Annual Option Payments. Commencing January 1, 2016, PEF shall pay an “Annual Option Payment” equal to the product of 30% of 2,000 AF (representing the maximum Annual Volume discussed in Section 3.1 above) multiplied by that year’s Unit Volume Charge (discussed in Section 7.2 below). On or after January 1, 2017, if PEF elects to increase the maximum Annual Volume in accordance with Section 3.2 above, the Annual Option Payment shall be increased for the remainder of the Term of the Agreement such that PEF shall pay an Annual Option Payment equal to the product of 30% of 3,500 AF (representing the maximum increased Annual Volume discussed in Section 3.2 above) multiplied by that year’s Unit Volume Charge (discussed in Section 7.2 below). By way of example:

Unit Volume Payments. PEF shall pay “Unit Volume Payments” of $1,025 per AF of Annual Volume and Additional Supply delivered to the Points of Delivery, with a 3% annual escalator to this fixed fee commencing January 1, 2017. The Annual Option Payment (discussed in Section 7.1 above) will be credited toward the Unit Volume Payments.