Workshop & Webcast 1:30 - 3:30 March 2, 2004 1. Damian Bassett Stewardship Ontario “Examining 2004 & 2005 Steward Fees” 2

Workshop & Webcast

1:30 - 3:30

March 2, 2004 1

Damian Bassett Stewardship Ontario

“Examining 2004 & 2005 Steward Fees”

2

TODAY’S AGENDA1:30 – 1:35 Welcome Damian Bassett – Stewardship Ontario

1:35 – 1:45 Examining 2004 & 2005 Steward Fees Derek Stephenson – Stewardship Ontario

1:45 – 2:40 Preliminary Fees for 2004 Guy Perry – Stewardship Ontario

• Cost Allocation Project Dan Lantz – MacViro

2:40 – 3:25 Question Period Derek Stephenson Guy Perry

3:25 – 3:30 Closing Remarks Damian Bassett 3

TODAY’S INSTRUCTIONS

• Remember: veterans and rookies alikein audience

• 2nd audience listening in on-line• Save questions for Q & A at the end – Guy will break

½-way for preliminary questions * with Dan Lantz• Those on-line:

download slides from our homepage within the Yahoo player, or “minimize” player, and download slides from our homepage through your web browser

e-mail Questions - from your regular email program - to: [email protected]

4

TODAY’S OBJECTIVES

• Focus on the setting of Steward fees for the second half of 2004 and the development of fees for 2005

• Examine the allocation of costs to each Blue Box material collected in the Ontario municipal waste system

• Webcast archived – 180 days

• Deadline to comment – March 10, 2004

5

6

“Examining 2004 & 2005 Steward Fees”

Derek StephensonStewardship Ontario

• Introduction

• Review of Fee Setting Formula

• Cost Allocation

• Preliminary Fees for 2004

• Proposed Consultation

• Proposed Process for Setting 2005 Fees

EXAMINING FEES

7

• Blue Box Program Plan (BBPP) approved December 22,

2003

• Extension of BBPP for 6 months

• First year “2003” stewards fees extended to be effective

to end of June 2004

• Minister requires 2004 fees for July though December to

be submitted by March 31, 2004

EXAMINING FEES

8

9

“Preliminary Fees for 2004”

Guy Perry Stewardship Ontario

Draft for CONSULTATION – Preliminary Material Levies for Obligated Stewards for 2004

ADDITIONAL INFORMATION

• Information on some of the tables on these slides has

been aggregated for the purposes of presentation.

• Detailed tables summarizing the calculation of 2004

fees are available from the website

www.stewardshipontario.ca

• Background information may be found in the February

2003 Blue Box Program Plan (BBPP), particularly,

Section 9.10 - Setting Fees

Appendix XI – Pay In Model, and

Appendix IX - Cost Allocation Principles 10


INTRODUCTION

• Net cost of Blue Box Program represents ~82%

of fees

• Net cost negotiated to be higher in 2004: Net cost negotiated to be $62.5 million for first year

(2003), as per BBPP• gross cost of ~ $129.2 million; revenues of $66.7

million

Net cost negotiated to be $84 million for 2004 • Gross cost of ~ $150.5 million; revenues of

~ $66.5 million 11


CONTEXT

• Negotiated gross cost is higher by ~16%, but in fact,

Actual costs have not increased significantly in system

Most of increase due to improved information on costs

Obtained through detailed financial survey of all

municipalities (2003 financial datacall)

2001 2002

Tonnes Recovered 699,255 727,007 27,751 4.0%

System Gross Cost $129.2 M $150.5 M $21.3M 16.5%

System Revenue $66.7 M $66.5 M ($0.2 M) -

System Net Cost $62.5 M $84 M $21.5M 34.4%

Net Cost / tonne $89.38 $115.54 $26.16 29.3%

Cost of Living - - ~ 2%

Change

12


CONTEXT

• To set 2004 fees, first considered raising each material

cost by same proportion

However, it was recognized that we need to improve data &

to ensure there is a link between allocation & real system

material costs

• Recommended => 2004 fees should be based on updated

material-specific costs obtained from additional field study

of cost for managing materials in municipal programs

13


FUNDING MODEL - PRINCIPLES

Five key Principles:• Reflect the true costs to manage each designated Blue

Box material

• Consider the benefits to all stewards from high recycling rates achieved by some materials

• Encourage increased material recycling rates

• Minimize the total net costs to the members of Stewardship Ontario (SO), e.g., reflect positive revenue

• Encourage stewards to select materials that can be recycled at lower costs

14


BLUE BOX WASTE

Blue Box Waste is defined as:

• Printed materials and packaging that are made of paper, glass, metal, plastics, textiles or any combination of these materials that are used by consumers and households and that make their way into municipal waste management systems.

