Date: 19th
DECEMBER 2002.
Title: INTEGRATED WASTE MANAGEMENT
CONTRACT – UPDATE ON THE OPERATION OF THE RESOURCE RECOVERY FACILITY (RRF) AND
ADJOINING POWER PLANT AT FOREST PARK, NEWPORT.
REPORT
OF THE HEAD OF ENGINEERING SERVICES
_________________________________________________________________________________
To report on
the current closure of the Power Plant Operation located at Forest Park,
Newport, and the potential implications to the Council.
The Council’s Integrated Waste management contract commenced
in October 1997, and was groundbreaking in that it was the first truly
Integrated Waste Contract of its type in the UK, and was also the first of its
type under the provisions of the Governments Private Finance Initiative (PFI).
This has allowed major investment to be made in the Islands waste management
infrastructure. Under the PFI the Council also receives PFI credits of
approximately £1.5m per annum. The contract is currently one of the largest
currently operated by the Council. The contract was awarded to Island Waste
Services (IWS) who were specifically set up to operate the contract. They are a
fully owned subsidiary of Biffa Waste Services Limited.
The contract covers many service areas including waste
collection; waste treatment; waste disposal, including landfill development,
operation, restoration and monitoring; recycling including composting and
backdoor and kerbside collection of recyclables; civic amenity site development
and operation; and the operation of a Resource Recovery Facility (recovery of
recyclables and fuel production).
The main thrust of the contract is the diversion of waste
from landfill. High targets were set which were well in excess of the average
recovery rates being achieved nationally, and which after year 5 of the
contract increases incrementally by 1% on an annual basis. The current annual
target is 30%. Diversion of waste from landfill has many advantages to the Council
both financially and environmentally.
The original contract length was twelve years. The Council
extended the contract by six years in the year 2000. The current contract will
end in October 2015. Part of the basis of this extension was to allow IWS to
make capital investment in the existing Waste Derived Fuel Plant, to convert it
into a Resource Recovery Facility that would produce a partially densified floc
fuel from the same feedstock as was processed by the WDF plant but which would
also produce additional fuel from wastes that were un-processible through the
existing WDF plant pelletisisation system. This increased the throughput and
effectiveness of the plant, and hence diverted more waste from landfill. The
existing power plant facility adjacent to the RRF facility also had to be
converted to be able to accept the floc fuel. This is operated by another
company, Combined Heat and Power (CHP) / Ener-G, with whom IWS have a separate
contract for the supply of floc fuel. Works to modify the WDF plant commenced
in January 2001. Since becoming fully operational earlier this year recovery
rates have increased significantly, and have on a number of occasions exceeded
50%, which was the desired outcome of the revised process. The average recovery
rate for year 5 of the contract exceeded 49%
However, on the 31st October 2002, the power plant operation
was closed and ceased to accept any of the floc fuel production from the RRF
plant, following a prolonged period of discussions and negotiations between IWS
and CHP concerning various operational and other issues. In the short term it
is unlikely that the power generation facility will come back on line. It has
therefore become necessary for IWS to source alternative markets for the floc
fuel.
Alternative markets for the fuel do exist on the mainland,
although the transport logistics of such an operation do create problems.
Island markets have also been investigated, but found not to be viable. An
outlet has already been established in Lincolnshire and investigations are
currently ongoing for an alternative site in Wiltshire. Loads have already been
sent on a trial basis to the Lincolnshire outlet with great success as far as
the combustion process is concerned.
At the present time the new tipping cell at Standen Heath
landfill is being brought into use and will require approximately 8,000 tonnes
of soft waste to be placed in the base as a protection blanket. This was a
programmed event and would have required waste to be diverted from the RRF
plant in any case.
In the short term waste will continue to be processed at the
RRF plant with a target of two loads of floc daily being transported to the
mainland (approximately 40 tonnes). The remainder will be used on the landfill
site, initially as a soft protection layer, and then for disposal. Extraction
of steel and aluminium will continue at the RRF facility and the fine rejects
from the plant will continue to be processed through the in-vessel composter at
Lynnbottom. Plant and equipment has been sourced, including two walking floors
and five bulk carriers, which will be used in the short term to transport floc
to the Lincolnshire plant.
Negotiations are currently being undertaken by IWS for the
installation of a baling press. This will make the handling of the floc fuel
easier and more economic for export to the mainland. In addition the quantity
that can be delivered on a daily basis can be increased to approximately 55
tonnes. The machine will also be capable of baling cardboard for recycling
rather than converting it to fuel or disposing of it to landfill. This will
also improve the performance and efficiency of the main processing plant
without its modification, and therefore not compromise operations in any way
should the energy from waste plant be re-commissioned in the future.
It is expected that in the short term with approximately 40
tonnes of floc fuel being delivered to the mainland that recovery rates will
remain at or above 40% in line with the average recovery rates to date. With a
baling process in place, and an increased tonnage being delivered, recovery
rates will increase to be more in line with recent recovery rates.
However, IWS have indicated that they are committed to the
principle of an energy from waste plant on the Island, and have indicated that
it is their intent to submit a planning application for construction of their
own state of the art unit to replace the existing energy plant.
Waste management and recycling form part of the innovative
Private Finance Initiative scheme and are consistent with the Corporate Plan
objectives.
Within the contractual arrangements with IWS they are
required to meet recycling targets for each year of the contract. If IWS had
only met their contractual target of 30% recycling for the current contract
year the cost of landfill tax to the Council would have been £682,500, based on
a landfill tax charge of £13 tonne, and 52,500 tonnes of waste being
landfilled. However, IWS achieved a much higher recycling rate of 50%, which
resulted in a saving to the Council of £97,500 in landfill tax charges (i.e.
landfill tax charges reduced to £585,000). The closure of the Power Plant is
likely to result in a recycling rate of 40%, still some 10% in excess of the
contractual obligation. This will result in the savings to the Council being
reduced to approximately £48,750, based on current landfill tax rates, and
tonnages of waste being processed.
None
The apportionment of risk benefit is clearly defined in the
PFI agreement. The closure of the plant will not give any greater risk than at
present.
That this report is noted and that further reports be
brought back to this committee as required providing updates.
None
Contact Point: Steve Boswell Tel: 823732
STEPHEN
MATTHEWS
Head of
Engineering Services