Solid Waste & Recycling

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Cover Story: Setting Handling Fees

Handling fees run from one cent in regions of the U.S. to as much as seven cents for some large containers in British Columbia, Saskatchewan and Yukon (see table). Typically, these fees are arbitraril...


Handling fees run from one cent in regions of the U.S. to as much as seven cents for some large containers in British Columbia, Saskatchewan and Yukon (see table). Typically, these fees are arbitrarily set with little rigorous methodology applied to reflect actual handling costs. In fact, setting fees often falls under the sway of the political process, with subsequent fee structures echoing the demands of the most vocal opponents or proponents.

More recently, however, there is a movement afoot to reassess handling fees in Canada. This year alone, studies in New Brunswick, Nova Scotia and Alberta were undertaken to address the issue. The Beverage Container Management Board (BCMB), the regulatory agency for Alberta’s deposit-return program, commissioned the province’s recent “Acton Model.” This model claims to build a virtual depot based on seven existing depot cost structures. Using container throughput data in addition to cost estimates for such factors as volume, labour, floor space, turnover rates, and comparative handling difficulties, among others, the model calculates a fee per unit.

The Acton model recommends fees from 2.7 cents for aluminum cans, 5.7 cents for refillable beer bottles and 15 cents for gable top, HDPE and other, less common containers. For refillable beer bottles, wine bottles, and plastic juice containers this represents an increase in handling fees of 101 per cent, 55 to 161 per cent and 76 to 200 per cent, respectively. For aluminum cans, it represents a decrease of 10 per cent; the only handling fee that diminished compared with the status quo.

Such new fees would herald substantive change. There’d be increased compensation among the bottle depots, reduced cross-subsidization between container sorts and material types by as much as 16 per cent, and allowance for an adequate rate of return of about 7.6 per cent for investment in a new depot.

However the new fee structure was not adopted with the ease some had anticipated. The Western Brewers Association (WBA) has challenged the BCMB’s study results and methodology. The WBA suggests that the Alberta bottle depot network is analogous to a public utility, and setting fees should therefore be based on standard utility rate setting principles. More specifically, WBA suggests that the widely employed definition of a public utility is entirely consistent with the BCMB’s by-laws.

Specifically, “an enterprise is not regarded as a public utility unless the regulations to which it is subject includes direct control of its rates of charge for service” and that direct control of a utility’s rates for service must be “the protection of the public in the role of consumers rather than in the role either of producers or of taxpayers.”

Greg D’Avignon, executive director of the WBA says “the bulk of the data on which the WBA and other Board members have been deliberating over the last few months has amounted to little more than estimates, averages of estimates and educated guesses.”

In a letter to the BCMB the WBA writes, “In the absence of actual operating costs, the Board is not in a position to responsibly fulfill its mandate and apply its own criteria when changing commissions now or in the future.”


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