SCHEDULE4 PAYMENT MECHANISM [BOUND INTO THE RPP … · Schedule 4 - Payment Mechanism [BOUND INTO THE RPP DEED OF VARIATION IN SEPARATE VOLUME] The Future of Hertfordshire's Waste

Hertfordshire County Council Veolia ES Hertfordshire Limited

HWPP

Residual Waste Project

SCHEDULE4

PAYMENT MECHANISM

Schedule 4 - Payment Mechanism

[BOUND INTO THE RPP DEED OF VARIATION IN SEPARATE VOLUME]

The Future of Hertfordshire's Waste

SCHEDULE 4

PAYMENT MECHANISM

Payment Mechanism amendments

Following update of the Base Case in accordance with Schedule 19 (Base Case and Custody), the following Appendix in the Payment Mechanism will be updated to reflect the revision to the Base Case update:

i) Appendix 1 (Base Payment).

Following the actions related to Schedule 33 (FX Hedging Protocol), the following figure will be updated:

i) Corporation Tax Adjustment Figure.

Final Version 14th June 2016


Contents

1. Definitions ... ....................................... ........................................................ ..................... 4

2. Interpretation ................................................................................................................... 9 2.1 General interpretation ..... ....... ....................................................... ... .. ... .................. ....... .. . ...... .......... ...... 9 2.2 Rounding of numbers .... .. ....................... ........... ...... ...... ........................ ...... ........ ..... .... ...... ........ ... ..... .... 9 2.3 Calculation of adjustments ............ ..................... .................. ................. .................................. ................ 9

3. Commissioning Payment. ... .................................................................... ........ ............. 10 3.1 Commissioning Payment (C) .. ............................. ............................. .. .... ............... .................... .. ... ...... 10 3.2 Commissioning Base Payment (CB) ........................ ..... .. .......................................... ...... .... .......... .... .. .. 10 3.3 Commissioning Period Performance Deductions (Pc) ................ ........ ...... .................. ........................... 11 3.4 Calculation of the Commissioning Period Performance Deductions Cap .............................. ............ ..... 11 3.5 Limitation on Payment of Performance Deductions .............. .. .... ............. ...... .. .......... .. ........................ .. 12 3.6 Disruption Deduction during the Commissioning Period (De) ...... ...... .. .. .. .. ............ ................... ............. 12 3.7 Ad Hoc Waste Payment during the Commissioning Period (AHWc) ................ .. .. .......................... ........ 12 3.8 Final Commissioning Payment Deduction (Cend) .............. .................. .. .............. .. .. ...... .. .. ........ .. .... .. ..... 13 3.9 Commissioning Period Performance Deduction Cap Reconciliation Payment (PRc) .. ...... .... ..... ........... . 13 3.10 Commissioning Period Non Acceptance Deduction (Nc) .. ........................ .. .. ...................... ................... 14 3.11 Commissioning Period Non Acceptance Deduction Rate (NRcom) .... .. ...... .. .. .. ...... ..... .. .. ...... ........... .. .. . 14

4. Unitary Charge ........... ........... ............... ...... ................................... ................................ 16 4.1 Calculation of the Unitary Charge .. .. ............ ........ .. ...................... .. ....................... .. ............ .. ................ 16

5. The Monthly Unitary Charge ........................................................................................ 17

6. Base Payment (B) ......................................................................................................... 18 6.1 Base Payment. .... .... .. ..... ...... .. .... .. ..... ..... ......... ...... ...... .. .. ... ..... ............... ..... .. .. .. .. .. ....... ...... .. ............ .... 18 6.2 Calculation of the Base Payment. ................ ............................. .................... .... .. .... ...... ................ ........ 19

7. Performance Deduction (P) ..................................................................................... .... 20 7.1 Performance Deduction ........... .......................................................................................... .. .. ............... 20 7.2 Calculation of the Performance Deductions Cap ... ..................... ................... .. ................. .. .. ......... ..... .. . 20 7.3 Limitation on Payment of Performance Deductions ............ .. .. .................. .......... ............ ..... ........ .. ........ 21

8. Mileage Deduction (M) ................................................................................................. 22 8.1 Mileage Deduction ...... .... . ............... ..................... ....................... ...... .. ........... ...... ...... ..... ....... .. ............. 22

9. Non Acceptance Deduction (N) ................................................................................... 23 9.1 Non Acceptance Deduction ... ............. .. .. ........ ...................... .. ......... .. .. .. .... ... .. .......... .. ... .. .... ................. 23 9.2 Non Acceptance Deduction Rate ............................... ...... ....... .... .. ...... ....... ..... .......... .. .... ......... ..... .. ..... . 23

10. Other Components (OC) .............................................................. ......................... ....... 24 10.1 Other Components . .. .... ............ ...... .. ..... ... .. ...... .... ...... ..... ....... ...... ..... ........ ...... .......... .. ........ ..... ..... .. ..... 24 10.2 Ad Hoc Waste Payment ...... ....... .. ................... ........... ................. ......... .. ............... .......................... ..... 24 10.3 Additional Waste Payment .... ...... ......................... .. ........................ .... .. .. .. .................... .............. ...... ..... 24

11. First Annual Reconciliation Payment (ARP1) .......................... ................. ....... .. ....... .. 26

12. Annual Tonnage Reconciliation (ATR) ....................................................................... 27 12.1 Annual Tonnage Reconciliation ... .......... ..... ...... ...... ...... ... ..... ..... .... .. ....... ...... .... .. .. .. .......... ...... ... .. .. ....... 27

13. Third Party Income Deduction (T) .... ............................... ..... ................... .................... 28 13.1 Third Party Income Deduction ....................... ... .. ............. ........... .............. ........... ............... ......... ....... .. 28 13.2 Third Party Income Deduction ....................... .......................................... ....... .... ........... .. ... ............. ..... 28 13.3 Electrical Output Third Party Income Deduction (TELEc) ... .................. .. .. .... .. .......................... ............. .. 29 13.4 Recycled and Recovered Materials Third Party Income Deduction (TREc) .. ...... ... .. .................... ...... ...... 29 13.5 Third Party Waste Third Party Income Deduction (TTPIN) ..................................... .. .. .. ............................ 30 13.6 Third Party Income from Other Sources Deduction (T orH) .. ...... .. .. .. .. .... ............. ....... ....... .. ... .. ............ .. . 31 13.7 Corporation Tax Rebate (TR) ...... : ....... .. .. ............ ....... ...................................... ..... ......................... .. .... 32

14. Qualifying Change in Law Adjustment (CLMp) .......................................................... 33 14.1 Qualifying Change in Law Adjustment (CLMp) ...... ...... .. .. ..................... ............ ............. .. .................... .. 33


15. Substitute Waste Adjustment (SWA) .................................................... ..... ............ ..... 35 15.1 Substitute Waste Adjustment... .................................... ...... ..... .. ... ....................... .. .. ... .......... .............. ... 35 15.2 Calculation of Substitute W aste Adjustment ... .. ............ ................ ..... .... .. ... .......................... .. .............. 35

16. Diversion Performance Deduction (D) .............. ............... ....... ................................... 36 16.1 Diversion Performance Deduction ........... ... ........................ ..................... ...... ... ....... ......... ... .. ....... ........ 36 16.2 Guaranteed Processed Landfill Tonnage .................... ...................... .. ..... ... ................................ .......... 36

17. Recycled and Recovered Materials Deduction (RRA) .............................................. 37 17.1 Recycled and Recovered Materials Deduction .... ......... ....... .. .. .. ... .. ... .. ...... ............... ... .. ....................... . 37 17.2 Guaranteed Recycled and Recovered Materials Tonnage .................................................................... 37

18. Performance Deduction Cap Reconciliation Payment (PR) .. .................. ................. 38 18.1 Performance Deduction Cap Reconciliation Payment (PR) ... ....... .. .... ....................... .. .. ..................... .. . 38

19. Second Annual Reconciliation Payment (ARP2 ) ................................. . . ...... ....... . ..... . 39 19.2 Excess Profit Share Payment ..... ....... ................. ................. .... .. ......... ..... ............................ ........ ......... 39 19.3 Calculation of Cumulative Actual Profit (CAP) ........... .. ........ .. .............................. ...... .. .. .. ............. ......... 40 19.4 Calculation of Cumulative Forecast Profit (CFP) ............................ ....................................................... 40 19.5 Calculation of Actual Profit (AP) ............. .. ....................................... .......................... ............................ 40 19.6 Calculation of Forecast Profit (FP) ............................. ....... .. .......... .................. .. ........ .. ................ .......... 42 19.7 Calculation of Cumulative Excess Profit (CEP) ........................................................ ....... ................... .. . 42 19.8 Calculation of Excess Profit Threshold 1 (EPT1 ) .................................................................................. 42 19.9 Calculation of Excess ProfitThreshold 2 (EPT2) ............................ ...................................................... 42 19.10 Calculation of Excess Profit Threshold 3 (EPT3) ...... .. .............. .. ............ ....................... ......... .. ............ 42 19.11 Excess Profit Payment Log ................................................... .................... .................................... ........ 43

20. Indexation provisions .. ........ ........ ..................... ..................................... ...................... 44 20.1 Indexation provisions .. .................................. ...... .. ... ............. ..... .......... ...... .. ............. .................. .. ........ 44 20.2 Full Indexation Factor .................................. .. ................................ ................ .......... .. ..... .. ............ ........ 45 20.3 Forecast Index ....................... ............................................................. ..... .. .......................... .. ....... ........ 45 20.4 Changes to Indices Affecting any Indexation Factor ........ ...... ..... .................... .. ................ ................... . 45

21. Payments ....................................................................................................................... 47 21.1.1.1 during the period from the Readiness Date to the Services Commencement Date (the

Commissioning Period), the Commissioning Payment; and ............... .................................... ... 47 21.1.1.2 from the Services Commencement Date to the Expiry Date (the Service Period), the

Appendix 1

Appendix 1

Appendix 2

Appendix 3

Appendix4

Appendix 5

Appendix 6

Appendix 7

Unitary Charge .... ............................................. , ........................................................ .... .. ......... 47

1A Base Payment (pricing form 1A) .................................................... ..... 48

1B Base Payment (pricing form 18) .: ....................................................... 48

Landfill Performance (pricing form 2) ........................................... ........... 49

Performance Deduction Categories per PMF (pricing form 3) .............. 52

Guaranteed Third Party Income (pricing form 4) .................................... 53

Recycling and Recovered Materials Performance (pricing form 5) ...... 56

Forecast Contract Wastes ......................................................................... 57

