Dec 16 - CA Bottle Bill Processing Fees

The California Department of Conservation today proposed new Processing Payments and Fees for 2009 that will likely result in revenue shortfalls in excess of $3 million/month starting in January.

The Department rejected a proposal by CAW and recyclers to base the 2009 payments on the most recent scrap value data. The payments formula instead relies on the record high scrap values paid during the 12 month period ending September 30. Beginning in October, recyclers have experienced significant declines in scrap values. Those low prices are expected to continue through at least the first quarter of 2009. The combination of processing payments and actual scrap values will fall short of recycling costs. The revenue shortfall for PET plastic could be as high as $3 million per month if average scrap values in the $130-140 range continue into the new year.

Earlier this year, legislation was adopted striking the language in the statute requiring the Department to utilize the 12 months of scrap value data. CAW and others argued that the new language provides the Department with the authority to use the most recent scrap value data. CAW will ask the Department to exercise their authority to adjust processing payments when the final scrap value data for the 4th quarter of 2008 is available (in early 2009). It’s little consolation that next year’s (2010) processing payments and fees will reflect the low scrap prices from the 4th quarter of 2008. Despite the scrap value drop, total processing payments to recyclers for 2009 are expected to be in the $95-100 million range. See table below for details:

 

Glass

 

PET

 

HDPE

 

Recycling Cost (per ton)

 

$105.96

 

$532.95

 

$558.51

 

12 month avg Scrap Value

 

$5.99

 

$362.54

 

$372.22

 

2009 Processing Payment

 

$99.97

 

$170.41

 

$186.29

 

2008 Processing Payment

 

$94.52

 

$197.68

 

$216.33

 

Current Scrap Value*

 

$4.00

 

$132.00

 

$150.00

 

Revenue Shortfall

 

$1.99

 

$230.54

 

$222.22

 

 

 

Monthly Volume Projection

 

53,125

 

14,519

 

1,918

 

Monthly Revenue Shortfall

 

$105,719

 

$3,347,189

 

$426,297

 

*CAW estimate based on recycler survey for Oct & Nov