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Should the City Council elect to use reserve funds to lower the rate impact in rate period six, it should be noted that the amount of reserve funds used only delays the increase required for one year. For example, should the City elect to contribute $500,000 from reserves to lower the coming rate increase from 7.3 percent to 6 percent in rate period six, the rate payers will need to generate the $500,000 as funded by reserves during the rate period seven rate setting process unless the City elects to fund this amount again. This means that there will be an additional $500,000 (1.46 percent) increase that would be applied to the rates in rate period seven in addition to the estimated SB 1383 implementation costs of an additional $555,000 (1.62 percent) increase estimated in Table 4 and the application of the cost-based adjustment used to increase (or decrease) rates during rate period seven. In effect, the use of reserve funds simply delays the rate impact in that year, as the one-time funds would be used to offset recurring annual costs to PGS, and an amount equal to the amount of reserve funds used must be generated by rates in the following year. Table 7 illustrates the impact the proposed use of reserves described above would have on rate period six rates. Table 7— Impact of proposed use of reserve funds Rate Period Six Rate Period Rate Period Rate Period Rate Period Funding Used Seven Seven Seven Seven from Reserves Required Required Residential Residential Dollar Amount percentage to 35-gallon rate 96-gallon rate be applied $ 210,000 $ 210,000 0.65% $31.55 $55.04 $ 500,000 $ 500,000 1.46% $31.55 $55.04 $ 790,000 $ 790,000 2.3% $31.55 $55.04 Note:All rate period seven figures are shown before any adjustment resulting from the application of the cost-based rate adjustment that will occur in rate period seven. Based on this analysis and consideration of anticipated future trends and anticipated costs for rate period seven as previously outlined, City staff does not recommend smoothing rates by using the PGS special fund reserve (Fund 171). Rate comparison with other local cities Table 8 is an overview of the residential rates charged by other cities. Cities shown in the table have residential cart service similar to Pleasanton as all residents have three carts: solid waste, mixed recycling, and yard/food waste and residential rates are bundled, and the monthly price is set based on the size of the solid waste cart. It is important to note that each city negotiates contracts with its franchise hauler that is unique to their community. Additionally, how a city determines to structure the rates also varies. The total cost of a Franchise Agreement is allocated across the rate structure. Table 8 does not provide a like-for-like comparison but provides a general comparison of the bundled residential rates in the region. Page 6 of 7