Fuel & Environmental Charges for Waste Collection & Disposal Services

Overview

Waste Management of Canada Corporation and its subsidiaries including WM Québec Inc. (collectively, “Waste Management of Canada”) are subsidiaries of Waste Management, Inc. (“Waste Management”). Waste Management of Canada is committed to providing customers with safe and reliable quality waste services at a reasonable price.

Price Increases

General
We periodically increase our service rates. Price increases are subject to a customer’s applicable service terms, including any applicable municipal or franchise agreement or customer service agreement. Notifications for rate increases are typically provided the month of, or the month prior to, the increase and can be found in the “important messages” section on a customer’s invoice. Increases to service rates may be based on any number of factors, including to cover increases to both internal and third party disposal, processing and/or transportation costs, increased costs due to uncontrollable circumstances, including, without limitation, changes in local, state or federal laws or regulations, imposition of taxes, fees or surcharges or acts of God such as floods, fires, hurricanes and natural disasters, and increases in the Consumer Price Index (CPI). Standard CPI rate increases are tied to increases to the Canadian Property Taxes and Other Special Charges Consumer Price Index (rolling 12-month average) published by Statistics Canada. We may also apply different CPI based price increases, including a contractually allowed CPI+4% price increase for certain customers, or seek price increases for other reasons and/or to achieve acceptable operating margins.

Franchise/Municipal Customers
Residential, commercial and roll-off container customers serviced pursuant to a franchise agreement with a municipality or local governmental authority are subject to price increases permitted under the terms of such agreements.

Open Market/Subscription Residential Customers
Generally, open market residential subscription collection customers are serviced on a prepaid quarter by quarter (or other periodic) basis, without individual service agreements. Therefore, Waste Management of Canada can increase the price or cost to provide such residential collection service from billing period to billing period, and customers may terminate or choose to not renew services after each billing period. Residential subscription customers are billed in advance and invoices represent our offer to provide or continue to provide such services for the specified billing period. By paying the invoice and not cancelling service, the customer is agreeing to continue the service for the billing period and there is no proration or partial refund for any cancellation prior to the end of the billing period.

Non-franchise Commercial/Roll-off
Waste Management of Canada provides non-franchise commercial small container and permanent (i.e., recurring service) roll-off container service to customers under fixed term contracts with renewal options. Under Section 4(b) of our current standard service agreement for commercial small container and roll-off customers (“standard commercial/roll-off service agreement”), we have the right to increase a customer’s service rate and charges for any one or more of the following reasons:

1. for any changes to, or differences between, the actual equipment and services provided by Waste Management of Canada to the customer and those specified on the Service Summary to the customer’s service agreement;

2. for any change in the composition of the “Waste Materials” (as defined in the service agreement) or if the average weight per yard of the customer's Waste Materials exceeds the amount specified on the customer’s Service Summary;

3. for any increase in or other modification to our Fuel Surcharge, Regulatory Cost Recovery Charge, Recyclable Material Offset, Environmental Charge, and/or any Fees/Charges included on the customer’s Service Summary;

4. to cover any increases in disposal, processing and/or transportation costs, including fuel surcharges;

5. to cover increased costs due to uncontrollable circumstances, including, without limitation, changes in local, provincial or federal laws or regulations, imposition of taxes, fees or surcharges or acts of God such as floods, fires, hurricanes and natural disasters; and/or

6. for increases in any Consumer Price Index (generally the Canadian Property Taxes and Other Special Charges Consumer Price Index published by Statistics Canada).

The price increases specified in Section 4(b)(i) through (vi) may be applied singularly or cumulatively, and may include an amount for operating or profit margin. Price increases are not represented to be solely an offset or pass through of the company’s costs.

In addition to specific price increases allowed under Section 4(b), Waste Management of Canada also regularly seek price increases subject to customer consent pursuant to Section 4(c) of our standard commercial/roll-off service agreement. Waste Management of Canada notifies such customers of these price increases subject to customer consent, through invoice messaging, invoice inserts or separately mailed price increase notifications. Under Section 4(c) of such service agreement, the customer can either accept the price increase or trigger a termination of its service agreement, without any obligation to pay liquidated damages. Under Section 4(a) of our standard commercial/roll-off service agreement, payment of the price increase is deemed to be a customer’s consent to the consensual price increase.

Pricing, price increases and the assessment of charges, whether pursuant to Section 4 of our standard commercial/roll-off service agreement or subject to other applicable service terms or customer consent, are not applied uniformly and vary from customer to customer. By contract or at the company’s discretion, some customers are exempt from base rate or CPI based price increases or do not pay Waste Management’s standard or common charges, such as our Fuel and Environmental Charges. Section 4 price increases and charges are designed to recover all applicable costs as to all customers from only those customers subject to the price increase or charge, excluding any exempt or non-paying customers.

