During the Development Phase, Project Co will typically be liable for utility consumption in undertaking the Development Activities. There are rare exceptions to this on a project specific basis where it may be difficult for the State to distinguish between its own utility consumption and that of Project Co. Project Co is also obliged to pay for utilities consumed for undertaking Remaining Works and Returned Works Outstanding Items after the Development Phase.
Whether Project Co will be liable for the cost and volume of utilities consumed during the Operational Phase in the provision of the Services is determined on a project specific basis.
Where consumption levels are predictable, or where the operation of the Project Assets is fully outsourced to Project Co, procuring agencies should consider transferring volume risk to Project Co. Where consumption levels are not predictable and/or are heavily dependent on the way in which the Project Assets are operated by the State (where core services are retained by the State), volume risk is not generally transferred.
Pricing risk is typically not transferred to Project Co in recognition of the difficulty of locking in long term pricing for Utility supply with Utility providers. If pricing risk is transferred to Project Co, then pricing will typically be adjusted at intervals during the Term depending on the period for which prices are fixed in arrangements between Project Co and Utility providers. This should be tendered as part of the RFP Phase to ensure a competitive Proposal from Respondents.
If the MTPFA applies to the Project, there is a regime under Part 7 of the MTPFA for the interface with utilities, which includes a process for negotiating utility agreements with utilities where the Project requires the relocation or otherwise impacts those utilities, and a dispute resolution process, if no agreement is reached within the timeframes specified in the MTPFA. The regime also includes a process for the removal, relocation or protection of unknown Utility Infrastructure encountered during the course of a Project either by the Utility or the project authority.
The transfer of volume and price risk, particularly during the Operational Phase, should be considered and determined on a project specific basis.