"The target for preparing planning applications for treatment plants has been brought forward almost 2 years from July 2009 to September 2007, with an anticipated date for obtaining consent of September 2009"
The City Of York Executive have approved a report on the joint North Yorkshire County Council and City of York waste PFI business plan at a meeting this week. Council members confirmed that they are committed to finding the additional resources to make the PFI project affordable over the life of the project, despite the £708.9 million "affordability gap".
The report resulted from, in part, a Defra requirement to demonstrate commitment to the affordability of the PFI project.
The York Executive had earlier approved the submission of an Outline Business Case (OBC) to DEFRA for joint procurement of future waste treatment services on 12 September 2006.
DEFRA have subsequently revised and clarified the requirements for PFI projects in relation to sites and planning consents. This had required the City Council to update the OBC. Councillors were also presented with revise predicted waste flows and costs for the project.
Waste growth and market prices were identified as external factors that would require continual monitoring to keep project estimates up to date, as these factors effect waste flows and financial information.
Waste Volumes
Future waste volumes and flows are notoriously difficult to predict and yet good estimates are required as these reflect on the costs of long term projects and the scale of treatment plants required.
Recycling and composting performance for 2005-06 and 2006-07 in York has rocketed and estimates of future waste flows and growth have had to be revised to reflect the latest information available.
In addition estimates of future growth in waste have had to be revised downwards to reflect the lower waste growth trends in recent years.
The effect of these lower growth rates is significant and results in predictions for the total amount of waste to be handled from 2008 to 2033 across York and North Yorkshire of 13.25m tonnes, a reduction of 370,000 (-2.7%).
The reduction in waste estimates has, in addition to the scale of treatment plants, implications for operating costs. Coupled with other changes such as price and interest charges, this has meant revisions to the OBC.
Procurement programme
As in other areas of the country, the acquisition of suitable sites for development and the obtaining of planning consents is critical to the programme and this reflects in major changes to key dates.
The target for preparing planning applications for treatment plants has been brought forward almost 2 years from July 2009 to September 2007, with an anticipated date for obtaining consent of September 2009. This effectively gives more breathing space to the anticipated plant construction period of 2010 – 2013.
“Extremely significant financial implications”
The report to the Executive said that there are “extremely significant financial implications” for the project which are in effect based on the comparison of the proposed development option adopted (the reference case) compared to doing nothing by continuing with landfill and buying LATS allowances (the status quo).
The Reference Project relates to managing waste more sustainably. The approach covers waste minimisation, recycling and composting initiatives coupled with treatment technologies for diversion of biodegradable municipal wastes (BMW) from landfill. Energy recovery would be “optimized”, from residual wastes. The overall effect would be to reduce carbon emissions.
Comparisons of the ‘status quo’ to the reference case show major savings over the 25 year PFI partnership for the 2 Authorities, though because of the new circumstances of predicted reduced waste quantities, the savings have significantly reduced.
Savings of £311m over 25 years shown in the OBC at Sept 2006 have now been revised downwards to £143.8m, this mainly due to a fall in the cost of the “do nothing” case. Even so the cost implications to the Council, and in turn to the council tax payers, is still major compared to the present budget costs for waste management.
The "affordability gap"
York has calculated what it terms the “affordability gap” for the joint project with North Yorkshire, which is represented by the total cost of the project less budgets available and PFI credits to be received. In 2006 this was estimated at a massive £845.9 million and though this has reduced on recalculation to £708.9 million, it is still nevertheless very significant.
An estimate is given in the York report that shows the effect on an indicative council tax rate. This varies from 0.2% in 2008 to 7.5% in the worst case year of 2013/14.
Meeting conclusions
At the meeting the York Executive approved the report and confirmed that the Council is committed to finding the additional resources required to make the project affordable over its life.
This decision was necessary to progress the PFI application for funding to Defra.
The Executive recognised the achievements already made in recycling and composting by council staff as well as the need for continued action.
The Executive also re-affirmed support for Mechanical Biological Treatment (MBT) as the preferred residual waste treatment process for York’s waste.