Forecast Band 2 Revenue ...................................................................... .... 58

Definitions

1. Definitions

1.1 Capitalised words and phrases in this Schedule 4 are defined in Schedule 1 (Definitions). In addition the following further definitions are used in this Schedule:

Actual Profit

Actual Recycled and Recovered Materials Tonnage

Additional Waste

Addit ional Waste Payment

Additional Waste Processed

Ad Hoc Waste

Ad-Hoc Waste Payment

means the amount calculated in accordance with paragraph 19.5 of this Schedule

means the amount of recycled and recovered materials report in accordance with Method Statement 5.4.3 (Reporting)

means Contract Waste in excess of the Maximum Tonnage

means the amount calculated in accordance with paragraph 10 of this Schedule

means Additional Waste that is processed through the Facility

as defined in Schedule 1 --- -----

means the amount calculated in accordance with paragraphs 3. 7 and 10 of this Schedule

- --------- ·---- - --------Annual Accounts means the audited annual accounts for the Contractor for

the relevant Contract Year ------------ -· · ----·-----

Annual Payment

Reconciliation means the amount calculated in accordance with paragraph 4 of this Schedule

---Annual Reconciliation

Band 1

Band 2

Tonnage means the amount calculated in accordance with paragraph 12 of this Schedule

means the range of tonnages set out in paragraph 6.1.4

means the range of tonnages set out in paragraph 6.1.4 --- --- ·-----·----- --- --- - - -- - ·- ·- ·- - --- ----

Band 3

Base Date

means the range of tonnages set out in paragraph 6.1.4

means the cost base date of the relevant cash flow in the Financial Model;

- - - --- --- --- - --- ---- - · · ·· - --· ·· -·- ·----· Base Payment means the amount calculated in accordance with

paragraph 6 of this Schedule

Base Payment Index means indexation growth in any Contract Year

Base Price Band means the tonnage range set out in Pricing Form 1A (Indexed) Appendix 1 of this Schedule

Base Price per Tonne

Bullting Vehicle

means the relevant price per tonne for the relevant Base Price Band as set out in Pricing Form 1A, Appendix 1 of this Schedule

means an articulated bulk waste carrying vehicle of up to the maximum weight permitted by Legislation which discharges its load either by ejection or by tipping and which is, in the main, loaded at a Waste Transfer Station

- --·--- -- - - · - · --- - --- --- ·---------· - ·-·-- - ---Bulking Haulage Rctte

--------- -Calculated Actual Payment

Called

means per tonne per mile

Base means the amount calculated in accordance with paragraph 12 of this Schedule

means that notification has been provided to the Authority to deliver Contract Waste during the

Regulation 12 (5) (e)


Definitions

Commissioning Period in accordance with Clause 21.2 (Acceptance of Contract Waste) of the Contract

Commissioning Base Payment means the amount calculated in accordance with paragraph 3.2 of this Schedule

Commissioning Payment means the amount calculated in accordance with paragraph 3.1

Commissioning Period means the period between the Readiness Date and the Services Commencement Date

Commissioning Period Performance Deductions

Commissioning Period Performance Deductions Cap

Commissioning Period Performance Deductions Cap Reconciliation Payment




Commissioning Period Acceptance Deduction

Non means the amount calculated in accordance with paragraph 3.10 of this Schedule

Commissioning Period Non Acceptance Deduction Rate

Contingency Delivery Point

Contract Waste Processed

Contract Waste Shortfall

means the amount calculated in accordance with paragraph 3.1 1 of this Schedule

means the point of discharge of Contract Waste as defined within the Contingency Plan

means Contract Waste that is treated at the Facility or at another energy recovery facility

has the meaning given to it in Clause 25.2.3 of the Contract

Corporation Tax Adjustment Means as updated in Figure accordance with Schedule 33

Corporation Tax Rate

Cumulative Actual Profit

Cumulative Excess Profit

Cumulative Forecast Profit

Delivery Point

Disruption Deduction

means the standard UK corporation tax rate prevailing in any contract year, including any changes to the rate which may occur from time to time

means the amount as calculated in paragraph 19.3 of this Schedule

means the amount as calculated in parag raph 19.7 of this Schedule


means the point of discharge of Contract Waste as defined within the relevant Method Statement

means the amount calculated in paragraph 3.6 of this Schedule

Diversion Deduction

Performance means the amount calculated in accordance with paragraph 16 of this Schedule

Electrical Output means the electricity generated at the Facility. ----------------------

Electrical Output Third Party means the amount calculated in accordance with Income Deduction paragraph 13 of this Schedule

Excess Profit Payment Log means the record of Cumulative Excess Profit,


Definitions

maintained by the Contractor, which shall be updated in accordance with paragraph 19.11

Excess Pmfit Shat·•3 Payment means the Excess Profit Share amount for the relevant Contract Year as calculated in accordance with paragraph 19.2

Excess Profit Threshold 1 means the Excess Profit Threshold for the relevant Contract Year as calculated in accordance with paragraph 19.8

Excess Profit Tlneshoid 2 means the Excess Profit Threshold for the relevant Contract Year as calculated in accordance with paragraph 19.9

Excess Pro'fit Threshoid 3 means the Excess Profii Threshold for the reievani Contract Year as calculated in accordance with paragraph 19.10

Final Commissioning Payment means the amount calculated in accordance with Deduction paragraph 3.8 of this Schedule

First Annual Payment

Fixed Cost

Reconciliation means the amount calculated in accordance with paragraph 11 of this Schedule

Means per day

Flue Gas Treatment Residues means the residues from the chemical treatment of flue gases

Forecast Annual Contract means the waste flow forecast prepared and submitted by the Authority in accordance with Method Statement 5.5.3 (Reporting)

Waste

Forecast Band 2 Revenue means the revenue in real terms forecast to be received by the Contractor for Band 2 and as set out in Appendix 7

Forecast Contract Waste means the waste flow forecast set out in the Base Case and as set out in Appendix 6

Forecast Index

Forecast Profit


means the Forecast Profit for the relevant Contract Year as calculated in accordance with paragraph 19.6

Fu!l Indexation Factor means the factor calculated in accordance with paragraph 20.3 of this Schedule

Guaranteed Tonnage

Guaranteed Performance

Commissioning means the lower of

and (ii) the total Contract Waste arising during the Commissioning Period;.

Landfill as set out in Pricing Form 2, Appendix 2 of this Schedule

Guaranteed Landfill Tonnage means the amount as calculated in paragraph 16 of this Schedule

Guaranteed Third Party Income means the Third Party Income set out in the Base Case and as set out in Appendix 4

Index means the relevant index/indices



Definitions

indeKation

!ndeKab!e Items

means the amount as calculated in paragraph 20 of this Schedule

means the amount as calculated in paragraph 20 of this Schedule

lndeK Publication Dale means the date on which the Index is published

lndeKation Date

Indexed

means the 1 April 2015 and every subsequent anniversary of that date

means, subject to Indexation, in accordance with paragraph 20 of this Schedule

-------landfill Adjustment Rate means per

tonne

landfil! Allowance Scheme

Trading means the scheme set out in the Waste and Emissions Trading Act (2003) for the allocation of tradeable landfill allowances to each waste disposal authority in England

levy IEKemption Certificate means a certificate providing exemption to the Climate Change Levy, a UK scheme requiring non-domestic end users of energy to pay per MWh of energy purchased and consumed.

---------- -----··--------·----------------MaKimum Tonnage of Contract Waste

means three hundred and fifty two thousand tonnes (352,000 tonnes) per Contract Year

------Mileage Deduction

---·------ ---Minimum Tonnage of Contract Waste

means the amount as calculated in accordance with Paragraph 8 of this Schedule

means one hundred and thirty five thousand tonnes (135,000 tonnes) per Contract Year

---· Monthly Payment

Unitary Charge means the amount calculated in accordance with paragraph 5 of this Schedule

Non Acceptance Deduction --------

means the deduction calculated in accordance with paragraph 9 of this Schedule

Non Acceptance Deduction means the amount calculated in accordance with Rate paragraph 9 of this Schedule

Other Components -------------- ----


--· -------------Other Third Party Income

Performance Deduction

Third Party Income from sources not guaranteed in the Base Case


------------ ----Performance Deduction Cap means the amount calculated in accordance with

paragraph 7.2 of this Schedule ------- -- -·-· -· --···-

Performance Category

Deduction means the categories A to E set out in in Appendix 3 of this Schedule

Performance Standard FaUme

--····-------· Process Residues

means each event measured in accordance with the monitoring methodology in Schedule 2 (Authority's Requirements)

means residues produced directly by the treatment of Contract Waste and emission control systems at the Facility, including Incinerator Bottom Ash and Flue Gas Treatment Residues



Definitions

Processed Landfiil Tonnage means the amount calculated in accordance with paragraph 16 of this Schedule

Qualifying Material means a 'qualifying material' as defined in the Landfill Tax (Qualifying Material) Order 1996 as modified or reenacted from time to time

----- -- - -~------ ----~~---Recycled Materials

and Recovered Contract Waste and/or Third Party Waste that has been separated by the Contractor and/or that has been Accepted by the Contractor having already been separated at source, and has been sent for recycling and/or recovery. For the avoidance of doubt, this includes materials recovered by the Contractor from Process Residues.

Recycled and Recovered means per tonne Materials Adjustment Rate ·----·--~- -~~- -~-- --- -- ------------- ------~-

Recycled and Recovered means the amount calculated in accordance with Materials Third Party Income paragraph 13 of this Schedule Deduction

Refuse Haulage Rate

Refuse Vehicle

Renewable Certificate

------ ---------means per tonne per mile

means any vehicle that is not a Bulking Vehicle

Obligation means a green certificate issued to an accredited generator for eligible renewable electricity generated within the United Kingdom and supplied to customers within the United Kingdom by a licensed electricity supplier.

Second Annual Reconciliatnon Payment


Services Commencement Date means the date on which Service Commencement occurs in accordance with Contract Clause 21.1.3 (Completion of the Works)

Substitute Waste Price means the lowest Third Party Waste gate fee received by the Contractor for Third Party Waste that it was able to accept at the Facility during the Contract Year

Third Party Income as defined in Schedule 1 ·-- - -·~ ---- ·-- . --- ~--- -~ -· ----

Third Party Waste as defined in Schedule 1

Third Party Waste Third Party Income Deduction

Triad Revenue


means revenue in respect of avoided transmission charges as a result of generating electricity during the three half hours of system demand peak for the relevant Contract Year

Unitary Charge means the amount calculated in accordance with paragraph 4 of this Schedule

Unprocessed lanolfil! Tonnage means the amount calculated in accordance with paragraph 16 of this Schedule



Interpretation

2. Interpretation

2.1 General interpretation 2.1.1 Unless otherwise provided, references in this Schedule to Clauses and Schedules shall be

references to the relevant Clauses and Schedules in the Contract.