• A steward is required to report on all packaging and printed materials that are primarily destined for Ontario households and therefore managed by municipal waste management systems. This includes consumer packaging and printed material sold through all distribution channels that may subsequently find its way into the municipal waste stream such as from retail and take out food service.

• The materials within the Blue Box are addressed within the funding model in two streams: • All printed paper, and • All packaging

15


BASIS FOR FEE PAYMENTS

• The fees paid by stewards are based on: Blue Box Waste generation Blue Box recycling rates Gross costs for managing recyclables, and Revenue, primarily from sale of recyclables

• The model for calculating fees is comprised of 3 elements:1.Blue Box Waste generation and diversion

2.Net cost to manage (gross cost less revenue)

3.Funding formula 16


BASIS FOR FEE PAYMENTS

• Fees are to be updated annually February - June, 2004

=> 2003 fees based on 2001 system data

July – December, 2004

=> 2004 fees based on 2002 system data

2005 fees will be based on 2003 system data

• Fees are reported as annual figures, but • for the 1st 5 months of 2004 the 2003 fees will be used• for the later 6 months the 2004 fees will be used

17


WASTE GENERATION

• Generation based on waste audits in several municipalities• residential sector only - not sales into the marketplace• Updated for 2002 => incorporated additional audits

=> Also population growth (1.46%)

1,578,500 tonnes of Blue Box recyclables

generated in Ontario

households in 2002

Quantity %'age of Quantity %'age of Category Generated Generated Generated Generated

(tonnes) (tonnes)

PRINTED PAPERPrinted Paper Total 724,100 46.60% 732,000 46.37%

PACKAGINGPaper Packaging Total 325,400 20.94% 332,300 21.05%

Plastics Total 232,200 14.94% 238,700 15.12%Steel Total 67,900 4.37% 69,100 4.38%

Aluminum Total 28,100 1.81% 27,000 1.71%Glass Total 176,300 11.34% 179,400 11.37%

PACKAGING TOTAL 829,900 53.40% 846,500 53.63%

TOTALS 1,554,000 100.00% 1,578,500 100.00%

2001 2002

18


RECYCLED

• Source: annual datacall administered by WDO, MOE & SO• 727,006 tonnes diverted in 2002, up 27,750 tones or ~ 4% from 2001• The overall diversion rate for the Blue Box program in 2002 was 46%

Change in Change inQuantity Recovery Quantity Recovery Quantity Recovery

Category Recovered Rate Recovered Rate Recovered Rate(tonnes) (%) (tonnes) (%) (tonnes) (%)

PRINTED PAPERPrinted Paper Total 391,435 54.25% 409,754 55.98% 18,319 1.72%

PACKAGINGPaper Packaging Total 134,822 41.17% 134,980 40.62% 158 -0.55%

Plastics Total 26,989 11.47% 31,928 13.38% 4,939 1.91%Steel Total 32,582 47.91% 33,472 48.44% 890 0.53%

Aluminum Total 10,875 40.91% 10,776 39.91% (99) -0.99%Glass Total 102,552 58.00% 106,097 59.14% 3,545 1.14%

PACKAGING TOTAL 307,820 36.90% 317,253 37.48% 9,433 0.58%

TOTALS 699,255 44.95% 727,007 46.06% 27,752 1.11%

2001 2002

19


ALLOCATION OF COSTS

• Allocation of costs refers to attributing the cost of the Blue Box System to individual materials to set material fees

• Net costs (gross cost less revenue) represent ~82% of fees

• Although fees are expressed as $/tonne or ¢/kg, fees are NOT determined according to weight

20


ALLOCATION OF GROSS COSTS

• Fees are established by first determining the gross costs & revenues for management of each material

• Gross costs for managing each material are determined using “activity-based costing” (ABC)

