WEEE update: 2015 compliance fee

REPIC CEO Dr Philip Morton explains how the 2015 WEEE compliance fee works to improve collection of e-waste.

REPIC CEO Philip Morton

The 2015 WEEE compliance period saw the Secretary of State at the Department of Business, Innovation & Skills (BIS) again exercise the option to introduce a compliance fee as a safety valve in the WEEE system.

Under the target/fee-based system, each producer compliance scheme (PCS)knows exactly the tonnage it needs to collect and can comply by having more or less. If a PCS has more, it must fund the surplus itself. If a PCS is short, it can pay a fee.

So how is the fee determined and what’s the difference between the 2015 fee and the 2014 fee? 

The fee gives BIS the perfect tool to achieve its policy because it is approved (or not) each year and only announced after the deadline has passed for PCSs to ‘sell or buy’ surplus. This incentivises PCSs to do deals to meet their targets in the actual year, rather than risk exposure to a (low or high) fee or worse still no fee at all.

Each year up to 30 September, parties can submit proposals for a fee mechanism. The Secretary of State can then choose whether to set one and typically announces if a fee will be set before the end of the year (by way of example in 2015). This is then followed by an announcement of the chosen fee mechanism after the 31st January evidence deadline has passed in the following year (in this example, January 2016).
The fee chosen for 2015 was proposed by the Joint Trade Association (JTA) and is an enhanced version of the one used in the prior year – to reflect changes in the market and learning from the first year of operation. 
Things that haven’t changed are: 
  • It remains stream specific (cooling is different to display, et cetera).
  • It is based on each scheme’s own audited costs.
  • It has an escalator increasing the fee the further a scheme is away from target.
  • It uses only costs from schemes needing to use the fee in any particular category.
The enhancements are:
  • Any PCS short of 10 per cent or more of target pays a £2,000 charge per stream, capped at £5,000 – rewarding PCSs that miss by a small amount, and charging those missing by a lot.
  • There is no automatic fee for Cat 1 LDA, as the mechanism now calculates every stream so any category can have a zero or positive fee. This better reflects changing market conditions.

How will this affect the WEEE market, its participants and market behaviour?

The fact that a fee can be set has already affected the system. Any PCS now collecting above its target risks being left with surplus if other schemes don’t need or don’t wish toappoint them to collect it. A PCS with surplus has three choices:

This article was taken from Issue 84

  • win more members; 
  • provide competitive prices/quality service as a sub-contractor for other PCSs;
  • give up sites/access to surplus WEEE.

All of the above means we now have a much better, more competitive free market.

One might think the easiest thing is to ‘under collect’, so you are certain to avoid paying for surplus and pay a fee instead, but here too the regulations are smart. Regulation 34 gives every local authority designated collection facility (DCF) site operator the right of free uplift, so if no PCS offers to collect, the site operator can ask any PCS to collect all their WEEE free of charge – and the PCS requested must do so or risk being disqualified. Also, the Secretary of State could choose not to set a fee, in which case a PCS with shortfall couldn’t comply and risks being disqualified. Alternatively, the Secretary of State could set a punitively high fee if he/she felt people were abusing the system.

What if the pendulum to swings too far?

Examples could include: schemes ‘ditching’ too many sites; targets being set too low; Regulation 34 becoming commonplace; some schemes becoming overwhelmed with excess WEEE – the list could go on. 

The important thing to remember is that BIS has a significant ‘stick’ to use in the guise of the fee to nudge any errant players into shape – so tread carefully: it makes sense for everyone to keep the system working.