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Rob Callister claims rising incinerator costs 'unfair' on local authorities

Tue, 22 Jan 2019


A 5.7% increase in gate fees at the Energy From Waste Plant (EFW) is unfair on local authorities according to an MHK, and shouldn’t be taken at ‘face value’.
 
The hike comes into force from 1 April and will result in charges of £91.93 per tonne for domestic waste, and £183.04 for commercial waste.
 
The charge is imposed by plant operator SUEZ on the Department of Infrastructure, which then passes it on to local government.
 
It’s predicted to place a significant financial burden on local authorities, and coupled with other pressures, result in rate rises.
 
Rob Callister says most of the costs which make up the ‘gate fee’ are fixed, and is therefore questioning the rise, which he thinks is ‘unusually high’.
 
 
The politician produced a report in 2013 during his time as an Onchan Commissioner, in which he questioned the financing of the EFW, and the costs behind the gate fee.
 
AVAILABILITY FEE
 
These include the fixed ‘availability fee’, which is the £5.1 million required to run the plant, minus the price of any energy generated at the site and sold.
 
The figure doesn’t change, as Mr Callister writes in his report: ‘This £5.1 million is a fixed amount and irrespective of one tonne or sixty thousand tonnes going through the plant.’
 
He lodged a written question during the latest sitting of Tynwald for a breakdown of the availability fee, the result of which can be seen below:
 
 
The fee has risen this year, which Mr Callister suggests may mean the amount of energy generated at the plant has fallen, and less material has been processed.
 
He’ll submit a Tynwald question to the infrastructure minister to discover if throughput has indeed fallen.
In January 2018, it stood at around 50,000 tonnes (the plant’s operational range is 40,000 – 60,000 tonnes).
 
ANNUAL RENT
 
Another part of the gate fee is the fixed £3.6 million annual rent for the site.
 
The Isle of Man Government sold the plant to the Isle of Man Bank in 2004  under a ‘sale and leaseback’ arrangement, which ends in 2029.
 
Total payments over the 25 year term will amount to £85,089,760, double the £43 million needed to build the plant.
 
When seeking approval to fund the EFW in 2000, the then Minister for Local Government and the Environment Walter Gilbey, told Tynwald that without the sale and leaseback arrangement the deal would be ‘infinitely less attractive’.
 
Later in 2004, Chief Minister Richard Corkill faced questions on the model. He said: ‘The funding for the asset has been structured to recover the capital costs of development over the duration of the contract by way of a sale and leaseback agreement with a local bank, which, in essence, is akin to a fixed rate mortgage for 25 years’.
 
‘The benefits to Government as a whole come from the injection of the external finance, and with it, the opportunity to develop new schemes with the additional resources within the life of the current capital programme. In addition, it provides certainty in the cost of finance for the Energy from Waste Facility over a 25 year term. Exchequer benefits would accrue as normal.’.
 
It’s understood this unusual situation may have been related to possible VAT benefits.
 
FAIR COSTS FOR LOCAL AUTHORITIES?
 
Local authorities are required under law to use the facility to dispose of waste, which the department is legally obliged to provide.
 
Mr Callister has argued it’s unfair for those local authorities who weren’t party to this arrangement to pay for the capital costs for national infrastructure via the annual rent.
 
He suspects the 5.7% rise could be an effort by the DOI to balance its books, but insists central government can’t simply transfer costs on to ratepayers because of restricted budgets.
 
Mr Callister explained the issue to Local Democracy Reporter Ewan Gawne:

Media

  • Callister EFW

 

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