BUSINESS PLAN

Transcription

1 BUSINESS PLAN

2 TABLE OF CONTENTS ACCOUNTABILITY STATEMENT Page 2 INTRODUCTION Page 3 AUOMA Overview Page 3 Strategic Context Page 3 Opportunities to Improve Environmental Outcomes Page 6 VISION MISSION AND MANDATE Page 8 Vision Page 8 Mission Page 8 Operating Principles Page 8 Legislative Mandate and AUOMA Support for Government of Alberta Priorities Page 8 AUOMA s Support for Government of Alberta Priorities Page 10 OUTCOMES, KEY STRATEGIES AND PERFORMANCE MEASURES Page 12 Outcome 1: Financial Sustainability Page 13 Outcome 2: Responsible program management Page 16 Outcome 3: Maximized used oil material collection and recycling Page 18 BUDGET Page 22 Page 1

3 ACCOUNTABILITY STATEMENT The Alberta Used Oil Management Association (AUOMA) business plan and budget for the period January 1, 2018 through December 31, 2020 is prepared in accordance with the requirements of the Lubricating Oil Material Recycling and Management Regulation, as amended, which was enacted under the Environmental Protection and Enhancement Act. AUOMA s business plan is modeled after the Auditor General s Framework for Accountability. All of AUOMA s policy decisions as of December 1, 2017, accountability obligations and relationships are reflected in this business plan and budget. The Government of Alberta s Strategic Plan and Alberta Environment and Park s Business Plan and priorities were considered in the development of AUOMA s Business Plan. AUOMA is committed to achieving the outcomes presented in this business plan and budget. Approved by the Board of Directors, Alberta Used Oil Management Association November 24, 2017 Lee Wilkie Chair Page 2

4 INTRODUCTION AUOMA Overview The Alberta Used Oil Management Association (AUOMA), established by the Government of Alberta 20 years ago in 1997, facilitates the responsible collection and recycling of used oil materials. It collects funds (an Environmental Handling Charge or EHC) from companies that sell or import lubricating oil (e.g., automotive oil), oil filters and oil containers into the Alberta market and uses that funding to incent recycling opportunities across the province. Return Incentives (RIs) are paid to registered processors for picking up materials from collection facilities and major generators throughout Alberta, and ensuring they are recycled. Since our program s inception in 1997, to the end of 2016, we have facilitated the recovery of: Over 1.5 billion litres of used oil Almost 131 million used oil filters More than 32 million kilograms of used oil containers Strategic Context As AUOMA navigated its 20 th year of operation in Alberta in 2017 and looks ahead to the next three years, it finds itself at a crossroads. Environmental awareness and recycling efforts in many areas are growing rapidly in the province as the result of education, effective recycling programs and a desire to preserve our natural resources. However, that growth in awareness and recycling activities means organizations like AUOMA need the flexibility and resources to adapt to a quickly changing business. The EHCs AUOMA may collect to fund the collection and recycling of used oil materials are set in regulation the Lubricating Oil Material Recycling and Management Regulation (AR 82/1997) and the Lubricating Oil Material Environmental Handling Charge Bylaw (AR 228/2002) and have not increased in 20 years. The cost of recycling has risen over that time. Consequently, over the past several years, we have been working diligently with the Government of Alberta to have the regulations amended and ensure AUOMA has the ability to adjust EHCs as needed to continue to encourage environmentally sound collection and recycling of used oil materials. However, the provincial government has not yet moved forward with the needed regulatory changes. We are currently in a difficult position financially, with no options to increase our revenue and recycling rates. Our net assets vary in relation to the amount of new oil material imported and sold into Alberta (EHC revenue), and the amount of material collected and recycled (RI expenditures). The regulated EHCs, set in 1997, are AUOMA s sole source of revenue to fund administrative operations and pay RIs. RIs are our key financial tool to encourage recycling and public access to used oil materials collection sites across Alberta. AUOMA s RI expenditure for 2017 is projected to be nearly 98 per cent of EHC revenue collected, which is not sustainable. After almost a decade of deficit spending, AUOMA is at risk of depleting the minimum working capital needed to cover expenses and manage risks. As a result, in our Business Plan, AUOMA s Board committed to decrease the RI payout to balance its budget by Lowering the RI rate is the only tool the board has to reduce costs and preserve AUOMA s financial sustainability. Page 3

