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City of Pleasanton Exhibit I: Cost-Based Rate Adjustment Mechanism <br /> Franchise Agreement with Pleasanton Garbage Service <br /> <br />City of Pleasanton Page I-1 June 7, 2022 <br />EXHIBIT I <br />COST-BASED RATE ADJUSTMENT MECHANISM <br />1. PURPOSE <br />The City shall use the cost-based Rate adjustment method described in this Exhibit to determine Rates for <br />Rate Period Seven in accordance with Section 8.2 of the Agreement. <br />The cost-based Rate adjustment involves review of the Contractor’s actual cost of operations and <br />operational statistics (staffing levels, routes, route hours, Customers and their Service Levels, etc.) to <br />forecast the Total Calculated Costs for the coming Rate Period. The lesser of 6% or the difference <br />(measured as a percentage) between the forecasted Total Calculated Costs for the coming Rate Period <br />and the Gross Rate Revenues of the most-recently completed 12-month period (adjusted to reflect the <br />most recent Rate adjustment) shall be the Rate Adjustment Factor. The Rate Adjustment Factor is applied <br />to the then-current Rates to determine the Rates for the coming Rate Period. <br />The intent of performing the cost-based adjustment is to examine the actual impact of changes in costs, <br />the number of Customers, and the Service Level of Customers. <br />2. DEFINITIONS <br />In addition to the terms defined in Article 1, all defined terms presented in Section 2 of Exhibit H are <br />applicable to this Exhibit I. <br />3. FORECASTING TOTAL CALCULATED COSTS <br />The Total Calculated Costs for the coming Rate Period shall be forecasted in the manner described in this <br />Section. <br />A. Forecasting Total Annual Cost of Operations <br />1. Determine Actual Total Annual Cost of Operations. Contractor's financial statement, <br />books, and records shall be reviewed to determine Contractor's Actual Total Annual Cost <br />of Operations for the most-recently completed Rate Period to perform all the services in <br />the manner required by this Agreement for each of the following cost categories: <br /> a. Forecasted labor-related costs <br />b. Forecasted fuel costs <br />c. Forecasted other costs (as defined in Exhibit F) <br />d. Forecasted direct depreciation costs <br /> <br />2. Calculate Allowable Costs. Contractor shall calculate Allowable Total Annual Cost of <br />Operations for the most-recently completed Rate Period by adjusting Actual Total Annual <br />Cost of Operations for the most-recently completed Rate Period (determined in <br />accordance with Section 3.A.1 of this Exhibit) to deduct non-allowable costs. The