Outlined in Blue Box Program Plan (BBPP), Appendix IX

• For 2003 fees => costs allocated using the best available data from studies using similar ABC approach

• MPAC recommended further allocation studies (field study of municipal programs) to establish 2004 material costs

21


ACTIVITY-BASED COSTING (ABC)

1. ABC assigns costs to the activities which incurred the costs, e.g. labour cost for sorting, cost of wire for baling, cost of fuel for collection, cost of hydro for running magnets, capital cost of conveyors

2. ABC then allocates these costs to individual materials based on what caused the cost, e.g. time spent sorting PET, quantity of wire used for newsprint bales, portion of fuel for collecting volume of cardboard, hydro for magnetic separation of steel cans, capital cost of eddy current separator for aluminum

Minimizes the allocation of costs on an arbitrary basis, i.e. costs assigned that are not related to how costs actually incurred

Covers all aspects of program, incl. capital, operating and administration

22


ACTIVITY-BASED COSTING (ABC)

• The detailed set of principles by which the costs are assigned to activities and then to specific materials is presented in Appendix IX of BBPP

• The principles were developed by a subcommittee of Materials Packaging Advisory Committee (MPAC) in the fall of 2002

starting with earlier work of a municipal and industry task group

23


COST ALLOCATION PROJECT• Five municipal programs were studied in 2003/4

Both collection & processing operations

represent a range of systems, size, cost structures

• Field study involved conducting detailed operational

measurements time-motion studies of complete collection routes &

processing facility operations,

Building & capital equipment layout,

capital equipment & all operational costs, and

production & residue rates

• ABC analysis to determine gross cost to manage each

material in each program 24


COST ALLOCATION PROJECT

• Extrapolate gross cost for each material province-wide assigned weighting factor to each program

represented the proportion of total tonnes marketed in the province

managed by that type of program

for each material => Sum of gross cost multiplied by weighting

factor from applicable program

• Report will be available results,

observations about operations,

possible recommendations on how to improve the approach, and

a set of guidelines on how to conduct such ABC studies 25


2002 COSTS

• 2002 material costs calibrated to negotiated gross system cost of $150.5 million

• Negotiated gross cost higher for 2002 than 2001

~ $21.5 million

• Higher gross cost for all materials, except

glass (due to operational changes), and

boxboard (due to improved allocation method)

26


2002 COSTSCategory Material

2001 Cost ($/tonne)

2002 Recovery (tonnes)

2002 Cost ($/tonne)

PRINTED PAPERNewsprint, Magazines & Catalogues 85.00$ 381,809 90.00$ Telephone Books 85.00$ 6,461 124.00$ Other Printed Paper 85.00$ 21,485 159.00$

Printed Paper Total 85.00$ 409,754 94.19$

PACKAGINGPaper Based Packaging Old Corrugated Containers 270.00$ 87,705 372.00$

Gabletop & Aseptic Containers 350.00$ 46,602 728.00$ Old Boxboard 400.00$ 45,585 340.00$

Paper Packaging Total 315.00$ 134,980 364.63$ Plastic Packaging PET bottles 700.00$ 15,898 930.00$

HDPE bottles 770.00$ 8,964 877.00$ Plastic Film 900.00$ 2,702 1,338.00$ Polystyrene 870.00$ 886 1,613.00$ Other Plastics 870.00$ 1,047 866.00$

Plastics Total 756.00$ 31,928 997.68$ Steel Total 230.00$ 33,472 240.00$

Aluminum Total 557.00$ 10,776 733.18$ Glass Flint 190.00$ 59,613 144.00$

Coloured 190.00$ 46,484 137.00$ Glass Total 190.00$ 106,097 140.58$

PACKAGING TOTAL 311.64$ 317,253 352.83$

TOTALS 184.77$ 727,007 207.05$ 27


2002 REVENUE• For total revenue,

WDO Cost Containment Committee agreed to use the 3-year average of municipally reported revenue ~$66.5 million

• Adjusted to account for municipalities not reporting 3 years of data

• For material specific revenue, The total municipally-reported revenue was

apportioned to individual materials based on the 3-year average of CSR price sheet

• a monthly survey of market prices This is consistent with approach used to establish

first year fees 28


COMPARISON OF SELECTED PRICES

Material2002 CSR

Price Sheet

Adjusted 3-yr average

using price sheet (2)