5 Alberta s RIs are already the lowest in the country among regulated used oil recycling programs, and are no longer sufficient to cover the actual cost of recycling used oil containers and filters. The profit margin for collectors and processors on these materials is minimal. The Board of Directors made the difficult decision to reduce the RI rate, knowing it could result in a reduction in recycling rates if collectors and processors find it uneconomic to continue to serve all corners of the province. We consulted with used oil material collectors and processors in 2017 about the RI reduction and we continue to analyze the marketplace. Based on that input and our current financial situation, the Board of Directors approved a number of changes to the used oil materials recycling program that will be effective January 1, These include: 1. Decreasing the used oil RI rate by 15 per cent across all zones of the province. 2. Paying processors on processed weight rather than the current practice of paying on collected weight. This further reduces the RIs paid by ensuring payment is made only on material that is actually recycled and provides more transparency. 3. Increasing the RI on used oil plastic containers and filters to account for the estimated average difference between processed weight and collected weight for these materials. Since the RIs paid on containers and filters are already the lowest in Canada, this neutralizes the effect of paying on processed weight for these materials. The 15 per cent RI decrease combined with the shift to paying on processed weight will assist AUOMA in reducing our 2018 expenditures by approximately $1 million. This will allow us to balance our budget for 2018, while doing our best to maintain the integrity of the used oil materials recycling program in Alberta. Future budgets remain uncertain as the RI decrease could lead to less material being recycled and in turn, further reduce AUOMA s expenditures on recycling incentives. As a result of the changes and AUOMA s financial situation, collectors and processors will have to find a way of funding their used oil material recycling activities and remain viable. It will also be challenging for municipalities that may experience a decrease in service or have costs passed on to them by collectors and processors. It is also possible some collectors, processors and collection sites will get out of the business altogether. Page 4

6 Other factors impacting AUOMA s operations There are other factors currently affecting AUOMA s operations and ability to remain viable. 1. Low Commodity Prices AUOMA s program revenue is tied to the collection of EHCs on the sale of new oil products. Lower sales of new oil materials directly reduce AUOMA s revenues. Our revenue declined eight per cent in 2016, corresponding with the decline in sales of new oil products. Lower revenue also hinders AUOMA s ability to raise RIs to address market shortfalls and demand for used oil materials. 2. Collection Site Closures Low commodity prices, coupled with AUOMA s already low RIs, result in insufficient system-wide revenue to ensure free, province-wide recycling opportunities for Albertans. There is a growing tendency for registered collectors to pay nothing, charge collection sites for material pick-ups, or refuse to collect from some northern, rural and low-volume collection sites (due to the relatively low volume of materials these sites produce compared to the transportation costs of reaching the sites). The result is a growing number of collection sites finding it uneconomic to remain open and/or collect material from the public for free. Since 2014, Alberta has lost approximately 30 per cent of its collection sites across the province. Red Deer and several smaller communities are currently without public collection sites. 3. Other Plastic Automotive Fluid Containers Alberta is the only regulated used oil recycling program without compatible automotive materials as part of its recycling program. These materials include antifreeze and antifreeze containers. Some provinces also collect and recycle containers such as diesel exhaust fluid, brake cleaner fluid and lubricant aerosol containers. Though AUOMA cannot collect EHCs to fund the cost of recycling the other automotive plastic fluid containers that are deposited into AUOMA s collection system (e.g., diesel exhaust fluid, windshield washer, and antifreeze containers), they are still accepted at collection sites because they are recyclable and being kept out of landfills. These additional containers are estimated to make up approximately 21 per cent of all the plastic containers managed by the program. AUOMA made a business case several years ago for the Government of Alberta to include other automotive materials in its program and feels strongly that antifreeze should be included as well. This would bring us in line with other UOMA-operated provincial programs across Canada. To date, the provincial government has not expressed support for these recommended changes. As a result, AUOMA can no longer afford to pay RIs for the collection and recycling of non-program materials and the Board has made the difficult decision to eliminate payments on these materials by 2019, unless changes are made to regulation to designate these materials as materials to be managed by the program (see key strategy 1.2 on page 14). Page 5

7 Figure 1: Used oil materials collected and recycled by regulated used oil materials recycling programs in Canada. Opportunities to Improve Environmental Outcomes AUOMA s program is 20 years old and despite the current challenges, we cannot lose sight of the fact that it was one of the first generation of product stewardship/recycling programs. Our program modeled the way by shifting the costs of recycling from municipalities and general taxpayers to the producer/users of the products. The program successfully created a market for the collection and recycling of used oil materials at a time when there were limited options. There are now programs operated by used oil management associations in British Columbia, Saskatchewan, Manitoba, Quebec, New Brunswick and Prince Edward Island. AUOMA works closely with these associations to promote and encourage the environmental, economic and social benefits of recycling used oil materials in Canada. That collaboration is increasingly important as we collectively pursue new opportunities to be more cost effective, explore further environmental benefits and share what we each continue to learn about used oil material recycling. In fact, we benchmark much of our program against those in other jurisdictions. Page 6

