Defra opens consultation on 2018 WEEE compliance fee methodologies

Defra has opened up a consultation for waste electrical and electronic equipment (WEEE) stakeholders to give their feedback on proposals for this year’s compliance fee, with two mechanisms from the JTA and Valpak up for discussion.

Defra opens consultation on 2018 WEEE compliance fee methodologiesThe compliance fee system was established in 2013 to reduce producer costs while meeting requirements for them to cover the collection, treatment recovery and recycling of WEEE. While previously, producer compliance schemes (PCSs) sometimes had to pay over-the-odds to collectors to get evidence of collection, the fee now seeks to create a greater connection between producer fees and the real costs of recycling, allowing PCSs to pay a top-up fee calculated by a government-approved mechanism, rather than shelling out to collectors.

The methodology for calculating this fee is chosen every year, 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.

Last year PCS Valpak’s proposed mechanism was chosen, and the company has again put forward a proposal, alongside the Joint Trade Associations (JTA), a group of nine trade associations from the electronics sector, that had provided the chosen methodology for both the 2014 and 2015 fees.

The consultation will close on Wednesday 01 December 2017.

JTA and Valpak proposals

This year’s Valpak proposal is based on five key goals:

  • To be easily understood and straightforward to operate;
  • To support government in continuing to improve the UK’s WEEE system by discouraging excessive charges and encouraging schemes to meet their collection targets without resorting to the fee;

  • To be fair for all operators regardless of their circumstances regarding material stream collections;

  • To provide independence and confidentiality undertakings in handling sensitive information through the third part accountancy firm Grant Thornton UK LLP; and

  • To facilitate competition in the market to minimise costs to producers.

Under the proposed methodology, schemes would be required to provide actual direct collection and treatment cost data by stream to Grant Thornton, with a condition that schemes provide accurate and detailed cost data to support any submission.

The methodology allows for the fee to be lowered in any particular stream where the direct operational costs incurred by participating schemes are offset by any material income received by the scheme, and enables a compliance fee to 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, plus an amount to reflect the direct scheme operational management costs which would be avoided if these were not reflected in the fee.

The JTA proposal has been informed by an independent analysis by economists FTI. The fee would be administered by Mazars, which provided administration for the fee in 2014 and 2015.

The fee would be based on an escalator, so the further away a scheme is from its target, the higher the fee it has to pay. The fee will also reflect the extent to which a scheme has been collecting directly from local authorities and whether it is a member of the PCS Balancing Scheme (PBS), a voluntary group introduced last year to help share the cost of ‘Regulation 34’ requests, in which local authorities can request a PCS to clear WEEE from their site free of charge, fairly amongst compliance schemes.

The JTA says the fee will reflect whether nationally a particular stream of WEEE is in surplus or in deficit against the national target, with the intent to set a fee that encourages collections directly from local authorities and that encourages schemes to be a member of the PBS.

The full consultation document, as well as the two proposals, can be found on Defra’s website.

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