Mean (1) Min (1) Max (1)All Printed Paper 94$ 75$ 129$ 95$ 83$ OCC 114$ 97$ 148$ 106$ 77$ OBB 44$ 33$ 79$ 36$ 33$ All Paper Packaging 98$ 35$ 166$ 76$ 60$ PET 157$ 104$ 321$ 166$ 232$ HDPE 244$ 169$ 346$ 233$ 243$ Aluminum 1,650$ 1,052$ 2,068$ 1,709$ 1,559$ Steel 60$ 36$ 92$ 47$ 49$ Clear Glass 25$ 2$ 45$ 29$ 33$ Note:1. Reported revenue figures from programs managing more than 1,000 tonnes2. Prices after adjusting total municipally reported 3-year average revenues using 3-year average of price sheet

2002 Municipally - Reported Revenues

29


2002 REVENUE

• Lower for most materials, except ONP, polycoat, OBB & film

• Total 2002 revenue

~ $66.5 million

Total TotalMaterial Per Tonne Revenues Per Tonne Revenues

PRINTED PAPERONP/OMG/OTD 83.31$ 30,899,705$ 83.85$ 32,557,833$ Other Printed Paper 83.31$ 1,709,805$ 55.18$ 1,185,428$

Printed Paper Total 83.31$ 32,609,510$ 82.35$ 33,743,261$

PACKAGINGOld Corrugated Containers 81.46$ 7,156,834$ 68.24$ 5,984,761$ Polycoat & Aseptic 50.91$ 43,019$ 57.02$ 70,708$ Old Boxboard 37.95$ 1,733,081$ 44.16$ 2,012,888$

Paper Pack'g Total 66.26$ 8,932,934$ 59.77$ 8,068,357$ PET bottles 246.22$ 3,382,081$ 228.96$ 3,639,873$ HDPE bottles 259.18$ 2,064,103$ 241.24$ 2,162,354$ Plastic Film 6.48$ 8,942$ 7.02$ 18,960$ Polystyrene 115.71$ 59,010$ 88.60$ 78,542$ Other Plastics 3.70$ 10,178$ 1.75$ 1,837$

Plastics Total 204.69$ 5,524,314$ 184.84$ 5,901,566$ Steel Total 54.61$ 1,779,393$ 49.13$ 1,644,307$

Aluminum Total 1,605.06$ 17,455,025$ 1,552.70$ 16,732,651$ Flint 10.72$ 577,557$ 6.01$ 358,218$ Coloured (3.63)$ (176,614)$ -$ -$

Glass Total 3.91$ 400,943$ 3.38$ 358,218$

PACKAGING TOTAL 110.76$ 34,092,609$ 103.09$ 32,705,099$

TOTALS 95.39$ 66,702,120$ 91.40$ 66,448,360$

2002 Revenue2001 Revenue

30


PROGRAM GROSS COSTS & REVENUES

• For 2001, the gross cost of the program negotiated to be

$129.2 million & revenue negotiated to be $66.7 million,

Net $62.5 million – limited survey

TotalMaterial Per Tonne Total Cost Per Tonne Revenues

PRINTED PAPERPrinted Paper Total 85.00$ 33,271,975$ 83.31$ 32,609,510$

PACKAGINGPaper Pack'g Total 315.07$ 42,478,120$ 66.26$ 8,932,934$


Aluminum Total 557.00$ 6,057,375$ 1,605.06$ 17,455,025$ Glass Total 190.00$ 19,484,880$ 3.91$ 400,943$

PACKAGING TOTAL 311.64$ 95,930,545$ 110.76$ 34,092,609$

TOTALS 184.77$ 129,202,520$ 95.39$ 66,702,120$

Gross Cost 2001

Revenues 2001

31


PROGRAM GROSS COSTS & REVENUES

• For 2002, the gross cost of the program negotiated to be

$150 million & revenue to be $66 million, net $84 million –

mostly due to better data

TotalMaterial Per Tonne Total Cost Per Tonne Revenues

PRINTED PAPERPrinted Paper Total 94.00$ 38,579,990$ 82.35$ 33,743,261$

PACKAGINGPaper Pack'g Total 364.00$ 49,180,832$ 59.77$ 8,068,357$


Aluminum Total 733.00$ 7,899,153$ 1,552.70$ 16,732,651$ Glass Total 141.00$ 14,952,549$ 3.38$ 358,218$

