HCC WASTE MANAGEMENT CABINET PANEL - 07 MARCH 2013 Response to petition presented by Mr. M. Bee The financial papers presented by Mr. Bee in support of his petition are intended to present an argument that ‘Do nothing’ would be a less costly option to the County Council than the contract arrangements under the proposed Recycling & Energy Recovery Facility (RERF) at New Barnfield, south of Hatfield. His arguments are based on a number of broad assumptions that are based upon information which is publicly available at the present time. This information does not, though, include the confidential financial details of the County Council’s contract with the contractor, Veolia. Regrettably, whilst many of Mr. Bee’s assumptions are reasonable, they are applied in such a way as to arrive at some seriously inaccurate conclusions. Some of the calculations are clearly flawed but the biggest contribution to the false conclusions that are presented, lies with a misinterpretation of some financial information that was acquired through a Freedom of Information Act request soon after the contract was signed in July 2011. This information was intended to show all of the County Council’s projected expenditure on waste management up to the operational commencement date of the RERF and the 25 years beyond that, a total period of 30 years. This figure of £1,748m has been wrongly compared with the current WDA revenue budget expenditure with the error further compounded by a basic misunderstanding of the components of the WDA budget and how it is affected by higher or lower levels of recycling. To arrive at truly comparative ‘do-nothing’ figure it would therefore be necessary to add all the WDA expenditure for the period leading up to the operational commencement date for the RERF, which is now unlikely to be any sooner than November 2017. Because, for reasons of confidentiality, a breakdown of the £1,748m cannot be revealed, it is not possible for a detailed critique of Mr. Bee’s calculations to be given but there are two points that are worthy of note. 1.That the guaranteed minimum tonnage that the County Council has contracted to deliver to the RERF (180ktpa) is comfortably below Mr. Bee’s optimistic prediction of the residual municipal waste that will be generated in Hertfordshire (200ktpa). 2.That the WRAP gate fee median, discussed by Mr. Bee for new EfW facilities (£73/t) is significantly less than the £105/t that he forecasts for landfill. This in itself is evidence that considerable savings would be generated by the pursuit of an EfW solution rather than the ‘do-nothing’ landfill option. The fact that considerable transfer and haulage costs would be necessarily incurred once landfill is no longer available in or around Hertfordshire is another factor that cannot be ignored. Within Mr Bee’s projections there are some rounding’s which while in themselves are small when extrapolated for the 30 year period of the model become substantial. For instance he indicates that the 2010/11 WDA budget is £36.66m but in workings to get a total cost only includes £36.6m. Over the 30 year life of the model this understates the position by £2.63m. Similarly with regards to the tonnages sent to landfill Mr Bee has used 37.5% of 550,000 but come up with an answer of 200,000. However that should be 206,250 and with a start cost of £105 per tonne will cost an additional £28.8m over the 30 year model duration. Notwithstanding any of the above, it is clearly important that the financial implications of the RERF contract are kept under review such that any changes in circumstances are taken into account. A good example of this is the abolition of LATS at the end of 2012/13. This has resulted in the savings forecast being reduced from £779m over the course of the contract, to £667m. The requirements of the European Landfill Directive will still, however, apply and it is therefore possible that further Landfill Tax escalations will be employed to ensure compliance in the next target year, 2019/20. If so, the picture will change again and the forecasts reviewed. Some factors, of course, such as inflation, change on an almost daily basis but their impact would more normally be monitored on an annual basis.