Rate Structure Design: Setting Rates for a Pay-As-You-Throw (PAYT) Program
This guide was created by the U.S. Environmental Protection Agency (EPA) to help cities design effective rate structures for their Pay-As-You-Throw (PAYT) programs. It describes the concepts and real-world factors associated with the two basic methods used to design rate structures for PAYT curbside collection programs:
1. Modeling based on comparable communities, and
2. A six-step Rate Structure Design (RSD) process using city data:
- Forecasting Residential municipal solid waste (MSW) amounts
- Determining the types of MSW services to be provided
- Estimating the Net Costs of MSW
- Determine PAYT revenues and MSW program cost coverage
- Calculating PAYT Rates
- Adjusting MSW services and PAYT rate structure
The guide has strong explanations of the advantages and disadvantages of each choice, and should be useful to cities in the planning phase. A hypothetical neighborhood provides a concrete example throughout the step-by-step process, and is supplemented with a pricing map and real-world case studies. The booklet also covers direct and indirect costs, other factors affecting rates, and the 3 most common pricing structures:
- Proportional Pricing
- Variable rate Pricing
- Multi-tiered Pricing
