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• • <br /> ATTACHMENT K <br /> CONTRACTOR'S COMPENSATION AND RATE SETTING PROCESS <br /> Table 1 <br /> Adjustment to Proposed Costs for Annual Adjustment to Contractor's <br /> Cost Rate Year One (2011) Contractor's Compensation for Rate Years <br /> Compensation Two — Ten (2012 - 2020) <br /> E. • Step One: • Inflation adjustment to reflect one - <br /> Initially adjust 2008 fuel costs on year change in the U.S. <br /> Fuel for route and Attachment N using the U.S. Department of Labor, Bureau of <br /> service vehicles, Department of Labor, Bureau of Labor Statistics, Producer Price <br /> direct and indirect Labor Statistics, Producer Price Index - Commodity Index for #2 <br /> Index - Commodity Index for #2 diesel fuel (not seasonally <br /> diesel fuel (not seasonally adjusted, fuels and related <br /> adjusted, fuels and related products and power, series no. <br /> products and power, series no. wpu057303). Average index <br /> wpu057303). Average index change between index for May of <br /> change between index for May prior year and April of current year <br /> 2008 and April 2010 (i.e., twenty (i.e., twelve (12) months). <br /> four (24) months). <br /> • For Rate Year Three (2013) only, <br /> • Step Two: adjustment will be made for direct <br /> In order to reflect 2011 base costs, fuel costs based on one - hundred <br /> adjust the costs resulting from the percent (100 %) of the service <br /> adjustment in Step One using the level changes and for indirect fuel <br /> U.S. Department of Labor, Bureau costs based on sixty -five percent <br /> of Labor Statistics, Producer Price (65 %) of service level changes as <br /> Index - Commodity Index for #2 described in Table 2. <br /> diesel fuel (not seasonally <br /> adjusted, fuels and related <br /> products and power, series no. <br /> wpu057303Five (5) year average <br /> index change between index for <br /> May 2005 and April 2010. <br /> • Service level change adjustment <br /> for direct fuel costs based on one - <br /> hundred percent (100 %) of the <br /> service level changes and for <br /> indirect fuel costs based on sixty - <br /> five percent (65 %) of the service <br /> level changes as described in <br /> Table 2. <br /> Collection Services Franchise Agreement with Recology San Mateo County Attachment K <br /> City of Redwood City Contractor's Compensation and Rate Setting Process <br /> Page 11 of 26 <br />