11 - Laserfiche WebLink

A Crowe Horvath Mr. Steven Bocian Page 10 December 2, 2014 Regulatory Costs PGS' CY 2015 regulatory cost estimate reflects a CPI increase of 3.00 percent in the per ton dumping cost(increase from $39.23 to $40.41 per ton)and per ton tipping cost (increase from $25.00 to$25.75 per ton). We found these escalations reasonable. For our calculation, we used estimates for CY 2015 tonnages based on CY 2013 disposal data (75,081 tons) and tips data (3,746) provided in detailed supporting schedules by PGS. Based on the difference in tons and tips from those in the Application we project total dumping and tipping costs of$3,130,258 as opposed to the$3,149,167 figure presented in the Application. If we reduce this figure by the Dump/Tip/Diversion figure of$675,730, our adjustment to Regulatory Costs is$14,870 ($2,469,397 less $2,454,527). Impact(s): ❑ Reduction in CY 2015 expense by$14,870. City Franchise Fee Based on the other adjustments in this report, franchise fees also must be adjusted. Franchise fees are set at two (2) percent of collection revenues. Impact(s): 7] Reduction in CY 2015 expense by$10,840. City Consultant Cost We added a line item for City consultants equal to$35,000 per year. Impact(s): [1 Increase in CY 2015 expense by$35,000. Operating Ratio/Return on Equity Exhibit A of the franchise agreement provides the following guidance on the return on equity: "The annual return on equity(ROE)is defined as the difference between franchise revenue and allowable franchise expenses. Franchise expenses shall include corporate taxes calculated at prevailing California and Federal tax rates, and shall include expenses and reserves established in accordance with the provisions of Paragraph 18.2(d), (e), (f), and (g)of the Agreement. The ROE shall be determined annually covering a twelve (12) month fiscal year ending each March 31. The minimum and maximum ROE limitations shall be as specified in Paragraph 182(e). When the annual ROE is greater than the maximum ROE limitation,the excess revenues over and above the maximum limitations shall be held in a reserve to defray future rate increases. When the resulting annual ROE is less than the minimum ROE limitation, the deficiency in revenues shall be recoverable from future timely rate increases, and/or from reserves (if any) set up to defray future rate increases."