Ref : PELB(CR) 55/07 Pt 25

Provisional Legislative Council
Panel on Environmental Affairs

Trade Effluent Surcharge Review

PURPOSE

This paper reports the outcome of the Administration's consideration of the recommendations made by the consultant in the Final Report of the Review of the Trade Effluent Surcharge (TES) Scheme.

BACKGROUND

The Charging Scheme

2. The sewage charging scheme is an effort to improve the protection of our environment, based on the Polluter Pays Principle. The scheme comprises two components - a sewage charge (SC) and a Trade Effluent Surcharge (TES). SC is a general charge payable by all water consumers discharging waste water into the public sewerage system. It is currently charged at a flat rate of $1.2 per cubic metre. In line with water charges, domestic consumers enjoy an exemption of the first 12 cubic metres of water consumed in a 4-month billing period. Certain trades and industries discharge effluent at a strength higher than that of domestic sewage. As a result, a TES which reflects the additional cost of treating the stronger sewage is payable by 30 trades and industries. Charges are calculated according to the volume and strength of wastewater discharged. The Sewage Services Trading Fund (SSTF) within the Drainage Services Department (DSD) was set up to collect the charges and to operate and maintain our sewage collection and treatment systems.

3. The sewage charging scheme is designed to be technically and administratively simple, thereby cutting the administrative costs which will eventually impact on the TES individual dischargers have to pay. This is in line with the request of the previous LegCo that the operating costs should be kept to a minimum.

4. The strength of effluent is measured by the Chemical Oxygen Demand (COD) readings of wastewater. This is considered as the most suitable parameter as it measures well the strength of industrial and commercial sewage in Hong Kong. The higher the COD value, the higher the treatment cost and hence the higher the TES rate. For simplicity, an average COD value is assigned to a trade to represent the strength of wastewater discharged by it. The volume of effluent discharged is determined based on the metered water supply data. It is recognised that, for some trades, not all water supplied would be discharged direct to sewers because part of it may be used in products or lost to the atmosphere via evaporation. A system of discharge factors is therefore employed to allow for such losses.

5. Subsequent to the enactment of the Sewage Services Ordinance and the two regulations detailing the scheme, viz the Sewage Services (Sewage Charge) Regulation and the Sewage Services (Trade Effluent Surcharge) Regulation, the sewage charging scheme was implemented in April 1995.

Impact on Trades

6. According to an assessment carried out in 1996, for most manufacturing establishments, the existing SC and TES account for less than 0.3% of their operating costs. However, in the case of heavy users of water (such as the bleaching and dyeing, pulp and paper, stencilling and printing firms in the manufacturing sector; and Chinese restaurants and laundries in the services sector), the SC and TES account for 0.6% to 1.8% of their operating costs. Sewage charges thus represent an insignificant proportion of their total operating costs compared to their overall expenditure on salaries, rents and other overheads. However, some establishments claimed that it was difficult for them to absorb the charges because they were operating at a very low profit margin.

Major Concerns

7. Under the current system, traders can file an appeal against the COD value and discharge factor assigned to them by producing evidence. Certain trades have criticised that the appeal procedure is complicated and costly, particularly when they have to appeal on an annual basis since the appealed results would only stand for a year.

8. Some trades have also queried the fairness of using an average COD value to represent the strength of wastewater discharged by various establishments within a trade in view of their different scale of operation.

The Consultancy Review

9. When introducing the sewage charging scheme in April 1995, the Administration undertook to conduct a review of the TES scheme after it has been implemented for one year. A consultant was commissioned by the Environmental Protection Department (EPD) to undertake the review which commenced on 2 October 1996.

10. As part of the review, a consultation programme was undertaken by the consultant from November 1996 to January 1997, during which meetings with trade associations affected by the TES scheme and concerned political parties were arranged and a public forum was held. The views and concerns expressed on these occasions have been considered in the review.

11. The consultant's Final Report was released in April 1997. Apart from examining the various aspects of the TES scheme, the consultant also carried out an analysis of the SSTF finances and made a projection of future costs and revenues.

