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— �� Managing Tomorrow's Resources Today Becky Hopkins April 13, 2023 Page 2 of 3 Findings A. PGS informed the City that it currently holds$671,730 in an account as the result of the 35-gallon residential rate being set higher than staff had recommended in 2018. This amount has accrued from 7/1/2018 to 6/30/2022 and continues to accrue at roughly $175,000 per year. The liability amount generated from the rate set, as opposed to what staff had been recommended in Rate Period 1, and the actual 35-gallon cart rate over time is reflected in the table below. 35 Gallon 35 Gallon Rate Effective Liability Cart Rate 7/1/2018 to 6/30/19 $ 1.16 $ 26.06 7/1/2019 to 6/30/20 $ 1.20 $ 26.87 7/1/2020 to 6/30/21 $ 1.22 $ 27.33 7/1/2021 to 6/30/22 $ 1.23 $ 27.58 7/1/2022 to 6/30/23 $ 1.30 $ 29.18 HF&H reviewed customer data provided by PGS for each quarter starting 7/1/2018 and confirmed that the$671,730 is accurate based on the number of 35-gallon customers in a given quarter, multiplied by the liability amount. B. PGS also provided the City and HF&H with customer counts for 96-gallon container residential customers for each quarter,starting with Quarter 1 of Rate Period 1.These amounts were compared to the customer census data used in the initial rate model to set rates. The baseline 96-gallon customer count used in the rate model was 9,142.This amount was compared to the number of 96- gallon residential customers for each quarter to determine the quarterly migration and resulting revenue loss, a total of$52,602.The results of this analysis can be seen in the table below. Quarter Ended 96Gallon PGS Customer Migration Migration Baseline Count Count Loss Quarterly September30,2018 9,142 9,042 100 $ 6,174 De ce m b e r 31,2018 9,142 8,972 170 $ 10,496 March 31,2019 9,142 8,889 253 $ 15,620 June 30,2019 9,142 8,813 329 $ 20,312 Total Rate Period 1 Migration 329 $ 52,602 C. In its transmittal of support data to City staff, PGS requested that the majority of the $671,730 in the liability account be released to PGS to be reclassified as revenue. While subscription levels for the 96-gallon residential customers have continued to decline over time, the overall residential customer base has increased by 540. This increase in overall customers represents nearly as much as the 96-gallon customers have decreased from the baseline (683) as seen in the table below.