Consultation meeting. Consultation 2018 Schedule of Contributions
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1 Consultation meeting Consultation 2018 Schedule of Contributions October 26,
2 Agenda 10:30 Welcome 10:35 Opening remarks 10:40 Year in review 10: Schedule of Contributions: revised parameters 11:20 Question period Break 11:45 Future orientations and current and upcoming projects 12:10 Question period 12:25 Concluding remarks 2
3 Purpose of the meeting Present ÉEQ s actions in 2017 and the context that shapes the SoC Submit the draft 2018 SoC for consultation Collect feedback from companies and organizations Present future orientations for the SoC and ÉEQ s current and upcoming projects 3
4 Year in review ÉEQ is listening Overview of curbside recycling Compensation plan Updating knowledge 4
5 1. ÉEQ is listening Simplify processes for companies Continuation of the reporting optimization initiative Preliminary report available on March 1 Emphasis on personalized support Webinar following the publication of the 2017 SoC (highlights, tips, current projects) Under study Automatic report submission as soon as the SoC comes into effect Instalment payments on fixed dates 5
6 Optimizing the system we fund! Optimizing curbside recycling to make it more effective and efficient and control costs 6
7 2. Overview of curbside recycling Curbside recycling in Québec tons recovered through municipal curbside recycling in 2016 Down 0.5% since
8 Curbside collection in Québec 2 nd consecutive drop in municipal net costs! 8
9 Curbside recycling indicators Reference: 2016 municipal reports 93 $188/t 99% kg per capita 9
10 3. Compensation plan Reminder: important dates 2017 SoC Submission of reports October 10, st payment 2nd payment Supporting documents for the credit request for recycled content November 10, % January 26, % November 10, 2017 Deadline to request changes October 10,
11 Compensation plan The 2015 and 2016 SoCs are in relative alignment with estimated data. SoC Municipal costs estimated vs. actual Reported quantities actual vs. expected Contributions statement 2015 = < Portrait in January > > Portrait in July > To come Portrait in January
12 4. Data updates Characterization study Four-part municipal waste characterization study (ÉEQ and RECYC-QUÉBEC) Focus Period Expected results Residential Recovery rates per material Composition of materials (curbside recycling and waste) Industrial, commercial and institutional organizations 2016 Service profile (2016) Completed with a survey filled out by ICIs in Québec (ÉEQ study) fall 2017 Away from home 2016 Recovery rate per material Composition of materials (curbside recycling and waste) Sorting centres 2017 Composition of materials entering sorting centres 12
13 Activity Based Costing (ABC) Model Updated in 2017 by ÉEQ and RECYC-QUÉBEC Two objectives: 1. Allocate municipal net costs to the three classes of materials In anticipation of publication by the Québec government 2. Determine the net cost per material 13
14 2018 Schedule of Contributions Parameters 14
15 Establishing the 2018 SoC All parameters were updated for the 2018 SoC Parameters 1. Municipal net costs X 2. ÉEQ fees and other provisions X 3. Cost allocation between the three classes of materials (ABC study) X 4. Expected quantities reported by companies X 5. Recovery rate (characterization study) X 6. Net cost of materials (ABC study) X 15
16 1. Municipal net costs The 2018 SoC compensates the net efficient and effective costs of municipal curbside collection programs in the 2017 calendar year These costs for 2017 are unknown and must therefore be estimated Estimating the share of costs eligible for compensation by ÉEQ 1. Estimate the 2017 system costs 2. Add the QST paid by municipalities 3. Deduct the materials that are not designated (determined by decree) 4. Estimate the deduction for the performance and efficiency (P&E) factor 5. Apply the share of the costs to each materials category (determined by order) 16
17 Estimate of 2017 system costs Estimate system costs for the 2017 calendar year: $146.5M (+1.3%) Estimate based on actual curbside recycling system costs in recent years and anticipated market revenues 17
18 Performance and efficiency (P&E) factor The P&E factor makes it possible to deduct part of the net costs compensated to the least efficient municipalities The P&E factor deduction has been stable since 2014 Estimated deduction of 4.5% for
19 Municipal costs eligible for compensation (collection, transport, sorting and conditioning) Estimated costs for the 2018 SoC lower than those for the 2017 SoC Municipal net costs excluding taxes $151.6M $146.5M Québec sales tax (QST) $7.2M $7.0M Estimated municipal net costs $158.8M $153.5M Deduction for non-designated materials (-6.6%) 2017 SoC 2018 SoC $(10.5)M $(10.1)M Deduction for P&E factor(-4.5%) $(5.9)M $(6.4)M Municipal management fees (8.55%) $12.2M $11.7M Municipal net costs eligible for compensation $154.6M $148.6M Variation % - 3.9% 19
