"Aspects of computer modelling used for the Blue Box
negotiations were viewed as flawed by the arbitrator, potentially
paving the way for smaller payments to municipalities in the
In fact, the flaws in the rejected model are precisely
why municipalities have received smaller payments since 2009. Now
that this model has been discredited, municipalities will receive
larger payments, just as they did in 2014. This is why the
Arbitrator awarded municipalities nearly twenty million dollars
more than Stewardship Ontario proposed to pay for 2014.
What do the flaws in the computer model mean for future
The flawed computer model that the arbitrator rejected was the
so-called "Baseline Cost Model" that Stewardship Ontario
relied on. Stewardship Ontario has used this model in past years to
drive down payments to municipalities, and used it in the
arbitration to propose a payment of approximately $95 million
instead of the ~$115 million that was awarded. The arbitrator found
that municipal witnesses raised legitimate concerns about the
model1 and that the model did not produce a reliable
figure about Blue Box program costs.2
The Arbitrator did not use the model in his decision, and did
not recommend that it be used in future years. He left it open to
WDO and the parties "to revisit in the future if there is the
goodwill and the basis to do so.3
The reader wrote: "In the future, total net costs may have
to meet a reasonableness threshold that takes cost containment
principles into account."
This will not reduce payments in future years. The Arbitrator
concluded that the Datacall, as verified by WDO, is "sensible,
thorough and reliable," already does
meet the reasonableness threshold and is informed by the principles
of cost containment.4 This is precisely why he awarded
municipalities ~$115 million, the total amount that municipalities
requested. Mr. Armstrong recommended that the same Datacall method
should be how costs are determined in future years.5
In most past years, stewards have not paid a full 50% of
1 Decision at para. 216.
2 Decision at para. 224.
3 Decision at para. 292.
4 Decision at 229 to 241, para. 291.
5 Decision at para. 290.
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