r"'W J ✓W•J W W J d w^w ,� � rtrhr+'}+
y,.rart•,.r•..! Y,r...r M1,,r�ry.,,r•.r r� r+''�' 2 ' w ,,,• 'W^•1r, r ,�•'✓ 1r
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,y r r h.•,rr•`r !",.r,,,r ad.o •CIyAr ++-PWA"
yWi,"` .+,Wi�-'.,.,C:"•;,�
3 r r r• r"„r"„r' Quik YMw �AtMlOth =• "
i
vtlw 7r
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Page 13
1. Rate Setting Overview
B. Goals of irate Setting Process acknowledges that maintenance of
The primary goal of the rate setting quality service is related to providing
process and methodology is to determine adequate compensation and financial
residential solid waste collection charges incentives for continued good
which are fair and equitable to Contra Costa performance. Revenues generated
County residents, and which provide should be adequate to fully meet
reasonable profits to the franchise hauler. A reasonable costs-of-service. The
total of seven(7)key rate setting process resulting monthly charges for solid
goals are summarized in Exhibit I-Z on page waste service should be approximately
I-6,and described in detail below: comparable to those charged in other
jurisdictions providing similar services
I. The County and hauler should start with similar cost structures,assuming
with a strong and committed some efficiency of operations in these
partnership. The current franchise other jurisdictions.
agreement between the County and BFI-
PHBI3 extends twenty{20}years 4• The rate setting process should provide
through July 31,2015. The County and mechanisms for ongoing rate review
and long-term charge stability. A
hauler should view this franchise as a
long-term business partnership where periodic formal and thorough County
both parties commit to use the formal review of financial and operating data
rate setting methodology, and plan will set an expectation',for the hauler,
continuous communication on rate and ultimately will protect the
setting throughout the franchise term. ratepayer, The process should be
designed to prevent large,unexpected
2. The charges requested by the franchise fluctuations in charges clue to changes
hauler must be justifiable and in costs or from the need to fund a
supportable. A formal request to broadening scope of waste management
change residential charges, submitted by services.
a franchise hauler, should be based on 5. The process should be easy to
adopted guidelines for expenses and administer,while still ensuring that
profits which include only allowable and any rate request is justifiable and
necessary costs. In determining rates, reasonable. The process should be easy
the County shall consider both the need
for fairness to the ratepayer and the need to explain and not place an undue cost
for the hauler to be compensated fairly on either the County or the franchise
and consistently with the methodology. hauler to implement. Rate changes
ultimately should be easily explained
3. The process should ensure that and defensible to ratepayers.
revenues are adequate to fully meet 6. The County and BFI-PHBD should
reasonable costs-of-service. Estimated
costs of service, and resulting solid strive to maximize opportunities to
waste management charges, should be improve performance and service
reasonable. Granting a franchise for quality while maintaining cost
solid waste collection implicitly competitiveness in the marketplace. In
recognizes the private sector's ability to a"cost plus profit"relationship such as
provide quality services at reasonable exists between the County and hauler,
costs. Further,the County there often can be no incentive for the
hauler to decrease costs because
Page 1.4 Contra Creta County
........................................................... .
_ .........................
i Rate Setting Overview -
increases in allowable costs actually 7. The County should not micro-manage
result in increases in allowable operating the hauler's operation. A policy to
profit levels. However, cost increases micromanage BFI-PHBD operations is
cause rates to rise above market levels, counterproductive,requiring additional
and penalize ratepayers. Ideally,the administration which ultimately
County and hauler should set rates in a increases costs to the ratepayer. This
base year,and the hauler should attempt methodology requires base year rate
to reduce its costs in subsequent interim reviews every four years,and optional
years. The County and BFI-PHBD need interim year adjustments. These reviews
to determine a mutually agreeable and should be sufficient to efficiently
measurable mechanism to provide manage BFI-PHBD. Overuse of time-
incentives for BFI-PHBD to reduce and-motion studies,performance audits,
costs, and where possible,increase and other efficiency and effectiveness
efficiency. This can be accomplished studies requires additional
through cost-sharing programs as administration time, and costs, for both
described in Section G of this chapter. the County and the hauler.
Contra Costa County Page 1-5
EXHIBIT I-2
t
s
County/Hauler
Solid Waste Rate Setting Philosophy
1.Start With a Strong,committed
Partnership Between Ute County
z and Hauler
7.Micro-managing the 2.Utilize a Fomtal,Systernatic,
Hauler's Operations Is Counter- and Documented Rate Setting
Productive and Resource Process and Methodology for
Intensive Justifiable and Supportable
Charges
z5? rof
Gi Si
9t
6.identify Performance 'W. n 8ttlts�'
r Incentives for the Hauler to `' 3.Ensure Revenue Adequacy
Maintain Competitiveness � rlr and s U1 to Meet Reasonable
`
and Quality Services Costtf-Service" ltfus8�€tl+gici
on, ir{rj
�x
y
5.Make Process Easy to min 4.Provide a Process Which
and Administer Ensures Ongoing Rate Review
and Charge Stabliity
3
Page d-6
1. Rate Setting.Overview
C. Policies Guiding Rate Setting Manual not to be aligned with actual costs of
A total of six(6)guiding policies were providing service. This process and
considered in developing the processes and methodology codifies strict rate review
methodologies described in this manual. timelines and responsibilities. If the
These policies and their impacts are County and hauler adhere to these time
identified in Exhibit 1-3 on page 1-9. The frames for submission and rate change
remainder of this section describes each of approval,and no party defaults on these
these policies. time frames,all future rates should be
established such that there is no need for
1. Focus on rate regulation of residential retroactive rate increases.
solid waste management collection 3. Allow no balancing accounts. This rate
charges. Residential and recycling solid setting process is based on projecting
waste management charges are regulated results during base years. Thus,actual
by the County in this manual,and
represent recovery of allowable costs base year results likely will differ from incurred by the franchise hauler,and a base year projections. in some
regulatory environments,these
profit level proscribed by the County. , differences are"'balanced"in subsequent
These allowable costs include those costs years by using a balancing account.
associated with removal, collection,and
disposal of residential solid waste and Balancing accounts are occasionally
curbside collection of residential used in the waste industry as an
recyclable materials. accounting-based approach to true up a
Costs incurred by the franchise hauler previous year's projections to actual
must be adequately documented in a financial results. A balancing account
formal request for a rate change,and the can then be used to address differences
rate request must be supported by between actual and projected results. A
company audited financial statements. balancing account requires substantial
The first formal request for a rate administration, reporting,and control
adjustment(submitted during 1998)will measures which determine how funds in
not require audited financial statements, the account are invested and managed.
but all future base year rate requests will. When a balancing account is established,
This manual is not intended to terms and conditions related to these
specifically regulate commercial and light accounts are clearly documented as part
industrial solid waste charges. However, of a rate setting process and
revenues and costs for commercial and methodology manual. Also,terms and
light industrial services will be used to set conditions are specifically incorporated
residential rates. The County will by reference into contractual agreements
evaluate commercial and light industrial between the respective parties.
rates and rate changes separately from Balancing accounts are not commonly
this manual. utilized. The problem with balancing
2. Allow no retroactive rate Increases. accounts is that by funding surpluses and
There will be no allowance for a deficits using rate revenues,rates charged
retroactive increase in rates,except by to customers ultimately do not reflect the
special agreement, or by party default. true cost of providing service to
Retroactive reimbursements cause rates customers because they include
Contra Costs County Page 1.7
1. Rate Setting Overview
retroactive components. Overtime, The franchise hauler will work closely
current ratepayers can end up ultimately with the County to meet diversion goals
subsidizing,or benefiting from,prior mandated by the California Integrated
generations of ratepayers. For example, if Waste Management Board(CIWMB).
rates are raised to pay off a balancing The franchise hauler and County shall
account,then current ratepayers bear the agree on specific programs and activities
responsibility of what previous ratepayers to show a good faith effort to meet
should have paid for initially. CIWMB diversion goals. Examples of
these efforts may include: (1)
Municipal finance principles generally
developing a separate green waste
require a strong nexus between(1)cost-of- program,(2) increasing materials
service and benefits and(2)cost-of- collected via the current curbside
service and rates. Use of a balancing recycling program,(3)maximizing
account generally breaks down this nexus diversion activities at transfer
and results in rate inequalities. stations/materials recovery
A balancing account also frequently is less facilities/other disposal facilities that the
useful when a long-term franchise exists. franchise hauler may use,and(4)
With a long-term business partnership providing economic incentives to reduce
there is less need to recover variances residential solid waste collection through
between actual and projected results on a variable can rates. Costs associated with
year-to-year basis. These variances can these AB 939 diversion goals are
often be absorbed over the course of a considered allowable costs for rate
twenty-year franchise, such as is the case setting purposes. The franchise hauler
between the County and BFI-PHBD. will be allowed a profit on these costs.
Balancing accounts are not designed for 5. Provide the County drop box and bin
accounting for differences between"rates service. The franchise hauler shall
asked for"and"rates received." They also provide solid waste collection and
are not designed for accounting for disposal services at County buildings at
differences between"rates received"and no charge to the County. Costs
44a fair rate of return." Balancing associated with the franchise hauler
accounts,by their very nature,result in providing these services are allowable
retroactive rates, which do not reflect cost- costs for rate setting. The hauler also
of-service based rates. shall provide up to ten,20-cubic yard,
4drop boxes per year for community
. Fund costs to implement State
cleanup projects with these costs also
mandated source reduction and
allowable for rate setting.
household hazardous waste programs.
The County has adopted the Source 6. Indirectly regulate affiliated
Reduction and Recycling Element(SRRE) companies. Transactions between BFI-
and Household Hazardous Waste PHBD and affiliates,or related parties,
Element(HHWE) as required by the should be examined for reasonableness.
Integrated Waste Management Act of These"related party transactions"have
1989(AB 939). These elements contain potential for mistreatment in rate setting.
a number of recommended programs For example, if a cost of a related party
whose costs are projected to be funded by already includes a profit component,and
solid waste collection charges.
Contra Costa County
Page 1-8
EXHIBIT I-3
e
I
County/Hauler
Solid Waste Bate Setting Policies
Policy Impact
t
1. Focus on rate regulation of Commercial and light industrial
residential solid waste charges charges are not set by this process
2. Allow no retroactive rate increases Rates are never increased in one
period for activity of a prior period
Rates are set prospectively and are
3. Allow no balancing accounts not trued up in subsequent years
The hauler should work with the County �
4. Fund source reduction and to implement these programs with costs
HHW programs allowable and funded through rates
5. Provide County drop box and bin The hauler should provide these
service services to the County,with costs
allowable and funded through rates
6. Indirectly regulate affiliated
Assure that related party transactions
companies from affiliated companies are
consistent with market transactions
!
i
1. Rate Setting Overview
that cost is allowed for rate setting with a rent charged by property managers for
profit, a double-counting of profit can comparable office and warehouse space
occur. For each related party transaction, At the time this manual was developed,
the hauler should disclose the nature of BFI-PHBD had significant transactions
the relationship and whether the with the following affiliated companies:
transaction is a market-based transaction.
The hauler should provide documentation 0 Contra Costa Solid Waste
to support the reasonableness of these Transfer and Recovery(CCSWTR)
transactions. In particular, leasing of - a wholly owned subsidiary of
trucks and equipment, or office space,are Browning-Ferris Industries(BFI),
often related party transactions. and the operator of the solid waste
At the time a base year rate change transfer station where unincorproated
application is submitted, the franchise County waste is disposed
hauler is required to provide the County U Keller Canyon Landfill Company-
with at least three comparable rates for also a wholly owned subsidiary of
trucking charges, office space, and BFI, and the owner and operator of
warehouse space(i.e., a minimum of nine Keller Canyon Landfill,where all
comparable rates). County staff will be unincorporated County waste is
responsible for determining if these landfilled.
charges are reasonable. All of the transactions between BFI-
If the franchise hauler leases trucks and PHBD and CCSWTR/Keller Canyon
other equipment from an affiliated or Landfill Company are combined into the
parent company, then all trucking charges tipping fee which is charged to
are considered a pass-through cost and no unincorporated County ratepayers.
additional profit is allowed. Currently,this tipping fee is$51.24 per ton.
Additionally, if the franchise hauler rents This is a market-based rate, currently
office and/or warehouse space from a charged by CCSWTR to all self-haul
parent or affiliated company,then rent customers in the region and to certain other
charged by its parent company will be jurisdictions within Contra Costa County.
compared with
Page 1-10 Contra Costa County
......... _.. __ ...
1. Efate Setting Overview
D. Rate Change Application Process ❑ Change in costs for tipping fees
A Base Year Rate Change Application estimated to occur in the next
from the franchise hauler is required once interim year
every four years as shown in Exhibit I4, on ❑ An adjustment for the franchise fee,
the following page. This process requires which is based on a percentage of
detailed financial and operating information total revenues generated from
which is carefully reviewed and analyzed by residential and non-residential
the County. These detailed reviews are integrated solid waste collection
referred to as "base"years in the service.
methodology. The franchise hauler has the option to
With the Base Year Rate Change submit an Interim Year Rate Change
Application, the hauler submits annual Application for a rate increase between base
audited financial statements for the previous years. The scope of each interim year
year(except for the initial base year application is much more limited than a base
application after this manual is adopted). year request. A formal application is
These statements serve as the base required each year the company requests a
documents of the application. Financial rate change. The hauler can adjust rates
forms contained in the application should be following the County's interim year rate
reconciled to the audited financial statements review of its application,but is not obligated
to provide assurance that all of the to do so. The hauler is encouraged not to
company's activities are accounted for. raise rates in interim years except for
At the time a Base Year Rate Change extraordinary changes in their costs.
Application is submitted,the County shall The County or franchise hauler may
surrey rates and services provided in at least request an extraordinary, or consequential,
six other municipalities of comparable size adjustment outside of the base year and
and service. interim year adjustment schedules. For
In each of the"interim" three years, rate example, an extraordinary adjustment might
adjustments will be based on the annual result from a change in service or additional
percentage change in the following three program requested by the County. The
items. franchise hauler requesting an extraordinary
or consequential cost change shall
U Annual change in the most recent demonstrate,to the satisfaction of the
actual,not forecasted,Consumer County,that it has incurred extraordinary
Price Index(CPI) for all Urban and consequential cost changes.
Consumers for the San Francisco- The County may request an interim year
Oakland-San Jose area published rate change when there are extraordinary
by the Bureau of Labor Statistics changes, either up or down, in tipping fees
in their Monthly Labor Review. This charged to the hauler. For example, if there
CPI is applied to costs of the is a large drop in tipping fees paid by the
franchise hauler other than tipping hauler, the County can request a rate
fees.
decrease in an interim year.
Contra Costa County Page 149
_........ ......... ......... ..._..._. _
.... ............. .._...._.. ......... ......... .._..............................
__....._. ......... ......... ......... ......... _
.......................................................................
EXHIBIT 14
Timing and Financial Statement Requirements
of Contra Costa County
Rate Setting Process
�c
rE—�- Base Year Every 4 Years
Timing of
Bare Year
Rau Change
(See Exhibit
Fi-2)
Base Interim Interim Interim Base interim
Year I Year I Year 2 Year 3 Year 2 Year 1 ....
Submit
Base Year
Application
1997 1998 1999 2000 2001 2042 2003 ....
Beginning of Year(January 1)
FINANCIAL,STATEMENT REQUIREMENTS
Actual Actual Audited Estimated Projected
Base (Actual)
Year
2402 1998 1999 2000 2001 2002
2006 2002 2003 2044 2045 2006
2010 2006 2007 2008 2009 2010
Page 1-12
i. Rate Setting Overview
E. Allowable and Pass Through Allowable Costs
Casts The hauler is allowed to earn a profit on
Rates are established for each base year certain costs. The majority of allowable
based on the hauler's projected revenue costs are direct labor,corporate and local
requirement. The revenue requirement is general and administrative costs,trucking
defined as the sum of the following: and equipment costs, and tipping fees.
❑ Allowable costs These allowable costs are defined in
Exhibit 1-3,on the following page. The
❑ Allowable operating profits following costs of providing collection
❑ Pass through costs. service are clarified because of their special
Thus, for purposes of computing the revenue treatment for rate setting.
requirement,it is necessary to determine ❑ Tipping fees -Profit is allowed on
which of the franchise hauler's costs are(1) tipping fees in each base year. The
allowable costs, (2)pass through costs, and franchise hauler is allowed to include
(3)non-allowable costs. tipping fees of up to alset amount per ton
in the calculation of profit described
When a cost is said to be"allowable," above. The actual limit is established by
that cost,plus a profit component associated County policy. At the.time of this rate
with that cost, is included in rates charged to manual's development,tipping fees are
the ratepayers. Allowable costs are often set by the County at a'cap of$43.08 per
those costs which are integral to the healer's ton with profit. Any amounts over this
operation and/or are associated with actual limit are considered pass through costs,
activity performed by the hauler. and profit is not allowed. If the tipping
Pass through costs are costs which also fee is less than the established limit,
are included in rates charged to customers, actual fees paid are used to calculate total
however these costs do not have an tipping costs.
associated profit component. Pass through This tipping fee limit allows the franchise
costs are generally transactional in nature and hauler to make a reasonable profit on
often are thought of as costs not associated tipping fees, but removes excess profits
with any significant effort performed by the caused by dramatically increasing tipping
hauler. fees. The franchise hauler must conduct
Non-allowable costs are not allowed in certain activities related to tipping fees
rates charged to ratepayers. These costs are such as keeping records and making
disallowed because(1) they may not be payments to the disposal facility. As
associated with the case business, (2)they tipping fees increase,the franchise
may be included implicitly in the profit level hauler's workload does not change. To
allowed by the County(e.g., interest),or(3) allow the full amount of the tipping fees
they may unnecessarily complicate rate in the calculation of profit may give the
regulation(e.g., income taxes). franchise hauler excess and unreasonable
profits.
Contra Costa County Page 1-13
E)IBIT I-5
Definition of Financial Terms
Application Line Number/Kom Definition
Allowable Costs
1. Direct Labor Wages and related benefits paid to refuse collection,office,and
administrative staff, including wages,overtime, payroll taxes, health and
welfare benefits,workers compensation, and pension benefits.
2. Tipping Fees(Profit Allowed) Costs to dispose of solid waste at transfer stations,transformation facilities,
or landfills. These fees are capped with profit at a set amount per ton. The
per ton limit is established by the County and is currently$43.08 per ton.
3. Corporate and Local General All general and administrative costs in addition to corporate overhead.The
and Administrative Costs amount of this item cannot exceed 13.2 percent of total costs in the initial
base year. This item includes the following costs:
• Accounting • Management fee
• Collection fees 0 Medical expenses
• Computer equipment Postage
• Dues and subscriptions • Office supplies
• Insurance • Office repair and maintenance
• Janitorial • Telephone
• Laundry and uniform Travel
• Legal services Utilities.
• Licenses
4. Trucking and Equipment Includes depreciation of trucks,fuel expense, licenses, parts,tires, and
associated repair and maintenance expenses.
5. Depreciation and Other Principally includes depreciation and leases of real estatelfacilities,building
Operating Costs maintenance, and use taxes.
6. Services Provided to County Cost of services provided to collect and dispose of waste from County-
owned facilities.
7. Total Allowable Costs Sum of lines 1 through 6.
Allowable Operating Profit
8. Operating Ratio Determines allowable operating profit,and is the ratio of total operating
costs to total operating revenue. The operating ratio must be between 88
and 92 percent. If the franchise haulers actual operating ratio is outside
this range,the operating ratio is to be set at 80 percent during the base
year.
9. Allowable Operating Profit Established by the allowable operating ratio and equal to total allowable
costs(Line 7)=0.94—Line 7.
Pass Through Costs
10. County Administration Fee Fee associated with the franchise. This fee can be used for rate review
costs,audits,or other studies.
11. Tipping Fees (w/o profit) Cost to dispose of solid waste at transfer stations,transformation facilities,
or landfills. These are fees above the$43.08 per tort limit.
23. Residential/Commercial/Light Equal to five(5)percent of total gross residential,commercial,light
Industrial Franchise Fees industrial,and recycling revenue.
29. Total Pass Through Costs Sum of lines 10, 11, and 23.
Page 1-14
1. Rate Setting Overview
If the franchise hauler utilizes a disposal should continue to examine these costs
facility awned by an affiliated company, during future base years. In future base
as is the case currently with BFI-PHBD, years,the County and>BFI-PHBD shall
the tipping fee limit still applies. review the cap on corporate,regional and
However,the tipping fee charged by the local G&A to assure that this cap reflects
disposal facility to the franchise hauler industry averages.
must be equal to, or less than,the rate Table W
charged to other non-affiliated franchise Comparative Local,Regional,and
haulers for the same service. Tipping fees Corporate G&A Allocation,
are defined to include Moth transfer station Expressed as a Percent of Costs
and landfill disposal costs. (1"4 to 1"6)
In each interim year,tipping fees would Company 194 1945 1996
not be automatically adjusted by the CPI,
as is proposed for all controlled costs. WMAC-Alameda
Rather,a projection would be made of County 14.6 14.1 13.5
what tipping fees would be in the new WMAC-Fremont 10.8
interim year,then a comparison made with Vacaville Sanitary
this cast item in the previous year. Service 11.6 11.3 13.3
U General and administrative costs- Richmond Sanitary
Corporate and local general and Service 13.7 14.7 10.8
administrative(G&A)are allowed up to a Concord Disposal
capped limit set by the County. This Service 11.7 16.1
amount should,be examined in each base San Anseimo Refuse&
year to assure that the cap reflects Recycling 16.4
industry norms. Table I-1 (right) shows Oroville Sanitary
that at the time of the manual's service 16.1
development, total G&A costs for eight Sunset Scavenger 10.4 11.4
separate hauling companies over a recent Average 12.5 13.8 13.0
three-year period(sixteen separate data Average of 1994.1996 13.2%
points)ranged from 10.8 to 16.4 percent
of total costs, with an average of 13.2
percent. The hauler is thus allowed a cap 0 Certain regulatory charges -
of 13.2 percent of costs for the regulatory charges assessed on refuse
combination of corporate,regional,and disposed of by the franchise hauler,
local G&A in the initial base year. which are collected by the disposal
General and administrative costs often can facility operator(not the franchise
hauler)are normally incorporated in
include costs which may be misstated in tipping fees. The franchise hauler will
rate setting such as: (1)accounting and be allowed a profit on a portion of its
tax planning expenses,(2)legal costs, (3) tipping fees and,therefore, on these
management fees,and(4)officers salaries. regulatory costs. To do otherwise would
Additionally, in the case with BFI-PHBD, create a significant bookkeeping burden
overhead costs are allocated from BFI's on the franchise hauler to track such
corporate office, and determining to what charges separately.
degree the County benefits from these
allocated amounts is difficult. The County
Contra Costa County Page 1-15
.............. .............1.11
1. Rate Setting Overview
El Recycling-costs of providing residential contain interest. Lease payments to
curbside recycling and non-residential affiliated companies are a pass through
recycling services provided to the County cost. At the time this rate manual was
by the franchise hauler will be an developed, it does not appear that BFI-
allowable cost. Therefore,solid waste PHBD leases a significant amount of
management rates charged to customers equipment and buildings from non-
include recovery of allowable costs of affiliated companies.
providing recycling services,and a profit
is allowed on these costs. Allowable Operating Profits
• Costs to implement State mandated
source reduction and household U Provide allowable profit-based on
hazardous waste programs - the County current industry norms,we recommend
has adopted the Source Reduction and the County adopt an operating ratio
Recycling Element(SRRE) and Household which ranges from 88 to 92 percent,with
Hazardous Waste Element(HHWE) as a target of 90 percent. In the first base
required by AB 939. These elements year,the operating ratio will be set at 90
contain a number of recommended percent. In each succeeding base year
programs whose costs are paid for by the (once every four years),the operating
hauler and funded by solid waste ratio can range from 88 to 92 percent
management rates. The franchise hauler without a rate change,which will help
will be allowed a profit on these AB 939 stabilize rate changes and afford the
surcharges. company an incentive to reduce costs. In
• any succeeding base year,if the company
Depreciation-the following Table 1-2
depreciation methods and useful lives are earns an operating ratio outside this 88 to
92 percent range, then in that base yekr
recommended for amortizing future
capital costs for rate setting purposes: rates are reset to a 90 percent operating
ratio.
Table 1-2 The operating ratio determines the profit
Depreciation Methods allowed to the franchise hauler on
Capital Item Type(a) Years operating costs. The operating ratio is
frequently used in the waste management
Office Equipment SL 5 years industry as a basis for determining profit.