Public Consultation

12. A six-week consultation on the TES Review Final Report was conducted from April to June 1997. The Executive Summary of the Final Report was sent to 110 organisations representing relevant trades and industries and interested parties, to invite their views on the outcome of the Review. A copy of the Final Report was also deposited at EPD for public inspection.

13. 47 organisations sent in their comments. These were mostly of a general nature against the TES scheme, the whole sewage charging scheme and the SSTF. Three trades identified by the consultant as being "strong candidates" for inclusion into the TES scheme have raised strong objection to the consultant's findings. Only a few organisations/individuals made specific comments on the consultant's recommendations and these are summarised in the Annex.

14. The Advisory Council on the Environment (ACE) was consulted on the Final Report in April and May 1997. The previous LegCo Panel on Environmental Affairs was consulted in April and June 1997. Comments of ACE and the Panel were mostly of a general nature. But the Panel indicated particular concern about the appeal system and urged the Administration to introduce measures to improve it.

Future of the Sewage Charging Scheme

15. Since its introduction in April 1995, the sewage charging scheme has been operating smoothly. There is general public acceptance of the scheme, and no problem has been encountered in the collection of sewage charges. In the first two years of its operation, the revenue from the SC and TES has practically covered expenditure. However, with the completion and commissioning of major sewerage facilities, the operating costs are expected to go up significantly in the current year and the next few years. Because of the low level at which the SC has been set, large percentage increases in future years would be required if the SSTF were to meet its statutory obligation of balancing its receipts with spending.

16. On 19 November 1997, the Provisional Legislative Council passed a resolution that the Sewage Services Trading Fund should be closed at the end of the day on 31 March 1998. Although sewage services would thereafter be operated under vote funding with government subsidies, this would not affect the SC and TES. We have made known our position of preserving the Polluter Pays Principle under which polluters are expected to continue to pay for a proportionate share of the direct operating and maintenance costs of running the sewage services, and that the SC and TES would still need to be increased in future years in order to reflect the expected rising costs.Administration's Recommendations

17. A detailed assessment of the consultant's findings and proposals and the Administration's recommendations are at the Annex. The recommendations are highlighted in the following paragraphs.

(A) Basic Features to be Maintained

18. The Review has generally endorsed the basic features of the current scheme and we recommend that they be maintained. These include :

  1. the use of COD as the pollution parameter - it reflects the strength of effluents discharged by trades in Hong Kong and COD tests are simple and inexpensive;

  2. the application of existing generic COD values to all trades - it enables us to maintain a simple scheme and establishments are allowed to appeal against the assigned generic value;

  3. the use of volume and quality of effluent as the technical basis of charging - these are considered to be the most appropriate parameters for a charging scheme based on the Polluter Pays Principle;

  4. mixed accounts - the spirit is consistent with the Polluter Pays Principle; and

  5. determination of the volume of wastewater discharged from the volume of fresh water supplied - there are no reliable meters available for measuring effluent discharge directly.

(B) Proposals Recommended For Acceptance

19. The proposed changes recommended for acceptance are outlined in paragraphs 20 to 29 below.

(a) Simplify and Streamline the Appeal Procedure

20. We accept the proposal to introduce a different sampling method, with no advance notice, to make the sampling procedures easier and cheaper to carry out; and to delegate the responsibility for sampling and analysis solely to DSD. The latter obviates the need for DSD to monitor the work of the laboratory employed by the appellant under the current system. The appellant will continue to bear the full but lower cost of the appeal under the new procedure. We also recommend to extend the validity period of the appealed results from the current one year to three years. At present, establishments operating common processes, such as chain restaurants, have to appeal separately. To streamline the procedure, we are prepared to accept the application of group reassessments on a case by case basis.

