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Hearing to consider adoption of Resolution 158-2007 waiving the rate adjustment notification deadline in the Franchise Agreement of April 1, 2007, on a one time basis only, and increasing El Dorado Disposal Service, Inc.'s solid waste collection rates by the annual CPI of 3.9%, and adjusting the fuel surcharge from 3.78% to 3.75% effective July 1, 2007. (Continued 06/26/07, Item 62)
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Fiscal Impact/Change to Net County Cost: None. There is no change to the Net County Cost.
Background: Per the Solid Waste Services Agreement between El Dorado County and El Dorado Disposal Service, Inc. (EDDS), Section 22 B. Time for Rate Settings and Rate Setting Procedures, "The Board of Supervisors shall set the rates to be charged by Contractor pursuant to this Agreement annually at the beginning of each Operating Year (commencing with July 1, 2005), unless a longer period is agreed on by the County and Contractor; provided, however, that Contractor's rates shall remain unchanged unless Contractor submits a written request to the Board of Supervisors for a rate adjustment no earlier than January 1 and no later than April 1 prior to the commencement of each new Operating Year".
Reason for Recommendation: On May 9, 2007 the Environmental Management Department received a letter from EDDS indicating that EDDS wished a CPI adjustment in its rates for the upcoming Operating Year commencing July 1, 2007. EDDS stated that it was their interpretation of the Agreement that the annual CPI provided for under Section 22A of the Franchise Agreement is automatic, and therefore not subject to any annual request window or other rate payer notice requirement (see attached letter). The County's outside counsel (Tom Bruen) responded to EDDS stating that requests for annual rate adjustments, including CPI adjustments, must be made by the Contractor between January 1st and April 1st prior to the commencement of each Operating year (see attached letter), otherwise they will be waived. However, the County's outside counsel also stated that the Board could, in its discretion, waive the deadline for requesting the annual CPI adjustment for a given Operating Year. County Counsel concurred with the response from outside counsel.
On May 31, 2007, EDDS submitted a letter to the Environmental Management Department requesting that the Board of Supervisors (a) waive or extend the April 1 deadline set forth in Section 22 (B) of the Agreement to allow EDDS to request the relevant rate increases for the operating years beginning July 1, 2007 or (b) act on its own initiative to adjust EDDS' rates for the operating year beginning July 1, 2007, consistent with the CPI formula in the Agreement (see attached letter).
The Environmental Management Department recommends that the Board of Supervisors consider whether to waive or deny the notification requirement for this Operating Year only. The Environmental Management Department recognizes that since the Contractor has recently been assigned the Franchise Agreement from Waste Management, the Contractor may not be fully familiar with the County's practice regarding requests for annual rate increases (including CPI increases) under the new Franchise Agreement. However, EEDS is now on notice that in the future the Contractor's rates shall remain unchanged unless Contractor submits a written request to the Board of Supervisors for a rate adjustment, including a CPI adjustment, no earlier than January 1st and no later that April 1st prior to commencement of each new Operating Year (see attached letter).
The Environmental Management Department recommends that the Board of Supervisors consider whether to grant or deny EDDS a collection rate increase of 3.9% based on the annual CPI as determined by the State of California, Department of Industrial Relations, All Urban Consumers for California (see attached email). The solid waste service is within Franchise Areas #1 and #2, including the Cameron Park Community Services District.
In addition, at the August 22, 2006 Board of Supervisors meeting the Board approved a 3.78% fuel surcharge due to the increasing cost of fuel for EDDS in accordance with the Solid Waste Services Agreement. EDDS is currently requesting that the Board of Supervisors consider a rate request of a 3.75 % fuel surcharge for the next Operating Year (see attached email). The Environmental Management Department recommends that the Board of Supervisors consider whether to grant or deny the 3.75% fuel surcharge.
As agreed upon, the fuel surcharge from last year was not included in the Contractor's "base rate," and therefore EDDS calculated the CPI adjustment being requested using the base rates without any fuel surcharge, and then applied the new fuel surcharge to the new base rate.
EDDS has communicated to El Dorado County, Environmental Management that they plan to provide written notice to each ratepayer as described in Section 22(B) (see attached public notice letter). The hearing to adopt these proposed collection rate adjustments has been duly noticed in accordance with Section 66016 of the California Government Code.
Action to be taken following Board approval: Upon execution, forward a copy of the resolution to the Department for distribution.
Contact: Gerri Silva, M.S., R.E.H.S., Director of Environmental Management
Concurrences: