ubfic Service Commission

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1 ubfic Service Commission 281 Brooks Stmet, Pa 0. BQX 812 Phone: (304) Chai&ston, West Virginia F$X: (304) January 19,201 1 Mark Chapman PO Box 5 Mullins, WV RE: Case No MC- 19A Dear Mr. Chapman: Pursuant to Rule 2 of the Commission s Rules of Practice and Procedure, we are enclosing a copy of the Staff memorandum in this matter. If you wish to respond to the enclosed Staff memorandum, you may do so in writing, within ten days, unless directed otherwise, of this date. Your failure to respond in writing to the utility s answer, Staffs recommendations, or other documents may result in a decision in your case based on your original filing and the other documents in the case file, without further hearing or notice. If you have provided an address you will automatically receive notifications as documents are filed in this proceeding. The notifications allow recipients to view a document within an hour from the time the filing is processed. If you have not provided your address, please send an to caseinfo@,mc.state.wv.us and state the case number in the subject field. S Slj an Enclosure Memo Executive Secretary Division

2 BEFORE THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON FINAL JOINT STAFF MEMORANDUM TO: FROM: Sandra Squire Executive Secretary Charles W. Covert, Director Transportation Administration Division DATE: January 19, SUBJECT: Case No MC-19A Rural Garbage and Refuse, Inc. Rule 19A application to change rates and charges under P.S.C. M.C. Certificate No. F-6024 Transmitted herewith are the original and twelve (12) copies of an Audit Report as prepared by Michael E. Dailey, a Utilities Analyst I1 for the Commission's Utilities Division. Please distribute as appropriate. CWC/jw Enclosures

3 RURAL GARBAGE & REFUSE, INC. CASE NO MC-19A UTILITIES DIVISION ON BEHALF OF THE STAFF OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA ****** January 18, Brooks Street, P. 0. Box 812, Charleston, WV 25323

4 RURAL GARBAGE & REFUSE, INC. CASE NO MC-19A TABLE OF CONTENTS STATEMENT NUMBER PAGE NUMBER LETTER OF TRANSMITTAL A A- 1 A-2 A-3 A-4 C D F G H SUMMARY OF STAFF RECOMMENDED STATEMENT OF INCOME AND EXPENSES OPERATING REVENUES OPERATION AND MAINTENANCE EXPENSE CALCULATION OF DEPRECIATION EXPENSE TAXES OTHER THAN INCOME TAXES PRESENT, PROPOSED AND STAFF RECOMMENDED RATES BILL ANALYSIS BALANCE SHEET DETAIL OF ADJUSTMENTS CASH FLOW ANALYSIS

5 Phone: (304) FJX: (304) January 18, Public Service Commission of West Virginia P.O. Box 812 Charleston, West Virginia RE: CASE NO MC-19A RURAL GARBAGE & REFUSE, INC. Rule 19A application to change rates and charges under P.S.C. M.C. Certificate No. F Dear Commissioners: An examination has been made of the books and records of Rural Garbage & Refuse, Inc. (Rural) for the twelve month period ended December 3 1,2009. Rural provides refuse service to approximately 1,130 residential customers and 90 commercial customers in certificated areas of Wyoming County, West Virginia. Rural provides this service under P.S.C. M.C. Certificate No. F Rural is currently authorized to charge a monthly residential rate of $ Rural's Per Books and Going-Level, and Staff Recommended tariffs are displayed as attachments to Statement C in this report. Rural did not specify a specific rate increase. Instead, it requested that Staff recommend an appropriate rate. Rural is seeking this rate increase in order to cover expenses related to the day-to-day operations of the business. In its report, Staff provided a $0.25 per hour increase for hourly employees, and a 5% increase for the lone salaried employee, as requested by the applicant. The last increase in wages occurred when the Fair Minimum Wage Act was signed in May Staff also adjusted payroll tax expenses directly related to the wage increase. Staff further made adjustments pertaining to current interest expense and depreciation expense that reflect the proposed purchase of a used satellite side loader packer. In total, Staff made eleven (1 1) adjustments, all of which are listed and detailed on Statement G, with corresponding adjustments reflected throughout Staffs report.