8 As we work to balance our budget for 2018, AUOMA is examining and pursuing a number of opportunities to enhance our recycling programs. These activities are limited by our current budget constraints, but our Board of Directors is committed to pursing them to the extent possible: Monitor and conduct environmental research on used oil materials to better understand the relative environmental effect of various end uses. Based on these analyses, potential strategies can be developed to encourage better environmental outcomes, such as reduced greenhouse gas emissions. AUOMA s Board of Directors can then determine if these strategies are justified within the parameters of sound market economics. Explore the feasibility of adopting environmental performance indicators that measure the environmental effect of the entire recycling process, such as greenhouse gas emissions, carbon footprint, water use and substance releases. Lifecycle assessment, for example, is a tool for helping businesses, governments and program operators assess their performance against these indicators and implement improvements. While there are no applicable performance indicators that currently exist in Canada for used oil materials, AUOMA will extend its research to identify applicable performance measures to stewardship programs for other materials in Canada and internationally. Encourage banning the practice of using road oil for dust suppression, which has recently reemerged in some parts of Alberta (the practice is banned in all other jurisdictions in Canada). Used oil is a value-added commodity that can and should be continually recycled and road oiling prevents that from occurring. Page 7

9 VISION, MISSION AND MANDATE Vision AUOMA is a renowned industry-driven organization facilitating the recycling of designated waste materials, and a recognized leader in supporting industry best practices that achieve optimal recycling of materials and sound environmental outcomes for the benefit of all Albertans. Mission AUOMA manages effective and efficient used oil materials waste minimization and recycling programs in Alberta, in keeping with Alberta Environment and Parks mission, to ensure effective stewardship of environmental systems that enable a sustained high quality of life in Alberta. AUOMA will also fulfill its mission and realize its vision through sound policies and good governance, supporting and supported by engaged stakeholders, effective communication and full accountability. Operating Principles In delivering its program, AUOMA follows key principles, which guide its policies, day-to-day operations, relationships with stakeholders and decision-making activities: Environmental protection: AUOMA should encourage used oil material recycling activities that achieve optimal and measurable environmental outcomes. Accountability: AUOMA is accountable to the Minister, its members and Albertans, and carries out its activities in an open, transparent and fair manner. Innovation: AUOMA encourages innovation and best practices in its business and networks. Partner and stakeholder involvement: AUOMA collaborates with its partners and stakeholders in developing its program and strives to create a level playing field for businesses involved in used oil material recycling. Responsible financial management: AUOMA is committed to managing its financial resources to ensure a sustainable program that facilitates environmentally sound recycling, while aiming to minimally affect the used oil recycling market. Legislative Mandate and AUOMA Support for Government of Alberta Priorities AUOMA is an Alberta-based, not-for-profit association that was established in 1997 under the Environmental Protection and Enhancement Act, 2000 (EPEA) and the Lubricating Oil Material Recycling and Management Regulation (AR 82/1997, the Regulation ) to deliver programs and initiatives that facilitate the collection and recycling of used oil materials for the benefit of Albertans. AUOMA is also bound by the regulated Lubricating Oil Material Recycling and Management Bylaw (AR 227/2002), which appoints it the administrator of a recycling fund to incent waste minimization and recycling of used oil materials. The fund supports activities such as communications, education, and research and development. The recycling fund s revenue is made up of EHCs, which are regulated fees Page 8

