Budget transfer relating to Energy from Waste Plant

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A decision made 15 December 2014:

Decision Reference: MD-T-2014-0130

Decision Summary Title :

Rescind MD-T-2014-0118 and transfer capital from one head of expenditure to another existing head of expenditure.

Date of Decision Summary:

09 December 2014

Decision Summary Author:

Capital Accountant

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

Written Report

Title :

Rescind MD-T-2014-0118 and transfer capital from one head of expenditure to another existing head of expenditure.

Date of Written Report:

09 December 2014

Written Report Author:

Capital Accountant

Written Report :

Public or Exempt?

Public

Subject: Rescind MD-T-2014-0118 and approve the transfer of funding from the capital head of expenditure for EFW Replacement Assets to the capital head of expenditure for Replacement Assets.

Decision(s): The Minister rescinded MD-T-2014-0118 and approved the transfer of funding from the capital head of expenditure for EFW Replacement Assets to the capital head of expenditure for Replacement Assets.

Reason(s) for Decision: Transport and Technical Services (TTS) have been requested to rescind MD-T-2014-0118 for the creation of a new head of expenditure and instead use the existing head of expenditure for Replacement Assets (Q00MC10012).

The existing green waste shredder is now seven years old and although an asset life of 10 years was assigned in the replacement schedule this was overly optimistic and increasing maintenance costs and breakdowns mean that a new shredder is required to ensure continuity of operation at the Green Waste site. As the current backup shredder is now subject to continual breakdown and uneconomic to repair, it is proposed to use the existing shredder as backup plant.

As a result of the extended defects period imposed upon the EFW plant, some assets which were to have been replaced from the EFW replacement assets funding have been replaced under contract at nil cost to the States. As such, it is proposed to transfer these funds to the head of expenditure for Replacement Assets to fund the shredder replacement. The “Replacement Assets” funding originally provided to TTS is insufficient to provide for the replacement of this asset which is essential for the continued operation of the Green Waste composting operation in accordance with Waste License requirements.

Under Financial Direction 3.6 the approval of the Minister for Treasury and Resources is required for variations to heads of expenditure, although this power has been delegated to the Treasurer of the States for amounts under £1,000,000.

Resource Implications: The TTS capital head of expenditure; EFW Replacement Assets (Q00MF14036) will decrease by up to £450,000 and the “Replacement Assets” head of expenditure (Q00MC10012) will increase by an identical amount.

Action required: The Minister to rescind MD-T-2014-0118 and subsequently approve the transfer of up to £450,000 from the EFW Replacement Asset Vote (Q00MF14036) to the Replacement Assets Capital Head of Expenditure (Q00MC10012).

Signature:

Position:

Minister for Transport and Technical Services

Date Signed:

Date of Decision (If different from Date Signed):

Budget transfer relating to Energy from Waste Plant - Replacement Assets

TRANSPORT AND TECHNICAL SERVICES DEPARTMENT

RESCIND MD-T-2014-0118 AND TRANSFER CAPITAL FROM ONE HEAD

OF EXPENDITURE TO ANOTHER EXISTING HEAD OF EXPENDITURE

Purpose of Report

To enable the Minister to rescind MD-T-2014-0118 and to approve the transfer of funding from the capital head of expenditure for EFW Replacement Assets to the capital head of expenditure for Replacement Assets.

Background

Transport and Technical Services (TTS) have been requested to rescind MD-T-2014-0118 for the creation of a new head of expenditure and instead use the existing head of expenditure for Replacement Assets (Q00MC10012).

The shredding operation at La Collette is a critical part of the Transport and Technical Services (TTS) organic waste processing site. Large mobile shredders are used to break up the incoming green garden waste and plasterboard so that it can be taken to the composting slab for open windrow composting. In order to continue producing quality end products from the organic waste site, as well as meeting the Waste Management Licence requirements of shredding waste within 48 hours, reliable machinery capable of effective particle reduction is essential.

The current main shredder unit, which is used for approximately 2 hours per day, is a Crambo 5000 slow speed shredder. Maintenance requires the unit to be taken offline for roughly 2 days per month, although major services can take up to a week.

The TIM 1430 high speed shredder, which was reconditioned in 2000, is used as a backup unit for the Crambo when it is taken offline for maintenance.

The Crambo 5000 was purchased new in 2007 and was assigned an asset life of 10 years. Given the volume of work and harsh working environment this was overly optimistic as the shredder is now seven years old and is requiring increasing amounts of maintenance to continue operating.

A replacement main shredder is therefore required. TTS have estimated between £400,000 and £450,000 for a replacement shredder.

The Medium Term Financial Plan (MTFP) capital programme originally allocated funding to TTS for the replacement of their assets, however this is substantially inadequate to cover the amount of assets which require replacing.

In addition the MTFP capital programme allocated £1,586,000 for the replacement of EFW assets. Due to the extended defects period imposed upon the EFW some of the assets due to be replaced from this funding were replaced by the contractor at nil cost to the States. As both the EFW and the green waste shredder fall under the remit of replacement assets, TTS propose to reallocate up to £450,000 to their existing Replacement Asset Capital Head of Expenditure.

Discussion

Finance Direction No.3.6 ‘Variations to Heads of Expenditure’ sets out the procedures for the transfers between revenue and capital heads of expenditure and states that budget transfers in excess of £1,000,000 require the approval of the Minister for Treasury and Resources and the relevant Minister party to the transfer. Authority to approve non-contentious budget transfers under £1,000,000 has been delegated to the Treasurer of the States.

Recommendation

That the Minister rescinds MD-T-2014-0118 and approves the transfer of up to £450,000 from the EFW Replacement Asset Vote (Q00MF14036) to the Replacement Assets Capital Head of Expenditure (Q00MC10012).

Resource Implications

The TTS capital head of expenditure; EFW Replacement Assets (Q00MF14036) will decrease by up to £450,000 and the TTS Replacement Assets head of expenditure (Q00MC10012) will increase by an identical amount.

Action required

The Minister rescinds MD-T-2014-0118 and approves the transfer of up to £450,000 from the EFW Replacement Asset Vote (Q00MF14036) to the Replacement Assets Capital Head of Expenditure (Q00MC10012).

Written by:	Capital Accountant
Approved by:	Director of Finance