6 Staff notes that approximately 700 of Rural's customers are located within the City of Mullens, WV (Mullens). These customers are billed by Mullens under a service and lease agreement signed by both parties on December 26,2007. Under this contract, Rural pays to Mullens, the amount of $1.61 per bill, which includes postage and supplies. Specifically, the contract states, in part, that "The City shall be responsible for billing each and every customer of Hauler (Rural) receiving sewer service from the City (including postage and materials), collecting all applicable service charges, pursuing all unpaid charges through all practical legal means (including pursuing claims in Magistrate Court and discontinuing service until payment is made), and promoting the customer awareness and policies of the City and Hauler with regard to garbage collection." Currently there is no time limit to Mullens' billings with regard to collecting accounts in which refuse service has been terminated for lack of payment. Rural's bookkeeper has scheduled a February 201 1, meeting with City of Mullens officials, in which a cutoff limit, not to exceed 6 months in arrearage, will be determined. In other words, after no more than 6 months of having service terminated due to lack of payment, Mullens will no longer bill customers that have had their service terminated due to lack of payment, and thus cease charging the $1-61 per bill to those terminated customers at that time. Once the terminated bill reaches 6 months past due, Rural will determine whether to go forward with collection attempts, or simply write the account off. At Per Books, Rural's rates and charges resulted in an operating ratio of %, a net loss of $4,794, and a cash flow deficit of $4,211, At Going-Level, Rural's rates and charges result in an operating ratio of %, a net loss $2,641, and a cash flow deficit of $2,058. Upon review of Rural's books and records, Staff recommends a residential base rate of $20.20 per month. This rate results in a monthly residential increase of $2.05, or an overall residential increase of %. Rural's last rate increase became effective on September 25,2007, in Case No MC-42T. Staff also recommends an 11.29% across-the-board increase in industrial and commercial customer rates and charges. Staffs recommended rate increase results in an operating ratio of 97.47%, with a net income of $8,435, a cash flow surplus of 17,998, and debt service coverage of %. Staff made no adjustment to fuel expense at Going Level. Instead, Staff recommends that Rural continue to apply the Commission's authorized emergency fuel surcharge to its Commission authorized residential, commercial, and industrial rates.

7 In conclusion, Staff recommends that the applicant be given three (3) months to provide the Commission with documentation verifying the implementation of the wage increases and the purchase of the proposed satellite packer truck. If documentation is not provided within this time period, Staff recommends that the applicant s rate be adjusted accordingly. In conclusion, Staff requests that its recommended rates and charges be approved without hearing, provided proper publication is made and no significant protests are received. Michael E. Dailey, Utilities Analyst I1 Utilities Division

8 Case No MC-19A Summary of Staff Recommended Income Cash Flow Detail Statement Analysis $ $ $ Operating Revenue Residential Commercial Fuel Surcharge 275, ,611 14, , ,942 Operating Revenue Deductions Operating Expenses Wages Compensation to OwnersiOfficers Gas, Oil, and Grease Maintenance - Equipment Repairs Landfill and Dumping Other Depreciation Taxes Other Than Federal Income Tax Total Deductions Net 94,369 21,580 34,261 32,121 71,355 85, , ,054 22,896 21, , , , Other Income Other Deductions Interest Total Debt Service Other 1,488 14,821 Net Income - or - Cash Flow Surplus Operating Ratio 97.47% Note: Footings throughout this report may appear to be off $1 due to rounding of intermediate calculations. -1 -

9 Case No MC-19A Summary of Staff Recommended Number of Customers: Residential - 1,138 Commercial 90 Area Served - Certificated Areas of Wyoming County, WV Approximate Annual Increase in Residential Revenue: Requested: Amount NIA Percent NIA Recommended: Amount $27,995 Percent 11.29% Approximate Annual Increase in Commercial Revenue: Requested: Amount N/A Percent NIA Recommended: Amount $10,414 Percent 11.29% Company Present Rates Company Proposed Rates (2) $ Staff Recommended Rates (3) s Residential: Base Rate Total Monthly Charge NIA N/A Commercial Negotiable NIA Negotiable -2-

