ciwmb board meeting - item 10 (presented at the strategic policy development committee)
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CIWMB Board Meeting - Item 10 (Presented at the Strategic Policy Development Committee). Discussion of Possible Adjustments to the Recovery and Recycling Payment Rates and the Electronic Waste Recycling Fee within the Covered Electronic Waste Recycling Program. April 22, 2008 www.eRecycle.org. - PowerPoint PPT PresentationTRANSCRIPT
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California Integrated Waste Management Board
CIWMB Board Meeting - Item 10(Presented at the Strategic Policy Development Committee)
Discussion of Possible Adjustments to the Recovery and Recycling Payment Rates and the Electronic Waste Recycling Fee within the
Covered Electronic Waste Recycling Program
April 22, 2008www.eRecycle.org
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California Integrated Waste Management Board
This item will cover:
• Recap of program growth to date• Preliminary findings from 2007 Net Cost Reports• Summary of DOF validation project • Discussion of industry business practices• Analysis of fund condition / financing considerations • Update on future uncertainties• Open discussion
• But first…
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California Integrated Waste Management Board
Handling Electronic Waste In CA•Electronic waste is hazardous waste
–Includes covered electronic waste (CEW)
•May be managed as universal waste•Presently two categories:
–CRT (cathode ray tube) materials–Universal waste electronic devices
“CRT material handler” means any person who generates, accumulates, stores, treats, or recycles any universal waste CRT material.
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California Integrated Waste Management Board
Handling Electronic Waste In CA
• DTSC regulates universal waste handling–Notification, reporting, inspections, etc
• CIWMB only pays approved CEW recyclers–Recyclers obligated to pay approved collectors–Collectors might compensate handlers
• Artificial value of CEW does create regulatory and compliance challenges
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California Integrated Waste Management Board
Electronic Waste Recycling Act
• Established system to pay for the recovery and recycling of CEW
– Only CEW from CA sources are eligible– Must be recycled (cancelled) in CA– CIWMB sets payment rates to cover average net costs
• Payment system is funded by fees assessed on consumers of new covered electronic devices (CED)
– DTSC determines what constitutes a CED– CIWMB determines fee structure to maintain solvency
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California Integrated Waste Management Board
CEW Payment System
Consumer RetailerFee paidat purchase
Remits fee (Quarterly)
Deposits fee
Program Implementation
Permitting+ Inspections
Fee Collection
Recycling payment(48¢/lb)
Recovery payment(20¢/lb)
IWMB
DTSC
BOE
Recyclers Collectors
E-Waste Account
USED item recycled as “E-Waste”
NEW itempurchased
E-Waste
Electronics
$$
Payment Claim
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California Integrated Waste Management Board
Revenue, Payments & Volumes•FY 2004/05 - $31 million
–$11.4 million claimed (~24 million lbs)
•FY 2005/06 - $78 million* –$45.9 million claimed (~95 million lbs)
•FY 2006/07 - ~$78 million– ~$75 million claimed (>150 million lbs)
•FY 2007/08 - ~$83 million projected– ~$105 million projected (>210 million lbs)
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California Integrated Waste Management Board
(Note that 1st quarter 2008 quantities represent only a portion of anticipated claims. Recyclers may submit a claim up to 45 days after the end of a reporting month.)
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California Integrated Waste Management Board
(Note that 1st quarter 2008 quantities represent only a portion of anticipated claims. Recyclers may submit a claim up to 45 days after the end of a reporting month.)
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California Integrated Waste Management Board
Financial Considerations•Fund Condition:
–At current rates, depletion in FY 08/09–CIWMB has authority to make adjustments
•Revenue Source:–Current $6, $8, or $10 fee on retail CED sales –List / nature of CEDs will change over time
•Cost Demands:–CIWMB, DTSC, BOE operations–Recovery and Recycling Payments ($.48/lb)
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California Integrated Waste Management Board
Payment Rate Considerations• CIWMB must reconsider “payment schedule” on or before July 1, 2008
– Rates should cover the average net cost for a collector to collect, consolidate, and transport, and for a recycler to receive, process, and recycle, covered electronic wastes.
