Increase in Minimum Capacity Commitment and Minimum Throughput Commitment Sample Clauses
The "Increase in Minimum Capacity Commitment and Minimum Throughput Commitment" clause establishes the conditions under which the minimum levels of capacity or throughput that a party is obligated to provide or purchase may be raised. In practice, this clause might specify that if certain operational milestones are met or if demand increases, the minimum quantities of goods or services delivered or received under the contract will be adjusted upward. This mechanism ensures that the agreement remains responsive to changing business needs and helps both parties plan for increased production or consumption, thereby reducing the risk of underutilization or supply shortfalls.
Increase in Minimum Capacity Commitment and Minimum Throughput Commitment. If HFRM timely exercises its option at the end of the Malaga Initial Period or a Subsequent Year in accordance with this Section 2, then, with respect to the next Subsequent Year and the remainder of the Applicable Term thereafter:
(a) the Minimum Capacity Commitment for the Malaga Pipeline System shall be increased by the amount specified in the Malaga Exercise Notice; and
(b) the Minimum Throughput Commitment shall be increased by an amount equal to the increase in the Minimum Capacity Commitment for the Malaga Pipeline System. For example, if HFRM exercises its option at the end of the Malaga Initial Period to increase the Minimum Capacity Commitment for the Malaga Pipeline System from 40,000 bpd to 50,000 bpd (a 25% increase), then the Minimum Throughput Commitment shall be increased to equal 50,000 bpd (a 25% increase). This will have the effect of increasing the Minimum Pipeline Revenue Commitment by the operation of Section 2.2(a) of the Agreement.