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fr. Crowe Horwath. Mr. Brian Dolan Page 4 October 27, 2015 Table 3 Pleasanton Garbage Service Calculation Supporting Labor Cost Index Pension Contribution Current Min Inc. Est.7/15 Comment Per Hour Rate 10 12 5.40% 10.67 Checks with Union Agreement language. CPI plus 2.0 percent,but not less than Annual Hours 2,080.00 2,080 00 5.4 percent,pg.36 Annual Pension Cost 21,049.60 22,186.28 Cost per Month 1,754.13 1,848.86 Labor Composite Index 2014 2015 Union Agreement specifieds 2.7% Union Wage Rate per Hour 33 44 2.70% 34 34 escalation(pg 20). Average Monthly Hours 173.33 173 33 Average Monthly Wages $5,796.16 ' 2.70% $5,952 65 Monthly Pension Contribution 1,754.13 ' 5.40% 1,848.86 Monthly Health&Welfare Contribution 2,073.00 2 70% 2,128 97 Maintenance of benefits Total $9,623 29 $9,930.48 Change in Monthly Driver Cost Labor Index 3.19% B. Landfill Disposal Costs The company projects an 11 percent increase in landfill disposal tons from 75,081 tons to 83,428 tons between 2013 and mid-2015.We verified that this growth rate in tons was supported by the most recent available tonnage information provided by the company which compared annual 2013 tonnage with July 2014 to June 2015 tonnage.The tipping fee rate at Vasco Road Landfill, the landfill used by PGS for disposal, is projected to increase 1.0 percent from$41.69 to$42.10 per ton The combination of these factors results in a projected increase of 12.2 percent in landfill disposal costs. C. All Other Costs (Escalated by the Consumer Price Index(CPI)) The Application was submitted on August 28, 2015 To escalate all other costs(i.e., not labor and landfill disposal costs),we used the most recent available CPI at the time of the Application's submission, or the June 2014 to June 2015 change in the CPI. Between June 2014 and June 2015, the CPI increased from 253.317 to 259.117, or by 2 29 percent(see Attachment C of this report).We used this change in CPI to project changes in all other costs. 5. Recommended Rate Change As indicated, each of the three components of the calculation are weighted (shown in lines 17 through 25 of the Interim Year Rate Change Worksheet)and then summed to equal 3.79 percent(line 26). To account for the fact that the hauler must pay a two(2) percent franchise fee to the City, we adjusted the resulting 3.79 percent increase to a 3.87 percent increase in the rate(shown in lines 27 and 28). Crowe recommends a 3.87 percent increase to residential and commercial rates for January 1, 2016. Following two interim years(2016 and 2017), the City would conduct a base year rate review beginning in mid-2017 for rates to be set for January 1, 2018, in accordance with the Manual requirements. The company would be required to submit a Base Year Application to the City by June 30, 2017. In a"base year" rate review, the City will, among other analyses, assess whether the hauler's costs have escalated at a rate faster or slower than the interim year adjustment, which may provide a rationale for why rates would be adjusted at that time. Thus, if in interim years, use of the interim year adjustment has materially Draft—For Discussion Purposes