California Integrated Waste Management Board 1 CIWMB Board Meeting - Item 12 (Presented at the Strategic Policy Development Committee) Consideration Of Adjustments To The Electronic Waste Recycling Fee To Maintain The Solvency Of The Electronic Waste Recovery And Recycling Account June 17,

California Integrated Waste Management Board 2 This item will cover: Recap of program statistics to date Analysis of fund condition & financing models Overview of future uncertainties Staff recommendation Q & A

California Integrated Waste Management Board 3 Electronic Waste Recycling Act System to pay for the recovery and recycling of covered electronic waste (CEW) – Only CEW from CA sources are eligible – Must be recycled (cancelled) in CA – CIWMB sets payment rates to cover average net costs System is funded through a fee paid by consumers of new covered electronic devices (CED) – DTSC determines what constitutes a CED – CIWMB determines fee structure to maintain solvency

California Integrated Waste Management Board 4 CEW Payment System

California Integrated Waste Management Board 5 Revenue, Payments & Volumes FY 2004/05 - $31 million –$11.4 million claimed (~24 million lbs) FY 2005/06 - $78 million –$45.9 million claimed (~95 million lbs) FY 2006/07 - ~$78 million – ~$75 million claimed (>150 million lbs) FY 2007/08 - ~$83 million projected* – ~$105 million projected (>210 million lbs)*

California Integrated Waste Management Board 6 (Note that 2 nd quarter 2008 quantities represent only a portion of anticipated claims. Recyclers may submit a claim up to 45 days after the end of a reporting month.)

California Integrated Waste Management Board 7 Financial Considerations Fund Condition: –At current rates, EWRRA depletion in FY 08/09 –CIWMB has authority to make adjustments Revenue Source: –Current $6, $8, or $10 fee on retail CED sales Cost Demands: –CIWMB, DTSC, BOE operations –Recovery and Recycling Payments $.48/lb  $.43/lb  $.39/lb

California Integrated Waste Management Board 8 Revenue Considerations CIWMB has obligation to adjust fee to ensure fund solvency –Statute provides adjustment direction –CIWMB must act on or before August 1 st –New fees take effect on January 1 st Degree and structure of adjustment is dependent on need and trends –Program growth, payment rate affect need –Evolving mix of CED, total units sold

California Integrated Waste Management Board 9 Revenue Considerations Historical total CED sales: –2005 – 9.9 million units –2006 – 10.6 million units –2007 – 10.1 million units Allocation of CED sales in size categories: –2005 – 23%72%4% –2006 – 24%67%8% –2007 – 25% 64%11%

California Integrated Waste Management Board 10 Model Assumptions Loan dependent on CEW volumes –Repaid by late 2010 Target average revenue per CED sold –Current average revenue is ~$7.64 per CED CED sales volume and size distribution –Assume approx. constant at 2007 levels Aiming to remain solvent for two-plus FYs

California Integrated Waste Management Board 11 Model 1: Assumes no program growth (volume flat at ~50 M pounds per quarter) $6.6 M loan to EWRRA Target $10.00 average revenue per CED sold Possible fee structures to achieve average per device revenue of $10.00: $6 / $10 / $20 $6 / $9 / $26 $7 / $9 / $24 Fiscal YearRevenues Retailer Admin Fee Pounds Recycled Recycling Payments All Other Expenditures Loan Payments Yr End Balance** FY 2008/09* $ 105,378 $ (2,758) 200,000 $ (80,000) $ (17,664) $ (1,700) $ 3,257 FY 2009/10 $ 104,550 $ (3,137) 200,000 $ (78,000) $ (17,664) $ (5,099) $ 3,907 FY 2010/11 $ 104,550 $ (3,137) 200,000 $ (78,000) $ (17,664) $ 9,657 *Revenue in the 2008/2009 fiscal year includes loan amount. ** Includes a 3% prudent reserve provided for by the Act

California Integrated Waste Management Board 12 Model 2: Assumes moderate program growth of ~2 million pounds per quarter $11.5 M loan to EWRRA Target $12.25 average revenue per CED sold Possible fee structures to achieve average per device revenue of $12.25: $6 / $13 / $22 $6 / $12 / $28 $7 / $12 / $26 Fiscal YearRevenues Retailer Admin Fee Pounds Recycled Recycling Payments All Other Expenditures Loan Payments Yr End Balance** FY 2008/09* $ 121,771 $ (3,102) 220,000 $ (87,880) $ (17,664) $ (2,969) $ 10,155 FY 2009/10 $ 128,074 $ (3,842) 252,000 $ (98,280) $ (17,664) $ (8,908) $ 9,535 FY 2010/11 $ 128,074 $ (3,842) 284,000 $ (110,760) $ (17,664) $ 5,342 *Revenue in the 2008/2009 fiscal year includes loan amount. ** Includes a 3% prudent reserve provided for by the Act

California Integrated Waste Management Board 13 Model 3: Assumes historical program growth of ~4 million pounds per quarter $15.6 M loan to EWRRA Target $15.00 average revenue per CED sold Possible fee structures to achieve average per device revenue of $15.00: $6 / $16 / $30 $7 / $16 / $27 $8 / $16 / $25 $8 / $15 / $31 Fiscal YearRevenues Retailer Admin Fee Pounds Recycled Recycling Payments All Other Expenditures Loan Payments Yr End Balance** FY 2008/09* $ 139,952 $ (3,524) 240,000 $ (99,854) $ (17,664) $ (4,041) $ 14,870 FY 2009/10 $ 156,825 $ (4,705) 304,000 $ (118,560) $ (17,664) $ (12,123) $ 18,643 FY 2010/11 $ 156,825 $ (4,705) 368,000 $ (143,520) $ (17,664) $ 9,579 *Revenue in the 2008/2009 fiscal year includes loan amount. ** Includes a 3% prudent reserve provided for by the Act

California Integrated Waste Management Board 14 Staff Recommendation Set new fee structure at $8 / $16 / $25 – Provides for better economic equity across CED categories than current fee – Keeps lowest rate low and highest rate below $30 – Moderate fee on CED category with largest sales volume, stabilizing revenue and reducing risk of volatility

California Integrated Waste Management Board 15 Future Uncertainties Impacts of DTV Broadcasting Transition – Consumer Electronics Association estimates DTV transition will result in 15 million TV discards thru 2010 – Only 48% of OTA households surveyed plan to get converter box and use existing TV – Direct replacement only one source of CEW; obsoletes in storage will emerge

California Integrated Waste Management Board 16 Future Uncertainties Continuing Growth of CEW Volumes? –Growth flattened in 3 rd, 4 th quarters 2007 and 1 st quarter 2008 –Pace has stalled before, only to pick up Large volumes of CEW still to recover –More CEDs sold than CEW recovered –Collection infrastructure robust, growing

California Integrated Waste Management Board 17 Summary Several key factors to consider –Looming fund depletion –Program growth: may be slowing? –Future discard rate unclear; huge volumes in use –DTV impacts not yet fully felt CIWMB has authority to make adjustments Fee adjustment must ensure EWRRA solvency Structure of adjustments can provide equity and stability Ability to adjust annually allows flexibility and prudence Staff recommends adjusting fee to $8 / $16 / $25