Although the Unitary Charge payable by the Authority is likely to be the most significant revenue source for the Contractor there may also be revenue from:
• Processing of Third Party Waste (commercial waste, waste from other authorities);
• Electricity and heat related sales; and
• Sales of other process outputs.
The purpose of the Third Party Income sharing mechanism is to allow the Authority to share in the financial benefit that arises if actual income is in excess of that anticipated. The intention is to leave the Contractor with the risks and rewards relating to operational efficiencies. Further guidance on the appropriate risk allocation in relation to Third Party Income is included in Section 4 of the Defra Derogations.
Third Party Income sharing arrangements are often complex and need to be tailored to the specific circumstances of each project. Therefore Authorities should allow sufficient time and resource to develop this part of the Payment Mechanism at each stage of the procurement process.