HomeMy WebLinkAboutItem 5.1 Oakland Scavenger Rate Adjustment (2) r
CITY OF DUBLIN
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: September 23, 1991
SUBJECT: Written Communication: Oakland Scavenger Company (OSC)
1992 Rate Adjustment Request
P�(Prepared by: Paul S. Rankin, Assistant City Manager)
EXHIBITS ATTACHED: Letter dated August 20, 1991
from D. David MacDonald, E.V.P. ,
Oakland Scavenger Company
RECOMMENDATION: Receive the Report and Direct the Request to the Joint
Refuse Rate Review Committee (JRRRC) for Further
Analysis.
FINANCIAL STATEMENT: OSC is requesting an increase in 1992 which would
generate an additional 13 percent in revenue
company-wide. Due to a new method used by the
JRRRC, actual increases will differ from this
amount as described below.
DESCRIPTION: In the past OSC has submitted rate applications to the
JRRRC. After review, the Committee identified a uniform increase required
by all agencies to generate the required revenue. As described in the
1991-92 Budget, the JRRRC has elected to undertake a cost of service study.
This study will develop a methodology which will implement the 1992 rate
increase on a jurisdictional basis. The rate application will identify the
projected cost of service by jurisdiction. Therefore, the projected
companywide figures presented in Mr. Macdonald's letter will differ by
agency.
As part of the 1991 rate application review, the JRRRC deleted certain
expenses for further consideration. The expenses were associated with:
Landfill Closure/Post Closure expenses, Lawsuit Defense costs, and an
Altamont Adjustment for Non-Franchised Assets. As stated in the 1991 rate
application staff report, these areas represented significant issues which
would impact rates in future years.
The JRRRC undertakes the review based primarily upon projections of revenue
and expenditures. Any difference in the projections will impact the
adequacy of the rate adjustment. As described during the 1991 rate review,
OSC maintains a balancing account. When OSC revenues exceeded necessary
expenses, these funds were used to offset rate increases. The balancing
account is currently in a deficit position with OSC expenses exceeding the
required revenues. In addition, due to economic factors and the deferral
of certain costs from the 1991 application,, the deficit has increased. The
JRRRC is just beginning to analyze the reasons for this increase and will
be identifying a policy recommendation for handling the deficit.
The JRRRC has also undertaken a Management Audit which utilizes an
independent review of OSC operations. The audit is being conducted by a
Consultant Team consisting of the Rate Review Consultant (Hilton Farnkopf &
Hobson) and SCS Engineers. SCS will be responsible for reviewing technical
operations and efficiency issues related to the collection and disposal
operations. It is anticipated that this report will be available at the
same time as the final rate review study and will provide valuable
information in considering the rate application.
Recommendation
Staff recommends that the City Council receive this report and direct the
JRRRC to analyze the application and report back with a recommendation.
a:s923jrrc.doc.agenda#5
----------------------------------------------------------------------
COPIES TO:
D. David MacDonald, OSC
Dan Borges, Livermore Dublin Disposal
ITEM N0. � ®��
CITY CLERK
FILE 181
G+aklancFScavenger Company
;.Administrative Offices A Waste Management Company
2000 Embarcadero, Suite 300
Oakland, CA 94606
415/532-1400 Fax: 415/532-1465
August 30, 1991
RECEIVED
Mr. Paul Causey, Chairman
Joint Refuse Rate Review Committee CFp _ 3 1991
P. 0. Box 95
San Lorenzo, CA 94580 ORO LOMA SANITARY DISTRICT
Dear Mr. Causey:
As requested by the Joint Refuse Rate Review Committee, we have
submitted rate applications as follows:
Technical Submission, dated July 15, 1991
Jurisdictional Submission, dated August 15, ' 1991
Based on the results of these submissions, our Company is
requesting the following revenue adjustments:
1992 1993 1994
Estimated Estimated
Overall increase (Note 1) 13% 13% 10%
Note (1)
Oakland, Hayward and Livermore increases will be less than
otherwise would have been required because their current
rates are higher than requested January 1, 1991 due to
delaying their 1991 rate increases until April 1, 1991.
We understand that it is the Committee's intention to institute
varying rate increase percentages by jurisdiction based on cost
of service and an equitable contribution to Oakland Scavenger
Company' s allowed return.
The requested overall increases noted above, anticipate bringing
the balancing amount to zero by the end of 1994 , however the
jurisdictions (and Committee) decision on the methodology to
allocate the balancing account will potentially impact each
jurisdictions own percentage increases.
t
Page 2
The impact of the reversal of Measure D fees has not been taken
into account in the above overall percentage increases requested.
Various options may be available to the jurisdiction as to how to
deal with the reversal. Additionally, closing and post-closing
costs need to be addressed as indicated in our earlier
correspondence.
Should you have any questions, please contact Mike Griffin or me.
Since el
D. David MacDonald
Executive Vice President
DDM/sp
DDM91085.s
cc: Joint Refuse Rate Review
Committee Members
Mike Griffin