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<br />88 <br />Page 153 <br /> <br />Formula for Revenue..Sharina from Incremental Diversion <br /> <br />Any incentive plan for diversion needs to benefit both SBWMA's ratepayers and <br />HBC/WSG if it is to be effective in the long run. HBC/WSG proposes an Incremental <br />Diversion Revenue Sharing Plan that provides both SBWMA and HBC/WSG with the <br />incentive to aggressively pursue maximum and cost-effective incremental diversion of <br />self~haul waste streams. If these rate~based incentives work effectively, they can be <br />applied to other waste streams that come through the SRDC. <br /> <br />HBC/WSG proposes a structure whereby the SBWMA wouLd first be paid back for its <br />"investment" in the gate discount, after Which cost savings of diverting self~haul <br />materials would be shared between HBC/WSG and SBWMA on a 50~50 basis. <br /> <br />An example appears below of a proposed formula for revenue-sharing from <br />incremental diversion based on an assumed $100.00 per ton gate fee for self-haul <br />waste, a $90.00 avoided cost to transport and process at a remote site, and a 20% <br />gate discount as an incentive for self-hauler to clean loads. The actual dollar numbers <br />will change based on current costs, but the formula would be basically the same. <br /> <br />Assumptions (per ton): <br />A. Current self-haul gate fee <br />B. Discount offered for clean loads <br /> <br />= <br /> <br />$100.00 <br />S 20.00 <br /> <br />C. Avoided cost to transport/process mixed recyclables S 90.00 <br />D. Average FOB value of diverted materials $ 0.00 <br /> <br />The proposed formula for Revenue-Sharing from Incremental Diversion: <br /> <br />SBWMA revenue share = ((C + D) I Z) + B = $65.00 per ton <br /> <br /> <br />HBC/WSG revenue share = ((C + D) / 2) - B = $25.00 per ton <br /> <br />The formula above is based on each of the two parties benefiting from incremental <br />diversion of self-haul waste stream volumes. If under the above 20% gate incentive, <br />there is a resulting incremental self-haul waste diversion of 10% from the previous <br />year, or approximately 3,000 tons, the SBWMA would receive an incremental $195,000 <br />in revenue-sharing income from the diversion for an "investment" of $60,000 in gate <br />discounts (3,000 tons X $20/ton diversion incentive discount). <br />