10 remitted by oil product manufactures and primary suppliers of lubricating oil products, as set in the Lubricating Oil Material Environmental Handling Charge Bylaw (AR 228/2002). AUOMA is directly accountable to the Minister of Environment and Parks to carry out its mandate. It is also accountable to its members and the Alberta public for the appropriate and transparent management of its fund, and to encourage sound environmental outcomes as a result of fund expenditures. Its members are the manufacturers and primary suppliers of lubricating oil and oil products in Alberta. In accordance with its mandate as a delegated administrative organization of the Government of Alberta (GoA), AUOMA ensures that its outcomes, strategies and activities are consistent with the GoA s vision and desired outcomes, Alberta Environment and Parks (AEP) outcomes and strategies, and the Minister s mandate under the Environmental Protection and Enhancement Act. Following is a summary of the government s relevant goals and strategies as outlined in the Government of Alberta Strategic Plan and AEP s Business Plan, and an explanation of how AUOMA s business plan supports them. Government of Alberta s Strategic Plan 1 Outcome One: Working to make life better by creating and supporting jobs Stabilizing and diversifying Alberta s economy and creating good paying jobs continues to be a key focus for government. Many areas of the economy have been adversely affected by the drop in oil prices. Key Initiatives and Activities Supporting Outcome One Diversifying the Economy: Through a number of programs and initiatives, government is committed to attracting investment, helping Alberta businesses grow, supporting the creation of jobs, enhancing market access and creating opportunities through diversification, research and innovation. Supporting Alberta Businesses: Contributing more GDP per capita than small businesses anywhere in the country, small and medium-sized enterprises (SMEs) are essential to Alberta s economy. In addition to providing jobs, they inject about $100 billion a year into the economy. Encouraging investment and market diversification: Action is also being taken to open new markets for Alberta goods and services. This includes showing leadership on the environment through Alberta s Climate Leadership Plan, Government of Alberta Strategic Plan, Government of Alberta, Page 9

11 demonstrating respect for Indigenous peoples and working collaboratively with other governments across Canada and around the world. Alberta Environment and Parks Business Plan 2 Outcome One: Environment and ecosystem health and integrity Albertans care about the health and integrity of their environment and ecosystems and the ministry is committed to a renewed approach to conservation, biodiversity and ecological integrity. Productive relationships and strategic partnerships that include Albertans are needed to achieve clean air, reduced greenhouse gas emissions, quality water, sustainable water supplies, productive and sustainable lands, conserved natural landscapes, protected areas and ecosystem services. Key Strategies 1.2 Ensure environmental protection, conservation and ecosystem integrity through: updating provincial waste management through revisions of waste control regulations and implementation of contaminated sites guidance document. The Government of Alberta still tracks municipal solid waste to landfills (kilograms of municipal solid waste, per capita, disposed of in landfills). However, it has shifted to be a performance indicator rather than a measure as the results are highly influenced by external factors, and Environment and Parks has limited contribution toward achieving performance metric results which align. AUOMA s Support for Government of Alberta Priorities AUOMA s program contributes to a diversified and greener economy. It relies on a large network of collection facilities, registered collectors that transport materials to processors and registered processors that undertake primary recycling of used oil materials. There are many small businesses that have grown and developed through programs like AUOMA s, and that help keep costs down and the market competitive. In 2016, AUOMA surveyed its network and determined that its program funding supports approximately 300 direct jobs and many more indirect jobs. AUOMA s program also contributes to greenhouse gas (GHG) reductions. The effect of recycling on GHGs has been studied extensively in Canada, and it s readily accepted that recycling programs result in GHG savings. AUOMA s counterpart in British Columbia, the British Columbia Used Oil Management Association, completed a GHG study on its program and determined that the program saved 117 million kilograms of Business Plan, Alberta Environment and Parks, Page 10

12 CO 2 equivalent in 2009 from recycling used oil, oil filters, and oil containers 3. If future budgets allow, AUOMA would ultimately like to do a similar study in Alberta. AUOMA s program diverts municipal solid waste from landfills and prevents contamination of our natural environment and waterways. AUOMA s program also contributes to environment and ecosystem health and integrity. Program funding supports investment in activities and infrastructure that promote responsible stewardship of used oil materials Greenhouse Gas (GHG) Savings Study Report, Conestoga-Rovers & Associates, Prepared for the British Columbia Used Oil Management Association. Page 11

