However, the future of the company's proposals to build a £100 million, 240,000 tonne-a-year capacity energy-from-waste facility as the centrepiece of the contract remains uncertain, with a public inquiry scheduled to begin next month (March 16) to decide whether to grant planning permission under appeal for the proposals.
The report, which was drawn up by the council's Waste Development Advisory Panel, it explained that: “The costs associated with terminating the existing contract and changing the existing strategy is estimated to be approximately £18-19m p.a. additional operating expenditure plus £35m contract termination.
“Over the nine year period that it will take to implement an alternative strategy it will cost in the region of £200m,” it added.
The additional yearly costs were linked to added Landfill Tax and LATS costs which would have to be paid while the council developed a new waste strategy, procured a new contractor and obtained planning consent for an alternative technology.
The council also noted that it was “likely” that it would lose the £45 million in PFI credits it received towards the project if it opted to change technology, while expressing reservations about taking “risks” by pursuing for “unproven” options.
New proposal
Instead, it decided to ask SITA to submit a revised plan for the CERC project, which the report explains would include “a new proposal made by SITA Cornwall which would aim to meet the requirements of the original contract with the re-evaluation of the market costs for providing this solution at today's updated costs.”
In particular, the report noted that SITA's sub-contractor for developing the incinerator – previously named as Japanese firm Takuma Co Ltd – had made provided a price guarantee for its work, but, with the project delayed, that this had now expired.
As a result, the council said that SITA could re-price the cost of the facility, and, as a result, it anticipated the price would “increase significantly”.
But, it stressed that: “The Revised Project Plan will seek to mitigate any
increase as much as possible.”
Next step
In the report, the council explains that the public inquiry which represents the next step for the CERC project, is expected to be heard during March and April 2010 by the planning inspector, before being passed to the secretary of state in August 2010.
And, it added: “It is anticipated that a decision by the Secretary of State will be made by February 2011 at the latest.”
The council explained that, once it knew whether SITA's current proposal had received planning permission, it could decide whether to accept or reject the company's revised project plan.
The SITA proposals have attracted vociferous opposition locally, with the St Dennis Anti-Incinerator Group (STIG) raising concerns over the potential impact of emissions from the proposed facility, as well as its impact on the surrounding area.
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