MMSW Non-Member Discount Factor Confirmed for January 1, 2015 Program LaunchNews posted on October 30, 2014
MMSW can now confirm that the non-member discount factor is 25%, effective January 1, 2015 when the program is launched.
In the absence of a fully compliant steward community in Saskatchewan, but with 314 municipalities signed up for industry funding beginning on January 1, 2015, MMSW now has the information it needs to apply a discount factor calculated to ensure that all 314 municipalities are provided with funding and that MMSW does not pay for non-compliant businesses.
With the launch of the MMSW program two months away, 370 businesses have joined MMSW and they collectively reported supplying 50,000 tonnes of waste packaging and paper into the Saskatchewan residential marketplace.
To date 314 municipalities have signed agreements with MMSW and are expected to collect a total of 40,000 tonnes of waste packaging and paper.
While the Saskatchewan regulation does not include a collection or recycling target, the absence of a target makes it difficult for MMSW to estimate its supply chain costs and avoid paying for non-compliant businesses. To address this issue MMSW has applied a voluntary recycling rate of 60% to ensure that each participating municipality receives funding but that MMSW does not pay for free riders. We think that the 60% recycling rate is reasonable, given the current recycling infrastructure in Saskatchewan.
How the Discount Factor was Determined:
Step 1: Calculate MMSW member tonnes to collect: Multiply the 50,000 tonnes as reported by MMSW members by a voluntary 60% recycling rate: 50,000 x 60% = 30,000 tonnes.
Step 2: Calculate the non-member discount factor:
Determine expected amount of tonnes to be collected by participating municipalities: 40,000 tonnes
Subtract MMSW member tonnes from municipal-collected tonnes: 40,000 – 30,000 = 10,000 non-member tonnes. (10,000 tonnes = 25% of the 40,000 municipal-collected tonnes.)
Please note that the provision of a non-member discount factor was anticipated and therefore included in the Funding Agreement Section 6.3 to ensure that municipalities were aware at the time of signing that a non-member discount factor would be applied.
What this means for you:
Please see the example below for how the 25% non-member discount factor will work:
|1. Municipality with a population of 15,000 to 100,000 reports its tonnes to MMSW||1,000 tonnes reported|
|2. MMSW applies non-member adjustment factor||25% x 1,000 tonnes = 250 tonnes|
|3. MMSW subtracts non-member adjustment factor from reported tonnes||(1,000 tonnes – 250 tonnes) = 750 tonnes|
|4. MMSW calculates payment owing to the municipality||750 tonnes x $156* = $117,000|
*As set out on page 14 of MMSW’s Waste Packaging and Paper Stewardship Plan
The non-member discount factor will be assessed on a quarterly basis, and may be adjusted as more Saskatchewan businesses join MMSW.
What are the next steps?
Based on the confirmed non-member discount factor, should a municipality decide to opt out, 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. We will issue signed Funding Agreements over the next few weeks with your vendor number and details of next steps to be taken before the program launches on January 1, 2015.