OULINE BUSINESS CASE (OBC): Outline of Draft Guidance …
Hertfordshire County Council
Waste Management
Outline Business Case
|[pic] | |
|[pic] |Final Draft |
| |October 2008 |
Contents
1. Executive summary 3
2. Background 21
3. Strategic waste management objectives 35
4. Procurement strategy and reference project 47
5. Risk management, risk allocation and contractual structures 79
6. Project team and governance 87
7. Sites and Planning 97
8. Cost, Budgets and Finance 137
9. Stakeholder Communications 140
10. Timetable 140
1. Executive summary
1.1 Introduction
1. The management of municipal waste is one of the greatest challenges facing local government. With increasing awareness of the issue being translated into EU and UK regulation supported by increasingly stringent fiscal measures an alternative solution to landfill is required.
2. Hertfordshire County Council as Waste Disposal Authority (WDA) works in partnership with ten Borough and District Waste Collection Authorities (WCAs) through the Hertfordshire Waste Partnership (HWP). The Partnership endorsed the Joint Municipal Waste Management Strategy (JMWMS) 2007 in November 2007.
3. The Strategy sets the context for municipal waste management and seeks to address the immediate and long term issues. Targets are set for increasing recycling and composting, minimising the amount of residual waste sent to landfill and increasing the treatment of residual waste. The Strategy is supported by the waste minimisation and recycling campaign known as WasteAware, established in 1997[1].
4. This Outline Business Case (OBC) seeks to build on the Strategy and identify a long term solution for Hertfordshire through the treatment of its residual waste.
1.2 Background
5. Hertfordshire is situated just north of London, neighbouring the London Boroughs of Enfield, Barnet, Harrow and Hillingdon in the south, with Essex in the east, Cambridgeshire, Bedfordshire and Luton in the north and Buckinghamshire in the west. Hertfordshire is a prosperous county and is the least deprived in the Eastern Region. Local people are generally healthy, and enjoy higher life expectancy and lower than the national average death rates.
6. The county has a population of 1.048 million[2] living in over 452,000 households[3] with the majority living in 30 settlements. As a consequence it has a population density (6.44 per hectare) that is only exceeded by Surrey (6.53 per hectare). The use of space will continue to be a challenge as the East of England Regional Spatial Strategy (RSS)[4] identified that Hertfordshire should plan to accommodate at least 82,000 new dwellings and an additional 20,000 houses resulting from the expansion of Harlow and Luton.
7. The county is easily accessible with a good road network of motorways and A roads. It has two international airports on its border - Luton (Bedfordshire) and Stansted (Essex), whilst London Heathrow is easily accessible from Hertfordshire by motorway. Main rail lines cross the county with mainline stations between the North and Midlands and their respective London termini.
1.2.2 Council governance
8. The county council currently consists of 77 elected members with an executive function discharged through a Cabinet of nine councillors. The authority's net revenue budget is £650 million with a capital budget of £150 million for 2008/09. The county council's ambition is ‘to make Hertfordshire a better place to live and work and to provide the best possible services'. This ambition is shared by its partners and is being delivered through a group known as Hertfordshire Forward that oversees the delivery of the Local Area Agreement (LAA).
1.2.3 Managing waste through partnership
9. For municipal waste management the Hertfordshire Waste Partnership (HWP) has set out through the JMWMS 2007 its policies and action plans. At the heart of the strategy is the principle: Reduce, Reuse, and Recycle. The partners work collectively through a Memorandum of Understanding (MoU). This governs the operational engagement and determines the direction of joint working. The joint recycling and composting initiative known as WasteAware[5] has existed for over a decade and is well recognised amongst Hertfordshire residents.
1.2.4 Municipal waste arisings in Hertfordshire
10. During 2007/08, Hertfordshire disposed of 566,096 tonnes of Municipal Solid Waste (MSW), which includes not only waste collected from households but also street sweepings, waste from Household Waste Recycling Centres (HWRCs) that is not recycled plus trade waste.
11. To predict the likely future growth in waste, four scenarios have been considered. The assessment made assumes the achievement of the 50% recycling and composting target by 2012 held at that level over the life of the procurement. The model reflects the proposed household growth promoted by the East of England Plan to 2021 and, thereafter, the county's historical growth rates. This model produces an average annual MSW growth rate of 0.8% with a treatment requirement of approximately 249,000 tonnes by 2019/20.
1.2.5 Waste collection and disposal arrangements
12. All ten WCAs provide refuse, dry recycling and organic waste collection services. Two of the districts (St Albans City & District Council and Dacorum Borough Council) operate small Materials Recycling Facilities (MRFs) for the separation of plastics and cans.
13. The WDA manages various arrangements for the recycling and composting of waste and its disposal either to treatment facilities or landfill. These include:
• 19 HWRCs county wide.
• Windrow composting facilities at Cumberlow Green (Hertfordshire), Ongar and Canfield (Essex).
• In-Vessel Composting (IVC) contracts for mixed organic waste at St Ives (Cambridgeshire) Harefield (Hillingdon), and Cumberlow Green (Hertfordshire).
• A Waste Transfer Station (WTS) at Waterdale, North Watford serving five Waste Collection Authority areas.
• A single Energy from Waste (EfW) contract at Edmonton (North London).
• Three landfill disposal contracts (Hertfordshire, Bedfordshire and Cambridgeshire) utilising six sites.
14. Service performance is good with over 38.5% recycling and composting being achieved currently. The county has been well within its landfill allowance limits in each year of the Landfill Allowance Trading Scheme (LATS) regime.
1.3 Strategic waste management objectives
1.3.1 The Joint Municipal Waste Management Strategy (JMWMS) and its approach
15. The HWP has developed a strategy that sets out policies, objectives and delivery actions. The HWP wants first and foremost to adhere to the waste hierarchy and to move away from a reliance on landfill for waste that cannot be economically reused or recycled. The JMWMS was informed by extensive public consultation with more than 11,000 people registering their views. The consultation results identified that the public wanted the HWP to consider the following when planning new waste treatment facilities:
• Minimising transportation to the facility.
• Cost effectiveness and affordability.
• Environmental impacts (e.g. noise and emissions).
• The potential for turning waste into energy.
16. In order to meet the targets set out in the national Waste Strategy England 2007 (WS07) the Partnership wants to deliver high recycling and composting levels. To achieve these targets the HWP has recycled or composted a further 65,129 tonnes between 2004/05 – 2007/08.
1.3.2 Following the waste hierarchy
17. The JMWMS policies seek to manage materials in accordance with the waste hierarchy and to move away from the reliance on landfill. It also identifies as a priority the need to work collectively to reduce the potential for generating waste. The JMWMS contains three policies that focus on waste minimisation to be achieved by:
• Utilising the Waste Performance and Efficiency Grant (WPEG) and Waste Infrastructure Capital Grant (WICG) to enable the introduction of new services and facilities or to facilitate improvements to the HWRCs to help to maximise recycling and composting.
• Incentives for waste minimisation such as initiatives to promote home composting, the use of reusable nappies, support for community organisations for unwanted household goods.
• More composting capacity, to allow county-wide collection of green and kitchen waste.
• New Recycling Centre management contracts to increase the number of recycling opportunities including waste wood.
• Appointment of a Partnership Development Manager to coordinate and promote the development of the HWP.
• Ongoing engagement with Waste and Resources Action Programme (WRAP) to identify recycling opportunities.
Figure 1: Contribution to recycling and composting targets by the proposed activities of the Hertfordshire Waste Partnership.
|Year |National Waste Strategy target (% |Reference Project - expected attainment (%) |
| |household waste recycled) | |
|2009/10 |40 |42.50% |
|2012/13 |- |50% minimum |
|2014/15 |45 |50% minimum |
|2019/20 |50 |50% minimum |
18. Despite its strong current performance in recycling and composting, over 60% of the county’s residual household waste is sent to two landfill sites within Hertfordshire and four in neighbouring counties. Core Policy 12 commits the Partnership to reducing the amount of unstabilised waste sent to landfill to a level that is no greater than is necessary. To this end, the county council’s current strategy to achieve LATS self sufficiency has three strands[6]:
• Work with the HWP (and through HWRC management) to reduce waste arisings.
• Work with the HWP to increase recycling and composting to at least 50 percent by 2012, through the capture of food waste and card.
• Procure residual waste treatment facilities, which will be fully operational in 2014/15.
19. The county council as waste disposal authority is aiming for self sufficiency in landfill allowances and modelling shows that this can be achieved throughout the life of LATS, if new waste treatment capacity is developed as outlined in this OBC.
1.4 Procurement strategy and reference project
1.4.1 The approach to waste procurement
20. Hertfordshire currently lacks facilities for treating residual waste and the landfill capacity to deal with untreatable waste within its boundaries. Given this complex challenge, the county council has agreed that a disaggregated contract approach should be followed. Consequently a separate procurement project to deliver landfill disposal capacity to meet interim needs will commence in 2009/10.
21. This approach recognises and understands the interfaces and dependencies between projects within the programme. Careful consideration has been given to the number and nature of the procurement exercises required to meet the overall waste management objectives. There is a common approach to data reporting, compilation, and management, including the utilisation of Waste Data Flow (WDF)[7]. This ensures that procurement activities are well informed and aligned, contributing to effective project interface and resource management.
22. The county council recognises that there are significant cost pressures and will seek to achieve Value-for-Money (VfM) by building upon current contracts and the strength of the HWP. There is a clear ambition to implement sustainable waste management that will achieve and where practicable exceed both national requirements and locally agreed policy objectives.
1.4.2 The emerging Output Specification and associated targets
23. At the centre of the Hertfordshire Waste Procurement Programme (HWPP) is an Output Specification (OS) that identifies the services and standards required to deliver long-term residual waste management. For example, from the original Project Initiation Document (PID) the county council identified a number of acceptance criteria to provide the framework for the OS including:
• Treating the appropriate residual waste tonnages.
• Complying with the county council’s waste management and procurement policies.
• Achieving appropriate risk transfer.
• Taking advantage of market expertise solution provision.
• Allowing the project to consider merchant market capacity.
24. Other aspects of the OS include:
• A 28 year contract period to allow for sustainable debt repayment
• The delivery arrangements for Residual MSW to the appointed contractor that could include direct delivery or via WTS(s).
• The transport arrangements that the contractor needs to arrange for onward transport to the treatment location(s).
• The treatment of third party waste (i.e. waste delivered to the facility under contracts between the operator and third parties) which will be permitted subject to tonnage limits.
• A desire to achieve efficiencies and innovation in service delivery to ensure continuing best value.
• The requirement to provide WTS(s) is to be excluded from the OS.
25. The contract's performance framework will focus on measurable targets and objectives and will be developed based on Department of Environment, Food and Rural Affairs (Defra), Waste Infrastructure Development Programme (WIDP) guidance. The framework will be based on measurable indicators to measure performance and where appropriate to provide incentives for the contractor.
1.4.3 Recent developments in the determination of future waste management
26. Since the March 2008 submission of the Expression of Interest (EoI) to Defra the development of the OBC has provided a strategic and commercial rationale for the scope of the Private Finance Initiative (PFI) contract.
• Waste growth estimation has been revised to reflect the household growth proposed in the East of England RSS.
• Waste flows have been revised to show the current situation and that expected in future, based on the above growth rates.
• Recycling and composting has been modelled using the up to date status of contracts, projects, plans and activities and confirms that the HWP is on course to meet its target of 50% recycling and composting by 2012.
27. This work provides the basis for the development of a Technical Options Appraisal (TOA) based on Defra guidance published in April 2008 (and the revision published in June 2008) to identify the most suitable treatment technology. The evaluation criteria were based on six categories: diversion from landfill, compliance with the waste hierarchy, global environmental impacts, operational flexibility, proven reliability and deliverability, and its impact on the local environment.
28. These criteria were applied to a range of residual waste treatment processes with weightings of 60% on the above qualitative criteria and 40% on cost. The short-listed technologies included:-
• Landfill - to provide the base case (known as Do Nothing and sometimes referred to as status quo) against which all others would be measured.
• Energy from Waste (EfW).
• Energy from Waste with Combined Heat and Power (EfW + CHP).
• Mechanical Biological Treatment producing Refuse Derived Fuel for off-site combustion (MBT + RDF).
• Mechanical Biological Treatment with Anaerobic Digestion (MBT + AD).
• Mechanical Biological Treatment producing Refuse Derived Fuel for combustion in an on-site Gasification facility (MBT + Gasification).
29. In addition, it was decided to model the options against different combinations of sites owned by the county council:
• Single centrally located site supported by two WTS's (one in the east and one in the west)
• Two waste treatment sites (central and east) supported by the existing WTS at Waterdale, Watford.
30. The combination of technologies and sites created eight different options, subsequently modelled with the following results:
• A centrally located EfW + CHP supported by two WTS scored the highest against the criteria and the application of costs.
• The second highest score was for the centrally located EfW, followed by a twin site EfW.
• The MBT options scored consistently lower because of the need for an off-take market for the RDF which, if not found, would require to be landfilled.
• The Landfill option was ranked last on the qualitative criteria and second worst in terms of cost.
1.4.4 The Reference Case
31. From the TOA, the HWPP Board decided that the following option should form the basis of the Reference Case:
• A centrally located EfW + CHP with the ability to treat a capacity of 270,000 tonnes at 2039/40.
• This facility would be supported by the existing WTS at Waterdale, Watford plus a new WTS in the east to be secured by the county council.
• In addition there would be a continuing requirement to secure landfill capacity of up to 75,000 tonnes at 2039/40 to deal with difficult to treat waste such as bulky items, street sweepings and fly-tipped wastes.
1.5 Risk management, risk allocation and contractual structures
1.5.1 The county council’s approach to risk management
32. The county council has an established and committed approach to risk management. It has its own corporate risk management team, a corporate risk management policy and operates an online corporate risk management system known as JCAD. Utilising this system, the authority has undertaken a thorough exercise to identify and assess both the risks involved in procurement and the contract risks and allocation envisaged between the county council and the contractor.
33. The county council recognises that the implementation of control measures to manage the likelihood and impact of a risk occurring is a vital element of project management. Through a programmed review cycle, the county council has allocated resource and methodology to manage risks. Risk mitigation will continue to identify optimal contingency arrangements as the project moves through its progressive procurement cycle.
34. Working with the guidance provided by Defra and under the Projects in Controlled Environments (PRINCE2) methodology, the project assurance function is led by the Corporate Head of Risk Management. There is a series of review sessions planned into the future procurement delivery programme.
1.5.2 The Hertfordshire waste procurement project risk matrix
35. The county council has identified and considered the risks associated with the Waste Procurement Project and has established a risk register which identifies the foreseeable key risks associated with the project. Risks have been considered in relation to their timing, probability of occurrence and potential impact. The risk matrix is divided into the following categories and the identified risks grouped as shown in Figure 3 below.
Figure 2: Risk categorisation
|Risks categorisation within the risk matrix |
|Planning risk |Residual value risk |Technology / obsolescence risk |
|Design risk |Financial risk |Change in Law risk |
| | | |
|Construction risk |Performance risk |Demand risk |
| | | |
| |Operational risk | |
| | | |
36. This project risk matrix identifies the key project risks and how they will be allocated between the parties to the contract (county council (authority), Contractor or shared) at the outset of procurement. The contract terms and risk allocation will be in line with HM Treasury’s Standardisation of PFI Contracts Version 4 (SoPC4 – March 2007). As such, the proposed allocation of risk will be set out in the draft Project Agreement and other contractual documents to be developed for the Invitation to Participate in Dialogue (ITPD) and explored with bidders as part of the Competitive Dialogue (CD) procedure. New risks may emerge depending on a bidder’s proposed solution and allocations may change.
1.5.3 Payment Mechanism
37. The county council’s Payment Mechanism will be based on the WIDP best practice model. The county council and its advisors will continue to develop this in the context of the proposals brought forward during the CD process.
1.5.4 Markets for outputs
38. The main output from the reference case (EfW + CHP) is the sale of energy in the form of electricity and heat. During the procurement the county council will seek to encourage a contractor to guarantee the minimum level of income available through the facility(s) and thereby offset the Annual Unitary Charge (AUC) payable. This will include all output sales from the process.
1.6 Project team and governance
39. The county council has the responsibility as the WDA vested in it by the Environmental Protection Act 1999 (EPA). Under the act, the county council has the duty to discharge two primary functions:
• Disposal of all the controlled waste collected in Hertfordshire by the ten district WCAs.
• To provide Hertfordshire residents with household waste disposal location (HWRCs).
40. In addition the county council has powers to make payments in the form of recycling credits, to recover from the WCA the full reimbursement for the disposal of commercial and industrial waste and to make reasonable payments to the WCAs as a result of being directed to a disposal site which is beyond a reasonable distance from the collection area.
1.6.1 Project Governance.
41. Given the size and the long-term nature of the HWPP there is a need to ensure that there are appropriate elected member and officer structures in place. The current structures have been in place since the start of the OBC and will be built on and developed during pre-procurement.
42. In terms of elected members there is a clear pathway from the Executive (Cabinet) to oversight of the development of the procurement project. A Member Advisory Group (MAG) comprising of nominated members from the Waste Management Cabinet Panel (also known as the Waste Management Panel or WMP) and the HWP chaired by the Executive Member for Planning, External Relations and Waste has met regularly to review progress and provide advice to officers on any emerging issues. In turn, progress has been reported to the quarterly meetings of the WMP, which provides advice and information to the Executive Member, who then promotes items for Cabinet approval.
43. Within the delegated authority to officers, the development of the OBC has been directed by the HWPP Board (as directed by the PRINCE2 methodology) and chaired by the Project Executive, who is an Assistant Director within Environment with the delegated responsibility for waste management. The other board members include Assistant Directors from corporate financial and legal departments, unit heads representing communications, insurance, procurement, property, risk management and waste management. The Defra WIDP transactor is a member of the board.
44. The HWPP Board reports to the Environment Department's Board which meets weekly and the Assistant Director provides a regular progress up date on the project. Progress is further reported to the Authority's Strategic Management Board (SMB), which meets fortnightly and is chaired by the Chief Executive and comprises of Service and Corporate Directors. The Environment Director provides a regular update on the project's progress with formal presentations at key stages of the decision making process. The HWPP is also fully engaged through nominated representatives that sit on the MAG and the Project Board.
45. During the OBC the project has been managed by an Environment Department based project team supported by resources drawn from corporate departments. From the submission of the OBC a central Programme Directorate will be created to provide strategic management and will be supported by a number of secondees from communications, financial, legal, procurement and waste management. Further support will be provided by property and insurance staff. A budget is available to support these posts.
46. Currently all the county council's contracts with external advisors end on 31 October 2008 with a commitment to provide advice on requests for clarification and further information required by Defra and HM Treasury (HMT) up as required. It is intended that advisors for financial, legal and technical will be recruited and be in place before 2009 to ensure that the HWPP team is fully prepared for procurement.
1.6.2 Partnership arrangements
47. The county council, as the WDA, does not have any formal partnership arrangements with other similar authorities. Rather the county council attends a regional and national groups and maintains a dialogue with its neighbouring WDAs. Within Hertfordshire, the county and district councils have a history of partnership working through the HWP. As a result there is well developed architecture of member and officer meetings plus a financial contribution to the activities associated with the WasteAware initiative.
48. Executive Members responsible for waste collection and disposal meet quarterly. In terms of officers there are a number of different groupings including a Directors Group that deals with the strategic development of the Partnership, a Heads of Waste Group that addresses operational issues and a WasteAware group that deals with the development and implementation of waste minimisation and recycling and composting initiatives. The partnership structure has been further strengthened by the recruitment of the jointly funded Partnership Development Manager, who began work during September 2008.
49. The HWP has an Memorandum of Understanding (MOU) that was agreed when the JMWMS was signed in November 2007. With significant procurement planned it is being proposed to strengthen the MoU through an Annexe that clearly identifies roles and expectations for all parties. Further work has been identified to further strengthen the Partnership with a proposed Intermediate Inter Authority Agreement to be in place by the start of procurement in May 2009 running until the completion of procurement in April 2011.
1.7 Sites, planning and design
1.7.1 Introduction
50. Hertfordshire's proximity to London creates particular town planning challenges:
• Two- thirds of the county is covered by Green Belt policies or similar policies that control development in order to prevent coalescence.
• There is extensive coverage of national and international environmental designations such as the Chiltern's Area of Outstanding Natural Beauty (ANOB) plus a large number of locally significant environmental features.
• There are no large areas of despoiled or damaged land. Despite a long history of significant sand and gravel extraction, much of the land has been restored to agriculture or recreation and very little can be described as Previously Developed Land (PDL).
• The East of England RSS has proposed an increase in houses of around 82,300 houses and 68,000 jobs to 2021.
• Significant proposed development has been identified within designated Key Centres for Development and Change (KCDCs) that include Hemel Hempstead, Stevenage, Hatfield and Welwyn Garden City.
• A further 20,000 homes have been allocated to Harlow and Luton but located within Hertfordshire.
• Such proposals will require significant extensions into the Green Belt with an associated impact on the county's landscape character.
• The result is that land for development within or at the edge of settlements is at a premium and subject to intense competition.
1.7.2 Planning policies and plans
51. The East of England RSS provides a regional context for Waste Management in line with the national Waste Strategy England 2007 for England (WS07) and Planning Policy Statement (PPS)10. The county council is the Local Planning Authority (LPA) with regard to matters to do with waste and is responsible for the production of the Waste Local Development Framework (LDF). The Framework's Core Strategy reflects government guidance with regard to the allocation of areas of search and specific sites (Policy 3). This policy identifies the specific site selection principles supported by a sequential approach that includes:
• Priority to PDL, contaminated, derelict or disturbed land.
• Land outside the Green Belt to be considered before that inside.
• ANOB and sites with nature designations will be avoided.
• Local and environmental assets to be protected / enhanced.
1.7.3 Site requirements
52. The TOA has identified that the best option to be is a centrally located EfW + CHP facility with a capacity to treat up to 270,000 tonnes of residual municipal solid waste by 2039/40. This facility would be supported by two WTSs - one existing at Waterdale and a new facility to be located in the east of the county.
1.7.4 Site selection
53. The site selection process began by short-listing those sites identified within the Waste LDF Site Allocations Preferred Options study (January 2008) within the area of search. This work produced a short list of four sites to which the site owned by the county council at New Barnfield, South Hatfield was added. New Barnfield is a former secondary school site in South Hatfield and was identified in the EoI as a potential reference site.
54. A town planning assessment was undertaken based on the principles of Planning Policy Guidance (PPG) 2 - Green Belt and PPS 10 Planning for Sustainable Waste Management. The location of the reference treatment plant at New Barnfield was considered to be least damaging in Green Belt terms and scored well on accessibility, its current use and its proximity to employment uses.
1.7.5 Detailed work on the reference site
55. A desktop study (Environmental Scoping Study) was undertaken as part of an initial Environmental Impact Assessment (EIA) in support of the EoI. The conclusions from this work were a series of recommendations for further investigation. These issues will be addressed as part of the development of the Environmental and Traffic Impact Assessments (TIA) required for such a size of development.
56. Work has been undertaken including the potential for electricity and heat off-take as well as draft building designs and layouts. A desktop study of the potential for heat off-take within a 1, 5 and 10 kilometres (km) distance from the proposed plant has identified that the EfW + CHP could generate between 154,500 and 535,800 MWh per year based on UK and European examples. The analysis to date has identified that there could be a number of potential users for the heat within practical distances. The next stage is to investigate the feasibility for the supply network to consumers. Another study has been undertaken on the electricity grid to ensure that a connection can be made. Further work is planned for the pre-procurement stage.
1.7.6 Design issues
57. Whilst the county council is not currently promoting a fully designed facility at the reference site, it does recognise and value the concept of good design. The county council has identified a corporate challenge of "Reducing the impact of new development on the Environment". The Executive Member for Planning, External Relations and Waste champions this challenge.
58. In terms of waste management treatment facilities, the LPA has not adopted supplementary planning guidance or a best practice guide. Rather the LPA intends to follow the principles and guidance provided by PPS10 - Planning for Sustainable Waste Management.
59. The WDA has set itself a number of objectives that include ensuring that any development should safeguard environmental features; where possible new habitats should be created; the building's design should be of a high quality and make a positive impact within its surroundings; and that operation of the plant should be carbon efficient. With this in mind, a comprehensive assessment of the site and planning related work for the project has been completed. This planning health-check identified that the project has covered the relevant requirements. ,
1.7.7 County Council's town planning strategy.
60. The county council has considered its options and has decided that it will not by itself or in partnership apply for planning permission for a residual waste treatment facility. By doing so it recognises the complexity of the facility and the differences between the different technologies. However it intends to undertake sufficient technical and permitting work to enable the successful bidder to have confidence that planning permission can be secured. For the eastern WTS the county council will secure and obtain planning permission on the site prior to the completion of procurement.
1.8 Costs, budget and finance
1.8.1 Introduction
61. The Reference Case (EfW + CHP) has been identified above. The county council’s understanding of the costs of procurement, the procurement route for this contract, the affordability of the Project, the county council’s LATS strategy and county council’s approval process is set out below.
1.8.2 Procurement costs
62. The budgetary provision for internal resources and external consultancy support to complete the required procurement has been considered and budgeted for, with significant provision made. The county council has budgeted £4.4 million for the three year period from 2008/09 to cover the cost of internal staff and external advisors.
1.8.3 Cost of the Reference Case
63. The analysis that has been undertaken seeks to establish the costs of the Reference Case against the costs associated with continuing to landfill the remaining residual waste having already recycled and/or composted the other half of the waste arisings. The analysis shows the details of the Reference Case as:
• Operation of the EfW + CHP treatment facility: £800 million
• Non-Reference Case costs: £1,057 million
• Total Cost of the Contract: - £1,857 million
64. In comparison, the costs of the Do Nothing scenario are £2,174 million, £317 million more than the Reference Case.
1.8.7 Projected budgets, affordability and sinking fund
65. As the proposal is for the public sector to transfer the provision of waste management services to the private sector contractor, there will be an existing county council waste management budget that is available to help fund the Reference Case costs. The projected budgets run for the period 2011/12 through to the final year’s budget in 2039/40. Post 2011/12 budgetary increases are at the expected Retail Price Index (RPI) rate of 2.5% per annum.
66. The projection of the county council's budget for waste management is £1,505 million over the 28 year period including three years construction and 25 years of operation. Compared to the costs of the Reference Case there is an affordability "gap" of around £352 million. If PFI credits are factored into the equation, the Reference Case would attract £111.4 million of PFI credits with a Revenue Support Grant (RSG) contribution of £208 million, which is payable from the time the facility becomes operational.
67. In order to equalise the effect of differing cash flows over the appraisal period, the county council has calculated a Sinking Fund requirement. This is an equal amount the county council will set aside each year and is assumed to be £40.9 million in real terms (2011/12 prices). The funding above is based on assumptions including a PFI Credit award of £111.4 million.
68. The county council has taken the view that it has made prudent assumptions in determining the costs of the Reference Case. In order to test the robustness of the affordability position a sensitivity analysis has been completed and this shows that the adverse sensitivities increase the overall affordability gap for the Project by between 13.4% and 54.2%. For all scenarios, the sensitised cost is still lower than the Do Nothing option.
69. The county council intends to be self-sufficient in LATS throughout the lifetime of the scheme. Modelling using the M-Beam tool has been completed and the LATS Strategy designed to meet the changing relationship between its landfill allowances and the biodegradable MSW tonnage requiring management.