21. The proposed changes to the appeal system will address the two major concerns of the trades. Firstly, they will simplify the appeal procedure and significantly reduce the cost of appeals. Secondly, the recommended procedure provides the possibility of developing a system whereby Government and the trades arrive at individually assessed effluent strength for charging purposes. The importance of generic values will therefore be gradually reduced and replaced by individually assessed COD levels.

22. Details of implementing the proposed changes to the appeal procedure will have to be spelled out in the Sewage Services (TES) Regulation and the related Technical Memorandum.

(b) Change the Existing Charging Basis

23. The objective of implementing the sewage charging scheme is to recover the operation and maintenance (O&M) costs which should include administration, collection, conveyance and treatment of sewage discharged into the public sewerage system, whilst Government finances all capital costs.

24. Notwithstanding the above, the existing TES charging rates are based solely on the cost of primary and secondary treatment of sewage and on the assumption that all sewage receive both primary and secondary treatment, even though the latter takes place in only five major secondary treatment plants. The consultant found that this simplied charging basis has resulted in excess of revenue over cost in respect of the TES in the first two years of implementation. To be in line with the Polluter Pays Principle and the objective of the charging scheme, we support the proposal to revise the existing charging basis.

25. The new charging basis would take into account the costs of administration, collection and conveyance of sewage in addition to primary treatment cost and the lower secondary treatment cost attributed to TES. The current apparent excess of revenue over cost should be viewed against the rapid rise in the latter in future years. Our recent projections indicate that the balance would change in the next two years even if TES charges were to be increased in line with inflation, and TES traders would be considerably under-paying by 2000/01. We will address this issue again in connection with our review of the sewage charging rates in future.

(c) Introduce an Annual Adjustment Factor to the Charging Rates

26. The O&M costs of running the sewage services will inevitably rise with inflation and the introduction of new and improved services. We therefore support the proposal to introduce an annual adjustment factor to the charging rates to recover these cost increases. We also support the proposal that the adjustment should include a pre-determined efficiency factor so as to provide incentives for Government to improve its efficiency in administering the sewage services.

27. The new charging basis and the annual adjustment factor will together provide a good reference of the correct level of the costs of running the sewage services. It should also improve the transparency and public acceptability of the charging scheme by providing a more accurate estimation of the costs of service provision. These two proposals would be adopted to work out the full O&M costs for reference in reviewing the TES charges for future years.

(d) Consider Incorporating More Trades into the TES Scheme

28. The consultant has found that of the 210,000 businesses estimated to be operating in Hong Kong, only some 12,000 or less than 6% are included in the current TES scheme (but in terms of volume discharge this represents 30-40% of the trade waste treated). While many of the other trades are considered not to produce effluent at greater than domestic strength, it is likely that some strong effluent producers have not been covered by the current scheme. The consultant has therefore identified seven trades, including three "strong candidates", for possible inclusion under the current scheme, and recommended that a comprehensive confirmatory sampling and data analysis be carried out before making a final decision. They are printing, garage, tobacco manufacture, petrol stations, markets, medical laboratories and barber/beauty shops. Subject to resources being available, EPD will undertake a detailed study on this.

(e) Reassess the Discharge Factor for Six Particular Trades

29. The consultant has found that for six TES-payable trades, the observed discharge factors were below those assigned and suggested further investigation be carried out for these particular trades. Subject to resources being available, EPD will undertake a study on this.

(C) Proposals Not Recommended for Acceptance

30. The proposed changes not recommended for acceptance, together with the Administration's evaluation, are outlined as follows :

  1. introduce another pollution parameter called total suspended solids - it is unnecessary to do so; it will complicate the charging scheme and yet offer no practical advantage;

  2. introduce EPD licence data as a means of agreeing COD levels - the TES scheme and EPD's licence control scheme are developed under two different regimes; converging the two schemes will have very significant impact on EPD resources and seriously impede the control function of the licence scheme;

  3. accept measures of COD values provided by individual traders - this proposal, if implemented, will have very significant impact on DSD resources in monitoring and auditing the submitted COD values;

  4. unify the discharge factors under the sewage charge and TES schemes - this proposal, if implemented, will have very significant financial implications; and

  5. consider two alternative charging schemes - the two alternative schemes suggested by the consultant would not bring any practical advantage or generate any significant increase in revenues, but there would be very significant additional costs involved.