PACKAGING TOTAL 353.00$ 111,916,864$ 103.09$ 32,705,099$

TOTALS 207.00$ 150,496,853$ 91.40$ 66,448,360$

Gross Cost 2002

Revenues 2002

32


2002 NET COSTS – Printed Paper

• Negotiated Total System Net costs ~ $21.5 million higher• Printed Paper net cost ~ $4.2 million higher

~ 6% of total system net cost ~ 20% of the “increase” in system net cost

Change in Net Cost

Per Total Per TotalMaterial Tonne Net Cost Tonne Net Cost

PRINTED PAPERNewsprint 1.69$ 592,910$ 6.15$ 2,254,068$ 1,661,157$

Magazines and Catalogues 1.69$ 24,374$ 6.15$ 92,661$ 68,288$

Telephone Books 1.69$ 10,446$ 40.15$ 259,388$ 248,942$

Other Printed Paper 1.69$ 34,735$ 103.82$ 2,230,612$ 2,195,877$

Printed Paper Total 1.69$ 662,465$ 11.80$ 4,836,729$ 4,174,264$

TOTALS 89.38$ 62,500,400$ 115.61$ 84,048,493$ 21,548,093$

Net Cost of Current System

Net Cost of 2001 System

33


2002 NET COSTS – Packaging

• Packaging net cost ~ $17.4 million higher ~ 94% of total system net cost ~ 80% of the “increase” in system net cost

Change in Net Cost

Per Total Per TotalMaterial of Total Tonne Net Cost Tonne Net Cost

PACKAGINGPaper Pack'g Total 248.81$ 33,545,186$ 304.58$ 41,112,475$ 7,567,289$

Plastics Total 551.78$ 14,891,996$ 812.75$ 25,949,517$ 11,057,520$

Steel Total 175.39$ 5,714,467$ 190.87$ 6,388,940$ 674,473$ Aluminum Total (1,048.06)$ (11,397,650)$ (819.70)$ (8,833,498)$ 2,564,152$

Glass Total 186.09$ 19,083,937$ 137.56$ 14,594,331$ (4,489,606)$

PACKAGING TOTAL 200.89$ 61,837,936$ 249.68$ 79,211,765$ 17,373,829$

TOTALS 89.38$ 62,500,400$ 115.61$ 84,048,493$ 21,548,093$

Net Cost of Current SystemNet Cost of 2001 System

34


CALCULATING MATERIAL LEVIES

• After setting material gross cost & revenues =>

net costs,

The Industry portion of total net system cost is

allocated to each material based on three

weighting factors:

1. Recovery Rate – 40% of total cost to industry

2. Net Cost – 40% of total cost to industry

3. Equalization Factor – 20% of total cost to industry

35


CALCULATING MATERIAL LEVIES– Recovery Factor

Recovery Rate Calculation – 40% of net cost Recovery rates are compared relative to one another

• by comparing each to the mean

Separate calculations for printed paper and packaging Net costs allocated so that levy ($/tonne) is:

• higher for materials with lower recovery rates• lower for materials with higher recovery rates, and• the same for materials with the same recovery rate

The total levy ($) will be proportional to tonnes generated

36


CALCULATING MATERIAL LEVIES – Net Cost Factor

Net Cost Calculation – 40% of net cost Levies are proportional to each material’s percentage

of the system current net cost

40% of the net system cost is allocated in proportion to the cost of managing each material in the Blue Box system

• E.g, if the net cost of managing a material represents 5% of the total net cost of the current Blue Box program, it is assigned 5% of $ allocated to the net cost levy (40%)

37


CALCULATING MATERIAL LEVIES – Equalization Factor

Equalization Calculation – 20% of net cost

A means of promoting fairness in sharing costs

• by accounting for different $/tonne to manage materials, and

• compensating for different current recycling rates,

• by assuming all materials are recycled at the same rate

Determine the net incremental cost to manage 75% recovery of each material

Incremental cost to manage 75% recovery calculated by:

1. multiplying 75% of the tonnes generated by the net cost per tonne to manage a given material, &