1.8.4 Qualitative and quantitative assessment
70. This assessment needs to address the issues of Viability, Desirability and Achievability with regard to the reference case of a single treatment plant operating over a 25 year period to treat Hertfordshire's residual waste under PFI regulations. The analysis shows:
• Viability - It is considered that a contract structure can be arrived at that meets the county council's strategic aims and objectives for waste management.
• Desirability - It is considered that a PFI contract for the Project should bring sufficient benefits to outweigh an expected higher capital cost.
• Achievability - The proposal is considered achievable given that; the right level of resource has been committed, the Project seeks a product that is familiar to the private sector, risk sharing has been based on established standards, right level of internal and external resource and expertise has been committed.
1.8.5 Value for Money assessment numbering
71. As part of the financial analysis there is a need to establish the VfM provided by PFI compared to the option of Conventional Procurement (CP). With a VfM percentage of 11.0% on the base case scenario, this provides a clear indication that PFI can deliver VfM for the disposal of MSW.
1.8.6 Indifference analysis
72. HM Treasury's model uses Indifference Points to demonstrate the level of change required in the value of the individual inputs to erode the difference between CP and PFI to zero, thus making the county council indifferent between the two procurement routes. The analysis demonstrates that the capital expenditure under CP would need to decrease by 16% in order for the county council to be indifferent between the two options.
73. With the details above considered and considering that the Do Nothing option is more expensive than the Reference Case (EfW + CHP) by £317 million, the county council believes that the Reference Case represents the most economically advantageous option to ensure compliance with the EU Landfill Directive and other requirements as well as delivering the best possible waste strategy for Hertfordshire.
1.9 Stakeholder communications
1.9.1Introduction
74. The HWPP communications strategy addresses the issues of:
• Awareness of the basic facts – who, what, where, when, why and how much.
• Understanding what the proposals the alternatives and the impacts.
• Informing all stakeholders, allowing involvement and appreciation of proposal benefits.
• Involvement in the process where input can help inform the proposals’ developments.
1.9.2 Market interest
75. An initial market sounding day was carried out on 10 January 2008 and despite being early in the process it demonstrated that there is significant industry interest in Hertfordshire. Following this, a Prior Information Notice (PIN) was published to invite companies to the second market testing day which was held on 3 October 2008. The event was attended by 35 companies providing 67 delegates representing a wide range of waste management interests including waste disposal companies, technology providers, financial institutions etc. There was a high degree of interest in Hertfordshire's reference proposal and this has given the county council confidence to proceed with the development of its OBC.
1.9.3 Engagement with other relevant authorities
76. The county council has regular dialogue with adjoining counties through the Lead Officer Waste Management (LOWM) Group that forms a sub-group of the East of England Regional Waste Panel. In addition the county council has held detailed discussions, in the past, with both Essex County Council and North London Waste Authority with regard to potential markets for Refuse Derived Fuel (RDF). These discussions have ceased as the HWPP technology choice is different from these other authorities.
77. In the past there have been discussions with Buckinghamshire County Council and these have resulted in Hertfordshire being referenced in their OJEU notice (March 2007). However the capacity in their proposed reference plant was tightly constrained to their waste growth and there is likely to be little spare capacity that the county council could have utilised.
78. In their letter of approval of 30 May 2008 (in response to the EoI), Defra indicated that Hertfordshire should initiate discussions with Bedfordshire County Council to discuss opportunities for joint working. These discussions concluded that whilst it was not possible within the time allowed to consider the submission of a joint OBC there were opportunities for joint working. These opportunities have included the exchange of information and experiences on procurement and communications as well as invitations to attend site visits and the market testing events. It is anticipated that further contact will be made during the procurement of advisors as the two authorities share similar recruitment requirements.
1.9.4 Public and stakeholder engagement.
79. The HWP carried out an extensive public and stakeholder engagement and consultation exercise during the development of the JMWMS07. This contact has been maintained through the WasteAware campaign under which the residual waste treatment proposal is badged. The targeted engagement implemented to date is described below. Further communication is planned following the publication of the OBC and related councillor papers.
• Councillor education. To date the training programme has included technical presentations and visits to a range of waste treatment facilities
• Officer education. The training programme has included technical, risk and financial management workshops, as well as procurement training provided by 4Ps.
• Wider Stakeholder Engagement. Throughout the development of the EoI and OBC communications have been promoted by the county council's website, a newsletter and information bulletin along with articles in the county council’s own newspaper.
1.10 Timetable
1.10.1 Timetable
80. The timetable is divided into five key stages, namely: EoI / OBC period; initial bid phase; procurement (CD) phase; selected bidder phase and contractor phase. Separate work activities are identified for the development of a planning application and the development of heat supply.
1.10.2 Managing Timetable Risks
81. The county council intends to strengthen its officer project team structure. It will also undertake the recruitment of external advisors with significant PFI procurement experience and extensive resources. During the pre-procurement period up to April 2009 there will be an intensive training programme for both officers and members with sessions provided by 4Ps and the WIDP Transactor. Working with advisors the HWPP team will prepare all the necessary documentation required for procurement so that it is ready for the dialogue ahead.
82. The county council intends to maximise the use of energy generated by the residual waste treatment plant. The Reference Case includes the costs necessary to capture the waste heat from the process. During the initial bid phase of the project the county council will be finalising a strategy to ensure that the available waste heat is exploited to the fullest extent possible. The current durations for negotiation of the contract and construction of the heating network would allow heat to be made available to external users approximately four months after the operational date of the facility.
83. The procurement period from Issue of Official Journal of the European Union (OJEU) notice to Financial Close is two years, which is believed to be adequate to complete the Competitive Dialogue (CD) process. A duration of three years has been allowed for the detailed design, construction and commissioning of the plant. Key dates on the programme are the OJEU notice release in April 2009, the completion of the CD stage in September 2010 and a facility construction start scheduled for March 2011. Key milestones are shown in Figure 4 below.
Figure 3: Proposed HWPP timetable - 2008 to 2014
|Procurement milestone |Date |
|OJEU / PQQ Published |Apr-09 |
|Invitations to Participate in Dialogue (ITPD) with Invitation to Submit Outline Solutions (ISOS)|Jul-09 |
|Issued | |
|Invitation to Submit Detailed Solutions (ISDS) Issued |Nov-09 |
|ISRS Issued (if necessary) |Apr-10 |
|Invitation to Submit Final Tenders (ISFT) |Aug-10 |
|Preferred Bidder Selected | Oct -10 |
|Planning Application Submitted |Nov-10 |
|Submission of FBC | Dec 10 |
|Contract Awarded | Mar 11 |
|Financial Close | Mar 11 |
|Operational Commencement |May-14 |
84. The county council believes it has put in place a robust and realistic timetable for the delivery of the facility. This takes account of the requirements of the planning process, along with the likely duration of a CD procurement process.
1.11 Outline Business Case approval
85. The reported to the WMP on 7 October 2008 and to the Cabinet on 20 October 2008 made elected members aware of the costs of the Reference Case against the Do Nothing option and the key sensitivities of the Reference Case. The Waste Management Panel supported the officer recommendations. A further report containing the final draft of the OBC was considered by Cabinet on 20 October 2008.
2. Background
2.1 Introduction
2.1.1The county of Hertfordshire
86. The county of Hertfordshire is situated just north of London. It covers an area of 634 square miles (164,306 sq. km) with 64% of the land area as agricultural, 19% urban and 7% woodland. The county is the 6th largest shire-county with a population of 1.048[8] million in over 452,000 households[9]. Considerable tracts of the county are subject to land quality designations of national, regional or local importance. The Green Belt now covers approximately 63% of the county outside built-up areas.
87. Hertfordshire’s location leads to a complicated set of external boundaries and internal divisions. Some of these are identified below:
• Hertfordshire is located within the East of England Region and sends representatives to the East of England Regional Assembly.
• The county contains10 borough and district councils – Broxbourne, Dacorum, East Hertfordshire, Hertsmere, North Hertfordshire, St. Albans, Stevenage, Three Rivers, Watford and Welwyn Hatfield plus 129 Town and Parish councils.
• Hertfordshire is bounded by the London Boroughs of Barnet, Enfield, Hillingdon and Harrow, the counties of Buckinghamshire, Bedfordshire, Cambridgeshire and Essex, and the unitary authority of Luton.
88. The proximity to London resulting in something often referred to as the "London effect", means that there is no large town but a large number of small to medium settlements spread across the county. The largest towns are Watford, Stevenage, St. Albans and Hitchin. A further impact of London is reflected in the number of New Towns that have been developed since 1945 (Stevenage, Hatfield, Hemel Hempstead and Welwyn Garden City). The ‘London effect’ is also reflected in Green Belt planning policies of the county resulting in the majority of the population concentrated in around 30 urban settlements, set against a background of open countryside.
89. Many of these “green” areas are protected by designations. The Chiltern Hills in the west and north-west are designated as an Area of Outstanding Natural Beauty. Landscape Conservation Areas, Sites of Special Scientific Interest and Sites of Nature Conservation Interest also cover significant portions of the county.
90. The geology of Hertfordshire ranges from the clay-lands of the London Basin to the extensive chalk-lands further north and is the major factor determining the county’s topography. This chalk forms an important water aquifer providing a vital source of public drinking water as well as water for industry and agriculture. Gault clay is overlain by 200 metres of chalk which forms the Chiltern Hills in the north west. Glacial clays and gravels overlie much of the north-east of the county and river gravels occupy the vale of St Albans and many of the river valleys.
91. The county is easily accessible and has over 3,000 miles of good road network. There is heavy transport usage and the associated impacts of congestion during peak periods. In addition, there are two airports near the county’s border - Luton (Bedfordshire) and Stansted (Essex), whilst London Heathrow is easily accessible from Hertfordshire by motorway (M25). Main rail lines cross the county with mainline stations between the Midlands and their respective London terminus. Being a compact county, transport distances are not great; Tring in the west is only 56 miles from Bishop’s Stortford in the east and Royston in the north is only 35 miles from Borehamwood which is close to London’s border.
92. Hertfordshire is a prosperous county, with a wide range of industry covering financial and business, distribution, biotechnology and pharmaceuticals, electronics, film and media and information technology. It is the least deprived county in Eastern region. There is a higher life expectancy and lower than national average death rates.
2.1.2 Hertfordshire County Council
93. The county council currently consists of 77 elected members. Its current administration is led by the Conservative Group (46 members) with the opposition made up of the Labour Group (16 members) the Liberal Democrat Group (14 members) and a single member from the Green Party. The county council has a net revenue budget of £650 million and a capital budget of £150 million for 2008/09.
94. The Executive Function is discharged through a Cabinet of nine Executive members, who are in turn advised by 11 Cabinet Panels including a dedicated Waste Management Cabinet Panel (WMP).The county council's Scrutiny function is delivered through a single committee and this supplies submissions to either the Cabinet or full Council. There is a separate Development Control Committee dealing with county council promoted planning applications and those relating to minerals and waste proposals.
95. Officer leadership is provided by a Chief Executive working with four Service Directors (Adult Social Care, Children Schools and Families, Environment, and Fire and Rescue). There are also 4 Corporate Directors (Communications, Commercial Services / Financial, Legal, and a joint Human Resources (HR) and Property directorate). Together they form a Strategic Management Board (SMB) that oversees the work and drives the strategic direction of the county council.
96. The county council is the lead member of Hertfordshire Forward, the Local Strategic Partnership (LSP) made up of key organisations in the county. The partnership has identified shared priorities and is responsible for delivering Local Authority Agreement (LAA) targets aimed at improving the performance of services.
2.1.3 Corporate priorities
97. The county council’s overarching ambition is ‘to make Hertfordshire a better place to live and work and to provide the best possible services'. This ambition is shared by partners and four strategic partnerships are in place to deliver it. As a result of further consultation, specific references to growth, congestion and climate change have been included in the new corporate strategy. Several monitoring system and data sources, including that of the Hertfordshire Environmental Forum (HEF)[10], are used to underpin ambition.
98. The Departmental Service Plans reflect these key challenges in their working priorities and resource allocation plans. A key part of this process is the use of a business planning tool known as the Strategic Compass[11], which is subjected to annual scrutiny by the Cabinet. Performance management is systematically undertaken for the Environment Department through the Balanced Scorecard that uses a collection of national and locally generated indicators plus the results of annual customer satisfaction survey to measure performance. Whilst there is not a direct Corporate Challenge that covers Waste Management, the Departmental and Group Service Plans recognise its significant importance. The Environment Department Service Plan 2008/09 has the implementation of the Joint Municipal Waste Management Strategy 2007 (JMWMS07) as one of its six key priorities.
99. Within the Environmental Management Group (EMG) which delivers the service, a key priority is to secure the capacity for residual waste treatment for the medium term (by 2011) and the longer term (by 2016). The county council recognises the importance of delivering these objectives and through the Hertfordshire Waste Partnership (HWP) joint priorities are recognised and supported. Waste minimisation and recycling grants received by the county council from Defra (£5 million) have been passed on to the Waste Collection Authorities (WCAs) to invest in accelerated kerbside recycling as part of the HWP’s delivery of the JMWMS07.
2.1.4 Population Growth
100. The county of Hertfordshire comprises ten borough and district councils and one county council. The populations of each borough and district are shown below in figure 4.
Figure 4: The population of each of the Hertfordshire District areas[12]
|Borough / District |Population |
|Broxbourne |88,900 |
|Dacorum |138,400 |
|East Hertfordshire |132,600 |
|Hertsmere |96,000 |
|North Hertfordshire |121,500 |
|St Albans |131,300 |
|Stevenage |79,300 |
|Three Rivers |85,500 |
|Watford |79,600 |
|Welwyn Hatfield |105,500 |
|TOTAL |1,058,600 |
101. The county’s population will continue to grow. The East of England RSS[13] has identified that Hertfordshire should plan to accommodate at least 82,300 new homes and 68,000 new jobs in 20 year period up to 2021. This situation of a compact densely populated and congested Green Belt county situated close to London means that there is continuous competition for space.
2.1.5. Hertfordshire County Council as the Waste Disposal Authority (WDA)
102. The county council is the statutory WDA within the HWP. It operates a range of contracts for both recovery and disposal. It is responsible for finding ways to dispose of the municipal waste produced by Hertfordshire’s communities. The JMWMS07 sets out the delivery approach and framework policies. At the heart of the strategy is the principle: Reduce, Reuse and Recycle.
103. The county council is responsible for:
• Handling some 567,772[14] tonnes of municipal waste.
• Management of 19 HWRCs processing 89,812 tonnes.[15]
• Disposal of 315,351 tonnes to Landfill.
• Recovery of 40,767 tonnes, sent to EfW facilities.[16]
2.1.5 Hertfordshire Waste Partnership (HWP)
104. The HWP was established to focus on achieving common goals and to benefit from working together. It has allowed the improved coordination of activities and the access to funding made available by Government. The HWP authorities work collectively through a Memorandum of Understanding (MoU) which governs the operational engagement and determines the direction of joint working.. Hertfordshire’s key recycling and composting initiative is known as WasteAware.
2.1.6 The Hertfordshire Joint Municipal Waste Management Strategy 2007 (JMWMS07)
105. The Strategy, which was approved by all parties on 27 November 2007, sets out how the HWP intends to manage municipal waste in the period up to 2020. It takes as its context European regulation and national legislation; changes in population and waste growth rates; and the significant increases in recycling and composting levels of the last 5 years. It is intended that the JMWMS07 will be subject to further review in 2010. The Strategy is supported by action plans that include the delivery of new waste management contracts and facilities. The county council as WDA has a disaggregated approach to the procurement of waste management contracts. The JMWMS07 is covered in detail in section 3
2.2 Analysis of waste arisings
2.2.1 Recent waste arisings
106. In 2007/08[17], 567,772 tonnes of Municipal Waste was collected in Hertfordshire of which 535,926 tonnes was household waste representing over 1170 kgs. per household, of which almost 451 kgs. were recycled or composted.
Figure 5: Summary waste generation data for Hertfordshire, 2007/8
|Waste type |Total (tonnes) |Per household (Kg) |
|Municipal Solid Waste (MSW) (disposed) |567,772[18] |n/a |
|Household Waste |535,926 |1,169 |
|Waste Collected at HWRC's (disposal) |43,032 |94 |
|District Council Collected Household Waste ('black bin' waste) |286,880 |624 |
|Waste Recycled / Composted |206,014 |451 |
|Collected Commercial Waste |31,834 |n/a |
Figure 6: Recent trends in municipal waste arisings
|Year |WCA Household |WCA Collected Trade|HWRC Collected |Other MSW |Total MSW |
| |Collected Waste |Waste |Household Waste | | |
| |Tonnes |Tonnes |Tonnes |Tonnes |Tonnes |
|2003/4 |402,564 |26,099 |112,696 |887 |542,246 |
|2004/5 |419,435 |27,399 |110,744 |455 |558,032 |
|2005/6 |443,524 |28,515 |95,247 |952 |568,238 |
|2006/7 |458,141 |31,553 |95,342 |10,912 |595,748 |
|2007/8 |446,114 |31,771 |89,812 |75 |567,772 |
107. It should be noted that the 2006/07 figures are based on a 53-week contractual year for waste disposal, which inflates the figures for that year; In addition, in 2006/07, a further 10,912 tonnes of commercial waste was landfilled through HCC contracts, and are hence counted as municipal waste. Apart from 2006/7 the general trend has been for a slow decline in the growth of municipal waste, with little difference in the totals of 2005/6 and 2007/8.
2.2.2 Forecast of future waste arisings
108. Following recent reassessment, previous waste forecasts undertaken for Hertfordshire predicted waste growth rates are now considered less realistic. Four waste growth scenarios have been considered and assessed and are shown below.
• Scenario 1: Waste growth in line with growth in the number of households, i.e. the number of new households as set out in the Eastern RSS to 2020/21, reverting to the historic rate of growth in households thereafter.
• Scenario 2: Waste growth as for the Eastern RSS identified above forecasts for waste to 2020/21.
• Scenario 3: Waste growth in line with the Waste Strategy for England 2007 (WS07) target for reducing residual household waste to 225 kg per person each year by 2019/20.
• Scenario 4: Waste growth in line with the JMWMS07 target for reducing residual household waste to 285 kg per person by 2011/12, with no growth thereafter (based on existing recycling & composting rates).
109. The total tonnage of MSW requiring management as forecast under each of these scenarios, is shown in Figure 9 below. This figure also shows the original growth rate as predicted in the Expression of Interest (EoI growth), in addition to the predicted number of households and population estimates.
Figure 7: Waste Growth Scenarios, showing recent and projected growth in MSW (tonnes)
[pic]
110. The modelled scenarios were discussed with the Hertfordshire Waste Procurement Programme (HWPP) Board which approved Scenario 1: RSS Household Growth as the most appropriate, providing a realistic forecast of MSW requiring management capacity. This growth rate was applied to the proposed solution in the recycling and composting model (forecasting waste management performance to 2012/13), and to the appraisal of residual waste treatment options. The modelled growth rate gives an estimated total of approximately 249,000 tonnes of residual MSW requiring treatment at the proposed facility by 2019/20.
2.3. Current arrangements for collection and disposal
2.3.1 Collection arrangements
111. As the WDA, the county council is responsible for the disposal of waste collected by the WCAs, and for financial payments under the Recycling Credits Payment Scheme (RCPS)[19] (with local enhancements). The current collection methods for the 10 WCAs are detailed in Figure 11 below. 7 WCAs provide services through Direct Service Organisations (DSOs) and three through private sector contracts.
Figure 8: Kerbside systems operated by Hertfordshire WCAs
|Council |Collection Type |
| |Residual |Dry Recycling |Organic Waste |
|Broxbourne BC |Part black sack and part free |Paper, cans, glass, plastic bottles |Garden waste, 240 litre wheeled bin |
| |collection: 52 sacks issued each year,|(fortnightly collections, source |(Fortnightly collections) |
| |additional for purchase (both Weekly |separated (s/s) | |
| |collection) | | |
|Dacorum BC |240 litre wheeled bin (Fortnightly |Newspapers, magazines in black box. |Garden waste, cardboard and kitchen |
| |collection) |Cans, plastic bottles, glass (Weekly |waste in a 240litre wheeled bin |
| | |collections, partly s/s) |(Fortnightly collection) |
|East Herts DC |240 litre wheeled bin (Weekly | Paper, glass and cans (Fortnightly |Garden waste, 240 litre bin |
| |collection) |collection, partly s/s) |(Fortnightly collection) |
|Hertsmere BC | 240 litre wheeled bin (Fortnightly |Papers, Plastic bottles and Cans |Garden waste, cardboard and kitchen |
| |collection) Policy of no side waste |(Fortnightly collection, partly s/s) |waste in a 240 litre wheeled bin |
| | | |(Fortnightly collection) |
|North Herts DC |240 litre wheeled Bin (Fortnightly |Paper in blue box, glass, aluminium and|Green waste and cardboard in wheeled |
| |collection) |steel cans in black box (Fortnightly |bin, and food waste from June 2008 |
| | |collection, s/s) |(Fortnightly collection). |
|St Albans City &|Black sack (Weekly collection). AWC in|Paper, cans, plastic bottles, |Garden waste, food waste and cardboard.|
|DC |240 litre bin from nova 08 |(cardboard), glass (Fortnightly |240 litre bin. (Fortnightly collection)|
| | |collection, partly s/s) | |
|Stevenage BC |Black sacks (Weekly collection) |Paper, glass, cans (Weekly collection, |Garden waste, 240 or 140 litre bins |
| | |s/s) |(Fortnightly collection) |
|Three Rivers DC |140 litre bin unless > 5 people in |Paper, glass, cans, plastic bottles |Garden waste, food waste and cardboard,|
| |house (Weekly collection) |(Fortnightly collection, partly s/s) |240 litre bin. (Fortnightly collection)|
|Watford BC |140 litre bin unless > 5 people in |Paper, glass, cans & plastic bottles in|Garden waste, food waste and cardboard,|
| |house (Weekly collection) |boxes (Fortnightly collection, ss) |240 litre bin. (Fortnightly collection)|
|Welwyn Hatfield |Black Sack or dustbin (Weekly |Paper, glass, cans (Fortnightly |Garden waste, 240 litre bin. |
|BC |collection) |collection, ss) |(Fortnightly collection) |
2.3.2 Disposal and recovery arrangements
112. As the WDA, the county council provides waste recycling, recovery, transfer and disposal infrastructure for the HWP. Its services comprise:
• 19 Household Waste Recycling Centres (HWRCs) county wide.
• Windrow composting facilities at Cumberlow Green, Ongar (Essex), Canfield (Essex).
• In-Vessel Composting (IVC) contracts for food waste at St Ives (Cambridgeshire) Harefield (London Borough of Hillingdon), and Cumberlow Green.
• A WTS at Waterdale serving five WCA areas.
• Three landfill contracts (in county, Buckinghamshire, Cambridgeshire and Essex) using six sites.
• A single Energy from Waste contract at Edmonton (North London Waste Authority)
• Miscellaneous contracts for disposal of clinical waste, asbestos etc.
The county council is also working to make provision of further facilities for the composting of green garden waste, cardboard and kitchen waste collected directly from households.
113. Two of the districts (St Albans City and District Council and Dacorum Borough Council) operate small Materials Recycling Facilities (MRFs) for the separation of plastics and cans. Bulking facilities for dry recyclables also exist at the Waterdale WTS. It is recognised that additional facilities such as MRFs and WTSs will be required as a result of a long term procurement strategy.
114. The vast majority (89%) of the municipal waste collected in Hertfordshire that is not recycled or composted is sent to landfill. Additionally, the county council has a contract for energy recovery of up to 60,000 tonnes each year to the Edmonton EfW facility in North London.
115. Details of the county council contracts are provided in Figure 11 below. The contracted landfill disposal tonnage lies with two contractors operating disposal facilities both outside and within Hertfordshire. Three contracts have effectively been rolled into one with waste going to a single site as the others become full.
Figure 9: Waste Disposal Authority Contracts (October 2008)
|Contract Type |Contractor |Site |Contract Start |Contract Finish |
|Landfill |WRG |Bletchley / Stewartby |13-Jan-98 |Extended to 31 Dec 2010 |
|Landfill |Biffa |North Herts |01-Aug-99 |31-Mar-10 |
|Landfill |Biffa |Ugley |1 Jan.2003 |31-Mar-10 |
|Landfill |Biffa |Westmill |01-Jan-03 |31-Mar-10 |
|Landfill |WRG |Milton |01-Jan-03 |31-Dec-10 |
| | | | | |
|Incineration |Londonwaste |Edmonton |02-Jan-98 |01-Jan-18 |
|Windrow Composting |Cumberlow Green |Cumberlow Green |01-Apr-08 | 31 Mar 2023 |
|Windrow Composting |Heatherland |Ongar |01-Apr-08 |31 Mar.13 |
|Windrow Composting |Edwards |Canfield |01-Apr-08 |31 Mar.2013 |
|In Vessel Composting |West London Composting |Harefield |01-Nov-04 |01-Nov-14 |
|In Vessel Composting |Cumberlow Green |Cumberlow Green |01-Apr-08 |31-Mar-23 |
|In Vessel Composting |Envar |St Ives |01-Apr-08 |2018 |
|In Vessel Composting |Agrivert |Ridge |Contracted subject to |15 years from commencement |
| | | |Planning | |
|Waste Transfer |Londonwaste |Waterdale |01-Jan-98 |31-Dec-10 |
|and haulage | | | | |
|HWRC operation |Various contractors |19 sites |01-Oct-08 |01-Oct-13 |
|HWRC container supply and |Edwards |19 sites |01-Oct-08 |01-Oct-13 |
|haulage | | | | |
|HWRC materials recycling |Various |- |2008 |2011 |
|Chemical & Asbestos collection|Cleansing Service Group |Manchester |01-Sep-08 |01-Sep-13 |
|service | | | | |
|Clinical waste disposal |Grundon |Colnbrook |01-Jul-04 |01-Sep-13 |
2.3.3 Performance of existing services
116. The recycling and composting performance of the HWP is set out in Figure 10 below. Growth in dry recycling has been steady (up 4.3%), with growth in composting more rapid (up 7.5%).
Figure 10: Recycling and Composting for the HWP – 2004/5 to 2007/8
|Year |Recycling | Recycling (BVPI) |Composting |Composting (BVPI) |
| |Tonnage |% of HHW |Tonnage |% of HHW |
|2004/5 |90,999 |17.25 |49,886 |9.46 |
|2005/6 |99,887 |18.60 |78,319 |14.58 |
|2006/7 |108,785 |19.68 |88,873 |16.08 |
|2007/8 |115,296 |21.58 |90,718 |16.98 |
117. The pattern of residual waste disposal in recent years is shown in Figure 11 below[20]. There has been a slow growth in the amount of waste sent for energy recovery at Edmonton but a sharper reduction in landfill and a steady increase in the diversion rate. The county has been well within its limits in each year of the LATS regime.
Figure 11: Residual municipal waste disposal 2004/5 to 2007/8
|Year |Thermal Treatment |MSW Landfilled |Diversion Rate |BMW Landfilled |Landfill Allowances |
| |Tonnage |Tonnage |% |Tonnage |Tonnage |
|2004/5 |32,852 |381,863 |25.36 |n/a |n/a |
|2005/6 |34,627 |353,784 |31.45 |225,139 |290,472 |
|2006/7 |36,862 |359,942 |33.31 |230,711 |278,572 |
|2007/8 |40,767 |318,614 |36.52 |203,930 |262,706 |
118. There is quite a heavy dependence on disposal facilities outside Hertfordshire and this has been necessary for some time. It is still the current situation and is demonstrated by Figure 12 below. Currently, only 20.8 percent is actually disposed of within the county.