13 OUTCOMES, KEY STRATEGIES AND PERFORMANCE MEASURES While AUOMA s focus for 2018 is balancing its budget, we continue to build on our other desired outcomes for the program that are aimed at re-establishing AUOMA s position as a leader in used oil material recycling. There are important and exciting opportunities to expand the program and work with the other used oil management associations in Canada on initiatives like: creating new recycling options for used oil materials that are not currently recycled (e.g., non-metallic filters and bag-in-a-box containers); harmonizing programs so all Canadians have the same opportunity to recycle used oil materials; and working towards a circular economy that sees products continually recycled. The work we do with other Canadian UOMAs is the basis for our benchmarking as an organization. Everything we do and the decisions we make for the Alberta program are compared with what is happening in other jurisdictions through our national working group, the National Used Oil Materials and Antifreeze Advisory Council. We continually explore precedent and lessons learned to ensure we are operating with the highest standards and level of achievement possible. AUOMA will continue to work with stakeholders and the Government of Alberta to see the necessary regulatory changes made to allow us to adjust our EHCs and have sufficient, sustainable funding to meet our recycling mandate. Improved regulation, program operations and recycling measurement are critical to return AUOMA to a position of environmental leadership. To help ensure that happens, the Board has developed the following strategic direction for AUOMA over the next three years. A number of our strategic priorities and performance measures have changed from the Business Plan and new ones are under development. This is in keeping with AUOMA s need to balance its budget, shift our business priorities and improve our business planning approach. The Business Plan highlights our three desired outcomes moving forward: 1. Fiscal Sustainability 2. Responsible Program Management 3. Maximized Used Oil Material Collection and Recycling Rates Key strategies and performance measures have been updated or added for each outcome to reflect how we intend to achieve those outcomes and to better track our performance. The methodology for each measure can be found in either the key strategy descriptions or under the performance measure tables. With the new business planning approach, AUOMA anticipates future reporting on our desired outcomes and strategies (in our annual reports) to be more effective, logical and transparent. However, with the significant changes we are making to balance our budget, it is possible measures for program outcomes (i.e., public satisfaction and support) might drop. Page 12

14 Outcome 1: Financial Sustainability Key Strategies 1.1 Balance AUOMA s budget After consulting with used oil material collectors and processors, and continuing to analyze the marketplace, AUOMA will be taking the following actions to reduce its 2018 expenditures by approximately $1 million and balance its budget while doing our best to maintain the integrity of the used oil materials recycling program in Alberta: 1. Decrease the used oil RI by 15 per cent across all zones. 2. Pay processors on processed weight rather than the current practice of paying on collected weight. This ensures payment is made only on material that is actually recycled and provides more transparency. 3. Increase the RI on used oil plastic containers and filters to account for the estimated average difference between processed weight and collected weight for these materials. Paying on processed weight encourages more efficient collection and recycling processes (i.e., fewer non-program materials) while the increase in the RI will help ensure containers and filters are still recycled. Figure 2: Net assets status quo and with oil RI decrease Note: AUOMA s net assets fluctuate over the course of a year because of the significant fluctuations between when revenues are received and when expenditures are paid on a month-to-month basis. The minimum working capital requirement shows the minimum funds on hand needed to ensure AUOMA can meet its expenditure obligations as they come due. Page 13

15 1.2 Eliminate payments of recycling incentives on non-program materials AUOMA has historically collected and recycled non-program automotive plastic containers (i.e., diesel exhaust fluid, windshield washer fluid and antifreeze) because they are 100 per cent recyclable and it is not economically feasible or practical to sort them out when they are deposited by Albertans into the system. However, regulation does not allow us to collect EHCs to fund the cost of recycling these containers, which make up approximately 21 per cent of the plastic containers managed by the program. AUOMA can no longer afford to fund their collection and recycling. Based on a review of its RI program in 2017, AUOMA will develop new compliance measures for processors and collectors by 2019 and will no longer pay RIs for the collection and recycling of nonprogram materials. 1.3 Pursue opportunities for additional shared administrative services with other used oil management associations across Canada. AUOMA will continue to share program administration with the BC Used Oil Management Association to maximize cost efficiencies. For the past decade, the UOMAs have shared the costs of administering a national website to provide common information to Canadians and UOMA stewards. We have also shared the costs of EHC compliance reviews to ensure each UOMA is collecting all the revenue it is owed. These cost-sharing initiatives will continue. We are exploring additional opportunities to collaborate and share services with the other UOMAs, including: An improved one-window EHC remittance system for stewards to report and remit fees to all UOMAs. Having an effective one-window approach will reduce the costs of stewards participating in each provincial program and will improve the efficiency of data collection and analysis for each UOMA. Cost-sharing for additional communications strategies. AUOMA will also continue to collaborate with the other recycling delegated administrative organizations in Alberta on campaigns to build program awareness and support. 1.4 Pursue regulatory changes for the used oil materials program AUOMA will continue to pursue and work with the Government of Alberta on regulatory changes that will help AUOMA achieve financially sustainability and fulfill its recycling mandate. The regulation governing AUOMA s operations has not changed since The EHCs are set in that regulation so AUOMA is unable to change them to align with the rising costs of recycling over the last two decades. As a result, our current fee structure is limiting our ability to meet our mandate of enabling the collection and recycling of used oil material in all areas of the province. Page 14

