The approach to operational consumption risk varies among the different forms of contract. In particular, the Standard Form contracts provide for Project Co to accept a measure of consumption risk (subject to periodic rebasing through the normalised performance indicators (NPI) or energy target provisions) whereas the NPD/Hub Projects provide for Authorities to accept consumption risk, subject to the ongoing obligations of Project Co in relation to the FM Service (e.g. to maintain the plant to the contractual standard). Generally pricing risk for utilities rests with Authorities. When utilities invoices are received, it is worth checking that the optimal tariff is in place and there are no late payment charges (if Project Co has delayed payment it should not have passed those costs onto the Authority) and that the consumption is correct and related to the tariff.
It is important for Authorities to be clear at the outset as to the contractual arrangements in their relevant contract in relation to consumption risk. While there are some forms of contract that include provision for interim energy target adjustment in the event of material change, where Project Cos have accepted consumption risk, these provisions would need to be considered and consequentially amended as part of the Change provisions so that where or to the extent that Authorities are making additional payments to effect the Change they receive the benefit of any reduction in energy costs as a result of reduced consumption.