PART 2Content of public service contracts
Interpretation of Part 25.
For the purposes of this Part—
(a)
subject to paragraph (b), “net financial effect” equals—
(i)
costs incurred in relation to a public service obligation or a bundle of public service obligations imposed by the competent authority (whether contained in a public service contract, a general rule, or both), minus
(ii)
any positive financial effects generated within the network operated under the public service obligation or obligations in question, minus
(iii)
any receipts from fare or any other revenue generated while fulfilling the public service obligation or obligations in question, plus
(iv)
a reasonable profit;
(b)
where, in the competent authority’s opinion, compliance with the public service obligation has a quantifiable financial effect on a public service operator’s other transport activities, such an effect must be taken into account when calculating the net financial effect under paragraph (a);
(c)
“reasonable profit” means, taking account of the amount of any capital or other resources (or both) invested by the public service operator and the risk, or absence of risk incurred by the public service operator by virtue of public authority intervention, having regard to the size and nature of the services, including by transfer of financial risk around any capital investment, revenue or operating expenditure—
(i)
a level of profit that is within a normal range for the sector, or
(ii)
where a level of profit that is within a normal range for the sector cannot be determined, the level of profit that would be required by a typical, well-run undertaking adequately equipped with the means to provide the service, and active in the same sector considering whether or not to provide the service in question.