2.1.2 Unless otherwise provided, references to parts, paragraphs, tables and appendices shall be references to parts, paragraphs, tables and appendices in this Schedule.

2.1.3 VAT properly chargeable on any component of the Unitary Charge shall be payable as set out in Clause 49 (VAT) of the Contract.

2.1.4 Where the symbol 2: is used in formulae it shall have the meaning 'sum of.

2.1.5 'm' shall relate to Contract Months.

2.1.6 'y' shall relate to Contract Years.

2.1.7 This Schedule (Payment Mechanism) shall be read in conjunction with the Contract and Schedule 2 (Authority's Requirements).

2.1.8 Paragraphs 1, 2, 3, 20 and 21 apply during the Commissioning Period. Paragraphs 1, 2 and 4 to 21 inclusive apply during the Service Period.

2.2 Rounding of numbers 2.2.1 Where a calculation within this Schedule requires an input of a percentage, that percentage

will be rounded to two (2) decimal places, with the exception of Indexation where the Indexation Factor will be rounded to four (4) decimal places.

2.2.2 Where a calculation within this Schedule requires an input of a tonnage, that tonnage will be rounded up to the nearest whole tonne if the tonnage fraction is equal to or greater than half a tonne and will be rounded down if the tonnage fraction is less than half a tonne. Similarly where the result of the calculation is a tonnage, that tonnage will be rounded up or down to the nearest tonne.

2.2.3 Where a calculation within this Schedule requires an input of a monetary value that monetary value will be rounded up or down to the nearest whole pence. Similarly where the result of the calculation is a monetary value, that monetary value will be rounded up or down to the nearest whole pence.

2.3 Calculation of adjustments 2.3.1 In the event that any Contract Year is less than twelve (12) months or any Contract Month is

not a full month and reference in this Schedule is to an annualised amount or value such amount or value shall be pro rated for the relevant period of such Contract Year or Contract Month save to the extent such amount or value is pro rated or otherwise adjusted for the relevant period in accordance with other provisions of this Contract, or such amount or value has previously been taken from the Base Case in such a way as to already represent the relevant period.

Commissioning Payment

3. Commissioning Payment

3.1 Commissioning Payment (C) 3.1.1 The Contractor shall be paid in respect of each tonne of Contract Waste that is Accepted

during the Commissioning Period in accordance with the following formula:

where:

Pcm

Dcm

AHWcm

the Commissioning Payment

the Commissioning Base Payment as calculated in 3.2 below

the Commissioning Period Performance Deductions as calculated in paragraph 3.2.2 below

the Disruption Deduction as calculated in paragraph 3.6 below

the Ad Hoc Waste Payment during the Commissioning Period as calculated in paragraph 3. 7 below

the Final Commissioning Payment Deduction as calculated in paragraph 3.8 below

3.2 Commissioning Base Payment (CB) 3.2.1 The Commissioning Base Payment shall be calculated for each Contract Month during the

Commissioning Period in accordance with the following formula:

CBm = CT m-1 * * l2

where:

CBm the Commissioning Base Payment in respect of the relevant Contract Month during the Commissioning Period

CT m-1 the tonnage of Contract Waste that is Accepted by the Contractor in the Contract Month one month prior to the relevant Contract Month during the Commissioning Period

12 the Full Indexation Factor

3.2.2 If the Commissioning Period extends beyond the Planned Services Commencement Date then in any month within the Commissioning Period but after the Planned Services Commencement Date the Commissioning Base Payment shall be the lower of:

. a) The amount calculated in accordance with paragraph 3.2.1; and b) CT m-1 * BP1 where BP1 is the relevant Base Price per Tonne for Base Price Band 1,

as set out in Pricing Form 1A, Appendix 1 of this Schedule 4.



3.3 Commissioning Period Performance Deductions (Pc) 3.3.1 The Commissioning Period Performance Deductions shall be calculated for each Contract

Month during the Commissioning Period in accordance with the following formula:

Pcm = L(PSFnm-1 * PDFn * VP) * I,

where:

Pcm

PSFnm-1

PDF

n

VP

the Commissioning Period Performance Deductions in respect of the relevant Contract Month during the Commissioning Period

the number of Performance Standard Failures in Performance Deduction Category 'n' calculated in accordance with Schedule 2 (Authority's Requirements) in respect of the Contract Month one month prior to the relevant Contract Month

the Performance Deduction Points per Performance Standard Failure in Performance Deduction Category 'n' determined in accordance with Appendix 3,

the relevant Performance Deduction Category A to E, as set out in Appendix 3 of this Schedule

the Full Indexation Factor

3.3.2 Provided that the sum of Commissioning Period Performance Deductions shall not exceed the Commissioning Period Performance Deduction Cap.

3.4 Calculation of the Commissioning Period Performance Deductions Cap

3.4.1 The Commissioning Period Performance Deductions Cap shall be calculated for the Commissioning Period in accordance with the following formula:

DCc = * (GCTcom* * l2)

Where:

the Commissioning Period Performance Deductions Cap

GCTcom Guaranteed Commissioning Tonnage


3.4.2 In the event that the Comissionning Period takes place during two separate Contract Years the Commissioning Period Performance Deductions Cap shall be calculated for the Commissioning Period in accordance with the following formula:

Where:

the Commissioning Period Performance Deductions Cap


Regulation 12 (5) (e) Regulation 12 (5) (e)

Regulation 12 (5) (e)Regulation 12 (5) (e)


CPDtot

CPDycNB

Guaranteed Commissioning Tonnage

the total number of calendar days in the Commissioning Period

the number of calendar days of the Commissioning Period that occur in each of the two Contract Years

the Full indexation Factor for each Contract Year

3.5 Limitation on Payment of Performance Deductions 3.5.1 Commissioning Period Performance Deductions shall be payable by the Contractor each

Contract Month during the Commissioning Period until such time as the cumulative Performance Deductions paid by the Contractor during the Commissioning Period equal the Commissioning Period Performance Deductions Cap. Thereafter Pcm shall not be paid for the remainder of the Commissioning Period. In this event, Pcm that is incurred in accordance with the provision in paragraph 3.3, but not paid by the Contractor for the remainder of the Commissioning Period (PAc) shall continue to be calculated for use in the Commissioning Period Performance Deduction Cap Reconciliation Payment in paragraph 3.9 below.

3.6 Disruption Deduction during the Commissioning Period (De) 3.6.1 The Disruption Deduction shall be calculated for each Contract Month during the

Commissioning Period in accordance with the following formula:

Dcm = Dcom * NDcom *I 2

Where:

De m

NDcom

Disruption Deduction in respect of the relevant Contract Month during the Commissioning Period

the number of Business Days in the Contract Month one month prior to the relevant Contract Month in which Contract Waste that has been Called is cancelled with less than 48 hours notice to the Authority in accordance with Clause 21.2.3 (Testing and Commissioning) ..


3.7 Ad Hoc Waste Payment during the Commissioning Period (AHWc)

3. 7.1 Where the Contractor receives Ad Hoc Waste it will manage it in accordance with Schedule 31. The price of the Ad Hoc Waste items shall be determined in accordance with the following provisions.

3. 7.1.1 The Ad Hoc Waste prices for the items of Ad Hoc Waste listed in Schedule 31 shall be provided by the Contractor to the Authority no later than forty (40) Business Days prior to the start of the Contract Year. Such costs shall be supported by third party evidence and/or other supporting documentation where requested by the Authority. Within fifteen (15) Business Days of receipt of the proposed Ad Hoc waste prices, the Authority shall



agree with the proposed Ad Hoc Waste prices, or shall disagree, and will provide to the Contractor the reason for the disagreement.

3.7.1.2 Following agreement of the Ad Hoc Waste prices, Schedule 31 shall be updated by the Authority before the start of the Contract Year to reflect the Ad Hoc Waste prices, and such Ad Hoc Waste prices shall prevail for the duration of the Contract Year, unless otherwise agreed by the Parties.

3.7.1.3 If the Authority and the Contractor are unable to reach agreement for the proposed Ad Hoc Waste prices before the start of the Contract Year, the relevant types of Ad Hoc Waste for which disagreement exists shall continue to be paid at the existing Ad Hoc Waste prices until such time as agreement is reached, or the matter is determined in accordance with Clause 60 (Dispute Resolution).

3.7.1.4 For the Contract Year in which the Readiness Date falls, the initial Ad Hoc Waste prices shall be determined in accordance with paragraph 3. 7.1.1 and 3. 7.1.2 above prior to the start of that Contract Year or otherwise through Clause 60 (Dispute Resolution).

3.7.2 The Ad Hoc Waste Payment in respect of the items not listed in Schedule 31 shall be the sum of all costs reasonably and properly incurred by the Contractor in managing Ad Hoc Waste plus a mark-up on costs of . The costs shall be demonstrated by the Contractor to the Authority's reasonable satisfaction as being a reasonable price in line with the waste treatment market for comparable Waste at the relevant time.

3.8 Final Commissioning Payment Deduction (Cenct) 3.8.1 The Final Commissioning Payment Deduction shall be calculated following the last Contract

Month in the Commissioning Period in accordance with the following formula:

3.9

C end = PRe + Ne

where:

PRe

Ne

the Final Commissioning Payment Deduction

the Commissioning Period Performance Deductions Cap Reconciliation Payment as calculated in paragraph 3.9 below

the Commissioning Period Non Acceptance Deduction as calculated in paragraph 3.10 below

Commissioning Period Performance Deduction Cap Reconciliation Payment (PRc)

3.9.1 The Commissioning Period Performance Deduction Cap shall be recalculated based on Contract Waste that is Accepted during the Commissioning Period (the Adjusted Performance Deductions Cap). The Commissioning Period Performance Deduction Cap Reconciliation Payment shall be calculated in accordance with the following formula:

Where

PRe is the lower of:



ii) PAe

where:

PRc

ADCe

Performance Deduction Cap Reconciliation Payment

the Adjusted Performance Deductions Cap for the Commissioning Period calculated as:

ADC,= * LCB

LCB the sum of all Commissioning Base Payments paid to the Contractor during the Commissioning Period

DCe the Performance Deductions Cap for the Commissioning Period

PAe The sum of Commissioning Period Performance Deduction incurred but not paid by the Contractor during the Commissioning Period in accordance with paragraph 3.5

3.10 Commissioning Period Non Acceptance Deduction (Ne) 3.1 0.1 In the event that Contract Waste that is Accepted during the Commissioning Period is less

than the delivered Guaranteed Commissioning Tonnage (the Contractor having requested the Guaranteed Commissioning Tonnage in accordance with Clause 21.2.3) then the Commissioning Period Non Acceptance Deduction shall apply.

