Exh 8EAGENDA ITEM #3E
JULY 11, 2005
.CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Proposed Fuel Rate Increase for Sanitation Services
SUBMITTED BY: Rick Carper, P.E., Public Works Director/'~~'~
DATE: July 1, 2005
BACKGROUND: At the Commission's March 24~' meeting, in conjunction with the annual
cost of living rate increase request, Waste Services of Florida (WSF), the
City's contracted waste hauler, asked the Commission to consider a fuel
surcharge based on an anticipated fuel cost increase resulting from
expiration of a long-term fuel contract (former rate $1.31lgal,
average rate since expiration has been $2.1771ga1. - as of February,
the price paid by COAB had increased 36% in one year and 38% since
February 2001, when the current contract with BFI/V1ISF was signed).
WSF requested fuel surcharge increase be authorized under Section 2,
paragraph G. Unusual Changes or Costs. Staff did not consider that the
proposed fuel surcharge met the intent of Paragraph G because the
examples provided in the contract were increases caused by legal or
contractual changes rather than unanticipated overhead increases. The
Commission concurred with Staff recommendation directed Staff to further
research the issue and recommend a method by which the City would not
be locked in to higher rates, but could also benefit if fuel prices decreased.
Since the initial presentation, Staff has met with the Contractor and
discussed the proposed fuel surcharge in depth. The justification provided
appears to reflect the true increase in WSF's cost of doing business and is
not a mechanism for increasing profit at the City's expense.
WSF's contract with the City expires May 31, 2006. There is provision for
extending the contract in five-year terms, at the City's option.
RECOMMENDATION: Authorize Staff to negotiate and the City Manager to sign a Contract
Addendum authorizing a monthly fuel surcharge (or credit) for services
provided by Waste Services of Florida. Fuel surcharge is not to exceed 5%
of contracted amount with Commission notification.
ATTACHMENT: _ ___ Fuel Surcharge Calculation Spreadsheet.provided by WSF _____
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AGENDA ITEM #3E
JULY 11, 2005
Steve Wright
General Manager
service - 7580 Philips Highway
Jacksonville, F132256
of Florida . ~~~. Tel: (904)-338-0944
~ Fax: (904)737-7614
Cell: (904) 509-1784
Email:lbranzCrilceri. iz
May 20, 2005
City of Atlantic Beach
Attn: Rick Carper
1100 Sandpiper Lane
Atlantic Beach, Florida 32233
RE: Request for Addendum to Address Escalatinb Fuel Costs
Dear Rick:
We are requesting Atlantic Beach to approve an escalating and de-escalating fuel surcharge to
help recover the extraordinary increase in fuel prices. WSUAllied had the foresight to lock into
a fuel contract during 2002. When most transportation vendors were passing on these increases
through surcharges in 2004, WSI was able to maintain their costs and forego any increase.
Unfortunately, the contract expired in February, 2005. Our fuel rate increased from the
contracted $1.31/ per gallon to a current average price of $2.12/per gallon.
The following is a calculation supporting the surcharge:
A normal weekly route truck will operate 55 hours per week. The average monthly route hours
would be calculated by taking the 55 hours per week multiplied by 4.33 = 238 monthly truck
_operating hours. At four gallons fuel usage per hour, the average route uses 953 gallons of fuel
per month. - ~--_---
953 gallons per month multiplied by $0.81/gallon increase = $772 increase per route, per month
or a 62% percentage increase in monthly fuel cost per route. The CPI increase will only cover
3% of the fuel cost, or $37 per route, per month. Ex: 953 gallons X $1.31 = $1,248 X 3% _ $37
per route vs. $772 actual per route monthly increase
We are requesting the City to allow us a fuel adjustment to cover the additional $735 per month,
per route not covered by the annual CPI of 3%.
Using the same calculation as residential, one commercial route will have the same $735
monthly fuel variance.
WSI currently operate 3.6 residential routes and one commercial route per day in Atlantic
Beach. The surcharge we are requesting $3,381 ($735 per month multiplied by 4.6 routes).
The fuel surcharge would be calculated as a percentage of the total Atlantic Beach billing and
adjusted monthly based on the average fuel price per gallon.
AGENDA ITEIVI #3E
JULY 11, 200
Using the month of April as an example: the fuel surcharge would be 4.34% ($3,381 divided by
the total billing of $77,941). Each month WSI can provide the City of Atlantic Beach copies of
. monthly fuel invoices with the billing to support an increase, or decrease in the fuel surcharge
using the aforementioned calculation.
If you have any questions, please don't hesitate to contact me directly at (904) 338-0944.
Sincerely,
Steve Wright
General Manager
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