Vehicles and Equipment SL 8 years The operating ratio (OR) is based on the
Buildings and Leasehold following formula:
Improvements SL 20 years OR= Allowable Expenses
(A) SL-straight line depreciation Allowable Expenses+Profit
Current methods used to depreciate The rate of return on operating expenses
capital items,which were in use prior to corresponding to each operating ratio
rate regulation,are allowed to continue. between 88 and 92 percent is shown in
Useful lives in Table 1-2 are for new Table 1-3, on the following page:
capital purchases(i.e.,those after 1998).
U Lease payments- lease payments to non-
affiliated companies are an allowable
expense. These payments may implicitly
Page 1-16 Contra Costa County
.............
1. Rate Setting Overview
Table I-3 We reviewed financial information for
Operating Ratio as Compared to twelve publicly traded companies
Return on Operating Expenses between 1994 and 1996. The twelve
Rate of Return companies included:
Operating Rutin on Allowable • Allied Waste Industries
(%) Operating Expenses
• American Waste Services
88 13.64
• Browning-Ferris Industries
89 12.36
• Laidlaw
90 11.11
91 9.89 • Mid-American Waste
Systems
92 8.70
• Philip Environmental
• Sanifill
The 90 percent targeted operating ratio
corresponds to a 11.11 percent return on United Waste Systems
allowable operating expenses. • USA Waste Services
The operating ratio is the most • Waste Management
commonly used method for refuse rate International
regulation. Our recommended • Western Waste Industries
operating ratio is supported by recently
available information for publicly--held • Waste Management
companies,privately-held companies, Technologies.
and neighboring jurisdictions. Table I-4,on the following page,
As support for a target operating ratio shows that the weighted average
of 90 percent we compared recent operating ratio on an EDIT(earnings
financial data available for publicly and before interest and tax)basis between
privately held waste management 1994 and 1996 was 86.8 percent,while
companies. Because available financial the average operating ratio during the
data is for combined collection, same period was 93.7 percent. The
transportation,and disposal operations, data for this period indicates that a few
the corresponding operating ratios are larger companies performed better
lower than for businesses providing than the average company,thus
exclusively waste collection services decreasing the weighted average
(i.e,without disposal). Operating ratios operating ratio. Operating ratios
for collection operations alone are increased for 1996 alone(i.e.,profit
generally higher than for disposal levels decreased)for the weighted
operations alone because disposal average measure. The weighted
companies require greater returns due average operating ratio in 1996 was
to the significant environmental and 94.1 percent,and the average
regulatory risks of operating landfills. operating ratio was 90.2 percent.
Centra Costa County Page 1-17
I. Rate Setting Overview
Table 14 include companies primarily engaged in
Publicly-Held collecting and transporting refuse
Waste Management Companies without disposal." As shown in Table I-
Average Operating.Ratios' S,the operating ratio, on an EBIT basis,
(1994 to 1996) of over 300 companies surveyed in each
of the three years from 1994 to 1995,
Number Average Average
Weighted ranged from 90.2 to 90.7 percent.
of Operating Operating Table I-5
Year(s) Compaule Ratio Ratio Robert Morris&Associates
S Operating Ratios'
1994 to 12 86.8% 93.7% (1994 to 1996)
1996 Number of Operating
1996 12 94.1% 90.2% Year Companies Ratio
On an earnings before interest and tax basis(KBIT). 1994 300 90.7%
Due to the recent significant acquisition 1995 325 90.2%
and merger activity in the waste
management industry,some of these 1996 304 90.7%
companies are now part of other For SIC Code 4953,Refuse Systems,on an
companies. Namely, American,Philip, earnings before interest and tax basis(EBIT).
and Sanifill were acquired by LISA
Waste Services. Likewise, Laidlaw Profit methods other than the operating ratio
was acquired by Allied Waste often are harder to determine, or don't
Industries. At the time of this writing, compensate the hauler sufficiently. For
USA Waste Services plans to merge example, a return on assets profit
with Waste Management International. methodology might encourage a hauler to
However, we believe that the historic over-invest in assets,or alternatively,
data for these companies represents the over time might cause a hauler's profits
best available information for publicly- to decrease as book assets are
held companies. depreciated. A return on equity
calculation may be problematic as limited
We also reviewed data published by comparable benchmark data exists,
Robert Morris&Associates(RMA). determining equity contributions is
RIMA publishes its"Annual Statement difficult, and returns can be insufficient
Studies" for an array of industries, for less capitalized companies.
including privately-held waste In the future the County can update the
management companies. RMA data is operating ratio figure to reflect current
for companies doing business as refuse industry norms and practices. However,
systems(SIC Code 4953). These are historical operating ratios for similar
systems"primarily engaged in the collection businesses frequently have fallen
collection and disposal of refuse by within the recommended operating ratio
processing or destruction or in the range of 88 to 92 percent(on an earnings
operation of incinerators,waste treatment before interest and tax basis).
plants, landfills,or other sites for disposal
of such materials." This data"does not
Page 1»18 Contra Costa County
i. Rate Setting Overview
There is no contractual obligation by the of these franchise Fees in July, 1997.
County to provide the hauler with a . Upon completion of this rate review
constitutional fair rate of return through this methodology, and completion of the rate
review process. Rather,the County reviews review with BFI-PHBD in 1998,BFI-
revenues,costs,and profits as a basis for PHBD must begin to pay franchise fees
recommended changes to residential refuse to the County.
collection charges. Charges should be 0 County administrative fee-this fee is
sufficient to cover costs of operations and established by the County to pay for
allow a reasonable profit to the hauler. costs associated with administering the
However,this profit level is not guaranteed. franchise agreement,and can include
rate review casts,policies and
Pass Through Casts procedures development,audits, and
other studies. This fee is in addition to
The following pass through costs do not the franchise fee.
earn a profit,but are included in determining Trucking charges•trucking charges
total revenue requirements to establish solid from companies affiliated with the
waste management charges: franchise hauler will be a pass-through
• Tipping fees(pass through)-at the time cost,and no profit is allowed to the
of this rate manual's development, franchise hauler. This is based on the
tipping fees were set at a cap of$43.08 assumption that profits are already
per ton. Any amounts over this limit are included in the trucking charges paid by
considered pass through costs,and profit the franchise hauler. Surcharges
is not allowed. Currently,tipping fees imposed for regulatory requirements,
between$43.48 per ton and$51.24 per and which are collected by the franchise
ton are pass through coasts for rate setting. hauler directly, also will be pass-through
The County can adjust this cap in a costs with no profit allowed. At the time
reasonable manner during subsequent of the first base year rate review,these
base years. If the tipping fee is less than trucking charges are reflected in tipping
the established cap,actual fees paid are fees charged to County ratepayers.
used to calculate total tipping costs and
there is no pass through component of
tipping fees. Non-Allowable Costs
• Franchise fees-franchise fees paid to The following costs are not allowable
the County are set equal to 5.0 percent of for rate setting,and as a result will not be
gross residential, commercial and light passed on the ratepayers:
industrial refuse and recycling revenues. 0 Amortization of franchise purchases-
These fees help provide funding for: (1) consistent with the waste management
administering the Franchise Agreement, industry,we recommend that the County
(2)solid waste services and programs disallow amortization of franchise
provided by the County,and(3) State purchases. The operating ratio is
required Solid Waste Program designed to provide a return to the hauler
development and implementation. These sufficient to compensate BFI-PHBD for
fees are paid to the County in return for its investment in the business.
providing an exclusive franchise to the
hauler. The County approved initiation
Contra Costa County Page 1=19
.......... ........-...I......... -........................... I'll-............-..............,.........-....
1. Rate Setting Overview
❑ Charitable and political contributions - equity financing. In other words, a
this category includes charitable, or company's financing decisions are
political,contributions and donations of independent of the amount of profit
cash,property, and services. Also non- earned
allowable are costs associated with Interest expenses are not allowed in the
attempting to influence the outcomes of profit calculation in this methodology,
any federal, state,or local election, which differs from the practice in some
referendum, initiative,or similar procedure, municipalities. Interest expenses are a
through in kind or cash contributions, relatively significant portion of the
endorsements,publicity,or similar current franchise hauler's total costs.
activities. Allowing profit on interest expense may
4 Fines and penalties -costs associated provide an artificial incentive for the
with violations of,or failure of, the hauler hauler to increase use of debt-financing.
to comply with federal, state, local, or Further, in cases where the operating
foreign laws and regulations. This ratio used is on an after interest basis,
category of non-allowable costs can also the operating ratio often is adjusted
include costs in connection with upward(i.e., the hauler earns less profit)
alteration or destruction of records, or to account for interest as an allowable
other false or improper charging or expense.
recording of costs. U Other costs on a case-by-case basis -
• Income taxes-the operating ratio is all costs incurred to provide solid waste
typically provided on a pre-tax basis. To services to areas outside of
allow income tax expense would unincorporated Contra Costa County are
unnecessarily add complexity to the rate not allowed. Additionally, consistent
review process. with reasonable practices in the waste
• Interest expenses-consistent with the management industry,certain costs may
waste management industry, the be determined non-allowable for rate
operating ratio is typically used on a setting through the course of the base
before interest and tax basis. The year rate setting process.
operating ratio allowed is intended to
provide the hauler with sufficient returns
to pay its debt and equity holders.
Disallowing interest expense eliminates
artificial incentives for the hauler to
finance its operations using either debt or
Page 1.20 Contra Costs County
............
-_ 1. Rate Setting Overview
F. Use of the Manual begins at the top of a page and is
Each chapter of the manual has been prominently marked for easy reference.
divided into a number of sections. A The organization of each step is shown in
section begins with a capital letter and Exhibit I-6, following this page.
includes a discussion related to a major The manual also contains blank
topic. Many sections of this manual worksheets and forms which are used during
include a series of"steps"which must be the various processes. These materials are
completed during a process. Each step located in Appendix C.
Contra Costa County Fuge 1.21
EXHIBIT 1.6
Organization of Each Step
Manual Organization -
I. Chapter
A. Section
1. Step
a. Task Chapter Number
and Name Step Title
Step
Number dric Process
Party
` Preparation and ' R Responsible
Process or Submission of Rate for
Activity Change Application Completing
Where Step la the Step
Occurs Responsibility: Franchise Hauler
Timing: Completed six months prior to the date new
rates become effective
Tasks: a. Prepare Cost Information _ �-----
When the
Step
b. Prepare Revenue Information Should be
Tasks ! c. Prepare Operating Information Completed
Required
to d. Prepare and Submit Rate Change Application
and Supporting Documents
Complete
the Step
Description of Tasks
Overview Actual data is required for the first three
During this step,the franchise hauler years,estimated data for year four(based on
prepares the Buse Year Rare Change actual results to date),and projected data for
Application. The franchise hauler should be year five. Subsequent base years will replicate
able to complete the application over a 60- the data requirements in this example.
day period consistent with current Franchise The County and BFI-PHBD have agreed
Agreement terms. Instructions for preparing to use fiscal year ending September 30
the application forms referred to in this step, financial data to set January I rates. For
are available in Section Ill of this manual. example,BFI will project financial data for its
Blank forms are provided in Appendix C to fiscal year October 1, 1997 through September
_ the manual. 30, 1998. This data will be used to set rates
In general,information provided by the beginning January 1, 1998. Thus,there is a
franchise hauler is for five fiscal years: lag in the projection of three months(i.e.,the
October 1, 1998 through December 31, 1998
Detailed Year 1 -Last Base Year period).This disparity is shown in Figure II-1
G] Year Z-Year Following Last on the following page. Because these figures
Descriptions Base Year are projections,the impact of this lag is likely
of Actions to be immaterial to the rate setting process.
Required in Year 3-Prior Year To reconstruct calendar year financial results
Each Task Year 4-Current Year using audited fiscal year data would be
Year 5-Base Year. impractical and a significant administrative
burden to the County and BFI-PHBD.
Contra Costa County Pape al-3
Page 1-22
_.. . ._._. ......... ......... ......... _ __ _
.. ... ......... ........._._........__...._.......__....._. . . ......... _._..... . .........
1. Rate Setting Overview
G. Future Enhancements to Opportunities for cost-savings might
tate Manual be identified by the franchise hauler or
As the County and franchise hauler gain through performance audits initiated
experience in working with the new rate by the County.
setting process,refinements and revisions Monitoring actual savings achieved is
should be identified and incorporated in this the most difficult task in developing a
document over time. Four areas which cost-savings program. Cost,and in
should be considered for future inclusion are some cases, operating data must be
(1) implementation of special cost-savings identified and carefully reviewed.
programs, (2)occasional,performance Without careful monitoring,the
audits,(3) no interim year increases on program may be abused.
selected cost and line items, and(4) Adjusting rates to reflect the savings
expansion of the rate review to include a also is difficult because rate
detailed review of tipping fees. adjustments for each interim year are
0 Cost-Savings Programs The determined by a change in the
franchise hauler would be allowed to consumer price index instead of by an
share in cost-savings clue to examination of base year costs. The
improvements implemented by the hauler may, in fact,lower costs of
hauler. This savings program would operation through a cost-savings
provide an incentive to the franchise program, though the rates would not
hauler to reduce costs. Under the rate automatically be lowered. Cost-
setting process described in this savings cannot be included simply by
manual, if the franchise hauler is able reflecting the savings as a reduction in
to reduce costs,the benefits of these total cost.
cost-reduction efforts are passed on to New polices and procedures would
the ratepayers in the next base year. have to be established to allow for
There may be no direct incentive for cost-savings adjustments under the
the franchise hauler to identify and methodology presented in this manual.
implement cost-savings activities. The These policies must address a number
purpose of a formal program is to of issues including: the time period
allow the franchise hauler to receive for sharing costs, the split of the
some of these benefits while also savings,the form in which cost
lowering rates for customers. reduction proposals must be prepared,
Examples of cost-savings programs the process for monitoring actual cost-
include: savings,and incorporation of the
• Investing in new equipment concept into the current methodology.
• Redesigning collection routes The amount of cost-savings would be
identified initially during development
• Automating administrative of a proposed new program and then
functions would be monitored during
• Streamlining administrative implementation of the new program.
Savings would be shared by the
processes. franchise hauler and the ratepayers on a
pre-determined bases. For example,
Contra costa County Page 1-23
....... ......... .._-.... ._._._... .._...... ._..._._.
................... .........
......... ..... ... __
1 Rate Setting Overview
during the first year of a new program, Uncontrollable
the franchise hauler might receive 75 • Tipping fees
percent of the savings and the ratepayers
would receive 25 percent. In year two, • Regulatory charges
the franchise hauler might receive 50 Controllable
percent of the benefit and the ratepayer
would receive 50 percent. In year three, • Labor
the franchise hauler might receive 25 . Equipment
percent of the cost-savings. In the fourth
year, all savings might be passed through • Trucking
to the ratepayers. . Operating costs
Alternatively,the County and hauler . General and administrative.
might create a system as depicted in
Figure I-1,below, whereby revenue or The hauler would be allowed to keep
controllable cost savings which are not
cost savings are treated differently
detrimental to the customers, County, and
depending upon the cause of the
difference. Controllable and employees. The hauler would share
uncontrollable cast categories would need 50°10150%on uncontrollable cost savings.
to be created. The County and hauler The hauler would be allowed 100 percent of
might define each of these categories as all noncontrollable cost increases,however,
follows: the hauler would not be reimbursed for any
controllable cost increases.
Example Cost Sharing Methodology
,Savings Increase
Controllable 100%savings 0%of increase
allowed to hauler allowed to hauler
Costs
S00/0I500%shared by 100%of increase
Uncontrollable City ratepayer allowed to hauler
and hauler
..........................................Decrease Increase
100%of decrease i 00%of increase
Revenues reimbursed to reimbursed to
hauler City ratepayer
Figure 1-1
Page 1-24 Contra Costa County
1. Rate Setting{overview
Because the hauler has little control U No Interim-Year Increases on
over revenues received, increases in Selected Cost and Line Items The
revenues from the projections would be methodology described in this manual
paid back to the ratepayers,whereas allows for automatic increases in
decreases in revenues would be controlled costs based on changes in the
reimbursed to the hauler. In each case, Consumer Price Index for the San
these cost savings or reimbursements ' Francisco Bay Area for the prior year.
could be based on real dollars(without Controlled casts include labor,
interest),and could be amortized in the administrative costs,truck and
rates over the next three years until the equipment,etc. While many of these
next base year rate setting occurred. costs may increase at the same rate that
Q Occasional Performance Audits the CPI changes,others may change
While rates for residential services are very little. The methodology could be
evaluated in detail during each base revised in the future to more accurately
year rate change process,the rate determine true increases in costs during
review focuses on actual costs and does the interim years.
not address opportunities for the Specific modifications could be made
franchise hauler to improve general to the process followed in interim years
operational efficiency. If actions can be to more thoroughly examine actual
taken to improve the franchise hauler's changes in allowable operating casts.
efficiency,this could result in lower In developing a rate application for the
total casts, and correspondingly, lower second interim year,the franchise
rates for customers. hauler would have actual financial and
In order to address this issue, operating results available for the most
performance audits of the franchise recently completed base year. Actual
hauler could be occasionally conducted, results could be compared to original
such as once every five to ten years. projections to determine how well costs
The timing of these audits could be are projected.
independent of the rate change process U Review'Pipping Fees I This is a unique
described in this manual. In order to rate setting case where BFI owns and
maintain objectivity, these audits would operates bath the transfer station and
be conducted by an independent landfill used to dispose of
organization which is selected jointly unincorporated County waste as shown
by the County and the franchise hauler. in the Figure 1-2,on the following page.
A two-phase approach may be Thus,we cannot determine true landfill
appropriate for these audits. An overall and transfer station casts which should
diagnostic review would be conducted be charged to unincorporated County
in Phase I, and more detailed and ratepayers. Instead, for the first base
focused work in selected areas would year we utilized amarket-based tipping
be conducted in Phase II,based on the fee of$51.24 per ton. We understand
Phase l findings. that though in the past tipping fees at the
BFI-owned and operated transfer station
and Keller Canyon Landfill,were
regulated,they are not currently.
Contra Costa County Page 1-25
............ ........ .............—......
1. Rate Setting Overview
Waste Flow
Unincorporated Contra Costa County Areas
Serviced By BFI
Recycled Recycled material consolidated and
transported to California Waste
Ju
Solutions facility in Oakland
Unincorporated Contra Costa
County Solid Waste Keller
Canyon
L r
Collection Transfer Station III
Operations and Recovery Landfill
Waste transported approximately
$51.24 16 miles one way using 22 ton
per ton transfer trailer trucks
of waste
Figure 1-2
Page 1-26 Contra Costa County
.............
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_................
11. Base Year Rate Setting Process
Contra Costa County rate setting follows A. Overview of Base Year Rate Setting
a four year cycle. In the first year of the Process
cycle,the franchise hauler is required to The base year rate setting process
submit a Base Year Rate Change Application. requires the franchise hauler to submit to
In the second through fourth years,the the County a Base Year Rate Change
franchise hauler is allowed to submit an Application every four gears,beginning in
Interim Year Rate Change Application. The 1998. In this application, the franchise
cycle repeats itself in year five. This section hauler completes a number of forms,and
describes the detailed processes and steps provides supporting financial and
involved,from the franchise hauler operational information.) Unlike the
completing a base year,or interim year, Interim Year Rate Change Application
application through to the County's approval which is optional,the Base Year Rate
of new rates. Change Application is mandatory
Topics covered in this section of the regardless of whether it will result in a
manual include: rate change.
a Who is responsible for the various steps Exhibit H-1, following this page,
in each process overviews the base year`rate setting
• What tasks must be completed within process. For each of the eleven(11)
each step steps,participant responsibilities,tasks,
and associated outcomes(i.e.,documents
0 When each task should be performed. or deliverables) are identified for each
'
Information about how to complete worksheets step.
and forms for the Base Year Rate Change After reviewing the application,the
Application is provided in Section BI of this County evaluates whether proposed rate
manual. This chapter is organized into three changes will be fair to bath residents of
subsections: the County and the franchise hauler.
Fairness is demonstrated through an
A. Overview of Base Year Rate Setting analysis of the franchisehauler's actual
Process and projected revenues and expenses
included in the Base Year Rate Change
B. Timing of the Base Year Rate Setting Application.
Process Information required in the rate setting
C. Steps of Base Year Rate Setting Process. process which is considered confidential
by the franchise hauler will not be
disclosed at any public meeting(i.e.,
County Board of Supervisor meetings).
This would include employee
compensation information. The hauler
should make the County)aware of such
confidential information!
Contra Costa County Page 11-1
_ _.. _........ ......... . ............ ... ..
Ii. Base Year Rate Setting Process
B. Timing of the Base Year Rate hauler should begin preparing the
Setting Process application during the prior May,with the
Timing of the base year rate setting document submitted to the County on July
process is shown in Exhibit II-2, following 1. The total time required to complete
Exhibit II-1- Most of the time frames are this process will depend on the
recommended;however,certain key points complexity of changes in operating
are noted in the exhibit by circled letters. The conditions and the resulting application.
rate change process should begin eight
months prior to the beginning of the new C. Steps of Base Year Rate Setting
calendar year. Process
Base Year Rate Change Applications are The remainder of this chapter
submitted by the franchise hauler at least six describes each of the eleven steps of the
(6)months in advance of when the proposed base year rate setting process. Each step
base year rate change would take place on includes an overview of the step and a
January 1 of that base year. The County has detailed description of the tasks required
up to thirty(30)days to verify the application to complete the step.
is complete. After the County verifies that
the hauler's application is complete,the Step I of I I describes, in general,the
process is scheduled to take five (5)months elements of the Base Year Rate Change
until rates are implemented. New rates are to Application, for the benefit of both the
become effective on January i of each base County and hauler. Chapter III describes
year. in detail how to prepare the Base Year
Rate Change Application,primarily for
Thus, if the franchise hauler's fiscal year the benefit of the franchise hauler.
begins on October I st, then the franchise
Page 11-2 Contra Costa County
EXMBIT IM
Burse Year Rate Setting Process Overview
Stops Responsibility Taaft Doclintwnt(syWiverable(s)
1. Preparation and Franchise a. Prepare Cost Information • Rete Application
Submission of Rate Change Hauler b. Prepare Revenue Information • Audited Financial Statements
Application c. Prepare Operating Information • Supporting Financial information
d. Prepare and Submit Rate Change Application and
Supporting Documents
2 Verification of Completeness a. Verify Financial Data and Format . Notification Letter to Franchise
of Rate Change County b. Verify Supporting Documents and Schedules Hauler
Application c. Notify the Franchise Mauler
3. Review of Rate Change a. Review Actual and Projected Revenue Requirements Letter to French"Hauler
Application and Preparation County b. Review Actual and Projected Revenues Workpapers
of Responses c. Review and Verify Operating Ratio
d. Determine Components of Requested Change in Rates
a. Review Performance Data
U Request Additional Data and Clarification.If Necessary
g. Document Staff Review and Prepare Written Response
8. Response to Additional Franchise a. Provide Additional Information,d Requested Additional Documents,It Necessary
Information Requests Hauler b. Prepare and Submit Response
from County
5. Survey Rates a. Survey Residential and Commercial Solid Waste Rates Summary of Survey of Other
in Similar County and Charges in Similar Service Areas Jurisdictions
Service Areas b. Summarize Survey Results
c. Prepare and Submit Summary to the Franchise Hauler
S. Preparation a. Prepare Draft Report and Recommendations Draft Board of Supervisor Report
FofDraft Report County Supporting Documentation
and Recommendations
1,
7. Review of a. Review Draft Report and Recommendations with . Response Letter to Draft
Draft Report Franchisea.