20 2. ÉEQ expenses and other provisions Support ÉEQ s projects and activities in connection with the value chain ÉEQ expenses $5.5M $6.0M RECYC-QUÉBEC indemnity $2.7M $2.7M Bad debt provision $3.0M $2.9M Anticipated reports low-volume producers $(1.3)M $(1.3)M Other costs total $9.9M $10.3M Variation + 0.2% + 4.0% Innovative Glass Works plan* $0M $2M * Exclusively funded by the glass category 2017 SoC 2018 SoC 20
21 3. Costs allocated to three classes of materials The allocation was updated based on the findings of the Acitivty based costing study Increase in collection- and transport-related costs Printed matter most impacted by these costs Class of materials ACA 2013 ( SoC) ACA 2016 (2018- SoC ) Newspaper 8.7% 8.3% Printed matter 19.4% 20.9% Containers and packaging 71.9% 70.8% Total ÉEQ share 91.3% 91.7% 21
22 Cost overview First reduction in total costs to consider when determining the contribution to ÉEQ! 2017 SoC 2018 SoC Municipal net costs eligible for compensation $154.6M $148.6M ÉEQ share (set by order) 91.3% 91.7% Municipal net costs ÉEQ share $141.1M $136.3M Other costs $9.9M $10.3M Innovative Glass Works plan - $2.0M Printed matter fund - $(1.5) M Provision for credit for recycled content $0.6M $0.6M Total costs considered for ÉEQ s contribution $151.7M $147.7M Variation + 0.8% - 2.6% 22
23 4. Expected reported quantities The expected reported quantities for the 2018 SoC are those placed on the market in Québec in 2017 Overall increase as compared to the 2017 SoC 655 kt vs. 639 kt (+2.5%) Decrease for printed matter 150 kt vs. 153 kt (-1.9%) 23
24 Integration of CP&PM products: increase in expected reported quantities Expand the materials subject to a fee to reduce the average rate (-1.1%) The new quantities of materials subject to a fee are mainly fibers 24
25 5. Residential recovery rate: results Overall average rate of 63.6% Recovery rates relatively stable for all materials Slight impact on the SoC Detailed results available on our website 25
26 6. Net material costs: updated with the 2016 ABC Varied results from one material to the next Collection costs (up overall) Sorting costs (based on equipment and labour per materials) Sales revenue from materials (based on outlets and markets) 26
27 Rates 27
28 Overall average rate 5.0% reduction in the average rate as compared to the 2017 SoC Municipal net costs ÉEQ share $151.0M $147.1M Provision for credit for recycled content $0.7M $0.6M Total ÉEQ contribution $151.7M $147.7M + 0.8% - 2.6% Expected reported quantities 639 kt 655 kt Average rate 2017 SoC 2018 SoC + 0.3% + 2.5% $237/t + 0.6% $226/t - 5.0% Costs Quantities = Rates 28
29 Increase for printed matter (PM) $1.5M injected from the printed matter fund to offset the increase 2017 SoC 2018 SoC w/o funds 2018 SoC Municipal net costs PM share $31.7M $32.8M $32.8M Provision credit for recycled content $0.4M $0.5M $0.5M Printed matter fund $0M $(1.5)M Total contribution $32.1M $33.4M $31.8M - 0.4% + 3.5% - 1.1% Expected reported quantities 153 kt 150 kt 150 kt Average rate Costs Quantities - 0.3% - 1.9% - 1.9% 210 $/t + 2.6% 221 $/t + 5.6% 211 $/t + 0.8% = Rates 29
30 Decrease for containers and packaging (CP) Municipal net costs CP share $119.4M $115.7M Provision credit for recycled content $0.1M $0.1M Fund $0M $0M Total contribution $119.5M $115.9M + 1.2% - 3.0% Expected reported quantities 485 kt 505 kt Average rate 2017 SoC 2018 SoC + 1.4% + 3.9% $246/t - 0.2% $230/t - 6.7% Costs Quantities = Rates 30
31 Rates printed matter $1.5M injected from the Printed matter fund Magazines and other printed matter increased by nearly 5% Due to the share of the costs and the expected quantities Without the $1.5M, the variations would be: Inserts and circulars 3.8% Other printed matter 9.5% 31
32 Rates Paper/cardboard Overall decrease in the rates for fiber containers and packaging 32
33 Rates Plastics of rate for the majority of plastics HDPE bottles : major in revenues Polystyrene: of quantities for Non-expanded PS -> Increase in average rate 33
34 Rate Aluminium Increased rates for aluminium reported quantities in the other containers category, which has a low recovery rate and a higher net cost 34
35 Rate Steel Increase in the rates for steel in the net cost of the material (ACA) 35
36 Rate Glass Reduction in the rate despite $2M in funding from the Innovative Glass Works plan recovery rate Cost improvement for the materials (ACA) 36
37 Low-volume producers No change to low-volume producers flat fee eligibility Flat fees remain the same Tonnage generated criterion Turnover criterion 2017 SoC 2018 SoC 1 to 2.5 tonnes $420 $ to 5 tonnes $890 $890 5 to 10 tonnes $1 775 $ to 15 tonnes $1M to $2M $2 965 $
38 Impact on companies 82% of companies have a lower bill 5% will experience an increase of less than 4% 13% will experience an increase of between 4 and 8% 38