THE WAY FORWARD

31. Action will be taken to :

  1. draft amendments to the relevant legislation and Technical Memorandum to effect the proposed changes to the appeal system outlined in paragraphs 20 - 22; and

  2. bid for additional funds to carry out a study on possible expansion of the TES scheme and discharge factor as proposed in paragraphs 28 and 29 respectively. The estimated cost is about $14 million. We will consult the relevant trades prior to conducting any detailed sampling.

ADVICE SOUGHT

32. Members are invited to comment on the Administration's recommendations outlined in paragraphs 18 to 30.


Planning, Environment and Lands Bureau
9 January 1998
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Annex

Administration's Assessments of the Consultant's Findings and Proposals

The following paragraphs outline the consultant's findings and proposals (these are in italic and underlined), the trades's views and the Administration's assessments and recommendations.

Proposals Recommended for Acceptance

2. We recommend the continuation of the following features of the TES scheme :

(I) Continue to use Chemical Oxygen Demand (COD) as the sole parameter for measurement of the strength of effluent in the short term

Trades's Views

  1. The proposal is generally supported.

  2. The hotel trade has argued for the use of Biochemical Oxygen Demand (BOD) as the charging parameter.

Assessment

The consultant has already pointed out that while BOD is an alternative measure of oxygen demand of an effluent, COD has advantages over BOD in that COD tests are simpler, less time consuming and less sensitive to interferences from nitrification.

(II) Continue to apply existing generic COD values to all trades

Trades's Views

No specific comments from the trades except for the restaurant trade which has argued for a lower generic COD value.

Assessment

  1. The consultant has conducted an assessment of available monitoring data and concluded that there is no sufficiently robust basis for the revision of existing generic COD values. Because of the importance of the restaurant trade, particular attention was paid to the assessment of data for this trade, but it was found that there is insufficient evidence to justify changing the current generic value for restaurants.

  2. Establishments are allowed to appeal against their assigned generic value if they can produce evidence to show that the COD concentration of their effluent is lower.

(III) Continue to use volume and quality of effluent as the technical basis of charging

Trades's Views

No specific comments received.

Assessment

Volume and quality of effluent are the most appropriate parameters for a charging scheme which is based on the Polluter Pays Principle.

(IV) Continue to charge mixed accounts

Trades's Views

The only comments came from the hotels which claimed that since the hotel industry is a trade on its own, Government should not charge hotels as "mixed accounts".

Assessment

  1. The "mixed account" is an account with one water meter serving several water outlets for different uses, some of which e.g. restaurants, laundry and bakery, attract TES.

  2. The hotel trade has repeatedly made representations to the Government against charging hotels as "mixed accounts" and queried the legal basis of having "mixed accounts" under the TES scheme, despite our explanations. As a matter of fact, DSD has sought legal advice on "mixed accounts" in 1995 and been advised that "where any part of the premises is used for a prescribed trade business or manufacture, the rate of sewage charge appropriate to that use can be applied to the premises as a whole. Similarly where any part of the discharge is trade effluent, the TES can be applied in respect of the whole discharge". The legal basis for charging mixed accounts has, therefore, been confirmed. In practice, DSD has suggested hotel owners to install separate water meters or private check meters, otherwise assessment will be made according to factors such as floor area and number of employees of each type of business inside the hotel, hotel owner's own assessment and kitchen floor area. If a hotel owner does not agree to this assessment, the hotel owner can submit evidence to substantiate an alternative assessment for the calculation of TES charges. Bills will only be issued to mixed account holders after the above process has been completed.

  3. The spirit of "mixed accounts" is in line with the Polluter Pays Principle. We therefore recommend the current procedures be continued.

(V) Continue to take the measure of supplied fresh water as an indicator of the volume of wastewater discharged

Trades's Views

No specific comments received.

