Budget Transfer: Transfer between Capital Budgets to part fund purchase of spare turbine

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A decision made 10 October 2016:

Decision Reference: MD-T-2016-0091
Decision Summary Title :	Transfer of Capital budgets to part fund the purchase of a spare turbine		Date of Decision Summary:	06 October 2016
Decision Summary Author:	Senior Management Accountant - Waste		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Transfer of Capital budgets to part fund the purchase of a spare turbine		Date of Written Report:	06 October 2016
Written Report Author:	Senior Management Accountant - Waste		Written Report : Public or Exempt?	Public
Subject: The transfer of £415,153.95 budget in 2016 from the EFW Plant La Collette Capital head of expenditure (Q0000C2695), and £110,503.95 budget in 2016 from Clinical Waste Refurbishment Capital head of expenditure (Q00MF13030) to the EFW Replacement Assets Capital head of expenditure (Q00MC10012) to part fund the purchase of a spare turbine.
Decision(s): The Minister approved the transfer of budgets in 2016 between the DfI capital heads of expenditure for EFW Plant La Collette (Q0000C2695), Clinical Waste Refurbishment (Q00MF13030) and the EFW Replacement Assets (Q00MC10012) to part fund the purchase of a spare turbine.
Reason(s) for Decision: Article 18 of the Public Finances (Jersey) Law 2005 (the Law) and Finance Direction No.3.6 ‘Variations to Heads of Expenditure’ (the FD) set out the procedures for transfers between heads of expenditure. Paragraph 5.1 of the FD and Article 18(2) (c) of the Law require departments wanting to transfer funds between heads of expenditure to obtain the approval of the Minister responsible for their administration. Article 18(1) (c) of the Law requires the approval of the Minister for Treasury and Resources for any budget transfers between heads of expenditure. Paragraph 5.2 of the FD delegates non-contentious transfers between heads of expenditure up to £1,000,000 to the Treasurer of the States. Paragraph 5.3 of the FD states that, in all other instances, the approval of the Minister for Treasury and Resources must be obtained.
Resource Implications: The EFW Replacement Assets Capital head of expenditure (Q00MC10012) will increase in 2016 by £525,657.90, the EFW Plant La Collette Capital head of expenditure (Q0000C2695) will decrease by £415,153.95 and the Clinical Waste Refurbishment head of expenditure (Q00MF13030) will decrease by £110,503.95.
Action required: The Finance Director to request the approval of the Minister for Treasury and Resources Department for these budget transfers.
Signature:		Position: Minister for Infrastructure
Date Signed:		Date of Decision (If different from Date Signed):

Budget transfer from Energy from Waste Plant and Clinical Waste Refurbishment Capital Head of Expenditure to Energy from Waste Replacement Assets Capital Head of Expenditure: Part funding of spare turbine

DEPARTMENT FOR INFRASTRUCTURE

TRANSFER OF CAPITAL BUDGETS TO PART FUND THE PURCHASE OF A

SPARE TURBINE

Purpose of Report

To enable the Minister to approve the internal budget transfer totalling £525,657.90, being £415,153.95 from the EFW Plant La Collette head of expenditure (Q0000C2695) and £110,503.95 for the Clinical Waste Refurbishment head of expenditure (Q00MF13030) to the EFW Replacement Assets Capital head of expenditure (Q00MC10012) to part fund the purchase of a spare turbine.

Background

The Energy from Waste Facility was commissioned in January 2011 and entered a commissioning period lasting two years. During this time the main contractor CNIM, Spie Batignoles, Camerons (CSBC) was responsible for the operation and maintenance of the various sections of plant. This was largely carried out by the Engineering Procurement Construction (EPC) contractor and lead party in the CSBC consortium, CNIM.

During the lifetime of the steam turbine four services are required to fulfil a contractual obligation for the removal of the rotor for inspection and refurbishment at the original equipment manufacturers premises (GE Thermodyn, Le Creusot, France). There is a balance to be struck between the basic service requirements for the machine against the likelihood of replacing one of more stages of turbine blades or associated rotor structure.

Main Content

It is recommended that a spare rotor, including storage canister, is purchased with a value of €797,000 (+/- £693,000) for use in each of the four services during the life of the steam turbine assembly. With a spare rotor the impact on the EfW facility is an improved turbine availability, which in turn reduces the risk of having to burn waste without generating power, and therefore losing income.

GE Thermodyn has advised us that in their experience, without a replacement rotor, the turbine stage 8 blades will need to be replaced once during the 30 year life of the turbine at a cost of €167,400 (+/- £146,000); with a spare rotor this will not be the case and this expense is avoided.

The rotor will need to be removed during each service in the years 2017, 2023, 2029, and 2035. It is assumed that at the end of the design life of the plant in 2041 there will be no requirement to replace the rotor for the next six years

Recommendation

That the Minister approves the transfer of £415,153.95 budget from the EFW Plant La Collette Capital head of expenditure (Q0000C2695) and £110,503.95 budget from the Clinical Waste Refurbishment head of expenditure (Q00MF13030) to the EFW Replacement Assets Capital head of expenditure (Q00MC10012) to part fund the purchase of a spare turbine.

Reason for Decision

Article 18 of the Public Finances (Jersey) Law 2005 (the Law) and Finance Direction No.3.6 ‘Variations to Heads of Expenditure’ (the FD) set out the procedures for transfers between heads of expenditure. Paragraph 5.1 of the FD and Article 18(2) (c) of the Law require departments wanting to transfer funds between heads of expenditure to obtain the approval of the Minister responsible for their administration. Article 18(1) (c) of the Law requires the approval of the Minister for Treasury and Resources for any budget transfers between heads of expenditure. Paragraph 5.2 of the FD delegates non-contentious transfers between heads of expenditure up to £1,000,000 to the Treasurer of the States. Paragraph 5.3 of the FD states that, in all other instances, the approval of the Minister for Treasury and Resources must be obtained.

Resource Implications

The EFW Replacement Assets Capital head of expenditure (Q00MC10012) will increase in 2016 by £525,657.90, the EFW Plant La Collette Capital head of expenditure (Q0000C2695) will decrease by £415,153.95 and the Clinical Waste Refurbishment head of expenditure (Q00MF13030) will decrease by £110,503.95.

7. Action Required

The Finance Director to request the approval of the Minister for Treasury and Resources Department for these budget transfers.

Written by:	Senior Management Accountant
Approved by:	Director of Finance