10 Statement of Net Income Year Ended December 31,2009 Statement A Per Books Adjustments Per Books Going Level Staff Reference Inc Dec). Adjusted Adjustments Going Level Recommended (1) (2) (3) (4) (5) (6) Operating Revenues Operating Revenue Deductions Operation and Maintenance Expense Depreciation Expense Taxes Other Than Income Taxes Total Operating Revenue Deductions Statement A-1 350,911 2, , , ,942 Statement A-2 334, ,032 4, , ,054 Statement A ,313 (2) 22,896 22,896 Statement A-4 20,034 20,034 1,036 21,070 21, , ,649 28, , ,020 Net Operating Income (Loss) Other Income Income Deductions (3,73 8) 2,153 (1,585) (28,171) (29,756) 9,923 1,056 1, (3) 1,488 1,488 Net Income (Loss) Operating Ratio (4,794) 2,153 (2,641 j (28,603) (3 1,243) 8, % % % 97.47% I w

11 Operating Revenues Year Ended December 3 1,2009 Statement A-1 Per Books Adjustments Per Books Going Level Per Books Inc (Dec). Adjusted Adjustments Going Level (1) (2) (3) (4) (5) Staff Recommended (6) $ Tax Return Revenues 350,911 (350,911) (1) Residential Customer Revenue 247,856 (1) 247,856 Commercial & Industrial Customer Revenue 92,198 (1) 92, ,856 92, , ,611 Fuel Surcharge Revenue 13,010 (1) 13,010 13,010 Total Revenues 350,911 2, , ,064 14, ,942 P

12 Operation and Maintenance Expense Year Ended December 3 1,2009 Per Books Adjustments Description Per Books Inc (Dec). (1) (2) $ $ Per Books Going Level Adjusted Adjustments Going Level (3) (4) (5) $ $ $ Statement A-2 Staff Recommended (6) $ Employee Wages Compensation to Owners/Officers Gas, Oil, and Grease Maintenance - Equipment Repairs Landfill and Dumping Office Expense Utilities Expense Insurance Legal and Accounting Workers Compensation Telephone Expense Tires and Tubes Lot Rent Rent Bank Fees Travel and Entertainment Vehicle Expense Miscellaneous Expense Uncollectible Expense City of Mullens Fees 87,663 21,580 34,261 35,072 71,355 3,562 1, ,946 17,715 10,222 1,504 3,957 5,880 5, ,293 1,349 19,093 87,663 6,706 (4) 94,369 21,580 21,580 34,261 34,261 35,072 (2,951) (5) 32,121 71,355 71,355 3,562 3,562 1,157 1,157 11,946 2,200 (6) 14,146 17,775 17,775 10,222 (2,898) (7) 7,324 1,504 1,504 3,957 3,957 5,880 5,880 5,700 5, ,293 1,293 1,349 1,349 1,765 (8) 1,765 19,093 19,093 94,369 21,580 34, ,121 71,355 3,562 1,157 14,146 17,775 7,324 1,504 3,957 5,880 5, ,293 1,349 1,965 19,093 Total Operation and Maintenance Expense 334, ,032 4, , ,054

13 Depreciation, Depletion and Amortization Year Ended December 3 1,2009 DescriDtion Statement A-3 Date Less: Date Retired Salvage Depreciable Years Depreciation Acquired If Applicable cost Value Basis Life Expense (2) (3 1 (4) (5) (6) (7) (8) Vehicles 1997 Ford Truck 1989 GMC Truck 1995 Mack MR ASM Trailer 1986 Dodge 1995 Ford Packer 1993 Dodge Pickup Differential Repair 2004 Isuzu FRR Satellite Side Loader Total Equipment and Depreciation Expense lll29l l Proposed 34,250 34,250 3,000 3, ,500 1, ,377 38, ,675 1,000 1, ,500 23, , ,95 1 2, ,476 39,900 39, , , ,678 22,896

14 Taxes Other Than Income Taxes Year Ended December 3 1,2009 Statement A-4 Per Books Adjustments Per Books Inc (Dec). (1) (2) $ $ Per Books Going Level Staff Adjusted Adjustments Going Level Recommended (3) (4) (5) (6) $ $ $ $ F.I.C.A. F.U.T.A. S.U.T.A. City of Mullens B&O Tax Property Taxes License and Other Fees Business Franchise Tax Total Taxes Other Than Income Taxes 8, ,337 6, , , (9) 8,870 8, (148) (10) , (11) 1,840 1,840 6,246 6,246 6, ,099 3,099 3, ,034 1, , ,070