Figure 12: MSW Disposal destinations 2007/8
|Residual MSW processing route |Tonnes |% |
|Landfilled in-county |74,728 |20.8 |
|Landfilled out-of-county |243,886 |67.9 |
|Other disposal out-of-county, including energy|40,767 |11.3 |
|recovery and incineration of clinical waste | | |
|Total |359,381 |100 |
119. The historical local authority targets known as Best Value Performance Indicators (BVPI) and new LAA statistics for 2007/08 have been compiled (see table 13 below). These figures show residual household waste treatment by energy recovery at 7 percent of the total, with 54 percent being sent to landfill. These disposal indicators are set within the full range of waste performance figures. These figures combine the performance of the collection and disposal functions within the county.
Figure 13: Performance against BVPIs and LAA targets[21] during 2007/08
|BVPI target - code and detail |Target tonnage |Actual tonnage |Target percentage |Actual percentage |
|BVPI 82a Total tonnage of household waste arisings - |124,766 |115,096 |22.00% |21.56% |
|percentage recycled | | | | |
|BVPI 82b Total tonnage of household waste arisings - |85,067 |90,717 |15.00% |16.99% |
|percentage composted | | | | |
|BVPI 82c Total tonnage of household waste arisings - |39,698 |37,327 |7.00% |6.99% |
|percentage used to recover heat, power and energy | | | | |
|BVPI 82d Total tonnage of household waste arisings - |317,585 |290,746 |56.00% |54.45% |
|percentage landfilled | | | | |
|BVPI 84a Household Waste Collected per Head of |538.00 |504.38 | | |
|Population[1] | | | | |
|BVPI 84b Percentage increase in Household Waste per Head| | |1.98% |-4.44% |
|of Population | | | | |
|BVPI 87 Cost of waste disposal per tonne for municipal |£52.00 |£47.49 | | |
|waste | | | | |
|Household Waste Recycling Centre - Recycling and | | |52.00% |52.09% |
|Composting (BS 1.6 -17) | | | | |
|LAA Non-biodegradable Waste Recycling (local target) | | |9.16% |9.52% |
|LAA Reduction in the Percentage of Municipal Waste | | | |4.21% |
|Landfilled (from NI193) | | | | |
|LAA Increase in the Percentage of Municipal Waste | | | |3.20% |
|Recycled | | | | |
|Landfill Allowance Trading Scheme (LATS) Compliance | | | |76.91%[22] |
|(i.e. % of allowance used in this year) | | | | |
2.4 Waste composition
120. In 2007/08 the amount of MSW produced in Hertfordshire was 567,772 tonnes. Of this, 535,926 tonnes was household waste[23], the rest a mixture of other non household municipal wastes[24]consisting of trade waste[25] collected by the WCAs, fly tipped wastes and other non household wastes and tyres and soil (as collected at HWRCs)
121. Currently available waste composition detail for the total waste stream, is based on data from a compositional analysis carried out in August 2006 for the following WCAs: Dacorum; Hertsmere; St Albans; Three Rivers; Watford; and Welwyn Hatfield. The composition of 9 of the 19 HWRC’s residual waste material was also sampled at this time.
122. For the purposes of modelling the overall solution required for residual waste and to assist the development of the a clear Reference Case (the benchmark residual waste solution use to compare procurement bids and the central part of this OBC), this work was enhanced by:
• A further compositional analysis undertaken in September 2007 for East Hertfordshire District Council.
• Extrapolation to un-sampled districts by pairing similar WCAs, surveyed and non-surveyed.
• Adjustments for the recent separate recording of Waste Electronic and Electrical Equipment (WEEE).
• Use of a comparator for the composition of trade waste.
123. HWRC composition is based on merging the 2006 residual waste compositional analysis and the HWRC actual recycling and composting data for 2006/07. The Recycling and Composting analysis uses distinct composition data for each of the WCAs and the HWRCs, and these data sets have been averaged to produce the overall waste composition for Hertfordshire. This is shown in Figure 14 below.
Figure 14: Composition of MSW in Hertfordshire[26]
[pic]
124. These compositions are similar to the national average compositions though the HWRCs sample contained a high proportion of miscellaneous combustible material, in particular carpet. Future waste composition is forecast through application of the model covering known changes in recycling collections. Garden waste is now collected across the whole county and no further major changes in the volume of that stream are anticipated.
3. Strategic waste management objectives
3.1 Introduction
125. The Hertfordshire Waste Partnership (HWP) has developed an approach in its Joint Municipal Waste Management Strategy (JMWMS07) that sets out policies, objectives and delivery actions. The HWP seeks to embrace the principles of the waste hierarchy and:
• Reduce the amount of waste we all produce.
• Reuse as much of the material as possible.
• Recycle materials that cannot be reused.
• Recover value or energy from residual wastes.
• Dispose of whatever is left.
126. The JMWMS07 commits the HWP and stakeholders to move away from a reliance on landfill for waste that cannot be economically reused or recycled. The county council with its partners is committed to meeting published national targets.
2 The Joint Municipal Waste Management Strategy (JMWMS07)
1 Introduction
127. The strategy document is the foundation for the management of MSW in Hertfordshire to 2020 and beyond. There are 13 key objectives and 20 core policies covering all aspects of the management of municipal waste from prevention to disposal.
128. The JMWMS07 was developed with the benefit of a public consultation exercise. It identified that where waste cannot be reused, recycled or composted, it can have value recovered from it in the form of additional materials and energy. Any residues requiring final disposal can be pre-treated to minimise the environmental impact.
129. The JMWMS07's Action Plan include the delivery of new waste management contracts and facilities. To support implementation of these action plans, the HWP has developed formal joint working in the form of a jointly funded and managed HWP Partnership Development Manager, an enhanced recycling credit schemes, and sharing of funds available through the WICG scheme details of which follow in this section.
2 Consistency with Waste Strategy for England 2007
130. The National Waste Strategy (WS07)[27] has a number of key objectives for local authorities. The relevant accompanying fact sheet stated: “Local authorities are responsible for how waste is managed in their area. They should work with their communities to provide convenient collection and recycling services for their residents, and local businesses; and plan and invest in new infrastructure to divert waste from landfill. The proposals in the strategy will give them further incentives and tools to do so”.
131. The HWP collectively met the 2005/06 Government target of 30 percent recycling and composting of household waste. Waste Strategy for England 2007 (WSE 2007) has introduced revised targets. These targets will be reflected at local level through strengthened Local Area Agreements (LAA).[28] With this in mind, the HWP has developed the JMWMS07 that took account of key policies in the National strategy, recognising the subsequent National Indicators (NI)[29].
• NI 191: Residual household waste per household - Waste collected, minus material sent for recycling, composting or re-use.
• NI 192: Household waste recycled and composted - Material sent for re-use, reprocessing or controlled biological decomposition.
• NI 193: Municipal waste land filled - Collected municipal waste sent to landfill, including recycling rejects
132. Some of the key themes within the JMWMS07 that support the national approach of WSE 2007 are identified below.
• National targets for landfill diversion. The county council wants to play its part in delivering the necessary national waste infrastructure and support the Defra targets by meeting legislation requirements. Core policy 12 in the JMWMS07 demonstrates the commitment to this end[30].
• High recycling and composting levels. Recycling and composting form a core part of the JMWMS07. Hertfordshire’s residents already have a good record in this regard, recycling and composting 38.5 percent of household waste in 2007/8. HWP aims to improve on this and the JMWMS07 contains a commitment to recycle and compost at least 50 percent of household waste by 2012/13, which would be well ahead of the national target of a minimum of 50 percent by 2020. There is an interim local target of 45 percent in 2010/11. The HWP is keen to avoid limiting future additional recycling and composting potential. This is expressed in JMWMS07 in Objective 5: Ensure that services are flexible enough to allow technological developments and changing legal requirements to be accommodated, and to ensure that the desire to move waste up the Waste Management Hierarchy is not compromised.
In the response to the consultation for the JMWMS07, there was very strong support from residents for higher levels of recycling. Around 70 percent of residents supported the target of recycling at least 50 percent by 2012, and of those who do not, the vast majority wanted the target to be higher. Three-quarters of residents wanted to see more materials collected for recycling and 83 percent of respondents believed that recycling should be compulsory. To achieve the JMWMS07 targets, the HWP has developed a number of key actions and these are detailed later in sub-section 3.4.
• Residual waste per person. At the time of publication of the JMWMS02, household waste within Hertfordshire was growing at an average of 3% a year. Recent analysis shows that the rate of growth in municipal waste has slowed, but the amount of waste produced by Hertfordshire residents (and businesses) is likely to remain on an upward trend. With a growing population, and despite the stabilisation in waste generation per head and increases in recycling, the HWP has to face the possibility that the county council might need to dispose of the same amount of residual waste, or even more over time. To counteract this, it contains a target of reducing the amount of waste left over after recycling and composting (residual waste) to 285kg per person by 2012/13[31] (Core Policy 11).
Following more recent analysis (reported in section 2.2.2), a revised waste growth rate has been applied to the proposed solution in the recycling and composting model and to the appraisal of residual waste treatment options. The modelled growth rate gives an estimated total of approximately 249,000 tonnes of residual household waste requiring management capacity by 2019/20. Based on population projections for Hertfordshire, this equates to 260 kg per person each year in 2019/20, which is higher than the Waste Strategy England 2007 (WS07) target of 225 kg per person .If the level of recycling and composting could be increased to around 60% by 2019/20 then the HWP would be able to achieve the WS07 target.
• Combined Heat and Power (CHP). The JMWMS07 position on energy recovery, based on the feedback from the consultation, is clear and is captured in Objective 1: “Manage materials in accordance with the waste hierarchy - reduce, reuse, recycle / compost, energy recovery (e.g. local heating/ electricity), disposal - except where financial costs are prohibitive, or where environmental or public health consequences are negative”. Furthermore, one of the key desirables of the HWP is to achieve a solution which is as self sustaining as possible, as well as assisting the county council with its overall resource and energy management objectives These are expressed in the JMWMS07 Objective 12: “As local authorities, set an example by preventing, re-using, recycling and composting our own waste and by using our buying power to encourage sustainable resource use”.
The county council’s recently published Carbon Management Programme has clear corporate objectives aiming to reduce the county council’s contribution to climate change by reducing emissions of Carbon Dioxide (CO2) from its properties and operations. Given the corporate focus on carbon management, the county council is keen to develop a waste management solution that has beneficial attributes, and where energy recovery is achievable, that efficiencies are maximised when economically and operationally deliverable. Further details on the proposed CHP approach is detailed in section 4 and 7 of this OBC.
3.2.3 The Strategy consultation process
133. The development of the JMWMS07 was based on detailed technical work funded through Defra’s Waste Implementation Programme (WIP), and on the results of an extensive consultation exercise. The public consultation was undertaken between January and March 2007 by means of a questionnaire that was delivered to all Hertfordshire households, supported by a media campaign.
134. The consultation received a good response with more than 11,000 people registering their views. The results of the consultation made it clear that the public wanted the HWP to consider the following when planning new facilities:
• Minimising transportation to the (new) facility
• Cost effectiveness and affordability
• Environmental impacts (e.g. noise and emissions)
• The potential for turning waste into energy (e.g. local heating or electricity).
135. 95% of the respondents thought it was important to consider the environmental impacts of any new facility and the same proportion (95 percent) said it was important to consider turning waste into energy. 90 percent of respondents thought it was important to consider the cost effectiveness of any new facilities, and a slightly lower number (86 percent) thought the county council should seek to minimise the transportation to the facility.
3.3 Waste minimisation
136. Projections used in the JMWMS07 and those used for the Reference Case , forecast that the amount of waste produced in future will be significantly higher than today due to population growth. To help counter this, the JMWMS07 makes a priority of work that will both reduce the potential for generating waste, and encourage people to reuse materials rather than throw them away. As such the JMWMS07 has three policies focusing on waste minimisation:
• Core Policy 2: The Hertfordshire authorities will prioritise actions which promote and deliver waste prevention and reuse. The principal focus of this activity will be on the household waste stream, but the authorities will support initiatives affecting non-household waste as appropriate.
• Core Policy 11: The Hertfordshire authorities will work together through the HWP to ensure the amount of residual household waste generated per person does not exceed the following amounts: 315 Kg in 2008; 300 Kg in 2010; and 285 Kg in 2012.
• Core Policy 3 (part): Hertfordshire authorities will promote home composting of biodegradable waste (and) provide support to ensure that residents home compost successfully, through support and education.
137. In order to implement these policies the WCAs in Hertfordshire have introduced a range of measures to minimise waste collected. Three clear systems are identified below:
• Two WCAs have adopted a weekly 140 litre bin system for residual waste (for households of five or fewer people)
• Three WCAs have AWC using 240 litre bins, and one is introducing a single free refuse sack per week system (additional sacks need to be purchased)
• Six WCAs operate a ‘no side waste’ policy and / or charge for additional sacks.
138. These containment systems are backed by advice through Hertfordshire’s WasteAware campaign which has been running since 1997 and is widely recognised. This campaign will continue to educate residents about waste, how they can minimise waste generation and maximise recycling, and provide information on options for waste processing. The core work continues and includes promoting schemes such as home composting, reusable nappies, and support for community organisations that help people find a home for unwanted furniture and materials, as well as recycling home computers.
139. Objective 9 from the JMWMS07 makes the approach to working with community groups clear. Objective 9: Work with others, including commercial, statutory, non-governmental, and academic and community based or not-for-profit organisations, in pursuit of the Partnership’s vision of sustainable waste and resource management, particularly on the issues of waste prevention and re-use.
140. At Household Waste Recycling Centres (HWRCs) the main focus is on driving up recycling rates and excluding non-household waste; the county council works with the contractors in operating a system which promotes these activities providing benefit for both where successful. As a result of improved management, there has been a 43,000 tonne drop in waste handled by HWRCs since 2001/02. The largest contributor to this is the operator incentive scheme , supported by the use of Closed Circuit TV (CCTV) as a deterrent. One purpose of this equipment is to prevent commercial as well as construction and demolition waste being delivered to the sites. The remainder of the reduction reflects changes in WCA services particularly in some cases the introduction of kerbside garden waste collections.
141. During the consultation on the JMWMS07, it became clear that the amount of packaging used by supermarkets is a big concern for residents. Because of this, the JMWMS07 includes a commitment to work with manufacturers and retailers to encourage a more environmentally sustainable approach to packaging. Almost 98 percent of respondents to the Strategy consultation felt it was important to reduce the amount of waste produced and 99 percent believed that manufacturers and retailers should reduce the amount of non-recyclable packaging they use. Over 80 percent of respondents supported the promotion of reusable nappies, home composting and reuse organisations.
142. The WasteAware campaign will be used to try and turn these responses into action. Funding for future years is planned and waste reduction campaigns play a key role in the efforts to curb the overall growth of municipal waste of recent years. Working through WasteAware the JMWMS07 actions to reduce waste generation include:
• Continuing to offer reduced-price home composters.
• Continuing to encourage the sustained use of real nappies.
• Working with charities and small businesses to help find organisations that will accept their waste for reuse.
• Investigating reusing more of the waste collected through bulky waste collections and at HWRC’s.
143. The cumulative effect so far of these measures is that Hertfordshire generated 504kg[32] / person of total household waste per annum in 2007/8. This equates to 310 Kg[33] residual waste per head, in line with the target for 2008. The HWP built on this in the JMWMS07 in setting its waste minimisation targets, focusing on residual waste per person of 285 Kg in 2012.
144. In January 2008, to facilitate the achievement of the JMWMS07 targets, the HWP agreed a new financial model to supplement the RCPS now agreed and adopted. This scheme incentivises waste minimisation and recycling / composting for the WCAs and is designed to maintain past good performance and encourage improvement. Under this scheme, in addition to the standard consolidated RCPS payment, the full saving to the county council in landfill tax of each tonne of residual waste avoided is paid by the County to the relevant WCA on the basis of a target trajectory from its current position to the policy objective of 285 kg per person by 2012.
145. It is acknowledged that further work may be required to attain the national targets through to 2020, but based on future projections the county council expects the HWP to deliver reducing levels of residual waste per person / household in future.
3.4 Recycling and composting
146. The HWP is committed to recycling and composting as the recent progress demonstrates – HWP has increased recycling and composting by almost 12 % (65,129 tonnes) during the period 2004/05 – 2007/08.
147. The key JMWMS07 policies for recycling and composting are:
• Core Policy 5: Jointly, the Hertfordshire authorities will aim to recycle and compost a minimum of: 40% of household waste by 2008; 45% of household waste by 2010; and 50% of household waste by 2012.
• Core Policy 6: The HWP will provide convenient kerbside collection services, where practicable, so as to maximise the opportunity for separate collection of dry recyclables and organic waste. The partners will also work towards developing recycling schemes for smaller waste streams such as litter and street sweepings.
• Other policies cover the provision of a network of HWRCs, Bring Banks, and Re-use.
148. Since the adoption of the revised JMWMS07 in November 2007, the county council and HWP have put in place a number of linked actions to achieve the target of at least 50 percent recycling of household waste by 2012/13. This set of activities is a key component of both the interim and long term waste management solutions. It comprises:
• The WasteAware programme.
• Utilisation the WICG (Waste Infrastructure Capital Grant 2008-11)
• Incentives for waste minimisation (as described above).
• Contracts for additional IVC capacity, allowing kitchen waste and card to be collected county-wide.
• New HWRC management contracts.
• Appointment of a HWP Development Manager.
• A data review / gap analysis of existing HWP collection services.
• Ongoing engagement with WRAP.
149. The HWP has a jointly funded WasteAware Campaign leading with a 3 year work programme up to 2011, in addition to information and advice available via the website. Each strand of the programme is reviewed on an annual basis by a sub-group of the HWP. Recent surveys show that there is now a 35 percent recognition rate of the name and message. In addition to information and advice available via the website
150. The county council will receive £4.8M in the period 2008 -11 under the WICG, and its Cabinet has approved the allocation of this funding to waste management. It has also agreed to make 40 percent of the funds available through the HWP for projects which will contribute towards achievement of the JMWMS07 and national recycling targets. In this way the service improvements identified can be considered for funding and introduced efficiently, linked to the role of the HWP Partnership Development Manager.
151. Initial WCA proposals are currently being evaluated. HWP has identified four areas of investment together with a proportion of match funding expected from WCAs; these are:
• On-street recycling bins (0 percent matched funding)
• Kerbside collection containers (25 percent matched funding)
• Flats recycling facilities (25 percent matched funding)
• Plant for delivering recycling services to hard-to-reach properties (50 percent matched funding)
152. The remainder of the WICG will fund improvements to HWRCs and transfer facilities, with a number of projects under consideration. The major contributions to achievement of the 50 percent target in terms of percentage points will come from contracts for additional IVC capacity, allowing kitchen waste and card to be collected county-wide, and from new HWRC management contracts.
153. These activities are underpinned by the waste minimisation and education initiatives described earlier. Together they are the means of implementing Core Policy 17: Consistent with its desire to move waste up the hierarchy, the Hertfordshire authorities will continuously review, with a view to implementation, the range of initiatives available to them to incentivise: Waste prevention / reuse; and greater participation by residents in separate collection services
154. The county council has contracted for the provision of new In-Vessel Composting (IVC) capacity which will allow each of the collection authorities to add kitchen waste and cardboard to the existing collections. In 2007/08, four WCAs collected these materials and a further two added this service for their residents from July 2008. Adding to the existing IVC contracted capacity located at Cumberlow Green, Harefield, and St Ives (totalling 65,000 tonnes), a new 35,000 tonne site is contracted and due to be available in 2009, subject to planning approval.
155. In addition to this capacity of 100,000 tonnes, a further 30,000 tonnes may be available at a later date. This is dependent on the eventual choice of site(s) for residual waste treatment. If required, the county council will procure additional capacity from existing suppliers to handle the anticipated mixed organic stream requiring IVC treatment. A total IVC capacity of 127,000 tonnes is expected to be in place by 2012.
156. The county council has awarded new HWRC management contracts with a starting at the beginning of October 2008 and covering the period 2008-2013. The 19 HWRCs sites currently average 52 % recycling and the new contract will provide incentives for operators to raise this to 60 % (minimum). From October 2008 low-grade wood (at 17 sites) and dense plastics (at 11 sites) will be separated for recycling, and inert wastes will be diverted away from the residual household waste stream (at 17 sites).
157. It is anticipated that these changes to HWRC operations will contribute 1.5 % to the HWP overall recycling performance. In setting this target the county council has taken into account the inherent challenges, including the possible effects of measures to minimise waste collected at the kerbside, on HWRC arisings.
158. The HWP has created a new post (the HWP Partnership Development Manager) which became operational in September 2008. The key objectives for the post are to support and coordinate the work of the HWP, spread best practice and foster cross-boundary engagement on projects to achieve the shared objective of 50 %recycling. The cost of the post is shared by the partners with one of the district councils (specifically the Chairman of the HWP Directors Group) providing line management.
159. To accompany the new HWP post, the HWP commissioned a review of refuse collection services and recycling performance. This report will enable an analysis of service and performance opportunities which could be the target for actions designed to maximise WCA recycling. The partnership continues to follow best practice where possible and is in ongoing discussions with Waste Resources and Action Programme (WRAP). The county council is also working closely with WRAP on seeking improvements in recycling performance to minimise LATS impacts.
160. The effect of the projects described in the preceding paragraphs has been modelled. The overall benefit is shown in figure 17 below:
Figure 15: Contribution to recycling and composting targets by HWP proposed activities.
|Year |National Waste Strategy target (% |Reference Project - expected |
| |household waste recycled) |attainment (%) |
|2009/10 |40 |42.50% |
|2012/13 |- |50% minimum |
|2014/15 |45 |50% minimum |
|2019/20 |50 |50% minimum |
3.5 Landfill objectives
161. Despite its strong current performance in recycling and composting (38.5 %) together with some existing energy recovery (7 %), Hertfordshire remains heavily dependent on landfill for the disposal of residual waste. Two-thirds of its residual household waste is sent for landfill disposal and this is currently delivered to two landfill sites within Hertfordshire and four in neighbouring counties.
162. Landfill contracts are held with 2 waste management companies (covering the 6 sites) Details were show in Section 2.3.2 . The county council recognises that in the short term landfill will remain a major disposal route, but that this must be reduced for reasons of cost, potential scarcity, and environmental management, as embodied in the EU Landfill Directive.
163. The policies set out in the JMWMS07 are designed to achieve its core objective - “Objective 1: Manage materials in accordance with the waste hierarchy”. They act together to drive the management of waste up the waste hierarchy and the strategic aim of moving away from the historic reliance on landfill.
164. Core Policies 1-9 cover waste prevention and reuse, home composting, recycling and composting including non-household waste, the provision of kerbside, bring-site, and bulky waste services and HWRC facilities. Core Policy 12 has established the policy for the future use of landfill as a disposal method: “Core Policy 12: The HWP will reduce the amount of unstabilised[34] waste sent to landfill to a level no greater than is necessary to: Retain flexibility to perform better at activities higher in the hierarchy;
• Enable routine maintenance to be carried out at other waste facilities; and
• Treat wastes, which cannot easily be treated at other county waste facilities.
• When waste is landfilled, it will be done at the closest appropriate facility to its point of generation[35].
165. The county council’s aim is to maintain self-sufficiency in LATS through the lifetime of the scheme.
166. The waste minimisation, recycling and composting initiatives described above, together with the accompanying financial incentives and HWP development measures, support this strategy. The trajectory of increased recycling and composting performance, in the light of the waste treatment capacity that is provided by the county council's contract for disposal at the North London EfW facility, indicates that the county council could have a surplus of LATS allowances until at least the second target year of 2012/13.
167. In this second Landfill Directive target year, current projections suggest that the county council might have a small shortfall in LATS allowances. This could be overcome by either a higher than anticipated recycling and composting performance and/or increased throughput at the North London EfW plant. By that time, there may also be further opportunities available for the treatment of waste, at new or recently developed plants in neighbouring areas. The soon to be operational Donarbon MBT plant in Cambridgeshire would be a good example.
168. The projected shortfall in subsequent years from 2013/14 up until the time that the proposed EfW facility comes on stream, could be addressed by:
• further improvements in recycling and composting performance
• further waste minimisation initiatives
• increased input to the North London EfW plant up to the contracted maximum of 60,000 tonnes a year
• short term arrangements at neighbouring waste treatment plants, accessed by means of the county council's transfer facilities at Waterdale, and
• borrowing up to 5% of the allowances allocated for future years.
3.6 JMWMS07 appraisal of technology options for residual waste treatment
169. The JMWMS07 considered the possible residual waste treatment options and the document set out how the HWP and stakeholders proposed to decide on the type of treatment and disposal technologies to use. Whilst no specific waste processing technology was excluded (Core policy 13)[36], the strategy provided two proposed criteria for selection:
• Because of the long lead times in developing a major plant, the facility should utilise a proven technology, an approach that should assist delivery of ‘best value’.
• The facilities should be developed in modular form with increased capacity to meet increases in residual waste.
170. The modular approach was adopted at the time to reflect possible increases in recycling and composting and to ensure that the approach would be more flexible to changes in technology, policies, systems performance and social preferences. However, neither the approach nor the analysis accounted for spatial issues (for example, that a significant part of Hertfordshire is designated Green Belt), or the associated cost implications of a modular approach. The process of moving from this position (November 2007) to the agreement of a Reference Case is detailed in section 4, where the preferred option and procurement approach are set out in detail.
3.7 Environmental impact
171. A full Strategic Environmental Assessment (SEA) was carried out as the JMWMS07 was emerging. This work laid the foundations for the future for the residual project and other waste projects. Coupled with the county council’s corporate priorities[37] the HWP seeks to be more than compliant, rather a project that is at the forefront on environmental leadership in the county.
172. As already identified above in this section the position on environmental impact is clear. This is captured in Objective 1 of the JMWMS07.
• Objective 1: Manage materials in accordance with the waste hierarchy - reduce, reuse, recycle / compost, energy recovery (e.g. local heating/ electricity), disposal - except where financial costs are prohibitive, or where environmental or public health consequences are negative.
173. Furthermore, within the JMWMS07 objectives 2 and 3, the HWP indicates its approach to resource management that is sustainable in the short and long term.
• Objective 2: Manage resources and waste in a way that meets the current needs of Hertfordshire’s residents, without compromising the ability of future generations to meet their own needs.
• Objective 3: Deliver quality services which are affordable and which offer value for money, over both the short and long-term
174. With this in mind, one of the key desirables of the emerging project would be to make it deliver to the waste service requirements as well as assisting the overall county council with its resource and energy management. The county council recognises the possibilities of the future in objective 12.
• Objective 12: As local authorities, set an example by preventing, re-using, recycling and composting our own waste and by using our buying power to encourage sustainable resource use.
175. The carbon strategy for the county council has some clear corporate objectives aiming to reduce the county council’s contribution to climate change by reducing emissions of CO2 from its properties and operations. This statement is made as part of a community leadership approach to seek to contribute to the county’s response to tackling climate change. Given the corporate focus on carbon management, the county council is keen to develop a waste management solution that has beneficial attributes, and where energy recovery is achievable, that efficiencies are maximised when economically and operationally deliverable.
176. The Reference Case for the HWPP is detailed in the next section. Following detailed analysis of the possibilities to deliver an energy and value efficient residual waste management system, it is clear that the use of CHP makes a major contribution to the net energy per unit of emissions when fuelled by MSW.
