Case No. RF340-00093

JUNE 24, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Petitioner: Enron Corporation/

Gulf States Oil & Refining Company

Date of Filing: March 6, 1992

Case Number: RF340-93

On September 14, 1988, the Economic Regulatory Administration of the Department of Energy (DOE) filed a Petition with the Office of Hearings and Appeals (OHA) requesting that the OHA formulate and implement procedures for distributing funds obtained through a consent order with Enron Corp. (Enron). See 10 C.F.R. Part 205, Subpart V. The consent order resolved DOE allegations that Enron and all of its subsidiaries, affiliates, prior subsidiaries, predecessors and successors in interest violated the mandatory petroleum regulations in their sales of crude oil and refined petroleum products from January 1, 1973 through January 27, 1981 (the consent order period). On July 10, 1991, the OHA issued a Decision and Order setting forth final procedures for disbursing the portion of the Enron settlement fund attributable to various Enron entities' sales of NGLs and NGLPs. Enron Corp., 21 DOE ¶ 85,323 (1991) (Enron). These covered Enron entities are UPG, Inc. (UPG), Northern Propane Gas Company (Northern), and Florida Hydrocarbons Company. In accordance with the goals of 10 C.F.R. Part 205, Subpart V, Enron implements a process for refunding the consent order funds to purchasers of Enron NGLs and NGLPs who are able to demonstrate that they were injured as a result of the covered entities' alleged overcharges. This Decision and Order renders a determination upon the merits of an Application for Refund submitted on behalf of Gulf States Oil & Refining Company (Gulf States), a wholesale marketer and refiner that purchased propane, butane and natural gasoline from Enron.

I. Background.

In Enron we adopted a presumption that the alleged overcharges attributable to NGLs and NGLPs had been dispersed equally in all sales of refined product made by the covered entities during the consent order period. Enron, 21 DOE at 88,959. We stated that, in the absence of a demonstration of a disproportionate overcharge, a claimant would be allocated a share of the consent order funds on a volumetric basis. We provided that eligible claimants would receive $.00601 per gallon of covered Enron product purchased.(1)Id. We refer to the dollar amount derived by multiplying an applicant's purchase volume by the per gallon refund amount as the applicant's allocable share.

Enron generally requires a claimant to demonstrate that it was injured by Enron's alleged overcharges in order to receive a refund equal to its full allocable share. However, in Enron, we adopted several presumptions of injury that would allow certain types of claimants to receive a refund without a detailed demonstration of injury. We established that resellers, retailers and refiners seeking volumetric refunds of $10,000 or less were injured by Enron's pricing practices. Id. at 88,960. Such applicants would, therefore, only have to document their purchases of covered Enron products in order to receive a refund of their full volumetric share. Id. at 88,960.

We further established that a reseller, retailer or refiner whose volumetric share of the Enron consent order funds exceeds $10,000 may elect to receive as its refund the larger of $10,000 or 60 percent of its volumetric share up to $50,000. Id. Accordingly, a claimant in that group need only establish the volume of Enron covered products that it purchased during the refund period to

receive a refund of 60 percent of its allocable share up to $50,000.

Gulf States has chosen not to rely upon these presumptions of injury. Instead, it has submitted information aimed at showing that it was injured with respect to the product that it purchased from Enron and refined or resold. Accordingly, we will consider granting the applicant a refund for its volumes of Enron purchases based on our analysis of its business operations and the information that the it has submitted concerning injury.

II. Resellers and Refiners Must Show Injury to Receive a Refund.

A reseller or refiner whose allocable share exceeds $10,000 must demonstrate that it was injured by Enron's alleged overcharges in order to receive a refund equal to its full volumetric allocation of the consent order fund. Enron at 88,960. Generally, a firm who had a long term purchasing arrangement with Enron must meet a two- step requirement to make an injury showing. First, in order to determine the degree to which market conditions forced an NGL reseller or refiner to absorb the alleged overcharges, we determine whether the firm accumulated banks of unrecovered increased product costs large enough to justify the amount of the refund claimed during the period when it purchased from Enron through the end of the banking period. Next, the firm must show that market conditions forced it to absorb the alleged overcharges. Id. at 88,960. In this regard, the OHA applies a three part competitive disadvantage analysis that has been upheld by the courts. See Behm Family Corp. v. DOE, 903 F.2d 830 (Temp. Emer. Ct. App. 1990); Atlantic Richfield Co. v. DOE, 618 F. Supp. 1199 (D. Del. 1985). Under the competitive disadvantage methodology, we infer that where the firm was required to make purchases at above average market prices, it generally indicates that the firm was unable to pass through the alleged overcharges. Conversely, we infer that purchases made at prices below the market average placed a firm at a competitive advantage and did not injure the firm.(2)

