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ATTACHMENT K CONTRACTOR'S COMPENSATION AND RATE SETTING PROCESS Table 2: Service Level Adjustment Methodology for Rate Years Twelve to Twenty -Five (2022 - 2035) (Note: The table below replaces the current Table 2 in its entirety) Accounts (Single -Family Dwelling accounts for Solid Waste Collection) • Adjustment shall be based on the annual percent change in the rolling three-year average number of Solid Waste accounts in the SBWMA Service Area, where the annual percent change shall be calculated using the following formula: (((Average of Solid Waste accounts as of April 30 of the then -current Rate Year and the two most -recently completed Rate Years) - (Average of Solid Waste accounts as of April 30 of the three most - recently completed Rate Years)) / (Average of Solid Waste accounts as of April 30 of the three most -recently completed Rate Years)). The annual percent change calculated using the above formula is referred to herein as the "average service level change'. For example, if the Contractor is preparing its Application in Rate Year Eleven (2021) for Contractor's Compensation to be effective for Rate Year Twelve (2022), the average service level change shall be calculated as follows: (((Average of Solid Waste accounts as of April 30, 2021 + as of April 30, 2020+ as of April 30, 2019) - (Average of the Solid Waste accounts as of April 30, 2020+ as of April 30, 2019 +as of April 30, 2018)) / (Average of the Solid Waste accounts as of April 30, 2020+ as of April 30, 2019 + as of April 30, 2018)). The value of the applicable cost item for Rate Year Eleven (2021) would be multiplied by (1+ the average service level change) to determine the value of such cost item for Rate Year Twelve (2022), assuming the cost item is to be adjusted by 100% of the average service level change. If Table 1 states that the cost item is to be adjusted by 65% of the average service level change (as is the case for Allocated Indirect Costs), then the value of the applicable cost item for Rate Year Eleven (2021) would be multiplied by (1 + (0.65 x (the average service level change))) to determine the value of such cost item for Rate Year Twelve (2022). Lifts for Carts and Bins (Mufti -Family and Commercial, and Agency Facilities Bin and Cart lifts for Solid Waste, Recyclable Materials, and Organic Materials Collection) • Same method as described above, but using the average service level change in the number of lifts during a 4 week period in April, rather than the number of accounts as of April 30. • Calculations shall be separately performed for Solid Waste, Recyclable Materials, and Organic Materials Collection lifts, separately for Multi -Family and Commercial lifts and Agency Facilities lifts. Pullsfor Drop Boxes (Multi -Family and Commercial, and Agency Facilities Drop Box and Compactor pulls for Solid Waste, Recyclable Materials, and Organic Materials Collection) • Same method as described above, but using the average service level change in the number of pulls during the 12 month period ending April 30, rather than the number of accounts as of April 30. • Calculations shall be combined for Solid Waste, Recyclable Materials, and Organic Materials Collection pulls, but shall be performed separately for Multi -Family and Commercial pulls and Agency Facilities pulls. Note: Service level adjustments may be positive or negative values, which shall result in increases or decreases when costs are adjusted pursuant to Section 4. Collection Services Franchise Agreement with Recology San Mateo County Model Agreement for Adaptation by Member Agencies REV: 03-16-18 MI ATTY/AGR.2018.054/Recology of San Mateo Contractor's Compensa