Authority sets Final 2020 Blue Box Steward Funding Obligation

The Resource Productivity and Recovery Authority has set the 2020 Blue Box Steward Funding Obligation at $130.7 million. The steward funding obligation is the total amount that stewards must pay to municipalities for operating the Blue Box Program. The Authority previously approved an interim amount for the first two quarterly installments of 2020 paid to municipalities, as outlined here. On September 22, 2020, the Authority approved the Final 2020 Steward Funding Obligation using an updated methodology and accounting for the arbitration decision on the 2019 Steward Funding Obligation disputed by Stewardship Ontario, the industry funding organization representing stewards.

To determine the Final 2020 Steward Funding Obligation, the Authority used information obtained from its annual municipal Datacall, which surveys municipalities on costs and amount of materials collected through the Blue Box Program. The following factors were also considered:

  • Municipal cost containment. Earlier this year, the Authority undertook a review of the cost containment methodology used to set the steward funding obligation. The review was initiated due to anomalies in the outcome of the previously used cost containment methodology that were likely the result of the significant market changes in 2018. As a result of the review, the Authority updated the municipal cost containment methodology.
  • Steward cost containment. The arbitrator of the SO/RPRA arbitration confirmed in his ruling that the Authority can impose a steward cost containment fee. As a result of the Authority’s review mentioned above, the steward cost containment methodology was also updated this year to avoid large year-to-year fluctuations in the outcome.
  • InKind program. The arbitrator of the SO/RPRA arbitration concluded that there was no basis for adding the value of in-kind advertising used for the Blue Box program to the costs reported by municipalities. The arbitrator also ordered an adjustment to the 2019 Steward Funding Obligation to remove the in-kind costs added to that steward obligation. As a result, the 2019 in-kind amount is deducted from this year’s gross costs.
  • “Non-obligated” materials. The arbitrator of the SO/RPRA arbitration confirmed that it is appropriate to include costs in the steward funding obligation that are related to materials that are commonly found in the Blue Box recycling system, including contamination that ends up in the system and other materials that are not included in the definition of “Printed Paper and Packaging” (such as office and fine paper) in Stewardship Ontario’s Rules for Stewards. As a result, and consistent with prior years, only costs relating to pots and pans that are reported in the Datacall, but not covered by the Blue Box Program, are deducted from the gross costs.
  • Three-year rolling average revenue to reflect volatile commodity prices.
  • Prior year adjustments. Prior year adjustments reflect any errors identified by the Authority in verifying and auditing Datacall information.

Since the final Steward Funding Obligation for 2020 was not available by the first or second quarterly payment dates in June and September 2020, the interim obligation was used to inform the first two payments. The third and fourth quarterly payments have been adjusted in the final 2020 MFAM to ensure that each Blue Box program receives its appropriate share of the final amount.

The Authority will post the 2021 Steward Funding Obligation with the 2021 MFAM in October.

Final 2020 Steward Funding Obligation (2018 data year) 
Reported gross cost$366,648,957.75
“Non-obligated” -$59,171.17
Municipal cost containment-$9,868,722.85
Three-year average revenue-$90,561,743.20
Prior year adjustments -$6,875,678.46
InKind Adjustment -$2,156,414.25
Total net costs$257,127,227.82
50% of net costs$128,563,613.91
Steward cost containment$2,159,868.71
Steward Funding Obligation$130,723,482.63