Response
In north London NLWA contracts with LondonEnergy Ltd to manage the green garden and kitchen waste that is delivered by the north London boroughs that wish to use this contract.
LondonEnergy Ltd in turn, as you know currently has its own composting facility to process the material and also uses some third parties, but they will just be using third party facilities for processing in the near future. The future arrangements will include a mix of both composting and anaerobic digestion facilities with the separately collected food waste being sent to anaerobic digestion.
To answer your questions:
1. Is it your understanding that AD gate fees will rise to £80/tonne from December 2019?
In the budget forecast for 2018/19, presented to the Authority in February, and based on the old contract, we forecast that the cost recharged to the boroughs for a tonne of household food waste to be processed might be £80.89 for the next year. In other words, the budgeted cost was £80.89 per tonne for 2019/20.
I reported to the Authority meeting in June that LondonEnergy Ltd (LEL) has let new contracts and the price per tonne for food waste in the final months of the year was significantly lower than was forecast. However, you’ll note that in the latest WRAP gate fees report, Gate Fees 2017/18 Final Report, WRAP, June 2018 that this states that AD prices were between -£5 to £68 in 2017 and this report also comments that
“Some of the contractors suggested that the English market was going through a period of consolidation and that there was a risk smaller operators may have to close, which would have an inverse effect on the gate fees due to a reduction of available capacity.”
We will be able to take advantage of the lower gate fees through LEL’s contract, but once it ends, they would be required to re-tender and the cost to the Authority would be affected by the outcome.
2. Has there been any discussion at NLWA about AD gate fees?
The cost recharged to each borough for processing food waste includes an element of the Authority’s own overheads. Costs and tonnages are forecast during the budget setting exercise and then at the end of the year the actual costs are recast to work out the actual cost to each borough, based on the delivered tonnage.
We will start discussions in November 2018, producing an outline budget for 2019/20 for the December Authority meeting. This will therefore include an assessment of possible gate fees for AD after December 2019. However, as noted above in the budget forecast for 2018/19, presented to the Authority in February, and based on the old contract, we forecast that the cost to the boroughs for a tonne of household food waste to be processed might be £80.89 for the next year. The September report forecasts that the cost per tonne for 2019/20, based on the new contract, might be £34.03.
3. What were the AD gate fees for the last three years
For the past two years the final cost that NLWA charged for processing food waste was as follows:
2015/16 – not charged separately
2016/17 - £69.96
2017/18 - £54.48
