6 The Arbiter's involvement at Periodic Review is set out in Figure 13. If LUL and the Infracos cannot agree a price for the delivery of services in the restated terms for the next 7½ years, they may ask for help from the Arbiter in resetting the Infrastructure Service Charge (ISC). The new ISC must compensate an economic and efficient Infraco for project costs and enable a rate of return on equity as agreed at contract signature, assuming the Infracos exceed their performance benchmarks - Infraco JNP: 26 per cent; Infraco BCV: 18.3 per cent; and Infraco SSL: 18.2 per cent.12
7 Figure 12 also shows that the Arbiter may get involved with an Extraordinary Review, caused by adverse circumstances such as cost overruns on a line upgrade or sustained underperformance on train availability. In addition, Infraco JNP can ask the Arbiter to give direction as to the amount of Net Adverse Effects (or additional costs while acting "economically and efficiently") once this figure has reached £50 million. The Metronet PPP agreements include a specific provision that the Arbiter's guidance can be sought annually, as from April 2005, for a reasoned report on whether or not the Infraco has "performed its activities in an overall efficient and economic manner and in accordance with Good Industry Practice."13
8 Infracos and LUL can also refer to the Arbiter for interim referrals for guidance as to how a matter is likely to be treated at the next Review Period or on any matter contained in the contract not just that relating to price. For example, he may be asked to give directions on dividend payments in excess of contractual limits.
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12 For more on performance benchmarks, see Section A.
13 Routine Provision of Information to the PPP Arbiter: Initial requirements. January 2004: Office of the PPP Arbiter.