Staff . Board of Supervisor Report
and Recommendations Hauler b. Resolve Any Remaining Issues
c. Prepare Response to Draft Report and
Recommendations
S. Conduct a. Post Notice of Public Hearing • Public Hearing
Public County b. Conduct Public Hearing
Hearing
Ir
9. Preparation of a. Incorporate Franchise Hauiees Changes in Final Report . Final Board of Supervisor Report
Final Report County b. Incorporate Comments from Public Hearing
and Recommendations c. Prepare Final Report and Recommendations
10. Ptesentatfon of Final Report a. Distribute Report end Summary to Board of Supervisors • Notice of Board Review
and Recommendations County b. Obtain Board of Supervisor Approval • Approved Resolution
to Board of Supervisors
11. implementation Franchise a. Prepare Notification of Rate Change • Notification to Customer
EOf Hauler b. Implement Rate Change Rate Schedule
New Rates
Page 11-3
EXHIBIT II-2
Timing of Base Year Rate Change Process
34 Day
Stele Preparation Review Formal Review Process Implement
Month I Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8
1. Preparation ander
Submission of
Rate Change Application
A
2. Verification of
Completeness of ld►�;:
Rate Change Application
B
3. Review of Rau Change :
Application and Preparation [ 7t
of Responses
4. Response to
Additional information
Requests from County
5. Survey Rates
in Similar
Service Areas
6. Preparation of
Draft Report and :+i'C�►6
Recommendations
7. Review of
Draft Report and
Recommendations
D
8. Conduct
Public :►'ltd 4:`
Hearing
9. Preparation of
Final Report and
Recommendations
10. Presentation of Final Report
and Recommendations to
Board of Supervisors
11. implementation of
New Rates
Legend
A. Submit Rate Change Application to County F. Public Hearing
B. Acceptance/Return Letter G. Final Report and Recommendations
C. Additional Information from Hauler H. Application Approved
D. Letter Review of Draft Report 1. Customer Notification
E. Notification of Public Hearing J_ New Rates Implemented on January I
Page 11.4
It. Base Year Rate Setting Process
Preparation and
Submission of Rate
Change Application
Responsibility: Franchise Hauler
Timing. Completed six months prior to the date new
rates become effective
Tasks: a. Prepare Cost Information
b. Prepare Revenue Information
c. Prepare Operating Information
d. Prepare and Submit Rate Change Application
and Supporting Documents
Description of Tasks
Overview Estimated
During this step, the franchise hauler ❑ Year 4-Current Year
prepares the Base Year Rate Change Projected
Application. The franchise hauler should be
able to complete the application over a two ❑ Year 5- Base Year.
month period. Instructions for preparing the The County and BFI-PHBD have agreed
application forms referred to in this step,are to use fiscal year ending September 30
available in Chapter III of this manual. financial data to set January 1 rates. For
Blank forms are provided in Appendix C to example,BFI will project financial data for
this manual. its fiscal year October 1, 1997 through
In general, information provided by the September 30, 1998. This data will be used
franchise hauler is for five fiscal years. to set rates for base year 1398. There is a
Actual data is required for the first three lag in the projection of three months(i.e.,
years,estimated data for year four(based on the October 1, 1998 through December 31,
actual results to date), and projected data for 1998 period). This disparity is shown in
year five. Subsequent base years will Figure II-1 on the following page. Because
replicate the data requirements in this these figures are projections, the impact of
example. this lag is likely to be immaterial to the rate
setting process. To reconstruct calendar
Actual year financial results using audited fiscal
❑ Year I - Last Base Year year data would be impractical and a
❑ Year 2 -Year Following Last significant administrative burden to the
Base Year County and BFI-PHBD. Figure I1-1 also
indicates the five years of data required for
❑ Year 3 - Prior Year the 1998 base year review(fiscal year 1993
to 1998).
Contra Costa County Page 11-5
..........-1-1-1................
11. Base Year Rate Setting Process
Figure 11-1
Base Year Rate Change Application
Information Requirement
Year I Year 2-1 Year 3- Year 4 Year
Actual Actual Estimated Projected
ted
smog.
14�
1993 1994 1995 1996 8&ft 1997 1998
Year Rate
Change
Process
End of Year December 31
a. Prepare Cost Information By aggregating costs into these line
Cost information from the franchise items, it is possible to focus on major
hauler is provided in the Base Year Rate changes without becoming distracted by
Change Application. Cost information is large changes in insignificant cost
reported for the three most recently components. For example, if office
completed fiscal years, the current fiscal equipment maintenance doubled from
year, and the new base year. Information $10,000 in the current year to $20,000 in the
reported in each line item is the total cost for base year(i.e.,a IGO percent increase),this
residential,commercial,and light industrial might only cause Corporate and Local
General and Administrative Costs to
waste and recycling services. A segregation
of costs by residential, commercial,and increase by one percent,resulting in little light industrial services is not required. impact on the overall rate. Minorcomponents of Corporate and Local General
The cost information which is reported and Administrative Costs may decrease
includes: between the current year and the base year,
• Allowable Costs while others may increase.
- Direct Labor If one of the major cost line items in the
- Tipping Fees(Up to a Cap) application changes at an unusual rate, then
- Corporate and Local General and the hauler should provide an explanation for
Administrative Costs the change. An unusual change in cost is
- Trucking and Equipment any increase which is greater than the
- Depreciation and Other Operating change in the San Francisco-Oakland-San
Costs Jose Consumer Price Index,or any decrease.
The Consumer Price Index used in the
- Services Provided to County. analysis should be based on the most current
• Pass Through Costs actual information for the San Francisco-
- County Administrative Fee Oakland-San Jose Metropolitan Area. This
- Tipping Fees(Above a Cap) information is available from the United
States Department of Labor,Bureau of
- Franchise Fees. Labor Statistics, and is prepared monthly.
Page 11-6 Contra Costa County
....................... ...... ..........
.... ........
If. Bass Year Rate Setting Process
Cost information for the current year and Revenue projections are prepared based on
base year must account for any increases or existing rates and number of customers
decreases in the number of customers which the franchise hauler anticipates
served, or tons of waste and recyclable serving in the base year.
material collected. Actual increases in costs For the base year, the amount of
also must be included. For example, if labor commercial and light industrial revenue
costs will increase in the base year as a without any changes in rates the hauler
result of existing labor agreement terms, this anticipates receiving also is reported. This
additional cost should be included. If these figure should include changes in revenue
costs are not included,a rate increase will from servicing more or fewer accounts.
not be sufficient to compensate the franchise
hauler for actual costs and will result in a Recycled material saps revenues
reduction of the franchise haulers actual represents the actual amount of revenue the
profits. franchise hauler anticipates receiving during
Cost information provided in the the base year. Again, this would include
any projected changes in scrap prices,or
application is used with operating profit to quantities of recycled material sold.
calculate the franchise hauler's revenue
requirement. The revenue requirement is Allowances for uncollectible residential
equal to the sum of the following three and commercial and light industrial
categories: accounts(i.e.,bad debt expenses)are
Ci Allowable operating costs identified in the application. This provides
for a more accurate determination of the
❑ Allowable operating profits franchise hauler's revenuein the base year,
0 Pass through costs. as a small number of customers do not pay
This revenue requirement is compared to the franchise hauler for service rendered.'
anticipated revenues. If a shortfall exists, Once all revenues have been reported in
rates may need to increase,and if a surplus the application, total revenue without a rate
exists,rates may need to decrease. change is calculated. This total revenue is
subtracted from the revenue requirement to
b. Prepare Revenue Information determine the net surplus/shortfall. A net
shortfall determines the amount of a rate
Revenue information is provided in this change. If there is a net surplus, the
task. Similar to cost information,revenues franchise hauler should determine if the
are reported for the three most recently operating ratio can be reduced to eliminate
completed fiscal years,the current fiscal the surplus(i.e., the franchise hauler retains
year,and the projected base year. Revenue the surplus as additional profit).
is reported in three separate categories: If the operating ratio is calculated at 88
0 Residential percent, which provides the franchise hauler
0 Commercial and light industrial with the maximum amount of profit
0 Recycling material sales. allowable under current policy, and a
surplus still exists,the County must
Residential revenue in the base year is determine if rates will be lowered,and over
projected without any changes in rates. what period of time.
Contra Costa County Page 11-7
11. Base Year Rate SettIng Process
c. Prepare Operating Information • The application is based upon
During this task,non-financial operating management's judgment of
information is compiled by the franchise the most likely set of
hauler. Information to be provided conditions and course of
independently for residential,multi-family, action
commercial, and industrial sectors includes: * All significant relevant
❑ Number of residential,commercial,and information are made
light industrial customers served available
•
Assumptions are reasonable
❑ Quantity of residential,commercial,and and are accurate.
light industrial tonnage collected ❑ Base Year Rate Change Application
U County bins provided The franchise hauler should provide a
❑ County drop boxes provided. .Base Year Rate Change Application,
This information allows both the County including completed application forms
and the franchise hauler to monitor channges and supporting documentation.
in the service characteristics, to estimate Supporting documentation includes the
total revenues at existing rates and compare current rate schedules for residential,
these to changes in total costs. Operating commercial,and light industrial
information also is provided on a form in the customers.
Base year Rate Change Application. ❑ Supplemental Audited Financial
Information
d. Prepare and Submit Rate Change For applications received after 1998,
Application and Supporting audited financial statements for the most
Documents recently completed fiscal year should be
included, as well as other documentation
The completed Base Year Rate Change which support operating and financial
Application is submitted by the franchise data provided in the application.
hauler to the County. The application Because audited financial statements
should include the following items. serve as base documents for the
❑ Management Representation Letter application, statements of revenues and
expenses and other reports contained in
The management representation letter the application shall be reconciled to the
transmits the application to the County, audited financial statements to provide
and should provide a listing of included assurance that all activities are
documents. The letter should identify accounted for.
the requested adjustment in rates and
include a discussion of specific issues Once the application materials have been
which impact new rates(e.g., significant prepared,the franchise hauler submits one
increases in tipping fees). The letter reproducible hard copy, 15 bound hard
should state that: copies, and one disk copy formatted to the
County's specifications. They are submitted
* Management reviewed and to the County. The thirty(30)day review
accepts responsibility for the for completeness will begin upon receipt of
rate application the application.
Page 11•8 Contra Costa County
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111111,
......... ............... _.
H. Base Year Rate Setting Process
The penalty to the franchise hauler for agenda report)the franchise hauler would
an incomplete application would be a loss of lose revenue due to later implementation of
any additional revenue which would have rates. If the County fails to meet established
been generated through a timely and time frames for its responsibilities(i.e.,
approved rate adjustment application. steps 2, 3, 5, 7,and 8), at no fault of the
Similarly, for missing any other deadlines franchise hauler, the County will include the
specified in the rate setting process(i.e., value of revenue lost due to the delay,as
responding to County requests for additional part of the pending.Base Year Rate Change
information or reviewing the County's draft Application.
Contra Costa County Page€1 8
.......................__.
.........
u. Base Year Rate Settinfl.Process
Verification of
Completeness of Mate Change
Application
Responsibility: County
Timing: Completed within thirty(30)days after the rate
change application is submitted
Tasks: a. Verify Financial Data and Format
b. Verify Supporting Documents and Schedules
c. Notify Franchise Hauler
Description of Tasks
Overview b. Verify Supporting Documents
and Schedules
During this step,the County ensures that Various documents may be included in
the application has been fully completed by the the application package to support the rate
franchise hauler and that the data provided are change. The purpose of these supporting
consistent. During the 30 day period,the documents should be clearly identified by
County will obtain from the franchise hauler the franchise hauler.
any information necessary to complete the
application. c. Notify Franchise Hauler
If the application is complete the County
a. Verify Financial Data and Format will notify the franchise hauler that it will
begin the process of evaluating the proposed
County staff reviews the application rate adjustment. If incomplete, the County
package to determine if it is complete and will attempt to obtain from the hauler
ready for analysis. Detailed analysis of the additional required information within the 30-
contents of the application occurs during Step day verification period.
3. A revision of rates shall not be
The County reviewer should determine authorized until the 1 st day of the first
the following: calendar month following a five (5)month
❑ Has the applicant included all period from the date that an application is
required farms? verified to be complete. As an example, if
❑ Are all farms complete? the franchise hauler's application is
deemed complete on August 10th due to
❑ Are audited financial statements the fault of the hauler(a 10 day delay),
included? rates would be effective February 1 st
❑ Are all financial calculations instead of on January 1 st. The franchise
mathematically correct? hauler would lose the incremental
revenues that would have been received
from applying the new rates during
January.
Page I1-10 Contra Costa county
H. Bass Year Rats SettIng Process
Review of Rate
Change Application and
Preparation of Responses
Responsibility: County
Timing: Completed within one month after determining that
the application package is complete
Tasks: a. Review Actual and Projected Revenue Requirements
b. Review Actual and Projected Revenues
c. Review and Verify Operating Ratio
d. Determine Components of Requested Change in
Rates
e. Review Performance Data
f Request Additional Data and Clarification,
if Necessary
g. Document Staff Review and Prepare Written
Response
Description of Tasks
Overview Absolute and percentage changes in
During this step,County staff evaluates costs for the five years identified on the
the entire rate change application. This application should be calculated and
review includes examining significant reviewed,. Projections prepared from
previous years in prior Base Year,date
changes in costs or operating performance
aChange Applications are compared with
and evaluating explanations of these
cactual results. Costs are correlated'with
changes provided by the franchise hauler.
operating collection efficiency statistics
provided by the hauler.
a. Review Actual and Projected Any unusual trends or variances should
Revenue Requirements be explained by the franchise hauler. An
in this task,costs and operating profit unusual increase would be a change in cost
are reviewed and analyzed for which is greater than the change in the San
reasonableness. Reconciliations of casts to Francisco-Oakland-San Jose Consumer
audited financial statements shall be , Price Index,published by the Bureau of
checked for consistency. Explanations are Labor Statistics,and which can not be
sought from the hauler for items attributed to changes in the number of
significantly different than would otherwise customers serviced or tons of waste or
normally be expected. recyclable materials collected. If these
Contra costa county Page 11-11
11. Bass Year Rate Setting Process
unusual changes are not adequately Residential revenues reported by the
explained in the application,the County hauler should not include any rate increases
should request additional clarification from in the base year(year 5). Rate schedules
the franchise hauler. submitted by the franchise hauler should be
The County should review the allocation consulted to determine average rate
methodology used by the hauler to obtain increases. Account information included in
unincorporated County costs. Currently, the application is reviewed to determine
BFI-PHBD maintains separate accounting changes in the number of accounts served.
for CCCSWA areas and non-CCCSWA Allowances for uncollectible accounts
areas as shown. At a minimum,the County also are reviewed. These figures should be
should check that allocations assign costs to deducted from total revenue projections.
unincorporated County customers which are These allowances may be based on a fixed
reasonably consistent with other operating percentage of total revenues or on actual
metrics such as number of accounts and tons experience. Assumptions related to
collected. allowances for uncollectible accounts should
be provided by the franchise hauler.
b. Review Actual and Projected Revenues from recyclable material sales
Revenues is provided in the application. Amounts
identified in the third year of the five years
Actual and projected revenues should be provided should reconcile with the financial
reviewed in this task. Current residential, audit. Amounts identified in the current
commercial, and light industrial rates (fourth)year, the base(fifth)year should be
provided in the application are verified. documented by the franchise hauler. The
Any changes in the number of customers County will review these projections to
serviced should be identified and explained ensure they are consistent with trends in
by the franchise hauler. recycling collection costs, scrap values,
The application requires the franchise processing costs, as well as estimated
hauler to report five years of residential and diversion rates and tonnage.
commercial and light industrial revenues:
(1)calendar year three years ago (2) c. Review and Verify Operating Ratio
calendar year two years ago, (3) most recent
calendar year,(4)current year, and(5) The operating ratio must be between
projected"base"year. For applications 88 percent and 92 percent,and is set at
received after 1998, the County should 90 percent in the initial base year. County
reconcile the most recent year revenues with staff verifies that the operating ratio used in
audited financial statements. Revenues for the application is within this range. The
the current year are compared with year-to- allowable operating profit also is
date unaudited financial statements and recalculated utilizing the operating ratio
documentation supplied by the hauler. stated in the application. If the operating
Projected revenues for the fifth, or"base" ratio does not fall within the range stated
year,are evaluated by the County for above, or if there are any errors in
reasonableness. All assumptions made by calculating allowable operating profit,these
the hauler in preparing these projections are deficiencies are noted.
reviewed.
Page 11.12 Contra Costa County
H. Base Year Rate Setting Process
d. Determine Components of Requested operating statistics is any increase or
Change in Residential Rates decrease of more than the I Consumer Price
The County evaluates all costs, Index(CPI)publishedd by the Bureau of
revenues, and operating profits provided in Labor Statistics in their Monthly Labor
the application to determine the components Review. Changes in accounts served,
of the requested adjustment in rates. This number of routes,tons collected, or direct
would include determining the proportion of labor hours generally should correspond to
the requested adjustment in rates which is changes in cast and revenue. In accordance
due to changes in each of the following: with the Franchise Agreement, all operating
statistics which affect the competitive
0 Costs position of the hauler should be treated as
U Residential revenues confidential.
O Commercial and light industrial
revenues f. Request Additional Data and
• Revenues from the recyclable Clarification,If Necessary
sales 'Throughout the analysis of the
• Operating profit(or loss). application,County staff may request
clarification and/or additional data from the
franchise hauler to explain any unusual
e. Review Performance Data changes in costs or operating performance.
This information is requested in a letter
County staff reviews and analyzes
performance data which are included in the from the County to the franchise hauler.
application(number of accounts and tans
collected). Operating statistics are reviewed g. Document Staff Review and
to explain past historical trends and justify Prepare Written Response
future expenses. Both actual and percentage
increases are examined and any unusual During this task,County staff documents
changes in performance are investigated to the review process. A memorandum is
determine their cause and effect on future prepared which lists the activities completed
cost performance. An unusual change in during the review process and highlights any
of the key findings of the review.
Contra Costa County Page 11-93
it Base Year Rate Setting Process
Response to
Additional Information Requests
from County
Responsibility. Franchise Hauler
Timing: Completed within two weeks of receiving a
request for additional information from the
County
Tasks: a. Provide Additional Information, if
Requested
b. Prepare and Submit Response
Description of Tasks
Overview which require clarification or further
During this step the franchise hauler explanation. The franchise hauler should
responds to requests for additional respond to the County's request for
information from the County. additional information. Responses will vary
depending on the specific requirements of
the County.
a. Provide Additional Information,
If Requested b. Prepare and Submit Response
During Step 3,County staff reviewed the The franchise hauler prepares written
application and may have identified missing responses to the County's request for
information, or changes in the financial or additional information. These responses are
operating data between the five fiscal years prepared and forwarded to the County
during this step.
Contra Costa County Page I1-14
It. Base Year Rate setting Process
Survey of Rates
In
Similar Service Areas
Responsibility: County
Timing: Conducted concurrently with the application
review(Steps 2 and 3)
Tasks: a. Survey Residential and Commercial Solid"haste
Rates and Charges in Similar Service Areas
b. Summarize Survey Results
c. Prepare and Submit Summary to the Franchise
Hauler
Description of Tasks
Overview U General Information
The County conducts a survey of U Rate Setting Process
residential and commercial solid waste rates U Residential Service
in communities similar in size and location
to the unincorporated County. The County ❑ Commercial and Drop Bax Service. .
also determines comparable charges for In order to avoid mailing and response
residential truck usage,as well as rental delays,the survey is conducted by telephone.
rates for buildings similar to those rented by A minimum of six other jurisdictions should
the franchise hauler. The purpose of this be surveyed. Jurisdictions selected should be
survey is to benchmark the rates proposed located in Northern California and have
by the franchise hauler to determine if the operating environments which are similar to
rates are reasonable. Sample survey forms unincorporated Contra Costa County.
and instructions are provided in Section III-
B of this manual.
b. Summarize Survey Results
a. Survey Residential and Commercial After the survey has been conducted,the
Solid Waste Rates and Charges in results are tabulated and compared. The
Similar Service Areas purpose of surveying commercial rates is to
determine if there is an explanation for why
In this task,the survey of rates in other residential rates might vary significantly
areas which are similar to the among the surveyed communities.
unincorporated County is conducted. The
survey includes over 40 questions and Residential rates proposed in the rate
covers the following topics. change application should be compared to
residential rates in ether,jurisdictions. If the
U Introduction rates proposed in the application are
Contra Costa County Page 11-15
il. Bass Year Rate Settin Process
significantly higher than in other ❑ Average tipping fee per ton
jurisdictions,then County staff`should ❑ Average monthly charge for
request the franchise hauler's assistance in comparable residential can
explaining the differences. If the differences services
can not be explained,County staff may ❑ Average charge for once-a-week
consider adjusting the rates in the commercial service of a two and
application.
three cubic yard bin
❑ Average charge for ZQ cubic yard
c. Prepare and Submit Summary to the debris box service.
Franchise Hauler
The report should compare the proposed
The County then prepares a summary unincorporated County rates with averages
report,which makes conclusions about how from the survey. The report should
rates and services provided by the current summarize in a matrix format all results of
franchise hauler compare with those in other the survey listed by agency surveyed.
jurisdictions. The summary report should A co of the survey summary is
overview other jurisdiction's general solid rovided t the franchise hauler. If the
waste practices and rate setting approaches. p
`The report also should document residential County requires an explanation and/or
refuse,recycling, green waste,and clarification from the franchise hauler about
commercial refuse collection services and how the proposed rates compare to rates in
rates. It should include the following the survey,the County includes this request
information: in its transmittal memorandum.
❑ Number of agencies surveyed
❑ Percent of agencies which have
granted franchises
Contra Costa County
Page 11.16
_... . ......... . ._... . .
. .... ....................._.... ......... ...._.... ....... _.
11. Base Year Rate Setting Process
Preparation of Draft
Report and
Recommendations
Responsibility: County
Timing: Completed approximately two months after
determining the application package is complete
Tasks: a. Prepare Draft Report and Recommendations
Description of Tasks
Overview of these report topics is discussed below:
A draft report with recommendations ❑ Executive Summary
from County staff is prepared and submitted This is a one or two-page summary of
to the franchise hauler for review. The the review process and may include a
report will be reviewed by the franchise chart showing current and proposed
hauler in Step 7. Residents of the County rates, and the recommended rate change.
will be able to comment on the rate change
process through a public hearing(refer to ❑ Introduction and Background
Step 8). This section documents the rate change
requested by the franchise hauler. The
a. Prepare Draft Report and section identifies any proposed changes
Recommendations in services provided by the hauler. The
section also identifies the review goals,
In this step,County staff prepares a draft objectives, scope, and other relevant
report including recommendations for a rate background information.
change. The draft report includes the ❑ Rate Change Review
following sections:
❑ Executive Summary This section of the report provides a
brief overview of the rate change
❑ Introduction and Background process and discussion of significant
❑ Rate Change Review historical rate issues.
❑ Analysis and Discussion of Rate ❑ Analysis and Discussion of Rate
Change Application Change Application
❑ Recommendations This section of the report will include a
• review of the analysis work completed
Appendices. by County staff. This section includes
Results of the public hearing(Step 8)also the following sub-sections:
should be included in the draft report. Each
Contra Costa County Page 11-47
_._._._.
_... ......._
. ......... .
__..
....................
if Base Year Rate Setting Process
Review of Rate Changes, including Q Appendices
a discussion of rate changes during Appendices to the report would include:
each year since the last base year,the
relationship of these changes to Rate change application
changes in the Bay Area Consumer . Revised rate schedule
Price Index,and an analysis of the
significant components of the change Audited financial statements of the
in rates(e.g.,changes in tipping fees franchise hauler
or changes in operating profit). . Other relevant supporting materials
Analysis of Projected Costs, provided by the franchise hauler
including a discussion of any . Results of the rate survey.
unusual changes in costs which were After the draft report is complete,copies
discovered during the review are provided to the franchise hauler. These
process. copies must be provided two weeks prior to
Discussion of Service Issues, the public hearing date. Copies of the draft
including changes in frequency or report also are prepared for public review
type of curbside service. If prior to and during the public hearing.
significant service issues are not The County also should provide separate
involved with a rate change,this written approval to the hauler on its method
section would be omitted. of segregating its financial records between
Recommendations County-regulated and non-County regulated
County staff would present its operations. Methods used by the hauler may
recommendations regarding specific vary from time-to-time and thus at each
changes in residential rates in this Base Year the County should reexamine the
section of the document. haulers method, and approve this method in
writing.
Page It-Is contra Costa county
It. Base Year Rate Setting Process
Review of Draft
Report and
Recommendations
Responsibility: Franchise Hauler
Timing. Completed within two weeks of receiving the
County's Draft Report and Recommendations
Tasks: a. Review Draft Report and Recommendations
with County Staff
b. Resolve Any Remaining Issues
c. Prepare Response to Draft.Report and Recommendations
Description of Tasks
Overview r. Prepare Response to Draft Report
The franchise hauler reviews the Draft and Recommendations
Report and Recommendations. The A written response to the draft report is
franchise hauler also may provide additional prepared. The response may cover one or
information related to any issues identified more of the following topics:
during the County's survey of other ❑ If data discrepancies exist in any of the
communities' rates. areas noted in the prior task,the
County should be notified of these
a. Review Draft Report and discrepancies.
