RISK MANAGEMENT OPTIONS

During negotiations it has been recognised that there are a number of circumstances in which it is fair to review the performance of a site that has missed a milestone target, in order to consider whether a site should still be re-certified for the Climate Change Levy discount.

Relevant Considerations

In the following circumstances you can negotiate a milestone target failure with DEFRA:

1. Regulatory Constraints. If legislation forces a Participant to adopt new equipment or systems that increase energy consumption, this consumption can be added to the base line energy performance of the site. An example of this would be some form of environmental regulation (e.g. related to odour abatement) that obligates the site to install new equipment (e.g. an incinerator to remove odours from an exhaust air stream). Providing the new equipment is properly sub-metered, the extra energy consumption can be taken into account at each subsequent milestone.

2. Planning Constraints. If you miss a milestone target because you cannot implement an important project due to planning problems, then this can be considered as a justification for missing the target. For example if a CHP project cannot proceed either because of Local Authority planning constraints or due to problems with obtaining a suitable gas supply.

3. Energy Supply Disruptions. The effect of any major unexpected disruptions in energy supply can be taken into account. Any such disruption would need to be significant and not built in to either the base year performance or the target. Adjustment to the figures would not be allowed, for example, for routine interruptions to the gas supply, which were expected as part of the supply contract. Significant changes to energy prices will not be considered of relevance at each milestone, but may be considered in the renegotiations allowed at the 2^nd and 4^th milestones.

Many other CCLAs use the concepts of product mix adjustments or tolerance bands as further risk management options. However, these are not part of the Master Bakers CCLA because the use of "added value" as a measure of product output already takes product mix into account.