15 Present, Proposed and Staff Recommended Rates Year Ended December 3 1,2009 Statement C Company Company Staff Present Proposed Recommended Rates Rates Rates (1) (2) (3) Residential: Base Rate Total Monthly Charge NIA NIA Commercial Negotiable NIA Negotiable -8-

16 Statement C Attachment 1 Sheet 1 of 5 RURAL GARBAGE & REFUSE, INC. PER BOOKS AND GOING-LEVEL TARIFF PART I: RATES AND PROVISIONS APPLICABLE TO MOST SERVICE UNDER P.S.C. M.C. CERTIFICATE NO. F-6024: (I) A. RATES FOR RESIDENTIAL AND COMMERCIAL SERVICE: Residential Base Rate Tipping Fee Surcharge Bulky Goods Surcharge $ Total Per Month $18.15 Commercial Negotiable Bulky Goods Collection Rates Non-subscribing Household $ per pickup, with a limit of two (2) items PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: A. DUTY OF CARRIER TO NOTIFY RESIDENTIAL CUSTOMERS THAT COMMISSION S RATE JURISDICTION EXTENDS TO NEGOTIABLE RATES AND CHARGES: When negotiating a rate or charge with a residential customer, and before receiving payment for any negotiated rate or charge from that customer, this carrier shall first inform the customer that the Commission has jurisdiction over rates and charges for the collection and transportation of solid waste, including both fixed and negotiable rates and charges for such service, and that complaints about both fixed and negotiable rates and charges may be directed to the Commission. -9-

17 Statement C Attachment 1 Sheet 2 of 5 RURAL GARBAGE & REFUSE, INC. PER BOOKS AND GOING-LEVEL TARIFF PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (Continued) B. EXTRA BAG CHARGE APPLICABLE TO HOUSEHOLDS CONTAINING FORMER RESIDENTIAL CUSTOMERS:: If service by this carrier to an individual residential customer has been terminated, either by the action of that individual or by the action of this carrier, and that individual, or someone with whom he or she resides, (again) subscribes to residential service by this carrier, this carrier during the first twelve (12) months after the subscription (or resubscription) to service, may, but is not required to, assess an additional, negotiable charge for the collection and disposal of more than eight (8) bags of solid waste, or an equivalent amount of solid waste, per week. The negotiable charge shall not exceed one dollar ($1.00) per bag, or the equivalent, after the first eight (8) bags of solid waste, or the equivalent. This carrier shall add that extra charge to the next bill that is issued to the subscribing residential customer. C. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: 1. Subscribing Households: For subscribing residential customers, the applicable base rate and surcharges are set forth elsewhere in this tariff. This carrier shall, once per month, on the scheduled day of bulky goods collection, subject to the following exceptions, collect and transport, free of any additional charge, all discarded bulky goods, as defined in Motor Carrier Rule 1.8, that have been generated by the household of the subscribing residential customer, -10-

18 Statement C Attachment 1 Sheet 3 of 5 RURAL GARBAGE & REFUSE, INC. PER BOOKS AND GOING-LEVEL TARIFF PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (Continued) C. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: (Continued) Exceptions: (1) This carrier may, but is not required to, assess that subscribing residential customer an additional, negotiable charge for each large bulky goods item (equivalent in size to a normal refrigerator or washing machine) after the first two (2) large bulky goods items, generated by that subscribing household, that this carrier collects and transports on a scheduled day of pickup. This carrier shall add that extra charge to the next bill that is issued to that customer. (2) This carrier may, but is not required to, assess that subscribing residential customer an additional, negotiable charge for each used or waste tire after the first eight (8) used or waste tires, off the rim, having a radius of no more than 16.5 inches, generated by that subscribing household, that this carrier collects and transports during a twelve-month period. Once such an extra charge is assessed, this carrier shall add that extra charge to the next bill that it issues to that customer, (3) Bulky goods generated by a subscribing residential household do not include any bulky goods resulting from commercial activities that may occur on the premises of that residential household. With respect to such bulky goods, the applicable business entity shall be treated as a commercial customer of this carrier. (4) With respect to any bulky goods generated by a subscribing residential household that are collected on a date other than the regularly scheduled day of bulky-goods collection, this carrier may, but is not required to, assess the subscribing residential customer an additional, negotiable charge for each such bulky goods item. This carrier shall add the extra charge to the next bill that is issued to that customer. -11-