Assessment

This is recommended in the absence of any reliable meters that can measure effluent discharge directly.

3. We recommend the following proposed changes to the current TES scheme :

(I) Simplify the appeal procedure; introduce "grab sampling" to make the sampling procedures easier and cheaper to carry out; allow sampling to be undertaken without advance notice to overcome concerns about changes in practice during sampling; allow DSD to initiate appeals; allow the duration of validity of the successful appeal results, subject to checks, to stand for much longer than a year; change the style of the current procedure from that of an "Appeal" to one of "Reassessment" reflecting the special attention being paid rather than the finding of fault; and allow group reassessment

Trades's Views

  1. The proposal is widely supported by those who have sent in their comments.

  2. One suggested to extend the validity of the appeal result to 5 years.

  3. One suggested that the successful appellant should be reimbursed the cost of appeal.

Assessment

  1. Our current appeal procedure is no more complicated than similar systems in other places. The procedure is a scientific process to verify a trader's claim of the strength of his/her discharges. To do so, sufficient evidence must be established. The appeals system is there to ensure the fairness of the charging scheme, but if the procedure is too simple, it will become unreliable, lead to abuses and eventually render the scheme very unfair. We, therefore, have to strike a balance between convenience for the appellants and the benefit to the community as a whole.

  2. The proposed introduction of a form of "grab sampling" with no prior notice of sampling time/days could allow a reduction in manpower input in measurements, without significant loss in the statistical reliability of the results, and also reduce the scope of manipulation of the sampling process and the costs of reassessment. The reliability of "grab sampling" hinges on "sampling without prior notice" and shorter sampling period. To achieve this, DSD would need to take responsibility for sampling as it is not advisable to allow the private sector (accredited laboratories) to do so without giving advance notice to the establishment being studied. To simply the process further, it is recommended that DSD should also carry out the analysis work.

  3. It follows that the appellant will have to pay DSD for sampling and analysis instead of employing an accredited laboratory as required under the current practice. It is estimated that under the new procedure, the cost of each reassessment would be reduced from the present $20,000 - $40,000 to $12,000 - $24,000 depending on the discharge volume.

  4. As regards the duration of validity of the reassessed results, we suggest to extend it from the present 1 year to 3 years. This will further reduce the cost to the appellant. With things moving so fast in the business world in Hong Kong, we think 3 years is a reasonably long period for the reassessment value to stand. Furthermore, this proposal should be considered together with (b) above as a package. The reason is that if we continue to use the current sampling method, there is little we can do to minimise the scope of manipulation of the sampling process which will in turn reduce the reliability of the reassessment results and reduce Government's revenue unnecessarily. We expect that the 3-year period would be generally accepted by the trades.

  5. Under the current appeal system, the appellant has to employ an accredited laboratory to prepare sampling plan, carry out the sampling and analyse the samples. Also, DSD incurs costs in assessing sampling plan, inspecting the site before sampling, witnessing sample collection and analysing samples for auditing purpose. The proposed reassessment procedure, by having DSD to take over from the accredited laboratory the sampling and analysis work, will simplify the process and achieve better economy.

  6. As regards the suggestion to reimburse the successful appellants, we are of the view that the appellant must bear the cost of appeal irrespective of its outcome because reimbursement would impact on the administration cost and this is unfair to other customers. Afterall, the cost to the appellant will be significantly reduced if the proposed changes to the appeal system are implemented.

  7. Details of implementing the proposed changes have to be carefully worked out and spelled out in relevant legislation. We also have to consider other related issues such as transitional arrangements.

(II) Change the existing charging basis on the cost of treatment to one based on the operation and maintenance costs including the costs of administration and collection/conveyance/treatment of sewage

Trades's Views

  1. No specific views on this recommendation.

  2. Two commented that Government should not overcharge and one commented that Government should not seek to recover the operation and maintenance (O&M) costs in full. One proposed that the TES rate should be set at a level higher than the cost of recycling waste water.

