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 %
To see how the Energy Surcharge changes with different fuel prices, enter values for Diesel Price and Natural Gas Price.
Energy Surcharge
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The most recent available EIA/DOE weekly index value for diesel, and the most recent available weekly average Henry Hub spot price for natural gas, will be used for invoices as they are created. A separate Energy Surcharge is calculated and applied to collection customers, and disposal customers. A table that shows the previous value of the WM standard Energy Surcharge for collection and disposal services can be found here. WM periodically will update its Energy Surcharge calculation, including by making adjustments to the diesel and CNG weighting based upon changes in its enterprise-wide fuel usage, the diesel and CNG factors determined by WM, and the other variable components included in the formula.
The Energy Surcharge is applied to all monthly or periodic invoice charges before taxes. The Energy Surcharge allows WM to keep up with the changing costs of fuel on an enterprise-wide basis and so the amount or percentage of the Energy Surcharge is not specifically tied to the direct or indirect costs to service a specific collection or disposal customer account. By contract or at a WM operating company’s discretion, some customers pay a nonstandard energy surcharge, or are exempt from any fuel or energy surcharge, which does not change the aggregate Energy Surcharge charged to all other customers. Through the Energy Surcharge, WM operating companies attempt to collectively recover all WM enterprise-wide costs for diesel, natural gas and other hydrocarbon-based fuels and products used by WM operating companies above the diesel and CNG cost baseline, from only those customers subject to an energy surcharge and not from exempt or non-paying customers.
WM Recycling Services applies a separate Fuel Surcharge and Environmental Charge to its recyclable material processing customers, and so WM’s Energy Surcharge will not be applied to those customers. Those charges ordinarily are applied on a per-ton basis on the volume of recyclable materials delivered by a customer to a WM Recycling Services processing facility. Information on the Fuel Surcharge and Environmental Charge for WM Recycling Services customers can be found here.
1CNG volume ordinarily is measured in BTUs instead of gallons. The term “diesel gallon equivalent” or “DGE” means the volume of natural gas needed to produce the same amount of energy as one gallon of diesel fuel.
2For the CNG component of the calculation, the Henry Hub Natural Gas Spot Price is converted to DGE and then adjusted to include gas transmission costs and federal/state and local excise taxes on natural gas, before the CNG Baseline cost per DGE is deducted.
Watch the Video:
Watch the video to learn more about WM's Energy Surcharge.
The Energy Surcharge helps us keep up with the changing costs of diesel, natural gas and other hydrocarbon-based fuels and products that we use in our collection and disposal services on an enterprise-wide basis (WM and its WM operating companies and subcontractors). Energy or fuel surcharges are common in the transportation industry and are charged by other waste haulers, trucking companies and airline carriers.
