AGENDA ITEM 8

COUNCIL

19TH FEBRUARY 2009

POOLE CREMATORIUM – MERCURY ABATEMENT PLANT: REPORT OF THE PORTFOLIO HOLDER FOR STRENGTHENING OUR COMMUNITIES

1.PURPOSE

1.1To consider the recommendations from Cabinet of the 27th January 2009.

2.DECISIONS REQUIRED

2.1That Council approve:-

(i)the Poole Crematorium – Mercury Abatement Plant Scheme as detailed in the enclosed Report to Cabinet and Council;

(i)under Contract Standing Order 24(d), an Exception to Competitive Tendering for the purchase of the filtration plant as there are a limited number of suppliers. To use a negotiated procedure without prior publication of the Contract Notice under the Public Contracts Regulations 2006 Section 14(B2); and

(ii)the use of Prudential Borrowing to fund the Scheme with the borrowing cost funded from the Environment Levy introduced in January 2007.

3.BACKGROUND/INFORMATION

3.1Cabinet, at its Meeting on 27th January 2009, unanimously supported approval of the above recommendations to Council for approval.

3.2Central Government was requiring all Crematoria to reduce mercury emissions. Mercury emission into the atmosphere was caused by dental fillings and had been under investigation by the Department for Environment, Food and Rural Affairs (DEFRA). All Local Authority operated cremation services had until December 2005 to notify their Local Authority Regulator how they intended to meet DEFRA’s deadlines for compliance.

3.3This Council has decided to meet DEGRA’s requirements by installing filtration equipment designed to remove the emissions from cremators by 31st December 2012, the DEFRA deadline.

3.4By introducing the Environmental Levy on cremation fees, the Council is able to meet the costs of installing the Mercury Abatement Plant and the additional operating and maintenance costs. The Levy had been in place since 1st January 2007 and up to the 31st January 2009 £105,000 was forecast as being collected. These funds were being held in a reserve to offset the anticipated expenditure. The Environmental Levy was £25 per cremation.

3.5The reasons why a competitive tender is not being sought are as outlined in the enclosed Report. Cabinet approved the recommendation to Council that the purchase of the Mercury Abatement Plant be from the supplier of the original cremators who had a proven track record. The total project cost was estimated at £800,000.

3.6I would urge Council to support these recommendations.

Councillor Peter Adams

Portfolio Holder for Strengthening our Communities

BOROUGH OF POOLE

CABINET

27 January 2009

POOLE CREMATORIUM – MERCURY ABATEMENT PLANT

1.Purpose of report:

1.1To seek member approval for the project and the associated procurement and funding plan.

2.Decisions Required:

That Cabinet recommends to Council:

2.1Approval of the Poole Crematorium – Mercury Abatement Plant Scheme.

2.2Approval under Contract Standing Order 24 (d) of an exception to competitive tendering for the purchase of the filtration plant as there are a limited number of suppliers. To use the negotiated procedure without prior publication of a contract notice under the Public Contracts Regulations 2006 Section 14(b) ii.

2.3Approval of the use of prudential borrowing to fund the scheme with the borrowing costs funded from the Environmental Levy introduced in January 2007.

3.Background Information:

3.1Central government is requiring all crematoria to reduce mercury emissions.

Mercury emission into the atmosphere caused by dental fillings has been under investigation by the Department of Environment Food and Rural Affairs (DEFRA) and that department gave all local authorities, that run cremation services, until 31 December 2005 to notify their Local Authority Regulator how they intend to meet DEFRA’s deadlines for compliance. The Head of Leisure Services produced a report relating to Mercury Emissions Legislation with regard to Poole’s Crematorium and that report was considered by the ‘Environment Overview Group’, at its Meeting on 1st December 2005 and the decision was taken to meet DEFRA’s requirements by installing filtration equipment designed to remove the emissions from the cremators by 31 December 2012 (the DEFRA deadline).

Enquiries to determine how best to meet DEFRA’s requirements have shown it is necessary to extend and modify some parts of the existing cremators and add a highly specialised filtration plant, with all controls integrated into a single package. There are a number of alternative technologies available, however, the project team has identified that there are likely to be severe compatibility and technical issues when adapting the existing cremators and installing the filtration plant and recommend the filtration plant, manufactured by the original supplier of cremators, is adopted thus avoiding pitfalls of incompatibility. The Project Definition Report has been approved by the Strategic Director.

