Toll agreements are a common feature of the energy sector. Through these agreements, a buyer will supply fuel to an electric generator and in return, the generator will recover the electricity. Although widely used, the United States has recently found that such a toll agreement, when concluded between companies wishing to merge, was contrary to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, amended by 15 U.C 18a (HSR Act), which resulted in the imposition of significant financial penalties on the purchaser. You will also receive operating and maintenance payments as well as a starting payment for the start-up of the turbine. Project sponsors are also subject to various penalties if they do not meet the toll company`s expectations, including the construction of the facility in a timely manner. It has become a hot topic in the negotiations. Equipment manufacturers first find it difficult to meet delivery deadlines. There are also problems with defective or poorly mounted components, Feldman said. Many developers are trying to pass on some of the risks associated with the delivery of the facilities to the contractor. Arne Olson is a senior consultant at E3.
He has more than 10 years of experience in the energy field, including seven years that closely follow the Western electricity and natural gas markets. He has a common M.S. in the International Energy Management and Policy of the University of Pennsylvania and the French Petroleum Institute. ORLANDO – As gas prices rise and electricity prices rise, more and more companies are turning to tolls to finance and share the risk of building new commercial power plants, traders say. As part of a toll agreement, the toll company provides fuel to a power plant operator and buys the electricity as a product and then markets it. Feldman said the agreements had begun a significant cog in risk allocation in the sector and were based on a different cost-effectiveness than the original independent electricity projects. C.K. Woo is the principal partner of Energy and Environmental Economics, Inc.
(E3) in San Francisco. With more than 20 years in the electricity sector, Mr. Woo has published major publications in the electro-economy, applied microeconomics and applied financing. He received his Ph.D. in Economics from the University of California, Davis. This case underlines the importance of the advice of experienced HSR advisors ahead of the acquisition of shares, shares outside the group or assets by all means. Although such toll agreements are becoming more common in the energy sector, parties who have or may have an interest in acquiring the other party to the agreement must ensure that effective beneficiaries of the objective are not covered before complying with the reporting obligations of the Trade Control Act where notification of the HSR is required.