Tuesday, 20 November 2012

No to incinerator could save £320,000,000

Well done to the Cornwall Waste Forum.

Today I attended the launch of an independent review of alternatives to Cornwall Council’s plan for a massive incinerator near St Dennis.

The report was produced by consultants Eunomia who have in the past advised Cornwall Council. Their report is dynamite; it claims that an alternative approach to waste management in Cornwall could save local tax payers £320 million over the length of the contract.

Printed below are some extracts from the report:

The Cornwall PFI contract has been found to have two significant problems: 

It is outdated and not fit for purpose. Due to its origins in analysis conducted in the late 1990s, it no longer reflects the policy, legislative and technology context of waste management. For example, it does not identify food waste as a separate waste stream, and does not apply current guidance on how food waste should be collected and treated. This presents a level of legal risk to the council, which is obliged by law to apply the waste hierarchy in its approach to waste management.

It is expensive. Based on credible estimates of SITA’s charges, the contract appears to offer very poor value for money. We estimate that the contract currently costs the council around £28m per year, and that this will rise in future. The total cost is estimated at £647m (in real terms) from 2012/13 through to the contract’s end. Our modelling shows that by exiting the contract, more than half of this cost might be avoided.

The review did not set out to identify an optimum approach to waste management in Cornwall. A review on the modest scale of this project could not hope to succeed in so complex a task. Instead we have compared the estimated costs of the current approach with the costs the council might expect to incur if it made various changes to its arrangements. The scale of the potential saving is dramatic, in large part because of the charge of over £50 per tonne it appears that the contract specifies for receiving and processing recyclable materials. This charge is set to rise in the future and is already very high by the standards of the current market. We found that overall costs could be reduced by an average of £10m per year by simply diverting recyclable materials out of the PFI contract and onto the open market. 

Approaches that involve exiting the contract entirely and not building SITA’s plannedincinerator save even more – over £20m per year on waste management, although offset somewhat by additional collection costs. The detailed results of our modelling are set out in A.2.0. In the context of such significant savings, the risks and costs that the council has identified as likely to be incurred in leaving the contract, though unpalatable, are relatively small compared with the potential savings of over £320m in net present value terms over the period through to 2036/37. The costs include likely penalty payments to SITA stated by the council to be up to £80m, combined with the loss of some £45m of PFI credits.

To read the full report, visit http://www.st-ig.co.uk/files/eunomia_cornwall_waste_assessment_nov_12.pdf

1 comment:

Ross said...

Proof that consultants aren't all bad?

Proof that complex PFI contracts drafted by ill-informed council staff are all bad?