19 Statement C Attachment 1 Sheet 4 of 5 RURAL GARBAGE & REFUSE, INC. PER BOOKS AND GOING-LEVEL TARIFF PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (Continued) C. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: (Continued) 2. Nonsubscribing Households: For nonsubscribing residential households, the applicable charge is $ per pickup. This carrier shall, once per month, on the day of bulky goods collection, subject to the following exceptions, collect and transport, free of any additional charge, all discarded bulky goods, as defined in Motor Carrier Rule 1.8, that have been generated by the nonsubscribing residential household. Exceptions: (1) This carrier may, but is not required to, assess that nonsubscribing residential household an additional, negotiable charge for each large bulky goods item (equivalent in size to a normal refrigerator or washing machine) after the first two (2) large bulky goods items, generated by that household, that this carrier collects and transports on that day. (2) This carrier may, but is not required to, assess that nonsubscribing residential household an additional, negotiable charge for each used or waste tire, generated by that household, that this carrier collects and transports on that day. The charge per tire is not to exceed the sum of fifty cents ($0.50) plus the Commissionapproved charge for the acceptance of that tire by the landfill which this carrier uses for the disposal of solid waste. 3) For each nonsubscribing residential household, this carrier may require payment of all charges prior to the collection and transportation of these items. In the alternative, this carrier may issue a bill for these charges to the appropriate individual after the collection and transportation of these items. -12-

20 Statement C Attachment 1 Sheet 5 of 5 RURAL GARBAGE & REFUSE, INC. PER BOOKS AND GOING-LEVEL TARIFF PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (Continued) C. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: (Continued) (4) Bulky goods generated by a nonsubscribing residential household do not include any bulky goods resulting from commercial activities that may occur on the premises of that residential household. With respect to such bulky goods, the applicable business entity shall be treated as a commercial customer of this carrier. D. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF LARGE AND/OR HEAVY ITEMS THAT ARE NOT DEFINED AS BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: Subscribing and Nonsubscribing Households: For collecting and transporting large and/or heavy items of solid waste that do not fall within the definition of bulky goods under Motor Carrier Rule 1.8, this carrier may, but is not required to, assess both subscribing and nonsubscribing residential households additional, negotiable charges. Examples of such items that are not bulky goods are construction and demolition debris; automotive components, parts or frames that weigh at least two hundred (200) pounds each; automotive parts, such as motors and transmissions, that have a high density; and used or waste tires, off the rim, that have a radius of more than 16.5 inches. For a subscribing residential household, this carrier shall add the extra charge to the next bill that is issued to the subscribing residential customer. For a nonsubscribing residential household, this carrier may require payment of the charge prior to the collection and transportation of these items. In the alternative, this carrier may issue a bill for this charge to the appropriate individual after the collection and transportation of these items. -13-

21 Statement C Attachment 2 Sheet 1 of 5 RURAL GARBAGE & REFUSE, INC. STAFF RECOMMENDED TARIFF PART I: RATES AND PROVISIONS APPLICABLE TO MOST SERVICE UNDER P.S.C. M.C. CERTIFICATE NO. F-6024: (I) A. RATES FOR RESIDENTIAL AND COMMERCIAL SERVICE: Residential Base Rate Tipping Fee Surcharge Bulky Goods Surcharge $ Total Per Month $20.20 Commercial Negotiable (11.29% increase) Bulky Goods Collection Rates Non-subscribing Household $15.00 per pickup, with a limit of two (2) items PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (I) Indicates increase A. DUTY OF CARRIER TO NOTIFY RESIDENTIAL CUSTOMERS THAT COMMISSION S RATE JURISDICTION EXTENDS TO NEGOTIABLE RATES AND CHARGES: When negotiating a rate or charge with a residential customer, and before receiving payment for any negotiated rate or charge from that customer, this carrier shall first inform the customer that the Commission has jurisdiction over rates and charges for the collection and transportation of solid waste, including both fixed and negotiable rates and charges for such service, and that complaints about both fixed and negotiable rates and charges may be directed to the Commission. -14-