3.1 0.2 The Commissioning Period Non Acceptance Deduction shall be calculated in accordance with the following formula:

3.11

Ne= (GCTcom- LCT) * NRcom

Ne cannot be less than zero

Where:

GCTcom

LCT

NRcom

the Commissioning Period Non Acceptance Deduction

Guaranteed Commissioning Tonnage

the tonnage of Contract Waste that is Accepted by the Contractor during the Commissioning Period

the Commissioning Period Non Acceptance Deduction Rate as calculated in paragraph 3.11 below

Commissioning Period Non Acceptance Deduction Rate (NRcom)

3.11.1 The Commissioning Period Non Acceptance Deduction Rate shall be the Authority's additional costs (pro rated on a per tonne basis) reasonably and properly incurred (and certified by the Authority's Representative) in handling, treating or otherwise disposing of the tonnage of Guaranteed Commissioning Tonnage in excess of per tonne (inflated by the Full Indexation Factor). Such costs may include but are not limited to:



Commissioning Paymgnt

~ any Landfill gate fees (excluding Landfill Tax) paid for the disposal of Contract Waste that is Not Accepted to Landfill

~ any diversion costs paid for the diversion from Landfill of Contract Waste that is Not Accepted

~ any Landfill Tax incurred

~ any haulage costs including but not limited to any amount paid by the Authority to the WCAs pursuant to Section 52(10) of the Environment Protection Act 1990 (tipping away payments)

~ any reasonable administration costs

3.11.2 If there is a delay in achieving the Services Commencement Date beyond the Planned Services Commencement Date then the provisions of Clause 20 (Delays) of the Contract will apply.

Unitary Charge

4. Unitary Charge

4.1 Calculation of the Unitary Charge 4.1.1 The Authority shall pay the Unitary Charge to the Contractor for the provision of the Services

from the Services Commencement Date in accordance with the terms of Clause 45 (Invoicing and Payment) of the Contract. The Unitary Charge shall be calculated as:

UC = l:UCm + ARP, + ARP2

where:

UC Unitary Charge

UCm each Monthly Unitary Charge calculated in accordance with paragraph 5

ARP1 the First Annual Reconciliation Payment calculated in accordance with paragraph 11

ARP2 the Second Annual Reconciliation Payment calculated in accordance with paragraph 19

The Monthly Unitary Charge

5. Th~ Monthly Unitary Charg~

5.1 The Monthly Unitary Charge shall be calculated in accordance with the following formula:

UCm = B m- Pm - M m - N m + OC m

where:

Monthly Unitary Charge

Base Payment calculated in accordance with paragraph 6

Performance Deduction calculated in accordance with paragraph 7

Mileage Deduction calculated in accordance with paragraph 8

Non Acceptance Deduction calculated in accordance with paragraph 9

Other Components calculated in accordance with paragraph 10

Base Payment (B)

6. Base Payment (B)

6.1 Base Payment 6.1.1 The Base Payment for each Contract Month is calculated based on a Base Price per Tonne

applied to Forecast Annual Contract Waste divided by twelve (12).

6.1.2 The Authority shall prepare a Waste Flow Forecast in accordance with Method Statement 5.5.3 (Reporting) prior to the start of the relevant Contract Year which shall be the Forecast Annual Contract Waste.

6.1.3 If in any Contract Year where Contract Waste has been below the Minimum Tonnage the Authority is compensated for this in accordance with the Annuai Tonnage Reconciliation in paragraph 12 and the Substitute Waste Adjustment in paragraph 15.

6.1.4 For the avoidance of the doubt the Contract Waste bands are as follows:

6.1.5

~ Band 1: zero tonnes (0 tonnes) to one hundred and eighty thousand tonnes (180,000) tonnes

~ Band 2: one hundred and eighty thousand and one tonnes (180,001 tonnes) to the Forecast Contract Waste

~ Band 3: the Forecast Contract Waste to Maximum Tonnage of Contract Waste

Base Payment (B)

6.2 Calculation of the Base Payment 6.2.1 The Base Payment shall be calculated in accordance with the following formula:

where:

Bm the Base Payment

BT1 the tonnage of Forecast Annual Contract Waste that falls within Band 1 in the relevant Contract Year

BP1 the relevant Base Price per Tonne for Base Price Band 1, as set out in Pricing Form 1A, Appendix 1 of this Schedule

BP1A The Base Price Band 1 Adjustment calculated in accordance with paragraph 6.2.2





11 the Base Payment Index

lz the Full Indexation Factor

6.2.2 If there has been a breach of Clauses 81.3.2(b) to (f) that meets the conditions of Clause 81.3.2(g)(ii) then the value of BP1A shall be for the period the resulting non compliance with Clause 81.3.2(c) continues.


Performance Deduction (P)

1" Performance Deduction (P)

7.1 Performance Deduction 7.1.1 With effect from the Service Commencement Date, the Authority shall, be entitled to make a

Performance Deduction as set out in 7.1.4 below and in accordance with Schedule 2 (Authority's Requirements), in respect of the relevant Contract Month.

7.1.2 The Performance Deduction is subject to a cap, such that the Performance Deduction levied by the Authority in each Contract Year shall not exceed the Performance Deduction Cap.

7.1.3 The Performance Deduction incurred in the two Contract Months prior to the relevant Contract Month shall be deducted from the Monthly Unitary Charge for the Contract Month. The Performance Deduction for each Contract Month shall be calculated in accordance with the following formula:

Pm= L(PSFn m-2 x PDF n x VP) * l2

where:

PSFnm-2

PDF

n

VP

the Performance Deduction for the relevant Contract Month

the number of Performance Standard Failures in Performance Deduction Category 'n' incurred in the Contract Month two months prior to the relevant Contract Month

the Performance Deduction Points per Performance Standard Failure in Performance Deduction Category 'n' in accordance with Appendix 3

the relevant performance Deduction Category A to E, as set out in Appendix 3 of this Schedule


7.1.4 Provided that the Performance Deductions shall not exceed the Performance Deduction Cap in any one Contract Year.

7.2 Calculation of the Performance Deductions Cap 7.2.1 The Performance Deductions Cap in any specific Contract Year shall be calculated in

accordance with the following formula:

DC n = • ( 12 * 8 m)

the Performance Deductions Cap for each relevant Contract Year

the Base Payment as calculated in paragraph 6.2



Performance Deduction {P)

7.3 Limitation on Payment of Performance Deductions 7.3.1 Subject to the provisions of Schedule 2 (Authority's Requirements) Performance Deductions

shall be payable by the Contractor each Contract Month of the Contract Year until such time as the cumulative Performance Deduction paid by the Contractor during the Contract Year equal the Performance Deductions Cap. Thereafter Pm shall not be paid for the remainder of the Contract Year. In this event, Pm that is incurred, in accordance with the provisions of paragraph 7.3, but not paid by the Contractor for the remainder of the Contract Year (PA) shall continue to be calculated for use in the Performance Deduction Cap Reconciliation Payment in paragraph 18.

Mileage Deduction (M)

8. Mileage Deduction (M)

8.1 Mileage Deduction 8.1.1 The Mileage Deduction shall compensate the Authority for additional haulage and fixed costs

incurred in the event that the Authority, Waste Collection Authority and/or any contractor has to deliver Contract Waste to the Contingency Delivery Point for Acceptance by the Contractor. The Mileage Deduction shall be calculated in accordance with the following formula:

Mm= ((TARm-2 * AMRm-2' HRRm-2) + (TAam-2' AMsm-2 * HRsm-2) + (FC * DDm-2 * NPm-2)) * l2

where:

TAsm-2

AMsm-2

HR8

FC

DDm-2

NPm-2

the Mileage Deduction for the relevant Contract Month

the tonnage of Contract Waste delivered at a Contingency Delivery Point in a Refuse Vehicle in the Contract Month two months prior to the relevant Contract Month

the tonnage of Contract Waste delivered at a Contingency Delivery Point in a Bulking Vehicle in the Contract Month two months prior to the relevant Contract Month

the total difference in miles (one way trip) travelled by a Refuse Vehicle in transporting Contract Waste to a Contingency Delivery Point compared to transporting Contract Waste to the Facility in the Contract Month two months prior to the relevant Contract Month, calculated in accordance with Method Statement 4.3.4 (Contingency Plan).

the total difference in miles (one way trip) travelled by a Bulking Vehicle in transporting Contract Waste to a Contingency Delivery Point compared to transporting Contract Waste to the Facility in the Contract Month two months prior to the relevant Contract Month, calculated in accordance with Method Statement 4.3.4 (Contingency Plan).

the Refuse Haulage Rate

the Bulking Haulage Rate

the Fixed Cost (direct and indirect) associated with the nomination of a Contingency Delivery Point for a day or part of a day

the aggregate number of days during the Contract Month two months prior to the relevant Contract Month (without double counting) where a Refuse Vehicle and or Bulking Vehicle has been redirected by the Contractor to a Contingency Delivery Point

the aggregate number of Delivery Points (without double counting) from which the Refuse Vehicles and Bulking Vehicles carrying Contract Waste have been redirected by the Contractor in the Contract Month two months prior to the relevant Contract Month


Non Acceptance Deduction (N)

9. Non Acceptance Deduction (N)

9.1 Non Acceptance Deduction 9.1.1 The Non Acceptance Deduction shall be calculated in accordance with the following formula:

N m= (NADRm-2 * CWNAm-2)

where:

NADRm-2

CWNAm-2

the Non Acceptance Deduction for the relevant Contract Month

non Acceptance Deduction Rate in accordance with paragraph 9.2

the tonnage of Contract Waste that is Not Accepted in the Contract Month two months prior to the relevant Contract Month

9.2 Non Acceptance Deduction Rate 9.2.1 The Non Acceptance Deduction Rate shall be the Authority's additional costs (pro rated on a

per tonne basis) reasonably and properly incurred (and certified by the Authority's Representative) in the Contract Month two months prior to the relevant Contract Month in handling, treating or otherwise disposing of the tonnage of Contract Waste that is Not Accepted above what would have been paid by the Authority had such Contract Waste been Accepted, in the Contract Month two months prior to the relevant Contract Month(as determined by the weighted average gate fees(Bav) set out in Pricing Form 18 in Appendix 1 of this Schedule) and subject to the outcome of such calculation being greater than or equal to zero. The Non Acceptance Deduction shall include (without limitation) the following costs:

