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Mr. Steven Bocian, Assistant City Manager Page 4 August 22, 2013 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 `, Assess the extent of new regulatory requirements (mandatory commercial recycling per AB 341, Alameda County benchmark services fee) 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). 3. Attend Meeting as Requested by the City In this task, as directed by City staff, we will attend meetings with the City, PGS representatives, and the City Council Waste Management Subcommittee, to present results of our financial review and related work. For these meetings, we will prepare for