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Electrolink and Repic price deal brings end to WEEE cash crisis

Waste Electrical and Electronic Equipment (WEEE) producer compliance schemes Electrolink and Repic have reached agreement for the trading of WEEE evidence after months of dispute. The incident threatened to collapse the whole system. So what was the history of the conflict? And what happens now?

WEEE implementation has not yet reached its first birthday and has already experienced a few teething problems. Since July 1 2007 the WEEE Regulations required producers and exporters of electrical and electronic equipment (EEE) to pay for separately collected WEEE to be recycled. 

Under the Regulations producers of EEE have to join producer compliance schemes like Electrolink, Repic and others who arrange to deal with separately collected household WEEE on their members behalf. Producer compliance schemes collect the WEEE from designated collection facilities (DCFs) and need to show evidence to their members that they have collected this WEEE using evidence notes. The producer compliance schemes are contracted with local authorities who own some of the DCFs that collect the WEEE. The DCFs issue the evidence to the schemes to show how much WEEE they have collected. This was the problem that caused the conflict.

Electrolink was contracted to fund the collection and processing of WEEE by a number of local authorities and had a lot more collection sites than they needed so ended up with a surplus of evidence notes. Repic, on the other hand, did not have enough collection sites to provide the recycling required to meet its members obligations under the WEEE Regulations. The Regulations require compliance schemes to trade evidence with each other to balance their books.

Repic had been unsatisfied at the prices that Electrolink had been charging for its evidence and Electrolink had argued that it was only charging cost fees high enough to cover its partners costs.

A source close to the WEEE reprocessing industry revealed to MRW that the situation was leading to some reprocessors of WEEE and local authorities facing severe financial difficulties (www.mrw.co.uk, Feb 22 2008).  The source said that the conflict was so bad that some small hauilers involved in the process even had to take out small mortgages to pay their staff.
Under the WEEE Regulations all producer compliance schemes have until the end of May 2008 to finalise all the evidence needed to show that they have paid for enough recycling to meet their members obligations. Electrolink had an issue with this time frame and said it added to its problems with evidence trading.

Electrolink sales and marketing director Paul Van Danzig said:  The main problem lies in the time frame in which producer compliance schemes have to trade evidence with each other. The evidence for the first trading period started from July 1 2007 and ends on May 31 2008 and the next compliance period does not end until May 31 2009. This is not making cash flow through the system and a quarterly compliance scheme is needed to get a certain amount of cash flowing through the system.

We need to introduce quarterly compliance like they do already with packaging when packaging manufacturing compliance schemes have to buy a certain amount of evidence.
Both parties agreed a price deal last week for the trading of WEEE evidence and say that cash will now flow through the system.

Repic chief executive Philip Morton said that prices had been allowed to escalate because some contractors had not understood which costs could be included in fees for producers. The scheme is responsible for funding around half of all UK WEEE recycling in the household sector. It includes brands such as Hoover, Kenwood, LG and Panasonic.

Morton said: We are delighted that we have reached an agreement. Some felt the extent of producer responsibility was unclear. As part of our discussions the Department for Business, Enterprise and Regulatory Reform (BERR) clarified the position for those that were unclear. The WEEE Regulations are very clear, only a proportion of the total costs are producer responsibility and there are other quite legitimate costs that are to be borne by other stakeholders. DCF site costs for example are to be financed through the distributor take-back scheme. Once BERR clarified this for them it swept away many of the barriers and unrealistic price expectations. Prices for 2007 normalised and fell and continue to fall for 2008 and beyond.

But will this agreement solve the problem for everybody involved in the chain?
DCF Cumbria Waste Management finance director Andy Chant said: Clearly the agreement between the two parties [Repic and Electrolink] is a positive step but it has not yet resulted in Cumbria being able to recover its costs for 2007 evidence.

Cumbria has still funded all of the WEEE processing since July 2007 without getting paid. We hope that further trading now follows allowing us to finally recover most of our costs and reduce our financial exposure. We will have to wait and see.

 

 

 

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