Responding to the Downturn in Recycling Markets Municipal Waste Association

1. Responding to the Downturn in Recycling MarketsMunicipal Waste Association February 5, 2009

2. Presentation Outline • History of Residential Blue Box System Net Costs & Funding • Municipal Funding under BBPP • MIPC’s Actions re Commodity Markets

3. Historical BB System Costs • Year 1 (2004) • Limited 2002 data on net system cost • AMO & SO agreement on net system cost • Year 2 (2005) • Based on actual reported 2003 costs

4. Historical BB System Costs 1) 5/12ths of annual funding 2) 6/12ths of annual funding

5. Historical BB System Costs • Years 3 & 4 (2006 & 2007) • WDO Cost Containment Plan implemented • Reasonable cost bands applied to 2004 & 2005 costs • ODRP tonnes, costs & revenues deducted for 2007 funding • Year 5 & 6 (2008 & 2009) • Based on actual reported 2006 & 2007 costs • As reported costs were within Best Practices report cost model range for system best practice costs • ODRP tonnes, costs & revenues deducted for 2008 & 2009 funding

6. Historical BB System Costs 3) Adjusted to exclude wine and spirits containers under deposit. For 2007 & 2008, LCBO contributed $5 m less steward obligation for non-deposit Blue Box materials to municipalities.

7. BBPP Funding Calculation • Verified reported gross costs • Including amortized capital • Operating costs (except reported administration) • Plus • Calculated administration costs • Calculated interest on municipal capital costs • Equals • Total gross municipal BB system cost

8. BBPP Funding • Total gross municipal BB system cost adjusted for • Prior year corrections • Results of municipal Blue Box audits • Corrections arising from WDO verification • Errors reported by municipalities • ODRP for 2007, 2008, 2009 funding • Less • 3 year rolling average revenue • Equals net system cost • Multiplied by 50% = industry obligation to municipalities

9. BBPP Funding • Industry obligation to municipalities • Less CNA/OCNA in-kind contribution • Less CIF contribution = cash available for distribution

10. Pending Changes to 2009 • LCBO $5 million annual contribution • Less steward obligation on non-deposit materials • Remaining funds distributed to municipalities • In 2007 & 2008; does not continue into 2009 • LCBO not exempted as Blue Box steward for deposit wine & spirits containers by regulation • Stewardship Ontario notified LCBO of obligation under BBPP in 2009 • As part of annual notification process • Including wine & spirits containers as not exempted

11. Pending Changes to 2009 • Stewards must report by March 31 • If LCBO submits report re ODRP data • 2009 municipal funding will be adjusted

12. MIPC’s Actions • MIPC’s actions re commodity markets • Clarified with MOE that composting of paper fibres considered diversion • Liaised with SO re eligible BB system costs to include • Stockpiling costs • Composting costs

13. MIPC’s Actions • Arranged for correspondence from WDO, SO & AMO to Mayors/Members of Council dated January 22 • take every opportunity to market materials to recycling markets, even at reduced revenues • where marketing materials, even at reduced revenues, is not an available option • market materials to recycling markets that charge a tip fee, making every effort to minimize tip fees paid

14. MIPC’s Actions • Arranged for correspondence from WDO, SO & AMO to Mayors/Members of Council dated January 22 (continued) • for paper fibres • where it is not feasible to market materials even at reduced revenues or tip fees • direct materials to permitted composting facilities • where composting facilities are operated by municipalities • make every effort to market the resulting compost for revenue

15. MIPC’s Actions • Arranged for correspondence from WDO, SO & AMO to Mayors/Members of Council dated January 22 (continued) • for non-paper materials • where it is not feasible to market materials even at reduced revenues or tip fees • hold materials pending increased market demand

16. Changes to 2008 Datacall • Able to report • Quantity stockpiled • All materials not just glass & plastics • Quantity disposed • Not processing residue

17. Changes to 2008 Datacall • Stockpiling costs • Report under Blue Box Costs Processing tab • Under ‘Deduction of Stockpiling Cost’ as • Warehousing & transport costs for stockpiled materials • Stockpiled costs deducted in 2008 • Will be added in 2009 if materials marketed • Disposal costs • Not eligible • Do not report in Blue Box Financial Datacall

18. Changes to 2008 Datacall • Able to report market tip fees paid • Added to Section 6.2 costs

19. WEEE Contacting WDO Email Executive Director glendagies@wdo.ca Datacall Datacall@wdo.ca MHSW Report MHSWReport@wdo.ca BBPP Review BBPPReview@wdo.ca Telephone 416 226 5113 Fax 416 226 1368 Website www.wdo.ca