Project Cost Adjustment Clause Samples

Project Cost Adjustment. Shipper’s base negotiated rate, as set forth in Section 3(e) of the Precedent Agreement, shall be adjusted for any cost overruns as follows: To the extent Actual Project Costs, as defined below, deviate (upwards or downwards) from the Estimated Project Costs, as defined below, Shipper’s base negotiated rate shall be multiplied by the Capital Cost Adjustment Factor (“CCA Factor”). The CCA Factor shall be equal to 1 +/- ((CCA/EPC) x 50%), provided that the CCA Factor shall not exceed 1.15 upwards or downward. Any such adjustment shall be effective as of the Service Commencement Date and shall be made as soon as practicable, but no later than thirty (30) days after the first anniversary of the Service Commencement Date. In addition, the base negotiated rate as calculated above will be subject to an annual adjustment (upwards or downwards), to take effect on each anniversary of the Operational Start Date for the initial Contract MDQ, calculated as follows: OMSGA x (1+D) = ARR, where OMSGA = The current portion of the Monthly Reservation Rate that accounts for O&M and SG&A D = the percentage change in the Producer Price Index – Support activities for Oil and Gas Operations(“PPI-Oil and Gas”), as published by the US Department of Labor Bureau of Labor Statistics (“BLS”), from June 1 of the year that is two (2) years immediately prior to the year for which the adjustment is to be effective (the “Adjustment Year”) to June 1 of the year immediately preceding the Adjustment Year, based upon the most recent publication of the PPI-Oil and Gas prior to the end of the year immediately preceding the Adjustment Year for each such date. Any such adjustment (upward or downward) shall be capped at two percent (2%). ARR = the updated OMSGA to be used in annual adjustments.