Recommendations with County Staff ❑ If the analysis conducted by County
During this task,the franchise hauler staff can he clarified or considered
will review the draft report. Each section of differently, this information should be
the report should be reviewed to ensure the provided to the County staff.
following: ❑ If the report is acceptable and no
Correct data are included clarification or comments can be
offered, this should be relayed to
County staff analysis is accurate and fair County staff.
❑ Rate changes are acceptable. If no written response is received by the
County within two weeks of delivering the
b. Resolve Any Remaining Issues county's Draft Report and
Recommendations, then the County will
If any issues are identified during this assume that the hauler has no issues with the
step,the franchise hauler works with County report.
staff to fully explore and resolve these
outstanding issues.
Cor►tra Costa County Page U-19
II Base Year Rate Setting Process
# Conduct
1► Public
Hearing
Responsibility: County
Timing: Completed approximately 3 months after
determining the application package is complete
Tasks: a. Post Notice of Public Hearing
b. Conduct Public Hearing
Description of Tasks
a. Post Notice of Public Hearing Exhibit II-3,on the following page is a
County staff will arrange for a public sample public hearing notice for newspaper
hearing on the proposed change in
publication.
residential rates. This includes:
• Selecting a location for the hearing b. Conduct Public Hearing
❑ Selecting a date for the hearing Whenever legally required, during this task
❑ Preparing a public notice the public hearing is conducted. Copies of the
Draft Report and Recommendations should be
❑ Submitting the notice to the local made available at the meeting. Representatives
newspaper for a publication date 14 from the County should be available to respond
days prior to the hearing date to citizens questions about the proposed
❑ Preparing copies of the draft report changes. Representatives from the franchise
for public review. hauler may choose to attend at their option.
All citizen comments should be recorded for
consideration and possible inclusion in the
final report.
Contra Costa County Page I1-24
U. Base Year Rate Setting Process
EXHIBIT II-3
Public Notice
Contra Costa County will hold a
public hearing to consider proposed
increases in the rates charged for the
collection of residential solid waste
in service areas covered by BFI-
P"HBD. A hearing will be held at
7:30 p.m. on
in the
Copies of the proposed rates and the
rate change application are available
at the Contra Costa County
Community Development
Department, 651 Pine Street,
4' Floor, North Wing, Martinez,
California between the hours of
8:00 a.m. and 5 p.m.
Contra Costa County Page 11-21
........... ............ .............-......... I'll, I 'll I'll,......-................. .11 11
11. Bass Year Rate Setting Process
Preparation of
Final Report
and Recommendations
Responsibility: County
Timing: Completed within one month of conducting the
public hearing and receiving comments from the
franchise hauler
Tasks: a. Incorporate Franchise Hauler's Changes in Final
Report
b. Incorporate Comments from Public Hearing
c. Prepare Final Report and Recommendations
Description of Tasks
Overview b. Incorporate Comments from
The County prepares the Final Report Public Hearing
and Recommendations, incorporating Relevant comments received during the
relevant comments from the franchise hauler public hearing are considered during this task.
and public hearing during this task. If appropriate, modifications to the report
should be made. If significant modifications
are to be made, the franchise hauler is notified
a. Incorporate Franchise Hauler's and allowed an opportunity to respond to
Changes in Final Report these changes. The public contact portion of
Any comments or issues raised during the report also is completed during this task
the franchise hauler's review of the draft including a summary of the results of the
report are addressed during this task. If public hearing process.
necessary, meetings are conducted with
representatives from the County and the c. Prepare Final Report and
franchise hauler. Final solutions to Recommendations
outstanding issues are included in the report.
After final comments from the franchise
hauler and the public have been considered,
the Final Report and Recommendation
package is prepared. A copy of the Final
Report is submitted to the franchise hauler.
Contra Costa County Page U.22
It. Use Year hate Setting Process
Presentation of Final Report
and Recommendations
to the Board of Supervisors
Responsibility: County
Timing: Completed two weeks prior to the expected
implementation of new rates
Tasks: a. Distribute Report and Summary to Board',of
Supervisors
b. Obtain Board of Supervisor Approval
Description of Tasks
Overview other agenda materials. The Clerk of the
During this step,the Final Report and Board should be notified four weeks prior to
Recommendations is presented to the Board the meeting at which the rate change will be
of Supervisors for review, comment, and considered and reports should be provided
approval. two weeks prior to the meeting.
a. Distribute Report and Summary to b. Obtain Board of Supervisor Approval
Board of Supervisors Supervisors review the report and
In this task,the Final Report and proposed rate changes. If the Board agrees
Recommendations is provided to members with the recommendations of the County
of the Board of Supervisors. The report is staff,the report and rates are approved. If
included as an agenda item for Board of the Board does not agree with the
Supervisors consideration at a regular Board recommendations,the report is returned to
meeting. The rate change may be placed on County staff for additional analysis. If the
either the regular,or consent calendar. report and rates are not approved,the Board
Copies of the report are provided to the should specifically identify deficiencies.
Clerk of the Board for distribution with
Contra Costa County Page 11-23
fl Bass Year Rate Setting Process
# Implementation
of
New Rates
Responsibility: Franchise Hauler
Timing: Conducted following Board of Supervisor
approval of the new rates
Tasks: a. Prepare Notification of Rate Change
b. Implement Rate Change
Description of Tasks
Overview billings once every two or three months, and
During this final step,the franchise a rate change occurs during the middle of a
billing cycle, unbilled amounts in the
hauler implements new residential rates. current billing cycle due to the rate change
are calculated and included in the next
a. Prepare Notification of Rate Change billing cycle.
Once the report is approved, a In accordance with the franchise
notification of a rate change is mailed by the agreement,residential rates charged by BFI-
franchise hauler to all customers. This PHBD represent maximum rates. It is
notification may be included with a regular assumed for purposes of this manual that
billing or may be mailed separately. The BFI-PHBD will charge these maximum
notification must be performed at least 30 rates. If BFI-PHBD charges rates below
days prior to the effective date of the rate these maximum rates and fails to meet its
change. The franchise hauler should revenue requirement,the County is not
provide a copy or facsimile of the notice to responsible for making up any future
the County at the time of customer revenue inadequacies resulting from lower
notification. than maximum rates charged. In no case
will BBFI-PHBD be entitled to recover past
uncollected revenues through a balancing
b. Implement Rate Change account or future increases in rates. The
rate setting methodology is designed such
During this final task,the new rates are that rates are as closely aligned with costs-
entered into the franchise hauler's billing of-service as possible.
system and included in the billing cycle. If
the franchise hauler prepares residential
Page tt-24
Contra Costa County
M. Base Year Rate Setting Methodology
This section provides detailed purposes only and are not intended to reflect
instructions for completing the Base Year actual operating orfinancial rnancial conditions of
Rate Change Application and for conducting the franchise hauler.
the Survey of Rates in Similar Jurisdictions. Several lines in the application contain
The application will be prepared by the five columns. This includes lines 1-13, 16,
franchise hauler and reviewed by the 19-21,and 23. These columns are intended
County. The survey will be prepared by the to show the relationship between the three
County. most recently completed years,the current
Forms provided in this section identify all year, and projections for the new"base"
areas to be completed with double outlined year. These columns are organized as
boxes. If data are to be entered on the forms, follows:
the box has no shading. If calculation is D Columns One through Three includes
required,the box has light shading. information for the franchise hauler's
This section of the manual includes the three prior fiscal years! These are the
following sub-sections: most recent years that financial
A. Preparation of the Base Year information is available and that actual
Rate Change Application costs and revenues can be verified.
B. Survey of Rates in Similar Areas. 0 Column Four is for estimating
performance during the current fiscal
year. The"current year"is the franchise
A. Preparation of the Base Year hauler's fiscal year prior to the new base
Rate Change Application year. The base year rate change
application is prepared during the course
The franchise hauler is responsible for of the current year. Data in this column
preparing the Base Year Rate Change should include year-to-date performance
Application. This six page form includes plus estimated performance during the
detailed financial and operating information remaining months of the current fiscal
and is used to determine the actual costs and year.
revenues of the franchise hauler.
D Column Five is used to report projected
Exhibit III-1, following this page, performance during the new base year.
provides an overview of the steps and This information is utilized to determine
related tasks which must be completed to any rate changes.
prepare the application form. Exhibit III-2,
following Exhibit III-1,is a sample The relationship between these five columns
application form as it might he completed by for any given line item should be consistent.
the franchise hauler. Following this exhibit Any substantial difference between each of the
are detailed descriptions of each step and five years should be explained by the franchise
related tasks. Please note that data included hauler and considered by the County during the
in these exhibits are provided for illustrative review process.
Contra Costa County Wage I1I-1
EXHIBIT III-1
Preparation of Base Year Rate Change Application
Steps Tasks*
1. Entry of a. Enter Prior Year Information
Operating Costs b. Enter Current Year Estimated information
and Profit c. Enter Base Year ProjectedInformation
d. Enter Operating Data
2. Determination of a. Determine Residential Revenue
Residential, b. Determine Commercial and Light
Commercial,and Light Industry Revenue
Industry Revenues c. Determine Allowance for Uncollectible
Accounts
d. Determine Revenue from Recycled
Material Sales
e. Calculate Total Revenue
3. Calculation of a. Calculate Allowable Operating Profit
Allowable Operating b. Determine Franchise Fee
Profit and Revenue c. Calculate Revenue Requirement
Requirement
4. Calculation of a. Calculate Net Surplus/Shortfall
Percent Change b. Calculate Percent Change In Rates
In Rates
S. Preparation a. Calculate New Rates
Of b. Sign and Submit the Application
Summary Form
e All tasks performed by the franchise hauler.
Page 111.2
EXHIBIT III-2
PAGE 1 OF 6
Sample Base Year Rate Change Application
Contra Costa County
Base Year Rate Change Application
Fin anCial hforns ation
Actual t Estimated
:a
Historic*[Yeah Current or ::.4i6�Y1�r;::
Years Year2 Year3 Year)
€nlerActtalYear lnthis Row 1998 1999 2000 2001 •:��$002�: ,
1. DirectLsbor 5 9D01000 3 925,600 5 930000 3 $40,000 ::::930iSF
2. Tipping Foot(ProfitAOowed) 1,100,000 1,155,000 1,050,000 11000,000 is E;i�iSiA#iSfO:q:
J. Corporate and Local General and Administrative Costa 500,600 $151000 $05,000 520.000
4. Trucking and Equipment 550,000 535,000 540,000 545.000 :'::':55A•D06:
3. Depreciation and Other Operating Costa 500,000 525,000530;000 515,000
6. Services Provided to County50,000 $2,000 51,500 49,600.
7. Total Allowable Costs(Linas1+2+3+4+5+6) S 3.800,000 S 3,707,000 53,606.500. 5 3,689,500 ;5:�113l8ii0i000i
STEP
d. Operating Ratio 90.a% 89.4% 91.4% 89.4% i= 'i'9A:pOt6
9. Allowable Operating Profit((Ltne7-010)-Line 7)) S 372,633 $438,141 $340,638 $425007 iiEi:iiSiliQ;QOA:
STEP
10. County Administrative Fee 15,000 15.000 15,000 15.000
11. TI in Fees(Pass Through) 100,000 110,000 50,000
12. Total Pass Through Costs(wilhoutFronchtteFees)(Lines10+11) 115,000 125.000 65,000 15,006
13. Total Anowoble Costs(Line 7)plus Allowable Operating Profit(Line 9)plus
Total Pass Through Costs(without Franchise Fees)(Line 12) 13 4,087,833 34270,141 $4.012,1 38 $4,009,517 13'iii;{.15;D00
ResldentiatRevenue i::3 5;0p0ilast Allowance for Uncellectibte Residential Accounts Total ResidentialRavenue!withoutRateChangeinBaseYear} S 1,600,000 S 1,645,000 S 1,595,000 5 1,567,00tl Commerciei end Light Industrial Revenue Less Allowance for Uncollectible Commercial and Light industrial Accounts Total Co mmarcnllughtindustrialRevenue(withoutRateChangeinBaseYear) 5 2,50D,000 5 2,600,004 S 2,430Recycled Material Sales S 202.771 249,886 176,303 116,544ii
Total Revenue(Linet16+19+20) S 4,302,771 S 4,4@4,1)68- S 4;223.303 S 4,220.544 000:
11. NatShordall(Surplus)wtthouIFranchis0Fee 6(LIna 13-LIna 2 } 5 1i5'Q00•
23. Res idenaallCommerclaULlght Industrial Franchise Fees(see calculation below)I 5 215,139 $ 224,744 S 211,165 5 211,027 113 -4:15;5,7%1;
24. Not Shortfall(Surplus)with Franchise Fees(Lines 22+23) :::1:::X0;1 Ar.4:
23. Total Residential/Commercial/LightIndustrialRevenuePriortoRateChange(Unesl6+t@) i5::,:g1994.4AA
26. Percent Change In Elating Resit entiollCommercialUght Industrial Rates(Line 24+Line 25) A$
Franchise fees are sot by the County at3 percent of the revenue requirem ant 27. Total Allowable Costs(Line?)
Solve for two equations with one unknown,and identily franchise fees as X -> 28. Allowable Operating Profits(Line 9)
Equation t)Revenue R*qutremontx0.05-X 29. Total Pass Throu h Coats(with Franchise Foos)(Lines 12+23 4TE
Equation 2)Revenue Requirement-Line13+X,or$4,115,000+X 30. 1996 Revenue Requirement(Lines27+28+29)Substitute equation 2)Into equation 1)and solve for X ->
($40 05,000+X)x 0.05-X,or X-$218,679
Yost: 2001 Paso t of a
Page ui-3
EXHIBIT 1II-2
PAGE 2 OF G
Sample Base Year Rate Change Application (continued)
contra casts county
Base Year Rate Change Application
COSI Sam Mary for Year 1999
NoneCCCSWA Audited
tinincorparatert end Non ttnins. CCCSWA +N1t#
OsaariptlanatCae# County .Coup Atlas Floarwal
Lobar-Rtgufar S 680,000 $ 4205.982 S 2,960,000 S 7,005.11112 :,1Y0g1
tabor-Ovearno 73.000 468.294 : 322.069 892,333
silnosis 125,000 609.924 639.163 1,470,598 :tiinit(
Payroll Taxes 75,000 465,294 322.039 892.398` irfial
31. UnitOfractLabor $ 925,000 5 0.944.204 S 3,972.085 S 11041,176
32. Total Tipping Foos(ProttAllowed) 5 1,188,000 S 7,250.000 1 S 4.500.000 5 17908,000
Acoounbng S 18.000 5 97,055 $ 61,412 S 176,471 1(tiliiiltik
Compuatr6orv#4as 20,000 125.412 65,492 235204
Oues and Subscriptions 2.500 #6.176 101735 29,412
Insurance 68,000 420.596 279,116 794,708 ;:Sttiiitilt
Laundry 3.000 19,412 12.862 35.294
Legal 75000 468,294 322,059 662.353 ;y4i8iRti
S T E P MonagomentFees 80.000 323.,829 214,708 589.233 133di#ik
Miscellaneous and otter 10,000 64,706 42,941 117447
Paan-Deduofabfa 71000 48,294 30,059 $2,333
014oe Expanse 43,000 291,179 193,233 $29.412 :Vaii+iiia .:
Operating Suppose 65.000 420.698 219,118 794,709
Outside SeMces 20,000 129,412 4511162 : 235294 ::Va41ii1sfk
public Relevant and Pmmadon 30,000 194.118 12BA24 : 382,941
Tains andLicsnsas 12,500 60,462 33.676 147,086
Telephone 50,000 323429 214.706 : 556,235
Trawl
Utilities 45.000 291,176- 193235 529.412 'i;:::Vo)iiilia�tiis
33. Total Corporals end Local General and Administrative Casts S 515.000 3 3,332,353 S 2.211,471. S :9038;924
EqullimentRentai S 50.000 i 323.629 S 214.706 S 568,296
Gas end Oil 100,000 847,059 429,412 1.176.471
Insurance 75.000 468.294 322.039 IIIM363 :Yu;eii#ilt =:
Patio, 100,000 647,059 429,412 1,176,471 ;i;:;'-:.Vg-4iJ#
Repair and Maintenance 150.000 970.568 644 116 1,764.706 :
Tires $0.000 323,529 214.706 598.235.:. ,lfai?tt
Other 10,000 64.706 42.941 117.647 .Yoiilrtla.
34. Total Trucking and Eouipmont S 835,000 S 3.461365 S. 2.297,363 S 6,294.115
Depreciation-buildings s 75.000 S E04.2104
4 S 323.035 $ : 962.353
Depreciation-Vehicles 223.000 12 966,176 2447099
Depreciation-Containers 154.000 6 844;119 -1,764,706 i :;ftp)uttik i
OtierOperertag Costs 73.000 322459 662,353 : :Sdt,1s1e
36, TatslDepreciation"it Other Operating Costs S 35.000 S. 3.397055 S 2,28,4.412 S 6.178,4 1
36. Total Services Provided to County s 52,0001's - s S 82, 0 = 3r•t1
$7. Total Allowable Costs(Units 31•32•33+]4+35.3o,) 377'07.000 1 s 23;426.471 S 137233494 3 402,368.796
39, Total County Administration Fee
39. Total Tipping Foos(Pass Through) 5T. 100.000 Is. s. _ S 100.000 ::;XkiiilRik is
40. Total Res idenBsitCommsmieA49htIndus idol Franchise Fees 5 224;744 1S 440,40 11 $00,000 S 1.224,74417777*77
41. Total Pass Through Casts(Lkws 36.It s 40) rs 335,744 11 4 0.0,00 1 S 600.000 15 1,339344
42. TatslCosts(tines 37.41) 4,046.744 1 2 23,628,471 5 15738.294 s 43.708.509
Year: 2001 Page 2 of 4
Page 111«4
....................
..................I......
............
EXHIBIT 111-2
PAGE 3 OF 6
Sample Base Year Rate Change Application (continued)
Contra costs county
Base Year Rate Change Application
Revenue Summary
Actual Estimated
Historical Years Current Year
Ion 1099 2000 2001
this Year I Year 2 Year 3 1 Yasr4
Enter Actual Year Inis Raw
Single Family Residential Service
43. Single FamilyRosidentsf Revenue(Bass Year From Pogo 4 of 8) 1,556,400 1$ 1,597.800 1$ 1,552,300]$ 1,523,400 ji,
Muftlunit Residential Service
4t. Number of Accounts 520 1 5401 315 1 320 i i f3 ft
45 Mullunit Res idential Revenues S 93,600 1 S 97,200 1 S 92.700 1 S 93,600
46 Res idential Revenue(w10 Mlowance for Uncoils ctible Accounts)(Lines.43 45)Is 1.650,000 I$ 1,695'000 I$ 1,845,000 16 1,817,000
47. Allowance for Uncollisclible Residential Accounts s 50.000 5 50,000 50,0001 $ 50.000
1. Total Residential Revenue(Line 46-Uns 4?j F-7_07.08 11645,000 3 1,595,000 Is 1,567.000 :M—j
443s T E kP
Commercial and Light Industrial Can Service
10 Num bar of Accounts 1 5001 523 1 330 1 510
$0. Commercial and Light lndusbU$Can Revenues S 120,000 1 S 126.000 1$ 127,2001 S 122,400
Commercial and Light Industrial Bin Service
J1. Number of Accounts 550 1 570 1 540 1
52. CommefcIaland Light Industrial Bin Revenues 1.925.000 1 s 1'095,000 S 1'89000o 1S 1,977.500
Commercial and Light Industrial Drop Box Service
53, Number of Accounts 160 1 165 155 1 50
54. Commercial and U91ttindustriat Drop SaxROvenuds S 537,1500 IS 554,400 1 S 520.800 1 S 504,000 1: *:?Z,:
55. Commercial and Light industrial Revenue(w/o Allowance tor
Uncollectible Accounts)(Lines 50+52-54) $ 2,562,000 1 S 2,075,400 1$ 2.538,000 1$ 2,1503,900
56. Ailowance for Uncoillictibio Commercial and Light Industrial Accounts I$ 52,000 Is 15,400 Is 88,000 I$
S7. Total Commercial and Light industrial Revenue(1.1no 5$-Une$$) I$ 21500.000 1 S 2,600,004 I S 2,450.000 1 S. 2,515.000
$8. Ro"cledlilaterisigattit IS 202.771 1 S 249,886 1 S 478.303 1$ 138,544
50. TotalRovortue(Unti*46+57+55) IS 4.302,7171 1$ 4.494,888_1 S 4223,303 S 4,220,15"
Yoon 2001 Page 3 of 4
Page 111.5
...............................
EXHIBIT IH-2
PAGE 4 OF 6
Sample Base Year Rate Change Application (continued)
Contsr Coat*County
Base Year Rate Change Application
Slagle Fam ify Residential Sam M ary
#tcia�ra$t '
�zab�
$AIaN iamby Rr**Yenta!reranw fW""tA*tr Oban"N asa*year)
Current pre rcWif
tt*trJfiolrin Attewlta s;:.:t,,p�:,4t:,:::�:
t•20Owtntantiv.tot>OwttayoMnp,2NppefDt•21FuruWa i tE.50
1.20 Mbn ran efras*,low wyokW,r*MPPa+11a,2 etan.ot 16,00 1
1.20+Non ton of sss*.:Eow woyaft.I we up b 6`,2 a*on we 1$.50 2
tis gown tan alrss*.low fwytv",as ogsp v.2 cava vns 14.$0: 4
12
132 sown ton d rgit rn pr.0*.ad my sing.1 tkpoga,2 o16an4os 15.30 30 :$�� �: �6 7= -
1.32 pNsncon ofv"Is" W"-f felt",t S%Wft.2 atworot 14.00 Ea
131 qd"tan ofsw*on WopvV,Ew ueyt*g,1 etpptq.2 dsanlrips t*oaMs NaeH pa+Ml 12,00 460 :51i$66�
j.32 VW am*fuss*anprtpenl.tow myetns.isiiplmat,2slow400 Moo 500
1.2211rMtnsandsat*tnpnpsrW,tow raeyeft16*00",2o*rn.iptlsonwr) 15.00 400 $EQAD:
132 pottn tan stsaw a0 P"".tow fo YOW4,2 OM*P,2 t*anwpt 16.50 $50
132potentanofrw*onVrow*,low Move".If"wor.2tlssn.os 16.00 46D '•Y.�$:
1.32"know+hulk oh Pf"Off,no rocya",yssa ap*5',2 WWV401 16,66 500 q,11
1.2 vokno*f ofwas*on .tow fuyt*ip,I"op*5'.2 ttwn.*t(ionitr) 11,50 200$"totat10 $ '
241090 tan':rUlm an W""W,tW MMI VOW 1 COW416,1 ZWW+ t 24.00 56 :t4
2.32:pN*ttan 01Vote-anproporW;tow JWVW+p.ttipptlss.2s60ft-0t 25,010 :14
242 o01160 ton ofsws anvfoowM,f ow f ty:z.2 aim",2 so*%" 26.00 120 -
2-12146M tan of ss*en prapMW,E 0W rety wq.yWd up a V,2 elnnwin 26,56
?-itt�+soot+netrw*anpapwW.EOWneyttrp:Ztlppt+pt.2eWnauatiiallor) 23.00
2-32 peon ton ofsw*onp smll,E6w OstYelaq,Yw W b 6'.2 ofssn.w Iasdxi - 23.50
a*lgrtal uo ; '!663161+
3-W go"twv to MOO"
s*btotat 1a $ $#�io:
432 vow ewes 56.66 5
9Oblate 1 8
tot poMn wi pe ras*wo Y*rd),12.35 wart afatai fw fssytfsq,2 tWrvWt 16:00 t 9 $17;:7: :7500'
444 p1tn son ow was*and Yafol,61.35 nift0 of tort EW rstyWV,2 UM-44 20.00 450
tit ytoon tan porsu*ono Yard1.63.36 rsn*r ofsan,E0WratYting.2CMan.gs 23-00 E00 ::'f7,4Ai0A:
` 14411oknwn{brsss*tneytrl6:teM+rMoort EOw fwYtWp.20116m01 20.00 100 :PY AJiD
144 wow sort t*r,t"a and y*C=.two 04&WL I Ow Mcfc&v,2 o*.406 isvwr) Moo 12
a*btobl 1,17E `:�:� ::da1.tlY3
146prtwatan(lxrot*wbYteeS.l3nnWeloorlbeneYoft2tisso4oi E17:50 too
t46 Sam oan lbr s w*afw Is*83 rrw of som E*"Vol o,24 20.00 200
1•l5pWentrflbsree*onsysF 13361 doftrttowrwYCkp,2Gwmoq 22.00 boo ;:'4fs'
1461101160 eon 1*r writs Intl I40W POW of tar!Eow focyt*q.2#*amus 26.00 40 Ss Man:
tis ptaan an{Msaw*fu Yar>n.wnW ataMrt EDiN i�pysisq,2a*en.*e t6atwf) tE.50. 1S ;1�i O
subtotal 11tb5 $aj,170;
2."o"son Mrsssttand,Yogi.64.76NOW ofowtgo*11001ns.2#"ft4W - . .26.60 2 32A;
subtotrt
246 0AW owl ON a a%Wid IN*,so MnW atttws,10*MCI a".2 elson+Ot $0.G0 1
265ptonoortllo rstrrWY4wd1.++ ottars.EOwafsY+i+M.2#iun.+w 16.40 2 t7A:
#nbletal $ >1 tP$'$tl'
2-s6ptaonosr*Ibrsss*m/Ywe) 65:00 .
111. 76111 bUas Y4ysr aln9fe fanl6y Reawenfial
61322
a/ Equal tC toe current tam per month m WtplNC by 12 n1 Yla 44 by the PWI&CM0 num off of OCCOuntt.
Ysar: 2001 r■pn 4*1E
_. id Moo
Page 111.6
........... _..... _ _
... ......... ......... .........
........ ......
EXHIBIT M-2
PAGE 5 OF 6
Sample Base Year Rate Change Application (continued)
Contra Costa County
Base Year Rate Change Application
Operating Information
Hstorical Cunent Year Base Year
Hewrical ':;:Pt Rtes:`: Histotcal Pgipliyi pi Audited :;Fslrsi i ; Leiarwd :::;/iih ::;? ?toiccted
tnibmuuon :iCAan t:.�� Inbttnstion .L"h "'e inttrrmsttan .:£ban- hetotnMdon ':h`b e:-:: @tbrmetien
Yearl `YEf;iti3:`: Year2 ::Yt: sid3?: Year3 G Yesr4 itli:fiid:B:= Yssr5
Enter AetusIYear 194E 1994 2000 2001 2002
Accounts
di. Residential 8,875 ft i:`5!ti 8,885 :: -0i6,�iY. 8,8Sfl ;A>731F 6,700 ii `EOi8fl1G 8.734
61. Commercial 11,050 1,095 : '::=1;20§ 1,070 ': ;ti:4 46' 1,075 :';;'' :2eX! 1,078
63. Light industrial180 ? '`i ftifil4 t80 :::3;1394 155 :!: -9=23511 150 t; 3% 152
64. Total Accounts 7,885 A EDti4 7,944 0 02% 11;875 083'%
Waste Tonnage
6J. Residanilei 10.000 ''2'.tSlFk 10,250 3' D%` 9.875 ''.2 2'b14� 14.100 b. !A' 10,200 S T E i'
66. Commercial 15,000 i;i;3, 411 15,450 ?$i!!8'!G'• 14,850 111111;!;:5>I21i 14.000 :'::' ::2:bb"K: 14,350
67. Light Industrial 2.500 '`.:: j. ti% 2,545 ...2.9113' 2.485 ~�=1 iyk 2,450 #:884G! 2,545
66. Total Toni7.bOfl 271% 28.Y4'S 9.88x 211;210. ..:X2.431/ :`: .28;55{1 2.bb 27, 45•
Recyclable Tonnage
69. Residential SOD 2014 5110 t :#8% 450 1 i1y, 445 :: ':if;{7y, 440
70. Commercial 150 '3:3'66 135 r 45x' 145 ':''. M51i 140 7 111!4 150
711. Light industrial 50 tA,'O.t7lG' 45 SSE1 40 `: :123t75i 35 :::'.! 9:8> ,: 38
7:. Total Toni 700 1.436E 74:1t #�;6B'Ki B99 :"-2 313111..: :82C E;29*F 828:
r
County Services
73. 'County bins f0fYfl% 10 tl.bbti 10 :`*10 DAZE: 9 C b0?!E 9
14, County Orap Boxes 8 '' 1$:876 7 C.Ct79C' 7 A:fl01E`: T 't4.2B°iG': 8
7S. 3 Yd.Bin•iX per weak f 225 00 ; tQ% f 225.00 :` `:S:81Xi: S 228.40 i ' 0>S3}iE S 228.40 2 lSbrYi i 234.10
76. 2 Yd.81n.1X parweek S 150.00 i 3D.{1o% S 150.00 ': ft3S0!&` S 152.25 !?i it:',0'ti S 152.25 `:`°' 2 5ii?fi` i 158.05
77. 20 Yd.Box•per pick up S 300.00 '.',` M4066 S 300.00 bar16 S 304.50 A liDSE` S 304.80 ..i 2:80tl4' i 312.14
Year. 1001 rate s etc
Page
.......................................................................:........:.....:....................................:......:......:................................................................................................................................................................................
.. ............................................................................................................... _...........................................................................................................................................
EXHIBIT III-2
PAGE b OF 6
Sample Base Year Rate Change Application (continued)
Con"caw county
Base Year Rate Change Application
Unincorporated Area: Rodeo
ts. Rstb Change Requested
AbbreNswd Narauad New
Itate schedule Oumtnt Dear RNs Am xbnana<•� Axis
1.20 gallon It 14.60 15.23 6 0.02 f 1626
1'320allan(reayciind) 17.00 17.66 (OA4) 17.86
1.52 patlao(no racyelin0) NIA MIA MIA MIA
1.320atitln(Ionlor) MIA MIA NIA :MIA
1-32 2100A Wob0e Homo rats) NJA NIA MIA MIA
2.32salion 28.00 27.24 0.02 27;20
3-220ailon MIA MIA MIA MIA
4.32 sx0on MIA MIA MIA MIA
1-64 sxudn Can 20.00 21 Al (AA1 21.00
1-64 gotten can(senior) MIA NA MIA MIA
2.64 4 Doh Cafes MIA NJA MIA '. NJA
1.060a0an can 26.00 27.$2 10.02). 27.10
2-96 foutin ram 45.00 47.26 0.02 47:38
3-06 0suan tarp NJA MIA N!A NIA
Additional 32 rattan bap4MIA MIA MIA.. . : MIA
ta)Caiauiawd rates ars mundod up te M noarests0.o5.
7x. Mulbun014esidonsai Itse/inantaYxs of 1 11,06+ wi0 bot ap00ed
to$o rates ih each 11ruOWre With scan raw found"up to
bta"*last 34.06.
STEP
Tows boss of sly snowlelam Ine a"and inbnnsoon in dila sbouosson to cam Rise,seaurate,and cons lawns won
sur inaraatlana omlolis syCon"Coate County.
Mame:Jelin brown Tow:Convaoer
sionatars:'Id.Aaa Dow:may 1,1 sot
Year: 2041 hays•No
Aza-Mail,
Page 111-6
M. Base Year Rats Setting Methodology
Entry of
Operating Costs and
Profit
Responsibility: Franchise Hauler
Timing: Prepared during Step 1 of the Base Year Rate
Change Process(Refer to Section H-A)
Tasks: a. Enter Prior Year Information
b. Enter Current Year Estimated Information
c. Enter Base Year Projected Information
d. Enter Operating Data
Description of Tasks
a. Enter Prior Year Audited Line 11 Tipping Fees
Information (Pass Through)
A copy of audited financial statements Line 23 Residential/Commercial/
for the previous fiscal year should be Light Industrial Franchise
obtained. Financial information from the Fee.
audit is consolidated into specific categories The specific components of these cost
identified in the application. All financial categories are described in Exhibit I-5 in
information shall be in accordance with Chapter I. Supplemental documentation
generally accepted accounting principles. should be prepared which reconciles the
These categories include: financial audit to information provided in
Line 1 Direct Labor the application(e.g., a trial balance report).
Line 2 Tipping Fees This documentation, along with a copy of
(Profit Allowed) the audit, should be included in the
application package.
Line 3 Corporate and Local
General and Administrative Total cost information for both
Costs residential refuse collection/curbside
recycling and commercial and light
Line 4 Trucking and Equipment industrial refuse collection should be
Line S Depreciation and Other reported in this initial task, and in tasks b.
Operating Costs and c.,below. A breakdown of costs for
residential,commercial, and light industrial
Line 6 Services Provided to refuse and curbside recycling services is not
County required at any point in the rate setting
Line 10 County Administrative Fee process.
Contra Costa County Page 111-9
In. ease Year Rate Setting MethodoIJ '
b. Enter Current Year Estimated from residential,commercial, and light
Information industrial refuse,and recycling operations,
Current year costs are determined by the projected franchise fee in the base year
adding actual costs to-date to estimated costs may be calculated using the revenue
that will be incurred during the rest of the protections developed in Step 2.
fiscal year. Total costs for the current year In addition to the cost information
should be similar to the prior year, after requested in the application,three
taking into account increases due to inflation supplemental financial measures must be
and changes in the number of residential, provided as an attachment to the application:
commercial,and light industrial customers 0 the total square feet of office space used
served. Any significant changes should be by the franchise hauler and the rental or
explained and documented. A significant lease rate per square foot per month
change includes any increase in cost which during the new base year
is greater than the CPI,or any decrease in a
cost item. Q the fully-loaded cost per residential truck
during the new base year
c. Enter Base Year Projected U the total square feet of warehouse space
Information and the rate per square foot during the
new base year.
Base year costs are projected by the The franchise hauler must provide three
franchise hauler. These projected costs then comparable rates for each of these financial
are used to calculate the net shortfalltsurplus measures(i.e., three for trucking charges,
in revenues and, subsequently,the percent three for office space per square foot, and
change in rates. These projected costs three for warehouse space per square foot),
should be developed by estimating for a total of nine measures. The source of
anticipated service levels during the base these comparable rates must be identified.
year,and determining the expenses which
will be incurred to provide these services.
Each cost element in the application should d. Enter Operating Data
be reviewed and any anticipated change in
specific line items should be included in the Operating information requested in the
base year projection. For example,if application,provides an important indicator
negotiated labor rates are scheduled to of the franchise hauler's performance. If
change, or if tipping fees are expected to costs are changing at an unusual rate,
change,these changes should be included in operating data may provide some
cost projections for the base year. explanation of these changes. For example,
cost increases could be attributed to the
Actual and estimated franchise fees for increased lever of service provided(i.e.,
the four years prior to the base year(years accounts served). Two operating
one through four of the application} should characteristics are required in the application
be included in the application in tasks a and for residential,commercial,and light
b. The franchise fee for the base year(year industrial customers:
five of the application)is not estimated in
this task,but is estimated in Step 3. Because 0 Accounts served
franchise fees may be based on revenue U Tons collected.
Pao*111-10 Contra Costa county
Ili. Base Year Rate setting Methodology
The franchise hauler should report the fiscal year used in the financial sections of
quantity of drop boxes and bins provided to the application. Current year performance is
the County. Additionally,upon request by the based on performance to-date plus estimated
County,the franchise hauler should provide a performance for the remaining months of the
frequency distribution of the number of current year. Projected base year data
customers within each category of the rate represents the franchise hauler's best
structure. estimate of service levels during the new
Similar to cost data, five years of base year.
operating data are required in the Year-to-year percentage changes then
application. The first three years are are determined for accounts served,tons
"historical,"the fourth year is the"current" collected, and drop boxes/bins provided to
year, and the fifth year is the"base"year. the County. Any significant changes should
Historical data are based on actual annual be documented and explained by the
operating statistics during the last three franchise hauler. A significant change in an
complete fiscal years and reflect the same operating characteristic is an increase or
decrease of more than two percent.
Contra Costa County Page 111-11
_.__..
Ill. Basi►Year Rate S*tti M*tho"
Determination of
Residential, Commercial, and
Light Industrial Revenues
Responsibility: Franchise Hauler
Timing: Prepared during Step l of the Base Year
Rate Change Process(Refer to Section H-A)
Tasks: a. Determine Residential Revenue
b. Determine Commercial and Light Industrial
Revenue
c. Determine Allowance for Uncollectible
Accounts
d. Determine Revenue from Recycled Material
Sales
e. Calculate Total Revenue
Description of Tasks
a. Determine Residential Revenue the projected number of accounts by service
Residential,commercial,and light type in the second column of cells on page 4
industrial revenue comprise the majority of of 6. Total revenue for each service type is
revenues to the franchise hauler. Customers calculated based on the following:
generally either use one 32 gallon can Calculationof
service,64 gallon cart service,or 95 gallon Projected Base Year Revenue
cart service. However,additional cans and
carts are available. Depending upon the Rate per month
geographic County area, customers also are *#OW by 'Twelve months
offered recycling,yardwaste,and annual
clean up services.Pick-up is provided one
' °a a Per year
time per week and a standard monthly fee is MmWpW by Projected residential
charged. As of the time of the manual's accounts:
development,rates by service level(i.e., 32 Equals Revenue by service
gallon can or 64 gallon cart)vary type
significantly across the County depending
upon the geographic area. Revenue b service
To calculate projected residential in the third column of cel n page 4
type then is entered
revenue for the base year,enter the current These values then are added together and
monthly rates by service type in the first entered and totaled in line 60.
column of cells on page 4 of b. Then enter
Papa 111-12 Contra Costa County
Ill. Base Year Rate Setting Methodoiggy
The number of accounts in each service any additional revenue generated from
category may change throughout the year. additional accounts. Operating data provided
For example, some customers may request in Section)a(page 5)of the application
one can service part of the year and an should support any service level changes.
additional can during the remainder of the in order to analyze changes in
year. The average number of accounts by commercial rates, information must be
service type is to be used in these provided for the three specific commercial
calculations. In addition,the number of services. These services are:
accounts identified for these calculations .0 3 Yard Bin once per week
must agree with operating data provided in
Section VIII(page 6)of the application. 0 2 Yard Bin once per week
U Debris Box once per week
b. Determine Commercial and Light In the columns of lines 75 through 77,
Industrial Revenue the franchise hauler enters the rate for these
Because of the wide variety of services for the prior three years,the current
commercial and light industrial services year,and the base year,respectively.
provided, it is not practical to use the Percentage changes then are entered in
process described in task a to estimate columns 2,4, 6 and 8. This information
commercial.revenue. Instead,the approach provides an indication of the overall changes
to be used is similar to estimating costs for in commercial rates which can be compared
the new base year. to the requested change in residential rates.
Commercial and light industrial revenue
information is entered in lines 49 through 57 c. Determine Allowance for
of page 3 of 6 of the application. In the first Uncollectible Accounts
three columns of this line,actual revenue The franchise hauler likely will not be
generated by commercial and light industrial paid by all customers served. While this
accounts during the prior three years is
reported. The third year amount must amount is expected to be relatively small,it
must be accounted for in the calculation of
reconcile with the financial audit for that
same year. Commercial and light industbase year net revenues. These amounts are
industrial reported on line 15, allowance for
revenue for the current year is based on uncollectible residential accounts, and line
actual revenue to-date plus an estimate of 18, allowance for uncollectible commercial
the revenue that will be received through the
through
end of the fiscal year. Commercial and light and light industrial accounts,
industrial revenue in the current year should These amounts can be calculated based
be comparable to revenue in the prior year, on a formula, such as one percent of
after taking into account changes in rates anticipated revenues,or based on actual
and service levels. experience. All assumptions related to the
Projected commercial and light projection of uncollectible accounts must be
industrial revenue for the new base year is documented and included as a supplement to
entered in the fifth column. This amount, the application.
net of any projected uncollectible accounts,
is based on the estimated annual revenue
received during the current fiscal year plus
Contra Costs County page M43
Ill. $ase Year R*ta Settl» M*tisodoto
d. Determine Revenue from scrap prices for recycled materials and the
Recycled Material Sales anticipated quantity of materials sold. The
In addition to revenue generated through projected scrap prices are multiplied by the
residential,commercial, and light industrial projected volume of materials to be sold to
services,some additional revenue is determine projected scrap revenue. This
generated by selling recyclable materials projected revenue is reported in the fifth
collected through the curbside recycling column of line 20 of the application.
program. The amount of revenue generated
through the sale of these materials is e. Calculate Total Revenge
dependent upon the quantity of material
collected and the market price for these Total revenue is determined as follows:
materials. Both of these factors are outside
direct control of the franchise hauler. Calculation of Total Revenue
Therefore,revenues generated by recycled
material sales are not subject to an across-
the-board rate change. Line 16 Total residential
revenue
In the first three columns of line 20, plus Line 19 Total commercial and
actual revenues received during the most
recently completed fiscal years are reported. light industrial revenue
In the fourth column of line 20, estimated plus Lure 20 Recycled material sales
revenues for the current year are reported. Equal Total revenue
For the base year,revenue from recycled
material sales is determined by projecting
Total revenue is entered on line 21.
Page 111-14 Contra costa County
lit. Base Year Rate Setting MethodoF iy
Calculation of.Allowable
Operating Profit and
Revenue Requirement
Responsibility: Franchise Hauler
Timing: Prepared during Step 1 of the Base Year Rate
Change Process(Refer to Section Il-A)
Tasks: a. Calculate Allowable Operating Profit
b. Determine Franchise Fee
c. Calculate Revenue Requirement
Description of Tasks
a. Calculate Allowable Operating These actual operating ratios on allowable
Profit casts will reveal how well past base year
For the three historical years of actual
projections corresponded to actual results.
We would expect that the hauler would
data, the hauler will calculate the actual generally operate in an operating ratio range
operating ratio based on the formula below: of 88 to 92 percent on allowable costs.
Method For Calculating,Actual Similarly,the formula estimated above is
Operating Ratio on Allowable Costs used to calculate the operating ratio for the
current year(column 4).
Step I In the first base year,the operating ratio
Total operating revenues will be 90 percent. In each succeeding base
(Line 21) year,the operating ratio will range from 88
Minus Total operating costs to 92 percent,which will help stabilize rate
(Line 7+ 12 + 23) changes and afford the franchise hauler an
incentive to reduce costs. In any succeeding
E4uah Operating profit(Line 9) base year,if the franchise hauler will earn an
operating ratio outside this range,then 90
Step 2 percent should be reestablished.
operating ratio on The following operating costs are
allowable costs(Line 8) included as operating costs in the allowable
operating profit calculation:
Eyw�ts Allowable costs(Line 7) U Direct labor
ptmWd by Allowable costs(Line 7) Q Tipping fees
plus operating profit(Line
9) Cl Corporate and local general and
administrative casts
0 Truck and equipment
Papa#1145
Contra Costa County
HI. Basan Year Rahe Setting Methodology
• Depreciation and other operating value,the franchise fee,which is identified as
costs X. The equations are summarized in the
• Services provided to County. bottom left comer of the Base Year Rate
Change Application and are as follows:
The actual operating profit received by 1. Revenue Requirement x 0.05 =X
the franchise hauler in the three most
recently completed fiscal years is entered on 2. Revenue Requirement=Line 13 +X,or
line 9,columns 1 through 3. The estimated in more detail [Total Allowable Costs
operating profit for the current fiscal year is (Line 7)plus Allowable Operating Profit
entered on line 9,column 4. The actual (Line 9)plus Total Pass Through Costs
operating ratio for these two years then is (without Franchise Fees)(Line 12)]+X.
calculated using the operating ratio equation By substituting equation 2 into equation
shown on the prior page. 1,the calculation is simplified to:
To calculate the allowable operating (Line 13 +X)x 0.05 =X,or
profit in the base year,the equation below is
utilized: (Line 13 x 0.05)=0.95X,or
Method For Calculating X=(Line 13 x 0.05)-0.95
Nominal Operating Ratio Projected franchise fees,X,should be
Operating costs entered on line 23 of the application.
Lines 10 and 11 should be added and the
D ��y Operating ratio result entered on line 12,total pass through
Equals Allowable operating costs without franchise fees. Any significant
changes in total pass through costs should be
revenues explained and documented.'
Minus Operating costs
Equals Allowable operating profit c. Calculate Revenue Requirement
The revenue requirement establishes the
level of revenue needed to meet all
The allowable operating profit is entered on allowable costs and operating profit. This
line 9, column 5 of the application. includes residential,commercial, and light
industrial waste and recycling costs, and
assumes a reasonable profit margin based on
6. Determine Franchise Fee the operating ratio calculation.
The current franchise fees paid to the Total revenue requirements are
County is set equal to 5.0 percent of gross determined as the sum of.
revenues. The calculation of the franchise fee 0 Allowable operating costs me 7
is not a straightforward exercise because as p g �! )
revenue is increased(e.g.,via a rate change), 0 Allowable operating profit(Line 9)
so does the amount of franchise fees increase 0 Pass through costs(Lune 12+23).
because franchise fees are bossed on a percent
of gross revenues. To calculate the franchise The revenue requirement is entered on line
fee for the base year requires solving for two 30 of the application.
simultaneous equations with one unknown
Pada III-ta Contras Costa County
Ill. Base Year Rate Setting Methodology
1 Calculation of
Percent Change
. , in Rates
Responsibility: Franchise Hauler
Timing: Prepared during Step 1 of the Base Year Rate
Change Process(Refer to Section H-A)
Tasks: a. Calculate Net Surplus/Shortfall
b. Calculate Percent Change In Rates
Description of Tasks
a. Calculate Net Surplus/ b. Calculate Percent Change
Shortfall in Rates
The net surplus/shortfall,prior to the The percent change in residential rates is
franchise fee,is first determined based on the amount that rates must be either raised to
the following calculation: generate revenues sufficient to eliminate any
Shortfall/Surplus Prior net shortfall or lowered so that no net
to Franchise Fee surplus occurs. The projected amount of
Line 13 Revenue requirement revenue generated during the base year from
(without franchise fee) the sale of recycled materials was calculated
[equal to total in Step 3; therefore, any change in revenue
allowable costs (Line 7) required must come from an increase or
plus allowable decrease in residential and commerciattlight
operating profit(Line industrial rates.
8)plus total pass The percent change in existing rates is
through costs without calculated as follows:
franchise fees(Line 12) Shortfall/Surplus Prior
Less Line 21 Total revenue to Franchise Fee
Equals Line 22 Net residential surplus/ Line 24 Net surplus/shortfall
shortfall,without Divided
franchise fee by Line 25 Total residential and
commercialflight
industrial revenue
Next the franchise fee calculated in Line 23 is without change
added to the surplus/shortfall in Line 22 to Equab Percent change in rates.
get the total net surplus/shortfall(Line 24).
This number is used to calculate the percent The percent change in rates is entered on
line 26 of the application.
change in existing rates.
Contra Costa County Page M-17
Ill. Base Year Rate Sotting Methodology
Preparation
of
Summary Form
Responsibility: Franchise Hauler
Timing: Prepared.during Step 1 of the Base Year Rate
Change Process(Refer to Section II-A)
Tasks, a. Calculate New Rates
b. Sign and Submit the Application
Description of Tasks
a. Calculate New Rates This simplifies record keeping for the
The rate change identified on page 1, franchise hauler and should not make a
line 26 should be entered on page 6,line 78 material difference to customers. The
of the Base Year Rate Change Application. adjustment required to reach the nearest five
Current rates for residential solid waste cent increment should be calculated and
collection should be entered in the first entered in the third column. To determine
column of page 6 of 6. The adjusted rates new residential rates,column two should be
then are calculated by multiplying the added to column three and the result should
current rate by one plus the rate increase be entered in column.four. This column '
identified in line 1. These adjusted rates are provides the new rate schedule.
entered in the second column.
Page 6 of 6 of the application is designed b. Sign and Submit the Application
for use by each of the nine unincorporated
County areas. The top left of this page has a An authorized representative from the
space for the hauler to indicate which fiatichise hauler should sign and slate the
,geographic area the rate change is to apply application. This signature provides a
certification
to. In the future,should the County adopt a of the farichise hauler that the
uniform rate structure across these application is complete,accurate,and
geographic this form may used.for consistent with the instructions provided in
eo hic areas, this manual. The hauler should submit to
the entire County. However,due to the the County one reproducible hard copy, 15
current rate structures,one page 6 is required bound hard copies, and one copy on disk of
for each geographic area. the completed Vase Year Date Change
The adjusted rates are rounded up or Application.
down to the nearest five cent increment.
Page HI-18 Contra costa County
Ill. Base Year Rate Setting Methodology
B. Survey of Rates in Similar Areas While all questions in the survey provide
As a check of the reasonableness of valuable comparative information,there are
existing and new refuse collection fees, a several key questions including:
survey of rates in similar communities ❑ Monthly rates for a range of
'should be conducted during each base year residential service
(once every four years). This survey covers ❑ Monthly rate for standard
a variety of topics including: commercial and light industrial
❑ Residential service services(e.g., once-a-week pick-up
❑ Commercial service of a three yard bin)
❑ Rate setting process ❑ Tipping fees for transfer station and
disposal services
❑ Tipping fees
❑ Operating ratios.