• Net Cost Reports inform CIWMB
• Difficult to compare enterprises
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California Integrated Waste Management Board
Net Cost Reporting• Approved participants must submit annual reports as/if directed by CIWMB
• Latest report was due March 1, 2008–Compliance improved–CIWMB disciplining violators
• Preliminary analysis of raw 2007 data–Trend of decreasing costs continued
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California Integrated Waste Management Board
Costs Reported for 2005 Weighted Average Mean Median
Percentage Below Standard Payment
Rate
Recovery
Revenue 3.9 3.8 0.0
Cost 21.0 24.6 17.9
Net Cost 17.1 20.8 15.3 63%
Recycling
Revenue 5.7 5.5 5.1
Cost 30.9 39.1 31.8
Net Cost 25.2 33.6 27.5 50%
Costs Reported for 2006
Recovery
Revenue 2.0 2.3 0.4
Cost 18.7 17.2 15.0
Net Cost 16.7 14.9 14.2 66%
Recycling
Revenue 5.8 6.2 5.3
Cost 27.4 37.2 29.0
Net Cost 21.5 31.0 23.5 64%
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California Integrated Waste Management Board
Net Costs Reported for 2007
(Preliminary)Weighted Average Mean Median
Percentage Below Standard Payment Rate
Recovery
Revenue 5.0 8.6 3.0 NA
Cost 19.8 21.5 18.0 NA
Net Cost 14.8 12.8 11.7 85%
Recycling
Revenue 8.8 7.6 7.1 NA
Cost 29.8 28.2 27.7 NA
Net Cost 21.0 20.6 20.7 78%
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California Integrated Waste Management Board
Comparison of Weighted Average* Net Costs (cents/pound)
2005 2006 2007
(preliminary)
Recovery 17.1 16.7 14.8
Recycling 25.2 21.5 21.0
Total 42.3 38.2 35.8
* The weighted average reflects the overall industry cost, calculated as if the industry operated as a single organization – i.e., by dividing the total reported costs by total pounds for all participants in the study sample. By its nature, this measure is affected by the costs of larger operations more than smaller ones.
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California Integrated Waste Management Board
Net Cost Report Validation• Confidence in reported costs?
• CIWMB retained DOF audit services–Used agreed upon procedures –Determined if available documentation supported reported costs–Targeted range of business sizes, models, and regions–Rated subjects using three-tiered scale
• Results mixed, but encouraging…–Refer to Attachment 3
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California Integrated Waste Management Board
Net Cost Report Validation• Dual entities (collector/recyclers) tended to score well in validation
–Records supported reported costs–Applied to both collection and recycling activities
• Stand-alone collectors’ performance depended on focus of enterprise
–Handling that was incidental to broader activities tended to score poorly–Handling that was primary focus of enterprise tended to score well
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California Integrated Waste Management Board
Qualitative Industry Survey• Program staff contacted participants
– 197 collectors contacted, 146 responded– 37 recyclers contacted, 26 participated
• Mean payment to collectors: $.22/lb– Some recyclers paying over $.30/lb
• Most collectors do not pay sources– Most do not charge for extra services– Most are not charged for service above regulatory basics
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California Integrated Waste Management Board
Qualitative Industry Survey• What governs business transactions?
– Agreements address pricing, packaging, transportation, labor, non-compete, other supplies/support, etc.– Written contracts– Verbal agreements– No agreements
• Non-CEW payment: Highly variable• Evolving business climate
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California Integrated Waste Management Board
Revenue Considerations• Program funded by Electronic Waste Recycling Fee
–Currently $6, $8, or $10 assessed on CEDs
• CIWMB has obligation to adjust fee for fund solvency
–Statute establishes adjustment factors–Must be done on or before August 1st
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California Integrated Waste Management Board
Revenue Considerations• Fee adjustments will be necessary!
–Pace of CEW recovery has outstripped funds
• Degree & structure of adjustments will be dependent on need & trends
–Program growth, payment rate will affect need–Evolving mix of CED size categories
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California Integrated Waste Management Board
Revenue Considerations•Historical total CED sales:
–2005 – 9.9 million units–2006 – 10.6 million units–2007 – 10.1 million units
•Allocation of CED sales in size categories:–2005 – 23% 72% 4%–2006 – 24% 67% 8%–2007 – 25% 64% 11%
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California Integrated Waste Management Board
Revenue Considerations• Model assumptions:
– Loan of ~$40 million (repaid by late 2010)– CED sales volume and size allocations constant– Average revenue per CED sold
•Current average revenue is ~$7.64 per CED sold
– Aiming to remain solvent for two-plus FYs
• For discussion purposes only!!!
