Businesses are starting to feel the effects of the Environment Agency’s new charging scheme as invoices from the regulator land on desks. Despite receiving advance warning of the changes, the reality of 3-fold or more increases is proving shocking to many.
Where it all began
In late 2017, the Environment Agency undertook a consultation in which the regulator proposed to reform its charges for regulatory and non-regulatory work following its Strategic Review of Charges (SRoC). At the time, the EA indicated that its fees may rise to reflect the true cost of delivering its services. Wiser Environment highlighted that this was an understatement – some fees were expected to jump significantly including for example a Standard Permit with Fire Prevention Plan which could increase by 140% and a bespoke MRF application by over 350%.
Less than four months later, the Environment Agency published its new fees and charging scheme with most charges applied from 1st April 2018. The notable exception was specific supplementary environmental permit charges which were applied from 1st October 2018. In a short period of time, these significant fee increases became a harsh reality.
Despite being provided with information on the likely impact of the changes coming, many businesses have been shocked by the true implications of the new approach to charging which have only become apparent when the EA invoices have landed on desks.
What the new EA charges cover
The EA argues that the true cost of regulatory activity was not reflected in previous charges and that the new fees better represent the regulatory input across the following areas:
Basic pre-application advice is provided for free but anything beyond that is likely to be charged for. There appears to be teething problems with advice varying in quality and being subject to delays. If applying for a bespoke permit, there is the facility to request enhanced pre-application advice which will be charged. In our experience it has often taken four to six weeks to be advised of any fees and then when those are paid, further delays before the advice is provided.
There remains a fixed fee on application for a permit which varies according to the activities the permit covers and the type of permit. In most cases these include technical assessment of fire prevention plans and odour management plans where these are required but there are now also extra charges if additional technical assessment is required or if the permit is of high public interest. In the latter case, time and materials are charged at £100 per hour. Operators may face similar increasing charges for varying, transferring and surrendering permits as well as additional costs (as described above).
Annual subsistence charges
The annual subsistence fee that operators pay has increased dramatically. As a result, for example, an anaerobic digestion plant previously charged a fee of £1880 a year is now required to pay a subsistence fee of £7,700 – over three times that.
Supplementary charges – time and material
Where the Environment Agency needs to carry out additional or out of the ordinary activity, operators will be charged supplementary fees. These may be fixed where they relate to permit applications (as described above) or, of greater concern, vary based on time and materials.
The Environment Agency started charging time and materials in October 2018. When charging for time and materials the EA estimates how much work is required to assess a permit application or regulate that activity. The operator is invoiced (on a weekly basis) for the number of hours based on the EA’s new set hourly rate – between £84 and £100 per hour.
Whilst these changes are only starting to take effect and seem to initially be applied to ‘unplanned events’, we understand that in the future the Environment Agency (EA) may have plans to charge for assessment of information submitted to satisfy permit condition requirements. This is something which operators are likely to feel should be covered by the annual subsistence fee.
It’s not just waste operators affected
The EA charges don’t just affect waste operators but a wide range of other activities including:
- Flood risk activities
- Mining waste operations
- Mobile plant
- Land spreading
- Water discharge activities
- Groundwater activities
- Radioactive substances activities
- Exempt waste operations
Minimising exposure to these new costs
The income generated by these increased charges is there to fund investigations and disrupt illegal waste activities, following widespread budget and staff cuts in recent years the regulator needs to fund its own activities. Unfortunately, smaller operators and potential new entrants to the industry will suffer most from the changes and only time will tell what impact that has on their ability to join and operate in these sectors. But with this new regime already established, businesses will need to adjust accordingly and identify ways to minimise their exposure to these costs.
Those businesses operating in lower bands and classified as poor performing sites will face higher costs than those operating to a higher standard so these businesses will need to look at way to improve their operations, where environmental risks are greatest.
There may also be an even greater benefit from consulting experts (especially with environmental consultancy fees generally lower than the EA’s hourly rate!). In depth knowledge of the environmental permitting system and charging scheme, how the EA operates and how to tick the relevant boxes is going to become even more valuable. Whilst this may increase up-front costs, it could greatly reduce fees in the longer term and avoid a long drawn out process.
Find out more about Wiser Environment’s environmental permit and consent services.
More details about the new Environment Agency charging scheme can be found here.