Agenda of Nelson Tasman Regional Landfill Business Unit

Nelson Tasman Regional Landfill Business Unit – Delegations

The Nelson Tasman Regional Landfill Business Unit (NTRLBU) is a joint committee of Nelson City and Tasman District Councils. The NTRLBU is governed by a Terms of Reference (A1983272).

Areas of Responsibility

· Matters relating to the operation and use of the York Valley and Eves Valley landfills as regional landfill facilities, and the timing of their use.

Powers to Decide

· Setting of fees and charges for waste disposal at the regional landfill facilities by 30 June each year; including the power to apply discounted fees and charges for the disposal of waste in bulk; and to determine other circumstances where discounted fees and charges may be applied.

· Decisions to accept (or not accept) waste that is generated outside the Nelson-Tasman region.

Power to Recommend to Councils:

· Any other matters under the area of responsibility of the Business Unit

· All recommendations to Council will be subject to adoption of an equivalent resolution by the other Council, unless it is a matter specific to one Council only.

Quorum:

· The Memorandum of Understanding governing the NTRLBU allows for either four or five members to be appointed. The quorum at a meeting is either two (if four members are appointed), or three (if five members are appointed), including at least one from each local authority.

Procedure:

· The Standing Orders of the Council providing administration to the committee shall be applied at each meeting

· The Chairperson will not have a casting vote

· Copies of minutes of meetings of the Nelson Tasman Regional Landfill Business Unit will be retained by each Council for record keeping purposes

Item 3: Nelson Tasman Regional Landfill Business Plan 2020-2021

Nelson Tasman Regional Landfill Business Unit

1 May 2020

REPORT R16987

Nelson Tasman Regional Landfill Business Plan 2020-2021

1. Purpose of Report

1.1 To consider changes to the draft Nelson Tasman Regional Landfill Business Unit (NTRLBU) business plan for 2020- 2021 Financial year and to approve the NTRLBU Revised Business Plan 2020 – 2021.

2. Summary

2.1 The Nelson Tasman Regional Landfill Business Unit Business Plan 2020- 2021 (Business Plan) was prepared during 2019 and has been revised a number of times. During the 13 March 2020 NTRLBU board meeting it was resolved that the Business Plan be approved subject to minor amendments which would be made by the NTRLBU Chair and General Manager.

2.2 Prior to finalisation of these amendments, the NTRLBU Unique Emission Factor (UEF) was accepted by the NZ emission register, and the significance of COVID -19 became apparent. It therefore became necessary to further alter the Business Plan to incorporate these changes.

2.3 The acceptance of UEF submission results in a roughly 25% reduction in ETS costs for NTRLBU for all future years, which has a reduction on overall NTRLBU costs of around 5%.

2.4 For 2020-2021 the General Manager has identified that there is a significant risk that landfill volumes will be lower as a result of reduced economic activity. It is currently unclear how much the landfill waste volume will reduce by, and therefore there is a high level of uncertainty regarding the 2020-2021 revenue.

2.5 The General Manager recommends offsetting the savings from the UEF against lower income expectations. This results in a roughly 7% lower incoming waste mass allowance, while maintaining a balanced budget. (70,000 tonnes down to 65,000 allowance).

2.6 Due to the UEF that has been backdated to start on January 2019 additional savings from the 2018/2019 and 2019/2020 Financial Years has been used to pay back the accumulated loss from the 2018 year. This results means that NTRLBU no longer needs to budget for a surplus of $80,000 per annum to recover the 2018 losses.

2.7 The Business Plan has been updated to include allowance for these effects, and as these are considered to be significant alterations to the Business Plan they require the consideration and acceptance by the Board.

3. Recommendation

That the Nelson Tasman Regional Landfill Business Unit

1. Receives the report Nelson Tasman Nelson Tasman Regional Landfill Business Plan 2020-2021(RR16987) and its attachment (A2375357 and A2375131); and

2. Receives and approves the Draft Business Plan 2020/21 (A2375131) subject to minor changes approved by the Chairman; and

3. Recommends the Draft Business Plan 2020/21 be presented to the Tasman District Council and Nelson City Council.

4. Background

4.1 The NTRLBU Business Plan has been amended to include changes that have occurred between the time of the last board meeting and the finalisation of the Business Plan. These changes include

4.2 Estimated lower landfill volumes associated with the COVID-19 lockdown and the expected reduced economic activities associated with this over the next financial year.