22 Statement C Attachment 2 Sheet 2 of 5 RURAL GARBAGE & REFUSE, INC. STAFF RECOMMENDED TARIFF PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (Continued) B. EXTRA BAG CHARGE APPLICABLE TO HOUSEHOLDS CONTAINING FORMER RESIDENTIAL CUSTOMERS:: If service by this carrier to an individual residential customer has been terminated, either by the action of that individual or by the action of this carrier, and that individual, or someone with whom he or she resides, (again) subscribes to residential service by this carrier, this carrier during the first twelve (12) months after the subscription (or resubscription) to service, may, but is not required to, assess an additional, negotiable charge for the collection and disposal of more than eight (8) bags of solid waste, or an equivalent amount of solid waste, per week. The negotiable charge shall not exceed one dollar ($1.00) per bag, or the equivalent, after the first eight (8) bags of solid waste, or the equivalent. This carrier shall add that extra charge to the next bill that is issued to the subscribing residential customer. C. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: 1. Subscribing Households: For subscribing residential customers, the applicable base rate and surcharges are set forth elsewhere in this tariff. This carrier shall, once per month, on the scheduled day of bulky goods collection, subject to the following exceptions, collect and transport, free of any additional charge, all discarded bulky goods, as defined in Motor Carrier Rule 1.8, that have been generated by the household of the subscribing residential customer. -15-

23 Statement C Attachment 2 Sheet 3 of 5 RURAL GARBAGE & REFUSE, INC. STAFF RECOMMENDED TARIFF PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (Continued) C. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: (Continued) Exceptions : (1) This carrier may, but is not required to, assess that subscribing residential customer an additional, negotiable charge for each large bulky goods item (equivalent in size to a normal refrigerator or washing machine) after the first two (2) large bulky goods items, generated by that subscribing household, that this carrier collects and transports on a scheduled day of pickup. This carrier shall add that extra charge to the next bill that is issued to that customer. (2) This carrier may, but is not required to, assess that subscribing residential customer an additional, negotiable charge for each used or waste tire after the first eight (8) used or waste tires, off the rim, having a radius of no more than 16.5 inches, generated by that subscribing household, that this carrier collects and transports during a twelve-month period. Once such an extra charge is assessed, this carrier shall add that extra charge to the next bill that it issues to that customer. (3) Bulky goods generated by a subscribing residential household do not include any bulky goods resulting from commercial activities that may occur on the premises of that residential household. With respect to such bulky goods, the applicable business entity shall be treated as a commercial customer of this carrier. (4) With respect to any bulky goods generated by a subscribing residential household that are collected on a date other than the regularly scheduled day of bulky-goods collection, this carrier may, but is not required to, assess the subscribing residential customer an additional, negotiable charge for each such bulky goods item. This carrier shall add the extra charge to the next bill that is issued to that customer. -16-

24 Statement C Attachment 2 Sheet 4 of 5 RURAL GARBAGE & REFUSE, INC. STAFF RECOMMENDED TARIFF PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (Continued) C. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: (Continued) 2. Nonsubscribing Households: For nonsubscribing residential households, the applicable charge is $15.00 per pickup. This carrier shall, once per month, on the day of bulky goods collection, subject to the following exceptions, collect and transport, free of any additional charge, all discarded bulky goods, as defined in Motor Carrier Rule 1.8, that have been generated by the nonsubscribing residential household. Exceptions: (1) This carrier may, but is not required to, assess that nonsubscribing residential household an additional, negotiable charge for each large bulky goods item (equivalent in size to a normal refrigerator or washing machine) after the first two (2) large bulky goods items, generated by that household, that this carrier collects and transports on that day. (2) This carrier may, but is not required to, assess that nonsubscribing residential household an additional, negotiable charge for each used or waste tire, generated by that household, that this carrier collects and transports on that day. The charge per tire is not to exceed the sum of fifty cents ($0.50) plus the Commissionapproved charge for the acceptance of that tire by the landfill which this carrier uses for the disposal of solid waste. 3) For each nonsubscribing residential household, this carrier may require payment of all charges prior to the collection and transportation of these items. In the alternative, this carrier may issue a bill for these charges to the appropriate individual after the collection and transportation of these items. -17-

