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ATT ACHMENT K CONTRACTOR’S COMPENSATION AND RATE SETTING PROCESS REV: 03-16-18 MI ATTY/AGR/2018.054/RECOLOGY OF SAN MATEO ATTACHMENT K Page 13 of 24 Cost Adjustment to 2021 Projected 2021 Costs for Rate Year Eleven (2021) Contractor’s Compensation Annual Adjustment to Contractor’s Compensation for Rate Years Twelve to Twenty-Five (2022 - 2035) G. Total Allocated Indirect Depreciation Costs (e.g., depreciation costs related to General and Administrative, Operations, Vehicle Maintenance, and Container Maintenance services) • Contractor projected its equipment acquisition needs, costs, and depreciation expense related to indirect services for Rate Years Eleven (2021) through Twenty-Five (2035). The depreciation expenses is the Allocated Indirect Depreciation Cost of $117,650, which is specified in Attachment N for 2021. • The annual Allocated Indirect Depreciation Costs for Rate Years Twelve (2022) through Twenty-Five (2035) shall be fixed and shall equal the Rate Year Eleven (2021) amount of $117,650. • These depreciation amounts shall not be adjusted during the Term unless new equipment is purchased subject to SBWMA approval (which shall not to be unreasonably withheld). If additional equipment is purchased, the depreciation expense shall be based on ten (10) year period or other period agreed upon by the SBWMA and Contractor. Total Annual Cost of Operations • Calculated as the sum of the cost components adjusted as described above. • Calculated as the sum of the cost components adjusted as described above. PROFIT Profit • Calculate Profit using the following formula: [(Total Cost of Operations for the coming Rate Period) / 90.5%] – (Total Cost of Operations for the coming Rate Period). • The operating ratio is fixed for the Term of the Agreement at ninety and one-half percent (90.5%). • Same method as shown for Rate Year Eleven (2021). CONTRACTOR PASS- THROUGH COSTS 6.2.B. - Page 217