Assessment

  1. Coverage of the O&M costs through the sewage charging scheme is a stated objective of the Government. However, the existing charging rates are based solely on the cost of primary and secondary treatment of sewage and on the consumption that all sewage receives both primary and secondary treatment even though the latter takes place in only five major secondary treatment plants. The consultant found that this simplified charging basis has resulted in excess of TES revenue over TES costs in the first two years of the operation of the scheme.

  2. The new charging basis would now take into account the costs of administration, collection and conveyance of sewage in addition to primary treatment cost and the lower secondary treatment cost attributed to TES. The current apparent excess of TES revenue over TES cost should be viewed against the rapid rise in the latter in future years. As pointed out by the consultant, in the absence of appropriate increase in TES charges, the balance will change in the next two years, and TES traders will be considerably under-paying by 2000/01. The effect of adopting the new charging basis on the TES rates can be further addressed in the Administration's future review of TES rates.

  3. The new charging basis will provide a good reference of the correct level of the O&M costs. It will also improve public acceptability of the charging scheme by providing a more accurate estimation of the costs of service provision.

(III) Introduce an annual adjustment factor to the charging rate to recover the rise in costs due to inflation and improvements to sewage services, and to provide incentives for Government to improve efficiency

Trades's Views

One supported the application of the factor to encourage Government efficiency. Two objected to the inclusion of an adjustment factor to recover additional costs as a result of improvements to sewage services as it would jack up the annual increase to higher than inflation.

Assessment

  1. On the basis of full cost (O&M) recovery, the consultant has suggested that the rise in O&M costs should be recovered from the charges. On the other hand, to provide incentives for the Government to improve its efficiency in administering the sewage services, the consultant has suggested that the costs should be reduced by a pre-determined efficiency factor. To combine these effects into a single adjustment factor, it has been suggested that the costs are adjusted annually by the following formula:

    (PI - X) + Y

    where

    PI = the annual increase in the appropriate price index;

    X = a reduction to provide efficiency incentives;

    Y = a new service factor which could be expressed as a percentage of existing service costs.

  2. The consultant has suggested to apply an X factor of between 1-2% points similar to that applied in the UK. The Y factor would need to be determined following a review of the particular structure to be installed and the level of standards and operation to be applied in future.

  3. This recommendation, if implemented, will provide a good basis for revising the charging rates every year. It will also satisfy public anxieties about perceived Government "inefficiencies's.

(IV) Expand the scheme to cover more trades, with the printing, garage and tobacco trades being strong potential candidates

Trades's Views

  1. The three trades identified by the consultant as "strong potential candidates", i.e. printing, garage and tobacco objected strongly to the proposal, claiming that their operations are clean. The other four trades identified as "potential candidates" have not sent in their comments.

  2. Six others supported the proposal.

  3. One suggested that there should be regular review of the types of trades to be included in the TES scheme.

Assessment

  1. The consultant has advised that a comprehensive confirmatory sampling and data analysis be carried out before making a final decision on this recommendation because their findings were based on very limited available data.

  2. In principle, we support the recommendation to expand the coverage of the current scheme to make it more equitable. It should be noted, however, that potential trades would likely object to any proposal to include them under the scheme. It is therefore essential that we take a cautious approach and obtain sufficient evidence to justify the addition of more trades. Subject to resources being available, EPD will undertake a detailed investigation on possible expansion of the scheme to cover the seven trades identified by the consultant. We will consult these trades prior to any detailed sampling.

(V) Reassess the discharge factors for six particular trades

Trades's Views

The restaurant trade claimed that their assigned discharge factor should be better than 0.8.

Assessment

  1. The consultant has found that discharge factors of those trades with data are quite close to the assigned value with the exception of six particular trades where the observed discharge factors were below those assigned. However, the consultant has admitted that their findings were based on limited available data because they had run into great difficulties in seeking cooperation of the trades and finding suitable sites for measurements. The consultant has therefore suggested that further investigation be carried out for these particular trades.