4. Procurement strategy and reference project
4.1 Introduction
4.1.1 The approach to contract procurement
177. The county council has a clear policy of procurement and contractor engagement as set out in its procurement strategy[38]. At the centre of the approach, the county council always seeks effective risk transfer in the pursuit of best value for the council tax payer. The county council fully supports the principles of sustainable procurement. Wherever possible the county council will specify products which are made from recycled materials; can be recycled or re-used; can be operated in an energy efficient manner; and cause minimal damage to the environment in their production, distribution, use and disposal. This focus needs to be balanced with overall cost and so these aims must also meet the requirements for value for money and quality. Electronic procurement is tool for effective and efficient with bidders [39] and where this can be sensibly achieved, it will utilise this method.
178. The county council, working as Waste Disposal Authority, has adopted a disaggregated approach to the procurement of waste management contracts. The majority of the current contracted landfill disposal tonnage (delivering some 318,000 tonnes in 2007/8) lies with two contractors operating landfill disposal facilities at six locations. In addition there is contracted capacity (up to 60,000 tonnes) at the Edmonton EfW facility.
179. One of the key challenges for the Hertfordshire Waste Procurement Programme (HWPP) is Hertfordshire’s lack of county based facilities for treating and disposing of residual waste. This is an immediate procurement requirement since new landfill contracts need to be in place by April 2010. Given the challenges, the county council has reviewed current thinking and practice in respect of its current waste procurement needs. The use of a single procurement for all landfill and waste treatment services with distinctive service ‘lots’ has been evaluated. Though there are some attractions in this approach, there are a number of significant disadvantages namely:
• The risk of reducing the number of potential bidders.
• The risk that the procurement could not be completed in time to deliver landfill capacity when needed, and to qualify the treatment elements of the project for PFI funding, in line with the timetables set out by Defra.
• The added complexity of evaluating different lots, particularly since the waste volumes for different treatment and landfill solutions would be interdependent.
180. Therefore, the HWPP has identified that the disaggregated approach should be followed. Consequently a separate procurement project to deliver disposal capacity to meet interim needs will commence in 2009/10. Progress on waste projects is reported to the Executive Member for Planning, External Relations and Waste and significant changes are considered by the county council's WMP. This panel meets regularly to consider the status of the waste management key performance indicators, and to ensure that the necessary infrastructure is considered, planned, commissioned and delivered. Further details on project governance are covered in section 6.
4.2 Overall strategy for the procurement of waste services
1 Waste management service delivery
181. The requirements of legislation and the JMWMS07 have resulted in a range of procurement activities within the waste service in Hertfordshire. The service plan published by the county council’s Environment Department[40] on an annual basis covers the strategic issues using the ‘golden thread’ and ‘strategic compass’[41] approaches, effectively linking national priorities though regional approaches to locally delivered projects.
182. The HWP brings together the WDA and WCAs to develop an integrated waste management strategy and programme for Hertfordshire. It aims to streamline and coordinate all waste activity and to achieve efficiencies over time. It is the role of the WMU of the county council to implement its service plan with and through the HWP. As such, it is the combination of all service plans within the HWP that determine the overall approach to waste management in the county.
183. The ultimate aim is to implement a scheme of sustainable waste management that will meet both national requirements and locally agreed policy objectives. The county council recognises that cost increases may be unavoidable, but seeks to continue to achieve VfM by building upon current contracts and the strengths of the HWP.
184. The county council’s WMU has a waste procurement programme that identifies the full range of procurement projects that are required to deliver the WDA elements of the JMWMS. The interfaces and dependencies between projects within the programme are very important and both recognised and understood. The approach adopted is aligned with the existing tried and tested approach to contract management. The planned WDA contracts are detailed below in figure 16. For details of existing contracts, please refer to section 2.3.2.
Figure 16: WDA planned procurement projects within the overall waste service programme[42]
|Service required |Planned procurement |Planned procurement |Service Commencement date|Comments |
| |start date |end date | | |
|Residual waste treatment |Spring 2009 |Spring 2011 |2014 |Commissioning in 2013, full |
| | | | |year of operation 2014/5 |
|Interim disposal and |Jul-09 |Jul-10 |01-April 10 |See footnote[43] |
|ongoing landfill | | | | |
|requirement | | | | |
|Clinical waste disposal |2009 |2010 |Jul-10 | - |
|HWRC - various materials |2010 |2011 |2011 |Separate contracts for a range|
|recycling | | | |of materials |
|Windrow composting - for |2011 |Late 2012 |Apr-13 | - |
|HWRC waste only | | | | |
|HWRC operations, |2012 |2013 |Oct-13 | - |
|management and supervision| | | | |
|HWRC containers and |2012 |2013 |Oct-13 | - |
|haulage | | | | |
|Collection and disposal of|2012 |2013 |Oct-13 | - |
|chemicals & Asbestos | | | | |
|New WTS to serve East / |2012 |2013 |2014 |See footnote[44] |
|North Hertfordshire | | | | |
|In-vessel composting |TBC |TBC |TBC |See footnote[45] |
185. Careful consideration has been given to the number and nature of the procurement exercises required to meet the overall waste management objectives. Driven by a common approach to data reporting, compilation, and management, including the utilisation of the national waste data system, WDF, the WMU is empowering the management of these projects with a common data source and effective management. This ensures that procurement activities are well informed and aligned, contributing to effective project interface and resource management.
186. The county council's current disposal arrangements are heavily reliant on 2 landfill contracts which utilise 6 different sites. Of these 6 sites, 2 are expected to close within the next 2 years. The contracts for the remaining 4 sites are both due to expire in 2010; one with WRG for landfill at Bletchley, Milton and Stewartby at the end of March, and the other with Biffa for landfill at Ugley and Westmill, at the end of December. In order to bridge the gap between the expiry of these contracts and the time when the proposed residual waste treatment becomes operational, the county council will seek to procure interim disposal arrangements that will be cost effective and ensure LATS compliance. To this end the county council will be issuing an OJEU notice in July 2009 with a view to procuring arrangements that will be in place by April 2010.
187. Figure 17 below shows the supporting projects for the waste programme delivered by the HWP. Together these provide the context for a major residual waste procurement project and together with such a project, they map out the procurement activity required to deliver national and local objectives in Hertfordshire.
Figure 17: HWP projects, part of the overall waste service programme
|Service |Lead authority |Contract status |Service commencement |Comments |
|Glass consortium |Welwyn Hatfield |In procurement |Apr-09 |To 2012 |
| | |(renewal) | | |
|Paper consortium |Welwyn Hatfield |In procurement |Apr-09 |To 2013 |
|Cans consortium |East Herts DC |In negotiation for | | |
| | |extension from 2008 | | |
|Abandoned Vehicle |St Albans DC |Ends Nov 2008; In |Nov-08 |To 2013 |
|Collection | |procurement | | |
4.3 Output Specification for the project
188. The HWPP is delivering a solution for the long term treatment of Hertfordshire’s residual MSW. At the centre of the procurement is a specification of what is required. This is known as the Output Specification (OS) for the PFI procurement project, effectively a procurement brief for the project. It defines the county council's requirements and is the basis for bidders to prepare their proposals. This document is undergoing further development within the county council and will be published in full in due course.
189. Some of the primary outputs required of the procurement process were defined early in the project life cycle. Within the original project specification document (called the Project Initiation Document (PID)) the county council identified a number of acceptance criteria for the project. To be compliant, the solution provided by the HWPP should:
• Comply with the Waste and Emissions Trading Act[46] and Landfill Allowance Trading Scheme (LATS) targets[47].
• Comply with the statutory duties required of the WDA.
• Comply with and deliver to the Waste Strategy England (WSE) 2007
• Deliver residual waste treatment to fulfil the needs of the JMMS07.
• Comply with and align to all relevant corporate policies and planning policies.
• Deliver a ‘best value’ solution for the county council tax payers of Hertfordshire.
190. With the project acceptance criteria detailed above in mind, the OS will be used to:
• Treat the appropriate residual MSW tonnages.
• Comply with the county council’s waste management and procurement policies.
• Achieve appropriate risk transfer in the pursuit of best value.
• Take advantage of market expertise solution provision.
• Allow the project to consider merchant market capacity.
191. The specification will be in two parts, drafted to conform to the current Defra guidance on this subject[48], namely: Part 1: key service requirements; and Part 2: the performance framework. The contract will be primarily focused on the treatment of residual MSW in order to assist in achieving the statutory requirement placed upon the WDA to divert Biodegradable Municipal Waste (BMW) from landfill. It will also be designed to contribute to waste minimisation, recycling and composting as appropriate, supporting the JMWMS policies and objectives.
192. Due to the expected need to procure capital plant to deliver the required service, it is anticipated that a 28 year contract period (including three years of construction where alternative treatment will be required) will be appropriate to allow for sustainable debt repayment. Within the specification, there will be targets and key performance indicators to ensure the service provided complies with relevant policies. The specification will also set out anticipated waste tonnages that the contractor will be required to manage throughout the contract period. Tonnages will be presented in the form of a range of minimum and maximum tonnages on an annual basis. This will be referred to as the contract tonnage (i.e. all waste delivered by the HWP authorities under this contract)[49]
193. Residual waste will be transferred to the appointed contractor at specified locations and the contractor will be responsible for any onward transport to the treatment location(s). Delivery is expected to be both direct delivery and via WTSs. The requirement to provide WTSs is to be excluded from the specification. In summary, the inclusions and exclusions of the project are shown below in figure 18.
Figure 18: Waste PFI Project definition - what is included and excluded
|Included |Excluded |
|Residual MSW facility |Eastern Transfer site CapEx |
|Bottom ash reprocessing - ONSITE |Western Transfer site CapEx (Existing facility at Waterdale) |
|Fly ash disposal and haulage - OFFSITE |Bulk haulage from Transfer stations to facility |
|Infrastructure to supply heat to the site boundary |Landfill disposal |
194. The emerging Output Specification (OS) has service requirements that are specified in terms of service outputs required, rather than particular assets or solutions. It is not considered that there is anything that would be considered unusual or unexpected in the HWPP as the emerging specification is aligned with current WMU practice and fits with the geographical and commercial realities of the county. The range of services included in the emerging specification should offer scope for efficiencies and innovation to assist best value delivery.
195. The work in the pre-procurement and procurement phases will be based on best practice and waste sector guidance. The experience of the county council’s Building Schools for the Future (BSF) programme is useful in this regard, the project being slightly ahead of the HWPP.
196. The treatment of third party waste (i.e. waste delivered to the facility under contracts between the operator and third parties which could include a range of suitable waste types from a range of sources)[50] should be permitted within the specification subject to tonnage limits. In considering other waste types, the contract will need to continue to deliver value for money in relation to the municipal BMW being managed through it.
197. In addition, should there be any proposal for the cross subsidisation of the costs of disposing of non-municipal waste streams, this would need to be completely transparent and acceptable to the county council and its project stakeholders. There will need to be evidential benefit to the county council and a level of acceptable risk with regard to obtaining planning permission and permitting. The management of the HWP’s contract waste as a priority will be a specified requirement.
198. The OS will identify specific design requirements[51] that must be met or exceeded. Clearly all existing, expected and emerging legislative matters must be accounted for[52], but within the confines of the specification and the design framework, the type and capacity of all infrastructure and facilities necessary to manage the contract tonnage will be a matter for the contractor to determine.
199. Specification requirements may include, but not be limited to:
• Access - The ability to accept specified delivery vehicles.
• Storage - Requirements for waste storage capacity.
• Rejects - Oversized, reject and contaminated materials handling.
• Community engagement - Visitor and educational facilities.
• Construction - Energy and sustainability requirements.
• Energy efficiency – CHP configurations.
• Design - external architectural design (accounting for the local environment) including BREEAM assessment.
200. In addition to the design criteria, the OS will cover the operational essentials such as (but not limited to):
• Utilisation - Percentage overall availability per annum.
• Schedule - Delivery opening hours.
• Markets - For all output materials.
• End disposal - provision of landfill capacity and service.
201. The HWPP team believes that the emerging OS is pitched at the right level in terms of procurement best practice. The emerging document is consistent with affordability assumptions. The Project Board is aware that the specification will need to demonstrate that VfM is not diminished on an ongoing basis, be robust and relevant to the market to assist the delivery of best value.
4.4 Key Performance indicators for the project
202. The performance framework for the contract will focus on measurable targets and objectives and will be developed based on Defra WIDP guidance. The approach taken is to include key items fundamental to the delivery of the service and those which would cause the county council financial loss, reputation impact or other detrimental effect.
203. The central theme will be to use performance indicators to measure performance and where appropriate to provide incentives for the contractor. Performance aspects are likely to include, but not be limited to the following areas:
• Diversion - Tonnage of BMW diverted from landfill.
• Recycling – Tonnage of additional recycling and composting.
• Availability - Percentage annual availability of treatment plant.
• Flexibility - Availability to accept deliveries of contract waste.
• Energy balance – Net energy consumption of treatment plant.
• Employment – Local people employed.
• Data – Data reporting (systems, security, format, accuracy).
• Inclusions - Maintenance of education and office facilities.
• Servicing - Maintenance and cleanliness of facilities.
• Efficiency - Vehicle turn around times.
• Reliability – Service, systems and performance.
204. In preparing the OS, the county council has taken account of Defra’s Criterion No 12 and PRG’s Criterion No 3 for PFI projects. It believes that the procurement project and the resultant contract and service will meet these criteria. Background and rationale for the procurement of long-term processing capacity
205. In late 2007, following the initial approvals of the JMWMS, the county council developed an action plan to delivery long term waste disposal capacity for the HWP. Supported by the necessary mandate, initial business case and defined approach and project brief, a Waste Management Procurement Feasibility Study (Feasibility study) was commenced and reported in early 2008[53]. This work built on the JMWMS objectives, policies and priorities e.g. waste minimisation, a minimum 50% recycling and composting by 2012/13, and the avoidance of LATS penalties. During this study, a further primary project objective was added, one which complemented existing policies and objectives: the county council seeks to treat all of the MSW residual stream (not just that covered by LATS) in order to minimise the requirement for landfill and the impact of Landfill Tax and gate fees, and secondly, that the preceding objective must be economically justifiable.
206. The provisional technical appraisal of the long term residual waste treatment needs identified a range of possible processing technologies. It proposed that the WDA should consider developing
• A single site solution of 400,000 tonnes capacity to meet its long term needs but providing short term options for third party inputs.
• A modular approach to the single site solution to meet anticipated increases in residual waste and to take advantage in developing technologies.
• A multi-site approach that would be close to the location of the waste arisings and could use different proven technologies and providers to ensure flexibility and competition.
207. This work was completed with the recognition that further consideration was required during the OBC stage, including site investigation[54]. It has been recognised throughout that the county is a densely populated area that is constrained in town planning terms by the fact that it is largely designated as Green Belt. Available sites for development are at a premium. This situation provides a particular constraint for waste management facilities which generally face public opposition. Given that long-term solutions to the processing of residual waste require dedicated capacity, finding sites to accommodate the required size of plant is a challenge. A number of desktop studies were commissioned to investigate a range of potential sites that might meet the WDA's long term needs. This work continued into the summer of 2008 with the development of the OBC. This is reported below.
4.6 Recent development of the residual waste project
208. Further work on the preparation of this OBC has provided a strategic and commercial rationale for the scope of the PFI Contract. The key steps leading from the earlier work to the generation of the reference project are as follows:
209. Waste growth estimation has been revised. This now is based on forecasts of dwelling completions (utilising the regional housing growth figures for the Eastern RSS) and beyond this, the current annual completion rate until contract end. Waste growth is now an average of 0.8% per annum from 2008/09 to 2039/40.
210. Waste flows have been revised. To show current waste flows and those expected in the future, based on the above growth rates. Waste flows show the details of all materials within the control and influence of the county council.
211. Recycling and composting has been re-assessed. Both have been modelled using the up to date status of contracts, projects, plans and activities of the HWP. As such, it is clear that by executing its plans the HWP can achieve at least 50% Household Waste recycling and composting by 2012/13. This is shown in Section 3.4.
212. The selection criteria have been clarified. An assessment of all strategic objectives and policies was made and the Project Board approved a concise and focused set of criteria, with a criteria map to show derivation. The key policy themes were rationalised into six groups to allow further analysis. The details of this follow later in this section. This is summarised below in Figure 27. The full detail of this work is contained in the work which identifies the Reference Case and its derivation.
213. A Technical Options Appraisal (TOA) has been completed using the Defra guidance published in April 2008. This work has resulted in a clear outcome delivered via an auditable process. This is summarised below in section 4.12.
214. The scope of the project for which PFI Credits are now sought is that of a residual waste treatment project which looks to manage waste with the following characteristics:
• A minimum capacity of 270,000[55] tonnes residual MSW
• A defined residual MSW composition
• A date for operational commencement of facility, 2014/15
7 Technical Options Appraisal (TOA)
215. There are three fundamental aspects of the TOA:
• A technical review of the options, examining the performance against a range of environmental, social and practicability criteria.
• An assessment of the Full Economic Cost (FEC) of each of the options, to determine the Capital Expenditure (CapEx) and Operating Expenditure (OpEx) of the required infrastructure and any additional relevant costs including the shadow cost of carbon emissions to allow for comparison of the different options over the lifetime of the contract.
• An appraisal of the options using a scoring process against a range of agreed criteria.
4.7.1 TOA methodology
216. This process followed Defra’s suggested criteria given in Guidance on Options Appraisal and Identification of the Reference Case for OBC[56]. The performance of each option was assessed against the agreed list of criteria, using both quantitative and qualitative assessment methods. The life cycle assessment tool Waste and Resources Assessment Tool for the Environment (WRATE)[57] was used to assess the environmental impacts of each option. Information on process outputs from the WRATE tool was also used to develop the waste flow and mass balance model.
217. Unless otherwise stated, the options were appraised using information from the first complete year of facility operation, assumed to be year 2014/15. This is the assumed date due to the financial close of the project occurring in 2011/12 and the construction phase taking three years.
4.7.2 TOA criteria and weightings
218. To begin the process, a specific criteria weighting set for Hertfordshire was developed as part of this appraisal process. The weight set was devised to reflect the relative importance of each criterion to the WDA. Following development by the HWPP team, it was agreed and verified by the Project Board and MAG. Figure 22 below shows the approved criteria and weightings, for both first tier and second tier criteria.
Figure 19: Criteria for Options Appraisal with weightings
|Working Code |Criteria - tier 1 |Agreed Weight Set |Criteria - tier 2 |Tier 2 Weighting |
| | |(%) | |(%) |
|D1 |Diversion from landfill|20 |D1a - Effectiveness of BMW management |75 |
| | | |D1b - Effectiveness of reducing reliance on |25 |
| | | |landfill overall | |
|D2 |Compliance with the |12.5 |n/a |100 |
| |Waste Hierarchy | | | |
| | | | | |
| | | | | |
|D3 |Environmental Impacts |10 |n/a |100 |
|D4 |Flexibility covering |17.5 |D4a - Effectiveness / Availability to accept waste|71 |
| |waste composition and | |of varying composition (e.g. seasonal changes ) | |
| |volume risk | | | |
| | | |D4b - Effectiveness to be able to manage / cope |29 |
| | | |with tonnage changes (e.g. due to incremental | |
| | | |waste growth / economic up / downturn / changes in| |
| | | |legislation / Seasonal changes) | |
|D5 |Reliability / |35 |D5a - Extent of Commercial proven nature of |50 |
| |Deliverability | |technology / system / configuration | |
| | | |D5b - End product liability (availability, |21 |
| | | |soundness, access and sustainability of end | |
| | | |product demand / contracts and markets) | |
| | | |D5c - Planning Risk |29 |
|D6 |Social impact |5 |D6a - Local Employment predicted by the |10 |
| | | |implementation of the solution | |
| | | |D6b - Local Heat output utilisation expected by |50 |
| | | |implementation of the solution | |
| | | |D6c - Local traffic impact (non-emissions) |40 |
| | | |expected by the implementation of the solution | |
219. The criteria were weighted as detailed above. The cost of the options (FEC) weighted as per the Defra guidance with the criterion accounting for 40% of the overall results and the other technical criteria making up the other 60% altogether. The results for all appraisal criteria were normalised to convert the raw results to a common scale. In this case a scale of 0 -1.0 was adopted; the lowest scoring option being given a value of 0 and the highest scoring being given a value of 1.0.
4.8 The long list of technology options
220. As part of the development of Hertfordshire’s JMWMS, a previous technology options appraisal was undertaken on behalf of the HWP. To assist with the preparation of the EoI to Defra, further assessment was undertaken by advisers. It was important to build on the outcomes of these appraisals when identifying a relevant OBC reference case. Both studies identified a short list of suitable technologies. These can be split into three main categories: Conventional Thermal Treatment (EfW), Mechanical Biological Treatment (MBT, with either anaerobic or aerobic treatment) or Advanced Thermal Treatment (ATT, specifically gasification). As such, the technologies considered for residual MSW treatment by the previous appraisals are show below in Figure 20:
Figure 20: Long list of technical options considered
|Long list of technologies appraised in previous studies |
|Landfill |
|Energy from Waste (EfW) |
|Mechanical Biological Treatment (MBT) with Anaerobic Digestion (AD) |
|MBT producing Refuse Derived Fuel (RDF) |
|Anaerobic Digestion (AD) |
|Gasification |
|Pyrolysis |
|Autoclave |
|Plasma Arc |
221. Since the first of these appraisals was undertaken, Waste Strategy England (WSE) 2007 has been published. This provided an increased emphasis and policy support for EfW + CHP and also AD. Defra strongly encourage the consideration of these technologies in the development of OBCs. Defra’s also reminds authorities of the importance of bankability, and that a ‘Do Nothing’ (things remaining as they are) option should be considered for benchmarking purposes. The HWPP team considered the previous work and working with technical consultants and taking all of these points into account, the following technologies (shown in Figure 21) were identified as suitable for consideration for the reference case.
Figure 21: Short-listed technologies considered for appraisal
|Short-listed technologies for appraisal |
|Landfill |
|Energy from Waste (EfW) |
|Energy from Waste with Combined Heat and Power (EfW +CHP). |
|Mechanical Biological Treatment producing RDF for off site combustion (MBT +off site RDF) |
|Mechanical Biological Treatment with Anaerobic Digestion (MBT +AD) |
|Mechanical Biological Treatment producing an RDF for combustion in an on-site Gasification facility (MBT + Gasification) |
4.9 Site Configuration and short list of options
222. The total residual treatment capacity required by the WDA is approximately 270,000 tonnes each year. When considering the possible configurations of treatment facilities that could deliver this capacity, the following points were taken into account:
• The number of suitable sites within county council ownership, in county.
• The suitability of any site for particular technology needs.
• The potential footprint of the technologies being evaluated.
223. A Planning and Site Feasibility Study has identified two potential sites for waste infrastructure development. These are:
• Site A - New Barnfield in Hatfield; and
• Site B - A site in the East of the County of a similar size to the land in the county council's ownership at Westmill, near Ware
224. Neither of the sites were considered large enough for an MBT type facility with a capacity of 270,000 tonnes each year, and therefore, this technology is only assumed to be deliverable with the development of both Sites A and B. Furthermore, in considering the applicability of CHP, only Site A is considered to:
• Have potential heat users within reasonable proximity.
• Be of sufficient size to host an EfW or an EfW + CHP facility.
• Be of sufficient size to host an MBT + Gasification facility.
225. With the technology and spatial considerations identified[58], the final shortlist of options for appraisal was concluded as shown below in figure 22.
Figure 22: Final list of options for appraisal
|Option |Description |Capacity |Assumed Location |
| | |(tpa)1 | |
|A |Do nothing (Status Quo – continued landfill) |270,000 |Various |
|B2 |1 X EfW |270,000 |Site A |
|C |1 X EfW |150,000 |Site A |
| |1 X EfW |120,000 |Site B |
|D2 |1 X EfW + CHP |270,000 |Site A |
|E |1 X EfW + CHP |150,000 |Site A |
| |1 X EfW |120,000 |Site B |
|F |1 X MBT producing RDF/ offsite combustion at cement kiln |150,000 |Site A |
| |1 x MBT producing RDF/ offsite combustion at cement kiln |120,000 |Site B |
|G |1 X MBT + AD |150,000 |Site A |
| |1 X MBT + AD |120,000 |Site B |
|H |1 X MBT producing RDF for onsite Gasification |150,000 |Site A |
| |1 X MBT producing RDF for combustion at Site A |120,000 |Site B |
4.10 Appraisal of short-listed options to identify reference project
4.10.1 Introduction
226. Following approval of the criteria, weightings and possible site configurations, a Status Quo (option A) and 7 technical options (B-H) were appraised. The performance of each option was assessed against the agreed list of criteria, using both quantitative and qualitative assessment methods by independent advisers. To achieve a weighted score, the weighting applied (reported above in section 4.7, figure 22) has been multiplied by the score assigned the technology system achieves in each criteria. Some scores utilise ranking or weighting approaches. This methodology allows the technical scoring to be used in generating an overall ranking. This is achieved by multiplying each score by the agreed weightings for each criterion. This allows each of the technical options to be assessed against one another. This approach is inline with the Defra guidance and best practice.
227. The life cycle assessment tool WRATE was used to assess the environmental impacts of each option. Information on process outputs from the tool was also used to develop the waste flow and mass balance model. Each of the criteria was applied in turn and a synthesis of the results produced.
4.10.2 The performance of the short-listed options
228. This section provides details of the evaluation of each short listed option covering an assessment of relevant strategic issues and the level of performance anticipated. Summary information is presented here with the full details are shown in the TOA.
4.10.2.1 Effectiveness of BMW management- criterion D1a
229. This criterion was assessed quantitatively by using the outputs from the waste flow model. The amount of BMW diverted from landfill was recorded and these results provided the scoring for the criterion. This was calculated by taking the LATS allocation for Hertfordshire and adding the additional permits available for trading from each option to give a total figure for each option. The option with the most permits available for trading performed best.
230. Option H (2 * MBT + Gas) came out top in this assessment, although the performance of most options was similar. Option G (2 * MBT + AD) does not score as highly due to the amount of waste sent to landfill from the MBT process.
4.10.2.2 Effectiveness of reducing reliance on landfill (D1b)
231. Landfill capacity of all types is reducing in Hertfordshire. This criterion aims to reflect Hertfordshire’s objective to divert as much waste as possible away from landfill. Data from the waste flow model was used to undertake this assessment. The total amount of waste sent to landfill for each option, including waste resulting from the treatment process itself, was calculated. The option with the lowest level of waste being sent to landfill was assumed to perform best. For all of the treatment options, a proportion of waste is still sent to landfill.
232. Options B to E (all using EfW) perform best in this assessment. However, all other options performed well, with only option A (Do nothing) and G (2 * MBT + AD) still sending a significant amount of waste to landfill. Option A continues to send all residual waste to landfill, whilst option G sends a proportion of the output from the MBT process to landfill.
4.10.2.3 Compliance with the waste hierarchy (D2)
233. Government policy seeks to drive the management of waste up the waste hierarchy. The waste hierarchy represents a prioritisation of waste management options in which waste reduction is deemed to be the most preferable followed, in order, by re-use, recycling, composting, recovery and finally disposal. Where waste is produced, it should be viewed as a resource to be put to good use and disposal should be viewed as the last option for dealing with it. The waste hierarchy is the overarching policy for both European and national legislation. As such, this criterion assessed the ability of each of the options to manage waste in accordance with national waste policy. Data from the waste flow model was compared for the tonnages of material handled by each of the following management methods:
• The amount of waste landfilled.
• The amount of waste used to generate electricity.
• The amount of waste sent to AD plant or used to generate heat.
