Worked example of manual licence fee calculation

This worked example follows the 10 steps of the 'Quick guide to manual licence fee calculation'.

This worked example follows the 10 steps of the 'Quick guide to manual licence fee calculation'.

Background

You are a licensed sewage treatment system (STS) employing a combination of conventional activated sludge technology and ponds. You have an annual production capacity of 2,000 ML and an actual discharge of 1,742.5 ML of effluent to the Murray Riverina catchment for the 12 months to 22 September 2001 (the anniversary date of your licence).

Step 1:
Classify activity

Protection of the Environment Operations (General) Regulation 2009

FIGURE 1 - extract from Schedule 1 of the Regulation

[71] - Sewage Treatment, being activities that transport or treat sewage (including by way of filtering sewage) by the use of a sewerage system (including treatment works, pumping stations, sewer overflow structures and reticulation facilities).

For the purposes of this classification: "discharge'' means the release, re-use or transfer of liquid wastes to surface or ground waters, land or other users as authorised by the licence.

Units of measure (ML discharged)

Licence Administrative Fee

Maximum volume of discharge per annum

Number of administrative fee units

0-20

5

>20-100

8

>100-1,000

25

>1,000-5,000

65

>5,000-10,000

165

>10,000-20,000

300

>20,000-30,000

420

>30,000

2,650

Note: Schedule 1 is also found in Appendix 2 of Guide to Licensing: Part B

Step 2:
Calculate your annual administrative fee for the year commencing 23 September 2000 (your licence's anniversary date)

TABLE 1 - extract from Clause 9 of the Regulation

Date when licence fee period
for licence begins:

Administrative fee unit amount

Pollutant fee unit amount

1 July 1999 to 30 June 2000

$50

$0

1 July 2000 to 30 June 2001

$95

$24

1 July 2001 to 30 June 2002

$95

$29

1 July 2002 to 30 June 2006

$95

$35

1 July 2006 to 30 June 2007

$95

$36.75

1 July 2007 or subsequently

$100

$36.75

Administration Fee
= no. of administrative fee units activity attracts x value of each fee unit
= 65 units (from Figure 1 above) x $95 (from Table 1 above)

= $6,175 and is payable within 60 days of the commencement of your licence fee period, ie. 21 Nov 2000.

Note: Where there is more than one activity classification, the administrative fee is calculated for each but only the highest amount is paid (which I will demonstrate using the on-line fee calculator at the end of the session).

Step 3:
Identify your assessable pollutants

Your assessable pollutants are also calculated with reference to Schedule 1 of the Regulation:

FIGURE 2 - extract from Schedule 1 of the Regulation

Assessable Pollutants and Fee Rate Threshold Factors

The following assessable pollutants are only identified for this classification if the maximum annualised volume of discharge authorised by the licence in relation to the activity is more than 219 ML.

Processing by Small Plants (<10,000 ML per year)

Air pollutants

Fee rate threshold factor

Water pollutants

Fee rate threshold factor

nil

 

BOD

10

 

 

Oil and grease

2

 

 

Total nitrogen

10

 

 

Total phosphorous

0.3

 

 

Suspended solids

15

Your assessable pollutants are clearly listed: BOD, oil and grease, total nitrogen, total phosphorus, suspended solids.

Step 4:
Determine your assessable pollutant loads

Your assessable load is the least of your actual, weighted or agreed loads. These are calculated in accordance with the instructions laid down in the Load Calculation Protocol. For this example, you determine the following assessable loads for each assessable pollutant:

Pollutant

AL (kg)

BOD

26,137.5

Oil and grease

2,940

Total nitrogen

34,850

Total phosphorous

4,360

Suspended solids

22,580

Step 5:
Identify the pollutant weightings (PWs) for each of your assessable pollutants

The PW for every assessable air and water pollutant are given in Part 2, Schedule 2 of the Regulation. The PW reflects the relative harmfulness of the pollutant, and for water pollutants it is dependent on whether the discharge is to open coastal, estuarine or enclosed waters (definitions in handout). In your case the discharge is to enclosed waters (the Murray Riverina catchment).

BOD PW = 1

Oil and grease PW = 74

Total nitrogen PW = 23

Total phosphorous PW = 680

Suspended solids PW = 78

Step 6:
Identify the critical zone weightings (CZs) for each of your assessable pollutants

The CZs for applicable air and water pollutants are given in Part 1, Schedule 2 of the Regulation. The CZ reflects the sensitivity or state of compromise of the receiving environment (being a higher weighting where there are greater problems with or a greater sensitivity to the pollutant). If an assessable pollutant is not listed in Part 1, its CZ is assumed to be 1.