  2. Subject to resources being available, EPD will undertake a study on this. We will consult the relevant trades prior to any detailed sampling.

Proposals Not Recommended for Acceptance

4. We do not recommend the following proposals :

(I) Introduce another pollution parameter called Total Suspended Solids (TSS) to replace that part of the existing COD parameter which reflects the cost of primary treatment to measure the cost of treatment more accurately

Trades's Views

Of the five organisations which have commented, only one supported the use of TSS.

Assessment

Our assessment is that the introduction of a new parameter (TSS) will complicate the charging scheme, will require very significant amount of extra work (in TSS data compilation and analysis, redistribution of effluent load and consequently revising the TES attributable costs) and yet offer no practical advantage.

(II) Introduce EPD licence data as a means of agreeing COD levels

Trades's Views

Of the three organisations which have commented, two supported the proposal.

Assessment

  1. All commercial and industrial discharges in Hong Kong are subject to licence control by EPD under the Water Pollution Control Ordinance (WPCO). Each licence stipulates the standards of the discharges including a list of upper limits of pollution parameters which must not be exceeded in order to protect water quality.

  2. Our assessment is that this recommendation will have very significant impact on EPD resources, particularly in enforcement of the licence conditions. Moreover, the TES scheme and EPD licence control are developed under two different regimes and with completely different philosophy, statistical approach and implementation requirements. For example, the current WPCO monitoring data may not contain the necessary parameters for TES charging purposes and may not be statistically precise enough for it to be used as a means of agreeing COD values.

  3. Overall, we consider that converging the two schemes would significantly impede the control function under the WPCO.

(III) Accept measurements provided by individual traders, provided that DSD would undertake random audits of submitted results and impose penalties for falsification of data

Trades's Views

Only one support for this proposal.

Assessment

This proposal, if implemented, could be easily abused and will impose tremendous burden on DSD in monitoring/auditing submitted measurements and prosecution cases.

(IV) Unify the Discharge Factors under the Sewage Charge and TES schemes

Trades's Views

One support for unifying the Discharge Factors under the Sewage Charge and TES schemes.

Assessment

  1. TES chargeable trades are levied both SC and TES. At present, a Discharge Factor (DF) of 0.7 is used as the basis of the SC for 10 trades, 8 of which also enjoy a DF of 0.8 under the TES scheme. The 0.8 DF used in the TES scheme was based on the estimates of wastewater discharged from establishments of selected trades whereas the 0.7 DF for the SC scheme was the result of various discussions between the Government and the water intensive industries and the previous LegCo.

  2. The unification of the DF would result in very significant financial implications.

(V) Consider two alternative charging schemes, namely the Trade Effluent Charge and Universal Sewage Charge Schemes

Trades's Views

  1. Only one support for the proposed Trade Effluent Charge Scheme, and one for the Universal Sewage Charge Scheme. The other five who have also commented did not support the proposal.

  2. Two ITDC members proposed an alternative scheme under which trades will be put into 3-4 trade brackets with tariff on a sliding scale. Businesses in a trade should be charged according to the tariff applicable to that trade. However, businesses discharging effluent of quality better than the trade's effluent strength would apply for lower tariff.

Assessment

  1. The consultant has proposed two major revisions to the TES scheme. One is to move to a Trade Effluent Charge where all trades and industries have a unified charge matrix (SC plus TES), whilst the existing SC is retained for domestic users. The other proposal goes a stage further to propose a Universal Sewage Charge that would encompass every customer discharging to sewers.

  2. As the two proposed schemes would still be based on volume and quality of the wastewater discharged, they would not bring any practical advantage or generate any significant increase in revenues, but there will be very significant additional costs involved in reclassifying and determining generic effluent strengths for all the estimated 210,000 businesses (about 200 different trade categories compared to the current 30 trades) and administering the 210,000 accounts (compared to the current 12,000 TES accounts).

  3. The charging method suggested by ITDC members is considered to be too simplistic and much less equitable than the existing scheme.

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