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Thank you for returning your signed Funding Agreement for the MMSW program. We are looking forward to working with you to help continue diverting waste from landfill, and encouraging increased residential recycling.
As discussed in the May 2, 2014 webinar, MMSW needs to introduce a non-member adjustment factor, which will affect the amount of financing you will receive from us to operate your recycling program.
What is the non-member adjustment factor?
The Waste Packaging and Paper Stewardship Plan stipulates that stewards who join MMSW's program will finance the recovery of the material they supply into the Saskatchewan market.
We cannot assume that all businesses will join our program, and therefore we must make an adjustment to ensure our members are not paying to manage materials for non-members. While MMSW does not have responsibility for making obligated businesses comply with the Regulation and join MMSW, as this responsibility falls to the Ministry of Environment (MOE), we will work with MOE to help identify businesses that are not members with the aim of having them join the program.
To that end, and based on the current number of MMSW members and the tonnes they represent, we will need to apply a non-member adjustment factor. Please note that the factor below is being communicated at this time to meet our commitment to you to provide this information by mid August. This factor is based on the steward reported data that was due to MMSW by June 30, 2013. The data is under review and new stewards continue to join our program. As such, the factor below will be updated later this year to reflect the most current information.
How is the non-member factor calculated?
The non-member adjustment factor was calculated using the following information and calculations:
- MMSW currently estimates that 90,000 tonnes of waste packaging and paper is currently supplied into the province
- MMSW estimates that there are approximately 2,000 companies in Saskatchewan that supply waste packaging and paper to the residential market
- MMSW has approximately 400 member stewards who have registered and reported their supplied tonnes
- MMSW estimates that these 400 members account for 50,000 tonnes, or 55% of the total tonnes supplied, meaning non-member tonnes equal 45% of what's supplied
- With consideration given to the cost-revenue drivers that affect waste packaging and paper (cost to manage materials and the revenue generated from sale on commodity markets), the resultant adjustment factor works out at 40%
- MMSW member tonnes, although representing 55% of total supplied tonnes, actually account for 60% of system costs. This is because MMSW members' tonnes consist of a high percentage of high-cost-to-manage tonnes such as plastics, and a low percentage of low-cost-to-manage materials such as newsprint
- A final calculation is made to account for the fact that 25% of MMSW member tonnes are managed by non-participating municipalities, which reduces the adjustment factor to 30%.
What impact will this have on municipalities?
To demonstrate how the non-member adjustment factor of 30% will work practically, we have put together the following example:
| Step | Result | | 1. Municipality reports tonnes | 1,000te | | 2. MMSW applies non-member adjustment factor | 30% x 1,000te = 300te | | 3. MMSW subtracts non-member adjustment factor from reported tonnes | (1,000te -300te) = 700te | | 4. MMSW calculates payment owing to the municipality | 700te x $156 = $109,200 |
The municipality would have received 1,000 x $156 (the cost per tonne, as detailed in the program plan, for municipalities with a population of 15,000 - 100,000 residents) = $156,000 in the case where a non-member adjustment factor is not required. Will the non-member adjustment factor change? There are two factors that may alter the non-member adjustment factor: - New stewards joining MMSW - MOE compliance activities may bring in new members before the January 1, 2015 launch, which may impact the non-member discount factor. MMSW will communicate any change to the factor to you before the end of the year. In addition, MMSW will monitor, throughout 2015, its overall membership status as new members join and will review the non-member adjustment factor on a quarterly basis and update as needed to maintain the proper balance
- New municipalities taking advantage of the program - non-participating municipalities will have the opportunity once a year in May/June, when MMSW budgets are developed, to join the program for the upcoming calendar year, which may alter the non-member adjustment factor. We will notify municipalities in the summer as to what the non-member adjustment factor will be starting in January the following year
What's next? As you are aware, funding rates are fixed for a two-year term. The non-member discount factor was not known at the time the contracts with municipalities were executed. Should a municipality decide to opt-out following notification of the non-member discount factor, they can do so as per the provision in the Funding Agreement in Section 3.4(b). Municipalities that wish to continue to receive financing from MMSW need take no action. MMSW will stay in touch with you over the next six months ahead of launch, and should the non-member discount factor change, we will certainly let you know. Questions? If you have any questions regarding the non-member discount factor, please email: [email protected]. Very best, Karen Melnychuk, Acting Managing Director, MMSW Kelly Goyer, Director Field Services, MMSW Tamara Burns, National Supply Chain, CSSA Kent Hollister, Supply Chain Planning, CSSA |
