- The regulator should review the deposits regularly (at least annually) to ensure that the sums deposited accord with the expenditure profile. The sum should be subject to an annual inflationary adjustment which should be specified in the relevant clause in the performance agreement. The regulator should carry out this calculation and communicate it to the operator.
- If the operator wishes to withdraw sums for works legitimately carried out under the permit, they should be requested to present contractors’ invoices as evidence. In circumstances where there is a major withdrawal, which has not been planned for, the sum taken out will impact on the financial profile of the account. At that time the overall sum will need to be reviewed.
- It is vital that account statements are issued to both parties on a regular basis. The regulator should review the statements to ensure that the value of the deposit is in line with the agreed profile. For example, for a landfill, the expenditure profile may have been calculated on a rate per tonne – in line with the anticipated input rate to the site. It will therefore be necessary for the regulator to review the waste input rate and ensure that the cash available continues to meet the potential liability at the particular point in time. The regulator will also have to adjust the rate per tonne annually in line with the inflation clause in the performance agreement.
A Practical Guidance on Financial Provision for Environmental Liabilities