2. subtracting the current net cost 38


CALCULATING MATERIAL LEVIES – Equalization Factor

Equalization Calculation – 20% of net cost

Levies ($) are proportional to each material’s percentage of the incremental cost (over the current system) of the system in which all materials recycled at the same rate (75% recovery)

• E.g, if the cost to manage 75% recovery of a material represents 5% of the total incremental cost to manage 75% of all materials, it is assigned 5% of the $ allocated to Equalization (20%)

39


CALCULATING MATERIAL LEVIES – Base Levy

• Sum of each of three levies assigned to each material

Recovery Rate Factor levy + Net Cost Factor levy + Equalization Factor levy

• Changing the weightings (40%, 40% and 20%) will have an impact on the levies assigned to each material, currently

• weightings established through a series of sensitivity analyses to minimize variance of levies between material categories

40


PRELIMINARY 2004 BASE FEES

Rec. Rate Net Cost Percentage Equalization Combined Base Fee100% minus Allocated Net Cost Allocated of Costs at Allocated Base Total

Recovery Fee/Tonne Fee/Tonne 75% Recovery Fee/Tonne Allocated Fee/TonneMaterial Rate Generated Generated Rate Generated Fees GeneratedWeight for Factor 40.0% 40.0% 20.0%

PRINTED PAPERPrinted Paper 44.02% 1.32$ 100.00% 1.32$ 100.00% 0.66$ 2,418,100$ 3.30$

PACKAGINGPaper Based Packaging 59.38% 17.52$ 51.90% 24.74$ 17.91% 4.27$ 15,462,745$ 46.53$ Plastics Packaging 86.62% 27.86$ 32.76% 21.74$ 78.73% 26.12$ 18,075,484$ 75.72$ Steel Packaging 51.56% 14.55$ 8.07% 18.49$ 1.59% 1.82$ 2,409,109$ 34.86$ Aluminum Packaging 60.05% 17.77$ -11.15% (65.49)$ 0.00% -$ (1,287,086)$ (47.72)$

Glass Packaging 40.86% 10.49$ 18.42% 16.27$ 1.77% 0.78$ 4,941,648$ 27.55$

Factor Allocation to Printed Paper 2,418,100$ Factor Allocation to Packaging 39,601,900$

Recovery Rate Factor (1)

Net Cost Factor Equalization Factor

41


OTHER COSTS

• Other program costs & WDO & SO Administration added to the base levy, e.g. Ensuring compliance Market development Effectiveness & Efficiency Fund Program audits – cost containment Start-up WDO & SO Admin, e.g. annual financial & tonnage

datacall

42


OTHER COSTS

Material

Annualized Mandated

Program Costs for 2003 Fees

(1)

2004 Budget (2)

Annualized Mandated

Program Costs for 2004 Fees

(3)

Market Development 3,000,000$ 2,453,500$ 2,407,000$ Feasibility Studies 500,000$ 508,300$ 600,000$ Glass Investment 2,500,000$ 1,945,200$ 1,807,000$

MOE & SO Compliance 400,000$ 301,700$ 270,000$ Other Programs 750,000$ 462,500$ 300,000$ SO Program Delivery & Administration 1,842,300$ 2,739,100$ 3,943,000$ Start-up 750,000$ 750,000$ 875,000$ WDO Administration -$ 710,000$ 1,420,000$ Total 6,742,300$ 7,416,800$ 9,215,000$ Notes1) Fees for 2003 cover 5 months but figures are annualized since they are set based on material generated annually2) Figures represent budget for 20043) Fees for 2004 cover 6 months but figures are annualized since they are set based on material generated annually

43


CALCULATING FINAL LEVIES

• A factor to account for de minimis & projected Year 1 compliance rate is applied.