16 Performance Measures Metric 2016 Actual 2017 Estimate Annual net revenue (deficit) 1 ($267,401) $(430,000) $7,000 $83,000 $107,000 Net Assets 2 $7,193,057 $7,098,000 $7,105,000 $7,195,000 $7,302,000 1 Annual net revenue (deficit) is calculated as total revenues less total expenditures. Because a balanced budget is AUOMA s main focus, our deficit is a crucial measure right now. Assumptions are included in the chart below (with actual $ values for revenues/expenditures added this year to show slight variances that may not result in a percentage change). Estimates/targets have been revised from those reported in the Business Plan and 2016 Annual Report due to some recovery in the marketplace overall and in the sale of used oil material over the past year, which has resulted in an improvement in projected oil sales. Growth/Change 2016 %Change/ Actual 2017 % Change/ Estimate 2018 % Change/ 2019 % Change/ 2020 % Change/ Oil EHC -11.3% $7,673, % $7,965, % $8,124, % $8,287, % $8,453,155 RI -9.7% $6,840, % $7,100,998 $6,156,566 $6,279,697 $6,405,291 Filters EHC -7.9% $4,778,692 $5,026, % $5,127, % $5,229, % $5,334,433 RI 8.3% $4,014, % $4,049,611 $4,130,603 $4,213,215 $4,297,479 Containers EHC -7.6% $2,196, % $2,195,322 $2,217,275 $2,239,448 $2,261,842 RI -4.8% $3,480, % $3,730,820 $3,768,128 $3,805, % $3,843,867 2 A minimum of $3.5 million in working capital is needed to meet ongoing expenses and cash flow fluctuations, barring new, increased or unforeseen costs. Page 15

17 Outcome 2: Responsible program management Key Strategies 2.1 Improve governance practices to achieve a level of excellence AUOMA is accountable to the Minister of Environment and Parks, its members and Albertans, and will carry out its business in an open, transparent and fair manner. It will maintain and be governed by its policies and procedures, which are set out in its Governance Manual. It will continue to work cooperatively with AEP to develop clear expectations for used oil material collection and recycling, and will continue to report on performance through its Annual Report. The Board of Directors has approved a systematic plan to improve its governance practices and shift to reporting on outcomes. Improvements will be made to AUOMA s governance manual, policies and procedures, as necessary, based on best practices. 2.2 Implement electronic systems that improve administrative efficiency. The electronic claims submission system approved in 2017 by the Board will reduce AUOMA s administrative costs by improving the efficiency of claims processing and enabling more effective compliance reviews. In 2018, all large processor RI claims and related information will be required to be submitted into the electronic claims database (Progression Live). By 2019, disincentives will be put in place for all collectors and processors who are still manually submitting claims. AUOMA will also continue the review of, and improvements to, its information technology system. A 2017 review identified critical improvements needed to ensure AUOMA can continue to effectively manage and analyze the data it needs to collect to ensure the veracity of the steward EHC payments and processor claims. In 2018, AUOMA will invest in the first of three phases of upgrades needed to improve the efficiency of revenue processing and internal data management. 2.3 Work with UOMA partners to optimize revenue collection AUOMA and its provincial counterparts work closely to ensure revenue collection in their used oil material recycling systems is optimized. Each year, a national EHC compliance plan is developed and implemented by all UOMAs. Reviews take place between March and October. National cooperation ensures administrative efficiency for stewards (i.e., one compliance review rather than one review per province). It also ensures the identification of stewards that are remitting into one jurisdiction, but should be remitting into several. Page 16

18 Compliance reviews are conducted on all stewards at least once every three years, though stewards that are large contributors or that were found to be out of compliance in past reviews, are reviewed more often. AUOMA is also working toward implementing an updated Original Equipment Manufacturer (OEM) Category Summary. The OEM Category Summary identifies EHCs owed on original equipment sales and imports into Alberta. The list was reviewed against changes in automotive makes and models over the past several years to ensure a fair EHC is collected from all vehicle models. 2.4 Implement changes to AUOMA s compliance system to improve the accuracy of reporting on materials collected, materials recycled and the end fate of materials. AUOMA is undertaking a review of its compliance system to ensure the reporting of used oil materials collected and recycled, as well as the end fate of those materials, is as accurate as possible. Performance Measures Performance Measures 2016 Actual 2017 Estimate Review and improve Director s Governance Manual n/a Begin review Complete Review Manual updated as needed Manual updated as needed Review AUOMA bylaws n/a n/a n/a Begin review Complete review Administrative costs/efficiencies as a percentage of total revenue % 5.1% < 5% < 5% < 5% Percentage of RI claims submitted into the electronic claims database (Progression Live) % 80% 95% 3 AUOMA aims to keep administrative costs at less than 5% of its overall annual revenue by reducing discretionary expenditures in periods where revenues decrease. 4 In 2018, AUOMA will pay RIs, a financial incentive, based on the amount of material processed. The metric will measure dollars of RIs paid through Progression Live as a percentage of the overall RIs paid. Page 17