In addition, however, a reseller or refiner who made only spot purchases of Enron product must overcome a rebuttable presumption that it was not injured as a result of its purchases. Id. at 88,961. Enron states that a claimant is a spot purchaser if it made "only sporadic purchases of significant volumes of covered Enron product." In order to receive a refund, such a claimant must rebut the spot purchaser presumption by submitting specific and detailed evidence aimed at establishing the extent to which it was injured as a result of its spot purchases from Enron. Id., citing Sauvage Gas Company, 17 DOE ¶ 85,304 (1988)(Sauvage).

III. OHA's Notification of Presumed Non-injury to Gulf States.

As noted above, Gulf States is attempting to show that it was injured by its purchases from Enron in order to receive a full volumetric refund for the 41,128,406 gallons of product that it purchased from Enron's subsidiary, UPG, during the refund period. Gulf States has submitted information aimed at establishing that it had banks of unrecovered increased product costs sufficient to support its refund claim, and that a price comparison indicated that it was placed at a competitive disadvantage when it purchased product from Enron.

The OHA reviewed the Gulf States submissions and, in a February 19, 1997 letter, informed the Gulf States that as a probable spot market purchaser of NGL products, it must submit additional information to substantiate its claim that it experienced economic injury as a result of its purchases from Enron. Specifically, we stated that:

In its application, you maintain that Gulf States was a retailer or reseller of Enron product. The high volume of its purchases from Enron indicate that Gulf States may have been operating at the wholesale marketer level of NGLP distribution. The characteristics of sales in the producer/wholesaler market are large volumes and a price that is usually negotiated for each transaction. It therefore appears that Gulf States may have purchased Enron products primarily on the spot market. Spot purchasers are generally presumed not to have been injured by the alleged overcharges. The OHA has adopted this presumption because firms usually made spot purchases only when those transactions were beneficial to them and provided the best available terms. Thus, it is unlikely that they would have been injured on those purchases by the consent order firm's pricing practices.

There are two ways in which Gulf States may respond in order to receive a refund in the Enron proceeding. The first is to demonstrate that it was not a spot purchaser. To do this, you should submit a detailed description of its purchasing relationship with Enron and its relationship with its own customers, that establishes that it was required to make regular purchases from Enron in order to maintain supplies to base period customers. Alternatively, the firm could establish that it was forced by market conditions to resell the product purchased from Enron at a loss that was not subsequently recovered.

February 19, 1997 letter from Thomas L. Wieker, Deputy Director, OHA, to Shelia K. Crouse of Energy Refunds, Inc. (ERI).(3) In addition, the letter indicated that we required more information from Gulf States concerning its business operations as an NGLP wholesale marketer in order to evaluate the appropriateness of its injury claim. We asked Gulf States to provide a description of the typical manner in which it located customers and negotiated the purchase and sale of NGLs. We also advised Gulf States to submit some sample sales contracts or any other documents showing the nature of the agreements between Gulf States and its customers during the refund period. Finally, we asked Gulf States to identify its marketing region and describe how its purchase and sale transactions facilitated the distribution and consumption of NGLPs. Id.

In a submission dated April 9, 1997, Mr. Eric Small of ERI responded to this inquiry on behalf of Gulf States. In this submission, he makes several assertions concerning Gulf States' purchases of NGLPs from Enron, and concerning its resales of these NGLPs. In a May 19, 1997 telephone conversation with Ms. Shelia Crouse of ERI, Kent Woods, Esq., of the OHA asked for clarification of and support for several assertions made in Mr. Small's letter. Specifically, Mr. Woods asked for any records detailing Gulf States' transactions involving either the purchase of NGLP's from Enron or the sale of those NGLPs to Gulf States' customers. Mr. Woods also asked that Gulf States specify how it purchased product from Enron and whether it purchased this product in order to maintain regular supplies of NGLPs to its customers. In a submission dated May 20, 1997, Mr. Small responded to these requests. Finally, on June 17, 1997, in response to Mr. Woods' request, ERI faxed portions of a Gulf States document referred to in the firm's April 9, 1997 submission. As discussed below, the information provided to us by Gulf States is insufficient to establish that the firm was injured by its purchases from Enron.

