The waste company sector is dysfunctional. Why on earth were they cross-subsidising heavy use customers from low use customers?
I'm not sure dysfunctional is totally fair, though they may have appeared so recently as they waited to see what the competetion were doing in relation to pay-by-weight. I feel opportunist is more accurate. Most of them have jumped on this opportunity to significantly up their income while avoiding most of the blame or backlash for doing so. Service providers using low use/cost customers to subsidise heavy users is very common.
Are they obliged to provide the service - if they are, that is a public service obligation (PSO). If they are not, why weren't they just cherry picking low use customers via their pricing structure and pocketing the profits instead of using it to subsidisee other customers?
They're licensed to provide service to an area as defined by the local authorities.