The objective of the Payment Mechanism is to define the Unitary Charge payable to the Contractor in exchange for delivering the services. By ensuring that the Unitary Charge is reduced when Performance Standards are not met the Payment Mechanism incentivises the Contractor to deliver the service stipulated in the Output Specification. The reduction in the Unitary Charge should be proportionate to the impact (which could embrace more than the direct financial impact of the service failure) on the Authority of the failure to
provide the service. A further objective of the Payment Mechanism is to share any benefits arising from over performance by the Contractor and increases in Third Party Income such as, for example, electricity income.