3.2Proposal to purchase the mercury abatement plant from the supplier of the original cremators.

Although there is more than one supplier of filtration plant the project team consider there are extremely good reasons for not seeking a competitive tender and propose to purchase the plant from the same supplier as the original cremators. This supplier has a long-standing and proven track record and our experience is that they are reliable, responsive and keep their promises.

The current cremation process operates extremely well and the project team consider it would be unwise and risky to compromise this by choosing a different supplier to install the filtration plant. Principally the reasons are:

  • The new filtration system will be directly connected to and will form an integral part of the existing cremators. It is therefore essential that any new plant should have similar technical characteristics and be compatible with the current cremators.
  • If there were problems with the operation of the cremation process it could prove difficult to determine which part of the process (whether the cremators or the filtration plant) were at fault and seek redress under guarantee.
  • The addition of the filtration plant requires careful dismantling and modification of the existing plant and installing equipment in an extremely tight space. Again, if the plant didn’t perform properly the question of liability would be hard to ascertain!
  • Enquiries have shown that no other supplier has fitted mercury abatement equipment to the model of cremator (Evans Universal 300/2) in use at Poole Crematorium.

3.3The project will deliver:

  • Compliance with statutory requirement to eliminate mercury emissions.

4.Project Progress and Timescale

4.1The project is led by the Head of Leisure Services and appropriate plans are in place to ensure effective project management.

4.2The £30k budget already allocated from existing revenue contributions will be utilised to progress the design until the procurement route has been established.

4.3Project Timetable:

November 2008 / Select technical consultants (activity complete).
Nov 2008 to March 2009 / Design period.
March to June 2009 / Single Quotation and evaluation period (a tender comprising full specification and schedule of requirements will be sent to the sole supplier and returned in the normal way via members).
July 2009 to March 2010 / Construction on site.
April 2010 / Project complete/handover.

5.Financial Analysis

5.1The total project costs together with the sources of funding are set out below.

Although we are single sourcing the filtration plant we have carried out benchmarking to ensure value for money is being achieved. Examples of three councils, Guildford Borough Council, Shrewsbury and Atcham Borough Council and Reading Borough Council show prices of £810,000, £808,100 and £1,200,000 respectively for comparable works.

Total Project Costs / £800,000
Sources of Funding
Total receipts of environmental levy of £25 per cremation between 1 January 2007 and 31 January 2009 (estimated). / £105,000
Prudential Borrowing / £695,000
Total Income / £800,000

Note: The amount of levy will be reviewed annually – next review January 2009.

5.2Prudential Borrowing:

The Council can borrow under the Prudential Code as long as the involvement plans are justifiable in terms of being:

a)affordable, having considered the impact on Council Tax levels.

b)Prudential and sustainable over the agreed period of the commitment.

c)Repayments will be met by the environmental levy. Actual number of cremations 2007/08 = 2,283 cremations x £25 = £57,075. Note however that the amount of levy will be reviewed in January 2009. The industry range is between £25 and £50 per cremation.

Loan amount: / £695,000
Loan period: / 20 years
Interest rate: / 4.10%
Annual repayment: / £49,561
Total interest over 20 years: / £296,223

5.3By introducing the environmental levy on cremation fees the Council was able to meet the costs of installing the mercury abatement plant, and the additional operating and maintenance costs. The levy has been in place since 1 January 2007 and up to 31 January 2009 £105,000 is forecast to have been collected. These funds are held in a reserve to offset the anticipated expenditure.

5.4Closure of the crematorium will be kept to a minimum – all in agreement with other local crematoria. Loss of revenue will be part of the project cost.

6.Staffing:

Whilst there may be some minor changes in the working arrangements, these will not be significant and no additional staff will be required to meet the new requirements.

7.Running costs:

Any additional costs for energy, maintenance and operation will be met by the income generated, including any residual environmental levy.

Background Papers: Report to The Environmental Overview Group – 1st December 2005.

Portfolio Holder:Peter Adams.

Contact Officers:

Clive Smith - Head of Leisure Services.

Liz Wilkinson – Head of Financial Services.

Adam Richens – Senior Finance Manager, Financial Services.

Diana Goldsmith – Principal Solicitor, Legal & Democratic Services.

Jamie Fry – Corporate Procurement Manager, Financial Services

1