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A decision made (20/03/2009) regarding: Septic Tanker Service - Jersey Competition and Regulatory Authority - Investigation.

Decision Reference: MD-T-2009-0031
Decision Summary Title :	Septic Tanker Service – JCRA Investigation		Date of Decision Summary:	19th March 2009
Decision Summary Author:	Chief Officer		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title :	Septic Tanker Service – JCRA Investigation		Date of Written Report:	19th March 2009
Written Report Author:	Chief Officer		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Septic Tanker Service – JCRA Investigation
Decision(s): The Minister approved: The revocation of all current discharge licences to private sector operators on Monday 30th March 2009. The new Agreement that will come into force on Monday 30th March 2009 to enable private sector operators to work in a free market condition which will be in compliance with the Competition (Jersey) Law.
Reason(s) for Decision: To make changes to the Department’s operating practices which are in contravention to the current Competition (Jersey) Law. The new Agreements will allow the private sector operators to undertake work previously carried out by Transport and Technical Services tanker department in a free market condition.
Resource Implications: The Department anticipates that there will be a reduction in the level of service provided by its own tanker fleet and any staff reductions will be managed through natural turnover or redeployment. The financial consequences of this change are difficult to quantify but will be managed within the Department’s own revenue budget.
Action required: To advise the current private sector operators that all previous licences will be revoked and new agreements issued. To advise the Jersey Competition and Regulatory Authority of the changes that are being made in order to conform to the Competition (Jersey) Law.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Septic Tanker Service - Jersey Competition and Regulatory Authority - Investigation.

TRANSPORT AND TECHNICAL SERVICES

SEPTIC TANKER SERVICE – JCRA INVESTIGATION

Purpose of Report

To recommend to the Minister changes to the current septic tanker service operation following an investigation and negotiations with the Jersey Competition and Regulatory Authority.

Introduction

The Department has for many years operated a septic tanker service to provide a sewage emptying service to the members of the public whose properties are unable to connect to the main drains and have to rely on septic tanks, soakaways and tight tanks.

Background

In the early to mid-1990s a number of proprietary small package treatment plants came onto the market for individual properties. Due to the installation being carried out predominantly by local private drainage contractors who would also undertake the ongoing maintenance and cleaning of the systems, agreement was reached with the private sector for them to empty their tankers at Bellozanne when they had to undertake maintenance operations.

At that time the industry was excluded from undertaking work on the traditional septic tanks, soakaways and tight tanks as there was very strong opposition from the workforce and the concept of outsourcing or part private sector operation was not being pursued by the States of Jersey.

This operation worked well for a number of years with very few complaints. However, as a result of a change in the planning requirement for new developments in the country where no mains drains are available there has been a very significant increase in the number of tight tanks being installed over the past 6-8 years.

Previous Committee policy has always been to apply the significant subsidy element provided by the States to those properties whose drainage system was connected to a conventional septic tank/soakaway and in some circumstances a tight tank where the previous septic tank/soakaway system had failed. The policy did not apply to recent developments where the property had to install a tight tank as a requirement of the planning process. New developments using tight tanks have always been charged full cost recovery. The reason for this decision is that the Committee felt that many of the older properties had no choice in terms of their drainage system but in the case of new developments, the developer had the choice at the time of considering the development and should have factored in the economics of the development taking into account the cost of emptying the tight tank.

The Department received a complaint from a limited number of the general public concerning the lack of choice in terms of tanker service and one of these complaints resulted in it being referred to the Jersey Competition and Regulatory Authority. Following a number of discussions with the JCRA it became evident that the previous agreement whereby TTS staff provided a service to a certain sector and the private sector operated in another sector was against the Competition Law. Agreement has now been reached with the JCRA in terms of changes to the way in which the Department operates its septic tanker service that requires a change to the current licences in place with the private sector.

Proposed New Structure

It is proposed that the original licences issued to the private sector operators are revoked forthwith as they are in contravention of the Competition Law. A new Agreement has been drafted by the Department with support from the Law Officers Department that enables the private sector to use the Bellozanne tanker discharge facilities to discharge the contents of their tankers without restriction on the type of system they operate from. This effectively opens up the market to free competition.

Whilst the Minister continues to provide a high level of subsidy to the septic tank and soakaway properties (approximately 50% of cost) the impact on the Department’s own tanker fleet will probably be limited to the areas where tight tanks are emptied. The current charge for tight tanks is £50.31 per 750 gallon load.

It is inevitable that this new operation will impact on the TTS tanker service in terms of the number of vehicles and hence staff required to operate. Discussions have already been undertaken with the staff and through natural turnover or potential re-deployment to other areas of the Department any reduction in manning levels will be managed.

One of the requirements for the Department’s tanker service is to provide emergency cover to the pumping station and drainage network in the event of an emergency breakdown. In preparing for any change to the operation, the Department has been conscious of the impact any reduction in its own tanker fleet might have in terms of being able to react to a genuine emergency. To address this issue, the Department has built into the new agreements with the private operators a requirement that in the event of an emergency, the contractor will make available all of his tankers to assist the Department in preventing a major pollution incident. Clearly the Department will have to pay a pre-arranged rate for these vehicles and be conscious of the fact that the contractor has commitments to members of the public. It will however be a requirement to work with the contractors to ensure that they are able to prioritise their own workload in the event of emergency and provide the Department with as many vehicles as possible.

Recommendations

The Minister is recommended to:

Approve the revocation of all current discharge licences to private sector operators on Monday 30th March 2009.

Approve the new Agreement that will come into force on Monday 30th March 2009 to enable private sector operators to work in a free market condition which will be in compliance with the Competition (Jersey) Law.

Reason for Decision

To make changes to the Department’s operating practices which are in contravention to the current Competition (Jersey) Law. The new Agreements will allow the private sector operators to undertake work previously carried out by Transport and Technical Services tanker department in a free market condition.

Resource Implications

The Department anticipates that there will be a reduction in the level of service provided by its own tanker fleet and any staff reductions will be managed through natural turnover or redeployment. The financial consequences of this change are difficult to quantify but will be managed within the Department’s own revenue budget.

Action Required

To advise the current private sector operators that all previous licences will be revoked and new agreements issued.

To advise the Jersey Competition and Regulatory Authority of the changes that are being made in order to conform to the Competition (Jersey) Law.

JDR:PAF

19.03.09