The Base Payment should be based on a payment per tonne of Contract Waste accepted by the Contractor after the Service Commencement Date relating to the facility.1 The price per tonne of Contract Waste may be banded to allow differentials in marginal pricing of tonnages above or below the expected tonnages. This approach allows the Authority to benefit from paying only the additional variable costs associated with the provision of the additional capacity and prevents the Contractor from suffering excessive loss of income where tonnages are lower than expected. This provides an equitable and clear basis for adjusting the Base Payment when fluctuations in Contract Waste tonnages are relatively small.
For each year the Contract should specify a Minimum and Maximum Tonnage of Contract Waste. These tonnages can vary from year to year and need to be specified and agreed during the dialogue phase of the procurement (see Section 4). For tonnages of Contract Waste within these thresholds, the Base Payment will be calculated in accordance with this Payment Mechanism. Where Contract Waste is lower than the Minimum Tonnage the principles set out in Section 2.1.3 should apply. Section 2.1.4 addresses the issues that arise when the Authority has to manage waste in excess of the maximum set out within the Contract.
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1 In principle, once the facility is ready to accept waste for commissioning, some payment should be made by the Authority to the extent that Contract Waste is being processed. See Section 3.5 for guidance on payments during the commissioning period. Authorities should consider the case for having a Base Payment for different waste streams (e.g. garden waste, dry recyclables) where there are multiple waste streams within the scope of the project, e.g. an integrated project involving the management of dry recyclables as well as residual waste treatment.