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NewPoint Group" M anage;Cent ensu ton's Mr. Steven Bocian Page 4 February 23, 2012 We will then conduct a detailed review of the Application. Our review will consist of performing the following steps, at a minimum: ■ Reconcile the Application to audited financial statements ■ Review actual and projected revenue requirements • Review actual and projected revenues to determine why they are increasing/decreasing ■ Assess how line items costs compare with prior years • Compare year-to-year changes in revenues and costs with the change in the Consumer Price Index (CPI) • For allocated costs, review allocation basis for reasonableness ■ Assess transactions with affiliates ■ Determine if wage rates are consistent with norms ■ Cross-check disposal fees using tonnages and tipping fees ■ Review lease schedules ■ Review depreciation schedules • Evaluate planned new equipment purchases • Review and verify prior, current, and projected return on equity results • Assess the prior year(deficit)/credit carry forward • Review costs to ensure PGS followed cost caps (e.g., officers salary at 4.1 percent of revenues) ■ Review operating and performance data for consistency with financial results ■ Develop rate setting adjustments, as necessary. We will follow up with PGS by requesting additional documents, data, or clarification, if necessary. We also will conduct an on-site review of PGS operations to validate that the financial information contained in the Application matches actual PGS operations. We will develop workpaper documentation of our Application review. 2. Provide Assistance Regarding Potential Rate Structures and Adjustment Amounts In this task, we will provide the City with assistance regarding potential rate structures, and adjustment amounts identified in Task 1, to assure consistency with the Franchise Agreement and PGS financial information. We will assist the City with identifying where to increase/decrease rates and modify the rate structures, if necessary, to meet revenues requirements (e.g., uniformly across all rate structures, different rate changes for different sectors).