Net Pricing – MRF Processing Fees

This is correspondence between Arlene Miller of the Springfield Recycling Facility and Peg Hall of Greening Greenfield.

December 20, 2023
Re:  Springfield New Pricing

Peg,

Thank you for your note regarding clarification about the MRF processing fees. It certainly can be a very confusing issue.
Let me begin with a bit of history. You may remember that in FY 2020, the 10 year contract extension the regional communities signed with the MRF operator (Waste Management) expired. That contract was very favorable to our towns. We never paid anything and we most often received revenue for our recycling. However, around 2018, the recycling markets took a deep dive. We were protected by the contract and our “deal ” remained in place for several years after the market dive until the contract expiration date.
The recycling world changed at that point–not just in Massachusetts. All over the country. The MRF processors demanded an up front processing fee to cover the operating costs.  Our current contract began in July 2020 expires June 30th 2025. The processing fee in that contract began at $93.50 and will increase to $103.31 by  the last year of the contract.
The western MA communities negotiated a revenue component to this contract. The revenue section is based on a monthly market driven AMV–Annual Monthly Value. Put very simply, the dual stream communities are responsible to pay the net amount of the different between the operating fee (processing fee) and the AMV.
We are now 3.5 years into that contract. The actual average cost to the MRF communities for the first 3 years was : FY 2021 -$41.81, FY 2022 +21.72, FY 2023  -$47.80. As of December 2023 (FY 2024) we are paying  $44.50 . You will note that in year #2 of this contract the AMV was greater than the operating cost. During that year–the towns 12 month average was a positive revenue of  +$21.72. I have sent you copies of the reports we receive monthly, delineating  the operating cost, the AMV and the net cost to member towns. The better the market–the better we do. It is that simple.
I am attaching here for you three year end summary reports plus the most recent operations report through December. (the AMV is given one month in advance)
Congratulations to Greenfield for receiving this fabulous EPA grant award. I hope this summary helps you and the town officials better understand the financial picture that is in place at the Springfield MRF.
Please feel free to let me know if you have any additional questions.
Sincerely,
Arlene Miller

In response to Ms. Miller’s letter, Peg writes to the Greenfield Town Councillors:

December 23, 2023
Dear City Councilors and Councilors-elect,

Please see (ab0ve)  for a letter from Arlene Miller, Chair of the Springfield MRF Advisory Board.  Although she included a number of past annual reports with lots of details, I am forwarding only the most recent one, along with her cover letter as they are large files.  I can make any other years available upon request.

At the November 15 City Council meeting, the packet presented to the Council from the City Recycling Grant “Team” included at the top of page 12 the following misleading statements regarding pricing: “Currently the City pays $100/ton for procession dual stream materials at the Springfield Materials Recycling Facility (Operated by Waste Management Recycle America).  Technically in our contract we qualify for an “Average Commodity Revenue” or ACR for the monthly net per ton revenue from the sale of recyclables in our contract.  With an ACR clause, in months where material markets are good, we’ll receive more revenue, however, when markets are down, we receive no revenues.  For this past year to date, we have not received any revenues.”

As I stated in public comment following the Team’s presentation, we do not and have not paid $100/ton for our dual stream.  The revenue we receive is credited against this base fee so that our actual payments have been considerably less, such as the $44.50 we are paying for December 2023.  In case there was any confusion about the differing amounts you heard about, I solicited and received this confirmation of my numbers directly from the Springfield MRF Advisory Board.

Also, as you can see from the attached public report, the residue rate at the Dual Stream Springfield MRF is calculated at 5%.  This is much lower than the national average quoted on the bottom of page 10 of the 11/15 packet where it says “dual stream on average has about a 12.67% contamination rate”.  Note that near the bottom of page 11, the proposed Berlin single stream MRF is said to have contamination of 15 – 20 % and then a residue rate of 2% of the remaining fraction.  At a December cost of $86.15 / ton (as in attached chart) that alone, represents a considerable cost differential between dual stream and single stream.  Actual contamination plus residue at the dual stream MRF totals between 5 & 5.7% (personal communication).

Peg Hall
Greening Greenfield
Solid Waste & Recycling Consultant, retired