39 Broadening materials subject to a fee Shoft-life containers and packaging and printed matter sold as products 39
40 More materials, more contributors, more equity: broadening to reduce The broadening targets two types of materials Costs compensated Coûts compensés 141,1 M$ 136,3 M$ Containers, packaging and printed matter subject to a fee Short-life containers, packaging and printed matter sold as products* Printed matter sold as products* * Materials designated under the Regulation but excluded from earlier SoCs
41 Equity and coherence: broadening to reduce Total costs / reported quantities = rates higher quantities = lower rates Sharing the same costs over a higher number of designated materials and contributing companies The total amount of the compensation will not increase The provenance of the contributions will be allocated differently $136.3M 41
42 Principles that support the broadening of materials subject to a fee EQUITY SIMPLICITY APPLICABILITY AUDITABILITY PREDICTABILITY MATERIALS HARMONIZATION ACCOUNTABILITY
43 Short-life containers and packaging sold as products What are the criteria? Any flexible or rigid material intended to contain, protect or wrap products Single-use or short-life: whose physical and aesthetic features are altered after its first uses Sold as products Ultimately purchased by consumers (individuals) Containers and packaging similar to those currently subject to a fee under the SoC 43
44 Printed matter sold as products What are the criteria? Paper and other cellulosic fibres, whether or not they are used as a medium for texts or images Sold as products Ultimately purchased by consumers (individuals) All printed matter sold to individuals are now subject to a fee 44
45 Product categories Food bags and packaging film Aluminium foil Plastic wrap Waxed paper Parchment paper Sandwich and freezer bags Paper liners (muffins) Kraft paper bags (lunches) Candy bags, etc. 45
46 Product categories Disposable food and beverage containers Aluminium plates and all types of containers Plates, bowls and all other types of non-aluminium containers Cups (all types and materials) Lids (all materials), etc. 46
47 Product categories Birthday and celebration supplies Gift bags Wrapping paper Greeting cards Tissue paper Gift boxes Gift tags Ribbons and bows (if designated material) Piñatas, party poppers, etc. 47
48 Product categories Stationery Envelopes Notebooks including spiral notebooks Notepads Loose-leaf and graph paper Agendas Calendars Protective films and document covers Photo paper, etc. 48
49 Product categories Household products Moving and storage boxes Recycling bags Furniture covers Paint roller pan liners Plant saucers Vacuum storage bags Protective packaging, bubble wrap, etc. 49
50 Product categories Leisure and crafts Colouring books Activity books (sudoku, crossword puzzles, etc.) Workbooks (mathematics, etc.) Construction paper Art kits Scrapbooking supplies, etc. 50
51 Short-life containers and packaging sold as products Would be excluded: Containers and packaging explicitly and solely intended to contain or package garbage and all other types of waste designated under another regulation. For example: Trash bags Compost bags Vacuum bags Biomedical waste bags 51
52 Printed matter sold as products Would be excluded: Books Materials included in the newspaper category Schoolbooks Personal medical files Identification documents (birth certificate, passport, etc.) Printed matter intended to be used or consumed only by a final user at the sales or distribution site (e.g. paper placemats and menus in a restaurant) 52
53 SoC rules 53
54 Updated with no changes The dates and reference years were updated In keeping with the draft regulation tabled by the government, other updates may be made whenever necessary 54
55 Payment dates If the 2018 SoC is published before May 31, 2018, the two payments will be required in fall 2018 Instalment payments on set dates are currently under study T4 T1 T2 T3 T SoC 80% November SoC 20% January 26 80% October 20% December 55
56 Next steps 56
57 Consultation process Approach Date Consultation meetings Montréal: Oct. 24 Toronto: Oct. 26 Consultation period (submission of surveys and feedback) Oct. 24 to Nov. 15, 2017 Adoption of the SoC and consultation report Dec. 8, 2017 Submission of the SoC and consultation report to RECYC-QUÉBEC Recommendation of the SoC by RECYC-QUÉBEC to the Québec government Adoption of the 2017 SoC by the government of Québec and publication in the Gazette officielle du Québec Before December 31, 2017 January 2018? Before May 31, 2018? 57
58 Questions 58
59 More information Consult our website beginning October 27, 2018 Full presentations from the meetings Webcasts of the meetings Draft 2018 Schedule of Contributions including tables Executive summary on the development of the Schedule of Contributions 59
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