WM is committed to providing customers with safe and reliable waste services at a reasonable price. WM also is expanding its commitment to use sustainable technologies in the services we provide, such as the deployment of trucks fueled by compressed natural gas (CNG) for much of our collection fleet that reduce our overall impact on the environment. Although WM continues to transition to more sustainable energy sources, changing diesel and CNG fuel prices are something we cannot control. As a result, WM has implemented an Energy Surcharge that allows our collection and disposal companies to recover the cost of diesel, CNG, and other hydrocarbon-based fuels and products that WM uses in its business on an enterprise-wide basis above a baseline cost of $0.95 per gallon for diesel, and $0.39 per diesel gallon equivalent for CNG1. The Energy Surcharge allows all our collection and disposal companies to keep up with the changing costs of fuel and other hydrocarbon-based products, and to achieve an acceptable operating margin.
The Energy Surcharge replaces the Fuel Surcharge for our collection and disposal services. Prior to April 2023, WM’s former ‘Fuel Surcharge’ was based on the reported price of diesel fuel only. Information on WM’s previous Fuel Surcharge can be found here. With the continuing growth of our CNG fleet, starting with customer invoices for collection and disposal services generated in April 2023 WM replaced the Fuel Surcharge with its new Energy Surcharge which is based on the reported prices of both diesel fuel and natural gas.
WM’s standard Energy Surcharge is tied directly to two nationally recognized price indices reported weekly by the Energy Information Administration of the U.S. Department of Energy ("EIA/DOE"): (i) the national average price of diesel fuel as reported in EIA/DOE’s Weekly Retail On-Highway Diesel Prices Index; and (ii) the Henry Hub Natural Gas Spot Price. These indices are objective, publicly available, and widely recognized across industries that utilize diesel and natural gas, including trucking and transportation. Tying our program to these indices ensures customers are assessed an Energy Surcharge that utilizes objective pricing data updated regularly by the EIA/DOE.
WM’s Energy Surcharge is a weighted calculation that uses a ratio based upon the volume of diesel fuel and CNG consumed enterprise-wide by WM collection and disposal companies and their subcontractors. For each fuel type, WM’s baseline cost ($0.95/gallon diesel and $0.39/DGE for CNG respectively) is deducted from the reported index price for that fuel2. In addition to the index-driven prices less baseline costs and fuel weighting, the WM Energy Surcharge includes diesel and CNG factors determined by WM. The resulting Energy Surcharge value is reflected as a percentage of a customer’s monthly or periodic invoice charges, before taxes. The WM Energy Surcharge formula can be depicted as follows:
(Diesel Market Index Price – Diesel Baseline) x Diesel Factor x Diesel Weight %
+
(CNG Market Index Price – CNG Baseline) x CNG Factor x CNG Weight %
