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:

Annual OptionUnit Volume Payments. Commencing January 1, 2016, PEF shall pay an “Annual Option Payment” equal“Unit Volume Payments” of $1,025 per AF of Annual Volume and Additional Supply delivered to the productPoints of 30% of 2,000 AF (representing the maximumDelivery, with a 3% annual escalator to this fixed fee commencing January 1, 2017. The Annual Volume discussed in Section 3.1 above) multiplied by that year’s Unit Volume ChargeOption Payment (discussed in Section 7.2 below). On or after January 1, 2017, if PEF elects to increase1 above) will be credited toward 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:Payments.