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Company: Rate hike tied to inflation

Company: Rate hike tied to inflation

October 30th, 2010 in News

While the changes that came earlier this month to Jefferson City's trash contract with Allied Waste were unexpected, the most recent change is anything but unexpected.

This week, Allied Waste announced that rates for residential, commercial and industrial customers will increase, beginning in November. The residential rates will increase by 2 percent, while the commercial and industrial rates will increase by 5 percent.

On Oct. 4, the City Council approved 5-4 an amendment to the contract, which changed the number of participating households from 14,000 to 12,600. It also reduced Allied Waste's road use and future planning fees by $320,000 for both 2010 and 2011. The council made the changes because there was concern that leaving the contract the way it was could be create a legal issue with Allied Waste because there were fewer participating households than the contract stipulated.

This week, Rick Graham, general manager of Allied Waste, said the rate increase is an inexact number because of the different sizes of barrels, but that residents will see an increase of about 30 cents per month, or about $3.60 per year.

Graham said the increase is just standard procedure for running a business.

"Contracts that we have with all municipalities have a rate-adjustment clause that is tied to the Consumer Price Index," Graham said. "Jefferson City's Consumer Price Index relates to water, sewer and trash."

The Consumer Price Index, Graham said, could have allowed for as much as 6 percent across the board, but Graham wanted to find a way to work with city officials and residents.

"We felt like, with the situation where we were able to work with the city on the customer shortage issue and different things, we would try to do our part and do what we could do as a company by backing off and making it less painful," Graham said.

Graham said the new rate change could have been much higher, but that the company took the current economic state into consideration when making the decision.

"Normally, we don't back down," he said. "Normally, we do the full price increase because our costs are tied to that. We have a landfill we have to keep into compliance. We have our hauling company with operating costs. We have heath insurance. We have costs just like any other business and they go up every year."

Monday marks the oneyear anniversary of the start of the city's contract with Allied Waste.