CLEARLAKE — The city council voted Thursday in favor of a rate adjustment for Clearlake Waste Solutions. The rate adjustment was requested in order for the company to recover from the substantial increase in fuel costs throughout the last year.
A rate increase of 3.183 percent was calculated and ultimately approved, following evaluation by the city administrator and the finance director as well as a subcommittee consisting of Mayor Curt Giambruno and Vice Mayor Chuck Leonard.
“As everyone knows, there has been a substantial increase in fuel costs over the last year,” City Administrator Dale Neiman said in his report to the council. “We need to allow Waste Solutions to recover an equitable amount of money to cover the fuel costs so they remain a viable company.”
According to Neiman”s staff report, Clearlake Waste Solutions had initially proposed a rate increase of 9.67 percent over the nine month period between October through June. The increase proposed reflected the difference between fuel costs at the beginning of the year to the end of the year. Using this approach, the increase was $1.97 per gallon.
City staff used a different approach to derive at the 3.183 percent increase. “We estimated the monthly increase in fuel costs with an average using data from the federal government,” Neiman said. “We then reviewed Waste Solutions fuel receipts and developed an average increase. Our methodology resulted in a fuel increase of $0.76 per gallon.”
The approved increase also takes into consideration annual rate adjustments in accordance with the Consumer Price Index (CPI), which in part, covers fuel costs.
According to Neiman, the city”s contract with Clearlake Waste Solutions is poor and not up to current standards. “The reason is it has been amended numerous times and we could not find one file that has all the signed amendments,” Neiman said.
“We have agreed to amend the agreement over the next year by developing one contract that we would execute.”
Neiman further reported that the current methodology for rate increases adjusts the rates with one CPI. He said the rate needs to be divided into three components including operational costs, regulatory costs such as landfill and fuel costs.
The 3.183 percent rate increase will be valid from Oct. 1 to June 30, 2009. The rate is to decrease by 3.183 percent on July 1, 2009 unless the city and Clearlake Waste Solutions have entered into an amended contract that incorporates and updates all the previous amendments into one initial contract.
The rate adjustment was approved on a 3-0-1 vote with council members Joyce Overton and Roy Simons absent for the vote.
On a side note, Neiman mentioned that Clearlake Waste Solution Owner Bruce McCracken has agreed to donate time and equipment to sweep the streets in mid-October. This will benefit the Public Works Department in relation to winter clean-up tasks in association with clogged drains and debris runoff.
Contact Denise Rockenstein at drockenstein@clearlakeobserver.com.
