CIWMB Electronic Waste Recycling Program

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R.W. Beck, Inc. Humboldt State University

• CIWMB Electronic Waste Recycling Program

Analysis of Net Cost Reports
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Analysis of 2005 Net Cost ReportsOutline

• 1. Background
• 2. Results
• 3. Issues and Considerations

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The Team

• HSU, Office for Economic Community Development
• Margaret Gainer, Director
• Dan Iharra, PhD, Economics
• Student Assistants

• R.W. Beck, Inc.
• Ed Boisson, Project Manager
• Greg Broeking, CPA
• Susan Bush and Mary Chamberlin, Recycling Market
  Analysts

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Project Objectives

• Help participants prepare reports
• Maximize accuracy and consistency
• Provide information to help the Board administer
  the program

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Timeline

• Jul. 2005 Project begins
• Oct. 2005 Participant survey and literature
  review
• Nov. 2005 Reporting forms and Guide
• Jan. 2006 Webinar trainings
• Mar. 2006 2005 reports due
• Nov. 2006 Preliminary results Guide and forms
  revised
• Jan. 2007 - Webinar trainings
• Mar. 2007 2006 reports due

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Net Cost Reporting System

• Form 220, Net Cost Report
• Worksheets
• Form 220a for collectors
• Form 220b for recyclers
• Guide with Line-by-Line Instructions

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(No Transcript)
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The Math

• Total Revenue
• - Costs (Labor, Transportation, Other)
• Net Cost
• Pounds Handled
• Net Cost per Pound

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Key Guidelines

• Include costs revenue for CEW only
• Report on collection recycling separately
• Dont include CIWMB revenue
• Report your best, most reasonable estimate

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Methodology

• Preliminary Analysis to Determine Best Approach
• Select Representative Sample
• Review and Confirm Selected Reports (Not an
  Audit)
• Analyze Confirmed Reports

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Most Common Errors

• Wrong forms
• Reporting on e-waste other than CEW
• Separating collection recycling activities
• Missing line item costs
• Arithmetic errors

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Analysis of 2005 Net Cost ReportsOutline

• 1. Background
• 2. Results
• 3. Issues and Considerations

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Sample of 2005 Reports Analyzed
Item Analyzed Sample Percent of 2005 Totals
Number of Collector Reports 29 11
Number of Dual Entity Reports 20 71
Total Recovered Pounds CEW in Analyzed Reports 43,100,991 66
Total Recycled Pounds CEW in Analyzed Reports 44,716,438 69
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Collection Net Costs in Sample
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Recycling Net Costs in Sample
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Net Cost per Pound (2005)
Weighted Average Mean Median Percentage Below Standard Payment Rate
Recovery Revenue 3.9 3.8 0.0 NA
Recovery Cost 21.0 24.6 17.9 NA
Recovery Net Cost 17.1 20.8 15.3 63
Recycling Revenue 5.7 5.5 5.1 NA
Recycling Cost 30.9 39.1 31.8 NA
Recycling Net Cost 25.2 33.6 27.5 50
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Net Cost per Pound (2006 - Preliminary)
Weighted Average Mean Median Percentage Below Standard Payment Rate
Recovery Revenue 2.0 2.3 0.4 NA
Recovery Cost 18.7 17.2 15.0 NA
Recovery Net Cost 16.7 14.9 14.2 66
Recycling Revenue 5.8 6.2 5.3 NA
Recycling Cost 27.4 37.2 29.0 NA
Recycling Net Cost 21.5 31.0 23.5 64
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Comparison of Weighted Average Net Cost per Pound
2005 2006 (Preliminary) Difference
Recovery 17.1 16.7 -3
Recycling 25.2 21.5 -15
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Findings

• High variability of net costs
• Current payment rates cover most participants
  net cost
• High variability in suggested reasonable rate of
  profit

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Analysis of 2005 Net Cost ReportsOutline

• 1. Background
• 2. Results
• 3. Issues and Considerations

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Key Trends

• Growing, Immature Industry Continued
  Restructuring Likely
• Intense Recycler Competition
• Mergers, acquisitions, partnerships
• Innovative business models
• Pass thru of funds to collectors, handlers and
  generators
• Relatively strong end markets and pricing in 2005
  and 2006
• Changing technologies will radically affect
  recycling costs, but not yet

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Issues for Board Consideration

• Which measure of average net cost should be
  used?
• Include collector revenue?
• Should collector, recycler or both rates be
  changed?
• Are tiered payment rates practical?

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Options to Enhance the Self-Reporting Approach

• On-site review of documentation and/or audits
• Time-and-motion studies
• Derive reasonable costs for archetypal programs
• Analyze impact of changing technologies
• Decline of CRTs, new consumer products, etc.
• Analyze recycling industry market trends
• Impact of SB20 system on recycling non-CEW
  material
• Document best management practices

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Questions?

• Ed Boisson, R.W. Beck, Inc.
• 415-499-0919
• eboisson_at_rwbeck.com