Rationale for Adjustment

The Discount Rate will need to be reconsidered where the bidders' inflation proposals indicate either a higher, or lower level of risk transfer.  This will normally be evident through the bidders' response to the Payment Mechanism.  It is common for the Payment Mechanism to be amended in either or both of the following ways:

•  The proportion of the Annual Service Fee (ASF) subject to inflation may be adjusted

•  The index used to adjust the ASF may be by reference to different, and sometimes multiple, indices, for example, components linked to the Labour Prices Index.