CIWMB Electronic Waste Recycling Program

1. R.W. Beck, Inc. Humboldt State University CIWMB Electronic Waste Recycling Program Analysis of 2005 Net Cost Reports

2. Analysis of 2005 Net Cost ReportsOutline 1. Background 2. Results 3. Issues and Considerations

3. 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 The Team

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

5. 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

6. The Math Total Revenue - Costs (Labor, Transportation, Other) = Net Cost ÷ Pounds Handled = Net Cost per Pound

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

9. Key Guidelines • Include costs & revenue for Covered Electronic Waste (CEW) only • Report on collection & recycling separately • Don’t include CIWMB revenue • Report your best, most reasonable estimate

10. Analysis of 2005 Net Cost ReportsOutline 1. Background 2. Results 3. Issues and Considerations

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

12. Sample of 2005 Reports Analyzed

13. Most Common Errors • Wrong forms • Reporting on e-waste other than CEW • Separating collection & recycling activities • Missing line item costs • Arithmetic errors

14. Collection Net Costs in Sample

15. Recycling Net Costs in Sample

16. Net Cost per Pound (2005)

17. Net Cost per Pound (2006 - Preliminary)

18. Comparison of Weighted Average Net Cost per Pound

19. Findings • High variability of net costs • Current payment rates cover *most* participants’ net cost • High variability in suggested “reasonable rate of profit”

20. Analysis of 2005 Net Cost ReportsOutline 1. Background 2. Results 3. Issues and Considerations

21. 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

22. 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?

23. 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

24. Questions? Ed Boisson, R.W. Beck, Inc. 415-499-0919 eboisson@rwbeck.com