!!>- any Landfill gate fees (excluding Landfill Tax) paid for the disposal of Contract Waste that is Not Accepted to Land fill

,... any diversion costs paid for the diversion from Landfill of Contract Waste that is Not Accepted

,... any Landfill Tax incurred

,... any haulage costs including any amount paid by the Authority to the WCAs pursuant to Section 52(1 0) of the Environment Protection Act 1990 (tipping away payments)

,... any reasonable administration costs

Other Components (OC)

10. Other Components (OC)

10.1 Other Components 10.1.1 The Other Components shall be calculated in accordance with the following formula:

OC m = NNDRm + AHWm + AWPm

where:

OCm Other Components for each Contract Month

NNDRm NNDR (as defined in the Schedule 1)

AHWm Ad Hoc Waste Payment

AWPm Additional Waste Payment

10.2 Ad Hoc Waste Payment 1 0.2.1 Where the Contractor receives Ad Hoc Waste it will manage it in accordance with Schedule

31. The cost of the Ad Hoc Waste items shall be determined in accordance with the following provisions.

1 0.2.1.1 The Ad Hoc Waste prices for the items of Ad Hoc Waste listed in Schedule 31 shall be provided by the Contractor to the Authority no later than forty (40) Business Days prior to the start of the Contract Year. Such costs shall be supported by third party evidence and/or other supporting documentation where requested by the Authority. Within fifteen (15) Business Days of receipt of the proposed Ad Hoc waste prices, the Authority shall agree with the proposed Ad Hoc Waste prices, or shall disagree, and will provide to the Contractor the reason for the disagreement.

1 0.2.1.2 Following agreement of the Ad Hoc Waste prices, Schedule 31 shall be updated by the Authority before the start of the Contract Year to reflect the Ad Hoc Waste prices, and such Ad Hoc Waste prices shall prevail for the duration of the Contract Year, unless otherwise agreed by the Parties.

10.2.1.3 If the Authority and the Contractor are unable to reach agreement for the proposed Ad Hoc Waste prices before the start of the Contract Year, the relevant types of Ad Hoc Waste for which disagreement exists shall continue to be paid at the existing Ad Hoc Waste prices until such time as agreement is reached, or the matter is determined in accordance with Clause 60 (Dispute Resolution).

1 0.2.2 The Ad Hoc Waste Payment in respect of the items not listed in Schedule 31 shall be the sum of all costs reasonably and properly incurred by the Contractor in managing Ad Hoc Waste plus a mark-up on costs of The costs shall be demonstrated by the Contractor to the Authority's reasonable satisfaction as being a reasonable price in line with the waste treatment market for comparable Waste at the relevant time.

10.3 Additional Waste Payment 1 0.3.1 Subject to the provisions of Clause 23.3 and 23.4, where Additional Waste is Accepted by the

Contractor in a Contract Month, and such Additional Waste is processed at the Facility the Additional Waste Payment shall be calculated in accordance with the following formula:

AWP m = AWT m-2 ' BP3' I,


Other Components (QC)

where:

AWPm

AWT m-2

BP3

Additional Waste Payment

Additional Waste Processed the Contract Month two months prior to the relevant Contract Month

Band 3 Price


1 0.3.2 Subject to the provisions of Clause 23.3 and 23.4, where Additional Waste is Accepted by the Contractor in a Contract Month, and it is agreed by the Authority and Contractor that such Additional Waste cannot be processed in the Facility but can be processed at another Veolia treatment facility, it will attract a gate fee which covers the cost of disposal, including any transport costs, disposal costs and Landfill Tax that are reasonably and properly incurred by the Contractor. The Contractor shall provide the gate fee and a breakdown of the gate fee costs (including any mark-up on those costs) to the Authority for agreement prior to disposal of the Additional Waste at another Veolia treatment facility.

1 0.3.3 Subject to the provisions of Clause 23.3 and 23.4, where Additional Waste is Accepted by the Contractor in a Contract Month, and it is agreed by the Authority and Contractor that any Additional Waste cannot be processed in the Facility or another Veolia treatment facility it will attract a gate fee which covers the cost of disposal, including any transport costs, disposal costs and Landfill tax that are reasonably and properly incurred (and certified by the Contractor's Representative) plus a mark-up of . The Contractor shall provide the gate fee and a breakdown of the gate fee costs to the Authority for agreement prior to disposal of the Additional Waste.


First Annual Reconciliation Payment (ARP1)

11. First Annual Re~Conciliation Payment (ARP1)

11.1.1 The First Annual Reconciliation Payment shall be calculated in accordance with the following formula. T, CLMp. SWA, D and RRA cannot be less than zero:

ARP1 = ATR- T- CLMp- SWA- D - RRA- PR

where:

ARP1 First Annual Reconciliation Payment

ATR Annual Tonnage Reconciliation calculated in accordance with paragraph i 2

T Third Party Income Deduction calculated in accordance with paragraph 13

CLMp Qualifying Change in Law Adjustment as determined in accordance with paragraph 14

SWA Substitute Waste Adjustment calculated in accordance with paragraph 15

D . Diversion Performance Deduction calculated in accordance with paragraph 16

RRA Recycled and Recovered Materials Adjustment calculated in accordance with paragraph 17

PR Performance Deduction Cap Reconciliation Payment in calculated accordance with paragraph 3. 9

Annual Tonnage Reconciliation (ATR)

12. Annual Tonnage Reconciliation (ATR)

12.1 Annual Tonnage Reconciliation 12.1.1 The Annual Tonnage Reconciliation shall be calculated for each Contact Year to reflect the

difference in the number of tonnes of Contract Waste used in the calculation of the Base Payment paid by the Authority during the Contract Year and the actual number of tonnes of Contract Waste that is Accepted by the Contractor in the relevant Contract Year.

12.1.2 The Annual Tonnage Reconciliation for Contract Waste for each Contract Year shall be calculated as follows:

ATR = CABP- (12 * Bm)

Where:

ATR Annual Tonnage Reconciliation

the Base Payment as calculated in paragraph 6.2

CABP Calculated Actual Base Payment

Where:

CABP The higher of

a) MTA * (BP1 * 11); and

b) ((AT1y *(BP,* 1,)) +(AT 2y * (BP2 * l2)) +(AT 3y * (BP3 * l2))

MTA Minimum Tonnage of Contract Waste for the Contract Year, reduced by the tonnage of Contract Waste that is Not Accepted and reduced in accordance with Clause 25.2.5 of the Contract.




AT1 y Contract Waste that is Accepted falling within Band 1 in the relevant Contract Year

AT 2 y Contract Waste that is Accepted falling within Band 2 in the relevant Contract Year

AT 3 y Contract Waste that is Accepted falling within Band 3 in the relevant Contract Year

11 the Base Payment Index

I, the Full Indexation Factor

Third Party Income Deduction (T)

13. Third Party Income Deduction (T)

13.1 Third Party Income Deduction 13.1.1 The Third Party Income Deduction allows any additional Third Party Income over and above

the Guaranteed Third Party Income to be shared with the Authority. Third Party Income earned before the Planned Service Commencement Date and solely related to the early commencement is excluded from the Third Party Income Deduction calculation.

13.1.2 The Third Party Income Deduction applies to all Third Party Income earned by the Contractor or any Affiliate (but not for the avoidance of doubt, to Third Party Income earned by any other party), including without limitation:

Third Party Income derived from Electrical Output , including but not necessarily limited to, sale of electricity (excluding Triad Revenue), income from Renewable Obligation Certificates (ROCs) and Levy Exemption Certificates (LECs) and any potential successor regimes;

ii Third Party Income derived from the sale of Recycled and Recovered Materials;

iii Third Party Income derived from the handling, receipt and/or treatment of Third Party Waste (excluding electricity); and

iv Other Third Party Income derived directly or indirectly from sources not guaranteed in the Base Case, including but not necessarily lirnited to, sale of heat and/or steam and any successor or replacement regimes;

13.2 Third Party Income Deduction 13.2. 1 The Third Party Income Deduction for each Contract Year shall be determined in accordance

with the following formula:

Ty = T ELEC + T REC + T TPW + T OTH- TR

where:

T the Third Party lncorne Deduction for the relevant Contract Year

T ELEc the Electrical Output Third Party Income Deduction for the relevant Contract Year as determined in accordance with paragraph 13.3

T REc the Recycled and Recovered Materials Third Party Income Deduction for the relevant Contract Year as determined in accordance with paragraph 13.4

Trew the Third Party Waste Third Party Income Deduction for the relevant Contract Year as determined in accordance with paragraph 13.5

T arH the Other Third Party Income Deduction for the relevant Contract Year as determined in accordance with paragraph 13.6

TR The Corporation Tax Rebate arising from an increase in the corporate tax rate between the base case and 20% for the relevant Contract Year as determined in accordance with paragraph 13.6

provided that if Ty is calculated for any Contract Year to be a negative number pursuant to this paragraph 13.2 then Ty for such Contract Year shall be deemed to be zero (0).

Third Party Income Ded<.~ction (T)

13.3 Electrical Output Third Party Income Deduction (T ELEc)

13.3.1 The Electrical Output Third Party Income Deduction in any Contract Year shall be determined in accordance with the following formula:

T ELEC = (AT ELECCUM - GT ELECCUM) X - L:T ELEC

where:

TELEC

ATELECCUM

GTELECCUM

GTELEC

LTELEC

The Electrical Output Third Party Income Deduction for the relevant Contract Year

The actual amount (in pounds) of Third Party Income received by the Contractor from the sale of Electricity Output (excluding Triad Revenue) before any deductions that may apply in the period between the Service Commencement Date and the end of the relevant Contract Year

The aggregate of the indexed Third Party Income guaranteed by the Contractor for Electrical Output (excluding Triad Revenue) up to and including the relevant Contract Year.

GT ELEccuM shall be determined in accordance with the following formula:

For the avoidance of doubt the guaranteed income for each year set out in Appendix 4 will be multiplied by the Full Indexation Factor for that particular Contract Year when calculating GT ELEccUM·

The amount (in pounds) of Third Party Income guaranteed by the Contractor for Electrical Output (excluding Triad Revenue) in accordance with the Base Case, for each Contract Year as set out in Appendix 4

The aggregate of the T ELEc received by the Authority for all Contract Years from the Service Commencement Date up to and including the previous Contract Year.

the Full Indexation Factor for each respective Contract Year

provided that if T ELEc is calculated for any Contract Year to be a negative number pursuant to this paragraph 13.3 then T ELEC for such Contract Year shall be deemed to be zero (0).