25 Statement C Attachment 2 Sheet 5 of 5 RURAL GARBAGE & REFUSE, INC. STAFF RECOMMENDED TARIFF PART 11: ADDITIONAL PROVISIONS RELATING TO RESIDENTIAL SERVICE UNDER P.S.C. M.C. CERTIFICATES NO. F-6024: (Continued) C. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: (Continued) (4) Bulky goods generated by a nonsubscribing residential household do not include any bulky goods resulting from commercial activities that may occur on the premises of that residential household. With respect to such bulky goods, the applicable business entity shall be treated as a commercial customer of this carrier. D. CHARGES FOR THE COLLECTION AND TRANSPORTATION OF LARGE AND/OR HEAVY ITEMS THAT ARE NOT DEFINED AS BULKY GOODS FROM RESIDENTIAL HOUSEHOLDS: Subscribing and Nonsubscribing Households: For collecting and transporting large andor heavy items of solid waste that do not fall within the definition of bulky goods under Motor Carrier Rule 1.8, this carrier may, but is not required to, assess both subscribing and nonsubscribing residential households additional, negotiable charges. Examples of such items that are not bulky goods are construction and demolition debris; automotive components, parts or frames that weigh at least two hundred (200) pounds each; automotive parts, such as motors and transmissions, that have a high density; and used or waste tires, off the rim, that have a radius of more than 16.5 inches. For a subscribing residential household, this carrier shall add the extra charge to the next bill that is issued to the subscribing residential customer. For a nonsubscribing residential household, this carrier may require payment of the charge prior to the collection and transportation of these items. In the alternative, this carrier may issue a bill for this charge to the appropriate individual after the collection and transportation of these items. -18-

26 Bill Analysis Year Ended December 3 1,2009 Statement D Residential Customers: Base Rate Residential Total Commercial and Industrial Fuel Surcharge Totals Correction Factor Totals Billing Per Books Adjusted Determinants Rates Revenue (1) (2) (3) s s , ,856 92,198 13, ,064 1.ooooooo 353,064 Going Level Proposed Revenue Increase Rates Revenue Rates Revenue Amount Percent (4) (5) (6) (7) (8) (9) $ $ $ $ $ % , ,856 92,198 13, ,064 1.ooooooo 353,064 Staff Recommended Revenue Increase Rates Revenue Amount Percent (10) (11) (12) (13) s $ $ % Residential Customers: Base Rate Residential Total Commercial and Industrial Fuel Surcharge Totals Correction Factor Totals , , % 275,851 27, % 102,611 10, % 14,480 1, % 392,942 39, % 1.ooooooo 1.ooooooo 392,942 39, %

27 Balance Sheet December 3 1,2008 and 2009 STATEMENT F 12/31/2008 $ Current Assets: Cash and Cash Equivalents 81 Accounts Receivable - Trade, Net Other Current Assets 50 Loans to Shareholders Prepaid Expenses and Other Current Assets Total Current Assets 131 Long-Term Assets: Property, Plant, and Equipment, Net 1,458 Other Long-Term Asssets (Land) Total Long-Term Debt 1,458 Total Assets 1,589 12/31/2009 $ 952 7,000 7, Current Liabilities: Accounts Payable 10,880 Mortgages, Notes, Bonds Payable in less 1 year 11,248 Other Current Liabilities 1,588 Loans from Shareholders 2,290 Total Current Liabilities 26,006 9,354 1,235 2,290 12,879 Long-Term Liabilities: Other Liabilities Mortgages, notes, bonds payable Total Long-Term Liabilities Stockholders Eauitv: Capital Stock Additional Paid in Capital Retained Earnings - Uappropriated Intercompany Total Stockholder s Equity 8,790 8,790 1,000 4,000 (38,207) (33.207) 36,337 11,657 47,994 1,000 4,000 (5 7,047) (52.047) Total Liabilities and Equity 1,

