Materials

Consultation launched on two proposals for 2016 compliance fee

The Department for Environment, Food & Rural Affairs (Defra) has launched a consultation on which waste electrical and electronic equipment (WEEE) compliance fee should be used, if any, for 2016.

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The compliance fee system was established in 2013 to reduce the costs to producers through the compliance system. Previously, producer compliance schemes (PCSs) needing evidence of collection sometimes had to pay over-the-odds to collectors, whereas now, the fee seeks to create a greater connection between producer fees and the real costs of recycling.

Instead of being sanctioned when they haven’t met their requirements, PCSs can pay a top-up fee calculated by a government-approved mechanism, rather than shelling out to collectors.

Each year, one methodology for calculating the compliance fee for the current year is chosen, based on factors including the method’s likelihood to encourage schemes to meet collection targets, economic analysis of the method, costs of administration and the timescale for the method’s implementation.

Previously, this process has been carried out by the Department for Business, Innovation & Skills (BIS), which has now merged with the defunct Department of Energy and Climate Change, but this will no longer be the case following March’s transfer of the government’s environmental regulation team from BIS to Defra.

This year, two proposals for methodologies have been submitted by external organisations. The consultation will close on Friday, 25 November. The chosen methodology will be announced in February ahead of the deadline for schemes to carry out their complaince at the end fo March 2017.

JTA

The JTA (Joint Trade Associations), a group of nine trade associations from the electronics sector representing around 90per cent of the companies obligated under the WEEE producer obligations, which provided the chosen methodology for both the 2014 and 2015 compliance fees, has proposed a fee based on the 2015 fee but with ‘some adaptations’ to reflect changes in guidance by Defra this year, feedback on the 2015 mechanism and an updated economic assessment carried out by independent consultancy FTI Consulting.

The group, which comprises AMDEA, BEAMA, BTHA, EEF, GAMBICA, LIA, PETMA, SEAMA and techUK, says that its 2016 calculation is based on the weighted average net cost of direct collections and treatment transactions incurred by PCSs when undertaking local authority collections, with a separate fee calculated for each collection stream of WEEE.

The mechanism includes two fee escalators, which increases the fee depending on how far away a PCS is from their collection target per stream and whether UK WEEE collections for that stream exceed the WEEE collections target set by Defra. As in the 2015 proposal, PCSs that use the compliance fee mechanism for any stream for more than 10 per cent of their target for that stream will be required to contribute to the administrative costs of operating the 2016 compliance fee mechanism. For each such stream, the PCS concerned will be required to pay an administration fee of up to £5,000.

Valpak

The second proposal has been submitted by packaging compliance company Valpak.

Valpak was one of the three groups to propose a methodology last year, and says that its 2016 proposal supports the government in improving the UK WEEE system by discouraging PCSs from making excessive charges by over-collecting WEEE and encouraging the schemes to take all steps to meet their targets without using the fee.

It says its proposal also ‘facilitates competition in the market to minimise costs to producers whilst also assisting producers considering changing their compliance scheme by increasing the ability of schemes to recruit additional members without the disincentive of excessive compliance costs’.

Through Valpak’s proposed fee mechanism, schemes would be required to provide direct collection and treatment cost data by stream, while the compliance fee will be calculated separately for each scheme wishing to use the fee and for each WEEE stream using a combination of the weighted average collection and treatment costs and an amount to reflect the direct scheme operational management costs that would be avoided if not reflected in the fee.

The collection and treatment costs would only will be escalated by a factor related to the degree of scheme shortfall against the national target set by the government in each stream, so that a greater fee is payable for a shortfall which is more significant compared to the government’s requirement.

Details of the two proposals can be found on the Defra consultation website.

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