Authorisation is sought to explore options, with our partners Worcestershire County Council, to extend or conclude the joint Waste Management Services Contract and to assess if such options could provide value for money to the councils.

In parallel to exploring options to extend the contract, authorisation is sought to assess alternative options for provision of the services when the contract ends. It is important that this work is undertaken alongside assessment of an extension option to allow the council to assess the respective merits of all the options to inform any decision.

Any proposals for extending the contract identified and assessed against the alternatives will be subject of a further report, and determined as appropriate. It is expected that the council will have proposals and an assessment in early 2019, for determination in March 2019.

If the option to extend the contract proves unfavourable, the council will progress identifying alternatives for providing the waste disposal service on expiry of the contract. 

In addition to considering future options a number of changes to the contract in its existing term are being considered. These changes seek to maximise savings/revenue for the council, reduce risk, minimise environmental impact and comply with legal requirements, they are:

I.          Consider the option of expanding the capacity of the energy from waste facility in order to generate additional revenue for the councils.

II.          To implement a variation to the contract to amend the annual price adjustment mechanism in order to reduce the risk of an unforeseeable price change caused by future revisions of the Gross Domestic Product (GDP) deflator.

III.          To implement a variation to the contract to reflect a change to the method of treatment of residues, Incinerator Bottom Ash (IBA) and Air Pollution Control Residues (APCr), from the energy from waste facility. Residues are being recycled instead of landfilled as specified in the contract at a reduced cost. A variation to the contract is required to reflect the change in treatment and amend the payment mechanism to reflect the reduced costs.

IV.          To implement a variation to the contract to comply with the legal requirements of the Environmental Permitting (England and Wales) Regulations. The regulations require Materials Facility (MF) operators to sample materials sent for recycling to measure and report on the quality of materials processed.

1.           The cabinet member could decide not to consider options for extending the WMSC at this time. This is not recommended, considering and assessing options to extend the WMSC will provide the council with a better understanding of its merits and implications and inform decision making in a timely manner.

2.           The cabinet member could decide not to identify and assess options for providing the services on expiry of the existing services. This is not recommended, without considering the councils’ options and assessing the relative merits of those options the council will be unable to make an informed decision on how best to provide the services on expiry, or if an extension to the existing contract is desirable.

3.           The cabinet member could decide not to consider the option of expanding the capacity of the EfW facility. This is not recommended, the EfW has the potential to process additional waste which could generate additional income from gate fees and electricity sales. The options should be considered and assessed to allow the council to make an informed decision on whether to implement this change.

4.           The cabinet member could decide to make no change to the annual contract price review mechanism. This option would mean that the council would be exposed to unforeseen price changes caused from future revisions of the Gross Domestic Product (GDP) deflator which is used to calculate contract inflation. The recommended approach is to amend the mechanism to avoid the risk of any unforeseen price change. 

5.           The cabinet member could decide not to agree a variation to the contract to reflect the change in processing of EfW residues. This is not recommended as the change benefits the councils financially as processing of residues through recycling is less costly than the specified route of sending them to landfill.

6.           The cabinet member could decide not to agree a variation to the contract to introduce material sampling and reporting measure to meet the requirements of the Environmental Permitting (England and Wales) Regulations. This is not recommended as the councils are obligated to agree a variation to the contract to meet the requirement of this change in law.