With regard to the restructuring of electricity supply contracts and the calculation of returns on equity, the value of volatility is an effective buffer from the cash reserves needed to cover debt servicing. 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. In August 2014, Duke Energy Corporation (Duke) and Calpine Corporation (Calpine), a competing wholesale electricity seller in Florida, agreed to Duke`s purchase of the Osprey Energy Center (Osprey) in Florida. The structure of the proposed transaction included a toll agreement that entrusted Duke with responsibility for determining the energy to be produced at BeiOsprey and for purchasing the fuel needed to produce that energy. Essentially, the toll agreement allowed Duke to take operational control of the Osprey plant and limited Calpine`s role to “the mechanical operation of the Osprey facility in accordance with Duke`s instructions.”  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. 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.