The State's guiding principle for deductions is to abate Service Payments to the extent Project Co fails to perform the Services in accordance with the service specification in the PSDR. The value of the Abatement will generally be sized to reflect the State's or users' loss of amenity arising from the under-performance. Care must be taken when sizing abatements to ensure that they are sufficient to motivate rectification or replacement within the required timeframes and otherwise good performance but are not so onerous as to lead to unnecessary disputes.
The Payment Schedule and services specification in the PSDR will provide for clear definition and measurement of performance to create clear triggers for applying any deductions, including rectification periods and temporary fix provisions. The State's intention is to establish arrangements which are simple to implement and minimise administration.
Service Payments will typically be deducted for:
• Availability Failures, meaning unavailability of part of the Project Assets; and
• Service Failures, meaning failure to meet other defined performance measures including KPIs as set out in the Services Specification.
Deductions for Availability Failures, will, in a worst case, reduce the availability fee (or a subset of it) to zero. Deductions for Service Failures will typically be calculated using points or dollar amounts linked to particular performance measures. Abatements may ramp-up where under-performance is frequent or prolonged, and contractual default mechanisms will be triggered where specified abatement thresholds are breached (see section (a)(i)2.40.3 for more detail).
The PV Standard Project Deeds require Project Co to acknowledge the application, operation and enforceability of the Abatement regime and that the Abatements reflect a genuine pre-estimate of the diminution in value to the State (and users) in connection with the relevant under-performance and has been agreed by the parties to protect the legitimate interests of the State in performance of the Services by Project Co.