13.4 Recycled and Recovered Materials Third Party Income Deduction (T REc)

13.4.1 The Recycled and Recovered Materials Third Party Income Deduction in any Contract Year shall be determined in accordance with the following formula:

T REC =(AT RECCUM - GT RECCUM) X - L:T REC

where:




ATRECCUM

GTRECCUM

GTREC

The Recycled and Recovered Materials Third Party Income Deduction for the relevant Contract Year

The actual amount (in pounds) of Third Party Income received by the Contractor from the sale of Recycled and Recovered Materials in the period between the Service Commencement Date and the end of the relevant Contract Year

The aggregate of the indexed Third Party Income guaranteed by the Contractor for Recycled and Recovered Materials up to and including the relevant Contract Year.

GT REccuM shall be determined in accordance with the following foimula:

For the avoidance of doubt the guaranteed income for each year set out in Appendix 4 will be multiplied by the Full Indexation Factor for that particular Contract Year when calculating GT REccuM.

The amount (in pounds) of Third Party Income guaranteed by the Contractor for Recycled and Recovered Materials in accordance with the Base Case, for each Contract Year as set out in Appendix 4

the aggregate of the T REc received by the Authority for all Contract Years from the Service Commencement Date up to and including the previous Contract Year ..

the Full Indexation Factor for each respective year

provided that if T REC is calculated for any Contract Year to be a negative number pursuant to this paragraph 13.4 then TREe for such Contract Year shall be deemed to be zero (0).

13.5 Third Party Waste Third Party Income Deduction (TTPw) 13.5.1 The Third Party Waste Third Party Income Deduction shall be determined in accordance with

the following formula:

Trew= ((ATrewcuM- L:CLM,- GTrewcuM) X )- L Trewc

where:

Trew

ATrewcuM

the Third Party Waste Third Party Income Deduction for the relevant Contract Year

The sum of:

~ The actual amount (in pounds) of Third Party Gate Fee Income received by the Contractor derived from Third Party Waste (excluding Substitute Waste) handled by the Contractor in the period between the Service Commencement Date and the end of the relevant Contract Year; and

~ The actual amount (in pounds) received by the Contractor in respect of tonnages of Contract Waste that are Accepted and that fall within Band 2 and Band 3, from the Service



GTTPWCUM

GTTPw

FRsz

l:CLMp

I Trpwc

Commencement Date to the end of the relevant Contract Year.

The sum of:

~ The aggregate of the indexed Third Party Gate Fee Income guaranteed by the Contractor from Third Party Waste to be handled by the Contractor up to and including the relevant Contract Year; and

~ The aggregate of the indexed Forecast Band 2 Revenue up to and including the relevant Contract Year.

GT TPWcuM shall be determined in accordance with the following formula:

GTrPWCUM =I ((GTrpwX lz) + (FRsz X I,))

For the avoidance of doubt the guaranteed income and Forecast Band 2 Revenue for each year set out in Appendices 4 and 7 will be multiplied by the Full Indexation Factor for that particular Contract Year when calculating GT rPwcuM.

The amount (in pounds) of Third Party Gate Fee Income guaranteed by the Contractor from Third Party Waste in accordance with the Base Case, for each Contract Year as set out in Appendix 4

The amount (in pounds) of Forecast Band 2 Revenue in accordance with the Base Case, for each Contract Year as set out in Appendix 7 (Band 3 is forecast to be zero)

The cumulative Qualifying Change In Law Adjustment from the Service Commencement Date to the end of the relevant Contract Year (as determined in accordance with paragraph 14.1)

The aggregate of the TTPwc received by the Authority for all Contract Years from the Service Commencement Date up to and including the previous Contract Year.


Third Party Income derived from gate fees charged to third parties for use of Gate Fee the Facility only. Income

provided that if TTPw is calculated for any Contract Year to be a negative number pursuant to this paragraph 13.5 then Trpw for such Contract Year shall be deemed to be zero (0).

13.6 Third Party Income from Other Sources Deduction (T orH)

13.6.1 Where in any Contract Year the Contractor or an Affiliate generates Other Third Party Income which has not been guaranteed in the Base Case, the Authority's share of the Other Third Party Income shall be calculated according to the following formula:

ToTH= (01-0C)xS Regulation 12 (5) (e)


T OTH the Authority's share of Other Third Party Income in the relevant Contract Year

01 the actual amount (in pounds) of Other Third Party Income generated by the Contractor or an Affiliate in the relevant Contract Year

OC any additional operating and/or capital costs (including principal repayments and interest charges) and loss of Third Party Income reasonably and properly incurred in generating the Other Third Party Income. The Contractor shall demonstrate to the reasonable satisfaction of the Authority the incremental operating and capital costs and loss of Third Party Income incurred in generating the Other Third Party Income, on an open book basis in accordance Schedule 21 (Change Protocol)

provided that if T oTH is calculated for any Contract Year to be a negative number pursuant to this paragraph 13.6 then ToTH for such Contract Year shall be deemed to be zero (0).

13.7 Corporation Tax Rebate (TR) 13. 7.1 Where in any Contract Year after the Service Commencement Date the Corporation Tax Rate

varies above the Base Case level of up to and including the level of , then Veolia shall be entitled to a rebate determined as follows:

TR = BT, x CT., x ((ATR- x 100) x I,

BT1

CT.,

ATR

the tonnage of Forecast Annual Contract Waste that falls within Band 1 in the relevant Contract Year

The Corporation Tax Adjustment Figure

the Actual Corporation Tax Rate in the relevant Contract Year, with a maximum value of and a minimum value of

13. 7.2 For the avoidance of doubt, TR shall be subject to indexation at the Base Payment index




Qualifying Change in Law Adjustment (CLMp)

14. Qualifying Change in Law Adjustment (CLMp}

14.1 Qualifying Change in Law Adjustment (CLMp) 14.1.1 Without prejudice to the provisions of this paragraph 14.1, the provisions of Clause 44

(Change in Law) and Schedule 19 shall apply in respect of any Change in Costs or Change in Revenue resulting from a Qualifying Change In Law.

14.1.2 Not used.

14.1.3 The Qualifying Change In Law Adjustment payable to the Authority in any Contract Year after a Qualifying Change In Law (CLMp), subject to any further revision to the Base Case in that Contract Year, shall be calculated as follows:

CLMp is the lower of:

i) TcLM and

ii) CLM51 + CLMd

Where:

Where:

TcLM

ATTPW

GTrpw

(ATTPw- GTrPw * lz)

The sum of:

.,.. The actual amount (in pounds) of Third Party Gate Fee Income (as defined in paragraph 13.5 above) received by the Contractor derived from Third Party Waste (excluding Substitute Waste) handled by the Contractor in the relevant Contract Year; and

.,.. The actual amount (in pounds) received by the Contractor in respect of tonnages of Contract Waste that are Accepted and that fall within Band 2 and Band 3, in the relevant Contract Year.

The sum of:

.,.. The amount (in pounds) of Third Party Gate Fee Income (as defined in paragraph 13.5 above) guaranteed by the Contractor from Third Party Waste to be handled by the Contractor in accordance with the Base Case, in the relevant Contract Year as set out in Appendix 4; and

.,.. The amount (in pounds) of Forecast Band 2 Revenue in the relevant Contract Year as set out in Appendix 7 (Band 3 is forecast to be zero)

the Qualifying Change In Law Adjustment due to the Authority for the relevant Contract Year (as calculated for any Contract Year in

Qualifying Change in Law Adjustment (CLMp)

accordance with paragraph 14.1.4)

the cumulative Qualifying Change In Law Adjustment due to the Authority from the Service Commencement Date to the end of the Contract Year prior to the relevant Contract Year

the cumulative Qualifying Change In Law Adjustment paid to the Authority from the Service Commencement Date to the end of the Contract Year prior to the relevant Contract Year


provided that if T eLM is calculated for any Contract Year to be a negative number pursuant to this paragraph 14.1.3 then TcLM for such Contract Year shaii be deemed to be zero (0).

14.1.4 The Qualifying Change In Law Adjustment due to the Authority in any Contract Year after a Qualifying Change In Law (CLMd), subject to any further revision to the Base Case in that Contract Year, shall be calculated as follows:

CLMd = TPWy x CLRn x b

Where:

CLRn

the Qualifying Change In Law Adjustment due to the Authority

the actual Third Party Waste treated at the Facility in the relevant Contract Year following the Base Case Change Date

the Change In Law Rate calculated in accordance with 14.1.5


14.1.5 The Change In Law rate per tonne shall be calculated as follows:

CLRn = {CIL I XT) + CLRn-1

Where:

CLRn the Change In Law Rate (per tonne)

CIL the actual or deemed change in Unitary Charge for that Contract Year as a result of the Qualifying Change In Law calculated as:

XT

CLRn-1

i) The revised Unitary Charge for that Contract Year determined in accordance with paragraphs 14.1.1 and 14.1.2 as applicable; less

ii) The Unitary Charge for that Contract Year in the Base Case immediately prior to the Base Case Change Date

on an annual basis (atApri12015 prices)

the Maximum Tonnage

the Change In Law Rate (per tonne) (if any) that had already been applied prior to the relevant Base Case Change Date

Substitute Waste Adjustment (SWA)

15. Substitute Waste Adjustment (SWA)

15.1 Substitute Waste Adjustment 15.1.1 If in any Contract Year Contract Waste delivered to the Facility by the Authority is less than

the Minimum Tonnage, the following provisions shall apply.

15.1.2 Subject to the provisions of Clause 25.2 and 25.3, the Contractor shall, if applicable, at the end of the Contract Year, notify the Authority of the Contract Waste Shortfall and confirm the amount if any of Third Party Waste that the Contractor has received that is to be treated as Substitute Waste (Substitute Waste Tonnage) as contemplated by Clause 25.2.4.

15.1.3 To the extent that the Substitute Waste Price is equal to or less than the Base Price per tonne for Base Price Band 1 then the Authority shall be entitled to, and the Contractor shall pay, an amount equal to the Contract Waste Shortfall multiplied by the Substitute Waste Price after the end of each Contract Year, as set out in paragraph 15.2.1.

15.1.4 To the extent that the Substitute Waste Price is greater than the Base Price per tonne for Base Price Band 1, the Authority shall be entitled to and the Contractor shall pay an amount equal to:

~ The Contract Waste Shortfall for that Contract Year multiplied by the Base Price Band 1 (indexed); and

~ A share of the income in excess of that which the Contractor would have received had the Substitute Waste been Contract Waste in the relevant Contract Years as set out in paragraph 15.2.2.