19 OUTCOME 3: Maximized used oil material collection and recycling Alberta s program should provide reasonable access for all Albertans to recycle used oil materials. However, the processor and collector network must be monitored to ensure any issues that could hinder the collection and recycling of used oil materials are caught early. The recycling network consists of processors, collectors and collection sites. In 2016, Alberta registered several new processors and collectors, a sign of a competitive market system. However, Alberta lost approximately 130 collection sites in the last three years; the effect of this loss is undetermined. Research and data are needed to determine whether pockets of Alberta are underserviced and if so, a plan must be created to correct this gap. AUOMA s primary aim in this Business Plan is to balance its budget. In the absence of regulatory amendments that increase revenue (i.e., EHCs), AUOMA must reduce its main expenditures (i.e., RIs). Two market drivers encourage the collection and recycling of used oil material in Alberta, and in provinces with regulated programs across Canada, including the: market value of the processed material, and recycling incentives paid (i.e., RIs). The market value of processed used oil materials has declined in recent years, corresponding with the downturn in the economy. Given current market economics, AUOMA expects reducing RIs will cause some processors and collectors to find it uneconomic to continue to collect all used oil materials from all areas of the province. AUOMA is concerned this will lead to a decline in collection coverage, unless municipalities accept the cost of providing this service. Key Strategies 3.1 Enable an effective collection network for used oil materials. AUOMA will continue to monitor the availability of public collection sites available for Albertans to recycle used oil materials. In 2018, we will identify gaps in coverage and options to improve coverage in areas that are underserviced. In 2019, AUOMA will implement actions to improve collection in underserviced areas. AUOMA will also monitor the health of the collector processor network servicing our program with a plan to assess and report to stakeholders on the effects of AUOMA s cuts to its recycling incentives on collector/processor activity in Alberta. Page 18

20 3.2 Continue to provide financial incentives to encourage recycling of program materials In 2017, AUOMA s Board directed that recycling incentives be paid on processed weight rather than collected weight (which provided an unintended incentive to bulk the collected weight with nonprogram materials). Paying on processed weight encourages improvements in the efficiency of collecting program materials, and processing those materials into value-added products. Reporting on the amount of material that is collected and ultimately processed into value-added materials is a best practice being adopted by a growing number of waste stewardship programs in Canada, as it provides more transparent and accurate information about the environmental and economic effects of the used oil material recycling. The switch to paying on processed weight will begin in The effects on collectors and processors, and on collected weight will be monitored and reported on annually. AUOMA will also monitor the effects of the 15 per cent cut to used oil recycling incentives on used oil materials collection. If collection decreases, we will develop and implement options to help ensure all Albertans have the opportunity to recycle their used oil materials. 3.3 Educate Albertans about the program, and provide clear and readily available information on how to recycle used oil materials by: Developing and implementing a strategic communications plan for the program. Providing clear and timely information on AUOMA s program on its web site. Continuing to partner with Alberta Recycling and the Beverage Container Management Board on joint communications activities highlighting recycling initiatives in Alberta. Implementing the newly updated visual identity for AUOMA that is a clear and professional representation of our mandate. Publishing a business plan and annual report each year that highlight AUOMA s desired outcomes and our progress towards achieving them. Conducting bi-annual public surveys to gauge support for and awareness of the program, and to identify opportunities for improvement. Consulting with collectors and processors on a regular basis on opportunities for program improvements. Page 19

21 Performance Measures Metric 2016 Actual 2017 Estimated Proximity to public used oil collection depots that collect all three program materials 5 n/a n/a Number of collection sites Develop baseline Set target Set target Identify collection gaps Set target Set target % of used oil material collected 7 Used oil Used oil filters Used oil containers 8 % of Used Oil material processed 9 Used oil Used oil filters Used oil containers Collector and processor n/a n/a n/a n/a n/a n/a Set baseline Set baseline Set target Set baseline Set target Set target satisfaction 10 n/a n/a Public support for recycling used oil materials 11 n/a 90% 90% 12 90% 90% Public support for paying environmental fees to recycle used oil materials n/a 76% 76% 76% n/a Public awareness of used oil recycling 13 n/a n/a n/a Under development Under development 5 This measure is new and under development. A baseline and future targets will be developed in The purpose of this target is to measure how easy it is for the average Albertan to properly dispose of all their used oil materials. 6 This is the first year the number of collection sites is being reported as a performance measure. 7 Material collected (formerly identified as material recovered) is calculated as the amount of material collected divided by the amount of material available for collection. The quantity of material available for collection equates to the sale of new oil material for which an EHC was paid to AUOMA, except for oil which includes an adjustment for the amount of oil consumed during use. 8 In addition to used oil containers, the used containers category includes other used plastic automotive fluid containers (i.e., antifreeze, windshield washer, and diesel exhaust fluid containers) for which AUOMA does not receive an EHC, but does provide RI payments. Based on studies, these other automotive containers are estimated to make up 21 per cent of the volumes recovered. Page 20

