The two compliance schemes in the row over trading of evidence under the waste electrical and electronic equipment (WEEE) regulations, finally reached an agreement in March.
It comes after more than seven months of dispute, which had threatened to destabilise the regime and raised serious questions over the Business Department’s handling of it.
Under the WEEE regulations, producers of electronic and electrical equipment must pay for its collection, treatment and recovery at end of life (ENDS Report 383, p 42 ). To do this they join compliance schemes, which must obtain sufficient evidence of treatment to cover the obligations of their members, based on market share.
The row revolved around the failure of REPIC, the largest compliance scheme with a market share of some 47%, to sign up enough designated collection facilities to obtain the evidence it needed. This forced the scheme to trade with other schemes. Electrolink had surplus evidence because it had signed up 245 such facilities, despite representing only 0.53% of the market.
Last year, REPIC - whose stated objective is maximum compliance at lowest achievable cost - argued that Electrolink’s costs were too high (ENDS Report 392, p 18 ). Electrolink insisted its costs reflected the need to pay a fair price to councils and waste management companies.
In recent months, the argument expanded. REPIC argued that Electrolink’s over-procurement of evidence was grounds for it to be deregistered. BERR warned that could happen last April, although it then went quiet on the matter. In response, Electrolink called on the environment agencies to take action against REPIC for failing to procure evidence during the required compliance period. However, both schemes were coming under increasing pressure from councils and the waste industry to reach an agreement.
REPIC’s refusal to trade with Electrolink meant the latter’s cash flow became dependent on loans. This effectively stopped when BERR issued a statement that ruled out the use of bank finance to cover short-term costs. The decision meant Electrolink could no longer pay its councils, logistics providers or recyclers. They have been forced to pay for WEEE collection and treatment themselves, with some threatening to stop doing so.
The situation was most dire in rural areas. Wiltshire, Somerset, Suffolk, North Lincolnshire, South Gloucestershire, Gloucestershire, Durham, Dorset, Cumbria, Cornwall, Bournemouth and Bedfordshire were all apparently experiencing difficulties. Some wrote to BERR, asking it to "urgently resolve the crisis".
In most instances, waste contractors underwrote the costs of maintaining collection. SITA, for once, has been covering costs for all its Electrolink-related contracts. However, some councils have been footing the bill themselves for several months. For example, Devon County Council has been paying its subcontractors £25,000 a week to keep collections going.
It had warned that it could not afford to carry on for much longer. "We will continue to fund the collection of WEEE, but we can’t afford to continue doing this beyond the end of the financial year," Ben Jennings, Devon’s waste manager said before the dispute ended. "It won’t be easy to tell the public that we have to stop collecting WEEE because of the mess the regime is in."
A spokesman for Dorset County Council voiced similar concerns, saying, "should this situation not be resolved in the very near future, then it is possible that current arrangements will fall apart".
The cash should start flowing to councils again now REPIC has made a commitment to buy some of Electrolink’s evidence.
It is understood that Electrolink has reduced the prices it offered REPIC following a letter from BERR that stated that "working capital costs" could not be included in its price. A statement from REPIC said "this has eliminated many of the barriers [we had to trading] and… as a result, price expectations have fallen."
Equally, REPIC has softened its stance on costs, recognising there are different collection costs by region and by type of WEEE. It said this was now reflected in its own contracts and dealings with other producer compliance schemes.
Previously, councils have been concerned with REPIC’s position on cost. Ben Jennings of Devon said REPIC had been "unreasonable" with its expectations while others told ENDS they were "short-sighted".
Despite the agreement, Electrolink feels BERR still needs to provide a greater understanding on what can or cannot be included in the price of evidence, according to sales and marketing director Paul Van Danzig. The WEEE advisory board will have to look at this issue urgently to ensure councils are not placed under such financial pressure in future.
One approach might be to switch from six-month to quarterly compliance periods, Mr Van Danzig said, similar to the regime for packaging waste.
SITA’s technical director Gev Eduljee said the case illustrates how confusion still exists in the WEEE regime despite the years of delay in getting it operational. "There is still a lot of uncertainty in the rules of engagement between all parties concerned, including producers, compliance schemes and people caught in the middle like ourselves. The situation does not bode well for [the forthcoming] batteries [regime], which BERR also leads on."