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Attachment 1 HRH CoySuLTAN IS LLC Managing Tomorrow's Resources Today 201 N.Civic Drive,Suite 230 Robert D.Hilton,Emeritus Walnut Creek,California 94596 John W.Farnkopf,PE Telephone:925/977-6950 Laith B.Ezzet,CMC www.hfh-consultants.com Richard J.Simonson,CMC Marva M.Sheehan,CPA Robert C.Hilton,CMC May 15, 2020 Ms. Becky Hopkins Assistant to the City Manager City of Pleasanton P. 0. Box 520 Pleasanton, CA 94566-0802 Re: Review of Pleasanton Garbage Service, Inc.Application for Index-Based Rate Adjustment for Rate Period Three for Rate Change Effective July 1,2020 Dear Ms. Hopkins: Following are the findings from our review of Pleasanton Garbage Service, Incorporated's (PGS) Application for Index-Based Rate Adjustment for Rate Period Three for Rate Change Effective July 1, 2020 (Application). 1. Summary Findings A. PGS submitted its Application on time and in accordance with Exhibit H — Index-Based Rate Adjustment Mechanism of the City's Franchise Agreement with PGS (Agreement). B. The PGS requested rate increase of 2.0%has been adjusted to 1.7%, due to a decrease of$60,000 resulting from a one-time cost in the same amount from the prior year, which was inadvertently reflected as an ongoing expense. (See Attachment A for summary of adjusted costs.) C. This rate adjustment is somewhat less than would have resulted from a simple CPI adjustment of 3.0%to 3.5%,for example.The difference is largely due to the following: decreases in the agreed- upon fuel indices (-7.5% Diesel and -3.4% CNG) ($54,200); a decrease to City Fees covering the costs of a performance review ($60,000); a reduction to transfer, transport and disposal costs ($474,000) due to decreases in solid waste tonnage by 6% and construction and demolition tonnage by 30%; and, a year over year reduction in landfill maintenance/closure costs by approximately 30%($61,000); partially offset by increases in organics tonnage by 21%($220,000) resulting in an overall, adjustment factor which is lower than the change in standard CPI. (See assumed Application CPIs listed in Attachment B,Schedule 1.) D. PGS's calculated Proposed Monthly Rates effective July 1, 2020, shown in Schedule 4 of the Application, were adjusted to reflect the revised increase of 1.7% (See Attachment C for revised Schedule 4).