De minimis:

• small businesses are exempt from paying levies

• < $2,000,000 in annual Ontario sales, or

• < 15 tonnes of Blue Box material generated

Compliance:

• It will take time to “capture” all stewards

• Lower rates are assumed for first year as program is established

44


PRELIMINARY 2004 FEES – Printed Paper

Material

($) (¢/kg) ($) (¢/kg) ($) (¢/kg) (%)PRINTED PAPER

Newsprint 135,186$ 0.028$ 135,186$ 0.026$ -$ (0.002)$ -6.2%

Magazines and Catalogues 72,890$ 0.081$ 189,124$ 0.310$ 116,234$ 0.23$ 281.1%

Telephone Books 11,783$ 0.081$ 101,695$ 0.687$ 89,912$ 0.61$ 750.7%

Other Printed Paper 327,395$ 0.251$ 1,771,779$ 1.318$ 1,444,384$ 1.07$ 425.3%

547,253$ 0.084$ 2,197,784$ 0.334$ 1,650,530$ 0.25$ 297.3%

2003 Fee 2004 Fee ($) Change in Fee

• Figures represent total fees for printed paper including, Base Fee, Other programs, Program Delivery, Administration & Start-up

adjusted to account for compliance & de minimis factors

• Figures for Newsprint are after the deduction for in-kind contribution of $1.3million

45


CNA/OCNA IN-KIND CONTRIBUTION• The in-kind contribution ($1.3 million) is deducted from the fees of CNA/OCNA stewards (excluding the SO & WDO administration & start-up

costs).

• Deduction should not apply to fees for non-CNA/OCNA generated newsprint

• Calculation not presented in this way in BBPP & in information on 2004 fees

a reliable figure for the quantity of non-CNA/OCNA material will not be available until stewards have filed their sales figures

• Therefore, it is proposed that once data are filed, the fees will be adjusted accordingly.

• Preliminary audit data suggest that up to 20% to 30% of the newsprint could be generated by stewards who are not part of CNA/OCNA. Given

this, Preliminary 2004 fee for non-CNA/OCNA stewards could be ~ 0.241¢/kg

Part of the administration fee currently allocated to CNA/OCNA members will be distributed to non CNA/OCNA members, maintaining the per-kg levy for

CNA/OCNA members

46


PRELIMINARY 2004 FEES – Packaging

• Figures represent total fees for packaging including, Base Fee, Other programs, Program Delivery, Administration &

Start-up, • adjusted to account for compliance & de minimis factors

Material

($) (¢/kg) ($) (¢/kg) ($) (¢/kg) (%)PACKAGING

Paper Packaging Total 15,384,507$ 4.728$ 19,894,872$ 5.987$ 4,510,365$ 1.26$ 26.6%

Plastics Total 15,538,623$ 6.692$ 22,940,760$ 9.611$ 7,402,137$ 2.92$ 43.6%

Steel Total 2,466,921$ 3.633$ 3,033,899$ 4.391$ 566,978$ 0.76$ 20.8%

Aluminum Total (1,895,764)$ (5.465)$ (862,833)$ (3.199)$ 1,032,931$ 2.27$ 41.5%Non-LCBO - Flint 2,740,229$ 3.723$ 2,728,602$ 3.682$ (11,627)$ (0.04)$ -1.1%Non-LCBO - Coloured 819,356$ 4.016$ 802,775$ 3.916$ (16,581)$ (0.10)$ -2.5%LCBO Glass 4,750,000$ -$ 4,750,000$ -$ -$ -$ -

Glass Total 8,309,585$ -$ 8,281,376$ -$ (28,208)$ -$ -

2003 Fee 2004 Fee ($) Change in Fee

47


PRELIMINARY 2004 FEES – Selected Paper Items

Packaging Type

Product Packaging ExampleUnit

Weight (Grams)

Cents/kgEstimated

Fee Cents/Unit

Cents/kgEstimated

Fee Cents/Unit

Printed Paper Daily Newspaper 249 0.03 0.0069 0.03 0.0065

Magazine - large 820 0.08 0.07 0.31 0.25

Magazine - small monthly 251 0.08 0.02 0.31 0.08

Catalogue - large 1450 0.08 0.12 0.31 0.45

Paper Paperboard box - 525 g cereal 104 4.73 0.49 5.99 0.62

Packaging Paperboard box - 312 g waffles 40 4.73 0.19 5.99 0.24

Egg Carton 53 4.73 0.25 5.99 0.32

Corrugated case 210 4.73 0.99 5.99 1.26

Kraft bag - 4 kg of pet food 82 4.73 0.39 5.99 0.49

Polycoat 2 litre milk carton 63 4.73 0.30 5.99 0.38

1 litre milk carton 41 4.73 0.19 5.99 0.25

250 ml drinking box 10 4.73 0.05 5.99 0.06

2003 Fees 2004 Fees

48


PRELIMINARY 2004 FEES – Selected Packaging

Packaging Type

Product Packaging ExampleUnit

Weight (Grams)

