In the case of a change in law risk that government has assumed wholly or partly, the mitigation options open to government include:
• having a system in place to ensure government is fully aware of the financial consequences of a proposed change for which it will inevitably be liable
• where appropriate, devising a regulatory framework which provides a mechanism for tariff adjustments to assist pass-through to end-consumers (subject to public interest considerations)
• where the change has capital expenditure consequences, placing an obligation on the private party to fund up to an agreed limit, and thereafter to use its best endeavours to raise capital from fresh debt or equity so that a government capital contribution is an option of last resort. Any contribution above the agreed limit should be at government's discretion
• graduate the costs for which government is liable
• providing a mechanism for joint review of, and agreement with the private party on, the proposed expenditure to meet the changed requirements
• where appropriate, pursuing symmetrical risk allocation and monitoring the potential for upside benefits
• discussion with the federal government where the Commonwealth is the source of the proposed change
• requiring greater flexibility in the design of the facility so that it can more efficiently accommodate the impact of the change in law. This is likely to result in government paying more up-front for the facility, but over the whole of the life of the project, may result in better value for money.