22 9 Material processed is calculated as the weight or volume of material that exits the recycling process as a valueadded product divided by the amount of material available for collection. The quantity of material available for collection equates to the sale of new oil material for which an EHC was paid to AUOMA, except for oil which includes an adjustment for the amount of oil consumed during use. 10 This measure is new and under development. A baseline and future targets will be developed in It will replace the number of web site visits as AUOMA has determined that is no longer a useful measure. Instead, we will focus on measuring both public satisfaction and awareness, as well as the level of satisfaction collectors and processors have with our program. 11 AUOMA conducts its public survey on the used oil materials recycling program biannually. The most recent survey was conducted in Those results are reflected in the 2017 estimate and 2018 target. The next survey will be conducted in The 2018 and 2019 targets have not been increased due to the difficult program changes occurring in AUOMA expects lower levels of service will be met negatively by Albertans so we feel maintaining the level of public satisfaction will be a significant achievement. 13 Public awareness will be measured in the next survey to be conducted in Page 21

23 BUDGET 2014 Actual 2015 Actual 2016 Actual 2017 Projected 2018 Budget 2019 Budget 2020 Budget Revenue Environmental handling chrgs $ 18,233,435 $ 16,144,039 $ 14,660,659 $ 15,187,673 $ 15,469,474 $ 15,756,690 $ 16,049,430 EHC Compliance Reviews 440, , , ,000 50,000 50,000 50,000 Investment income - Net 311,060 65, , , , , ,000 Interest & other income 93,711 18,129 12,571 1,000 10,000 10,000 10,000 Registration fees 2,202 3,400 1,200 2,000 2,000 2,000 2,000 Total Revenues 19,080,933 16,396,562 15,082,227 15,831,673 15,701,474 15,988,690 16,281, Actual 2015 Actual 2016 Actual 2017 Projected 2018 Budget 2019 Budget 2020 Budget Expenditures Program costs Return incentives $ 16,955,300 $ 15,749,373 $ 14,263,546 $ 14,881,429 $ 14,055,296 $ 14,298,721 $ 14,546,637 Communications 127, , , , , , ,000 Mgmt and admin contracts - Program 71,806 58,223 94, , , , ,416 Consulting 52, ,626 99, , , , ,000 Legal - Program 127,459 73,182 86,634 95,000 85,000 75,000 75,000 EHC compliance reviews 34,329 53,462 42,048 50,000 50,000 50,000 50,000 Program Related Travel - 3,296 5,288 10,000 10,000 10,000 10,000 Bad Debt 88,781 9,594 (6,594) 5,000 5,000 5,000 5,000 Total Program costs 17,456,982 16,235,475 14,724,002 15,489,429 14,946,796 15,173,121 15,424,053 Administrative costs Mgmt and admin contracts - Admin 500, , , , , , ,664 Board expenses* 41,167 46,386 41,240 45,000 71,500 50,000 52,500 Office and general expenses 84,056 93,376 83,661 95,000 97,000 99, ,000 Audit 36,761 49,460 31,888 34,650 36,330 38,220 40,110 Rent 55,106 47,814 48,337 48,500 49,500 50,000 50,000 Legal - Admin 49,400 75,432 46,581 55,000 85,000 75,000 75,000 Amortization 1,370 1,704 2,225 2,500 2,500 2,500 2,500 Total Administrative costs 768, , , , , , ,774 Total Expenditures 18,225,345 16,995,114 15,349,625 16,262,079 15,694,626 15,905,441 16,174,827 Deficit of revenue over expenses $ 855,588 $ (598,552) $ (267,398) $ (430,405) $ 6,847 $ 83,249 $ 106,602 Admin Costs as a % of Revenue 4.2% 4.7% 4.3% 5.1% 4.8% 4.6% 4.7% Legal - Total 176, , , , , , ,000 Mgmt and admin contracts - Total 572, , , , , , ,080 Page 22