12.7  Utility services

(a)  The private party is responsible (at its own cost) for the continuous supply of utility services to the facility in accordance with the specified standards.

(b)  Generally, government will take the risk on the unit price of utilities.  The allocation of volume risk will be determined on a project by project basis, taking into account:

(i)  Lifecycle Costs for the term of the concession;

(ii)  incentives to build using environmental and energy saving materials and systems;

(iii)  consideration of which party is in the best position to manage utilities consumption risk;

(iv)  difficulties in estimating long term consumption risk; and

(v)  most importantly, value for money for government.

(c)  Depending on the nature of the project, jurisdictions may look to either:

(i)  transfer the full volume risk to the private party for some or all utilities, for example where the core service environment is reasonably predictable, such as in a school or prison or where the private party has a degree of reasonable control over the utility end users (because, for example, of the way it designs the facility or approaches the delivery of the Contracted Services); or

(ii)  share volume risk above a specified threshold (to be bid by the private party).  Jurisdictions may also look to share volume savings on the same basis (i.e. below a specified threshold) if the private party uses less utilities than a baseline expected volume.

(d)  Provide incentive for the private party to design an energy efficient facility, jurisdictions may choose not to cap the private party's exposure.