Cents/kgEstimated

Fee Cents/Unit

Cents/kgEstimated

Fee Cents/Unit

Ferrous 1.36 litre juice can 153 3.63 0.56 4.39 0.67

Aluminum 355 ml soft drink can 15 -5.46 -0.08 -3.20 -0.05

Glass 473 ml juice bottle 228 3.72 0.85 3.68 0.84

Plastics 2 Litre PET bottle 58 6.69 0.39 9.61 0.56

HDPE - 2. 6 L dishwashing soap 149 6.69 1.00 9.61 1.43

PP - yogurt cup (no lid) 6 6.69 0.04 9.61 0.06

HDPE - carry out bag (large) 13 6.69 0.09 9.61 0.12

LDPE - outer milk bag 8 6.69 0.05 9.61 0.08

PS - half pint blueberries 10 6.69 0.07 9.61 0.10

Laminant Pasta bag 5 6.69 0.03 9.61 0.05

Frozen concentrated juice can 29 4.73 0.14 5.99 0.17

Multiple Frozen Entrée - Paper 28 4.73 0.13 5.99 0.17

Packaging Frozen Entrée - Plastic 25 6.69 0.17 9.61 0.24

2003 Fees 2004 Fees

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CONSULTATION 0N 2004 FEES• Need to submit 2004 fees to Minister by March 31, 2004

Consulting on: Preliminary 2004 Fees Process for Setting 2005 Fees

Proposed Timeline: MPAC & Stewards Initial Review February 17 Stewardship Ontario Board February 20 Seminar & Webcast for Stewards & Stakeholders March 2 Last Date for Comments March 10 Report to Stewardship Ontario Board March 10 SO Board Approval of Recommended Fees March 15 Report to WDO Board March 16 WDO Board Approval of Recommended Fees March 23

50


PROPOSED PROCESS TO SET 2005 FEES

• Blue Box Program Plan says submit preliminary 2005 fees to Stewards by August 15, 2004

• Plan says establish final 2005 fees by November 1, 2004

Issues:

Completion of 2003 data verification & set total net system cost

Revisit Funding Formula => 40:40:20 allocation of net cost

Additional cost allocation study

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PROPOSED PROCESS TO SET 2005 FEESProposed Timeline:

Task or Milestone

2003 Datacall Submission Deadline

Data verification

Set 2003 Total Net System Cost

Possible Additional Cost Allocation Analysis

Consultation on Pay-in Formula

Finalize Pay-in Formula (Board Approval)

x

Market Development Strategies

Submit Preliminary 2005 Fees x

Consultation on Preliminary 2005 Fees

Recommend Final 2005 Fees x

Final 2005 Fees x

May June July Aug. Dec.Sept. Oct. Nov.

52

Q & [email protected]

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DATES TO REMEMBER

• Blue Box Plan Approved• December 22, 2003

• Steward Obligations Effective• February 1, 2004

• Steward Pre-Registration• Began on January 21, 2004

• www.stewardshipontario.ca

• Deadline to Register & Pay Fees• April 20, 2004

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ADDITIONAL CONSULTATION

• Week of March 8, 2004

Public Consultation

• see www.stewardshipontario.ca

• webcast 1:00 pm, March 11

Municipal Consultation

• see www.wdo.ca

• webcast 9:30 am, March 11

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KEY NEXT STEPS

• Steward Deadline for Comment• Wednesday, March 10

• Write to: [email protected]

• Stewardship Board• Monday, March 15

• WDO Board• Tuesday, March 23

• Minister of the Environment• Wednesday, March 31

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ADDITIONAL SUPPORT

• Stewardship Ontario Membership Services www.stewardshipontario.ca

1-888-288-3360

[email protected]

Stewardship Ontario26 Wellington Street East, Suite 601Toronto, Ontario M5E 1S2

57

Thank You

58

Documents

Workshop & Webcast 1:30 - 3:30 March 2, 2004 1. Damian Bassett Stewardship Ontario “Examining 2004 & 2005 Steward Fees” 2