• The amount of waste recycled.
234. The score for each option was based on the relative tonnages for each management method, and multiplied by a weighting factor to represent the preference for each of these in the waste hierarchy. The weighting for landfill was higher than that for the other waste management methods that are higher up the waste hierarchy. The greater the tonnage of waste landfilled, the higher, and therefore ‘worse’ the score. Recovery and recycling and composting received a lower, and therefore ‘better’ weighting for the tonnage of material managed by that method. These scores were summed to give the final overall score and then ranked.
235. Options B – E (EfW and EfW + CHP) options score highly in this criterion. This is due to the low levels of waste to disposal. Those options that still rely upon disposing large amounts of waste to landfill (Options A & G) perform poorly.
4.10.2.4 Environmental Impacts (D3)
236. The WRATE tool was used for the purposes of quantifying the results for this criterion. WRATE calculates potential impacts stemming from all stages in the management and processing of municipal waste. These impacts include waste collection, transport, treatment and disposal activities, taking account of the associated infrastructure, together with the avoided burdens associated with materials recycling and energy recovery.
237. To undertake an assessment of the environmental impacts associated with each of the options, WRATE was used to assess the following environmental indicators: resource depletion, freshwater ecotoxicology, human toxicology, air acidification; and eutrophication. Equal weight was given to each environmental indicator. The global warming potential of each option was also assessed using WRATE. However, to ensure compliance with Defra guidance, this impact is not reported in the environmental impacts criterion, but considered in the financial appraisal using the Social Cost of Carbon indicator.
238. All the options result in an overall positive impact on the environment (represented by a negative number). This is largely due to the energy / heat generated by each of the processes, thus reducing the need for virgin energy production. The table shows that the biggest influence over the environmental impacts is resource depletion. The best performing option is option F (2 * MBT + RDF). It scores highly due to the fact that when an RDF is produced and sent to a cement kiln (for example, Barrington cement works, Cambridgeshire) for combustion, it is assumed to offset the use of coal for power generation in the cement kiln. All the MBT options perform well in comparison to the EfW/ EfW + CHP options, which all perform very similarly. This is due to the additional recycling achieved through the processes and energy generated from the combustion of the RDF. All options show a benefit; a negative score means positive environmental impacts.
4.10.2.5 Ability to accept waste of varying composition (D4a)
239. The options were assessed[59] for their flexibility in terms of ability to accept waste with differing compositions arising from seasonal variations or potential changes to packaging material. The results are shown below in Figure 23.
Figure 23: Results of the appraisal of criterion D4a - Flexibility to accept waste of varying composition
|Option |Technical Option |Rank |Commentary |
|A |Do nothing |1 |Flexible for variations in waste composition |
| |(Status Quo) | | |
|B |1 x EfW |2 |Relatively large range of Calorific Value (CV) is acceptable - large bunker |
| | | |enables flexibility to mix loads |
|C |2 x EfW |4 |More susceptible to peaks and troughs of CV, smaller bunker enables less chance|
| | | |to mix the waste accordingly (i.e. if you get a very wet load) |
|D |1 x CHP |2 |Relatively large range of CV is acceptable - large bunker enables flexibility |
| | | |to mix loads |
|E |1 x EfW, 1 x CHP |4 |More susceptible to peaks and troughs of CV, smaller bunker enables less |
| | | |chance to mix the waste accordingly (i.e. if you get a very wet load) |
|F |2 x MBT + RDF |7 |The contract for the Refuse Derived Fuel (RDF) would require a relatively |
| | | |consistent composition and strict quality protocol |
|G |2 x MBT +AD |8 |Very sensitive for the AD to work - particularly as kitchen and green is |
| | | |already being extracted |
|H |2 x MBT + Gas |6 |For the gasifier to work effectively, they need a relatively homogenous |
| | | |(consistent) composition of the RDF |
| | | |Passing waste through a WTS such as Waterdale could help with short term |
| | | |fluctuations through blending of waste |
240. Figure 23 above clearly shows that landfill is the best performing option as it is relatively unaffected by changes in waste composition. The most sensitive option with regard to waste composition is option G (2 * MBT + Gas). The change in biodegradability of waste in particular affects this option. Larger EfW + CHP options perform better against this criterion, due to their ability to store and mix different waste loads.
4.10.2.6 Ability to manage tonnage changes (D4b)
241. These changes may be through seasonal variations or more significant changes through unexpected waste growth or decline over time[60]. The results are shown below in Figure 24.
Figure 24: Results of the appraisal of criterion D4b - Flexibility in Managing Changes in Tonnage
|Option code |Technical Option |Rank |Commentary |
|A |Do nothing |1 |Very flexible |
| |(Status Quo) | | |
|B |1 x EfW |4 |All can operate at slightly lower capacity but costs will increase |
| | | |Possibility of burn through if considerably less |
| | | | Can't add additional small modules easily |
|C |2 x EfW |4 | All can operate at slightly lower capacity but costs will increase |
| | | |Possibility of burn through if considerably less |
| | | |Can't add additional small modules easily |
|D |1 x CHP |4 |All can operate at slightly lower capacity but costs will increase |
| | | | Possibility of burn through if considerably less |
| | | | Can't add additional small modules easily |
|E |1 x EfW, 1 x CHP |4 | All can operate at slightly lower capacity but costs will increase |
| | | |Possibility of burn through if considerably less |
|F |2 x MBT + RDF |8 | All can operate at slightly lower capacity but costs will increase |
| | | |Potentially will have a minimum contract to supply RDF |
| | | |Potential to add modules of additional capacity if land is available |
|G |2 x MBT + AD |2 |All can operate at slightly lower capacity but costs will increase |
| | | | Potential to add modules of additional capacity |
|H |2 x MBT + Gas |2 | All can operate at slightly lower capacity but costs will increase |
| | | | Potential to add modules of additional capacity if land is available |
242. The landfill option scores well as there is little impact associated with changing tonnages of waste delivered to landfill. Options G and H perform well due to the potential to add additional capacity in a modular fashion. Option F performs less well because one would expect there to be a minimum supply contract for RDF with the cement kiln.
4.10.2.7 Proven nature of the technology (D5a)
243. This criterion looks at one aspect of the ‘deliverability’ of facilities. To get financial backing for a waste management facility there needs to be security for the lender, that the technology proposed can work on the scale outlined.
244. There is a long history of waste management technologies being presented in the market as new and advantageous solutions, only for obstacles to their successful implementation and operation to emerge at a later date. Such technologies should not be disregarded. However, it is prudent to account for risks associated with delivery in practice, albeit that this is difficult to assess in advance. In addition, it is often harder to secure financial backing for facilities that have not been proven in the UK, or that have not been shown to work on a large scale or with a feedstock of the same characteristics as the intended waste stream.
245. All options assessed are of a reasonably proven nature. Only two options did not score the top score of four for being proven on a large scale in the UK, options G (2 * MBT + AD) and H (2 * MBT + Gas). They are however proven on a large scale in Europe and thus score three.
4.10.2.8 End product liability (D5b)
246. The options were compared based upon the tonnages of each material end product arising from the technologies involved in each option. The end product(s) from each technology have been assigned a coefficient based on the risks associated with finding a market for them. These risks have been based on adviser knowledge[61] and experience of the secondary materials market.
247. Figure 25 below presents the coefficient that has been awarded to end product markets. A high value (0.10) indicates a higher risk of finding a market willing to accept an end product. A low value (0.01) indicates that markets for end products are stable and well established. These coefficients have been applied to the end product tonnages to provide a score to determine the performance of each option.
Figure 25. End Product Liability Coefficient scores assigned to treatment generated materials
|End Product & Destination |Risk of Finding a market |End Product Liability |
| | |Coefficient |
|RDF for off-site combustion |HIGH |0.07 |
|Hazardous material to landfill |MED |0.05 |
|Markets for incinerator Bottom Ash (IBA) |MED |0.04 |
|Markets for dry recyclables |MED |0.03 |
|Non-hazardous material to landfill |LOW |0.02 |
|On-site gasification |LOW |0.01 |
248. Options D & E (EfW + CHP) generate heat as part of the treatment process. As part of this OBC development, there is a separate piece of research investigating potential users of heat within close proximity to the assumed site. It is assumed that the CHP options would only be developed if there was a user for the heat and therefore it has not been included in this assessment.
249. A high liability coefficient has been attached to RDF produced by treatment technologies for combustion off-site because there is, as yet, no guarantee that this material will be accepted at a reasonable gate fee. The ban on co-disposal of hazardous waste with non-hazardous waste in the UK has severely reduced the number of landfill sites licensed to accept hazardous waste. However, there is a landfill site capable of accepting hazardous material in operation approximately 110 km from the proposed sites. The disposal of hazardous waste to landfill is ranked as medium risk, as any problems at this landfill could require extra transport to the next nearest hazardous landfill site.
250. In the option appraisals landfill tends to score well in this regards as there are no products produced in the process that will require a market and hence liability attached to them. The small level of products attributed to option A in this appraisal are those associated with the ongoing use of Colnbrook and Edmonton to deal with small amounts of residual waste, these are assumed consistent for all options (assumes ongoing contracts). Option F is the worst option in this assessment. The liability associated with sourcing an outlet for off site RDF combustion has the greatest impact on this option. Option H (2* MBT + Gas) narrowly beats the EfW options (b – E) due the smaller amount of hazardous residues and IBA.
4.10.2.9 Planning risk (D5c)
251. The assessment of this criterion drew on the professional judgment of County Development Unit (CDU). The method of assessment was also developed by the Planners and their approach is detailed below. The options for assessment included a number of different technologies which have different adverse impacts but also provide different benefits. The impacts in terms of public perception are not considered in looking at the relative merits of the differing technologies, because all waste proposals are likely to result in opposition and it is not possible to quantify the relative likely opposition. The options were given positive or negative scores in relation to a number of factors which could affect the consideration of a planning application, namely:
• Visual impact and impact on the green belt.
• Performance in relation to the waste hierarchy and waste policy.
• Performance in managing Hertfordshire’s waste within county.
• Risks associated with a two site strategy.
Figure 26: Results of the appraisal of criterion D5c - Planning Risk
|Option |Technical Option |Total |Visual impact |Waste hierarchy / |Managing Herts. |Risk for 2 sites |Rank |
| | | | |recovery |Waste | | |
|B |1 x EfW |1 |-2 |1 |2 |0 |2 |
|C |2 x EfW |0.5 |-2 |1 |2 |-0.5 |5 |
|D |1 x CHP |2 |-2 |2 |2 |0 |1 |
|E |1 x EfW, 1 x CHP |1 |-2 |1.5 |2 |-0.5 |2 |
|F |2 x MBT + RDF |-1 |-1 |0.5 |0 |-0.5 |6 |
|G |2 x MBT + AD |-2.5 |-2 |0 |0 |-0.5 |7 |
|H |2 x MBT + Gas |1 |-1.5 |1 |2 |-0.5 |2 |
252. As shown in the results above in Figure 26, Option D (EfW + CHP) is the most favourable option for this assessment, given the high score attributed to managing Hertfordshire waste within the county, the recovery of heat value from the total tonnage of material in the residual waste stream and less risk posed by gaining planning permission for one site.
4.10.2.10 Local employment opportunities (D6a)
253. This criterion assesses the potential of each option to generate new jobs for residents in Hertfordshire. Examples of the number of employment opportunities presented were identified based on several sources including waste management industry contacts, publicly available data sources and adviser knowledge and experience. These diverse sources were analysed to identify an average number of employment opportunities for each technology. It was not appropriate to apply these numbers to the two site options directly as there are some roles and functions that could be shared across the two sites, i.e. administrative functions. Therefore a reduction in the number of employment opportunities of one third was made for the two site options.
254. The best option for creating employment is option H (2 * MBT + Gas). This is due to the inclusion of both MBT and gasification processes on site. Two site options score higher than the one site options as expected. Option A (do nothing) ranks last as there is no additional employment associated with continuing the status quo.
4.10.2.11 Potential for local heat utilisation (D6b)
255. This criterion aims to assess the potential for Hertfordshire residents and businesses to benefit from locally produced heat. This criterion was assessed on two aspects – the actual utilisation of heat output proposed under each of the options and the potential for heat output to be utilised under each option (but not proposed at this stage).
256. Scores were calculated based upon the heat conversion efficiency of the technologies proposed under each of the options. Actual heat output is that output that was modelled in WRATE and is expected from that particular option. Potential heat output is assessed as whether or not the technology could produce heat that might be used locally, but this was not modelled.
257. This assessment shows option D (EfW + CHP) scoring well based on a proven potential to produce heat. Option E (1 * EfW and 1 * CHP) scores well for actual and potential, but only for one of the sites, hence the score of 5. Options G (2 * MBT + AD) and H (2 * MBT + Gas) have potential heat recovery, but not on the scale of the EfW options.
4.10.2.12 Local Traffic impact (D6c)
258. This criterion concentrates on the social/amenity impacts associated with transport, such as congestion and accidents. The environmental impacts of transport are taken into account in the environmental criterion discussed above. Transport impacts can be one of the most obvious and immediate effects arising from a new waste management facility. However, a certain degree of waste transport is inevitable, so it is appropriate to look at how the scenarios compare against the baseline ’Status quo’ scenario, to measure what difference any changes would make.
259. The total amount of waste freight is taken to be an appropriate proxy for transport amenity, on the assumption that amenity is proportional to the waste moved. This is measured in tonne-kilometres (tkm), which are generated by multiplying the weight of waste (in tonnes - t) by the distance it is moved (in kilometres – km). WRATE provides vehicle tonnages, and to complete the assessment distance estimates for waste transportation in each option were calculated. In the case of hazardous waste disposal, as reported earlier, there is a landfill site capable of accepting hazardous material in operation approximately 110 km from the two sites, and it was assumed that any hazardous waste would be transported to this site.
260. For recyclables, the distances between the proposed sites and the known facilities currently used by the county council were used. IBA is typically screened on site and then taken to where it would be used for beneficial reuse. A travel distance of zero was assumed for IBA as it is processed on-site. RDF for burning was assumed to go to a nearby cement works in Cambridgeshire, which is approximately 50 km from both sites. Remaining residual waste was assumed to go to a landfill in Buckinghamshire (56 km from one site and 88 km from the other).
261. Assumed distances are based on distances to facilities currently used by the county council. Changing these assumptions has a minimal effect on the overall assessment. The transport impacts within the environmental criteria (D3) showed that transport had on overall effect of c. 3% in each of the options. A small change to the distance assumptions would have an effect of less than 0.1%. The results of the appraisal are shown below in Figure 27.
Figure 27: Results of the appraisal of criterion D6c - Local traffic impact
|Option code |Technical Option |Collection to treatment |Treatment |
| | | |outputs |
|A |Do nothing (Status Quo) |754,000 |n/a |n/a |754,000 |6 |
|B |1 x EfW |633,600 |57,000 |35,800 |726,300 |4 |
|C |2 x EfW |382,800 |55,300 |35,800 |473,800 |1 |
|D |1 x CHP |633,600 |57,000 |35,800 |726,300 |4 |
|E |1 x EfW, 1 x CHP |382,800 |55,300 |35,800 |473,800 |1 |
|F |2 x MBT + RDF |382,800 |538,500 |35,800 |957,000 |7 |
|G |2 x MBT + AD |382,800 |709,900 |35,800 |1,128,400 |8 |
|H |2 x MBT + Gas |382,800 |169,700 |35,800 |588,200 |3 |
262. Options C (2 * EfW) and E (1* EfW and 1 * CHP) perform the best in terms of transport. The MBT options perform worse in this criterion due to the significant amount of output that requires transportation post treatment. Option H has significantly less impact than option F because the RDF doesn’t require transportation out of county for combustion.
4.11 Summary of the technical performance of short-listed options
263. Assigning a rank to the performance of the options places all of the criteria in a comparable position. This helps in considering which option is likely to offer the best overall performance, but loses the resolution of quantitative data. However, the score for each criterion can be converted to a ‘value’, a measure of performance that retains the cardinal nature of the data, whilst still allowing performance against all criteria to be placed on a common scale. The ‘value’ of each performance score can be assessed by converting actual scores into a scale of 0 -1, where 0 is the worst performance and 1 is the best (in practice, any convenient scale could be employed). This simplifies the scores, retaining the cardinal nature of the data, whilst allowing performance against all criteria to be placed on a common scale. The ‘valued’ performance (or ‘normalised’) data is presented below in Figure 31.
264. The valuation of the performance of each option against the assessment criteria simplifies the performance data. However, each option has different advantages and disadvantages, and it is not appropriate to simply add these values to identify the best performing option. Therefore, to finalise the results the process utilises the weighting applied by the HWPP to each criteria and this was applied to the valued scores.
Figure 28: Summary of appraisal value scores.
| |
|D1a – Effectiveness of BMW management |
|Key |Lowest | | | | |
| | |MKg CO2-equiv |£ |
|A |Status Quo |-79.2 |52.1 |-27.1 |32,545,715 |
|B |1 x EfW |-79.2 |18.1 |-61.1 |9,067,683 |
|C |2 x EfW |-79.2 |17.6 |-61.7 |8,707,527 |
|D |1 x CHP |-79.2 |-33.2 |-112.4 |-25,876,542 |
|E |1 x EfW, 1 x CHP |-79.2 |-9.8 |-89 |-10,081,321 |
|F |2 x MBT + RDF |-79.2 |-13.8 |-93.1 |-12,700,598 |
|G |2 x MBT + AD |-79.2 |22.8 |-56.5 |12,255,672 |
|H |2 x MBT + Gas |-79.2 |-5.1 |-84.3 |-6,727,844 |
265. Assumptions made are detailed in the TOA. The approach taken has used the standard Discounted Cash Flow (DCF) techniques as set out in HMTs Green Book, costs are presented as NPV. Costs have been broken down into the different elements which make up the FEC for ease of analysis of each technical option. Land acquisition costs are assumed to be zero, as sites are already under the ownership of the county council, or could be made available. The FEC analysis results are shown below in Figures 30 and 31.
Figure 30 - NPV costs of short-listed options – excluding LATS
[pic]
Figure 31: NPV costs of short-listed options – Excluding LATS costs
| |Option NPV (£m) |
| |A |B |
|B |Base Payment |The Base Payment is calculated based on a rate per tonne which is applied to all tonnages of |
| | |Contract Waste accepted by the Contractor in a Contract Year. The relevant rate per tonne steps up|
| | |as the Facility is commissioned. The Base Payment is subject to a minimum tonnage provision, below|
| | |which the Base Payment shall be calculated as though the tonnage of Contract Waste was equal to |
| | |the minimum tonnage provision. |
|D |Diversion |The Diversion Performance Adjustment reflects the difference between: |
| |Performance | |
| |Adjustment | |
| | |The tonnages of Contract Waste the Contractor sends to landfill; and |
| | |The target Landfill Tonnage in a Contract Year which the Contractor is permitted to send to |
| | |landfill. |
|P |Performance |The main purpose of the Performance Deduction component is to incentivise the Contractor to meet |
| |Deductions |the Performance Standards which are set out in the Output Specification. |
|M |Mileage Deduction |The Mileage Deduction is intended to compensate the county council for additional haulage costs |
| | |incurred in the event that the Authority has to deliver Contract Waste to the Contingency Delivery|
| | |Point. |
|N |Non Acceptance |Intended to compensate the county council for tonnage not accepted by the Contractor |
| |Deduction | |
|T |Third Party Income |The purpose of the Third Party Income deduction is to allow the County council to share in the |
| | |financial benefit that arises if actual income is in excess of that anticipated. The intention is |
| | |to leave the Contractor with the risks and rewards relating to operational efficiencies. |
|R |Recycling Payment |The purpose of the Recycling Payment is to provide a mechanism to incentivise the Contractor to |
| | |recycle. |
|PT |Pass Through Costs |There may be a need for other components of the Unitary Charge to allow for miscellaneous payments|
| | |that may arise for various reasons, including project specific reasons. The components will |
| | |therefore vary from project to project. However, it is likely that in most projects there will be |
| | |a need to allow for some “pass through” payments. |
266. It is recognised that the PFI contractor will wish to protect itself against inflation over the life of the project, and to prevent operating cost increases through inflation undermining the bankability of the project. It is therefore proposed that the AUC will, in part, be subject to indexation. Whilst it is anticipated that it will be for bidders to propose the proportion of the AUC subject to indexation, the council expects that the proportion will reflect the underlying cost structure of the project.
267. The county council’s Payment Mechanism will be based on the WIDP best practice model. The county council and its advisers will continue to develop this in the context of the proposals brought forward during Competitive Dialogue (CD).
5.7 Markets for process outputs
268. The main output from the reference EFW + CHP technology is the sale of energy in the form of electricity and heat. During the procurement dialogue, the county council will seek to encourage a contractor to guarantee the maximum level of third party income available through the facility(s) and thereby offset the AUC payable. This will include all output sales from the EfW + CHP process. The project team has identified potential output sales as follows:
• Incinerator Bottom Ash (IBA); an inert material which may, or may not contain high ferrous or non-ferrous metals content depending on whether these have been extracted from the ash grate within the process.
• Ferrous and non-ferrous metals; which may have been extracted from the ash grate within the process.
• Air Pollution Control (APC) residues; the so-called ‘fly ash’ resulting from the control of dust emissions from the emissions control system / stack, normally high in pH (classified as H% - Irritant) so deemed hazardous by regulation.
• Electricity; which may be exported to the electricity grid.
• Heat; which may be exported to district heating systems, or industrial plant.
269. Figure 34 below summarises the process outputs, the expected quantity produced from the reference case, the principal market for the outputs (or their disposal routes) and an indication of the revenue generated, or gate fee for the outputs.
Figure 34: Markets for the process outputs[63]
|Process output |Quantity (pa)[64] |Principal market |Revenue (Cost) |
|Incinerator Bottom|46033 tonne |Used as replacement for secondary road aggregate. The |Net revenue anticipated – additional |
|Ash (IBA) | |Department of Transport’s Design Manual for Roads and |ferrous metal extraction possible |
| | |Bridges identifies that IBAA can replace primary and |downstream[65] |
| | |secondary aggregates in most applications. | |
| | |Ballast Phoenix currently operates six English IBA plant | |
| | |for EfW facilities, processing 300 ktpa per annum. | |
|Ferrous metal |3566 tonne |Global commodity traded to replace primary production of |~ £100/t[66] |
| | |steel. | |
|Non-ferrous metals|243 tonne[67] |Global commodity traded to replace primary production, |~ £600/t[68] |
| | |principally of Aluminium. | |
|Air Pollution |7078 tonne |APC is typically pre-treated to neutralise, then is |(~ £270/t)[70] |
|Control (APC) | |landfilled. ~50 Hazardous landfill sites are available in | |
|residues | |the UK[69]. | |
|Electricity |133650 MWh7 |Export to local grid network has been achieved for ~ 20 |£65/MWh[72] |
| | |incinerators in UK. Draft ERM report[71] confirms that | |
| | |connection to EDF grid would be possible. | |
|Heat |310635 MWh8 |Export of heat to district heating systems or industrial |£10/MWh[73] |
| | |users is currently achieved by 6 operational plants in the | |
| | |UK. The same report confirms heat export would be | |
| | |possible. | |
3 Balance sheet treatment
270. The council has sought advice from its financial advisors on the issues that will impact upon the final accounting opinion, which will be required from the council’s Accounting Officers as part of the Final Business Case and which will ultimately be reviewed by the Council’s auditors. Based on the OBC documentation, the Council’s initial view based on the scope of the HMT Guidance and IFRIC12, is that the PFI contract is likely to fall within the scope of IFRIC12, Accordingly, the infrastructure asset under the contract will be accounted for on an on-balance sheet basis, providing the Council seeks to control any residual interest in the principle infrastructure
6. Project team and governance
6.1 Introduction
271. The council intends to strengthen the existing project team structure in preparation for procurement and to ensure that experienced resource is dedicated to the procurement programme for the next phases. The revised structure will contain full-time internal functional managers and supported by external advisors who are expert and experienced in specific fields of technical, financial, legal and the other relevant disciplines relevant to the programme.
272. The programme team is currently led by the Programme Director, a manager with considerable experience in large scale projects. He will manage the day to day activities with oversight from the HWPP Board. This Board was established in November 2007 and is represented by internal officers from relevant disciplines and is responsible, under PRINCE2 guidelines, to the Project Executive (also the Assistant Director – Environmental Management).
273. The project budget provided, and agreed by Cabinet, recognises the commitment and resources that will be required until financial close. The proposed budget has been increased based on the experience of this OBC by £1.8 million to £4.4 million for the 3 year period from 2008/09.
6.2 Legal context
274. The county council is Hertfordshire's Waste Disposal Authority (WDA) [74] and operates under the Environmental Protection Act (EPA) 1990 (Section 51& 52). Under the terms of the EPA the county council has a statutory duty to act as WDA for Hertfordshire. As such, there are two primary functions that the county council must perform:
• Disposal of all the controlled waste collected in Hertfordshire by the ten WCAs
• HWRC facility provision for residents
275. There are also a number of secondary functions that the county council must perform, the more significant of which are:
• To pay recycling credits, to the WCAs equivalent to the full value of any savings in disposal costs due to recycling.
• To recover costs from WCAs for the disposal of any commercial and industrial waste that they may have been requested to collect in their area.
• To pay WCAs reasonable contributions towards any expenditure incurred when delivering collected waste to a disposal site which is beyond a reasonable distance
276. The county council anticipates that the legal basis under which the procurement will be conducted is the EU public procurement regime pursuant to the Public Contracts Regulations 2006 (SI 2006/5) (as amended) using the CD procedure (reported earlier in section 4) and leading to the following stages
• Stage 1 – Official Journal of the European Journal Union (OJEU) publication
• Stage 2 – Pre-Qualification -
• Stage 3 – Invitation to Submit Outline Solutions (ISOS)
• Stage 4 – Invitation to Submit Detailed Solutions (ISDS)
• Stage 5 – Invitation to Submit Final Solutions (ISFT)
• Stage 6 – Appointment of Preferred Bidder (PB)
277. During Pre-Qualification stage bidders will be required to respond to the Pre-Qualification Questionnaire (PQQ). Pre qualified bidders will then be invited to respond to an Invitation to Participate in Dialogue (ITPD) and to submit their outline solutions (ISOS) for evaluation by the county council. Following the evaluation of outline solutions, it is envisaged that a short list of at least three bidders will be selected and invited to proceed to the ISDS stage. At this time is anticipated that bidders will be provided with a full suite of emerging contractual documents. The bidders will then continue in dialogue with the county council to explore various areas as they prepare their ISDS submissions. The dialogue with bidders will continue until the county council is content that there are no major commercial issues remaining and a call for final tenders (ISFT) will then be made. The final tenders will be evaluated and a PB will then be appointed. Contract close should follow after all necessary clarifications and due diligence has been completed.
6.3 Project governance
278. Given the size and the long term nature of the procurement project there is a need to ensure strong and consistent governance. Figure 35 below shows the decision making and oversight architecture that is in place.
Figure 35 – The decision making structure for the HWPP
[pic]
6.3.1 Officer structure
279. There are well defined reporting lines for county council officers involved in the development and management of the HWPP. They include :
• HWPP Project Board (Project Board or the Board)
• Environment Board (EB).
• Strategic Management Board (SMB).
280. Within the delegated authority to officers, the development of the OBC has been directed by the HWPP Board (as directed by the PRINCE2 methodology) and chaired by the Project Executive, who is an Assistant Director within Environment with the delegated responsibility for waste management. The other board members include Assistant Directors from corporate financial and legal departments, unit heads representing communications, insurance, procurement, property, risk management and waste management. The Defra's (WIDP) transactor is a member of the board.
