Gloucestershire County Council decided not to enter into a 25 year PFI waste contract, losing around £30 million in PFI credits and a further £1 million in procurement costs.
At a cabinet meeting last week the decision not to go ahead with the contract was rather surprisingly accepted by everyone, a council spokeswoman said. She added that the cabinet conceded it was "one of the most important decisions" it would have to make.
The move follows a thorough three-year investigation into how the council would manage its waste contracts in the long term.
Estimates by the Council's waste management service that the long-term contract would have cost about £650 million were far below the nearest actual bid, that would have cost the council at least £900 million. Thus leaving the council with a £250 million gap it would have to meet itself - more than a year's council tax.
The council will now extend its existing waste contract with Cory Environmental until August 2006, and hope to procure a conventional recycling and composting contract for the medium term.
Gloucestershire County Council lead cabinet member for environment and resources Charles Gillams said: "Other local authorities have chosen to secure a long-term waste contract and accept PFI funding, but we feel the risks for Gloucestershire are too great. The PFI process can be inflexible and expensive; the technology is not guaranteed and we can't predict costs and taxes associated with landfill."