15.2 Calculation of Substitute Waste Adjustment 15.2.1 When

SWP < BP1 *11

SWA = SWT *SWP

15.2.2 When

SWP >BP,' I,

SWA = SWT * (BP1 * 11) + (SWT *(SWP- BP1 * 11)) *

Where:

SWP Substitute Waste Price

BP1 The relevant Base Price per Tonne for Base Price Band 1 as set out in Pricing Form 1Aof Appendix 1

SWA Substitute Waste Adjustment

SWT Substitute Waste Tonnage

11 Base Payment Index


Diversion Performance Deduction (D)

16. Diversion Performance Deduction (D)

16.1 Diversion Performance Deduction 16.1.1 The Diversion Performance Deduction is calculated in accordance with the following formula:

D = ((AULT- TULT) * (ULAR * 12)) + ((APLT- TPLT) * (PLAR* l2))

where:

AULT

TULT

ULAR

APLT

TPLT

PLAR

Unprocessed Landfill Tonnage calculated as:

Contract Waste that is Accepted and Contract Waste that is Noi Accepted less Contract Waste Processed in the relevant Contract year (AULT excludes Ad Hoc Waste and Additional Waste)

zero tonnes (0 tonnes)

per tonne 1

Processed Landfill Tonnage calculated as:

Process Residues derived from Contract Waste Processed that are sent to Landfill in the relevant Contract Year (APLT excludes Ad Hoc Waste and Additional Waste)

Guaranteed Processed Landfill Tonnage calculated in accordance with paragraph 16.2

per tonne


16.1.2 Where APLT is less than TPLT in the relevant Contract Year APLT- TPLT shall be deemed to be zero.

16.2 Guaranteed Processed Landfill Tonnage 16.2.1 The Guaranteed Processed Landfill Tonnage is calculated in accordance with the following

formula:

TPLT = CWP • PLPT

where:

CWP

PLPT

Contract Waste Processed in the relevant Contract Year (excluding Ad Hoc Waste and excluding Additional Waste)

Guaranteed Processed Landfill Performance referred to in Pricing Form 2 for the relevant Contract Year, as set out in 2

1 At the date of signing the original Contract both Parties agreed that the Guaranteed Unprocessed Landfi!l

Adjustment Rate of per tonne was a genuine pre-estimate of loss associated with the Landfill Allowance Trading Scheme. At the point of agreeing the Revised Project Plan the Landfill Allowance Trading Scheme (LATS) has been abolished and so this figure has been set to the same level as the PLAR. In the event of any replacement or successor regime for LATS coming into force, the Guaranteed Unprocessed LandfiJI Adjustment Rate shall be determined through an Authority Change in accordance with Schedule 21 (Change Protocol) ..




Recycled and Recovered Materials Deduction (RRA)

17. Recycled and Recovered Materials Deduction (RRA)

17.1 Recycled and Recovered Materials Deduction 17.1.1 The Recycled and Recovered Materials Deduction is calculated in accordance with the

following formula:

RRA= = (TRM -ARM) ' (RRM ' 12)

where:

TRM Guaranteed Recycled and Recovered Materials Tonnage calculated in accordance with paragraph 17.2

ARM Actual Recycled and Recovered Materials Tonnage

RRM Recycled and Recovered Materials Adjustment Rate

12 the Full Indexation Factor

17 .1.2 Where TRM is less than ARM in the relevant Contract Year TRM -ARM shall be deemed to be zero.

17.2 Guaranteed Recycled and Recovered Materials Tonnage 17.2.1 The Guaranteed Recycled and, Recovered Materials Tonnage is calculated in accordance


TRM = ACW ' PRM

where:

ACW Contract Waste that is Accepted (excluding Ad Hoc Waste and Additional Waste).

PRM Guaranteed Recycled and Recovered Materials Performance for the relevant Contract Year, as set out in Appendix 5

Petformance Deduction Cap Reconciliation Payment (PR)

18. Performance Deduction Cap Reconciliation Payment (PR)

18.1 Performance Deduction Cap Reconciliation Payment (PR) 18.1.1 At the end of the Contract Year, the Performance Deduction Cap shall be recalculated based

on the Calculated Actual Base Payment the Contract Year in accordance with the following formula:

PR = the lower of:

i) ADC- DC

ii) PA

PR Performance Deduction Cap Reconciliation Payment

ADC The Adjusted Performance Deductions Cap for the Contract Year calculated as

CABP

DC

PA

ADC= * CABP

Calculated Actual Base Payment in accordance with paragraph 12.1

The Performance Deductions Cap for the Contract Year calculated in accordance with paragraph 7.2

The sum of Performance Deductions incurred in accordance with paragraph 7, but not paid by the Contractor where the sum of such Performance Deductions is in excess of the Performance Deductions Cap


Second Annual Reconciliation Payment (ARP2)

19. Second Annual Reconciliation Payment (ARP2)

19.1.1 The Second Annual Reconciliation Payment, the Excess Profit Share Payment, shall be calculated in accordance with the following formula. EPS cannot be less than zero:

ARP2 = EPS

where:

ARP2 The Second Annual Reconciliation Payment

EPS Excess Profit Share Payment calculated in accordance with paragraph 19.2

19.2 Excess Profit Share Payment 19.2.1 The Excess Profit Share Payment shall be calculated in accordance with one of the following

four formulae:

When: CAPS EPT1

Then: EPS=O

Or when:

Then:

CAP > EPT1; and CAPS EPT2

EPS = EP1 - CEP Or when:

Then:

CAP > EPT2; and CAPS EPT3

Or when: EPS = EP2 + *CFP)- CEP

CAP> EPT3 Then:

EPS = EP3 + CFP)- CEP Where:

EPS The Excess Profit Share Payment, which cannot be less than zero in any Contract Year

CAP Cumulative Actual Profit as calculated in accordance with paragraph 19.3

EPT1 The Excess ProfitThreshold 1

EPT2 The Excess Profit Threshold 2

EPT3 The Excess ProfitThreshold 3

EP1 *(CAP- EPT1));

EP2 *(CAP- EPT2));

EP3 * (CAP- EPT3));






Second Annual Reconciliation-Payment (ARP2)

CEP

CFP

Cumulative Excess Profit received by the Authority as calculated in accordance with paragraph 19. 7. CEP shall equal 0 up to and including the first Contract Year.

Cumulative Forecast Profit as calculated in accordance with paragraph 19.4

Provided that in the event that the calculation of Cumulative Actual Profit is less than or equal to zero then the Excess Profit Share Payment shall equal zero.

19.3 Calculation of Cumulative Actual Profit (CAP) 19.3.1 The Cumulative Actual Profit in the relevant Contract Year shall be calculated in accordance


CAP = 2:AP (n·4l- n

Where:

CAP

2:AP (n·4)·n

Cumulative Actual Profit for the relevant Contract Yearn

the sum of Actual Profit for the five Contract Years up to and including the relevant Contract Yearn.

19.4 Calculation of Cumulative Forecast Profit (CFP) 19.4.1 The Cumulative Forecast Profit in the relevant Contract Year shall be calculated in

accordance with the following formula:

CFP = 2:FP (n-4)- n

Where:

CFP

2:FP (n-4)-n

Cumulative Forecast Profit for the relevant Contract Yearn

the sum of Forecast Profit for the five Contract Years up to and including the relevant Contract Year n.

19.5 Calculation of Actual Profit (AP) 19.5.1 The Actual Profit for each Contract Year shall mean the net profit after interest and before tax

as shown by the audited agreed and certified Annual Accounts (subject to the adjustments set out below) of the Contractor of the immediately preceding and completed calendar year at the time of the second Annual Reconciliation.

19.5.2 The audited Annual Accounts shall be prepared in accordance with Veolia Environment Services (UK) Plc group accounting principles and assumptions, and in so far as is practicable with the accounting principles and assumptions used in the Base Case.

19.5.3 For the purposes of calculating Actual Profit, the following considerations or adjustments should be made:

1. Any taxation on profit shall not be deducted from Actual Profit.


2. Any interest charges or receipts shown in the accounts shall be adjusted to the figures shown for interest charges or receipts in the Base Case for the year to the following 31st March.

3. Actual Profit shall be calculated before exceptional and extraordinary items (including profit or loss on the disposal of fixed assets calculated by reference to historic cost).

4. The effects, including any increased depreciation charges above those shown in the Base Case, of any asset revaluation shall be excluded from the calculation of Actual Profit.

5. To the extent arising, the Contractor's share of Third Party Income from Recycled and Recovered Materials shall be deemed to equal the Authority share of Recycled and Recovered Materials Third Party Income Deduction determined in accordance with paragraph 13.4 and such Contractor's share shall be excluded from Actual Profit.

6. To the extent arising, the Contractor's share of Third Party Income from Electrical Output shall be deemed to equal the Authority share of Electrical Output Third Party Income Deduction determined in accordance with paragraph 13.3 and such Contractor's share shall be excluded from Actual Profit.

7. To the extent arising, the Contractor's share of Third Party Income from Third Party Waste shall be deemed to equal the Authority Share of Third Party Waste Third Party Income determined in accordance with paragraph 13.5 and such Contractor's share shall be excluded from Actual Profit.

8. To the extent arising, the Contractor's share of Third Party Income from Other Sources shall be deemed to equal the Authority share of Third Party Income from Other Sources determined in accordance with paragraph 13.6.

9. Any management, administration or like charge made by the Contractor and/or any subsidiary of the Contractor above those shown in the Base Case shall be excluded from the calculation of Actual Profit.

10. Any costs or expenses incurred in complying with any financial reporting or other similar requirements of the Contractor, to the extent such reporting or other similar requirements are more onerous than those to which a company of the nature and size of and carrying on a business similar in all material respects to the Contractor would normally adhere shall not be deducted from Actual Profit.

11. The fees, remuneration and pension contributions of any director or officer of the Contractor above those shown in the Base Case shall not be deducted from Actual Profit unless such payment is properly related to and a fair and reasonable sum in respect of services provided by such director or officer.

12. Any action taken by the Contractor to artificially lower the Actual Profit so as to reduce or avoid the Excess Profit Share Payment shall be disregarded.

13. Any expenses for which the Contractor is not liable but which are gratuitously met by the Contractor shall not be deducted from Actual Profit.