281. The HWPP Board reports to the Environment Department's Board which meets weekly and the Assistant Director provides a regular progress up date on the project. Progress is further reported to the Authority's Strategic Management Board (SMB), which meets fortnightly and is chaired by the Chief Executive and comprises of Service and Corporate Directors. The Environment Director provides a regular update on the project's progress with formal presentations at key stages of the decision making process. The HWPP is also fully engaged through nominated representatives that sit on the Member Advisory Group and the Project Board.
6.3.2 Elected member structures
282. There are well defined reporting lines for county council officers involved in the development and management of the HWPP. They include::
• Member Advisory Group (MAG)
• Waste Management Cabinet Panel (WMP)
• Cabinet
283. In terms of elected members there is a clear pathway from the Executive (Cabinet) to oversight of the development of the procurement project. A Member Advisory Group (MAG) comprising of nominated members from the Waste Management Cabinet Panel (also known as the Waste Management Panel or WMP) and the HWP chaired by the Executive Member for Planning, External Relations and Waste has met regularly to review progress and provide advice to officers on any emerging issues. In turn, progress has been reported to the quarterly meetings of the WMP, which provides advice and information to the Executive Member, who then promotes items for Cabinet approval.
284. In terms of the engagement of the Hertfordshire Waste partnership in this structure, an Executive Member and a Director with responsibilities for waste collection attend respectively the MAG and HWPP Board
6.4 Project Management
285. During the development and production of the OBC, the project has been managed by a core project team supported by resources drawn from other corporate departments. For procurement (including the pre-procurement period leading to the issue of the OJEU notice in April 2009) the project team will addition of dedicated resources.
286. The current HWPP team will be supported by a number of dedicated secondees from communications, financial, legal, procurement and waste management units. Further support will be provided by property and insurance through their separate advisory contracts. Project management will continue to be provided by the Mace Group.
287. The implementation of the town planning strategy will be undertaken by a dedicated project team drawn from the Property and Estates unit supported by external advisors. This approach has been used successfully the county council’s children’s services PFI which reached financial close in June 2007. This team will not only be involved in the preparation of the site for a planning application but also ensuring that the site is vacant and that current service uses are successfully relocated.
6.4.1 Structure and function
288. The county council has considered the necessary structure, capability and capacity required to ensure the successful delivery of the project. At the centre of this are clear roles and responsibilities and succession planning. The HWPP team that will take the project forward through procurement is shown at Figure 36 below.
Figure 36 – HWPP team organisational structure
[pic]
During the initial stages of the project, the county council has relied heavily on external support. It recognises that more focussed internal staff resource is required and so the structure of the project team will adapt and be strengthened as the county council enters the procurement stage.
6.4.2 Roles and responsibilities of the wider project team
289. As with other elements of the project processes, the approach to the project organisational structure follows the PRINCE2 methodology and Defra WIDP guidance for project governance. The key roles in the approach are:
• Project Executive - Has delegated responsibility for waste management on the programme board and chairs its meetings to ensure that the programme is being delivered within its scope and objectives. He has the appropriate delegated powers to be able to direct the HWPP through each stage of the procurement process. The appointed Project Executive is a very experienced Assistant Director and has worked in local government for over 30 years and as a senior manager for the last 15 years. He has extensive project management experience and has been the Assistant Director responsible for waste management for the past four years.
• Waste Management User - This role is undertaken by the Head of Waste Management at the county council. He has 26 years experience within local authority waste management. He is well respected within waste management and is a former Chair of National Association of Waste Disposal Officers (NOWDA) and an advisor on their policy and advisory committee as well as being a member of the Chartered Institute of Waste Managers and an associate member for the Institute of Civil Engineers
• Project Director - Has responsibility for the direction and management of the project, the team and budget. He is responsible to the Project Executive. The appointed Project Director has 30 years experience in local government and has been head of programmes and projects for the last ten years. Relevant experience of successful project management includes a Best Value review and other service related reviews as well as being the policy advisor to Eastern county leaders group. Since June 2007, he has managed the production the county council's Feasibility Study, EoI and this OBC.
• Project Manager - Has responsibility for the day to day management as guided by the responsibilities set down by PRINCE2 methodology. The project management team work alongside the Project Director and there is constant contact on a daily basis and a close working relationship ensures delivery. The appointed Mace Group project manager has been working on project delivery for the last 20 years. Relevant experience includes project delivery of a PPP funded CHP solution in East London and various utility capital projects.
• Team Managers - Are responsible for the management and delivery of specific elements of the project work. Working in specialist areas and with specific tasks, they report to the project manager and have line reporting to Senior Suppliers and Users. Officers that have been appointed to the project from other specialist areas in the organisation have been chosen due to their experience and competence in delivering this project. Details of these roles are shown below in Figure 37
• Project Support - Project support is critical on projects. These roles provide daily administration and research support for the team with responsibilities for tracking and monitoring document version control. The project support has recently qualified in PRINCE2 foundation course. The new structure changes the name of the project support office to assistant programme officer. The appointed project support posts are graded posts that allow for development and training and to support succession planning as they progress through the team structure. Additional support resource is provided by a corporate graduate trainee through a 6 month placement.
Figure 37. Team Managers working on the HWPP
|Type |Status |Employment date |
|Communications |Full time |1st November 2008 |
|Technical |Full time |1st November 2008 |
|Legal |Full time |1st November 2008 |
|Procurement |Part time |10th September 2008 |
|Financial |Part time |1st June 2008 |
|Insurance |Part time |1st November 2008 |
290. The existing waste team within the Waste Management Unit sits along side the HWPP team. There is daily contact with the operational managers, who have daily responsibility for the current waste disposal contracts both within the county.
291. Knowledge and experiences will continue to be shared across the county council and in particular with regard to the Building Schools for the Future (BSF) PFI project so that best practice is nurtured across these key infrastructure projects and to build on the experiences. Most of the senior officers on the Procurement Programme Board are involved in BSF and provide invaluable insights on issues of common interest.
6.5 Advisors
292. The county council's current advisors have considerable experience in both OBC and PFI projects.
• Financial – Ernst & Young LLP
• Legal – Sharpe Pritchard
• Technical – ERM Ltd
• Project Management – Mace Group Ltd
• Communications – PPS Ltd
• Planning – Vincent and Gorbing
• Insurance – Broker to be appointed
293. The county council is currently undertaking a recruitment exercise to create an external advisory team with extensive and well documented experience and success in Waste PFI procurement projects. The successful advisors will be in before the end of 2008. In the meantime the county council is retaining its current advisors to help it to respond to requests for clarification and further information relating to the OBC submission raised by Defra and HM Treasury
6.6 Project Assurance
294. To ensure that the project is continually reviewed and audited, a series of project assurance processes will be incorporated into the project at various stages. The county council has committed itself to undertake a series of Gateway Reviews and the first of these is planned for February 2009. This process will examine the project to provide assurance that it can progress successfully to the next stage (procurement).
295. Prior to all planned Gateway reviews, an internal challenge is planned to assess if the project is ready to proceed to the next stage. Under PRINCE2 guidance, end of stage reviews are implemented to ensure that lessons learned are accounted for. In addition to the already established appointment of a Project Assurance Board Member (Head of Risk Management), all Project Board members have specific written and agreed responsibilities for assurance of functional areas and have been exercising these during 2008.
6.7 Partnerships
296. In addition to delivering a wide range of services in its own right, the county council works in partnership with many other organisations. Partnership working is often "behind the scenes" but the county council invests a lot of time and effort (managerially and politically) in developing and sustaining relationships. As such, the direct achievements can sometimes be intangible.
297. The Hertfordshire partnership group is known as Hertfordshire Forward. The executive is known as the “Core Group”. The county council is an active member of the Hertfordshire Forward which is the county's local strategic partnership working towards achieving the LAA targets. The relevant waste management targets have been detailed in section 2.
6.8 District involvement
298. Within Hertfordshire, the county and district councils have a history of partnership working through the HWP. As a result there is well developed architecture of member and officer meetings plus a financial contribution to the activities associated with the WasteAware initiative.
6.8.1 Hertfordshire Waste Partnership (HWP)
299. Executive Members responsible for waste collection and disposal meet quarterly. In terms of officers there are a number of different groupings including a Directors Group that deals with the strategic development of the Partnership, a Heads of Waste Group that addresses operational issues and a WasteAware group that deals with the development and implementation of waste minimisation and recycling and composting initiatives. The partnership structure has been further strengthened by the recruitment of the jointly funded Partnership Development Manager, who began work during September 2008.
300. The HWP has a Memorandum of Understanding (MOU) that was agreed when the JMWMS was signed in November 2007. With significant procurement planned it is being proposed to strengthen the MoU through an Annexe that clearly identifies roles and expectations for all parties. Further work has been identified to further strengthen the Partnership with a proposed Intermediate Inter Authority Agreement be in place by the start of procurement in May 2009 running until the completion of procurement in April 2011.
6.8.3 The involvement of districts in procurement
301. HWP has been involved in the HWPP from the outset with members and officers attending meetings of MAG and HWPP Board. There have also been regular presentations to the Member, Director and Heads of Waste meetings.
302. In addition over the last three years there has been a HWP programme of site visits which have included a Defra sponsored study tour to Germany covering a range of waste treatment facilities
303. The new role of the Partnership Development Manager underlines the HWP’s role in supporting the HWPP. This Manager will provide strategic management for the Partnership creating the necessary links between the WCA operations and the county’s responsibilities for residual waste management in order to move towards a ‘whole system’ approach.
7. Sites and Planning
7.1 Introduction
304. Hertfordshire's location close to London creates particular town planning challenges. Immediately post-war a number of planning strategies were introduced that led to the creation of four new towns and an extensive Green Belt to prevent the coalescence of settlements. The county is also covered by a number of national and international environmental designations such as the Chilterns AONB plus a large number of locally significant environmental features. The consequence is that up to two-thirds of the county is covered by either a Green Belt designation or a similar policy that restricts development.
305. Hertfordshire's proximity to the capital means that it does not contain a major city or town such as others in the Eastern region - Cambridge, Ipswich or Norwich. The result is that the county has a fragmented settlement pattern of 30 settlements. The influence of Green Belt policy means that a large proportion of the County's population is contained within these settlements. As a consequence of planning policies, historically a significant proportion of development has been delivered within these towns with the result that space is of a premium.
306. There is intense competition for developable land from a range of different uses - commercial, industrial, residential and retail. In addition the size of the settlements mean that there are few large sites for development which are available and not subject to intense competition from other land uses. Herefordshire does not have large areas of despoiled or damaged land. Therefore despite a long history significant of sand and gravel extraction, much of the land has been restored to agriculture or recreation and very little can be described as Previously Developed Land (PDL).
307. More recent regional policy guidance in the form of the East of England Regional Spatial Strategy (RSS) indicates that Hertfordshire will be subject to a step change in residential development with associated increases in employment opportunities. The East of England RSS calls for an increase in houses of around 82,300 units in the 20 year period to 2021 with the creation of an additional 68,000 jobs. The majority of the new development will be located in areas designated as Key Centres for Development and Change (KCDCs) - Stevenage, Hemel Hempstead and Hatfield and Welwyn Garden City. In addition a further 20,000 homes have been allocated within the period to accommodate extensions to Harlow and Luton.
308. Such proposals will require significant extensions into the Green Belt with an associated impact on the county's landscape character. The consideration of the location of a major residual waste treatment / power facility needs to be made within the physical characteristics of the county and its national and regional planning constraints and ambitions.
7.2.1 Regional Planning - East of England Plan (revised May 2008)
309. As already stated above the East of England RSS has identified significant growth. But it also provides a regional context for waste management in line with WSE 2007 and Planning Policy Statement (PPS) 10. Particular reference has been made to the aspirations of the East of England RSS in the development of the revised waste growth figures in section 2.2.2. With diminishing amounts of landfill capacity across the region, the RSS has indicated that Local Development Documents (LDDs) should allocate an appropriate number and range of sites for waste facilities reflecting the waste hierarchy.
7.2 Planning Framework
7.2.2 Local Planning
The county council is the Waste Planning Authority (WPA) with regard to matters to do with waste. The key policy documents include:
• Adopted Waste Local Plan
• Emerging Waste Development Framework (WDF)
• Waste Management Spatial requirements - Joint Municipal Waste Management Strategy (JMWMS) 2007.
7.2.3 Waste Local Plan 1995 - 2005 (adopted January 1999)
The Adopted Waste Local Plan reflects the planning policies at the time and concentrates on identifying sites that would accommodate re-use, recycling, transfer and composting. There is a recognition of other technological options in Chapter 7 - "Waste Reduction Facilities (including incineration) and Energy Recovery". Within the commentary there is a recognition of the need to address waste arisings within or close to Hertfordshire as part of the proximity principle; that there was a limit of the amount of available landfill void; and the impact of rising landfill costs and landfill tax introduced in October 1996. However whilst recognising the potential for Energy from Waste specific sites are not identified for such facilities, but the Plan provides guidance through Policy 19 which states that "Proposals for Waste to Energy Plants will be considered in relation to the following criteria. Proposed sites should:
a. Avoid major existing and proposed residential areas;
b. Minimise the impact on the local and natural environment;
c. Have or could secure ready access by rail, water or the main road network to minimise the impact of traffic
d. Be within or close to a major established or proposed industrial area;
e. Ideally relate to existing or proposed waste management or energy proposals
f. In case of large plants be located where visual and landscape impact is not a critical issue
g. Comply with requirements of Waste Policy 2 of this plan (to deal with Hertfordshire's waste)
310. In addition any proposal was required to conform with a range of environmental safeguarding policies (32 - 46) in the Plan. These policies are saved as part of the revised Waste Development Framework (WDF) procedure in following a letter from GoEast in September 2007.
7.2.4 Waste Development Framework (WDF)
311. The Waste Development Framework process was introduced under the Planning and Compulsory Purchase Act 2004 and will, when adopted, replace the Waste Local Plan. A key part of the process is the Statement of Community Involvement (SCI) which was adopted by the county council in November 2006. The WDF contains a number of Waste Development Plan Documents (WDPD) and in turn these documents are subject to examination by an appointed Inspector. As yet Hertfordshire does not have an approved WDF but work has been ongoing with the submission of the Waste Core Strategy (appendix 7E) and publication of Waste Site Allocations and Development Policies Preferred Options (appendix 7F).
312. The Core Strategy was subject to several formal and informal consultations and was submitted for examination by an Inspector in January 2008. The Waste Core Strategy's purpose is to set out the vision for waste planning in Hertfordshire up to 2021. The Strategy will deal with all waste - municipal, commercial and industrial and construction - in Hertfordshire. The overarching policy objective (1) is that "the Waste Planning Authority will seek to secure a network of waste management facilities that make adequate provision for waste requiring management in Hertfordshire including the requirements of sub-regional waste management apportionments".
313. In terms of municipal waste, the Core Strategy reflects the requirements set out in the JMWMS 2007. In terms of the location of municipal waste facilities the strategic approach is ... "In order to meet the county's objectives that waste should minimise impacts in terms of traffic and be managed as close as possible to its source, treatment plants for residual municipal waste should ideally be located centrally within the A1 corridor, supported by more local processing facilities for the sorting, recovery, recycling and the transfer of waste".
314. The more local processing facilities should be located as close as practicable to key urban areas because residential and commercial properties will be a key source of waste. Given that the Key Centres for Development and Change (KCDC) will be the main focus of growth over the plan period, it will be important to provide strategic waste management facilities close to these centres. Within its criteria for assessing locations, the WDF is seeking a balance between the need for waste management facilities with the need to protect the environment and minimise health risks.
315. The Core Strategy reflects government guidance with regard to the allocation of areas of search and specific sites (Policy 3). This policy identifies the specific site selection principles supported by a sequential approach that includes:
• Priority to Previously Developed Land (PDL), contaminated, derelict or disturbed land and redundant agricultural buildings and their curtilages; mineral workings and land in waste management use.
• Land outside the Green Belt will be considered before sites in the Green Belt
• AONBs and sites with international and national nature designations will be avoided
• The protection and the enhancement of Hertfordshire's local and environmental assets.
316. The Core Strategy recognises that proposed locations may be within the Green Belt and that any proposals must display very special circumstances. Proposals will be assessed against the following criteria:
• The lack of alternative suitable non Green Belt sites;
• The need to find locations as close as practicable to the source of waste;
• The availability of transport connections;
• The site characteristics;
• Any specific locational advantages of the proposed site;
• Wider economic and environmental benefits of sustainable waste management including the need for a range of sites
317. After submission, the Core Strategy was the subject of an exploratory meeting between the Inspector, representatives from Government Office for the east of England and officers from the county council's Waste Policy unit. This meeting discussed a number of issues regarding the "soundness" of the Core Strategy and these included:
• The county council's strategy for the future disposal of residual municipal waste to landfill following the closure of its only landfill site in 2017.
• The area of search for interim municipal residual waste treatment facilities as identified by the JMWMS 2007.
318. The Inspector concluded that "the Core Strategy is being prepared in advance of a number of key decisions - the size, type and number of facilities which will be provided through the (Hertfordshire Waste) procurement process and the technology to be used, although Energy from Waste is favoured. The county council is submitting an outline business case in October 2008". For these reasons the Inspector concluded that the Core Strategy was likely to be found to be "unsound". However the Inspector did not raise any issue with the methodology that had been used in the site selection process to create the list of Preferred Sites.
319. The County Council has since considered the Inspector's comments and has decided following a report to its Cabinet (item 5) on 22 September 2008 to withdraw the Core Strategy. It is proposed that following actions would be implemented:
• Await the submission of the Waste OBC with its specific references to its sites and planning requirements in the short and long term in line with the Inspector's conclusions. Included within these plans will be a clear identification of future landfill requirements for the disposal of "hard to treat" residual waste and residual waste from the treatment process.
• Await the publication of the Regional Waste Statements on Commercial and Industrial (C+I) and Construction and Demolition (C+D) arisings.
320. Following the completion of this work the proposal is to merge the Core Strategy with the Development Policies and to identify strategic locations. This document would be subject to further public consultation before re-submission during 2009. It is intended that the county council will have an approved WDF in place by 2010.
7.2.5 Waste management spatial requirements - Joint Municipal Waste Management Strategy (JMWMS) 2007.
321. The JMWMS identified a requirement for a residual waste treatment capacity of up to 80,000 tonnes to be in place by 2011/12 with an expansion of this capacity to, at least, 145,000 tonnes by 2017/18. However the strategy did not identify either an exact location for future treatment plant(s) or an area of search for such a facility. Rather it identified a core objective to "aim to manage a growing proportion of Hertfordshire's residual waste within the county and manage all other waste at the nearest appropriate facility by the most appropriate method or technology".
322. The work that has been undertaken to support the EoI and the OBC has meant that there has been a considerable change in the strategic approach of the WDA. The JMWMS07 reflected a position that the WDA would only seek to deal with the residual municipal waste that remained above the county's allocated LATS allowance that could continued to be landfilled. The strategy has now changed and seeks to maximise its treatment of all residual MSW waste to reflect a more strategic long term approach. Therefore the size of the treatment plant required to treat the residual waste has risen to 270,000 tonnes by 2039/40.
7.3 Sites and Planning Requirements.
323. The work undertaken for the EoI and this document has sought to clarify the operational requirements of the WDA in the short term (to 2013) and during the period to 2039/40.
7.3.1 Short-term requirement.
324. The Technical Options Appraisal (TOA) has undertaken a detailed review of the range of facilities required to meet the HWP's recycling and composting target of at least 50% by 2012/13 and undertaken further work on the future management of the residual waste. The emerging picture is that in order to maintain the HWP's recycling and composting performance, there will be a requirement for a number of facilities which include:
• A network of Household Waste Recycling Centres (HWRCs) - The WDA currently operates a countywide network of 19 HWRCs. The WDA has recently re-let the management contracts for these facilities.
• In-Vessel and Windrow Composting - The WDA has secured capacity within a number of IVCs and is seeking to expand this capacity to enable the complete county coverage of separated collection of food waste by 2009
7.3.2 Long term requirement.
325. In terms of period to 2039/40, the TOA has identified that the best option to meet Hertfordshire's residual municipal waste treatment needs would be an EfW + CHP facility with a capacity of 270,000 tonnes. Further work has been undertaken on the best location for such a plant and it has identified that a centrally located facility supported by 2 WTSs would provide an appropriate reference case. The WDA already operates a Waste Transfer Station at Waterdale, North Watford and is likely to seek to secure a second facility to deal with approximately 100,000 tonnes of waste per year in the east of the county The TOA also recognises the need to deal with up to 75,000 tonnes of residual waste via a non-treatment route by 2039/40. This waste includes complex and difficult wastes from different streams - not recyclable waste from the HWRCs, bulky waste, fly-tipped waste and street sweepings - that cannot currently be treated and therefore will need to be landfilled.
7.4 Site identification.
326. Hertfordshire provides a challenging town planning environment with regard to the location of major development proposals. Despite these challenges, the authority has decided that because Hertfordshire is dominated by two major waste companies it would seek to secure a reference site to ensure an appropriate level of competition throughout procurement. The EoI identified a former secondary school site at New Barnfield, South Hatfield within the county council's ownership as a potential reference site. However the analysis recognised that further work was required to address a number of town planning issues with regard to the site and that work on identifying suitable alternative sites to New Barnfield would continue.
327. The TOA has identified that the WDA has a requirement to secure a centrally located site of up to five hectares to accommodate an EfW + CHP plant with an ultimate capacity of 270,000 tonnes. In addition, there is a additional requirement to secure a site of around three hectares for a WTS in the east of the county.
328. Site identification work was undertaken using a two stage process that started with the work undertaken for the development of the Waste LDF's Waste Site Allocations Preferred Options study (January 2008). The second stage consisted of a detailed analysis of the Potential Preferred Areas (49) against the WDAs emerging size and locational requirements. It was decided from the outset to use the results of the work undertaken for the WDF's Site Selection Study. This decision was taken because it represented a significant volume of detailed work which used the best practice methodology identified in Planning Policy Guidance (PPG) 10 - Planning for Waste management and its successor Planning Policy Statement (PPS) 10 - Planning for Sustainable Waste Management. In addition this work had been the subject of a Strategic Environmental Assessment/Sustainability Appraisal during its development.
329. This work was comprehensive and has involved the screening of a long list of over 800 sites. This work created a primary list that was subjected to further categorisation of:
• Potential preferred areas (49 sites covering 67 parcels of land) including land at Travellers Lane and within this area is New Barnfield.
• Sites with existing waste management facilities to be safeguarded (126 locations).
• Employment land considered against WCS Policy 3 (80 Locations).
330. This short-list was subjected to extensive public consultation during January and February 2008. The results of this planning policy methodology were used in the search for suitable sites for a residual waste management facility. External consultants were employed to undertake a detailed examination of the identified Preferred Sites in relations to the WDAs requirement for a site of approximately five hectares to accommodate 270,000 tonne EfW + CHP.
331. In order to help direct the search further work was undertaken by the WDA to identify approximate waste collection catchment areas by taking the centre points of 20 major settlements and matching this information to journey times. Through this work a linkage was established with the proximity to waste arisings and collection arrangements to the proposed residual waste treatment plant. The resulting analysis identified a central area close to the junction A1(M) and A414 corridors and within a KCDC. It also indicated areas in the east and west that provided the basis for the location of the WTSs which will facilitate short journeys for the collection vehicles and reduce the vehicle movements into the preferred site. Based on this information it was decided that Waterdale in the west could continue to provide an adequate facility but an additional WTS would need to be secured in the east of the county.
332. The site search concentrated on the "Preferred Sites" identified within and adjacent to the central area.
333. Within the central area four sites were identified as being able to meet the needs of the WDA. A town planning assessment was undertaken on the short-listed sites plus New Barnfield.
334. The assessment recognised that all of the sites are located within the Green Belt and therefore need to be considered against PPG2 (Green Belts) which contains the general presumption against new development in the Green Belt and states that such development should only be approved in very special circumstances.
335. The other policy guidance is PPS10 (Waste Management), which post dates PPG2 and sets out a number of key objectives for local planning authorities preparing strategies for waste management. One of these is to: Protect Green Belts but to recognise the particular locational needs of some types of waste management facilities when defining detailed green belt boundaries and, in determining planning applications, that these locational needs, together with the wider environmental and economic benefits of sustainable waste management, are material considerations that should be given weight in determining whether proposals should be given planning permission".
336. Within this policy context it was concluded that New Barnfield provided the most deliverable reference site. Further work is being undertaken to ensure that there are no other opportunities to site a waste treatment facility of the size that has been identified on either a safeguarded site or on employment land within the current area of search.
7.5 Developing the preferred site - New Barnfield
337. A desktop study Environmental Scoping Study was undertaken in support of the EoI. Consultations took place during the development of this document with environmental advisers within the county council, Hertfordshire Biological Records Centre (HBRC) and the Herts and Middlesex Wildlife Trust (HMWT), officers at Welwyn Hatfield on Air Quality Monitoring and Health, the Environment Agency on water resources, flood risk and drainage and Natural England with regard to their interest in environmental issues. The conclusions from this work were a series of recommendations for further investigation with regard to:
• Protected species including great crested newts, bats, badgers, reptiles and nesting birds.
• Potential archaeological interest associated with a nineteenth century farm.
• Air quality and noise relating to the traffic generation from the proposed activity on the site.
• A landscape impact assessment will need to be undertaken to assess the townscape and landscape impacts of any development.
• The issue of any potential impacts on the residents of South Hatfield and Welham Green should be undertaken.
• A drainage strategy needs to be developed as part of the detailed Flood Risk Assessment. Further discussions are required with the Environment Agency with regard to the underlying hydrogeology as the site is underlain by a Major and Minor Aquifers.
• A Sustainability Appraisal will be required to address key issues such as sustainable design including measures for energy, carbon and water efficiency and climate change (green house gas emissions).
• The potential impact of light pollution from the plant.
• These issues would be addressed as part of the development of the required Environmental and Traffic Impact Assessment (TIA) for such a size of development. In addition for the purposes of establishing the principle of the location of a EfW + CHP plant at New Barnfield further work has been undertaken including: identifying potential for heat and electricity off-takes
7.6 Waste Transfer Station capacity
338. A key part of the county council's spatial strategy for waste management in the long term is the provision of two WTSs to support the central facility. The purpose of this approach is about supporting the principles of the JMWMS07 by:
• Minimising the distances that waste collection vehicles will have to travel to deliver their loads.
• Supporting the arrangements of the WCAs to ensure they are efficient and cost effective.
• Controlling the number of vehicle movements into the central site by bulking up the waste at the WTSs.
339. Within the reference case, Waterdale will be retained as an existing WTS in the county council's ownership. This facility currently serves five WCAs in the West of the County. It is proposed that a second facility will be secured in the east of the county to accommodate waste from Broxbourne and East Herts and parts of North Herts. This facility will be secured with planning permission by the county council by Invitation to Submit Outline Solutions (ISOS) stage of procurement. A project is being set up to deliver this facility.
7.7 The county council's approach to town planning
340. The county council has considered its options and has decided that it will not by itself or in partnership apply for planning permission for a residual waste treatment facility. By doing so it recognises the complexity of the facility and the differences between the different technologies. However it intends to undertake sufficient technical and permitting work to enable the successful bidder to have confidence that planning permission can be secured. For the eastern WTS the county council will secure and obtain planning permission on the site prior to the completion of procurement.