Your discharge is to the Murray Riverina catchment, which is listed as a critical zone, therefore:

BOD CZ = 1

Oil and grease CZ = 1

Total nitrogen CZ = 3

Total phosphorous CZ = 3

Suspended solids CZ = 1

Step 7:
Calculate the fee rate thresholds (FRTs) for each of your assessable pollutants

The fee calculation formula operates to double the fee for the portion of assessable load discharged above the FRT for that pollutant.

The FRT for an assessable pollutant (in kg) is calculated by multiplying the actual production by the FRT factor listed adjacent the assessable pollutant in Schedule 1 (see Figure 1 above):

Actual production (ML)

Pollutant

FRT factor

FRT (kg)

 

1,742.5

BOD

10

17,425

Oil and grease

2

3,485

Total nitrogen

10

17,425

Total phosphorous

0.3

522.75

Suspended solids

15

26,137.5

Step 8:
What is the value of one Pollutant Fee Unit (PFU) for the period commencing 22/9/00?

$24 (from Table 1 (Clause 19(7)) above

Step 9:
Apply the fee calculation formula

The annual load-based fee for an assessable pollutant is calculated using one of the following formulas (taken from Clause 19 of the Regulation):

If the assessable load (AL) is greater than the fee rate threshold (FRT), then use:

Equation 1

Fee = (2AL - FRT) x PFU x PW x CZ

where PFU is the value of one Pollutant Fee Unit (given in Table 2 above = $24 for the period in question). The first part of this formula (in brackets) reflects the fact that emissions above the FRT are charged at double the base rate.

In all other cases the following formula is used:

Equation 2

Fee = AL x PFU x PW x CZ
         _________________
                    
                   10,000

 

Pollutant

AL (kg)

FRT (kg)

Eq. 1 or 2?

Fee ($)

BOD

26,137.5

17,425

1

83.64

Oil and grease

2,940

3,485

2

522.14

Total nitrogen

34,850

17,425

1

8,656.74

Total phosphorous

4,360

522.75

1

40,133.74

Suspended solids

22,580

26,137.5

2

4,226.98

For example:  BOD fee = ((2x26,137.5) - 17,425) x 24 x 1 x 1 / 10,000 = $83.64

Step 10: 

Determine the total pollutant load fee and due date

Your pollutant load fee is $53,623.24 - $6,175 = $47,448.24 (the admin. fee is the minimum, not an additional fee payable, and therefore it must be subtracted from the total fee calculated in the table above). It is payable within 90 days of the end of your licence fee period, ie. 21 Dec 2001.

Reducing assessable loads - reducing licence fees

Background

To reduce your fee you decide to install phosphorus reduction technology that decreases the assessable load of this pollutant by 90%. Because of staged introduction of the new technology, there are gradual reductions in phosphorus discharges over three years, after which time you yield the full 90% reduction.

Question 1: Is it possible to receive financial relief to implement this technology?

Yes - load reduction agreements (LRAs) are voluntary contracts between licensees and the EPA. They specify a date by which load reduction goals for nominated pollutants must be met (covering a maximum period of four years).

The licensee pays a reduced annual fee based on the agreed (reduced) load, as though the reductions have been achieved immediately. Funds that would have been paid as fees are now free for investment in pollution reduction measures.

Penalties apply for failure to meet the agreed load goals, or any other breach of the agreement.

Additional background

You decide to enter an LRA to reduce assessable discharges of phosphorus to a maximum of 450 kg (approximately 10% of current load) within four years. In addition, at the start of this period you implement a sustainable effluent-recycling scheme that reuses 50% of discharges as fertiliser on crops.

Question 2: What are your weighted, agreed and assessable loads of phosphorus for each year of the agreement?

The assessable load is the least of your actual, weighted or agreed loads:

  • Your actual load, is your annual mass of emissions of phosphorus (in kilograms) measured directly by monitoring or established indirectly through emission factors;
  • Your actual load can be discounted if you take certain measures to reduce the environmental impact of your phosphorus discharges, yielding a weighted load. These measures currently include reusing effluent, provided the reuse scheme is managed sustainably according to criteria laid down in Section 5 of the Load Calculation Protocol;
  • Your agreed load is that committed to under a load reduction agreement.

Year

Actual (kg)

Weighted (kg)

Agreed (kg)

Assessable (kg)

Fee ($)

Savings ($)

1

4,360

2,180

450

450

2,203.20

37,930.54

2

3,120

1,560

450

450

2,203.20

25,788.46

3

1,812

909

450

450

2,203.20

12,980.52

4

880

440

450

440

2,154.24

6,057.58

 

 

 

 

Total savings

82,757.10

As can be seen from the right-hand column of the table, savings achieved through load weighting and LRAs can be substantial.

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