9  Utilities Management

The Contractor will include within their bid proposal, the projected estimate of the cost of the Utilities relevant to the accommodation that the Contractor is providing.  Typically, the Utilities could include supplies of electricity, gas, water and waste services.  The projected annual estimate of the cost of the Utilities will be based on an estimate of annual usage (or consumption) of each Utility multiplied by an estimated Utility unit price plus an estimate of the annual standing charge for each of the Utilities.  The design of the accommodation will have a significant impact on the amount of electricity, gas, water etc that is consumed so it is desirable that the Contractor takes some of the risk of variations in the consumption of these items.  However, the Contractor does not take the risk on changes in the 'price' of these items.

The approach to paying for Utilities can be summarised as follows:

•  As part of the Monthly Unitary Payment, the Authority will pay the Monthly Utilities Payment, which is based on the estimated unit cost multiplied by the Consumption Target plus the standing charge for each of the Utilities for the relevant year;

•  Other than in respect of any Initial Period (of two years), an annual reconciliation takes place to assess actual Utility Services consumption.  If the difference is within 10% above or below the relevant target, no adjustment is made.  If the difference is greater than 10% either way, the actual cost (or saving) of that differential is split 50:50 by the Authority and Contractor;

•  An annual reconciliation will also apply to assess the actual cost of the Utility Services against the estimate applied to calculate the Monthly Utility Payment over the previous year and to inform the estimate of consumption for the following year ;

•  The annual Consumption Target for each Utility for any Initial Period will be extracted from the Contractor's proposal.  Subsequent Consumption Targets will be agreed or determined and will last up to the point when 'harmonisation' of targets occurs;

•  The Consumption Targets for all accommodation will be 'harmonised' and re-set on 1 April following the Contract Year in which any Initial Period expires for the last accommodation to reach its Services Availability Date;

•  Thereafter, Utility Periods will last 1 year, with the Consumption Targets for those periods agreed or determined at the start of each period;

•  There is provision for annual adjustments to be agreed in certain circumstances to take account of such issues as climatic change over the life of the contract;

•  If the Contractor introduces energy saving technology, it can retain any savings until the Consumption Target is next reset;

•  The Contractor will market test utility prices annually.