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File Number: 19-198 Rate Increases 2010-2018 Year Rate Reason 2010: 2.88% Annual rate adjustment per Amendment 10 2011: 1.12% Annual rate adjustment per Amendment 10 2012: 5.5% Annual rate adjustment per Amendment 10 2013: 1.82% Annual rate adjustment per Amendment 10 2015: 4.01% Special rate adjustment per Amendment 11 2015: 8.49% Special rate adjustment per Amendment 12 2017: 1.65% Annual rate adjustment per Amendments 10 & 12 2018: 3.41% Annual rate adjustment per Amendments 10 & 12 Analysis ACI requests a special rate adjustment of 7.89% effective October 1, 2019. The request includes 3.78% contractual adjustment (using the RRI) to rates as specified in Amendment 10 to the Franchise Agreement. ACI also requests an additional 4.11% increase to manage the financial impact of SB1383 implementation costs and the Chinese Government’s “National Sword” policy. See Attachment 1. Schedule A - Rate Adjustment Process for 2019. SB 1383 In September 2016, Governor Brown signed SB1383 into law with the intent to cut methane emissions by 40%. SB1383 is the most significant waste reduction mandate adopted by California in the last 30 years. The law requires a 75% reduction in statewide disposal of organic waste and a 20% increase in recovery of currently disposed edible food by 2025. The regulations are highly prescriptive, with substantive requirements for cities and haulers. The regulations take effect January 1, 2022. This should allow enough time to plan and implement budgetary, contractual, and programmatic changes. Requirements for jurisdictions and their haulers include: establishment of organic waste collection for all businesses and residents; establishment of a food recovery program that diverts edible food from the waste stream; efforts to disseminate information about the regulations to all affected parties including generators, facilities, edible food recovery organizations, and city/county departments; procurement of organic waste products (i.e. compost) and renewable natural gas; inspection and enforcement compliance; and record keeping and reporting. In addition to ensuring that all customers will have access to organics collection service, ACI will be required to properly label all carts and bins as prescribed, and regularly inspect loads at the point of collection to ensure that they are not contaminated. Finally, the City will rely on ACI to be the primary outlet for education and outreach regarding SB1383 requirements for generators. Chris Valbusa, ACI’s General Manager, presented the rate request to the City Council on March 18, 2019 (Attachment 5). He highlighted some of the processing changes ACI made to anticipate implementation of SB1383. ACI replaced 19 collection vehicles in the San Leandro fleet with renewable natural gas vehicles at a cost of approximately $400,000 per vehicle. In 2018, ACI added a new collections route for compostable and recyclable materials for businesses and Page 2 City of San Leandro Printed on 6/12/2019 253