Template:IETA Master Agreement Receiving Party’s Replacement Cost

“Receiving Party’s Replacement Cost”, in respect of a failure to Transfer a number of Allowances of a particular Allowance Type and Specified Period pursuant to Clause 12.1 (Failure to Transfer) of the Agreement (being the “Undelivered Allowances”) has the meaning ascribed to it in the Agreement, except when the Excess Emissions Penalty is specified to apply in the relevant Schedule, in which case it means an amount (if positive) equal to the sum of:

(a) either:

(i) if in one or more arm’s length transactions the Receiving Party is able, using its reasonable endeavours, to purchase a number of Allowances of the same Allowance Type and Specified Period as the Undelivered Allowances (“Replacement Allowances”), to be Transferred during the period from (but excluding) the Final Delivery Date to (and including) the Reconciliation Deadline on or immediately following the Delivery Date (the “Buy-In Period”), which in respect of each such individual purchase of Allowances, when aggregated with other such purchases, amounts to a purchase of a number of Allowances equal to the number of Undelivered Allowances:

(A) the price (per Allowance) at which the Receiving Party is able to purchase the relevant number of Replacement Allowances; less

(B) the Allowance Price agreed by the Parties in respect of the Undelivered Allowances; multiplied by

(C) the number of Replacement Allowances which the Receiving Party is able to purchase at the price indicated in (1); plus

(D) interest for the period from (and including) the Delivery Date to (but excluding) the date of termination calculated on an amount equal to the product of the number of Undelivered Allowances and an amount equal to the excess, if any, of the price determined pursuant to (1) over the Allowance Price agreed between the Parties in respect of the Undelivered Allowances at the rate specified in Clause 9.5(a) (Interest) of the Agreement; or

(ii) if in one or more arm’s length transactions the Receiving Party, using its reasonable endeavours, is unable to purchase a number of Replacement Allowances equivalent to the Undelivered Allowances to be delivered during the Buy-In Period:

(A) in respect of the number of Replacement Allowances for which the Receiving Party is able to effect a Buy-In during the Buy-In Period, an amount for such Allowances calculated in accordance with paragraph (i) above; and

(B) in respect of the number of Replacement Allowances equal to the number of Undelivered Allowances minus the number of Replacement Allowances referred to in A(ii)(1) above (the “Shortfall”), the sum of:

(i) the price (per Allowance) at which the Receiving Party, using its reasonable endeavours and in an arm’s length transaction, is or would be able to purchase as soon as reasonably possible after the Reconciliation Deadline a number of Replacement Allowances equal to the Shortfall; less

(ii) the Allowance Price agreed by the Parties in respect of the Undelivered Allowances; plus

(iii) the EEP Amount; multiplied by

(iv) the Shortfall; plus

(v) interest for the period from (and including) the Delivery Date to (but excluding) the date the Receiving Party is or would be able to purchase Replacement Allowances in accordance with paragraph A(ii)(2)(I) above on an amount equal to the product of the Shortfall and an amount equal to the excess, if any, of the price determined pursuant to paragraph A(ii)(2)(I) above over the Allowance Price agreed between the Parties in respect of the Undelivered Allowances at the rate specified in Clause 9.5(a) (Interest) of the Agreement; and

(b) such reasonable costs and expenses which the Receiving Party incurs as a result of the Delivering Party’s failure to Transfer the Shortfall (including, without limitation, broker fees, commissions and legal fees) to the extent that those costs and expenses are not reflected in paragraphs A(i) or A(ii) above.

Where the Receiving Party confirms that it has been unable to purchase Replacement Allowances during the Buy-In Period, it shall be for the Delivering Party to show that it has been as a result of the Receiving Party failing to use its reasonable endeavors to do so.