7.8 Defra Planning health check framework
341. The Planning health check has been completed and seeks to provide the assurance that:
• The spatial strategy that underpins the reference case provides sufficient detail to inform any future revision by the WPA to revise the Core Strategy for the Hertfordshire Minerals and Waste Development Framework in line with the Inspector's observations.
• The methodology used in the site selection analysis accords with national town planning guidance and builds on the approach used to identify the "short-listed" Waste Site Preferred Options (January 2008).
• The analysis indicates that the proposed location of the reference site and the supporting WTSs accord with the principles of the Hertfordshire JMWMS07.
• The proposed technology and location accords with the planning advice provided by the WPA.
• The county council has a suitable site within its control that could accommodate the proposed EFW + CHP plant.
• In terms of a town planning strategy for the EfW + CHP plant the county council, due to the complex nature of any proposal, will not seek to submit a planning application in its own right but will undertake sufficient work to provide confidence that planning permission would be forthcoming for the successful bidder.
• The county council has plans to secure a WTS in the East of the county and that it is committed to attaining planning permission for this use.
7.9 Design issues
342. The WDA recognises the need for good design and has set itself a number of objectives. The Hertfordshire Waste Procurement Programme's objective is to "secure for Hertfordshire enduring, economically and environmentally sound integrated waste management through the procurement of appropriate facilities and processes as part of the collective implementation of the JMWMS. The county council objectives will be achieved by continuous improvement of services and in partnership with the public and private sector" is supported by a number locally based ambitions that include:
• Making a positive contribution to the local economy.
• Contribute to the aspirations of the LSP and Community Strategy.
• The chosen technology should be comprehensive and able to meet the long term requirements of the WDA.
• Existing environmental features should be safeguarded.
• New habitats should be created.
• The design of the building should make a positive contribution to the landscape.
• The design of the building should be iconic.
• The construction work should ensure maximum reuse of materials.
• The operation of the plant should be carbon efficient.
• The development should be innovative.
343. These objectives have clear resonance with the principles of good design. The emerging output specification for the works reflects the principles of sustainable construction and design and compliance with government and industry standards..
8. Cost, Budgets and Finance
8.1 Introduction
344. Having defined the Reference Case, this section sets out the Council’s understanding of the costs of procurement (section 8.2) and examines the following:
• The procurement approach for this contract to determine which route represents the best VfM for the residents of Hertfordshire through a comparison of PFI vs. Conventional Procurement (CP) (section 8.3);
• The affordability of the Reference Project, including a comparison with the “Do Minimum” and the effect on the affordability position of sensitivities carried out on key cost assumptions. (section 8.5);
• The county council’s LATS strategy (section 8.9); and
• Councillors’ Approval (sections 8.6 and 8.8)
8.2 Procurement Costs
345. The budgetary provision for internal resources and external consultancy support to complete the required procurement is set out in figure 38 below. All figures are at a 2008/09 price base date.
Figure 38: Waste Procurement Programme budget and resource requirements
|Resources |£ 000's |
| | |
|Procurement Team |2008/09 |2009/10 |2010/11 |
|TOTAL |1,360 |1,500 |1,500 |
346. The Council has earmarked £1m for both 2011/12 and 2012/13 for post Contact award support and any delays in the procurement process. The precise split of these costs between cost headings would be determined nearer the time.
8.3 Value for Money Assessment
347. This section of the OBC, in accordance with HM Treasury's requirements, assesses the residual treatment infrastructure included within the Reference Case and whether the use of the PFI offers potential Value for Money (VfM) over Conventional Procurement (CP) by the public sector. The three stages of the process under which the VfM of PFI is assessed in relation to alternative funding options are set out here:
• Stage 1: Programme Level Assessment (undertaken at a Government department level), to ensure that PFI is only considered for those programmes where PFI is likely to represent VfM;
• Stage 2: Project Level Assessment (undertaken by Council as part of an Outline Business Case), comprising both qualitative and quantitative elements; and
• Stage 3: Procurement Level Assessment, which is an ongoing assessment during the procurement phase of the Project to ensure that the desired Project can be delivered.
348. This OBC recognises that Defra has undertaken a Stage 1 programme level assessment for waste procurements as part of the Comprehensive Spending Review (CSR) completed in 2004 (and confirmed in 2007), demonstrating that waste, as an investment programme, is likely to achieve VfM under PFI. This OBC details the Stage 2 project level assessment aimed at verifying whether this initial decision to use PFI to fund the Project is valid for the Council.
349. In order to verify the Stage 2 assessment, the Council has considered the use of PFI as an alternative to the Public Sector Comparator (which estimates the cost of the Public Sector undertaking the project), referred to as CP. The CP and PFI procurement methods are defined as follows:
• The CP Option: Procurement through conventional approaches that use public funding (for example, letting a design and build contract for the construction of an asset, and then letting an operating and maintenance contract for the ongoing operation and maintenance of that asset).
• The PFI Option: Procurement under PFI, which is a specific procurement methodology through which the public sector lets a design, build, finance and operate contract to the private sector for the construction and whole life maintenance of an asset and/or associated service. This option transfers the interface and ongoing maintenance and operations risk of the asset to the private sector.
8.3.1 VfM assessment of PFI and CP
350. The approach used in this OBC is consistent with that outlined in the updated HM Treasury VfM Assessment Guidance (the Guidance) as issued in November 2006 and the “Supplementary VfM Guidance for Waste PFI” prepared by Partnerships UK (PUK) for Defra in September 2005.
351. The project level assessment of VfM considers both qualitative and quantitative factors. The qualitative appraisal considers the viability, desirability and achievability of PFI. The quantitative analysis uses a prescribed methodology and spreadsheet provided by HM Treasury to determine whether PFI represents indicative VfM when compared to CP. This section outlines the results of the qualitative and quantitative assessment.
8.3.2 Qualitative Assessment
352. The guidance states that PFI should generally apply to large projects that are critical to the delivery of public services. PFI projects commit the procuring authority to a particular provider for a number of years, and whether the projects are successful or not will depend on cost and a number of qualitative and quantitative considerations, relevant to deciding the most appropriate procurement route. The three qualitative factors identified by the Guidance are as follows:
• Viability: Confirmation that the investment objectives and all desired project outcomes can be translated into outputs that are measurable, ‘contractable’ and can be agreed. This factor also involves assessing whether there are efficiency or accountability issues which demand that the project is provided by the public sector directly rather than through the PFI procurement route;
• Desirability: Involves assessing the relative merits of different procurement routes. Considerations include incentivisation; risk transfer in PFI; the Government’s lower cost of borrowing in conventional procurement; and the relative advantages and disadvantages associated with a long-term contractual relationship between the public and private sectors; and
• Achievability: Involves gauging the expected level of market interest and whether the public sector client would have sufficient capability to manage the complex processes involved. This is integral to both the procurement of the services and their ongoing management and performance.
353. Figure 39 below provides a summary response for each of the three qualitative factors described above.
Figure 39: Qualitative assessment summary
|Qualitative Factor |Summary Question from the |Response |
| |Guidance | |
|Viability |Overall, in considering PFI,|It is considered that a contract structure can be arrived at for the Reference Case which |
| |is the department satisfied |will: |
| |that sustainable long term | |
| |contracts can be | |
| |constructed, and that | |
| |strategic and regulatory | |
| |issues can be overcome? | |
| | |Meet the Council’s strategic aims and objectives for waste management. |
| | |Deliver the project to the Output Specification. |
| | |Meet recovery and BMW diversion targets from the infrastructure proposed. |
| | |Provide a solution such that changing regulatory targets can be met where necessary. |
| | |Satisfy all current regulatory requirements. |
|Desirability |Overall, is the accounting |It is considered that a PFI contract for the Reference Case should bring sufficient benefits |
| |officer satisfied that PFI |to outweigh an expected higher cost of capital through: |
| |would bring sufficient | |
| |benefits that would outweigh| |
| |the expected higher cost of | |
| |capital and other | |
| |disadvantages? | |
| | |The risk transfer of future costs could be subject to fluctuation. With the exception of a |
| | |qualifying change in law, benchmarking and market testing, variations to the unitary fee are |
| | |generally only permissible as a result of movements in inflation. The risk variance in the |
| | |cost and revenue assumptions made by the Contractor in its base case financial model (which |
| | |underpins the calculation of the unitary fee) lies with the Contractor. The Authority is thus|
| | |protected at financial close from unexpected movements in the cost of meeting the Project’s |
| | |contractual requirements. |
| | |Providing positive incentives towards service delivery during the contract term, in |
| | |particular, as the contractor is only paid where the service delivered meets contracted |
| | |specifications |
| | |The use of a DBFO contract, which will ensure the construction and subsequent operating cost |
| | |benefits are linked. Any interface risks between the various construction and operation |
| | |sub-contracts required to deliver the Project will lie with the Contractor and not the |
| | |Authority. |
|Achievability |Overall, is the accounting |It is considered that the procurement programme for the Project is achievable, given that: |
| |officer satisfied that a PFI| |
| |procurement programme is | |
| |achievable, given an | |
| |assessment of the market, | |
| |Council resources and the | |
| |attractiveness of the | |
| |proposal to the market? | |
| | |The right level of resource and expertise has been committed to the project. This is supported|
| | |by experienced consultants. |
| | |The Project seeks a product with which the private sector is familiar. |
| | |Risk sharing will be based on established standards, which the private sector is familiar |
| | |with. |
| | |The right level of internal and external resource and expertise has been committed to the |
| | |project. |
| | |The management of the Project will be robust, with all staff being appropriately trained. |
| | |This is attractive to the market because there is: |
| | |A defined funding market. Whilst the Council is aware of the current volatility in the |
| | |financial markets, it will ensure that the project is structured to appeal to the market. The |
| | |Council will also use the emerging guidance on refinancing clauses to ensure that it protects |
| | |its own position. |
| | |An attractive asset. |
| | |Appropriate structuring which offers a good chance of deliverability. |
354. Based on the qualitative project level assessment, the Project appears to meet the viability, desirability and achievability requirements of the Guidance.
8.3.3 Quantitative Assessment
355. The quantitative assessment considers how the quantifiable costs and benefits of using PFI as a procurement route are likely to compare with CP. This involves estimating values for the capital and operating costs attached to the Project and adjusting these for any inherent Optimism Bias (see section 8.3.3.2) and/or specific risks, as well as expected transaction costs. For the PFI option, the projected cost of the Reference Case is calculated using an assumption of private financing and adjusting relevant factors accordingly. A generic spreadsheet has been developed by HM Treasury (the Treasury spreadsheet), to capture the values and enable sensitivity testing which, according to the Guidance, must be used as part of the project level assessment. The next four sub-sections outline:
• The key input assumptions that have been made in using the Treasury spreadsheet;
• Optimism Bias assumptions made;
• The indicative quantitative VfM results; and
• The outcome of sensitivity analysis performed on this analysis.
8.3.3.1 Key Input Assumptions
356. The Treasury spreadsheet contains a number of assumptions that have been ‘hard coded’ and therefore cannot be altered. For example, employment cost per employee for the CP option is fixed to equal the amount input for the PFI option. There are, however, many project specific input assumptions to be made when using the Treasury spreadsheet.
357. The Shadow Tariff Model, used to estimate the cost of the Unitary Charge for the Reference Project, assumes that financial close occurs on 1 April 2011, followed by a three year construction period which completes on 31 March 2014. The Treasury spreadsheet, therefore, assumes that full operation commences from 1 April 2014, with the contract ending on 31 March 2039. The key input assumptions used for the Treasury spreadsheet are summarised in Figure 40 below.
Figure 40: Summary of key input assumptions
|Variable |Description |Council Input Assumption |
|Timings |The contract period is restricted to intervals between |The contract period for this Project is modelled at 28 |
| |six and 40 years. |years from 1 April 2011 to 31 March 2039 |
|Capital Expenditure |Expenditure incurred in procuring the asset. It does not|The initial (real) CapEx of the project is at projected |
|(“CapEx”) |cover expenditure required to maintain the asset. |financial close of 31 March 2011. The PFI CapEx costs |
| | |reflect the estimated cost of the risks borne by the |
| | |private sector under a PFI transaction. |
|Lifecycle Expenditure|Capital Expenditure incurred on a periodic basis during |Lifecycle costs have been calculated on an annuity basis. |
| |the course of the contract period following completion | |
| |of the initial construction period, in order to maintain| |
| |the asset so that it remains fit for its intended | |
| |purpose. | |
|Operating Expenditure|Represents the costs incurred by the Council in |The annual (real) OpEx cost (non-employment) will be |
|(“OpEx”) |operating the asset and/or running the services that are|incurred from 1 April 2014 when the facility is operational|
| |included within the scope. Expenditure which falls |and will be uplifted to the relevant price base |
| |outside of the scope is excluded. | |
| | |Operating costs commence following the construction period.|
|Third Party Income |This represents any income stream which may result from |The Technical Advisors have derived the third party income |
| |the procurement which will reduce the unitary charge |data for the project. This comprises income from |
| | |electricity generation, heat generation and income from |
| | |sale of ferrous metals. An annual amount of income is |
| | |calculated following the same methodology as with lifecycle|
| | |costs (i.e. the derivation of an annuity). |
| | |As with OpEx costs, the third party income only commences |
| | |after CapEx period has finished. |
|Transaction costs |These represent the costs incurred by the private sector|The transaction costs have been based on the size and |
| |and the public sector, in reaching contractual |complexity of the procurement and costs incurred on other |
| |agreement. |waste PFI projects. |
|Gearing |This represents the share of the total financing |The level of senior debt as a percentage of the total |
| |requirement which is funded by debt under the PFI |project funding is 85%, based on a prudent level of gearing|
| |option. |acceptable to the current market. |
8.3.3.2 Optimism Bias
358. The Treasury spreadsheet accounts for the impact of uncertainty over project costs through input assumptions for Optimism Bias. Optimism Bias relates to the demonstrated and systematic tendency for project appraisers to be overly optimistic when considering project benefits and costs.
359. The guidance states that there is currently little, if any, evidence to suggest that either conventional or PFI-style procurement methods deal any more or less efficiently with Optimism Bias. However, there is evidence that the allocation of risks achieved under a PFI contract reduces the impact of any Optimism Bias on the procuring Authority as compared to the contractual arrangements typically resulting from the CP option.
360. The guidance explains that, in accounting for Optimism Bias, the Treasury spreadsheet differentiates between two key stages of the investment decision process, namely pre-Final Business Case (“FBC”) and post-FBC. FBC in this instance represents the date of contract award. The pre-FBC Optimism Bias factor represents the increase in estimated costs or shortfall in estimated income between the OBC and the FBC stage. The post-FBC Optimism Bias factor represents the increase in costs or the shortfall in income between the date of contract award and the completion of the associated asset(s).
361. Fundamental to the internal operation of the Treasury spreadsheet is the assumption that the impact of post-FBC Optimism Bias on the public sector will be greater under the CP option than the PFI option.
362. The Treasury spreadsheet requires inputs for both pre-FBC and post-FBC Optimism Bias percentages for CapEx, Lifecycle costs, OpEx, transaction costs and third-party income.
363. As stated above, the impact of the Post-FBC Optimism Bias for the procuring Authority is likely to be reduced by a PFI contractual structure.
8.3.5 Indicative PFI VfM results for the Reference Project
364. The key outputs from the Treasury spreadsheet are the CP Net Present Cost (NPC) of the project, the PFI equivalent and the indicative PFI VfM percentage, representing the percentage difference between the two. If the indicative PFI VfM percentage is positive, then this indicates that the Project supports the programme level assessment that VfM can be achieved through PFI. If negative, CP is deemed to offer better VfM.
365. For the base case scenario for the Reference Project, the indicative PFI VfM percentage is generated using a pre-tax Internal Rate of Return (“IRR”) for the private sector of 15%[75]. This produces an indicative PFI VfM percentage of 11.02%[76], confirming PFI as offering the potential to deliver VfM for the project. The base case scenario results are summarised in Figure 48 below.
Figure 41: Indicative PFI VfM results
| |CP NPC (£m) |PFI NPC (£m) |
|Reference Project –Indicative PFI VfM % | |11.02% |
8.3.6 Outcome of Sensitivity Analysis performed
366. The Treasury spreadsheet uses Indifference Points to demonstrate the level of change required in the value of individual inputs to erode the difference between the CP and PFI NPCs to zero thus making the county council indifferent between the two procurement routes. Figure 42 sets out Indifference Points for capital and operating expenditure for the CP option and for the unitary charge for the PFI option.
Figure 42: Indifference Analysis
|Procurement Option |Variable |Indifference Points (%) |
|CP |CapEx |-16% |
|CP |Non-employment OpEx |-39% |
|CP |Employment-related OpEx |-127% |
|PFI |Unitary Charge |16% |
367. The analysis demonstrates that, with all other things remaining equal, the capital expenditure under CP would have to decrease by 16% in order for the county council to be indifferent between the two options. Similarly, non-employment operating expenditure and employment-related operating expenditure would have to decrease by 39% and 127%, respectively, under the CP route. All of the above sensitivities are considered to be better than the Guidance benchmark of 5%. Affordability constraints aside, the PFI Unitary Charge would have to increase by 16% for the Council to be indifferent between the two procurement options. Again, this is higher than the Guidance benchmark of 3%.
8.3.7 PFI vs. CP Project Level Assessment – conclusion
368. The qualitative assessment produces a clear indication that, in terms of viability, desirability and achievability the county council is well positioned to deliver a PFI procurement for the Project. The quantitative assessment also produces a positive PFI VfM percentage of 11.02% on the base case scenario, the robustness of which has been demonstrated through sensitivity testing. These assessments provide a clear indication that verifies the outcome of the programme level assessment that PFI can deliver VfM for the project.
8.4 Cost of the Reference Project Using Private Finance
369. In arriving at an affordability assessment it is necessary to estimate the cost of services that underpin the waste disposal service provided by the county council. This is comprised of two elements:
• The Shadow Tariff Model (STM), which estimates the costs to the county council of delivering the Reference Case through PFI. This is the unitary charge that would be paid covering the capital and operating costs of the Reference Case, and includes the cost of financing such infrastructure (using latest financing data) through the use of non-recourse project finance at a gearing level of 85%.
• The costs of delivering those services outside the scope of the Reference Case which form part of the wider disposal operations of the county council (‘the Reference Project’).
370. The funding terms assumed in the financial model are in line with those used in recent bids for projects which are likely to close in 2011. However, the county council are aware of the volatility of current market conditions and a 0.5% buffer above the London Inter-Bank Offered Rate (LIBOR) has been assumed. The county council recognises that these terms are subject to change (in either direction) between OBC and Financial Close. The county council and its advisers will be paying close attention to this situation throughout the CD process.
8.4.1 Cost of the Reference Case
371. The estimated cost of the Reference Case delivered through a PFI procurement route is £799,653,000 (Total nominal costs (1 April 2011 – 31 March 2039). This does not include PFI Credit support, which would be applicable should the county council be awarded PFI Credits.
8.4.2 Services outside the scope of the Reference Project – PFI Element
372. The cost of the Reference Case described in section 8.4.1 relates solely to the costs of treating and disposing of the county council’s residual waste in order for it to meet its performance specification set out in section 4 of this OBC. The Reference Case includes the haulage and disposal costs of any residues from the treatment process.
373. The WIDP OBC Template specifies that, in assessing project affordability, recognition should be given to the total global cost of the Reference Project in the context of the county council’s waste management service. In assessing the total costs, the county council has assumed that:
• There will be a need to meet landfill disposal costs (including potential LATS costs) during the construction phase of the Reference Case. There will also be landfill disposal costs outside the scope of the Reference Case. These costs are for material that does not go to the EfW shown in figure 50 below.
• The design, build, finance (assumed to the Prudential Borrowing) and operation of the new transfer station has been included in the “total global cost”. The county council will continue to use its current Transfer Station at Waterdale.
• The Council will continue to pay for the existing contracted costs of HWRC’s, IVC’s, Windrows, Clinical Waste and Edmonton EfW (up to expiry of the contract in 2015/16). The costs of these contracts have been projected throughout the Project period.
• The existing expenditure by the Districts required to meet their WCA obligations is not included in the affordability analysis. The collection processes and infrastructure required to deliver the performance levels projected in the Reference Project are either in place or will be delivered through specific projects currently underway, with the exception of the additional transfer station discussed above. The county council and Districts are committed to delivering the recycling and composting performance as set out in the JMWMS and have existing funding mechanisms in place to achieve the levels of performance assumed within this OBC. The county council will continue to pay recycling credits and other subsidy payments to the Districts as part of its commitment to support them in achieving the agreed recycling and composting targets over the Project period and these projected payments are included in the affordability analysis.
• Income from dry recycling and trade waste (from contracts outside the Reference Project) has been included in the affordability analysis.
• The Council will provide the sites necessary for the various facilities required, the cost of which will be met by the county council. The county council is assumed to own the necessary sites required (see section 7). Therefore additional land costs have not been factored into the “total global cost” of the Reference Project.
374. Figure 43 below illustrates the projected cost of the Reference Project over the 28 year contract term. This comprises the Reference Case delivered through PFI and the other disposal operations detailed above. This amounts to £1.9 billion for the period from 2011/12 to 2038/39.
Figure 43: Cost of the Reference Project
|Nominal Costs |Reference Project |
| |£’000 |
|Total Reference Project Costs |799,653 |
|Total Non Reference Case Costs |1,057,134 |
|Total Project Costs |1,856,787 |
375. The projected Reference Project cost over the project period can now be compared against the “Do Minimum” Option and also the Council’s projected waste management budgets, in order to determine the extent of the affordability gap.
8.5 Affordability Analysis
8.5.1 Introduction
376. Having defined the Reference Project in section 4 and considered the preferred procurement route in the VfM section above, this section considers:
• The cost of the Reference Project, including the PFI Reference Case costs.
• The costs associated with the Do Minimum option, including the impact of implementing a Landfill Allowance purchasing strategy.
• A comparison of the Project to the Do Minimum option.
• The county council’s projected waste management budgets over the contract period.
• The revenue support contribution of the PFI credit.
• The ‘affordability gap’ between the cost of the Reference Project and the county council’s projected waste management budgets over the term of the contract.
• The effect that sensitivities, carried out on key assumptions, has on the county council’s projected “affordability gap”.
16 Cost of the Reference Case delivered through PFI
377. The estimated cost of the Reference Case set out above in 8.4.1 above is £799.7 million. The estimated cost does not include PFI Credit support, which would be applicable should the county council be awarded PFI Credits.
8.5.3 Cost of the Reference Project
378. The projected cost, as detailed in table 8.3 above, of the Reference Project over the 28-year contract term, comprising the Reference Case costs and other disposal operations, amounts to £1.9 billion for the period from 2011/12 to 2038/39.
20 Comparison of the Reference Project against the Do Minimum Option
379. The Do Minimum option assesses the cost to the county council if it were to continue disposing of all of Hertfordshire’s residual waste to landfill after the expiry of the Edmonton contract, and assumes that no facility is provided. In this scenario, landfill gate fees, landfill tax and LATS costs will be incurred for all of Hertfordshire’s waste going to landfill, the current IVC, Windrow and Clinical Waste disposal contract are assumed to continue, and Hertfordshire will require a new transfer station in the east of the county. In order to establish the justification for undertaking the Reference Project it is necessary to compare the Reference Project to the cost of the Do Minimum option.
380. For 2007/08 the standard rate of landfill tax is set at £24 per tonne. As of April 2008, the standard rate of landfill tax will escalate by £8 per tonne per annum until reaching £48 per tonne in 2010/11. In the recent budget announcement it was stated that landfill tax would continue to increase post 2010/11 and in respect of this we have assumed in the financial modelling that the rate of landfill tax increases at inflation (i.e. 2.5%) thereafter. In 2011/12 the landfill gate fee is assumed to be £23 per tonne. Due to the scarcity of landfill in-county, the increase in gate fee is assumed to be 3.5% above inflation per annum.
381. Under both the Do Minimum option and the Reference Project it is assumed that a LATS trading strategy is adopted. For the purposes of this comparison a “profile” of Landfill Allowance prices provided by technical advisers has been assumed to reflect anticipated market supply and demand conditions, rather than assuming a single value for the trading price of Landfill Allowances.
382. The results of the comparison of the Reference Project costs with those estimated to be incurred under the Do Minimum option are set out in figure 52 below.
Figure 44: Cost comparison of the Reference Project (excluding PFI credits) and Do Minimum
|Nominal Costs (2012 – 2039) |Reference Project |Do Nothing |
|£’000 |Profiled LATS |Profiled LATS |
|Total nominal costs |1,856,787 |2,173,724 |
|Saving compared to Do Minimum |- |316,937 |
383. Figure 44 above demonstrates that the Reference Project is £316.9 million lower in nominal cost terms than the Do Minimum option without recognising revenue from selling surplus LATS permits.
384. However, as both options do require the purchase of LATS and there is uncertainty around long term prices for LATS, the Council has considered three alternative LATS scenarios. These are set out in Figure 53 below.
Figure 45: LATS Scenarios
|LATS Scenario |LATS Value (£ per tonne) |
|1 |Buy at £0 per tonne until 2039 |
|2 |Buy at £30 per tonne until 2039 |
|3 |Buy at £150 per tonne until 2039 |
385. Figure 46 below compares the Reference Project against the Do Minimum option under the three alternative LATS cost scenarios. This demonstrates that there is always a case for undertaking the Reference Project. The price of LATS does not impact on this decision as the Reference Project always has a lower cost.
Figure 46: Cost comparison of the Reference Project (excluding PFI credits) and Do Minimum
|Nominal Costs |Reference Project |Do Nothing |Do Nothing Option |Do Nothing Option | Do Nothing Option |
|£’000 |Profiled LATS |Profiled LATS |LATS at £0/t |LATS at £30/t |LATS at £150/t |
|Total nominal costs |1,856,787 |2,173,724 |2,022,645 |2,083,863 |2,328,734 |
|Saving compared to Do |- |316,937 |166,255 |226,989 |469,926 |
|Nothing[77] | | | | | |
8.5.5 Details of Calculation of PFI Credits
386. The calculation of the PFI Credit has been undertaken in accordance with the guidance contained in the Appendix E of the WIDP OBC Template. WIDP specific financing assumptions have been applied to the Reference Project STM in order to generate the unitary charge and senior debt repayment figures required for the PFI calculation to be conducted. These assumptions are listed in the table below, as per instructions received from WIDP.
Figure 47: WIDP financing assumptions used in calculation of PFI Credit
|STM Input |WIDP Assumption |
|Gearing |85:15:00 |
|Senior Debt Interest Rate |5.50% |
|Senior Debt Margin |1.15% |
|Senior Debt Commitment Fee |0.50% |
|Senior Debt Arrangement Fee |1.00% |
|Senior Debt Service Reserve Account |6 months |
387. The PFI Credit for the Reference Project has been calculated at £111.3 million. This appendix also includes the STM used in the calculation of the PFI Credit.
388. The calculation of the Revenue Support Grant (RSG), generated from the PFI Credit has been calculated in accordance with the Local Authority PFI Grant Reform that came into force in April 2005, as updated by “Local Government PFI Annuity Grant Determination (No.2) 27 September 2005”. The guidance prescribes that the RSG should be paid on an annuity basis using an interest rate which is fixed for the term of the support. This current rate is 5.5% for projects that are approved in the financial year 2008/9.
389. Grant payments should commence to the county council when the relevant permanent assets specified in the PFI contract become available and be payable over the term of the contract remaining thereafter.
