Building on the projects for the Four-Step Fee Methodology and the Material Cost Differentiation Methodology, we are continuing our work to improve harmonization and fairness in the annual fee setting process with the Disaggregation and Material Category (DMC) Review Project.
The DMC project objectives are to:
- Review the reporting categories used by stewards when completing their annual filing to determine where the categories should be aligned with the MCD study categories.
- Retire fee aggregation used to “average” fee rates for a group of materials now that the MCD methodology is in use and defensible cost differentiation is available to inform fee setting.
Material Category Consultation
October 28, 2021 — Recycle BC, MMSW and MMSM are initiating a steward consultation on proposed changes to reporting categories used by stewards when completing their annual filing to determine where the categories should be aligned with the Material Cost Differentiation study categories.
October 5, 2021 — The DMC Project will be presented at this year’s Annual Steward Meeting (ASM) on October 27. Fees for 2022 include the first phase of the retirement of aggregation, or averaging, for fee setting now that the MCI is fully implemented. The ASM initiates the consultation phase on the proposed changes to reporting categories used by stewards when submitting their annual reports. These changes will more closely align the categories used in the MCD cost impact studies to the steward reporting categories. We look forward to receiving feedback from the steward community on the proposed approach to changing the reporting categories.
The DMC project was first introduced to stewards during MCD consultations in June 2020. It was noted then that MCD categories differ from the current reporting categories, which means there is an opportunity to assess whether the reporting categories used in fee setting should be changed to align with the cost categories.
Whether or not there are changes to the reporting categories, the process of aggregating fees will be retired starting in 2022. Fee aggregation refers to the process of ‘averaging’ the fee rates for a group of materials. The practice was followed when using the ABC methodology because materials were studied in groups. The MCD methodology, however, produces cost impact measurements for each unique material category, so there is no longer a need to aggregate fees given that the cost impact differentiation can be explained.
The DMC project is aligned with the eight guiding principles established by stewards for the MCD Project. It also advances the principles of the fee methodology project:
- All obligated materials should bear a fair share of the costs to manage the packaging and printed paper program, irrespective of whether a material is collected because all obligated stewards who put obligated materials into the marketplace should contribute to the recycling system.
- The material management costs allocated to each material should reflect the material’s impact on the cost to collect and manage it in the recycling system because a material’s unique characteristics can drive costs in distinctive ways.
- The commodity revenue should be attributed only to the materials that earn that revenue because materials that are marketed have value and should benefit from their earned revenue.
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