14. In respect of any transaction between the Contractor and any Affiliate, these transactions shall be recorded as they are stated in the Base Case within the calculation of Actual Profit. If any transactions between the Contractor and any Affiliate are not stated in the Base Case, they shall be adjusted so that they are on an arms length basis. Such transactions include, but are not necessarily limited to, the following:

The payment of remuneration or fees to any person who does not work full-time on the affairs of the Contractor.


ii The granting of assistance and facilities, including the secondment of employees and the sharing or leasing of premises.

iii The disposal for Flue Gas Treatment Residues charged to the Contractor (including any applicable margin) by an Affiliate.

19.6 Calculation of Forecast Profit (FP) 19.6.1 The Forecast Profit for each Contract Year shall mean the net profit after interest and before

tax as shown in the Base Case.

19.7 Calculation of Cumulative Excess Profit (CEP) 19.7.1 The Cumulative Excess Profit received by the ,11,uthority for the four years up to and including

the previous Contract Year shall be calculated in accordance with the following formula:

CEP = l:EPtn-'~J· tn·1J

Where:

CEP Cumulative Excess Profit received by the Authority for the four years up to and including the previous Contract Year

l:EPtn-41. (n-11 the sum of Excess Profit Share Payments for the four Contract Years up to and including the previous Contract Year.

19.8 Calculation of Excess Profit Threshold 1 (EPT1) 19.8.1 The Excess Profit Threshold 1 shall be calculated in accordance with the following formula:

EPT1 = * CFP Where:

EPT1 Excess Profit Threshold 1 for the relevant Contract Year

CFP the Cumulative Forecast Profit for the relevant Contract Year

19.9 Calculation of Excess Profit Threshold 2 (EPT2) 19.9. 1 The Excess Profit Threshold 2 shall be calculated in accordance with the following formula:

EPT2 = * CFP

Where:



19.10 Calculation of Excess Profit Threshold 3 (EPT3) 19.10.1 The Excess Profit Threshold 2 shall be calculated in accordance with the following formula:

EPT3 = * CFP Where:







19.11 Excess Profit Payment Log 19.11.1 The Contractor will maintain a log which will be updated annually to record the cumulative

value of CEP. This value will be agreed with Authority as part of the Excess Profit Share Payment calculated within each Contract Year.

Indexation provisions

20. Indexation provisions

20.1 Indexation provisions 20.1.1 Components of the Unitary Charge and Contract shall be subject to indexation, as follows:

lndeJCable Items

Commissioning Base Payment

Performance Deduction during Commissioning

Disruption Deduction during Commissioning

Non Acceptance Deduction during Commissioning

Base 1 Payment ~ --------- - -- ---

Base 2 Payment

Base 3 Payment

Diversion Performance Deduction

Performance Deduction

Mileage Deduction

Non Acceptance Deduction

index to be used i11dex factor

Full Indexation Factor


Fuil indexation Factor


Base Payment Index ·------ . "----- --




12

12

i2

12

I,

12

12

I,

Full Indexation Factor 12

Full Indexation Factor 12

No Indexation

-- - ~

Third Party Income Share excluding Third Full indexation Factor 12

Party Income Derived from Electrical Output


Any sums in the Contract or Schedules

Full indexation Factor


12

12

--


20.2 Full Indexation Factor 20.2.1 The Full Indexation Factor for the Contract Year represents the increase or decrease in RPIX

over the period since the Base Date and shall be calculated as follows:

where:

RPI,.1

RP I base

The Full Indexation Factor for the relevant Contract Year

The value published by the Office of National Statistics located in Table RP05 (or any index that replaces it from time to time) for RPIX for the January immediately preceding Contract Year y

The value published for RPIX for January 2015 of two hundred and fifty four point eight (254.8 which shall be the cost base date of the revenues in the Base Date

20.2.2 The Full Indexation Factor should be applied from the relevant Indexation Date.

20.3 Forecast Index 20.3.1 For the purposes of calculating indexation pursuant to this paragraph 20 where the relevant

Index has not been published by the January preceding the relevant Indexation Date then:

.,.. A forecast of the relevant Index shall be used in replacement for the relevant Index

. .,.. Within 20 Business Days of the Index Publication Date, the Full Indexation Factor for the relevant Contract Year shall be recalculated, using the published index rather than the Forecast Index, and the relevant lndexable Items shall be adjusted for the period from the relevant Indexation Date to the Index Publication Date; and

... If the amount of the Monthly Unitary Charge Payment paid by the Authority in respect of the relevant period is either in excess of or less than the amount which would have been paid had RPix or the relevant specific Index for the month of February in the relevant Review Period been published, an amount equal to the shortfall or excess shall be added to or deducted from the first or succeeding Monthly Unitary Charge Payment which follows the recalculation pursuant to this paragraph 20.3.

20.4 Changes to Indices Affecting any Indexation Factor 20.4.1 If there is a material change in the nature or basis of any Index, or if any Index is

discontinued, the Parties shall seek to agree upon an alternative to that Index which as closely replicates the relevant Index as is possible, and such consequential changes shall be made to the calculations provided for in this paragraph 20.4.1 as are necessary to ensure that all payments to be made pursuant to this Contract shall be the same as if such change had not occurred. Any dispute regarding changes to the Index and/or calculations may be referred by either Party to the Disputes Resolution Procedure.

20.4.2 If any error or mistake shall occur in the publication for the figures for the relevant Index which have been used at any time in any calculation pursuant to this Schedule which is subsequently duly acknowledged and corrected by the Office of National Statistics or the relevant body with responsibility for the publication of such Index, the calculations in which the incorrect figures were used for the adjustments of any part of the Monthly Unitary Charge shall be recalculated using the correct figures. Any dispute regarding the recalculations


pursuant to this paragraph 20.4.2 may be referred at the request by either Party to the Disputes Resolution Procedure. Any overpayment or underpayment by either Party to the other which has occurred as a result of the incorrect figures shall be paid or repaid by the Party to the other within 7 Business Days of the recalculation being agreed or determined (as the case may be).

Payments

21. Payments

21.1 Payment of the Unitary Charge

21.1.1 The Authority shall pay the Contractor in accordance with Clause 45 of the Contract:

21.1. 1.1 during the period from the Readiness Date to the Services Commencement Date (the Commissioning Period), the Commissioning Payment; and

21.1.1.2 from the Services Commencement Date to the Expiry Date (the Service Period), the Unitary Charge.

1A Base Payment (pricing form 1A)

Appendix 1 1 A Base Payment (pricing form 1 A)

Band 1 Price*

(BP1 £/tonne)

Band 2 Price

(BP2 £/tonne)

Applies from Service Applies from Service Commencement Base Date Commencement Date Date

Real as at April 2015

*Band 1 Price for early service commencement

Band 3 Price

(BP3 £/tonne)

Applies from Service Commencement Date

In the event that the SeNice Commencement Date is earlier than the Planned SeNice Commencement Date the Band 1 Price will be reduced by for the period up until the Planned SeNice Commencement Date.

Appendix 1 1 B Base Payment (pricing form 1 B)

Contract Year (Y/E 31 March)

2016

2017

2018

2019

2020

2021

2022

Weighted average gate fee

(with the Base Payment Index and the Full Indexation Factor applied)

(Bav)


2039

2040 - - -- -----

2041

2042

2043

2044 -

_____ 2045



(Bav)

---

-

- --- --2023 2046

2024 2047

2025 2048


Regulation 12 (5) (e)Regulation 12 (5) (e)


Landfill Performance (pricing form 2)


2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

Appendix 2


2016

2017

2018

2019

2020

2021

2022



(Bav)


2049

2050

2051



(Bav)


Guaranteed Unprocessed Landfill Performance %

Guaranteed Processed Landflll Performance %

· --- -



LandfiiJ Performance (pricing form 2)

Contract Year Guaranteed Unprocessed Guaranteed Processed (Y/E 31 March) Landfill Performance % Landfill Performance %

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

2048



Contract Year Guaranteed Unprocessed Guaranteed Processed (Y/E 31 March) Landfill Performance % Landfill Performance %

2049

2050

2051


Performance Deduction Categories per PMF (pricing form 3)

Appendix 3 Performance Deduction Categories per PMF (pricing form 3)

Performance Deduction Category Perlformance Deduction Pounts Per

Pel'formance Standard Failure

A

8

c D

E


Guaranteed Third Party Income (pricing form 4)

Appendix 4 Guaranteed Third Party Income (pricing form 4)

Third Party Income Third Party Income Third Party Income derived from Recycle

derived from derived from Third and Recovered Electrical Output Party W<:tste Materials

(year by year) (year by year) (year by year)

Contract Year (real terms) (real terms) (real terms)

(Y/E 31 March) (GT ELE} GTTPW (GTREC}

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030




derived from derived from Third and Recovered Electrical Output Party Waste Materials


Contract Year {real terms) {real terms) (real terms)

(Y/E 31 March) (GTELE) GTTPW (GTREC)

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045




derived from derived from Third and Recovered Electrical Output Party Waste Materials


Contract Year (real terms) (real terms) {real terms)

(Y/E 31 March) (GTELE) GTTPW (GTREC)

2046

2047

2048

2049

2050

2051


Recycling and Recovered Materials Performance (pricing form 5)

Appendix 5


2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

Recycling and Recovered Materials Performance (pricing form 5)

Guaranteed Recycling and Recovered Materials Performance (% of Forecast Annual Contract Waste)

2046 ---- ----- -----------------------------

2047

2048

2049

2050

2051


Forecast Contract Wastes

Appendix 6 Forecast Contract Wastes

Contract Year (Y/E 31 1\Jlarch)

Forecast Contract Wastes (t)

2016

2017

2018

2019 ~-----~~-------------

2020

2021 --------- ·---·- . --··-~~-----~

2022

2023

2024

2025 - -------·· ---- --~~-------- --------

2026 -------·-~-------

2027

2028 ~-~--~---

2029 ~~-~·----·-----··-----

2030

2031

2032 - -------~~~--

2033

2034

2035 .. - ·--·-----·--- ----~------··-

2036

2037

2038

2039

2040

2041 ---------------~-----------------

2042

2043

2044

2045

2046

2047

2048

2049

2050

2051

~~~- -----·--·-----

---·-----·-·-----


Forecast Band 2 Revenue

Appendix 7


2016

2017

2018

2019

2020

2021



(year by year) (real terms)

(FR82)

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

2048

2049

2050

2051



SCHEDULE4 PAYMENT MECHANISM [BOUND INTO THE RPP … · Schedule 4 - Payment Mechanism [BOUND INTO THE RPP DEED OF VARIATION IN SEPARATE VOLUME] The Future of Hertfordshire's Waste

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