28 Detail of Adjustments Year Ended December 3 1,2009 STATEMENT G PAGE 1 of 3 ADJUSTMENT NUMBER INCREASE (DECREASE) $ PER BOOKS ADJUSTMENTS (1) Tax Return Revenues Residential Customer Revenue Commercial & Industrial Customer Revenue Fuel Surcharge Revenue (350,911) 247,856 92,198 13,010 To adjust to reflect accrued test year billings per calculations on Statement D. GOING-LEVEL ADJUSTMENTS (2) Depreciation Expense 22,3 13 To adjust to reflect straight-line depreciation expense, per calculations on Statement A-3. This adjustments includes the calculation for the proposed purchase of a small packer truck. Going-Level Expense 22,896 Less: Per Books Adjusted Expense 583 Adjustment 22,3 13 (3) Income Deductions 432 To adjust to reflect interest expense at Going-Level, per calculations on Statement H. Going-Level Interest Expense 1,488 Less: Per Books Adjusted Expense 1,056 Adjustment 432 (4) Employee Wages 6,706 To adjust to reflect a $0.25 per hour increase in wages for three (3) hourly employees applied to test year hours, and a 5% increase for the lone salaried employee at Going-Level. Detailed calculations are included in Staffs workpapers. Going-Level Office Wages 94,369 Less: Per Books Adjusted 87,663 Adjustment 6,

29 Detail of Adjustments Year Ended December 3 1,2009 STATEMENT G PAGE 2 of 3 ADJUSTMENT NUMBER INCREASE (DECREASE) $ GOING-LEVEL ADJUSTMENTS (CONT.1 (5) Maintenance - Equipment Repairs To adjust to reflect the depreciation of truck differential repair work at Going-Level. This expense was removed and depreciated over a 2-year period. Going-Level Expense Less: Per Books Adjusted Adjustment 32,121 35,072 (2,951) (6) Insurance 2,200 To adjust to reflect Going-Level insurance expense per statements provided by the applicant's insurance provider (Erie Insurance). This calculations also allows for coverage of a small packer truck to be purchased. Going-Level Expense Less: Per Books Adjusted Adjustment 14,146 11,946 2,200 (7) Workers Compensation To adjust to reflect Worker's Compensation expense at Going-Level per documentation provided by the applicant's W/C provider. Staff notes the insurance provider changed from Brickstreet to Erie since the end of the test period (2009). Going-Level Expense Per Books Adjusted Expense Adjustment 7,324 10,222 (2,898) (8) Uncollectible Expense 1,765 To adjust to reflect uncollectible accounts expense at Going-Level, at a rate of 1/2 of 1 % of operating revenues. Going-Level Operating Revenues Rate Going-Level Uncollectibles Expense 353,064 X ,

30 Detail of Adjustments Year Ended December 3 1,2009 STATEMENT G PAGE 3 of 3 ADJUSTMENT NUMBER INCREASE (DECREASE) $ GOING-LEVEL ADJUSTMENTS (CONT.1 (9) F.I.C.A To adjust to reflect F.I.C.A. Expense at Going-Level. Going-Level Applicable Wages Rate Going-Level Expense Less: Per Books Adjusted Adjustment 115,949 X ,870 8, To adjust to reflect F.U.T.A. Expense at Going-Level. Going-Level Applicable Wages Rate Going-Level Expense Less: Per Books Adjusted Adjustment 43,149 X ) 5 03 To adjust to reflect S.U.T.A. Expense at Going-Level. Going-Level Applicable Wages Rate Going-Level Expense Less: Per Books Adjusted Adjustment 47,149 X ,840 1,

31 Cash Flow Analysis Year Ended December 3 1,2009 Statement H Per Books $ Per Books Adjusted $ Going Level $ Staff Recommended $ Available Cash Operating Revenues Other Income 350, , , ,942 Total Available Cash , , ,942 Cash Required Operating Expenses Taxes Other Than Income Tax 334, , , , , ,070 Total Cash Required Before Debt Service , ,124 Cash Available for Debt Service (A) (3,155) 32,819 Debt Service Requirements Interest Principal Retirement 1,056 1,488 13,333 1,488 13,333 Total Debt Service Requirement (B) 1,056 14,821 14,821 Remaining Surplus (2,058) (21,68 1) Percent Coverage (A) I (B) NIA NIA % I