4 Annual Utility Adjustment
4.1 Every Contract Year on 1 April the actual consumption of each Utility Service over the previous Contract Year shall be calculated and compared to the relevant Annual Utility Service Consumption Target.
4.2 Where actual consumption in the previous Contract Year was higher than the Annual Utilities Services Consumption Target, the Contractor shall bear all and any costs associated with such extra consumption of that Utility Service.
4.3 Where actual consumption in the previous Contract Year was less than the relevant Annual Utility Services Consumption Target, the Contractor shall retain and benefit from the cost savings associated with such reduced consumption of that Utility Service.
4.4 At the end of the Contract Year the Actual Unit Cost of the Utility Service paid by the Contractor shall be agreed by the Parties and, the Unitary Charge shall be adjusted by a sum equal to:
AUA = (UA – EU) x Ct
where:
AUA | = | the Annual Utility Adjustment as may be applicable in respect of the preceding Contract Year |
UA | = | the Actual Unit Cost of the Utility Service over the Contract Year11 |
EU | = | the estimated unit cost of the Utility Service at the start of the Contract Year; |
Ct | = | the Annual Utility Services Consumption Target for the Utility Service for that Contract Year; and |
Such adjustment shall be made by adding or subtracting the agreed amount to the Monthly Unitary Charge for the second Contract Month of the Contract Year next following the Contract Year to which the review relates.
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11 This drafting may have to vary to cover the eventuality of Unit Cost going up and down over the Contract Year for different periods