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Task 2.2 Tests of Transactions <br /> <br />R3 will conduct a review of PGS' rate application to verify that financial data, including <br />costs, headcounts, capital items, and operational data are consistent with the rate setting <br />policies and procedures contained in Section 18 of the Refuse Collection Agreement and <br />in Exhibits A, B, and C. The review procedure may include, but not be limited to the <br />following: <br /> <br /> · R3 will develop a rate model to assist in the evaluation of the rate application; <br /> · R3 will review the reconciliation of the financial information included in the rate <br /> application to PGS' audited financial statements as submitted in the rate <br /> application; <br /> · R3 will review the historical, actual and forecasted revenues generated from the <br /> rates and calculate current revenues; <br /> · R3 will review variances from year to year and obtain explanations for significant <br /> variances; <br /> · R3 will review officers' salaries for PGS and all affiliates and subsidiaries; <br /> · R3 will review the calculation of PGS compensation; <br /> · R3 will review projections of expenses for reasonableness; <br /> · To the extent additional information is needed to perform the above procedures, <br /> R3 will provide a written request to PGS. <br /> <br />Task 2.3 Rate Calculation <br /> <br />Based on the results of the procedures performed as part of the above-mentioned tasks, <br />R3 will calculate the return on equity in accordance with the requirements of the <br />Agreement. <br /> <br /> Deliverables <br /> Task 2 includes the following deliverables: <br /> <br /> · Initial letter to the City regarding the completeness of the rate application and data <br /> submittal from PGS; <br /> · Thorough review of PGS financial data, operating costs, revenues, staffing levels, <br /> officer salaries, capital items, etc., and <br /> · Preparation and submittal to the City of a rate model in electronic format that <br /> incorporates the relevant financial and operational data received during the <br /> review. <br /> <br /> Task 3: Rate Negotiations with PGS <br /> <br /> Upon completion of the review of the data and information received by PGS, R3 will <br /> work with City staff to initiate rate discussions with PGS. This will include the following <br /> subtasks: <br /> <br /> <br />