A toll contract is a lease agreement for a power plant to its owners. These agreements give the tenant the opportunity to convert a physical product (fuel) into another commodity (electricity). This chapter explains how to determine the economic value of a power plant. 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. Otherwise, the toll agreement can be interpreted as proof of fire and the acquiring person is subject to significant penalties for non-compliance of up to USD 40,654 per day. Squadron Energy Group`s Australian Industrial Energy Group has signed a long-term lease agreement with NSW Ports for a port site in Port Kembla, 112 km south of Sydney, for the development of the company`s LNG import terminal project. 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. For the toll party, the agreement serves as a physical guarantee of the assets to cover the electricity trading positions.
At the same time, commercial assets can be used to extract the ”level of volatility” or up that could be present in volatile gas and electricity markets, Feldman said. As gas prices rise and electricity prices rise, more and more companies are turning to pay-as-you-go to finance and share the risk of building new commercial power plants, dealers say. Roger D. Feldman, partner and co-chair of Bingham Dana LLP`s project finance and development group, told Power-Gen International on Wednesday that the basic model appears to be energy companies capable of managing both fuel and electricity risk. According to the DOJ, agreements that transfer the economic beneficiary and are executed before the HSR notification and the expiry of the waiting period can be reduced to shooting under the HSR jump regime. Act if entered when a buyer intends to acquire the destination.  These types of agreements allow the purchaser to take control of a target and obtain the effects of the combination before the regulators have completed their review of cartels and abuse of dominance.