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approach results in a variable rate adjustment that is smaller for 35-gallon cart customers and larger for 96-gallon cart customers. In general, this approach was recommended to provide a financial incentive to encourage residents to reduce waste and shift from a 96-gallon to a 35-gallon cart. This approach is employed in many communities where larger canned customers assume a much greater rate burden. Currently there is an 18.6% difference between the 35-gallon service and the 96-gallon service ($32.98 vs. $39.13) and based on the comparative survey in the Crowe Horwath report, the average difference is 150% ($28.99 vs. $73.33). Staff recognizes that the approach of reducing the rates for 35-gallon can service is widely used, but historically, the City Council has decided against this model for a number of reasons including: . The community is comprised of many large homes and families may not be able meet their needs with a 35-gallon cart . The cost difference may lead to increased disposal of non-recyclable material in the recycling or green waste cans when 35-gallon can capacity is reached . It generally skews collection service costs since there is only minimal difference between the cost of servicing 35-gallon and 96-gallon carts . The City did widen the spread between these services when it implemented the curbside recycling service in 2009. There are two critical components involved in determining the variable rate increase related to these two rate options (across the board vs. variable). The first is simply shifting a portion of the anticipated revenue from the current 35-gallon customers to the 96-gallon customer and this is easily accomplished. However, the second requirement is more variable and it involves estimating the number of customers that may decide to migrate from 96-gallon service to 35-gallon cart service as a means of realizing cost savings (and perhaps, increased recycling). This latter step (i.e. migration) is difficult to estimate and led to some of the deficit PGS experienced in 2011 when more than the anticipated number of customers migrated from 96-gallon can service to 35-gallon can service as part of the implementation of the residential curbside recycling program. Currently, the number of residential customers receiving both 35-gallon and 96-gallon is approximately evenly divided (50% 35-gallon / 50% 96-gallon). To address the above situation, PGS has estimated the impact of a variable rate adjustment, assuming a migration of 5% and assuming that the 35-gallon cart service adjustment is reduced from 3.26% to 2.5%. Page 4 of 6