The Minimum Tonnage of Contract Waste defines a threshold below which the Base Payment is calculated on a different basis to that which applies if the tonnage falls between the Minimum Tonnage and the Maximum Tonnage.
Where in a Contract Year the actual tonnage of Contract Waste is lower than the Minimum Tonnage for that Contract Year, the tonnage eligible for the Base Payment shall equal the Minimum Tonnage, subject to the Contractor satisfying its contractual obligation to use reasonable endeavours to reduce the Authority's costs by substituting other waste into the facility.
When negotiating the Minimum Tonnage, Authorities must consider the need to avoid committing to excessively high levels of tonnages which would conflict with the Authority's aspiration for waste minimisation and recycling. Authorities should also ensure there is a significantly wide range between the Minimum Tonnage and the Maximum Tonnage. WIDP recommends a ratio of at least 1.5.
Authorities should also note that the Minimum Tonnage will represent a worse case scenario for the funders and all parties should understand the impact on the Special Purpose Vehicle (SPV) finances of such a scenario. The senior debt cover ratios in this scenario should be no less than 1 to ensure the project company remains able to service senior debt.
The Minimum Tonnage in the Contract should be reduced in any Contract Year in which there is Contract Waste not accepted by the Contractor. The reduction should equal the amount of waste not accepted.
Where the Contractor has complied with its substitute waste obligations and the gate fee per tonne on the substitute waste is less than the Base Payment, the Authority should make a payment equal to the difference. Conversely where the Contractor sources substitute waste and the revenue received is in excess of the Base Payment, the excess should be shared with the Authority.
In addition to the Contractor's obligations concerning Contract Waste, the Contract should not exclude the Authority from providing substitute waste itself, subject to that waste complying with any requirements relating to Contract Waste.2 These measures will allow the Authority to take steps to reduce residual waste arisings in its area (either by increasing recycling or reducing waste arisings) without necessarily being left with an obligation to pay for contracted capacity it does not need.
• duration;
• price;
• exchange of information;
• tonnages;
• identity of party; and
• adequacy of credit standing as appropriate.
__________________________________________________________________
2 Arrangements for delivery of this substitute waste should be developed in a Substitute Waste Acceptance Protocol. The Substitute Waste Acceptance Protocol which the Contractor will be obliged to comply with should cover the following points: