PHILADELPHIA ENERGY SOLUTIONS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands, except unit and volume data)
3. RELATED-PARTY TRANSACTIONS
Agreements with Sunoco
Sunoco Supply Agreement
In connection with the acquisition of the Philadelphia refining complex, Refining entered into an agreement with Sunoco LLC (as
successor in interest to Sunoco, Inc. (R&M) (Sunoco R&M)), a subsidiary of ETP, pursuant to which Refining sells ethanol to Sunoco LLC for blending at Sunoco Logistics Partners L.P.s (SXLs) Belmont truck rack (Belmont Rack). The
agreement ended in June 2015.
The volume of ethanol sold under the agreement equals the amount required for blending based on the volume
of gasoline Sunoco LLC purchases from MLC under the intermediation agreement.
On June 1, 2015, Refining and Sunoco LLC entered into a new
agreement for the sale of ethanol from Refining to Sunoco LLC. In connection with this new agreement, the parties entered into a renewable identification number transaction agreement whereby Sunoco LLC agreed to sell Refining 8,000,000 renewable
identification numbers (RINs) per month at market price for the length of the agreement. The initial term of this agreement ends in June 2016 and will automatically renew for successive twelve-month terms unless terminated by either party upon 90
days prior notice.
Sunoco LLC is responsible for all fees, costs and expenses that are incurred outside of the Philadelphia refining
complex with respect to any product sold under this agreement including, without limitation, (i) rack and/or distribution costs, (ii) fees charged by SXL, (iii) fees for the use of the Belmont truck rack and (iv) docking fees. Obligations under the
agreement will be suspended to the extent affected by a force majeure event.
On June 1, 2015, Refining also entered into an agreement
with Sunoco LLC for the sale of refined products from Refining to Sunoco LLC. This agreement provides for the sale of approximately 2,000,000 gallons of refined products per month and expires in May 2016.
Refinings net sales under these agreements were $58,703, $73,429, and $77,057 for the years ended December 31, 2015, 2014, and 2013,
respectively. Refinings purchases of RINs under this agreement was $24,838 for the year ended December 31, 2015. The net sales and purchases of RINs are recorded as a component of net sales and cost of sales in the consolidated statements of
operations and comprehensive income (loss), respectively.
Transition Services Agreement
In connection with the acquisition of the Philadelphia refining complex, on September 8, 2012, Refining entered into a transition services
agreement with Sunoco for the performance by each party of certain transition services related to the transition of the Philadelphia refining complex to a stand-alone operation separate from the other businesses of Sunoco. Services provided under
the agreement included various accounting, management, information technology, human resources, commercial and other miscellaneous administrative functions. The party performing a transition service was reimbursed by the other party according to the
agreed-upon fee schedule for that particular service. While a majority of the services provided pursuant to this agreement ceased in 2013, Refining continues to utilize Sunocos common carrier bond in connection with Foreign Trade Zone
Transition services expenses were $73, $518, and $2,732 for the years ended December 31, 2015, 2014, and 2013,
respectively. Transition services expenses are recorded as a component of general and administrative expenses in the consolidated statements of operations and comprehensive income (loss).