IV. Analysis.

A. Gulf States Engaged in the Resale of Enron NGLPs.

Gulf States was located in Texas and began purchasing and reselling NGLPs in September 1974. The Consent Order that Gulf States entered into with the DOE on February 2, 1983, describes the firm as "among other things, engaged in the production, refining, processing, reselling and marketing of covered products." DOE Consent Order No. 6E0S00057 at 2. Although Gulf States engaged in production, refining and marketing of petroleum products, it does not appear that its purchases of NGLPs from Enron were related to these functions. In previous proceedings before this Office, it was established that during the period of price controls, Gulf States operated as a "small refiner", i.e., with a refining capacity of less than 175,000 barrels per day. 10 C.F.R. § 211.62. Specifically, in September 1974, Gulf States purchased a refinery located in Quitman, Texas. It sold this refinery on November 1, 1978, in order to finance planned capital improvements to a refinery in Corpus Christi, Texas. The Corpus Christi refinery did not commence operations until July 1980. Gulf States Oil and Refining Company, 9 DOE ¶ 81,012 at 82,580 (1982); Gulf States Oil and Refining Company, 7 DOE ¶ 80,131 at 80,644-46 (1981).

NGLP's are used by some refiners as an additive in the production of motor gasoline. However, as a very small refiner, it is unlikely that Gulf States produced significant volumes of motor gasoline in its refinery. Moreover, as noted above, from November 1, 1978 until July 1980, Gulf States apparently did not refine any petroleum products. Nonetheless, its level of purchases of NGLPs from Enron did not decline during this period. It therefore appears that Gulf States' purchases of NGLPs from Enron were unrelated to its refinery operations.

This conclusion is supported by Gulf States' own assertions. As discussed below, its statements concerning its disposition of the NGLPs purchased from Enron are speculative and unsupported by documentary evidence. Nevertheless, in no instance does Gulf States contend that these NGLPs were used in its refinery operations. Accordingly, we conclude that Gulf States purchases of NGLPs from Enron are reseller transactions unrelated to its refining and marketing operations.

B. Gulf States Purchased and Sold NGLPs on the Spot Market.

In determining whether Gulf States' purchases from Enron were spot purchases, it is important to first understand the purpose and scope of the presumption, so that it may be correctly applied to the facts of this case. In this regard, Enron's extensive discussion of the spot purchaser presumption in the context of responding to comments on the proposed Enron implementation order provides a more detailed explanation of the meaning of the presumption, and can provide a basis for our analysis of whether the presumption is applicable to Gulf States' purchases and sales of Enron products.

In Enron, we concluded that the concept of spot purchaser is sufficiently well defined to allow applicants to understand the theoretical basis for the presumption.

The term spot purchase is commonly used and understood in the petroleum industry to mean a contract for the purchase and sale of petroleum products on a short term basis. [Sauvage Gas Company/NGL Supply, Inc., 19 DOE ¶ 85,622 at 89,142 (1989)(Supply)] The OHA has interpreted the term spot purchaser to mean any firm that purchased significant volumes of covered products from a supplier on a sporadic or isolated basis outside of a long term supply obligation.

Enron at 88,955. It is clear from this discussion that the purchaser's discretion in selecting its supplier of product is a key element underlying the presumption of non-injury.

We have consistently determined that spot purchasers tend to have considerable discretion in where and when to make purchases and therefore would not have made spot market purchases from a firm at increased prices unless they were able to pass through the full price of the purchases to their own customers. The OHA has utilized this spot purchaser presumption of non-injury in numerous special refund proceedings.

Id., citing Sauvage, 17 DOE ¶ 85,304. It should be noted that short term, discretionary sales and purchases were the rule rather than the exception in certain portions of the NGL industry, particularly in the producer and wholesale reseller markets. Although such spot market purchases of Enron product establish a presumption of non-injury to the purchaser, such a purchaser may submit additional information concerning its business operations to rebut the presumption on a case-specific basis. As we noted in Enron,

The OHA examines the circumstances of each case to make an initial determination whether the applicant's purchases were likely to have been spot purchases. Where it appears likely that an applicant's purchases were spot purchases, the applicant is generally notified of our tentative conclusion and offered an opportunity to show either that it was not a spot purchaser or that it was injured by its spot purchases. Since this analysis focuses on the fundamental refund issue, viz., whether the applicant was injured, there is no merit to the claim that it is based on an impermissibly vague definition. ...

In Supply, ... we stated that "the determination of whether a [sic] individual's purchases from a particular supplier are spot purchases is a question of fact and therefore must be made on a case-by-case basis." Id. at 89,143.

Id. at 88,955-56. This case-by-case injury analysis is a broad one. Under this method, "we consider the circumstances under which a claimant made its purchases and any information submitted by the applicant that might aid our determination concerning whether its purchases were spot purchases." Our determination of whether a spot purchaser was injured is similarly based on a case-by-case analysis of information submitted by the claimant. Id. at 88,956- 57.

After reviewing the evidence submitted by Gulf States, we conclude that it has not rebutted our finding that it purchased from Enron on the spot market, nor has it made the showings of injury required of spot market purchasers. The information provided by Gulf States concerning its purchasing relationship with Enron and its relationship with its customers does not establish that Gulf States was required to make regular purchases from Enron in order to maintain supplies to established customers.

As an initial matter, we note that a document titled "Reseller Transactions" supplied by Gulf States indicates that firm's first purchase of propane did not take place until October 30, 1974. Its first purchases of butane and natural gasoline occurred in 1975. See "Reseller Transactions" document attached to Gulf States' May 20, 1997 submission. Accordingly, it is clear that Gulf States was not operating as a reseller during the period April 1972 through March 1973, the regulatory "base period" for purposes of the DOE allocation regulations. Consequently, Gulf States had no regulatory obligation to furnish any "base period" customers with a steady supply of product. It appears that Gulf States possessed complete discretion to purchase or not purchase NGLPs from Enron in accordance with its own business judgment.

In Gulf States' May 20, 1997 submission, Mr. Small makes the following statement about the firm's supply relationship with Enron.

Because Gulf States did not have a base period relationship with Enron, it may be reasonable to believe that Gulf States made purchases from Enron when Enron had excess products available for Gulf States' customers. The exact extent of monthly purchases is unknown, but [Gulf States] probably made sufficient purchases to have some type of contractual relationship with Enron.

We do not agree that the available information supports the conclusion that Gulf States had "some type of contractual relationship with Enron." The only available record of Gulf States' purchases from Enron are yearly totals supplied to the DOE by Enron. They indicate that Gulf States' NGLP purchases were limited to a small portion of the refund period or varied dramatically in volume during that period. Gulf States apparently did not purchase any product from Enron prior to 1978. It purchased normal and iso butane from Enron only in 1978 and 1979. With respect to natural gasoline, Gulf States purchased 840,000 gallons from Enron in 1978, no gallons in 1979, and 3.5 million gallons from January 1980 through January 1981. With respect to propane, Gulf States purchased 13.3 million gallons in 1978, 10.7 million gallons in 1979, and only 3.8 million gallons from January 1980 through January 1981. Accordingly, there is no indication that Enron supplied Gulf States with a steady supply of any of these products on a regular basis during the refund period.

