1. CIWMB Electronic Waste Recycling Program R.W. Beck, Inc. Humboldt State University Analysis of 2005 Net Cost Reports

2. Humboldt State UniversityR. W. Beck, Inc. 1. Background 2. Results 3. Issues and Considerations Analysis of 2005 Net Cost Reports Outline

3. Humboldt State UniversityR. W. Beck, Inc. The Team HSU, Office for Economic & Community Development Margaret Gainer, Director Dan Iharra, PhD, Economics Student Assistants R.W. Beck, Inc. Ed Boisson, Project Manager Greg Broeking, CPA Susan Bush and Mary Chamberlin, Recycling Market Analysts

4. Humboldt State UniversityR. W. Beck, Inc. Project Objectives  Help participants prepare reports  Maximize accuracy and consistency  Provide information to help the Board administer the program

5. Humboldt State UniversityR. W. Beck, Inc. Timeline Jul. 2005 – Project begins Oct. 2005 – Participant survey and literature review Nov. 2005 – Reporting forms and Guide Jan. 2006 – Webinar trainings Mar. 2006 – 2005 reports due Nov. 2006 – Preliminary results; Guide and forms revised Jan. 2007 - Webinar trainings Mar. 2007 – 2006 reports due

6. Humboldt State UniversityR. W. Beck, Inc. The Math Total Revenue -Costs (Labor, Transportation, Other) =Net Cost ÷Pounds Handled =Net Cost per Pound

7. Humboldt State UniversityR. W. Beck, Inc. Net Cost Reporting System  Form 220, Net Cost Report  Worksheets  Form 220a for collectors  Form 220b for recyclers  Guide with Line-by-Line Instructions

8. Humboldt State UniversityR. W. Beck, Inc.

9. Humboldt State UniversityR. W. Beck, Inc. Key Guidelines  Include costs & revenue for Covered Electronic Waste (CEW) only  Report on collection & recycling separately  Don’t include CIWMB revenue  Report your best, most reasonable estimate

10. Humboldt State UniversityR. W. Beck, Inc. Analysis of 2005 Net Cost Reports Outline 1. Background 2. Results 3. Issues and Considerations

11. Humboldt State UniversityR. W. Beck, Inc. Methodology  Preliminary Analysis to Determine Best Approach  Select Representative Sample  Review and “Confirm” Selected Reports (Not an Audit)  Analyze Confirmed Reports

12. Humboldt State UniversityR. W. Beck, Inc. Sample of 2005 Reports Analyzed Item Analyzed Sample Percent of 2005 Totals Number of Collector Reports2911% Number of Dual Entity Reports2071% Total Recovered Pounds CEW in Analyzed Reports43,100,99166% Total Recycled Pounds CEW in Analyzed Reports44,716,43869%

13. Humboldt State UniversityR. W. Beck, Inc. Most Common Errors  Wrong forms  Reporting on e-waste other than CEW  Separating collection & recycling activities  Missing line item costs  Arithmetic errors

14. Humboldt State UniversityR. W. Beck, Inc. Collection Net Costs in Sample

15. Humboldt State UniversityR. W. Beck, Inc. Recycling Net Costs in Sample

16. Humboldt State UniversityR. W. Beck, Inc. Net Cost per Pound (2005) Weighted AverageMeanMedian Percentage Below Standard Payment Rate Recovery Revenue 3.93.80.0NA Cost21.024.617.9NA Net Cost17.120.815.363% Recycling Revenue5.75.55.1NA Cost30.939.131.8NA Net Cost25.233.627.550%

17. Humboldt State UniversityR. W. Beck, Inc. Net Cost per Pound (2006 - Preliminary) Weighted AverageMeanMedian Percentage Below Standard Payment Rate Recovery Revenue 2.02.30.4NA Cost 18.717.215.0NA Net Cost 16.714.914.266% Recycling Revenue 5.86.25.3NA Cost 27.437.229.0NA Net Cost 21.531.023.564%

18. Humboldt State UniversityR. W. Beck, Inc. Comparison of Weighted Average Net Cost per Pound 20052006 (Preliminary) Difference Recovery17.116.7-3% Recycling25.221.5-15%

19. Humboldt State UniversityR. W. Beck, Inc. Findings  High variability of net costs  Current payment rates cover *most* participants’ net cost  High variability in suggested “reasonable rate of profit”

20. Humboldt State UniversityR. W. Beck, Inc. 1. Background 2. Results 3. Issues and Considerations Analysis of 2005 Net Cost Reports Outline

21. Humboldt State UniversityR. W. Beck, Inc. Key Trends  Growing, Immature Industry – Continued Restructuring Likely  Intense Recycler Competition  Mergers, acquisitions, partnerships  Innovative business models  Pass thru of funds to collectors, handlers and generators  Relatively strong end markets and pricing in 2005 and 2006  Changing technologies will radically affect recycling costs, but not yet

22. Humboldt State UniversityR. W. Beck, Inc. Issues for Board Consideration  Which measure of “average net cost” should be used?  Include collector revenue?  Should collector, recycler or both rates be changed?  Are tiered payment rates practical?

23. Humboldt State UniversityR. W. Beck, Inc. Options to Enhance the Self-Reporting Approach  On-site review of documentation and/or audits  Time-and-motion studies  Derive reasonable costs for archetypal programs  Analyze impact of changing technologies  Decline of CRTs, new consumer products, etc.  Analyze recycling industry market trends  Impact of SB20 system on recycling non-CEW material  Document best management practices

24. Questions? Ed Boisson, R.W. Beck, Inc. 415-499-0919 eboisson@rwbeck.com