Discussion:
This agenda item addressess two separate issues. The collection fee, which is payment to Republic Services under the contract and the disposal fee, which is dependent upon tipping fees at disposal facilities.
Collection Fee
Under the existing contract with Republic Services, they have the right to request an annual adjustment to the collection fee (Section 1.3 Payment Terms). The request for adjustment must be based on actual costs, and/or the Consumer Price Index (CPI) or diesel fuel prices.
Republic Services has requested a fee increase of 1.9%, commensurate with CPI. Staff has reviewed this request against other measures of inflation and/or cost. CPI appears to be a reasonable measure commensurate with actual cost increases to Republic. If approved, the 1.9% increase equates to $0.16/per user, per month.
Disposal Fee
Today, Republic Services collects waste and recycling from properties in Shakopee, transports it to Dem-Con in Shakopee, where it is sorted. From Dem-Con, recyclables are sold, and waste is transported to a facility in Newport, MN where it is converted to pelletized fuel. The City of Shakopee is required by statute to have all waste sorted and processed in this way. The Minnesota Pollution Control Agency has recently begun more aggressively enforcing this provision.
The Newport facility has notified Republic that as of 1/1/2018 they will be increasing their tipping fees from $70/ton to $115/ton. Republic researched options and found that the most cost effective disposal site that complies with statute is a facility in Elk River, which has a tipping fee of $98/ton. This increase in tipping fees will result in a disposal fee increase of $2.34/per user per month.
Summary
If approved by Council, these fee increases will impact residential customers as follows:
Collection Fee increase: .16/month = $1.92/year
Disposal Fee increase: $2.34/month = 28.08/year
Total: $2.50/month = $30.00/year