Check Your Applicable Service Terms
The service terms referenced above may apply to you, or your service terms may be different. Not all collection customers have service agreements and not all commercial and roll-off customers are covered by our standard commercial/roll-off service agreement. Your services may be covered by prior versions of our standard commercial/roll-off service agreement, which have different terms. If you have a service agreement, please check it for your applicable terms.

Fuel & Environmental Charge

We have made investments in cleaner technologies, such as LNG or CNG trucks, reducing our overall impact on the environment; however, fuel prices and environmental compliance-related costs are something we cannot fully control. Our standard Fuel/Environmental Charge is meant to help us cover these costs and achieve an acceptable operating margin. The Fuel/Environmental Charge is one line item on customer invoices that contains two separate components: a Fuel Surcharge and an Environmental Charge.

Fuel Surcharge
The Fuel Surcharge allows us to recover the cost of diesel, natural gas and other hydrocarbon based fuels and products that Waste Management on an enterprise-wide basis (through all its hauling and operating companies, including Waste Management of Canada (collectively, “WM operating companies”) uses in its overall business above a baseline cost. In Canada, the baseline cost is measured in diesel cost @$.55/litre. This charge allows us to keep up with the changing costs of diesel, natural gas and other hydrocarbon based fuels and products, and allows us to achieve the operating margin needed to maintain the high level of service that customers expect. Our standard Fuel Surcharge calculation is tied directly to the last weekly Canadian National average price for diesel as reported by Bloomberg, a leading global provider of data, news and analytics. Tying our standard Fuel Surcharge to this nationally reported diesel price ensures customers are assessed a fuel surcharge that is objective, currently adjusted and easy to calculate.

Our Collection and Disposal Fuel Surcharge Tables show what the Fuel Surcharge, as a percentage of a customer’s monthly or other periodic invoice charges, before the Environmental Charge, Regulatory Cost Recovery Charge and taxes, would be based upon the last weekly reported Bloomberg Canadian National average diesel price prior to a customer’s invoice date.

The amount or percentage of the Fuel Surcharge is not specifically tied to the direct or indirect costs to service a specific customer account. By contract or at our discretion, some customers pay a nonstandard fuel surcharge or are exempt from any fuel surcharge. Through fuel surcharges, Waste Management of Canada, together with other WM operating companies, attempt to collectively recover all Waste Management enterprise-wide costs for diesel, natural gas and other hydrocarbon based fuels and products used by WM operating companies above the baseline cost, from only those customers subject to a fuel surcharge, excluding any exempt or non-paying customers.

Environmental Charge
The Environmental Charge is 20% of all invoice charges, including the Fuel Surcharge, but excluding the Regulatory Cost Recovery Charge and taxes. (Some disposal customers are charged a flat rate per load or other rate or amount in accordance with their service or contract terms. Contact your local Technical Service Center through www.wmsolutions.com for more details.)

The Environmental Charge allows Waste Management of Canada, together with other WM operating companies, to cover Waste Management’s enterprise-wide costs and expenses for all its WM operating companies to operate collection, transfer, landfill, and recycling operations in a safe and environmentally responsible manner, and to achieve an acceptable operating margin. The amount or percentage of the Environmental Charge is not specifically tied to the direct or indirect costs to service a specific customer account. By contract or at our discretion, some customers pay a nonstandard environmental charge or are exempt from any environmental charge. Through environmental charges, Waste Management of Canada and other WM operating companies attempt to collectively recover all applicable Waste Management enterprise-wide environmentally related costs of its WM operating companies from only those customers subject to an environmental charge, excluding any exempt or non-paying customers.

Historical WM Fuel/Environmental Charges
The Fuel/Environmental Charge included on a customer's invoice is determined by first applying the Fuel Surcharge percentage from the WM Collection Fuel Surcharge Table or WM Disposal Fuel Surcharge Table to the total invoice charges (excluding the Environmental Charge, Regulatory Cost Recovery Charge and taxes). Then the environmental percentage is applied to the total invoice charges, including the Fuel Surcharge calculation. For example, a bill totaling $25.00 for services, with a $3.00 Fuel Surcharge, would see an additional $5.60 applied for the Environmental Charge (20% of $28). For ease of reference, our Historical Fuel Surcharge Percentages table shows each Fuel/Environmental Charge applied by us for the last 12 months. Contact your local WM office if you require more information.

Not a Governmental Tax; Future Changes
The Fuel/Environmental Charge is not a tax or surcharge imposed by or remitted to any governmental or regulatory agency; it is our charge. The Fuel Surcharge calculation or Environmental Charge percentage may be changed in the future at the company’s discretion. Any such changes shall be subject to an existing customer’s applicable service terms.