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Crowe Horwath. Mr. Steven Bocian Page 5 December 2, 2014 Table 4 Consumer Price Index(CPI) Used by Crowe for Rate Setting Purposes Description Index June 2013 245.935 June 2014 253.317 Percent Change 3.00% Salaries and Wages Union Labor As of October 3, 2013, PGS had executed its union agreement with Teamsters Local 70 applicable for the 2007 to 2017 contract period.5 This Teamsters Local 70 agreement covers PGS route drivers. PGS projected CY 2015 union wages by using a 2.8 percent increase in hourly wage rates between 2014 and 2015.6 The company indicated no expected changes in the number of union laborers expected in 2015. Non-Union Labor Non-union labor includes five(5)management,thirteen (13)administration (clerical), and thirty-three (33) transfer station workers. PGS projected CY 2015 non-union wages by using the same 2.8 percent increase in hourly wage rates between 2014 and 2015 as for union employees. The company indicated no changes expected in the number of non-union laborers expected in 2015. Impact(s): No adjustment to CY 2015 projection. Dump/Tip/Diversion PGS projected disposal costs of$805,002 for CY 2015, a reduction from $833,152 in the base year 2014. PGS assumed that refuse tonnage in CY 2015 will remain at CY 2013 levels. We verified that calendar year-to-date 2014 refuse tonnage is trending at levels very similar to CY 2013.We calculated, based on monthly data provided by PGS, total refuse tonnage for CY 2013 equal to 75,098 tons. Dumping costs are driven by projected refuse tons and a fixed tipping fee rate of$9.00 per ton. Impact(s): LT Reduction in CY 2015 expense by$4,039. Hauling/Grinding/Processing PGS projected CY 2015 refuse and wood hauling expenses by applying the 3.00 percent CPI index to the $1,782,116 figure approved for the base year 2014. Within the cost category are certain "related party transactions." Recycling & Resource Recovery Systems, LLC (RRRS)provides material hauling services to PGS. RRRS is a related party to PGS, with the same ownership structure as PGS. For example, RRRS charges PGS for hauling services on a per 5 PGS's Teamsters Local 70 union agreement is tied to terms of the Waste Management Teamsters Local 70 agreement.The agreement was unsigned as of this writing,and the plan was for the agreement to be finalized later this month. 6 This wage increase is consistent with prior agreed-upon wage increases identified in the union agreement.