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6 <br /> <br />APPENDIX F1 <br />NET RECYCLABLES PROCESSING COST ADJUSTMENT METHODOLOGY <br /> <br />1. General <br /> <br />The purpose of this Appendix F1 is to describe and illustrate the method by which the Contractor will calculate the <br />annual adjustment to Net Recyclables Processing Costs under Exhibit F, regardless of the adjustment method used <br />for each Rate Period. The intent of the Parties is to limit the adjustment for such Processing costs to inflationary <br />indices, but allow adjustment for both the value of Recyclable commodities and Disposal costs based on the actual <br />operating results of the Approved Recyclable Materials Processing Facility. <br /> <br />2. Adjustment of Net Recyclables Processing Costs <br /> <br />The cost categories of the main components of Net Recyclables Processing Costs are presented in detail in Section <br />3 below. Adjustments to these components to calculate costs for the coming Rate Period shall be c alculated as <br />follows: <br /> <br />A. Total Annual Cost of Operations <br />1. Labor-Related Costs. The Labor-Related Costs component of the Net Recyclables Processing Costs <br />for the then-current Rate Period is multiplied by one plus the Annual Percentage Change in the CPI-U. <br />2. Repairs and Maintenance. The Repairs and Maintenance Costs component of the Net Recyclables <br />Processing Costs for the then-current Rate Period is multiplied by one plus the Annual Percentage <br />Change in the CPI-U. <br />3. Transportation. The Transportation Costs component of the Net Recyclables Processing Costs for the <br />then-current Rate Period is multiplied by one plus the percentage change from one Rate Period to <br />another resulting from the calculation in Section 2.B below. <br />4. General and Administrative. The General and Administrative Costs component of the Net <br />Recyclables Processing Costs for the then-current Rate Period is multiplied by one plus the Annual <br />Percentage Change in the CPI-U. <br />5. Other Operational. The Other Operational Costs component of the Net Recyclables Processing Costs <br />for the then-current Rate Period is multiplied by one plus the Annual Percentage Change in the CPI-U. <br />6. Depreciation. The Depreciation Costs component of the Net Recyclables Processing Costs is one <br />million three hundred and four thousand twelve dollars and nineteen cents ($1,304,012.19) per year for <br />all Rate Periods and is not adjusted. <br />7. Interest. The Interest Costs component of the Net Recyclables Processing Costs is three hundred and <br />three thousand six hundred and forty-nine dollars and twenty-three cents ($303,649.23) per year for all <br />Rate Periods and is not adjusted. <br />8. Total Annual Cost of Operations. The Total Annual Cost of Operations portion of the Net <br />Recyclables Processing Costs for the coming Rate Period equals the sum of the costs calculated in <br />subsections (1) through (7) above. <br />B. Residue Disposal Cost. The Residue Disposal Costs shall equal the total actual cost of Disposal for any <br />and all Residue which cannot be marketed by Contractor. The per-Ton cost of Disposal for the purposes of <br />this Appendix F1 may not exceed the Disposal tip fee at the Designated Disposal Facility. Contractor shall <br />1111