The City of Regina says part of the reason its new curbside recycling program will cost almost twice as much as Saskatoon's new program is because the contractor it has chosen will have to build a new facility in the city.
The recycling programs will begin in both cities in less than a year, but homeowners in Regina will pay $7.60 a month while those in Saskatoon will pay $4.33 a month.
The two programs share many similarities — residents in both cities will have to put their recyclables into a blue cart that will be picked up and taken to a plant where materials will be sorted and eventually recycled.
The difference in the programs lies in how each city has chosen to run the business side of things.
Derek Bellows, the director of special projects for the City of Regina, said Emterra, the company chosen to run the recycling in Regina, will have one major cost right off the bat — construct a new building.
"The processor that we're contracting with is well known across Canada," he said. "They have a number of facilities … but they have no presence in Saskatchewan yet, so they will be building a brand new facility here in Regina."
That means the cost of building the Emterra processing plant in Regina will be added to the recycling bill of homeowners.
Saskatoon, on the other hand, already has a recycling facility available through Loraas Disposal Services Ltd., which has been serving the surrounding area.
Two approaches to managing risk
There is another major difference in the contract the cities have signed with recycling companies.
Nine per cent of the value of Regina's contract will deal with the amount of risk involved in the recycling program.
The first part states that residents can make mistakes, such as accidently throwing some garbage into their blue bins, which will create more costs at the processing plant.
Regina officials said the fee the city would have to pay Emterra is based on how much garbage contamination is present at the plant. So, if the blue bins are garbage free, the city gets a lower rate.
The second part of the risk assessment has to do with the price of recyclables in the market. Regina is giving Emterra some protection in case the market goes down.
Saskatoon is taking a different approach, Environmental Services Manager Brenda Wallace says, because it is not taking on any of the risk Regina is.
"We just didn't feel like it was our role to be prescribing that we needed a facility or that we needed to be in the business of owning recyclable materials," she said.
"Instead, what we wanted is to have access on behalf of our citizens to a service that would take material that is currently going to our landfill and facilitate that being recycled."
While Regina is taking on some of the risk, however, it will also benefit when the recyclable market is doing well, said Derek Bellow, director of special projects for the City of Regina.
He said the city has learned about taking on some risk from a previous experience with paper recycling.
"We've operated the big blue bin recycling program and in the history of that program we had a very simple contract," he said.
"We essentially sold paper to a processor for a fixed price and if the markets were good the processor would make more money and if the markets were bad the processor would make potentially less money or lose money."
Bellow said a few years ago the markets were so bad the processor was thinking of defaulting on the contract because the company was losing so much money.
"It was kind of tough sledding with all of the risk being on the the processor," he said. "If we take no risk then the processor will generally evaluate how much that risk costs them and they'll elevate the price to us. So when we take no risk we generally would pay more."
Bellow said if Regina takes on some of the risk it could ensure the service continues even when the recycling market isn't doing well.