The plant's sudden closure in July, with the loss of 60 jobs, had left the council's water and waste services business unit with a $703,606 hole in its forecast revenue for the 2009-10 year, and millions more in its 10-year budget forecasts.
The money was to be paid by the company for the use of the council's water and waste services, including wastewater treatment, trade waste charges and sold waste services.
The lost revenue could amount to $7 million over the council business unit's 10-year forecasts, although council staff were yesterday still working to confirm the figures, council solid waste manager Ian Featherston confirmed.
Details of the budget deficit were first revealed in a report by council water and waste services manager John Mackie to this week's infrastructure services committee meeting.
He warned the plant's closure would have a "significant negative impact on current and future revenues" for the council.
Savings would have to be found in other areas of the unit's operation, but "there is the likelihood of a budget overrun" in the 2009-10 year, Mr Mackie said.
The forecast $703,606 drop in revenue for 2009-10 would be partially offset by the $147,000 saved in reduced operating costs across the three service areas, due to reduced use of the council's facilities with the plant's closure.
That meant the net revenue drop resulting from the closure was $556,000 in the 2009-10 year.
Further revenue drops forecast for 2010-11 ($725,000) and 2011-12 ($751,000) would also be partially offset by savings.
Mr Mackie was unavailable for comment yesterday, but council water and waste services business support leader Narelle Barbour said the plant's closure had taken the council by surprise at the very start of the new financial year.
The closure came after the company spent $4 million upgrading its Green Island plant in 2005, and difficulties were not foreshadowed in meetings between council staff and company executives earlier this year, she said.
"We didn't see this coming. They [Graeme Lowe Otago] had just spent millions on upgrading, which highlighted to us they were fine, but obviously not.
"We budgeted our costs accordingly, with them in the picture," she said.
Council staff were now working to encourage better dialogue with its key customers, such as Port Otago, Cadbury or Ravensdown, in an attempt to ensure it was not caught out by the sudden changes in future, she said.
"In this case we didn't and it did come as quite a significant loss. We are trying harder to get that dialogue moving between our top customers," she said.
There was no talk of increasing council charges, or reducing staff numbers, to help offset the business unit's drop in revenue, she said.
Instead, it was possible an upgrade of the Green Island wastewater treatment plant - which was operating at only half its normal capacity - could be deferred, helping relieve pressure on the budget, she said.
Council staff were also investigating using spare capacity at the Green Island plant to accommodate greater flows from Kaikorai Valley and Mosgiel, which could allow the Mosgiel wastewater treatment plant to be decommissioned, Mr Mackie's report said.
Staff from Lowe Corporation - which owned the Green Island fellmongery - were not available for comment yesterday.
• Forecast lost revenue
2009-10: $703,606.
2010-11: $725,000.
2011-12: $751,000.
