Residents of Orange may be facing an increase in garbage fees because of the rising costs of diesel fuel.

Orange City Council was set to vote Tuesday evening on whether to pass a fuel surcharge on to individual customers. For the past few months, the city has been absorbing the surcharge from reserves, rather than pass the costs along to customers.
But City Finance Director Gail English has recommended charging residential cart customers 46 cents more per month and commercial cart customers an extra $1.40 per month.

The first fuel surcharge began Dec. 31 at a rate that would cost the city $1,620 per month.

In January, English told City Council “we had some cushion in the revenues that could offset the increase for a short period.”

By March 31, the surcharge doubled. The next quarter will end June 30 and diesel rates have continued to go up.

While preparing for the 2007-08 fiscal year, which began Oct. 1, the city this past August sought bids for garbage services. The city received bids from five different waste services and decided to go with Waste Management.

The new contract started the cart service with once-a-week pick-up, and Waste Management providing customers with a 96-gallon cart container. The contract included a fuel adjustment agreement based on the cost per gallon of diesel. The adjustment is determined by the U.S. Department of Energy Highway Diesel Prices for the Gulf Coast.

The agreement requires a 1 percent surcharge for a 25-cent-per-gallon increase above $3 per gallon for diesel. Another 1 percent is added for every 25-cent-per-gallon increase in the cost of diesel.

English, in a city report, said that on March 31, the surcharge was at 4 percent.

“I had hoped that the city would not have to get into a position where we would have to adjust rates every quarter as the cost of fuel increased or decreased, but with the large increases in the cost of fuel, it may now be necessary,” English wrote. “Taking all of the above factors into consideration, I would recommend that the Council consider passing the fuel surcharge on to the customers at this time.”

She also notes that the city will facing other increased operating costs because of the rising costs of fuel.

With a 4 percent fuel surcharge added to the monthly bill, the residential cart customer will pay an extra 46 cents, up from $16.90 to $17.36.

The commercial cart customer will pay $1.40 more, from $40.40 to $41.80, according to English’s report.

But even if City Council votes to pass along the 4 percent fuel surcharge to individual customers, it might not be enough.

The U.S. Department of Energy reported that on May 5, diesel for the Gulf Coast was $4.08 per gallon, and had increased 36 cents to $4.44 per gallon on May 19, less than two weeks later. At the higher rate, the city will be paying Waste Management a surcharge of nearly 6 percent.