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Annual Rate Review (1998-18)

Project Background

The Central Contra Costa Solid Waste Authority’s (CCCSWA) is a joint powers authority consisting of six member agencies: Orinda, Moraga, Lafayette, Danville, Walnut Creek, and Contra Costa County (Agencies). For over 20 years, HF&H has performed the annual review of the CCCSWA’s hauler’s rate adjustment application for the collection, transfer, transport, processing, diversion, and disposal services. Additionally, HF&H assisted with the negotiation of a new franchise agreement between the CCCSWA and Allied (aka Republic Services).

The annual rate adjustment is determined using one of two methodologies:  (1) an index-based adjustment, where the hauler’s approved compensation from the prior year is adjusted by various CPI’s or, (2) a cost-based adjustment, where the hauler’s compensation is calculated by forecasting costs based on actual results from the most-recently completed rate period, reviewed and adjusted for non-allowable costs.

Our reviews have included:

  • Discussing policy issues with haulers’ representatives;
  • Application compliance testing and consistency testing;
  • Testing for mathematical accuracy;
  • Testing for logical consistency;
  • Verifying the reasonableness of projected costs;
  • Identifying an alternative methodology for allocating costs;
  • Calculating reasonable profit;
  • Reviewing projected revenues; and,
  • Assisting the Agencies with alternative rate scenarios.

Project Results

Our results have included:

  • As a result of our cost-based review conducted in 2011, the combined haulers’ requested compensation of $36,935,000 was reduced to $34,333,000, saving rate payers, in subsequent index year reviews, approximately $2,602,000 per year until the expiration of the Franchise Agreements in February 2015.
  • The 2015 index-based review reduced the hauler’s requested compensation and associated fees by approx. $90,000, offset by increase in the subsequent 2017 and 2018 reviews.
  • The 2016 cost-based review reduced the hauler’s requested compensation and associated fees by approximately $2,200,000, resulting in a 1.9% increase in contractor compensation rather than the 7.7% increase requested by the hauler.