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BACKGROUND The franchise agreement outlines the processes for annual rate adjustments which includes an Index -based rate adjustment and a Cost -based Rate Adjustment. July 1, 2022, begins rate period five which incorporates an Index -based Rate Adjustment. As stipulated in the franchise agreement, all rates are set by the City Council. Additionally, this year, SB 1383 compliance related costs have been agreed upon by the City and PGS in the recently amended franchise agreement that have been incorporated into the garbage rates for rate period five. DISCUSSION As noted, rate period five stipulates the use of an Index -based Rate Adjustment. PGS submitted an application for a rate adjustment on April 1, 2022, which included as part of the application an additional cost for a portion (30 percent) of a fork truck. The application was reviewed by City staff and the City's consulting firm HF&H Consultants. The calculation of the Index -based Rate adjustment was correct and the cost for the fork truck was deemed an appropriate expense and therefore included in the rate. HF&H Consultants provided a letter of findings which notes that the application indicates that a 5.6 percent indexed rate increase will be required (Attachment 1). Additionally, there are related costs to SB 1383 to be included in rate period five. These costs are not optional as they are mandated by state law and the costs are to be passed onto the ratepayers. One of the requirements that was not included in the 2018 franchise agreement was SB 1383 route reviews and contamination monitoring of residential and commercial customers to determine if accounts are subscribed to the required service as well as properly sorting waste into the correct containers. The City and PGS have agreed to an additional 200 hours of staff time annually at an additional cost of $37,178 to conduct the required services which equates to a .20 percent increase to the rates, bringing the total rate increase for rate period five to 5.8 percent. Table 1 shows the increase to the residential rates. All residents have three carts: solid waste, mixed recycling, and yard/food waste. Residential rates are bundled, and the monthly price is set based on the size of the solid waste cart. Table 1 Cart Size 35 gallon cart 96 gallon cart Current Rate 27.58 48.12 Rate increase of 5.8% $ 29.18 $ 50.91 Table 2 shows examples of increases to commercial rates for solid waste. Commercial customers are charged for each waste stream separately and the impact of the rate increases will vary depending on the quantity and frequency of service. Page 2 of 7