Multi-tiered contracts

Journal Article · Wed Jan 01 04:00:00 EST 1997 · Independent Energy

OSTI ID:518409

Lilien, W ^[1]

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1. O`Melveny & Myers LLP, San Francisco, CA (United States)

In recent years, power projects increasingly involve multi-tiered fuel and feedstock supply arrangements. These often involve suppliers, transporters and other service providers and companies that deal with project owners through intermediary contracting parties. This intermediary contract structure improves upon past structures in which developers often made arrangements with separate parties for each fuel supply component. In today`s customer service, one-stop shopping environment, intermediary companies are helping to remove some of the complexity of fuel contracting by providing developers with a simpler approach. It allows developers to contract with fewer entities in the supply chain. These entities in turn coordinate and enter into subcontractual arrangements for certain aspects of a project`s fuel supply. In the past, the natural gas arrangements for a gas-fired generating project might have included suppliers, transporters, gas remarketers, fuel managers and supply aggregators. Under the multi-tiered approach the owner can make direct arrangements for fuel supply via a single, direct contract with a prime supplier. In turn, the supplier enters into subcontracts with producers and transporters. Tiered arrangements are also common for coal-fired plants. In one example, the fuel supply arrangements for a recently financed Indonesian power project included excavation of coal, land and water transportation, and unloading at the project storage facilities. Each step in the supply chain could have been separately arranged by the owner. However, the owner contracted with a single supplier, which arranged for certain services with other entities. Several of these entities further subcontracted additional components in the fuel supply chain.

• OSTI ID: 518409
• Journal Information: Independent Energy, Journal Name: Independent Energy Journal Issue: 1 Vol. 27; ISSN 1043-7320; ISSN IDPEEW
• Country of Publication: United States
• Language: English

Related Subjects

20 FOSSIL-FUELED POWER PLANTS
29 ENERGY PLANNING, POLICY, AND ECONOMY
CONTRACT MANAGEMENT
ELECTRIC POWER INDUSTRY
FUEL SUPPLIES