4.3 An allowance for the savings that will occur as a result of recently accepted UEF that has recently been accepted by the Emission Register.

4.4 Additional refinement of the capital and renewals budgets associated with projects proposed for the 2020-2021 year.

5. Discussion

There are three different changes that have been considered in the revised Business Plan. These are each discussed below changes to the UEF savings

Unique Emission Factor

5.1 The NTRLBU applied for and has been granted a UEF for the York Valley Landfill. This has resulted in a change from a standard factor of 1.19 tonne CO₂ per tonne waste to a lower 0.885 tonne CO₂ per tonne waste. The result of this difference is significant (~25%) reduction in the ETS cost and a 5% reduction on overall NTRLBU costs.

COVID-19 Effects

5.2 At the time of the last NTRLBU board meeting the effects of COVID 19 were not considered. NTRLBU now have information that show a reduction in waste discharge to the landfill during lockdown of around 70%, and it is expected that there will be ongoing reduction on waste volumes for the foreseeable future due to reduced economic activity. It is therefore expected that landfill volumes and income will be significantly reduced over the 2020-2021 year

Revised capital and renewals works

5.3 At the time of the last board meeting the there was a discussion regarding road resurfacing and whether to make an allowance for this and other changes to the capital expenditure plan in the Business Plan. At the time it was decided that this should not be included because the annual plans for the NCC and TDC already having been prepared and released for consultation.

5.4 The significant changes resulting from COVID-19 and the UEF require an additional update to the Business Plan, and therefore the new information in relation to the capital and renewals budgets has been included in the revised Business Plan.

6. Options

6.1 The current Business Plan has not been approved by the board at this time. The underlying assumptions on which the Business Plan has been prepared have changed and therefore it is necessary to change the Business Plan to reflect these changes.

6.2 These changes included considering the savings that are likely from the Unique Emission Factor, and balancing these savings with the reduced income likely from lower waste volumes associated with COVID-19 economic effects.

6.3 Following discussion with NCC and TDC finance leaders it is recommended that the landfill fee stay at the previously advertised level, and that savings associated with the lower UEF factor be used to allow NTRLBU to budget for a lower income from lower waste volume.

Table 1 – Summary of options considered

Option 1: Assume landfill volumes will remain at previous levels and reduce landfill fee to reflect savings from UEF
Advantages	· Potential reduction in landfill fees to consumers.
Risks and Disadvantages	· This would result in a significant risk of NTRLBU running a loss for the 2020-2021 year.
Option 2: Offset saving from UEF against a lower projected revenue from incoming waste.
Advantages	· This option results in no change to the previously advertised landfill fees to consumers. · This option results in significantly less likelihood of large NTRLBU annual loss in 2020-2021 financial year · This option maintains the current renewals and capital expenditure activity for landfill management which will potentially reduce costs in future years.
Risks and Disadvantages	· There is a risk that economic activity will not be as significantly affected as projected and that NTRLBU will have a surplus for 2020-2021.
Option 3: Assume more significant reduction in landfill volumes than covered by the UEF savings and raise landfill fee.
Advantages	· Very low risk of running a loss in 2020-2021 financial year.
Risks and Disadvantages	· A requirement to raise the Landfill fee, which would result in cost issues for our landfill users. · Additional financial stress to landfill users during a time where hardships are being experienced in our community · An increased risk of running a large surplus for the 2020-2021 financial year.

7. Conclusion

7.1 Following review of the finances, and discussion with the finance leaders from both NCC and TDC, it is recommended that NTRLBU adopt Option 2. This Business Plan uses the savings from the reduced UEF to offset the decreased revenue from incoming waste.

Author: Nathan Clarke, General Manager Regional Sewerage and Landfill

Attachments

Attachment 1: A2375357 NTRLBU Business Plan 2020-2021 Revised wording 26032020 track-change version ⇩

Attachment 2: A2375131 NTRLBU Business Plan 2020-2021 UEF review ⇩