Oil/Environmental Price Adjustment
While there are many costs we can control in our business, the cost of fuel and
fuel-based products (such as lubricants and tires), and of compliance with environmental
rules and regulations are largely out of our hands. Waste Industries applies its
Oil/Environmental Price Adjustment to offset these costs and to achieve a reasonable
operating margin. This Adjustment, which shows up as an invoice line item, is made
up of two components, one based on fluctuation in the price of fuel and the other
to address the increasing costs of environmental compliance.
Fuel Component
The fuel component of our Oil/Environmental Price Adjustment is updated weekly and is tied to the regional average price of diesel fuel as reported by the U.S. Department of Energy’s On-Highway Diesel Fuel Price Index published for the Lower Atlantic Region (http://tonto.eia.doe.gov/oog/info/wohdp/diesel.asp ). Tying the fuel component of our Adjustment to this index ensures that it is based on a widely accepted and up-to-date source that is publicly available and objective. This adjustment is not intended to tie specifically to the direct cost to service any customer’s individual account, but to the overall cost of fuel incurred by Waste Industries, including a reasonable operating margin.
Environmental Component
The second component making up our Oil/Environmental Price Adjustment is related to the cost of operating our business in a safe and environmentally responsible manner, and includes items such as landfill regulatory compliance, permitting, licensing, regulatory fees, ongoing verification and testing, safety equipment, and increased costs of construction or operation arising out of environmental regulation. This charge is not tied specifically to the environmental costs of a specific customer, but is instead designed to recover costs incurred company-wide associated with operating our facilities in an environmentally safe manner, including a reasonable operating margin. The environmental component of the Oil/Environmental Price Adjustment does not fluctuate on a regular basis, but is instead set from time to time at the discretion of Waste Industries. This portion of the overall Oil/Environmental Price Adjustment is currently set at 3% of the invoiced charges (excluding taxes and the fuel adjustment component).
Not a Governmental Tax
The Oil/Environmental Price Adjustment is not a tax, surcharge or fee imposed or mandated by any governmental or regulatory agency. It is a fee charged by Waste Industries and may be changed at the discretion of Waste Industries. To the extent required by the terms of your service agreement, your consent to the application of the Oil/Environmental Price Adjustment and any changes thereto is effective upon your payment of the invoice.
Frequently Asked Questions
Q: Why do you charge the fuel component of the Oil/Environmental Price Adjustment?
A: As you know, the price of fuel can fluctuate significantly in a short period of time, making it very difficult to operate in a manner that allows us to recover and administer fuel expenses within our standard operating margins. Providing for adjustments that isolate the fluctuation in fuel prices allows us to manage our expenses as the price rises and give our customers the benefit of reduced charges as the price falls.
Q: How often does the fuel component of the Adjustment change?
A: The fuel component of the Oil/Environmental Price Adjustment changes on a weekly basis. The amount of the fuel adjustment reflected in your invoice will be based on the last reported price in the DOE index discussed above prior to the invoice date.
Q: How often will the environmental component of the Oil/Environmental Price Adjustment change?
A: The environmental component of the Adjustment does not change on a weekly or monthly basis. This component may change from time-to-time at the discretion of Waste Industries as part of our ongoing review of environmental compliance related costs and expenses. This adjustment is currently set at 3% of invoice.
Fuel Component
The fuel component of our Oil/Environmental Price Adjustment is updated weekly and is tied to the regional average price of diesel fuel as reported by the U.S. Department of Energy’s On-Highway Diesel Fuel Price Index published for the Lower Atlantic Region (http://tonto.eia.doe.gov/oog/info/wohdp/diesel.asp ). Tying the fuel component of our Adjustment to this index ensures that it is based on a widely accepted and up-to-date source that is publicly available and objective. This adjustment is not intended to tie specifically to the direct cost to service any customer’s individual account, but to the overall cost of fuel incurred by Waste Industries, including a reasonable operating margin.
Environmental Component
The second component making up our Oil/Environmental Price Adjustment is related to the cost of operating our business in a safe and environmentally responsible manner, and includes items such as landfill regulatory compliance, permitting, licensing, regulatory fees, ongoing verification and testing, safety equipment, and increased costs of construction or operation arising out of environmental regulation. This charge is not tied specifically to the environmental costs of a specific customer, but is instead designed to recover costs incurred company-wide associated with operating our facilities in an environmentally safe manner, including a reasonable operating margin. The environmental component of the Oil/Environmental Price Adjustment does not fluctuate on a regular basis, but is instead set from time to time at the discretion of Waste Industries. This portion of the overall Oil/Environmental Price Adjustment is currently set at 3% of the invoiced charges (excluding taxes and the fuel adjustment component).
Not a Governmental Tax
The Oil/Environmental Price Adjustment is not a tax, surcharge or fee imposed or mandated by any governmental or regulatory agency. It is a fee charged by Waste Industries and may be changed at the discretion of Waste Industries. To the extent required by the terms of your service agreement, your consent to the application of the Oil/Environmental Price Adjustment and any changes thereto is effective upon your payment of the invoice.
Frequently Asked Questions
Q: Why do you charge the fuel component of the Oil/Environmental Price Adjustment?
A: As you know, the price of fuel can fluctuate significantly in a short period of time, making it very difficult to operate in a manner that allows us to recover and administer fuel expenses within our standard operating margins. Providing for adjustments that isolate the fluctuation in fuel prices allows us to manage our expenses as the price rises and give our customers the benefit of reduced charges as the price falls.
Q: How often does the fuel component of the Adjustment change?
A: The fuel component of the Oil/Environmental Price Adjustment changes on a weekly basis. The amount of the fuel adjustment reflected in your invoice will be based on the last reported price in the DOE index discussed above prior to the invoice date.
Q: How often will the environmental component of the Oil/Environmental Price Adjustment change?
A: The environmental component of the Adjustment does not change on a weekly or monthly basis. This component may change from time-to-time at the discretion of Waste Industries as part of our ongoing review of environmental compliance related costs and expenses. This adjustment is currently set at 3% of invoice.