❑ Profit methodologies. After the survey has been conducted,the
The survey is conducted by County staff results are summarized for comparison with
during base year process Step 5. Exhibit the franchise hauler's rate application. This
I11-3, following this page,is a sample survey summary is included as an attachment to the
form. The survey should be conducted by Final Report and Recommendations
telephone instead of by mail. A minimum of package, as described in Section II-A, Step
six cities should be contacted. These cities b. This information also is used in the
should be located in the East San Francisco evaluation of the franchise hauler's
Bay Area, and should be similar in size and application.
demographic make-up to unincorporated
Contra Costa County.
Contra Costa County Page 11149
EX MIT III-3
PAGE 1 OF 3
Sample Solid Waste Fee Survey
Contra Costa County
Solid waste Fee Survey
PRIN
f' Name of City/County
Contact Person
3. 'tithe of Contact Person
i "telephone Number
Date Contacted
6. Ate reaghr d Chtrbslde f}
collection and disposal services
prOV48d by dhe munk4olity or
Private contractor?
7. is the franchise granted to#tie
hauler excuaive for residential
and commercial srmrkxs7
i!. is chars a fronct4s fee? If so,
how much is it?
D. is frandese waste delivered to
a transfer station or directly to a
tertidfiif?
fO, What is the transfer station
gaping fee past by tate
franchised hauler for franchised
waste{it apOicable}7
11. What is the lsrtir 0 t ppft fee
OW by the franchise hauler for
franchised waste(d
applicable)?
It What Is the name of the transfer
station t n&*r landfill whole
f ndtiised waste is disposed
W7
13. What is the terio of the current
ri;tutictiise?
14. In what year does aro current
franchise end?
Year: Pave 1 of 3
Pao*111-20
........................
.........................................-
.................................
........................
EXHIBIT HI-3
PAGE 20F3
Sample Solid Waste Fee Survey (continued)
Contra Costa County
Solid Waste Fee Survey
is. Briefly describe the fate setting
process used.
16. What allowable profit
nwhanism is used?
17. What profit level is allowed?
18. Are audited financial statements
required of the franchise
hauler?
12. Are rates annually adjusted by
the CPI or a modified CPI?
20. Are residential rates regulated?
21. What we the monthly charges
for residential service?
(Provide a rate structure if
necessary)
22. How many cons are picked up
at this charge? (Provide a rate
structure if necessary)
21 What is the charge for
additional cons?(provide a rate
structure If necessary)
24. Is greenwaste picked up for free
or is there a separate charge?
25. What is the separate charge for
greenwaste?
26. How Is greenwaste collected?
Year. Paps 2 of 3
Page 111-21
...........I...... ........................................
EXHIBIT III-3
PAGE 3 4F 3
Sample Solid Waste Fee Survey {continued}
Coutts Costs Gesunty
Solid Waste Fee Survey
27. How many Clfywwi4s ttam-up
Cava ars provided for free by
the hauler?
28. Does you taammur*have a
curbside focyci tr2 program?
29. 1Nttat rrwterials we collected?
30. Is orate an additionsl charge to
rosidsnts fat this program,or is
It included In the mnrtthly
charge for garbage trotiec3ion?
31. If asperste,what is the charge
per Manth?
32. Are crstntnerdat to
teguisted?
33. Pmvids the trwnthitr tee for the
to>Wawirg services,assuming
pick-up is ons tuns per week
provides rata structure if
nscessaryy
sins
34. t Cubic Yard
.t
35. 2 Cubic Yards
36. 3 Cubic Yards
37. 6 Cubic Yards
Drop Bornes
38. 20 Cubic Yards
39. 30 Cubic Yards
40. 40 Cubic Yards
41. Effective Period of Rates
Quoted:
Year: P*go 3 of 3 Y
Pago M-22
IV. Interim Year Rate Setting Process
Interim year rate adjustment requests are Both the County and franchise hauler may
accepted in the three years between base initiate the extraordinary rate adjustment
years. The interim year process requires less process. For these adjustments,the
information and preparation time,while still franchise hauler will provide necessary
allowing fair and reasonable rate information and documentation so the
adjustments. County can make a judgment as to the
reasonableness of such a rate adjustment.
During the two interim years,rates can With Board of Supervisor approval,an
be adjusted annually through application of extraordinary adjustment can be made by the
a composite index. The index consists of' franchise hauler.
• Historical changes in the Consumer Exhibit TV-1, following this page,
Price Index {CPI)for the San Francisco- provides an overview of the interim year rate
Oakland-San Jose published by the adjustment process. Exhibit IV-2 following
Bureau of Labor Statistics in their Exhibit IV-1 shows the timing of the interim
Monthly Labor Review year process.
• Projected changes in tipping fees Generally,interim year rate changes are
• Adjustment for the franchise fees which implemented at the beginning of the fiscal
change if revenues change. year in which the new rates will take effect.
In each interim year,the franchise hauler The rate change process should begin four
is responsible for determining the actual months prior to the beginning of the new
annual change in the CPI for the most recent calendar year and the rate change application
should be submitted to the County a
12-month period. The franchise hauler also mimmurn of three months prior to the
will be responsible for estimating and implementation of the rates. For rate
documenting projected changes in tipping changes effective January 1,the application
fees in the interim year for which a rate
adjustment is requested. should be submitted to the County in
September.
Even if the interim-year adjustment The current Franchise Agreement allows
would justify an increase in rates,the the hauler to adjust rates up to the CPI
franchise hauler is not required to apply for without Board of Supervisor approval.
the increase. This will help stabilize rate Consistent with these terms we allow the
adjustments even when small increases hauler in Interim Years to adjust rates UP to
might be warranted. the CPI without Board of Supervisor
Special extraordinary adjustments are approval. Most of the time frames are
allowed outside of the annual schedules of recommended;however, certain key
the base year and interim year adjustments. products are noted in the exhibit by circled
letters. Following these exhibits is a
description of each step in the interim year
process.
Contra costs county Page IV-1
..... ........
...........
EXHIBITIV-2
Timing of Base Year Rate Change Process
Step P arattaa Formal Review Proeeaa im lement
Month I Month 2 Month 3 Month 4 Month 5
Pirpsiation and
l+ Submissionof
Rate Change Application
2. Preparation of hate Adjustment
Indices
3. Review and Response to County
Analysis and Calculations te� :
4. Preparation of Final Report and
Recommendations St
S. Presentation of Final Deport and
Recommendations to Hoard of
Supervisors
6. Implementation of New Rates
Legend
A. Submit Rate Change Application to County
B. Final Report and Recommendations
C. Application Approved
D. Customer Notification
H. New Rates trrgslemented on January 1
Page#Y-3
EXHIBIT IV-1
Interim Year Rata Change Process
Steps Responsibility Tasks Documen s!Deliverable s
1. Preparation and Franchise a. Prepare an Interim Year = Rate Application
Submission of Rate Hauler Rate Change Application
Change Application b. Submit Draft to County
Staff
2. Preparation of a. Identify Consumer Price Inde Interim Year Rate
County Change Worksheet
Rate Adjustment b. Complete Interim Year Rate = Additional
Indices Change Worksheet and
Determine New Rates Documents and
c. Request Additional Data, and Information
Droit Report
Clarification,If Necessary
•d. Prepare Draft Report and
Recommendations
3. Review of Response Franchise a. Review County Staff Written Response to
to County Analysis Hauler Calculations and Analysis Draft Report
and Calculations b. Prepare and Submit
Response
4. Preparation of a. Incorporate the Franchise Final Report
Final Report County Hauler's Comments in
and Recommendations Final Report
b. Prepare Final Report and
Recommendations
5. Presentation of Final a. Distribute Report to Notice to Board
Report and County Supervisors when Approve Resolution
Recommendations Requested Increase When Applicable(i.e.,
to the Board of Equals or is Less than when Increase is
Supervisors the CPI above the CPI
b. Obtain Board of
Supervisor Approval When
Requested Increase Is
Above the CPI
6. Implementation Franchise a. Notify Residential = Notification to
Of Hauler Customers Customer
New Rates b. implement Rate Change = Rate Schedule
Page IV-2
IV.interim Year Rete Settffig,Process
Preparation of
Rate Adjustment
Indices
Responsibility: County
Timing: Completed within three weeks of receiving)a
completed Interim Year Rate Change Application
Tasks: a. Identify Consumer Price Index
b. Complete Interim Year Kate Change Worksheet
and Determine New Rates
c. Request Additional Data, and Clarification,
if Necessary
d. Prepare Draft Report and Recommendations
Description of Tasks
Overview in CPI for the prior twelve months also is
County staff uses the franchise used as the projected CPI for the interim
hauler's awn projections of uncontrolled
year. This information is available from
costs, determines changes in the Consumer the United States Department of Labor,
Price Index for controlled costs, and then Bureau of Labor Statistics,San Francisco,
calculates the rate change and new rates and is prepared monthly.
for the next interim year. The Interim
Year Rate Change Worksheet is used to b. Complete interim Year Rate
complete this step. Change Worksheet and Determine
New Rates
a. Identify Consumer Price index County staff prepares the Interim Year
The annual change in the San Rate Change Worksheet and calculates new
Francisco-Oakland-San Jose Metropolitan residential rates during this task. This
Area Consumer Price Index(CPI) worksheet requires information from the
provides the single largest factor for most recent Base Year Application and the
determining new rates during interim current Interim Year Application. This
years. The actual change in this index worksheet also requires the Bay Area
during the twelve months prior to the date Consumer Price Index information collected
the Interim Year Rate Change Application in task a. The worksheet is used to calculate
is submitted to the County is used for the the new residential rates. Detailed
actual change in the methodology. instructions on how to complete this
Because a projected change in the CPI is worksheet are provided in Section IV of this
not produced for the San Francisco-Bay manual.
Area by a public agency,the actual change
Contra costa County Pogo tV»5
IV.Interim Year Rate Setting Process
Preparation and
Submission of Rate
Change Application
Responsibility: Franchise Hauler
Timing: Completed three months prior to the
implementation of the new rates
Tasks: a. Prepare an Interim Year Rate Change
Application
b. Submit Draft to County Staff
Description of Tasks
Overview Projected changes in uncontrolled costs
During this first step,the franchise then are entered on the Interim Year Rate
hauler prepares the Interim Year Rate Change Application. In addition, any
Change Application. discussion about these changes is provided
with the application. The application is
signed by an appropriate representative of
a. Prepare an Interim Year Rate the franchise hauler.
Change Application
The franchise hauler is responsible for b. Submit Draft to City Staff
projecting any change in tipping fees. The
projection is made for the interim year for The completed application is sent to the
which new residential rates are being County for review and calculation of new
requested. residential rates. The franchise hauler's
application does not include any new
residential rates, these are determined by the
County during Step 2. The hauler should
note whether the proposed change would
equal or exceed the CPI, and thus require
Board of Supervisor Approval.
Contra Costs County Page N-4
IV.Interim Year Rate-Sotting Rate-SettingProcess
Review and Response
to County Analysis and
Calculations
Responsibility: Franchise Hauler
Timing: Completed within three weeks of receiving the
completed interim year draft report from the County
Tasks: a. Review County Staff`Calculations and Analysis
b. Prepare and Submit Response
Description of Tasks
Overview ❑ Rate changes are reasonable and
The franchise hauler reviews the draft acceptable.
report to ensure that any calculations and
analysis completed by County staff are fair, b. prepare and Submit Response
reasonable,and justified.
A written response to the draft report is
prepared. The response may cover one or
a. Review County Staff Calculations and more of the following topics:
Analysis ❑ Data discrepancies in any of the
The franchise hauler reviews the draft areas noted in the prior task
report to ensure the following: ❑ Clarification for the County or
❑ Correct data are included alternative analysis of the application
❑ City staff analysis is accurate and ❑ Responses to the County's
fair request for additional
information.
Contra Costs County Page IV-7
W.Interim Year Rate Setting Process
c. Request Additional Data,and ❑ Background
Clarification,if Necessary This section of the report provides a
If necessary, County staff requests brief overview of the rate change process
clarification and/or additional data from the and discussion of any significant
franchise hauler. The request is to clarify historical issues.
the franchise hauler's assumptions for ❑ Analysis and Discussion of Issues
projected changes in tipping and to indicate
the expected change in residential rates. This section includes a review of the
analysis work completed by County
staff: This section also includes a
d. Prepare Draft Report and discussion of any significant changes in
Recommendations uncontrolled costs and an identification
County staff prepares a draft report with of the change in CPI assumed by the
recommendations of new rates for Hoard of County.
Supervisor consideration. If the change in ❑ Recommendation
rates does not exceed the CPI, the County County staff presents its
will inform the Board of Supervisors of the
upcoming change in rates. For a change recommendation regarding any change
in residential rates in this section.
above the CPI, the County will solicit
feedback and comments from the Board 0 Attachments
before obtaining the Board's approval for Attachments to the report would include:
the Interim Year rate change. This report
should be brief and include the following • Rate change application
sections: r Revised rate schedule
❑ Executive Summary s Rate change worksheet.
This is a one page summary of the
review process and includes a chart After the draft report and
showing current and proposed rates, and recommendations have been prepared,the
the recommended rate change. document should be submitted to the
franchise hauler for comment and review.
Page W-B Contra Costa County
IV.Interim Year Rata Setting Process
Presentation of
Final Report and Recommendations
to the Board of Supervisors
Responsibility: County
Timing: Completed within ninety days of receiving'a
completed Interim Year Rate Change Application
Tasks: a. Distribute Report to Supervisors When
Requested Increase Equals or is Less than the
CPI
b. Obtain Board of Supervisors Approval When
Requested Increase is Above the CPI
Description of Tasks
Overview the Board should be notified four weeks
For changes in rates which exceed the prior to the meeting at which the rate change
CPI,the Final Report and Recommendations will be considered and reports will be
is submitted to the Board of Supervisors for provided two weeps prior to the meeting.
review, comment, and approval, during this
step. b. Obtain Board of Supervisor Approval
When Requested Increase is Above
a. Distribute Report to Supervisors the CPI
When Requested Inerease Equals or is For changes in rates which exceed the
Less than the CPI CPI, Supervisors will review the report and
The Final Report and Recommendations proposed rate changes. If the Board agrees
is included as an agenda item for Board with the recommendations of County staff,
consideration at a regular Board of the report and rates should be approved. If
Supervisors meeting. This item may be the Board does not agree with the
placed on either the regular or consent recommendations,the report is returned to
calendar. Copies of the report are provided County staff for additional;analysis. If the
to the Clerk of the Board for distribution report and rates are not approved,the Board
with other agenda materials. The Clerk of should be asked to specifically identify
deficiencies.
Contra Costa County Page IV4
IV.Interim Year Rate Setting Process
Preparation of
Final Report
and Recommendations
Responsibility: County
Timing: Conducted within two weeks of receiving
comments from the franchise hauler
Tasks: a. incorporate the Franchise Hauler's Comments in
Final Report
b. Prepare Final Report and Recommendations
Description of Tasks
Overview with representatives from the County and
The County prepares the Final Report the franchise hauler. Final solutions to
and Recommendations incorporating outstanding issues should be included in the
comments from the franchise hauler, as report.
appropriate.
b. Prepare Final Report and
a. Incorporate the Franchise Hauler's Recommendations
Comments in Final Report After final comments from the franchise
Any comments or issues raised during hauler have been considered, the Final
the franchise hauler's review of the draft Report and Recommendations is prepared.
report are addressed during this task. If A copy of the Final Report should be
necessary,meetings should be conducted submitted to the franchise hauler.
Contra Costa County Page IV-$
V. Interim Year Rate Setting Methodology
Two forms are required to complete the during the interim year rate change process.
Interim Year Rate Setting Process: This application is prepared by the franchise
Q Interim Year Rate Change hauler, and identifies changes in
Application uncontrolled costs. Uncontrolled costs are
tipping fees and regulatory fees paid directly
This is completed by the franchise hauler by the franchise hauler. These two items are
and documents Changes in tipping fees reported as a cost per ton.
and regulatory charges.
• Interim.Year Rate Change Worksheet Exhiblt V-1, following this page,
provides an overview of the steps and
This form is completed by the County related tasks which must be completed to
and is used to calculate the change in prepare the application form. Exhibit V-2,
residential changes during an interim following Exhibit V-1,is a sample
year. application as it might be prepared by the
This section provides detailed instructions franchise hauler. This exhibit includes
for completing these two documents,and is references to the various steps which must
organized as follows: be completed to prepare the application.
Following this exhibit is a detailed
A. Preparation ofInterim Year Rate description of these steps and related tasks.
Change Application
Similar to the base year forms, these
B. Preparation of Interim Year Rate forms identify all areas to be completed with
Change Worksheet. double outlined boxes. If data are to be
entered in the form,the box:has no shading.
A. Preparation of the Interim Year Rate If a calculation is required.,the box has light
Change Application shading. Please nate that data included in
these forms are provided for illustrative
The Interim Year Rate Change purposes only and are not intended to reflect
Application is the first document completed actual operating or financial conditions.
Contra Costa County Page V•1
IV.Interim Yoor Rate Setting Process
9 Implementation
of
New Rates
Responsibility: Franchise Hauler
Timing: Conducted following the approval of the new
rates by the Board of Supervisors
Tasks: a. Notify Residential Customers
b. Implement Rate Change
Description of Tasks
Overview b. Implement Rate Change
After new rates have been approved by During this final task,the franchise
Board of Supervisors,the final step in the hauler enters the new rates into their
process is to implement the new rates. billing system and includes the new rates
on the next appropriate customer invoice.
If a rate change occurs during the middle
a. Notify Residential Customers of a billing cycle,unbilled amounts are
After the report is approved, a calculated and included in the next billing
notification of a rate change should be cycle.
mailed to all customers.
Contra costa County Pago IV-10
EXHIBIT V-1
Preparation of Interim Year Rate Change Application
sta s Tasks
1. Report of a. Provide Prior Year Uncontrolled Costs
Changes in b. Project Interim Year Uncontrolled Casts
Uncontrolled Casts c. Calculate Change in Uncontrolled Casts
2. Explanation of a. Provide Explanation of Changes
Changes in b. Provide Supporting Documents
Uncontrolled Costs
3. Application a. Sign Application
Certification b. Submit Application to County
Page V-2
EXHIBIT V-2
Sample Interim Year Rate Change Application
Costa County
Interim Year Rate Change Application
Section y in Uncontrolled Cotts
Change in Uncontroitsd Cost
f. Prior Year Tlppkg Fees per Ton # T
Z RA: Ptor Year fry Feet For Ton SCI
3. skiwis; Tot—at Prior Year Uncortvoled Costs Per Ton Sul
4. Projected Interim Yaw T{piA g Facts Per Ton $53
5. RA: Projected tetanus Year ReViatory Fees Par Ton $O
6, 6quais; Total Projectad hterim Year Lft*rtroled Costs Per Ton
7. }meted Chang*in Lavontroled Costs 8.0%
Provbe an exptanstion of any changes in tmontroled costs(i.e.,tipping fees and regulatory charges paid
by the hauler). Attach supporting documentation to this application as appropriate.
STEP
To the test of my k ow Wgs.the data and informs w in this applcstim is owm*te,sccwats,and consistent with
the instructions Mvided by the Contra Costa County,
f*M: John$row n Title: Chief FinsneielOfficer
Signature! Orae: 14A&r-98
STEP
YYear.• t of i
Page V-3
V.Interim Year Rat*Setting Methodology
Report of Changes
in
Uncontrolled Costs
Responsibility: Franchise Hauler
Timing: Prepared during Step 1 of the Interim Year Rate
Change Process(Refer to Section II-C)
Tasks: a. Provide Prior Year Uncontrolled Costs
b. Project Interim Year Uncontrolled Costs
c. Calculate Change in Uncontrolled Costs
Description of Tasks
a. Provide Prior Year Uncontrolled for the next interim year. Projected interim
Costs year tipping fees per ton are entered on line
The first task in this step is to provide 4, and projected interim year regulatory fees
prior year tipping fees and regulatory fees. per ton are entered on line S. The values
These items are to be reported in terms of entered on lines 4 and 5 then are added and
cost per ton to eliminate any changes which entered on line 6.
are due to increases or decreases in tons of
solid waste removed by the franchise hauler. c. Calculate Change in Uncontrolled
Prior year tipping fees per ton should be Costs
entered on line 1. Prior year regulatory fees
per ton should be entered on line 2. The The percent change in uncontrolled costs
values entered on lines l and 2 should then is determined as follows:
be added and entered on line 3.
lie 6,- line,3
b. Project Interim Year Uncontrolled line 3
Casts
The franchise hauler estimates what The product of this equation,rounded to the
tipping fees and regulatory charges will be nearest one decimal place,is entered on line 7.
Pap Y•d Contra Costa County
.........
........................... _
......... _
V.Interim Year Rata Setting Methodology
# Explanation of
Changes in
Uncontrolled Costs
Responsibility: Franchise Hauler
Timing: Prepared during Step 1 of the Interim Year Rate
Change Process(Refer to Section II-C)
Tasks: a. Provide Explanation of Changes
b. Provide Supporting Documents
Description of Tasks
a. Provide Explanation of Changes b. Provide Supporting Documents
Any changes in either tipping fees or Documents which support or further
regulatory charges should be fully explained explain any change in costs are provided, as
in this task. For example, if a landfill closes appropriate. This might include formal
and the franchise hauler begins using a new announcements of tipping fee increases
landfill with higher tipping fees, this provided by the landfill operator, or
information should be disclosed. descriptions of new regulatory fees which
will be paid directly by the franchise hauler.
Contra Costa County Page V-5
_.. -
V.interim Yaw Rg*_Setting Methodology
Application
r
Certification
ResponsibiW: Franchise Mauler
Timing: Prepared during Step l of the Interim Year Rate
Change Process(Refer to Section II-C)
Tasks: a. Sign Application
b. Submit Application to County
Description of Tasks
a. Sign Application b. Submit Application to City
An authorized representative from the At this point,the application should be
franchise hauler should sign and date the complete. The application;is submitted to
application. This signature provides the County for review and'calculation of the
certification by the franchise hauler that the rate change, as described in the following
application is complete, accurate,and subsection.
consistent with the instructions provided in
this manual.
pa9s V-6 Contra Costa County
V.interim Year Rath Setting Methodoio
B. Preparation of Interim Year Rate change. Steps I through 4 of the
Change Worksheet methodology will be completed using page 2
The Interim Year Rate Change of the worksheet. Step 5 will be completed
Worksheet is used to calculate new interim
using page 1 of the worksheet.
year residential rates. This document is Exhibit IV-3, following this page,
prepared by the County after the franchise provides an overview of the steps and-
hauler
ndhauler has submitted an Interim Year Rate related tasks which must be completed to
Change Application. Interim year rate prepare the worksheet form and calculate
changes are based on a weighted increase in new residential rates. Exhibit IV-4,
controlled and uncontrolled costs. Inflators following Exhibit IV-3, is a sample of the
for this process include changes in the San two page worksheet as it might be prepared
Francisco-Oakland-San Tose Consumer by County staff. This exhibit includes
Price Index(described in Step 2) and references to various steps which must be
changes in uncontrolled costs(documented completed to prepare the worksheet-
by the franchise hauler in the Interim Year Following Exhibit IV-4 is a detailed
Rate Change Application). description of each step and related tasks.
The worksheet is a two-page form. Page Please note that the data included in
1 provides summary information about the these exhibits are provided,for illustrative
rate change requested and the resulting new purposes only and are not intended to
residential rates. Page 2 includes detailed reflect actual operating orfinancial
calculations required to determine the rate conditions.
Page V-T
Contra Costs county
EXHIBIT V-3
Preparation of Interim Year tate Change Worksheet
Strips Teaks
1. Determination of a. Identify Prier Base Year Controlled Costs
Base Year Costs b. Identify Prier Base Year Uncontrolled Costs
and Weighting c. Calculate Weightings
2. Projection of a, Determine Projected Change in Consumer
Change in Price Index
Consumer Price Index b. Determine Consumer Price Index Adjustment
Factor
c. Calculate Adjusted Projected Change in
Consumer Price Index
3. Calculation of a. Enter Uncontrolled Cost Information from
Percent Changes Application
in Uncontrolled Costs b. Review Mathematical Accuracy
4. Calculation of a. Calculate Weighted Change in Controlled
Weighted Change Costs
in Residential Rates b. Calculate Weighted Change in Uncontrolled
Costs
c. Calculate Total Change in Cost
d. Calculate Franchise Fee Adjustment
e. Calculate Percent Change in Existing Rates
5. Preparation a. Enter Rate Change
Of b. Calculate New Rates
Summary Form
Page V-a
...............................
