Economics of Transfer Station Operations

1. Economics of Transfer Station Operations Laura J. Weber President The Lydia Company Serving our clients to build a better tomorrow

2. Presentation Summary Annual Operating Budget Full Cost Accounting Understanding Costs Example of how to use Full Cost Accounting Key points to remember The Lydia Company

3. Annual Operating Budget • Need to develop an annual operating budget for transfer station The Lydia Company

4. Full Cost Accounting (FCA) • Is a systematic approach for identifying, summing, and reporting the actual costs of solid waste management • Takes into account past & future outlays, overhead (oversight & support services) costs, and operating costs Source: http://www.epa.gov/waste/conserve/tools/fca/docs/fca-into.pdf The Lydia Company

5. Understanding Your Solid Waste Costs • A solid waste management system consists of various activities and paths. • Activities-building blocks of system – what you do • Waste collection, operation of transfer stations, transportation, waste processing, disposal, and any sale of by-products • Paths – is what happens to the solid wastes • Recycling, composting, waste-to-energy, land disposal • Follows from generation to disposal • The costs of activities & paths determine your total costs to manage solid wastes The Lydia Company

6. SRMT Example –MSW Land Disposal Path Cost to store, handle, haul out, dispose, & haul back The Lydia Company

7. Using FCA • Set rates/tipping Fees • Analyze alternative options for collection, processing, disposal, etc. etc. • Justify budget requests • Target cost reduction efforts • Determine actual program costs • Plan new facilities • Communicate cost information The Lydia Company

8. Example of Using FCA in Setting Tip Fees • Hypothetical Indian Community • Robin River Reservation • Community of 8,000 people, located in rural Maine • Generate 10 tons/day of MSW=3,560 tons/year • Generate 0.5 ton/day of mixed recyclables=183 tons/yr • Have a direct discharge transfer station that employees 3 full time operational staff, 2 full time management staff, and receives support services from other Tribal departments • There is a county transfer station located 12 miles and county landfill located 30 miles from reservation The Lydia Company

9. Example of Using FCA in Setting Fees • Hypothetical Indian Community • Robin River Reservation • MSW is directly discharged by customers into compaction trailer & contracts with hauler to haul • Mixed recyclables are directly discharged into roll off recycling container, receives no revenue from sale of recyclables, & contracts with hauler to haul • Robin River Tribe provides collection services & community are also allowed to self-haul to transfer station The Lydia Company

10. Robin River Reservation • Questions: • What is the tip fee that should be charged to breakeven for MSW & recyclables? • What is the cost/hour to operate the collection vehicle? The Lydia Company

11. Robin River Reservation Example Collection Activity Transfer Station Activity Transport Activity Landfill or MRF Activity The Lydia Company

12. Robin River Example Con’t Must allocate budget categories to their activities in order to determine the activity cost The Lydia Company

13. Robin River Example Con’t Approach to assigning budget categories to activity costs • Collection Activity Costs (CAC) • Personnel + fringe benefits + disposal fee + maintenance vehicle + fuel • Transfer Station Activity Costs (TSAC) • Personnel + fringe benefits + maintenance equipment + fuel • Transport Activity Costs (TAC) • Hauling Costs • Landfill or MRF Activity Costs (LAMRC) • Disposal Costs • What about the other budget categories? • Contractual, telephone, supplies, postage, insurance, advertising, travel, training, mileage, equipment rental, equipment, indirect The Lydia Company

14. Robin River Example Con’t The Lydia Company

15. Robin River Reservation Example Collection Activity Transfer Station Activity Cost/ton calculation excludes collection activity Transport Activity Landfill or MRF Activity Cost/ton = (Transfer Station Activity Cost + Transport Activity Cost + Landfill or MRF Activity Cost) / total tons The Lydia Company

16. Transfer Station Activity Cost MSW & Recyclables Cost/ton Calculation MSW Generation = 10 tons/day = 3,560 tons/year Recyclables Generation = 0.5 tons/day = 183 tons/year MSW = $129/ton ($459,007/3560 ) Recyclables = $279/ton ($51,001/183) Note: Disposal Fee includes transport activity costs and landfill activity costs for MSW or MRF activity costs for recyclables The Lydia Company

17. Collection Activity Costs Total Operating Hours for Truck Recyclable Collection = 187 hrs/year MSW Collection = 1685 hrs/year Recyclable Collection Cost = $70/hr ($13,263/187) MSW Collection Cost = $70/hr ($119,365/1685) Note: Disposal Fee includes transport activity costs and landfill activity costs for MSW or MRF activity costs for recyclables The Lydia Company

18. Question: How many tons/year of recyclables and MSW does the Robin River Sanitation Department collect & bring to the transfer station? Other MSW Other Recyclables Robin River MSW Total MSW = 3,560 tns/yr Robin River Transfer Station Robin River Recyclables Total Recyclables = 183 tns/yr The Lydia Company

19. Key Points to Remember • Operate your program like a business with the goal to at least breakeven • Establish fees that are reasonable considering local market conditions • Keep good data & records • Be flexible • Analyze analyze and make changes to improve your economics The Lydia Company

20. Laura J. Weber President The Lydia Company 315-212-0439 laura@thelydiacompany.com Connect With Me: www.facebook.com/TheLydiaCompany www.twitter.com/Laurajweber www.linkedin.com/in/laurajweber Questions? The Lydia Company