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California Integrated Waste Management Board
Model 1: •No change to recycling payment rate ($.48/lb)•Assumes program growth of ~4 million pounds per quarter •Raise E-Waste Fee to $18.60 average revenue per CED sold
Possible fee structures to achieve average per device revenue of $18.60:
$6 / $22 / $28 $8 / $21 / $29 $10 / $20 / $30
FiscalYear Revenues
RetailerAdmin Fee
PoundsRecycled
RecyclingPayments
All OtherExpenditures
Loan Payments
Yr End Balance
FY 08/09* $ 185,704 $ (5,571) 300,000 $ (144,000) $ (12,660) $ (9,352) $ 28,008
FY 09/10 $ 207,743 $ (6,232) 366,667 $ (176,000) $ (12,660) $ (28,056) $ 12,803
FY 10/11 $ 207,743 $ (6,232) 433,333 $ (208,000) $ (12,660) $ (4,676) $ (11,022)
*Revenue in the 2008/2009 fiscal year includes loan amount.
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California Integrated Waste Management Board
Model 2: •Change to recycling payment rate ($.40/lb)•Assumes program growth of ~4 million pounds per quarter•Raise E-Waste Fee to $15.60 average revenue per CED sold
Possible fee structures to achieve average per device revenue of $15.60:
$6 / $18 / $24 $7 / $17 / $27 $8 / $16 / $31
FiscalYear Revenues
RetailerAdmin Fee
PoundsRecycled
RecyclingPayments
All OtherExpenditures
Loan Payments
Yr End Balance
FY 08/09* $ 167,330 $ (5,020) 300,000 $ (120,000) $ (12,660) $ (9,352) $ 34,185
FY 09/10 $ 174,236 $ (5,227) 366,667 $ (146,667) $ (12,660) $ (28,056) $ 15,812
FY 10/11 $ 174,236 $ (5,227) 433,333 $ (173,333) $ (12,660) $ (4,676) $ (5,848)
*Revenue in the 2008/2009 fiscal year includes loan amount.
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California Integrated Waste Management Board
Model 3: •No change to recycling payment rate ($.48/lb)•Assumes program growth of ~2 million pounds per quarter•Raise E-Waste Fee to $15.60 average revenue per CED sold
Possible fee structures to achieve average per device revenue of $15.60:
$6 / $18 / $24 $7 / $17 / $27 $8 / $16 / $31
FiscalYear Revenues
RetailerAdmin Fee
PoundsRecycled
RecyclingPayments
All OtherExpenditures
Loan Payments
Yr End Balance
FY 08/09* $ 167,330 $ (5,020) 267,000 $ (128,160) $ (12,660) $ (9,352) $ 26,025
FY 09/10 $ 174,236 $ (5,227) 301,000 $ (144,480) $ (12,660) $ (28,056) $ 9,838
FY 10/11 $ 174,236 $ (5,227) 335,000 $ (160,800) $ (12,660) $ (4,676) $ 712
*Revenue in the 2008/2009 fiscal year includes loan amount.
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California Integrated Waste Management Board
Future UncertaintiesLatest on DTV Broadcasting Transition
– Consumer Electronics Association estimates DTV transition will result in only 15 million discards thru 2010
– 48% of OTA households surveyed plan to get converter box and use existing TV
– Over 10 million converter box coupons have been requested from NTIA by over 5 million households
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California Integrated Waste Management Board
Summary• Several key factors to consider
–Program growth continuing; may be slowing? –Cost of recovery and recycling less than payments–Looming fund depletion–Future discard rate unclear
• CIWMB has authority to make adjustments–Payment rate adjustment to better reflect costs
•Will slow fund depletion•May also slow CEW recovery; impact participants
–Fee adjustment must cover shortfall•Ability to adjust annually allows flexibility and prudence
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California Integrated Waste Management Board
Next Steps• Program will further evaluate need and options for payment rate adjustments
• Anticipate returning to Board in May for consideration of rate adjustments
• Program will refine models to assess impacts of fee adjustments
• Anticipate returning to Board in June for consideration of fee adjustments