EXHMIf'V-4
PAGE 1 of 2
Sample Interim Year Rate Change Worksheet
c w"QW12 i"nty
Interim Year Rate Change Worksheet
summary
r. Percent Change in Residential Mates Requested s�itf
STEP
Adjusted NOW
-- f400Sobedcdo {kar"Fbft f%deAt tf sttrtrni !fir
2. 33Cia1 wCan Swico 598.00 $16.94 $0.01 St6.96
3. 64 Qad M Can Service 30.00 29.98 0.02 2:1
<. 95 OWbn Owl Urviro 25.00 20A8 0:02 26 3G
i
i
Year Pa"i of 2
Page V-9
EXHIBIT V-4
PAGE 2 of 2
Sample interim Year Rate Change Worksheet (continued)
C""Costs c o^
Interim Year Rate Change Worksheet
Rnancial lnfornotfon
ease Year Controlled Costs
1, Total Operating Costs 64,000,000
2. Put: Allow able Opera"Profit 444.444
3. hems: TlppkgFees(PmfkAllow ad) 1.240.000
4. Equals: Toto Controlled Costs #3.244.444 699% S T E P
ease Year Uncontrolled Costs
5. Tlpoing Fees(Frofk Allow ad) $1.204.400
6. Plus: Ttppng Fees(Pass Through) $204.000
7. Equals: TatslUncontroledCosts $1.440.000
!l. Base Year Retnnu*Requirement(Loss franchise fee) $4. �s®� ,
Change in Controlled Cost
9. Projected Change in Consumer Price Max 6.0%
10. Ad"ur ent Factor from Prior interim Year
it. Adjusted Projected Change in Consurner Price Max 6�
Change in Uncontrolled Cost STEP
12 Prior Year Tipping Fees Per Ton
13. Plus: Prior Year Regulstory Fees Per Ton so
14. Equal: Total Prior Year Unwrivoked Costs Per Ton Sb4
15. Projected ntsrim Year Tipping Fees Per Ton 653
t6. Pius: FrojectW tnterrn Year Regulatory Fees Per Ton
17. Equal: Total Projected hterim Year Uncormoued Costs Per Ton =
STEP
16. Projected Change in Uncontrolled Costs 6.0%
Weighted Change in Controlled Costs
it. OXWO d Costs as%of Base Yr.Revenue RsquinOmMnss 69.9%
20. Muf9phod by Adjusted R'� in Consumer Price Vdex 5.9%
21. Equal: Weighted Change in Controwb Costs 1.6%
WROMMONWO
Weighted Change in Uncontrolled Costs
22. unconvoud Costs as%of Bees Yr.Revenue Requirements 30.1% STEP
23. Muftfpli*d by tad Change n tktcont oled Costs 6�
24. Equal: Weighted Change in Uncontrolled Costs 1.6%
Total Change Eq
26. Total Percent Charge n Costs26. Divided byAdjustrion for Fnmhda*Fee(1-S.o%)
Y4
27, Equal: Percent Changs in Existing Rates
P�
Year e 2 of 2
Page V-10
V.Interim Yaw Raft 8rttln Maathodolo
Determination of
Base Year Costs and
Weighting
Responsibility: County
Tag: Prepared during Step 2 of the Interim Year Mate
Change Process(Refer to Section H-C)
Tasks: a. Identify Prior Base Year Controlled Costs
b. Identify Prior Base Year Uncontrolled Costs
c. Calculate Weightings
Description of Tasks
a. Identify Prior Base Year
Controlled Costs
BaseControlled costsppliare those items which near Yet Name
Application Worksheet of
can be reasonably managed by the franchise Line Number Line Number Line Item
hauler in order to minimize future rate 7. 1. Total Allowable Costs
increases. Changes in these costs should
approximate the change in the San 9. 2. Allowable Operating
Francisco-Oakland-San Jose Consumer Profit
Price Index(CPI).
2. 3. Tipping Fees
In order to streamline the base year (Profit Allowed)
process,controlled costs are adjusted based
on an annual change in the CPI instead of
projected changes in each cost item. This Tipping fees are included in total operating
eliminates the need to conduct a detailed costs (line 1),however,they are uncontrolled
review of the franchise hauler's audited costs. Because of this,tipping fees must be
financial statements. deducted to determine total controlled costs in
The following table identifies the line the base year(line I plus lime 2 minus line 3).
items in the base yea application which This total then is entered on line 4 of the
must be entered on the controlled cost worksheet and is used to calculate the
portion of the interum year worksheet. The weighted change in controlled costs.
name of each line item is the same in both
applications.
Contra Coata County P"O V-11
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V.Interim Year Rate Setting Methodology
b. Identify Prior Base Year c. Calculate Weightings
Uncontrolled Costs Total controlled costs(line 4)plus total
Uncontrolled costs are those items over uncontrolled costs (line 7)equals total base
which the franchise hauler has little or no year revenue requirements(excluding
control. These include tipping fees and franchise fees). This total is entered on line
associated regulatory charges. Because 8 of the worksheet(base year revenue
changes in these cost categories do not occur requirement less franchise fee).
at predictable intervals and amounts, A weighting for both controlled costs
adjustments to uncontrolled costs during an and uncontrolled costs is calculated as
interim year are based on the franchise follows:
hauler's projections,not projected changes
in the CPL Total uncontrolled costs in the
prior base year must be calculated to Controlled Costs:
determine the weighting of controlled costs
to uncontrolled costs. Lime 4 Total controlled costs
The following table identifies the line Divided
items in the prior base year which must be ' by Line 8 Base year revenue
entered on the interim year worksheet in the requirement
uncontrolled costs sub-section. The name of Equals Controlled costs as a
each line item is the same in both forms. percentage of base year
revenue requirement.
Hose Year interim Year Name
Application worksheet of This percentage figure is entered on line 4,
Line Number Line Number Line Item column 2, and line 19.
2. 5. Tipping Fees
(Profit Allowed)
Uncontrolled Costs:
11. 6. Tipping Fees Line 7 Total uncontrolled costs
(Pass Through)
Divided
by Line 8 Base year revenue
The amounts in lines 5 and 6 are added and requirement
the total entered on line 7. Equals Uncontrolled costs as a
percentage of base year
revenue requirement.
This percentage figure is entered on line 7,
column 2,and line 22.
Pape Y-12 Contra Costa county
Y.interum Year Rate getting Methodology
Projection of Change
In Consumer Price
Index
Responsibility: County
Timing: Prepared during Step 2 of the Interim Year Rate
Change Process(Refer to Section II-C)
Tasks: a. Determine Projected Change in Consumer Price
Index
b. Determine Consumer Price Index Adjustment Factor
c. Calculate Adjusted Projected Change in Consumer
Price Index
Description of Tasks
a. Determine Projected Change in CPI for the San Francisco-Oakland-San Jose
Consumer Price Index Metropolitan Area are available from the
In this task, the San Francisco-Oakland- United State Department of Labor,Bureau
San Jose Metropolitan Area Consumer of Labor Statistics,in San Francisco.
Price Index(CPI)is determined. The actual This adjustment is not required far the.
change in the index between the prior year first interim year rate change following a
and the current year will be used as the base year. If this is the first rate change
projected CPI for the upcoming interim following a base year, enter a zero on line
year. This information is available from 10 and proceed to task c.
the United States Department of Labor, The adjustment factor is determined
Bureau of Labor Statistics, San Francisco, based on the following formula:
and is prepared monthly. Enter this
projected percentage increase on line 9.
Actual change in;the CPI during
b. Determine Consumer Price Index the previous interim year
Adjustment Factor Minks Adjusted projected change in
Because interim year rates are partially the CPI from the prior year
determined based on projected changes in Interim Year Rate Change
the Bay Area Consumer Price Index (CPI), Worksheet(line I I on page 2
corrections are required during the second ofpoor application)
and third interim years to reflect the Eqka& Adjustment factor
difference between actual and projected
changes in the index. Actual changes in the
Contra Costa county Page Y-13
V.Interim Year Rate Setting Methodology
This adjustment is entered on line 10 of the c. Calculate Adjusted Projected
worksheet. Two examples of this Change in Consumer Price Index
calculation are provided below: The adjusted changein CPI then is
calculated by adding the figures on line 9
Example 1: Actual change in CP1 is higher than and line 10. This adjusted projection of the
the prior year's projected change in CP1. If the change in CPI then is entered on line I I and
prior year's projected CPI change was 4,5 line 20 of the worksheet. This information
percent but the actual change was 5.0 percent, will be used in Step 4.
then the adjustment factor for interim year two
would be 0.5 percent:
Actual change in CPI 5.0%
Minus Prior year adjusted CPI 4.5
Equals Adjustment factor
Example 2: Actual change in CP1 is lower than
the prior year's projected change in CP1, If the
prior year's adjusted projected CPI was 5.5
percent,but the actual change in the CPI was 5.0
percent,then the adjustment factor for year two
would be-0.5 percent.
Actual change in CPI 5.0%
Minus Prior ym adjusted CPI 5.5
Equals Adjustment factor
Peg*V-14 Contra Costs County
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............
Y.Interim Year Rata Settina Wthodolocy
This adjustment is entered on line 10 of the c. Calculate Adjusted Projected
worksheet. Two examples of this Change in Consumer Price Index
calculation are provided below: The adjusted change in CPI then is
calculated by adding the figures can line 9
Exampk 1: Actual change in CPI is higher than and line 10. This adjusted projection of the
the prior years projected change in CPL If the change in CP1 then is entered on litre 11 and
prig year's projected Cpl change was 4.5 line 20 of the worksheet. This information
percent but the actual change was 5.0 percent, will be used in Step 4.
then the adjustment factor for interim year two
weld be 0.5 percent:
Actual.change in CPI 5.0%
Minus Prior year adjusted GPI 4.5
Equal3 Adjustment factor d
Example 2. .4ctual change in CPI is lower than
the prior year's projected change in CPL If the
prior year's adjusted projected CPI was 5.5
percent,but the actual change in the CPI was 5.0
percent,then the adjustment factor for year two
would be-0.5 percent.
Actual change in CPI 5.0%
Minus Prior year adjusted CPi 5.5
Equals Adjustment factor
Paq*V-U Contra Costa County
V.inttrim Y*sr Rats Setting Mothodoloay
Calculation of Percent
Changes in
Uncontrolled Costs
Responsibility: County
Timing: Prepared during Step 2 of the Interim Year Rate
Change Process(Refer to Section H-C)
Tasks: a. Enter Uncontrolled Cost Information from
Application
b. Review Mathematical Accuracy
Description of Tasks
a. Enter Uncontrolled Cost Information b. Review MathematicalAccuracy
from Application The mathematical accuracy of the
The figures on lines 1 through 6 of the franchise hauler's totals for Total Prior Year
application(actual and projected Uncontrolled Cost(line 14), and Total
uncontrolled costs) are entered on lines 12 Projected Interim Year Uncontrolled Cost
though 17,respectively,of the worksheet (line 17)are checked during this task. The
Any significant changes in these costs are percent change in uncontrolled costs should
documented by the franchise hauler. A be calculated as follows:
significant change would be any increase
greater than the change in the CPI,or a
decrease of any amount. If a significant jjne 17-liM l4
change has not been adequately explained, line 14
additional information is requested from the
franchise hauler.
After the percentage change in uncontrolled
costs has been verified, this figure is entered
on line 23 of the worksheet.
Contra Costs County Page V-1 5
V interim Year Rate Setting Methodology
Calculation of
Weighted Change in
Residential Rates
Responsibility: County
Timing; To be prepared during Step 2 of the Interim Year
Rate Change Process(Refer to Section II-C)
Tasks; a. Calculate Weighted Change in Controlled Costs
b. Calculate Weighted Change in Uncontrolled Costs
c. Calculate Total Change in Cost
d. Calculate Franchise Fee Adjustment
e. Calculate Percent Change in Existing Rates
Description of Tasks
a. Calculate Weighted Change in c. Calculate Total Change in
Controlled Costs Cost
Figures should have been entered on To calculate total percentage change in
line 19,controlled costs as a percent of costs,line 21,the weighted change in
base year revenue requirements, and line controlled costs, is added to line 24,the
20,the adjusted projected change in CPI, weighted change in uncontrolled costs,and
based on calculations completed in the result entered on line 25,total change
previous tasks. To obtain the weighted in costs.
change in controlled costs, line 19 is
multiplied by line 20 and the result entered
on line 21. d. Calculate Franchise Fee
Adjustment
In order to account for changes in the
b. Calculate Weighted Change in franchise fee resulting from an change in
Uncontrolled Costs residential rates,an adjustment is made to
Line 22, uncontrolled costs as a the percentage change in total costs which
percent of base year revenue requirements, was entered on line 25. The adjustment
and line 23,projected change in factor is equal to one minus the franchise
uncontrolled costs,should now have an fee(1.00-0.005 =0.950). This value
entry based on calculations completed in should be entered on line 27.
previous tasks. To obtain the weighted
change in uncontrolled costs, line 22 is
multiplied by line 23 and the result entered
on line 24.
Page V-16 Contra costa County
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V Interim Year Rate 5ettina Methodoloay
Preparation of
Summary
.Form
Responsibility: County
Timing: To be prepared during Step 2 of the Interim Year
Rate Change Process(Refer to Section II-C)
Tasks: a. Enter Rate Change
b. Calculate New Rates
PI -_
Description of Tasks
a. Enter hate Change line 1. The new rates are entered on the
The rate change identified in line 27 second column of lines 2-4.
should be entered on Page 1, line 1 of the The new rates then are rounded up or
worksheet. down to the nearest five cent increment.
The adjustment amount required to reach the
nearest five cent increment is calculated and
b. Calculate New Rates entered on the third column of lines 2-4.
Current rates for residential solid waste To determine new residential rates,
collection are entered in the first column of column two,lines 2-4, is added to column
lines 2-4 on page 1. The new rates then are three and the result is entered on column
calculated by multiplying the current rate by four. This column provides the new
one plus the rate change identified on schedule of residential rates.
Page V•18 Contra Costs County
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Y Interim Year Rate Setting Methodoiogy
e. Calculate Percent Change in
Existing Rates
The final task in this step is to calculate
the percent change in existing residential
rates. To determine this change, line 25
(total change in costs) is divided by line 25
(franchise fee adjustment), and the result is
entered on line 27. The value on line 27
should be greater than the value on line 25.
The difference accounts for the change in
franchise fees.
Contra Costa County Page V47
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Appendix A
Franchise Agreement with BFI-PHBD
Appendix A includes the Franchise Prior to this manual's development, the
Agreement between BFI-PHBD and Contra franchise agreement indicated that the
Costa County. The Agreement was signed County shall designate reasonable costs of
on August 1, 1995 and is for twenty(20) BFI-PHBD as"pass through"or"subject to
years through July 31,2015. This reasonable profit"through a rate review
agreement will need to be amended to process.
incorporate by reference this Rate Setting Further,the agreement requires BFI-
Process and Methodology Manual for PHBD to prepare rate applications in
Residential Solid Waste Charges. accordance with forms and detail required
The agreement grants BFI-PHBD an by the County. This manual provides the
exclusive franchise to collect and remove for format and content for these rate
disposal and recycling, all residential and applications. The agreement requires
commercial solid waste, including audited financial statements and financial
recyclable materials,within the information from the previous rate change to
unincorporated County franchise area. the present.
Contra costa County Pape A-1
Appendix B
Comparison of Franchise Agreement
Terms and Conditions with Manual
Appendix B provides a summary of Terms and Conditions with the Rate
how current franchise agreement terms Setting Process and Methodology
and conditions are treated in the manual. Manual for Solid Waste Charges." This
Included in this appendix is an exhibit matrix identifies the franchise agreement
titled"Comparison of Contra Costa term/issue, describes how the manual
County and Pleasant Hill Bayshore treats this issue, and wherein the manual
Disposal,Inc. Franchise Agreement the issue is covered.
Contra Costa County Page A-1
_. _.
Comparison of Contra Costa County and
Browning-Ferris Industries, Inc. -Pleasant Hili Bayshore Disposal, Inc.
Franchise Agreement Terms and Conditions with
Mate Setting Process and Methodalogjy Manual
for Solid Waste Charges
Description of Franchise hate Setting Process and Rate Setting
Franchise Agreement Agreement Methodology Manual
Issue Provision Reference Manual Treatment Reference
1. Regulation The Agreement Section 4 The manual regulates rates for Page I-I
of Commercial focuses on regulation residential solid waste handling
and Industrial of all recycling and services and recycling and allows the
Charges residential solid waste hauler latitude to set commercial and
collection,removal industrial rates outside of the manual
and/or disposal. with County approval
Commercial and Sections Cost and revenue information is Page 1-1
Industrial wastes are 2d,2k required for all residential,commercial,
only defined in the and light industrial services combined;
Agreement. There is however only residential rates are
no specific mention of established in the process. This
commercial and treatment allows commercial and light
industrial rate industrial rates to subsidize the
regulation. residential rates. This approach allows
the Company to realize the subsidy
within the rates charged.
2. Multi- Multi-family waste is Section 2n Multi-fancily revenues and costs are Page 111-5,Page
family included in the included within residential costs and 3 of 6 of the
Customer Franchise Agreement revenues in the manual. Therefore, Base Year Rate
Revenues and definition of when providing revenue and cost Application
Costs Residential Solid information/projections,the hauler
Waste. should incorporate multi-family
business into residential business.
Contra Costa County Page B-t
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..._.
........ .... .. ... ...._.. ._. __..
Comparison of Contra Costa County and
Browning-Ferris Industries,Inc. -Pleasant Hill Bayshore Disposal, Inc,
Franchise Agreement Terms and Conditions with
Rate Setting Process and Methodology Manual
for Solid Waste Charges
Description of Franchise Rate Setting Process and Rate Setting
Franchise Agreement Agreement Methodology Manual
Issue Provision Reference Manual Treatment Reference
3. Mandatory Identified in Franchise Section 2g, No apparent impact on rate setting and N/A
Subscription Agreement as County Section 37 on manual. A mandatory ordinance
Ordinance Ordinance Code will decrease the amount of self-haul
Chapter 418-6. customers. Such an ordinance also
may reduce potential bad debt expenses
because with a mandatory subscription
ordinance,liens may more easily be
placed on customers who do not pay
bills.
4. Solid Waste The Agreement Section 5 Identified as charges initially in the N/A
Rates,Fees, specifies that the hauler Policies portion of the manual and
Taxes,or has a"right to charge generally as"rates"throughout the
Charges and receive charges." manual.
Alternatively,Section 8 Tye manual assumes that because a
is entitled"Rates"and hauler is providing the refuse collection
refers to rates rather services rather than the government
than charges. In no body directly,and that refuse is not a
case does the "property related fee,"that Proposition
Agreement specify that 218 does not effect changes to refuse
refuse collection collection charges. Nor do refuse
charges are fees or collection charges represent"taxes."
taxes. Further,nowhere
does the Agreement Thus,an argument can be made that the
indicate that the residential charges do not have to be
Contractor is entitled to aligned with the actual cost of service
a constitutional fair rate and the County can maintain the
of return on its existing subsidy between commercial
investment. and residential customers whereby
commercial customers help keep
residential rates lower than they
otherwise would be.
5.Confidentiaiity Information gained Sections 7 Require operating statistics by service Page 11-1
from examination of and 34 type(i.e.,residential,multi-family,
books and records ... commercial,light industrial services)
shall be treated by the including tons per year,accounts per
County and its agents year,number of customers within the
as confidential rate structure,and dollar value of
information to the County provided services. Those
extent permitted by statistics that the hauler wishes to
law. remain confidential should be so noted.
Page S-2 Contra Costa County
_.__.._.....:._........_.. _...._.....................:...............................:..............................................................................................:.....................................................
Comparison of Contra Costa County and
Browning-Ferris Industries, Inc. -Pleasant mill Bayshore Disposal, Inc.
Franchise Agreement Terms and Conditions with
Rate Setting Process and Methodology Manual
for Solid Waste Charges
Description of Franchise Rate Setting Process and Rate Setting
Franchise Agreement Agreement Methodology Manual
Issue Provision Reference Manual Treatment Reference
b. Allocation Information sufficient Section 7 The manual is not prescriptive on the Page U-12
Methodology to determine allocation proper allocation methodology to use,
between regulated and but instead allows the hauler to
non-regulated determine their own method. In each
portions. Base Year,the allocation methodology
is examined for reasonableness and at
that time the County provides written
Written approval of approval for the methodology.
allocation The most critical allocation to examine
methodology. for reasonableness is the allocation
from BFI-PHBD's total non-CCSWA
serviced costs and revenues to total
unincorporated County area costs and
revenues. This allocation should align
with the unincorporated County's
portion of accounts and/or tonnage.
It is far less important to justify the
allocation of total unincorporated
County costs and revenues to all the
individual areas within the County.
The County's intent is to move to
common regional rates shortly after
completion of its first Base Year rate
review in 1998.
7. Allowable Reasonable costs shall Section 8 Allowable costs,pass-through costs, Exhibit 1-5,
costs be determined"pass and non-allowable costs are described Page 1-15
through"or"subject to throughout manual. The manual
a reasonable profit." attempts to identify and closely
scrutinize certain cost categories within
the waste management industry that
can exceed averages(e.g.,legal,
accounting,corporate overhead). The
manual is proscriptive in attempting to
place reasonable caps or`rules of
thumb"to benchmark costs against in
future rate setting.
Contra Costa County Page B-3
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_... _..... _... _... ..........................
Comparison of Contra Costa County and
Browning-Ferris Industries, Inc. -Pleasant Bill Bayshore Disposal, Inc.
Franchise Agreement Terms and Conditions with
Rate Setting Process and Methodology Manual
for Solid Waste Charges
Description of Franchise Rate Setting Process and Rate Setting
Franchise Agreement Agreement Methodology Manual
Issue Provision Reference Manual Treatment Reference
8. Maximum Rates charged shall be Section 8 The hauler may choose to set charges at a Page II-25
Rates maximum rates. level below charges determined through
the rate setting process (i.e.,accept a
lower profit,or a higher operating ratio).
Rates could be set lower by the hauler for
a number of reasons,including political
pressures,rate stabilization needs,
geographic factors,or other reasons.
However,in no case shall setting charges
below the level approved through the rate
setting process imply or result in a
balancing account concept or an actual
balancing account.
9. Allowable ...the County,in its Section 8 The method of profit established for Page I-17,and
Profit Level sole discretion,shall County rate setting is the operating ratio. Page III-15
determine the method For base year rate setting,the operating
for determining ratio shall range from 88 to 92 percent,
Contractor with a target of 90 percent.During each
profitability." base year,the hauler's revenue
requirement(i.e.,allowable costs plus
profit plus pass-through costs)is
projected for the following year. If after
projecting this revenue requirement using
an operating ratio ranging between 88
and 92 percent,no rate change is
required,then no rate change is
implemented. If however,a rate change
is required(i.e.,the operating ratio falls
outside of the 88 to 92 percent range),
then a 90 percent operating ratio is
reestablished in that base year. An
operating ratio range for base year rate
setting is intended to mitigate
fluctuations in charges while providing
the hauler an incentive to operate
efficiently. Through efficiency,the
hauler can increase its profit level to an
operating ratio as low as 88 percent.
Alternatively by operating inefficiently
the hauler's profit could rise to an
operating ratio as high as 92 percent
without a rate change.
Page 8-4 Contra Costa County
Comparison of Contra Costa County and
Browning-Ferris Industries, Inc. -pleasant Hill Bayshore Disposal, Inc.
Franchise Agreement Terms and Conditions with
Rate Setting Process and Methodology Manual
for Solid Waste Charges
Description of Franchise Rate Setting Process and Rate setting
Franchise Agreement Agreement Methodology Manual
Issue Provision Reference Manual Treatment Reference
10. Mini-can Contractor will offer a Section 8 some areas currently provide a mini:- N/A
Program mini-can program at can service,others a senior can service.
reduced rates as This is a rate structure issue and a
directed by the service issue which will be dealt with
County. separately outside of this manual and
1998 rate review.
