County council scraps energy from waste contract at cost of £30m-plus

A county council is to terminate a £600m waste contract at a cost of more than £30m, blaming the “failure to secure satisfactory planning permission”.

Members at Norfolk County Council voted this week by 48-30 (with one abstention) at an extraordinary meeting to scrap its deal with Cory Wheelabrator for an energy from waste plant at Saddlebow near King’s Lynn. The meeting recommended that the Cabinet axe the contract.

The total cost of terminating the contract (£30.26m) comprises:

  • £20.3m in capped compensation to Cory Wheelabrator;
  • £1.6m in contractor public inquiry costs;
  • £8.26m in exchange rate and interest rate related costs.

Norfolk awarded the 25-year contract in March 2011. However, the project attracted significant opposition.

The Government called in the planning application for the EfW plant in August 2012. A planning inquiry was held in the Spring of last year.

According to Norfolk, the Communities Secretary Eric Pickles suggested a decision would be made on or before 14 January but no decision was forthcoming.

In a statement on its website, the council said: “When the contract was signed, savings of over £250m were guaranteed over its 23 years, compared to landfill.

“The report to Council and Cabinet said that the Secretary of State's failure to make a decision was costing around £140,000 a day, and by June the projected savings would have disappeared. The escalating cost of continuing delay follows the Government’s decision last November to withdraw Waste Infrastructure Grant worth £169m over the lifetime of the contract.”

The local authority’s Cabinet has agreed that the termination costs should be met through the use of a contingency fund (£19m), under-spend in 2013/14 (£3m) and general reserves (£8m).

However, this is on the expectation that steps will be taken to replenish those reserves. The Cabinet will consider the various options at a meeting in May.

A report last December by Jonathan Acton Davis QC of Atkin Chambers cleared the council and officers of taking undue risk when entering into the contract.