As gas prices rise and electricity prices rise, more and more companies are turning to toll agreements to finance and share the risk of building new commercial power plants, according to negotiators. Roger D. Feldman, partner and co-chair of the financing and project development group for Bingham Dana LLP, told Power-Gen International on Wednesday that the basic model appears to be that energy companies that can manage both fuel and electricity risks have the upper hand in this type of project.C.K. Woo is a senior partner in energy and environmental economics. Inc. (E3) in San Francisco. With over 20 years of experience in the energy supply industry, Mr. Woo has published extensively in the fields of electricity economics, applied microeconomics and applied finance. He holds a Ph.D.
in Economics from the University of California, Davis. According to the DOJ, agreements that transfer effective ownership and are signed prior to the notification of the HSR and the expiry of the waiting period may, under the HSR Act, be equally equivalent to firearm jumps if entered into while a buyer intends to acquire the target.  These types of agreements allow a buyer to take control of an objective and obtain the effects of the merger before regulators have completed their antitrust review. The DOJ therefore argued that the condition sheet and the toll agreement taken together would have resulted in the elimination of Calpine as an independent competitive presence in the market and would have allowed Duke to make all highly competitive decisions for the Osprey facility from the effective date of the toll agreement and well in advance of HSR`s application. Toll agreements are a common feature of the energy industry. Through these agreements, a buyer supplies fuel to an electric generator and in return, the generator will return the electricity to the buyer. Although widely used, the United States has recently found that such a toll agreement, when entered into between companies intending to merge, violates the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a (HSR Act), resulting in the imposition of significant financial penalties on the buyer.
In the restructuring of power purchase agreements and the calculation of return on equity, the volatility value represents an effective buffer for the cash reserves needed to cover debt servicing. A toll contract is a contract to lease a power plant from its owners. These agreements give the tenant the opportunity to convert a physical product (fuel) into another product (electricity). This chapter explains how to determine the economic value of a power plant […].