11. Rate All rate applications Section 9 Each base year requires five years of Exhibit 1-4 on
Application shall include information,including three completed Page 1-12,Page
Timing and information from the interim years,current year(estimated), 11-5
Audited previous rate change and a projected base year.
Financial to the present.
Statements
Every three years,a rate Section 9 In the first base year,audited financial Page 11-8
application shall be statements will not be required,but in
accompanied by an subsequent base years audited financial
au iced f t1 i�al statements for the three completed
state=nt covering the fiscal years between base years must be
entire period since the submitted with rate applications.
last audited rate
application together
with supporting
documentation as
required to segregate its
County regulated
activities from other
business activities.
Rate changes may be Section 9 Do not recommend that County and N/A,replaced
initiated by the County hauler continue practice of rate changes by Manual
at any time or by at times other than the base year or as
Contractor under the allowed in interim years. The purpose
conditions allowed in of the manual and the new process is to
this section. provide formal structure and timing for
Contractor shall rate applications to be submitted in
submit its rate base years and interim years.
application to County
within 60 days. hate
change initiated by
Contractor no more
than once a year under
normal operating
conditions.
Contra Costa County Page S-5
Comparison of Contra Costa County and
Browning-Ferris industries,Inc. -Pleasant Hill Bayshore Disposal,Inc.
Franchise Agreement Terms and Conditions with
Rate Setting Process and Methodology Manual
for Solid Waste Charges
Description of Franchise hate Setting Process and Rate Setting
Franchise Agreement Agreement Methodology Manual
Issue Provision Reference Manual Treatment Reference
12. Interim Contractor may Section 9 Do not recommend a short form,or See Interim
Year Rate increase its rate up to automatic rate change. We believe all Year Process in
Setting such amount(CPI-all rate changes should be approved by the Chapter IV.
urban consumers for County. The interim year process
the SF Bay Area)and allows the hauler to submit applications
not request a rate for changes in charges in any interim
change from the year between base years. The interim
County year process allows the CPI on non-
controllable costs.
13. In the event the Section 9 Rate changes to account for Page IV-I
Extraordinary Contractor must make extraordinary cost changes are allowed
Cost Changes significant changes in in the manual. An example of such
its operations or extraordinary cost changes would be
experiences significant major capital improvements or outlays
changes in costs,not during a non-base year. We do not see
under control, that there will be many cases where
Contractor may submit such extraordinary cost changes will
a rate application occur•
relative to those
changes.
14. Source The County shall have Section 12b AB 939 costs are treated as allowable Page l-8,Page
Reduction and the right to direct costs(with profit)for purposes of rate I-16
Profit on AB Contractor to compile setting. This practice differs from
939 Costs information,develop some municipalities where all
plans for and/or regulatory costs are treated as pass-
conduct programs on through costs(in rates without profit).
alternative methods of
solid waste collection
and management,or to
take other action...for
the purpose of meeting
[AB 939]
requirements.
Reasonable[AB 939]
costs Wwiudina a
reasonable oroft)
associated with
carrying out directives.
Pao*S-8 Contra Costa County
Comparison of Contra Costa County and
Drowning-Ferris Industries, Inc. -Pleasant Hill Bayshore Disposal,Inc.
Franchise Agreement Terms and Conditions with
Rate Setting Process and Methodology Manual
for Solid Waste Charges
Description of Franchise Rate Setting Process and Rate Setting
Franchise Agreement Agreement Methodology Manual
Issue Provision Reference Manual Treatment Reference
15. Program County also may Section 12c The County may wish to formalize a Page I-25
Efficiency and require Contractor to performance audit schedule and
Changes in implement efficiencies implement efficiencies and other results
Service in its operations upon of the audit. It is recommended that
written notice from the timing of these performance audits and
County. implementation of the fundings occur
during base years.
16.Changes in Chanes in the billing Section 16 Will be incorporated as an allowable N/A
Billing System system required by the cost for rate setting. Generally,legal
County are allowable costs are included in the corporate and
expenses. local general and administrative cost
category which may be capped for
ratesetting.
17. Rate Contractor shall Section 16 Incorporated into rate setting schedule. Exhibit II-2 on
Change inform customers of Page II-4,
Announcement all rate changes at least Exhibit IV-2 on
30 days prior to their Page IV-a
effective date.
18. County Contractor shall Section 18 This is not a"free"service,but instead Exhibit I-5 on
Collection provide solid waste a service provided to the County at an Page 1-15,Line
Services services at County allowable cost passed on in the rates 6 of Base Year
Provided by buildings at no charge with profit. Application
Hauler to the County.
19. Area-wide Contractor shall Section 19 This is not a"free"service,but instead Exhibit I-5 on
Collection provide two annual a service provided to the County at an Page I-15,Line
Services collections for each allowable cost passed on in the rates 6 of Base Year
region in the Franchise with profit. Application
Area.
20. Solid Contractor shall Section 20 'This is not a"free"service,but instead Exhibit 1-5 on
Waste Drop provide up to ton 20- a service provided to the County at an Page I-15,Line
Boxes for cubic yard drop boxes allowable cost passed on in the rates 6 of Base Year
Clean-up per year,per region. with profit. Application
Projects
Contra Costa County Page B-7
_....... ......... ..................__
......... ......... ......... ......... .........
.......... ......_... .........
Comparison of Contra Costa County and
Browning-Ferris industries, Inc. -Pleasant Hill Bayshore Disposal, Inc.
Franchise Agreement Terms and Conditions with
Rate Setting Process and Methodology Manual
for Solid Waste Charges
Description of Franchise Rate Setting Process and Rate Setting
Franchise Agreement Agreement Methodology Manual
Issue Provision Reference Manual Treatment Reference
21.Administrative Contractor small pay Section 23 The County can charge costs of Exhibit I-5,
Services and the County for(a)the administering the Agreement,and for Page I-15,
Franchise Fees services provided by services and programs which are in Lines 10 and
the County in addition to franchise fees. 23 of Base
administering the The County has established a Year
Agreement,(b)for franchise fee equal to 5 percent of Application
services and programs gross total revenues(i.e.,residential
pertaining to Solid and non-residential revenues).
Waste provided by the
County,and(c)
additionally as directed
by the County,a
percentage of its gross
revenues...established
by the County.
Administrative and Section 23 Incorporated as pass-through expenses Page 1-15,Page
program services for rate setting. 1-17
charges,and any
franchise fees are
"passthrough"
22.Indemnification Contractor shall Section 28 Will be incorporated as an allowable N/A
reimburse the County cost for rate setting. Generally,legal
for reasonable costs are included in the corporate and
attorney's fees local general and administrative cost
associated with the category which may be capped for
County defending ratesetting.
itself for obligations
under the Contract
23. Affiliated Contractor shall Section 34 Affiliated companies and associated Page I-8
Entities provide information "related party transactions"will be
necessary to reasonably reviewed for reasonableness. The
satisfy County that the franchise hauler will be responsible
charges made by any for providing documentation to
Affiliated Entity are determine that the transaction is
reasonable in market-based.
accordance with the
provisions of Section 8.
Page S-8 Contra Costa County
Contra Casts Coumy
Base Year Rate Change Application
Financial Information
Actual Estimated
Historical Years Current Year :::B"i4iir:::
Year 1 Year 2 f Year 3 Year 4
Ener ACbAl Year in this Row 1996 ! 1999 # 2000 2001 Qb�
1. Direct Labor a
2. Tipping Fees(Pmfh Allowed)
3. Corporate and Local General anti Administrative Costs
4. Tntxkkg and Equipment
5. Depreciation and Other Operating Costs
S. Services Provided to Couript
7. oto lowabie Ckmft(Latae i+2+3+4+5+
8. Operating Ratio
9. Allowable Operating Profit((Line 7+0.9)-Late 73
10. County Admirdstrative Fee
11. T1001 Fees Pass Thro h
12. otal ass Through is(without rarchlseFoos)(Linea 10+i 1)
13. Total Allowable Costs(Line 7)plus Allowable Operating Profit(Line 9)plus
Total Pass Through Costs(without Franchise Fees)(Lire 12) 9 1
Olin
14. Residential Revenue
15. Less Allowance for Uncollectible Residential Accounts
15. Total Residential Revenue(without Rata Change in Base Year)
17. Commercial and Light Industrial Revenue
ta. Less Allowance for Uncollectible Commercial and Light Industrial Accounts
M Total Commercial/Light Industrial Revenue(without Rate Change in Base Year)
20. Recycled Mateutal$ates
21. Total Revenue(Lines 16+19+20)
a s r
22. Net Shortfall(Surplus)without Franchise Fees(Line 13-Line 21)
23. Residential/Commercial/Light Industrial Franchise Fees(see cafculatbn below)
24. Net Shortfall(Surplus)with Franchise Fees(Lines 22+23)
Sertion VII—Percent Chanqe in Rates
23. Total ResidentiaUCommorcial/Light Industrial Revenue Prior to Rate Charge(Lianas 16+19)
26. Percent Change in Existing ResiderttiaaltCommerciellUght Industrial Rates(Lire 24+Line 25)
ranchise are set by the Munry at I percent of the revenue requirement 27. Total Allowable Costs(Line 7)
olve for two equations with one unknown,and Identify franchise fees as X 26. Mlowable Operating Profits(Line 9)
Equation 1) Revenue Requicament x 0.05 a X 29. Total PassCosts with Franchise Fees Lines 12+23
Equation 2) Revenue Requirement a Lite 13+X,or S +X 30. 1998 avenue equlrement(Lines 27+26+29)
Substitute equation 2)Into equation 1)and solve for X a>
S +X)x0.05aX,orXm$
Year: Page 1 of 6
Contra Costa County
Base Year Rate Change Application
Cost Summary for Year 1999
Section VIll—Base Year Cos*Allocation
Non-CCCSWA Audited
Unincorporated and Non-Uninc. CCCSWA PH81 J4ilcscetioa::;:
Dowiption of Cost County County Areas Financial
Labor-Regular
Labor-Overtime
Benefits
Payroll Taxes
31. Total Direct Labor
32. Total Tipping False(ProfitAlkywsd) I 6:•: •:•:••.-
Accounting
Computer Services
Dues and Subscriptions
Insurance
Laundry
Legal
Management Fees
Miscellaneous and Other
Non-Deductaale
Office Expense i>:::<•:::::::::
Operating Supplies
Outside Services
Public Relations and Promotion {
Taxes and Licenses
Telephone
Travel {
Utilities i
33. Total Corporate and Local General and Administrative Costs
Equipment Rental
Gas and Oil 1
Insurance
Pacts
Repair and Maintenance t:::::«::•x•:»:
Tires
Other t :•::•::
34. Total Trucking and Equipment
Depreciation-Buildings
Depreciation-Vehicies {
Depreciation-Containers
Other Operating Costs i
35. Total Depreciation and Other Operating Costs I :.:•;;;:.:.;•:.:::.:.:.:.:
36. Total Services Provided to County : •:-:•.:
37. Total Allowable Costs(Lines 31+32+33+34+35+36)
38. Total County Administration Fee c•:<• : »
39. Total Tipping Fees(Pass Through) ,..
40. Total Rasidential/CommerciatiLight Industrial Franchise Fees �:<::::<:<::•:<•:
41. Total Pass Through Costs(Lines 38+39+40) i:-:-:-:•:•:•:•:•:•:•:•:<•
42. Total Costs(Lints 37+41)
Year: Page 2 of 6
Contra Costa County
Base Year date Chanqe Application
Revenue Summary
Actual Estimated
Histnricat Years urtnnt Year :•:B Lear:;•;
Year 1 Yew Year Year♦ :•:•:•.Y.rat:8::;:;:.:
Ender Actual Year in this Raw 1999 1999 2000 2001
ShVis Family Residential Service
43. Single family Residential Revenue(Bass Year From Pape 4 of 6)
Multiunit Residential Service
44. Number of Accounts
45. idultlund Residential Revenues
46. Residential Revenue(w/o AUowance for Uncollectible Accounts)(Llres 43+45)
47. Allowance for Uncollectible Residential Accounts
i I i
Ort. Total Residential Revenue(Lino 46•Lina 47)
Commercial and Light Industrial Can Service
49. Number of Accounts
W. Commercial and Light industrial Can Revenues
Commwrciai and Light industrial Bin Service
51. Number of Accounts
52. Commercial and Light industrial Bin Revenues I t I
Commercial and Light Industrial Drop Box Service
53. Number of Accounts
$4. Commercial and L+pnf industrial[amp Box Revenues
L....:.:...:.:.:.:.:..:.:..
56. Commercial and Light industrial Revenue(w/o Allowance for
UncWfectible Accounts)(Lines 50+52+54)
$6. Allowance for Uncollectible Commercial and Light Industrial Accounts i 1::.•:' - ::::::::
67. Total Cormmereiat and Light industrial Revenue(Lina 65•Line 56) f I
SA. Recyow Material sat" I { I {.•,.,•.-
69. Total Revenue(Lina*48+57+56) I 1::::?: ::;7:74::7:::;:
Year: Page 3 of 6
Contra Costa County
Base Year Rate Change Application
Single Family residential Summary
aro ear:.:.:
Singh Fondly RoSidentlal rewraua(Without Raft Change In Base Year)
Current P `
Rate Month Accourrts
1.20 gaktn an of wash,EOW"Kyd w,2 dlppkps,2 dean-ups
1-2t)pion an of anew.EOW recydhp,l d#fts,2 der qx
1-20 Baton can of wale,EDW fecyc",yard up t 5,2 deonjAx
1-20 pion an of wale,EOW mgcW p,no diggings,2 dean-ups
subEotal
132 galon can d wale on property,no recydirg,l,,Ig 'ge 2 dun-ups
132 ga9on an of waste on property,EW recydhip,I dipping,2 darwpa
132 gallon can of w*W on property,EW facyding,t dipping,2 dwrHrps(Moblk Home Park)
1.32 galon can of wysk on property,EOW wydhrp,I do fts,2 dean-ups
1.32 plDn an of*eels on property.EOW recycling,f diggings,2 dean-ups(Senior)
1.32 gallon can of waste on properly,EOW recydup,2 dippinps,2 dean-ups
1.32 Palon can of waste on property,EOW recydirq,yard up lo 5,2 dear-ups
1-32 gallon can of watts on property,no recoft,yard up to 5,2 drao•upe
1.32 Wfon can of watts on property.EOW recycling,Pard up to 5,2 dean-ups(Senior)
Subtotal
2.32 gallon can of wale on property,no meydN,i dippirps,2 dean-ups
2.32 gabn can of week on property,EW racydufg.l dip",2 dean-ups
2.32 gallon an of waste on properly,EOW mcydN,t dippi gs,2 dean-ups
2.32 gallon can of wast on properly.EOW fecyoWgp 2 dippi gs,2 dean-ups
232 Caton can of water on property,EOW me dkV,yard up to 5,2 deatwps
2.32 pagan an of weals on property,EDW recldirtg,2 cloggage,2 dean upc{Senor}
2.32 gallon can of wale on properly,EOW retydtng,Yard up to 57,2 dean•uupt(Senior)
.......•..•.•..•...
Subtotal
...............
3.32 9aton satire
Subtotal
1-32 gallon sary t
Subtotal a.r
144 galon tan(for waft and yar),SZ.35 ranfal of err no recycling,2 dean-ups
1.64 OWW Cert(for wale and yard!,52.35 MMal of cert EW racycft,2 derwps
1.64 Pion can por weale and yard),$2.35 rental of can,EOW tacydtng,2 dear-ups
1.64 OWN art(for wale and yen!),ramal of aR EOW meydinC,2 dean-ups
144 Paton an(tor*ala end yell),rental of cart,EOW racydvV,2 ckarwps(Senor)
Subtotal .......... ....
1.95 Parton on(oar assts and yard),$3 rental of CaR no+eoldk9,Z dewups
145 gallon cat(tor watts and yard),$3 renal of art EW molding,2 dw-ups
145 Paton an(tor waste and yard),$3 rental of art EOW raeydkv,2 aw4 ps
145 Caton Cart Orwafe and yard),ran%of art EOW meydrq,2derwps
1.55 gaion art(dor waft and yard),ramal of cart,EOW raerft 2 Clean ups(Senbr?
Subtotal
2.64 gahon art(for watts and yard),$4.70 rantel of out EOW nwycft.2 dean-ups
Subtotal
2.95 90m cart(for wale and yard),66 wdW of wffi,EOW raqvk9,2 dew io
2.95 goon can(brwaw ano yaaf},rental of cars,EOW wAhng,2 dean-ups
Subtotal
3.05 Caton ant(br waWe ane yard)
Subtotal
f0. Total Sas*Year Single gamily Residential6 ��■w.�w
V EQUW to Via Current rata per morrth multiplied by 12 multlMko by ow PmOK ad number of mounts.number
Year: Pargo 4 of 6
Contra sta Munty
Base Year Rate Change Application
Operating Information
Historical I.: Historical ::>::::•:::•:• Historical I:>::::::::: Current Year:::>::•:•::>:< Base Year
I...........
Audited PWitrsrtrxt Audited Auditted ::P. ';: Estimated I:;:.F?......•.`•. ProJscted
Information Ctia :i Information�: :Gita'''.> Information 1:: ..
. .•.,,,. :: IMorrnation a Information
Year i::Yc:714r2::l Year I :Yr;2fo:3:7 Year f::: .13ta4::1 Yesr4 I:Yc?tta5 :i Years
Enter Actual Year 19911 •:•:•:I 1999 i:::::•::: >:, 2000 i::•:•`.•:•:•:• 2001 2002
Section XI—Operating
Accounts
61. Residential
<»:»:....
62. Commercial ::::: >::> :»
63. tight Industrial >< » >: i>: .::>'• :`•
64. Total Accounts 1.;. ........... ...
:..>• ••:• �.. .... .. .....
Waste Tonnage
65. Residential .. ::: .:.
....
�...: : ::• ff 1::: .: f I
66. Commercial I:':»::` .. ;= >= !>:» >:
67. Light industrial >::: I i :.:.:. : E..........
68. Total Tons _
:
E <
ROCyciabie Tonnage
69. Residential ::i ( >:': ::� {:: ::.;.: •>:1.
70. Commercial :::
71. Light industrial :::::::;:.: :<:; ::•�
72. Total Tons :# :< .,:•:••>:•:: >:::::: :<•.a. ::•>:: >:.:.:•:•....•:.:.:.1,.,.....:,••;.,,•...........
County Services
'
73. County Bins
a
f ;:>:::?::;::
...........
74. County Prop Boxes :..;
Section XII—Change in Commercial Rates
75. 3 Yd.Bin-1X per week
76. 2 Yd.Sin-1X per week
77. 20 Yd.Sox-per Pick up
Year:
Page 5 of 6
Contra Costa County
Base Year Rate Change Application
Unincorporated Area: Rodeo
7e. Rate Change Requested
AbbrsvWed trlfM"d NOW
Rata Schedule Curran!Rate Rate Adjustments c'I Rate
1.20 gallon
1.32 g (recycling)
1-32 gallon(no recycling)
1-32 gallon(senior) I
132 gallon(Mobik Home Park)
2-32 gallon i
3-32 gallon
4.32 gallon i
1.64 gallon can
1-64 gallon cart(senior)
2.64 gallon dans
1-95 gallon cart A I
2-95 gallon carts I
3-95 gallon darts i
Additional 32 gallon bags
(a)Calculated rates are rounded up to the nearest$0.05.
Iii. Multiunit Residential Rata increases of I rw�C will be applied
to all Was in each structure with each rate rounded up to
the nearest$0.05.
To the best of my kncwiedge,the data and Information in tttls application is complete,accurate,and consistent with
the Instructions provided by Contra Costs County.
Name: Title:
Signature: Data:
Year: Pape$of 6
,wrrAr+rrwn,rr irrrnw,r�rrrrn�rri-- ---
Contra Costa County
Interim Year Rate Grange Worksheet
Summary
t. Percent Change In Residential Rates Requested
Rate Schedule
Adjusted New
Rate Schedule Current Mate Rate Adjustment Rate
2. 32 Galion Can Service
3. 64 Galion Cart Service
4. 95 Gallon Cart Service
War: Pagel of 2
rr�r.+�r+ri.r�wr�..u.r,+�r,�r r r�ir.�ri`�rrrn�,unrraMirrr
Contra Costa County
Interim Year Rate Change Worksheet
Financia!Information
Section I—Base Year Costs
Base Year Controlled Costs
1. Total Operating Costs
2. Plus: Allowable Operating Profit
3. Minus: Tipping Fees(Profit Allowed)
4. Equals: Total Controlled Costs }`
Base Year Uncontrolled Costs
5. Tipping Fees(Profit Allowed)
6. Plus. Tipping Fees(Pass Through)
7. Equals: Total Uncontrolled Costs
8. Base Year Revenue Requirement(Less Franchise Fee) x ,
Section 11—Changes in Cost
Change In Controlled Cost
9. Projected Change in Consumer Price Index
10. Adjustment Factor from Prior interim Year
11. Adjusted Projected Change in Consumer Price index
Change In Uncontrolled Cost
12. Prior Year Tipping Fees Per Ton
13. Plus: Prior Year Regulajqq Fees Per Ton
14. Equal: Total Prior Year Uncontrolled Costs Per Ton
15. Projected Interim Year Tipping Fees Per Ton
16. Plus: Projected Interim Year Regulatory Fees Per Ton
17. Equal. Total Projected Interim Year Uncontrolled Costs Per Ton t- ` >.>„ ;t
18. Protected Change In Uncontrolled Costs
Changes
Weighted Change in Controlled Costa
19. Controlled Costs as%of Base Yr. Revenue Requirements
20. Multiplied by: Adjusted Projected Change in Consumer Price Index
21. Equal: Weighted Change in Controlled Costs
Weighted Change in Uncontrolled Costs
22. Uncontrolled Costs as%of Base Yr.Revenue Requirements
23. Multiplied b . P 'ected Change in Uncontrolled Costs
24. Equal., Weighted Change in Uncontrolled Costs
Total Change
25. Total Percent Change in Costs T
26. Molded by: Adjustment for Franchise Fee(1-5.0%)
27. Equal. Percent Change in Existing Rates
Year. � ....� -
Page 2 of 2
Contra Costa County
Solid Waste Fee Survey
1' Name of City/County
2. Contact Person
3' Title of Contact Person
4. Telephone Number
5. Date Contacted
Section
6. Are residential curbside
collection and disposal services
provided by the municipality or
private contractor?
7. Is the franchise granted to the
hauler exclusive for residential
and commercial services?
8. Is there a franchise fee? If so,
how much is it?
9. Is franchise waste delivered to
a transfer station or directly to a
landfill?
10. What is the transfer station
Upping fee paid by the
franchised hauler for franchised
waste(if applicable)?
11. What is the landfill tipping fee
paid by the franchise hauler for
franchised waste(if
aoolicabie)?
12. What is the name of the
transfer station and/or landfill
where franchised waste is
disposed oft
13. What is the length of the
current franchise?
14. In what year does the current
franchise end?
Year. Page I of 3
Contra Costa County
Solid Waste Fee Survey
Section 111--Rate Setting Process
15. Shelly describe the rate setting
process used.
16. What allowable profit
mechanism is used?
17. What profit level is allowed?
18. Are audited financial
statements required of the
franchise hauler?
19. Are rates annually adjusted by
the CPI or a modified CPI?
Section
20. Are residential rates regulated?
21. What are the monthly charges
for residential service?
(Provide a rate structure if
ndoessarv)
22. How many cans are picked up
at this charge? (Provide a rate
structure if necessarv)
23. What is the charge for
additional cans?(Provide a
rate structure if necessary)
24. Is greenwaste picked up for
free or is there a separate
charge?
25. What is the separate charge for
greenwaste?
26. How is greenwaste costed?
Year: Page 2 of 3
Contra Costa County
Solid Waste Fee Survey
Section s.
27 How many City-wide dean-up
days are provided for tree by
the hauler?
28. Does you community have a
curbside recycling program?
29. What materials are collected?
30. Is there an additional charge to
residents for this program,or its
It included in the monthly
charge for oarbsoe collection?
31. If separate,what is the Marge
per month?
Section V—Comnxrcial d Drop Box
32. Are commercial rates
regulated?
33. Provide the monthly fee for the
following services,assuming
pick-up is one time per week
provide a rate structure if
necessary):
Bins
34. 1 Cubic Yarn'
35. 2 Cubic Ylaras
36. 3 Cubic Yards
37. 6 Cubic Yards
Shop Boxes
38. 20 Cubic Yards
39. 30 Cubic Yards
40. 40 Cubic Yards
41. Effective Period of Rates
Quoted:
Y"r. Pogo 3 of 3