The announcement from BIS comes ahead of the 31 January 2016 deadline for schemes to post their final waste electrical and electronic equipment (WEEE) evidence for the 2015 compliance period. The compliance fee is an alternative means of compliance for schemes which have not secured enough evidence to meet their targets.
In a written statement to compliance schemes today (26 January), a BIS official said: “Following the consultation held last autumn I am writing to inform you that the government has decided to approve a compliance fee methodology and administrator for the 2015 WEEE compliance period as provided under the 2013 WEEE Regulations. Three proposals were received and we will announce details of the winning bid week commencing 1 February.”
This will represent the second year in a row that the government has opted to choose a compliance fee methodology, following changes to the WEEE Regulations in 2013.
The changes to the law have effectively removed a market that previously existed for the trading of WEEE ‘evidence’ between compliance schemes, which it was claimed had led to inflated costs under the pre-2014 system.
Evidence
‘Evidence notes’ are used to demonstrate that producers have funded the recycling of a volume of WEEE in proportion to the amount of new products they have placed onto the market in the UK.
Since the changes to the law were brought in at the start of 2014, schemes which are unable to collect enough evidence to meet their members’ obligations are no longer forced to secure evidence from those with a surplus, and can instead opt to use the compliance fee to meet the targets.
The level at which the fee is set is determined using a methodology, which is set after the end of the compliance period for which schemes have until 31 January to secure evidence.
Proposals
In October three proposals for how the methodology should be set were put forward (see letsrecycle.com story).
These included proposals submitted by the Joint Trade Associations, with input from compliance schemes including ERP, Recolight and Repic; compliance scheme Valpak; and a joint ‘seven scheme’ proposal from Advantage Waste Brokers, Dataserv Group, DHL WEEE Compliance, Veolia WEEE Compliance, Electrolink, WeeeCare and WE3 Compliance.
JTA’s proposal was used by BIS to set the WEEE compliance fee for 2014 and involved a sliding scale that set a higher fee for schemes the further they are from their target, overseen by accountancy firm Mazars. This is calculated by taking into account the average cost of transport and treatment for each stream.
Attention will now turn to which of the three proposals BIS opts to select as the compliance fee methodology for 2015, and how the fee will be calculated for the year.
The three proposed methodologies include the following:
_________________________________________________________________________________________
‘Seven schemes’
Critics of the chosen methodology in 2014, including the authors of the ‘seven scheme’ proposal claimed that the methodology was open to “manipulation by those PCS intending to use the fee as an alternative means of compliance.”
As an alternative, the seven schemes who include Advantage Waste Brokers, Dataserv Group, DHL WEEE Compliance, Veolia WEEE Compliance, Electrolink, WeeeCare and WE3 Compliance submitted a methodology for 2015 which comprises a base compliance fee multiplied by an escalator which would increase the fee by certain percentages depending on the degree of shortfall in any particular stream against the PCS collection target.
The proposal also includes adding a 10% base escalator which will not be linked to the shortfall of the individual scheme, to incentivise meeting the collection targets through physical WEEE collections. Schemes using the fee would also have to provide details of direct costs of WEEE collection.
_________________________________________________________________________________________
Valpak
Valpak’s proposed methodology would see schemes provide direct collection and treatment cost data for the calculation of the fee, as well as a participation fee of £2,000 for each scheme wishing to use the mechanism, to cover administrative costs.
The process would be overseen by Grant Thornton LLP and involves the data to calculate the weighted average cost per stream. A standardised additional charge of £3.50/tonne would also be applied to allow for the necessary fixed costs of managing collections – to ensure that schemes are not using the fee to avoid costs involved in the WEEE collection process.
The fee applied to schemes unable to meet their collection targets would be escalated against their shortfall from the national target for each WEEE stream.
_________________________________________________________________________________________
JTA
The proposal submitted by the Joint Trade Associations, whose mechanism was chosen by BIS to set the 2014 compliance fee, is largely in line with that used in 2014.
JTA, which through its trade association members represents major producers including Candy, Samsung, Delonghi, Toshiba and Dell, is proposing that accountancy firm Mazars oversees the administration of the fee for the second year running.
The 2015 proposal includes using the same methodology involving a sliding scale calculation of costs to set the fee, but adds a requirement that schemes using the fee for any stream for more than 10% of their target will be required to contribute to the administrative costs of the running of the system.
_________________________________________________________________________________________
‘Balance’
Commenting on the three proposals, Dr Richard Peagam, senior consultant at Anthesis Group, said: “The compliance fee needs to strike the balance between its role as a “safety valve” for the compliance market, while not being a disincentive to collection for producer responsibility.
“What is striking about the three proposals, is how similar they appear to be. All follow the model of a weighted average for collection costs, with the addition of an escalator to ensure that the incentive for collection remains, which is the model currently in place. What BIS will have considered is which escalator, and which approach to the weighted average calculation, reflects the cost of collection fairly and would not inadvertently re-stimulate the pre-2014 artificial markets for compliance.”
Register for free to comment