390. A spreadsheet devised by the Department for Communities and Local Government (DCLG) to assist local authorities in calculating expected levels of grant (based on the annuity system) has been used to calculate the estimated annual grant to be paid. The payment of the RSG commences after the construction period, at the start of operations and continues throughout the 25 year operational period of the contract.
391. Under this guidance, the RSG equates to annual grant payments over the 25-year operational life of the Reference Project of £8.3 million, resulting in total revenue support of approximately £207.4 million over the duration of the contract. It has been assumed that the entire construction phase will need to be completed before the annuity payment can commence (as it is only after this period that the project relevant permanent assets become fully available).
22 Projected Budgets
392. As the proposal is for the public sector to transfer the provision of waste management services to the private sector contractor, there will be an existing county council waste management budget that is available to help fund the Reference Project costs.
393. Figure 48 shows the projected budgets for the period 2011/12 through to the final year’s budget in 2038/39. Post 2011/12 budgetary increases are at the expected RPIx rate of 2.5% per annum.
Figure 48: Affordability analysis projected county council budgets
|Projected Budgets |Year 1 |Year 2 |Year 3 |Year 4 |Year 28 |28 Year Total |
23 Affordability Gap – comparison of the county council’s budget to the Reference Project costs
394. The Reference Project modelling and budgetary information has been used to calculate the projected affordability gap of the Reference Project taking account of the application of PFI Revenue Support and this is set out in figure 49 below.
Figure 49: Affordability Gap taking into account PFI Credits
|Nominal Cost |Year 1 |
| |£’000 |
|Total Reference Project Nominal Costs |1,856,787 |
|Projected Budgets |-1,505,208 |
|Gross Affordability Gap |351,579 |
|PFI Support |-207,360 |
|Net Affordability Gap for the Reference Project |144,219 |
|Add: | |
|Total additional cost for combined effects as above[78] |194,308 |
|Adjusted Affordability Gap |338,527 |
395. Again, in order to equalise the effect of differing cash flows over the appraisal period, the sinking fund required in this scenario would be the equivalent of increasing the Council’s budget in 2011/12 to £50.42 million (at a 2011/12 price base). This is an increase of £12.66 million above the current projected annual budget of £37.76 million.
8.7 Evidence
396. Member support has been provided at every stage of this Project development. Regular meetings are held with the Leader of the Council to provide an update. The Full Council is regularly briefed and all senior officers are continually kept appraised of the situation. Final Cabinet approval for this business case is being sought at the meeting of 20 October 2008.
8.8 Key components of the Members’ Report
397. In the reports to county councillors in October 2008, the HWPP Project Executive made them aware of the costs of the Reference Project against the Do Minimum option and the key sensitivities for the project.
• The cost of the Reference Project is estimated to be £1.9 billion compared to estimated cost for the Do Minimum option of £2.2 billion.
• Sensitivity analysis against key sensitivities produced a variety of results ranging from an affordability gap of £73.6 million (49.0% decrease on the Reference Project affordability) if the excess capacity of the facility in the early years was sold, to an affordability gap of £222.1 million (54.0% increase on the base case scenario) if the capital expenditure cost increased by 15%, per figure 52 above.
• The predicted worst case scenario, comprising a combination of sensitivities would provide an affordability gap of £338.5 million (increase of 134.7% on the Reference Project affordability). As the members are prepared to sign up to this worst case scenario this provides a headroom of £194.3 million above base case assumptions as preset out in Figure 52.
8.9 The Authority’s LATS Strategy
398. The county council’s LATS Strategy is designed to meet the requirements of the BMW disposal There is a three phase approach which is summarised here and the key aspects are as follows:
399. In the period up to and including the first Target Year of 2009/10 it can be said with some certainty that will have a healthy excess of allowances in each and every year.
400. In the period from 2010/11 until the second Target Year of 2012/13, LATS compliance will be almost certainly assured by achievement of the HWP's 50% recycling and composting target in all but possibly 2012/13 when a small shortfall could occur. This could be overcome by increased utilisation of the county council's contract for disposal at the North London EfW plant and/or further waste minimisation initiatives.
401. In the period from 2013/14 to the third Target Year of 2019/20, LATS compliance will be very dependent upon the successful establishment of the proposed Hertfordshire EfW plant in or around 2014/15. The measures described in 544 above, coupled with the borrowing of allowances from future years, should be sufficient to achieve compliance although there are also likely to be opportunities to secure short term capacity at new and recently developed treatment facilities in neighbouring areas such as Cambridgeshire
9. Stakeholder Communications
9.1 Introduction
402. The successful delivery of Hertfordshire Waste Procurement Programme (HWPP) will be influenced by the understanding and acceptance of its value from stakeholders. To reflect this, the county council has made communications a top priority, placing effective engagement with stakeholders at the very heart of the project.
403. Extensive public and stakeholder engagement and consultation has already underpinned the development of the Joint Municipal Waste Management Strategy 2007 (JMWMS07). The Hertfordshire Waste Partnership (HWP) carried out a consultation on the draft strategy in early 2007. More than 11,000 people registered their views, which were used to update the Strategy and inform ongoing waste management in the county. With this benchmark, the county council has also adopted a proactive approach to engaging with stakeholders as it takes forward its proposals to find alternatives to landfill. A comprehensive communications strategy has been developed based on the fundamental principle of effective, open and meaningful communication.
9.2 Communication strategy
404. The communications strategy was signed off by the HWPP Board in March 2008 and is central to the delivery of the overall project. It builds on the JMWMS07 engagement and consultation exercise, the key aim is to ensure stakeholders are fully informed and that all views are considered at relevant stages in the project. Communications activity will be based on the established community involvement and engagement principles:
• Awareness of the basic facts – who, what, where, when, why and how much.
• Understanding what the proposals and processes consist of, and what the alternatives and the impacts are.
• Informing stakeholders including hard-to-reach groups, so that they feel involved and appreciate the proposals’ benefits.
• Involvement in the process when public suggestions can help inform the proposals’ developments.
9.3 Market interest
405. In order to maximise competition in the waste management industry , the county council has sought to make the project attractive and marketable. An initial market sounding day was carried out on 10 January 2008. 11 companies representing a wide range of waste management interests including full system management, technology providers and construction companies attended the event that included scripted interview.
406. As part of the development of this OBC a Market Testing Day was held on 3 October 2008. 63 industry representatives from 34 interested companies attended. The purpose of the day was to assist in selecting the most suitable procurement options and to request the market’s thoughts on the keys issues in terms of delivering the project. Sixteen companies took part in interviews with a county council officer panel. Key findings from the exchanges are:
• The market supports the view that a single EfW will provide a well established and reliable solution which can deliver significant economies of scale and delivers excellent VfM. However, public perception and its impact on planning were highlighted as areas of risk.
• In respect of waste composition and values, the Council needs to secure agreement with the WCAs in order to provide greater certainty to the market. Additionally, a more detailed position on third party waste was requested.
• The market favours a flexible contract allowing for changes in waste composition and sufficient capacity to handle contingencies.
• The majority of companies welcomed the Council’s identification of a reference site, reporting that this made the project more attractive from the bidders’ perspective.
• There is enthusiasm within the market for the energy provision potential of CHP, supplying local houses as well as industrial users.
• Most companies interviewed are comfortable with PFI, although many gave assurance that project finance is a viable alternative.
• There is widespread experience and support for Competitive Dialogue as a way of procuring the contract.
• The Council is competing for bids with other local authorities. To stand out from the others the Council must demonstrate an open mind regarding preferred technology, a clear vision, and a willingness to work in partnership.
407. As a result of the success of the day, the Council is considering either a second market testing event prior to the issue of the OJEU notice, or a bidders’ day to follow it.
9.5 Engagement with other relevant authorities
408. Hertfordshire shares its boundary with 7 other WDAs and maintains regular engagement with them. Options for closer working have been discussed, in particular with the Bedfordshire County Council, Buckinghamshire County Council, Essex County Council, Luton Borough Council and the North London Waste Authority. Regular contact also continues to be made through formal member and officer meetings in the East of England region.
409. Specifically, the county council has engaged with Bedfordshire County Council to discuss joint working possibilities. Contact will be maintained with Bedfordshire to ensure any opportunities are fully explored. The communications teams in Hertfordshire and Bedfordshire are working together to ensure ideas and information are shared, including exchanging best practice information. Possible opportunities have been discussed, including:
• Potential joint procurement.
• Back-up facilities.
• Communications.
• Market testing.
• Advisor procurement.
9.6 Public and stakeholder engagement
410. The HWP has carried out an extensive public and stakeholder engagement and consultation exercise during the development of the JMWMS07. The consultation questionnaire, which was sent to every household via the county council’s residents’ magazine, asked people’s views on ways to reduce waste and increase recycling as well as on alternative methods of dealing with the remaining waste. This was supported by an awareness-raising campaign to a wide range of internal and external stakeholders, including:
• Media briefings.
• Newspaper to all residents incorporating a strategy questionnaire.
• The promotion of responding online.
• Briefings for members and MPs.
• County-wide summary leaflet incorporating a questionnaire
• Working jointly with partners to encourage responses.
• Encouraging interest groups to respond.
• Internal activity to encourage staff to take part.
411. There was an excellent response with more than 11,000 people registering their views. Some of the key findings included:
• Almost 98 percent of respondents felt it is important to reduce the amount of waste produced
• 83 percent felt recycling should be compulsory and 72 per cent wanted a 50 percent recycling target by 2012 (current recycling rate is 36 percent)
• When planning new waste facilities: 86 percent agreed minimising transportation to the facility is important or essential;
90 percent agreed it should be cost effective and affordable; 95 percent felt considering the environmental impact is important or essential; and 94 percent felt that turning un-recycled waste into energy is important or essential.
412. The HWP’s established and ongoing public campaign WasteAware has consistently raised awareness of the issues of waste - encouraging people to reduce, re-use and recycle. This has proved instrumental in driving forward recycling targets and increasing take-up of services. It is a well-recognised brand locally and will continue to be the vehicle for educating and informing Hertfordshire residents about general waste issues
413. The county council has adopted a proactive approach to communicating its proposals for new waste facilities and plans to fully engage and consult with the public and stakeholders. Key to the effectiveness of the strategy is establishing communication channels with a broad range of stakeholders. Work has been carried out to develop a stakeholder database to build on the initial list identified in the communications strategy. This will constantly be updated during the lifespan of the project to ensure lines of communication are consistent and up to date.
414. The following outlines some of the main activities that have either been carried out or are underway.
415. Member engagement: A focused cross-party engagement and education programme has commenced to ensure members can make informed decisions about waste management in Hertfordshire, this includes:
• Technology background - A presentation to members and key officers providing impartial advice and information on a variety of new waste technologies was given in September 2008.
• Site visits – Members have visited German facilities in 2006 and several in the UK in 2008. Further visits will be arranged to continue to inform members. A summary of the visits was also provided to all members to ensure they had the same information.
• Specific briefings to key members including the Leader, Deputy and Executive Member and regular updates have been given to the MAG.
• Information and awareness-raising through the Environment Department’s member weekly newsletter / project news letter
416. Officer training: In order to ensure project officers and members of the HWPP Board are well-informed, tailored briefings and workshops have been carried out on specific issues. These include, risk and financial workshops, 4 Ps training and site visits. Although external advisers will be required for the full length of the procurement phase, the council wishes to ensure the internal project team develops skills to enable the successful future management of large scale procurement projects
417. Internal communications: The county council employs around 30,000 staff. It is important to keep staff informed about the project as it is one of the county council’s major priorities. well-informed staff can act as conduits and help communicate the proposals to the wider community. Intranet articles have been published at key points in the process and exhibition boards placed in council buildings. Briefings have been given to staff on the existing council premises at New Barnfield and they will continue to be updated about developments.
418. Website: Dedicated pages have been set up on the council’s website waste to inform people about the issues with landfill, what Hertfordshire is doing to find alternatives, useful links and FAQs. Front page articles to inform people about key milestones.
419. Information bulletin: A specific waste procurement information bulletin was issued, providing background information, an update on progress and next steps. This was sent to all county council members, internal stakeholders, the HWP, the Hertfordshire Association of Town and Parish Council and county MPs. It was also published on the website.
420. Newsletter: A dedicated project newsletter has been developed in order to inform a wide audience about the project to coincide with publication of the OBC. It has been widely distributed to key stakeholders, the media, public libraries, council offices and published on the website. In order to open a dialogue with people with a particular interest in waste issues, a sign-up facility has been set up on the web pages to allow people to receive further information. They will be targeted with updates and further issues of the newsletter.
421. Local groups – Face to face briefings were held with Hatfield Town Council, North Mymms Parish Council and the North Mymms Greenbelt Society in spring 2008 alongside the announcement of the Expression of Interest (EoI). Follow-up meetings with each of these organisations have been arranged during October to discuss the OBC.
422. MPs – All MPs in the county have been personally contacted by the Leader of the council and sent copies of the newsletter. A face to face briefing meeting was held with the MP for Welwyn Hatfield in spring 2008
423. Media relations: Recognising the important and influential role of the local media, this activity has been consistently proactive. Since the EoI stage when New Barnfield began to emerge as a likely preferred site, face to face briefings have been held with the relevant publication to ensure the strategy and emerging procurement process was set in context and the benefits fully understood. As a result, the coverage of the main announcement of the council’s proposals was positive and follow up articles have been well balanced. Press releases have been issued to all relevant media at key milestones supported with key facts and frequently asked questions. The county council wishes to maintain an open and productive relationship with the media throughout the project and will continue to update them with information as it becomes available. Trade media publications will also continue to be targeted at relevant opportunities to promote Hertfordshire’s project within the waste industry.
424. Hertfordshire Horizons residents’ magazine: Sent to all households in Hertfordshire. The magazine has consistently promoted ongoing waste awareness-raising issues and updates on the project as well as highlighting the importance of the message reduce, reuse and recycle.
425. WasteAware: The county’s ongoing awareness-raising and community engagement campaign will continue to promote reduce, reuse and recycle as well as support the delivery of information about the procurement project. Activity includes road shows and community events.
426. Defra and WIDP. Ongoing engagement with Defra has continued through a series of formal and informal meetings, WIDP workshops and events. The county council has enjoyed the challenge provided by the WIDP Transactor and their support for the county council's communications material that has supported the release of the Waste Management Panel and underpinned the Market Testing Day.
427. Environment Agency. The county council has been proactive and sought advice from the Agency, who have responded with documentation on permitting and an offer for engagement with them at the appropriate stage the programme.
Waste Resources and Action Programme (WRAP). A meeting is planned to take place before the end of October to discuss opportunities for improving recycling and composting performance.
9.7 Community sector/ Non-Government Organisations
428. Hertfordshire’s countywide strategic partnership “Hertfordshire Forward” brings together key players from the public, business and community sectors. Its Sustainable Community Strategy sets out how the organisations will work together to tackle challenges facing the county, including actions for increasing recycling and composting as well as providing new waste facilities.
429. Further work has been carried out to identify a broad range of community groups, associations, charities, businesses, organisations and interest groups and relevant information will be targeted at each group at appropriate points during the process. This will be focused around general awareness-raising at a countywide level and targeted activity close to the proposed reference site.
10. Timetable
10.1 Introduction
430. This section of the OBC provides an overview of the county councils approach to the project timetable. It identifies the key activities required to allow effective and efficient delivery of the Project and the major milestones in the process.
431. The key stages of the programme are: OBC period; initial bid phase; competitive dialogue phase; selected bidder phase and contractor phase.
432. Separate work activities are identified for undertaking the necessary town planning and environmental permitting assessments at New Barnfield. There will be additional work undertaken to ensure that the heat and power off takes are feasible from the proposed EfW+CHP plant. Further work will be undertaken to secure a waste transfer station in the east of the county. This work will require the county council securing planning permission for the proposal as well as creating an operating facility before Financial Close.
10.2 Timetable
433. Figure 62 below provides a summary of the key project milestones. The procurement period from Issue of Official Journal of the European Union (OJEU) notice to Financial Close is two years, which is believed to be adequate to complete the procurement process. Key dates on the programme are the OJEU notice release of April 2009 and the completion of the Competitive Dialogue (CD) phase in September 2010 together with the contract award scheduled for the end of March 2011.
Figure 62: Proposed HWPP timetable - 2008 to 2014
|Procurement milestone |Date |
|Submission of EOI |Mar-08 |
|Approval of EOI |May-08 |
|Business Case Approved by Council |Oct-08 |
|Submission of OBC to Defra |Oct-08 |
|Defra Approval of OBC expectation |Mar-09 |
|PRG Approval of OBC expectation |Mar-09 |
|OJEU / PQQ Published |Apr-09 |
|PQQ Evaluation |May-09 |
|Invitations to Participate in Dialogue (ITPD) with Invitation to Submit Outline |Jul-09 |
|Solutions (ISOS) Issued | |
|ISOS Returned |Sep-09 |
|Invitation to Submit Detailed Solutions (ISDS) Issued |Nov-09 |
|Invitation to Submit Detailed Solutions (ISDS) Returned |Feb-10 |
|ISRS Issued (if necessary) |Apr-10 |
|ISRS Returned (if necessary) |Jun-10 |
|Call For Final Tenders |Aug-10 |
|Preferred Bidder Selected | Oct -10 |
|Planning Application Submitted |Nov-10 |
|Submission of FBC | Dec 10 |
|Defra Approval of FBC | Jan 11 |
|Contract Awarded | Mar 11 |
|Financial Close | Mar 11 |
|Operational Commencement |May-14 |
434. A duration of three years has been allowed for the detailed design, construction and commissioning of the plant. This assumption is based on the results of the soft market testing and advisor knowledge from previously completed projects. It also takes into account the county council’s experience in delivering major PFI Projects. These durations are consistent with the affordability analysis contained in section 8.
10.3 Managing Timetable Risks
435. The county council is taking a proactive attitude in the management of programme risk, utilising a number of tools to identify and evaluate likely impacts to the delivery programme. In addition a formal project management system (PRINCE2) has been adopted to ensure that rigorous processes are utilised in the execution of the works.
436. In generating the overall programme a formal review process was undertaken which allowed the critical path to be identified and assessed. The resultant programme has been developed to minimise the risk of slippage, by amongst other measures, starting work early wherever possible. With this in mind, the HWPP team will utilise the period between the submission of the OBC in October 2008, and the issue of the OJEU notice in April 2009 for the preparation of the draft Project Agreement and other contract documentation. This will ensure that the development and approval of such documents do not impact upon the programme later in the process. The evaluation methodology will also be fully developed during this period as shown in the detailed programme.
437. Recognising the need for contingency planning, the county council has considered the possibility of programme slippage resulting from, amongst other things, a delay in obtaining planning permission. The impact of such delay has been assessed both in terms of its impact on overall affordability and the need for alternative disposal arrangements in the short term. Full details are contained in sections 4 and 8 of the OBC accordingly.
10.4 Conclusion
438. The county council has put in place a robust and realistic timetable for the delivery of the Reference Case. This takes account of the requirements of the planning process, along with the likely duration of a Competitive Dialogue process. While the programme is challenging it is also realistic and will allow best value to be obtained through optimal programme delivery.
439. The risks associated with the successful delivery of the Programme within the proposed time scale have also been identified and assessed in line with the risk protocol and strategy detailed in section 5. This has allowed counter measures to be developed to protect against delay to the programme.
.
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[1] Hertfordshire Waste Partnership – WasteAware -
[2] Registrar General’s mid-2005 estimates for Hertfordshire
[3] Valuation Office, Dwelling and Non domestic properties in Hertfordshire at 31 March 2007
[4] East of England Regional Spatial Strategy -
[5] Hertfordshire Waste Partnership – Waste Aware -
[6] Hertfordshire County Council LATS Strategy
[7] WasteDataFlow is a web based system for MSW data reporting by UK local authorities to central government. It is accessed via -
[8] Registrar General’s mid-2005 estimates for Hertfordshire
[9] Valuation Office, Dwelling and Non domestic properties in Hertfordshire at 31 March 2007
[10]
[11] The strategic compass is a term used to describe the approach and focus for the council’s service plans.
[12] Sources from Registrar General’s estimates mid 2006 estimates for Hertfordshire
[13] Eastern RSS -
[14] This figure (567,772 tonnes) is MSW collected, the actual disposal and reported under BVPI’s for Hertfordshire is 566,096. The difference is due to tonnage loss (evapouration) at Waterdale WTS
[15] Over 52% was recycled or composted in 2007/8.
[16] The primary disposal sites was Edmonton. A small amount was sent for clinical incineration & to commission the Allington EfW bunkers.
[17] Technical / financial appraisal work supporting this OBC is based on the 2007/08 data (held by the WMU) taken in May 2008.
[18] All figures in this table in rows 2 – 6 if summed add up to the total disposed in 1, less: 12 tonnes of asbestos.
[19] This system is used in enhance recycling where controlled payments are made from WDA to WCA
[20] Please note the abnormalities of data from in 2006/7 (also see figure 5) applies here
[21] Hertfordshire LAA 2005/6 -2007/8. Data in this table is from Waste Data Flow and there are slight variations with other data in this report due to reporting time lags / data baselining.
[22] Performance in figures 10-13 show reported disposal tonnages, for calculation of the BVPI’s for Hertfordshire. This differs from the modelling for the purpose of projections which accounts for abnormalities in 2007/08 datasets to create a more realistic ‘baseflow’ picture of waste in Hertfordshire
[23] Household waste is waste arising from households as defined in the Controlled Waste Regulations 1992
[24] Municipal Waste is household waste plus other waste coming under its the control as a WCA or WDA
[25] Trade waste is commercial waste collected from businesses by WCAs
[26] Data used in period 2007/08 but sourced from analysis taken in 2006.
[27] Waste Strategy for England 2007 May 2007
[28] The new LAA targets -
[29] Department for Communities and Local Government May 2008
[30] There are 13 key objectives and 20 core policies of the JMWMS. Core policies 12 supports national priorities stating that ’The HWP will reduce the amount of unstabilised (waste that has not been re-treated to reduce its biodegradability) waste sent to landfill to a level no greater than is necessary…’
[31] Subsequently DCLG announced that N1 191 would measure residual waste per household. The Hertfordshire data set is able to report both per head and per household figures.
[32] Actual figure is 504.38 kg as reported via waste data flow
[33] Actual figure is 309.91 as reported via waste data flow after mass loss at WTS and in transit. The equivalent figure is 718 kg/household
[34] Un-stablished is waste that has not been pre-treated to reduce its biodegradability”
[35] Where contract volumes allow
[36] Core Policy 13: the Hertfordshire Waste Partnership will ensure residual waste treatment facilities compliment the waste hierarchy and help secure self-sufficiency in landfill allowance. In discussing waste treatment options, no single technology will be ruled out.
[37] Corporate challenge n.6 -
[38]Hertfordshire County Council Procurement strategy -
[39] Electronic procurement -
[40] Environment Department service plans are published annually and are available online at -
[41] The golden thread / strategic compass are terms used to describe the approach and focus for the service plan.
[42] HWRC capital projects have been identified but it is not possible to state exact timings because of land and planning uncertainties. This figure does not include procurement of operation and haulage services from existing HCC WTS at Waterdale or operation of any new WTS as these services are contained within the reference project.
[43] Interim disposal is likely to include long term arrangements for material that will be non-contract waste under the main residual waste treatment contract (e.g. oversize waste, street sweepings).
[44] A new Waste WTS is envisaged as part of the overall reference project based on a single treatment site (see the options appraisal below); however it is assumed that its construction will be the subject of a separate procurement outside the PFI project.
[45] In vessel composting capacity: negotiations are underway to provide additional in-vessel capacity through existing contracts at Cumberlow Green, replacing some windrow tonnage. This may make further procurement unnecessary.
[46] WET act - and
[47] LATS targets to be detailed here - and and
[48] Defra WIDP guidance on Output Specification was published in August 2008 and can be accessed at -
[49] A precise legal definition of Contract Waste will form part of the agreement
[50] A precise definition of Third Party Waste will form part of the agreement
[51] The key aspects of design are covered in section 7, sites and planning.
[52] As guided by SoPC4 here - legal position on legislative change
[53] As reported in panel paper -
[54] Reported in the EoI submitted to Defra in March 2008
[55] This assessment is concerned with the expected first year of operation of a new facility, identified as 2014/15. The tonnage of MSW forecast to be arising in this year is 604,000 tonnes. Of this, 303,000 tonnes is identified as being recycled or composted, leaving 301,000 tonnes of residual waste. However, the total residual treatment capacity required by Hertfordshire is approximately 270,000tpa (the total tonnage of waste requiring treatment at the end of the forecasting period).
[56] Guidance on Options Appraisal and Identification of the Reference Case for OBC. Residual Waste Procurement Pack 1 Defra. June 2008. - For further details of the criteria, derivation, assumptions and specifics of the appraisal see Technical Options Appraisal Report 016 – ERM 2008
[57] WRATE – Waste and Resources Assessment Tool for the Environment is the Environment Agency’s life Cycle Analysis tool for Waste and Resource Management -
[58] Please note, section 7 covers sites and planning in extensive detail
[59] This criterion was assessed qualitatively by ERM, using professional judgement based on experience of the waste management industry. This criterion was assessed qualitatively by ERM, using professional judgement based on our experience of previous technical options appraisals. The methods employed by ERM (in specific appraisals cited in the TOA) have been reviewed and approved by Defra.
[60] This criterion was assessed qualitatively by ERM, using professional judgement based on experience of the waste management industry.
[61] This is a method used in a number of other technical options appraisals by ERM as stated above and is a method accepted by Defra.
[62] DEFRA guidance -
[63] These are conservative estimates and do not necessarily reflect the market at the time of reading
[64] Estimates from 270ktpa plant in HWPP_ERM-CAL Waste flow modelv6 for the 2039 projection
[65] Conversation with George Overfield, Commercial Manager, Ballast Phoenix, 21 Aug 2008
[66] . June 2008
[67] Quantity based on non-ferrous capture rate of Ballast Phoenix Billingham IBA recycling process in WRATEv1.0.1.0
[68] . June 2008
[69]
[70] ERM estimate comprising £20 general landfill gate fee, £48 Landfill Tax and neutralisation pre-treatment cost of £200/t
[71] Initial feasibility of grid connection to EfW plant: Hertfordshire Waste Procurement Project, ERM, Draft report, August 2008
[72] Value of 0.495 MWh/t prorated to 270ktpa plant and £30 MWh for the export of electricity and £35 MWh for sale of Renewable Obligations Certificates from Technical Options Appraisal – Identifying the reference case. ERM Final report, August 2008
[73] Estimate prorated to 270ktpa plant from mid point value quoted in Table 1 of ERM CHP Report for Hertfordshire Waste Procurement Project, August 2008
[74]Statutory duties of the WDA -
[75] Base case scenario assumes that the private contractor will target a pre tax return of 15%. This equates to the Shadow Tariff Model blended shareholders return rate of 15% which has been assumed for the purposes of the affordability analysis.
[76] The Treasury spreadsheet allows alternative rates of 13% and 18% to be utilised. The use of these will either increase or decrease the extent to which PFI is seen to offer value for money over traditional procurement. For example, a blended equity return of 18% will yield an indicative value for money result of 8.35% whereas a 1 !34JKLMQRSlnpr{|}”•üñæñÔÈÔÈ¿®¿?¿‘¿ˆ3% rate would yield a value for money result of 12.68%.
[77] This saving is calculated as the difference between the cost of the Reference Project and the cost of Do Minimum when the various LATS scenarios are assumed in the Reference Case as well as in Do Minimum
[78] The additional cost for the combined sensitivities is calculated as the compound cost of the four sensitivities occurring together, rather than adding together the results for each sensitivity.
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