Tiny trash cans do not mean tiny bills
Original post made by Tim Hunt, Castlewood, on Jul 18, 2013
In Livermore, there’s now a 20-gallon option. That’s really small. The deal that Livermore Sanitation made with the city when it wrestled the contract away from Waste Management includes two 90-gallon cans, one for recyclables and one for green waste plus a container for garbage that goes straight to the land fill. That’s similar to the Pleasanton Garbage plan.
When the trash container grows to 32 gallons in Livermore, the quarterly rate jumps $30 to $82.53. That compares favorably with the $99 rate in Pleasanton for the relatively equivalent sized 35-gallon can.
The challenge for the garbage companies moving forward is that costs change marginally as the size of the garbage can shrinks. They still are paying the driver, fueling and maintaining the truck and paying for the vehicle. Depending upon the capacity and capabilities of the truck (separate compartments), companies may run the same streets three times to collect the separate cans.
For the bottom line, a smaller container will mean slightly reduced fees at the landfill because the volume will be down slightly.
That will not come close to covering the basic costs.
It is similar to a utility such as a water company. In the case of the Livermore Valley’s water wholesale agency, Zone 7, it has huge sunk costs in its treatment plants, its wells, its reverse osmosis treatment plant and in the bonds for water supplied from the State Water Project. Think of those bonds as equivalent to the mortgage on your house.
If you are on vacation, the utility bills (water, gas and electric) drop because you are not using those services. However, the mortgage holder expects to be paid whether you are occupying your home that week or not.
It’s the same for bonds for the State Water Project. Those were 40-year commitments that all of the contractors must pay regardless of how much water they receive (it is the mortgage on the system). The operations and maintenance expenses may shrink a bit as less water is pumped, but the staff to run treatment plants and other operations does not appreciably shrink even if volume does.
For consumers who reduce their water usage and then see rates climb to cover fixed expenses or anticipated capital expenditures, it is a tough explanation, but one based in reality for many utilities.