While it is true that Gulf States purchased significant quantities of NGLPs from Enron, this high volume of purchases does not in itself refute our preliminary finding that Gulf States is a spot purchaser. While some spot purchasers clearly make only isolated or sporadic purchases from a supplier, a firm that makes spot market purchases from a particular supplier on a frequent basis may also be a spot purchaser if other factors, such as the size and pattern of purchases, the prices paid, and the purchaser's market position, indicate that the purchases were discretionary. When the first refund procedures were established in Office of Enforcement (Vickers Energy Corp.), 8 DOE ¶ 82,597 (1981)(Vickers), OHA recognized that the situation of spot market purchasers often contrasted sharply with that of other customers of a consent order firm. Vickers, 8 DOE at 85,396-97. In Supply, we found that OHA's adoption of the spot presumption rested on our observation that a firm's position in the petroleum industry often determined whether it was likely to have incurred injury as a result of its supplier's alleged regulatory violations. As we noted above, steady, base period customers such as small gasoline retailers were often tied to a supplier by the federal allocation regulations, a supply contract, and state branding laws. Firms purchasing product consistently from an allocated supplier under these conditions lacked the flexibility to take advantage of lower prices by making discretionary purchases on the spot market, and were much more likely to have been "stuck" with any overcharges that occurred. In contrast, firms purchasing significant volumes of product on the spot market tended to have considerable discretion to determine whether to purchase and, if so, to select product that they were able to resell at a profit. This distinction between different kinds of purchasers forms an important part of the basis for adopting the spot market presumption of non-injury. Supply, 19 DOE at 89,141.

Gulf States' pattern of purchases from Enron, as evidenced by the Enron sales records described above, indicates that Gulf States' purchases were large and made on a sporadic, discretionary basis rather than pursuant to long term supply contracts that would have committed Gulf States to a particular volume of purchase. Indeed, the monthly Enron purchase prices for each NGLP submitted with Gulf States' competitive disadvantage analyses show a strong month-to- month variation rather than the tendency to price stability that a long term purchase contract between Enron and Gulf States would produce.(4)

Finally, our determination that Gulf States was a spot purchaser of Enron product is supported by available information concerning the volumes of its typical NGLP purchases and the nature of its suppliers and customers. In its May 20, 1997 submission, Mr. Small describes Gulf States' purchases and sales of NGLPs as follows:

It appears from the few records that I made copies of in Houston that Gulf States' customers were resellers (wholesalers selling to retailers or consumers), retailers (selling to consumers) and end users (consumers). With what records I have, I do not believe I can determine the exact extent of the proportional sales of NGLs. If I were to guess, I would say probably 50% or more to resellers and 50% or less to retailers and end users. Most sales seem to be to repeat customers in other products sold.

May 20, 1997 submission at 1. Our conclusion that Gulf States purchased and sold NGLPs through spot transactions in the wholesale reseller market is supported by Mr. Small's statement that more than half of Gulf States' customers were wholesale resellers who apparently had no retail operations. With respect to his statement that 50% or less of Gulf States customers were retailers and end users, we note that some reseller/retailers and some large end users, such as utilities and cooperatives, were active participants in the wholesale spot market. Thus, there is no indication that any NGLP customer of Gulf States was operating outside of the spot market and relied on Gulf States as a steady source of supply for it NGLP requirements. Indeed, the only NGLP customers specifically identified by Gulf States are firms that operated in the wholesale reseller market. See "Reseller Transactions", attached to Gulf States' May 20, 1997 submission. Mr. Small's statement that "most [Gulf States] sales seem to be to repeat customers in other products sold," also supports our conclusion, because wholesale resellers were more likely to deal in a full range of NGLPs, whereas many small-scale retailers and end-users purchased only particular NGLPs, such as propane or butane. In fact, the list of Gulf States' initial transactions indicates that Gulf States purchased product from the same wholesale resellers who were its customers in other transactions.(5)

As discussed above, the available evidence indicates that Gulf States' purchases and sales of Enron products were completely discretionary; it had no base period supply obligations that required it to purchase product for its customers. Nor is there any indication that it was required to purchase Enron product to maintain existing business relationships with regular customers. In exercising its discretion to purchase Enron products, we must conclude that Gulf States made a rational business decision. It must have determined that the Enron products were priced so that it could realize an acceptable amount of profit from the resale of those products on the wholesale market.

C. Gulf States Has Not Shown Injury from Its Spot Purchases.

Based on these considerations, we find that Gulf States' purchases of NGLPs from Enron were sporadic and discretionary, and involved large volumes of product. Under these circumstances, we believe that Gulf States' purchases from Enron are precisely the sort of transactions that the spot purchaser presumption was intended to cover. Accordingly, in order to qualify for a refund, Gulf States must rebut the presumption that it was not injured by its spot purchases of Enron products. This presumption may be rebutted by the submission of evidence sufficient to establish that: 1) the purchases were necessary to maintain supplies to base period customers; or 2) the claimant was forced by market conditions to resell the product at a loss which was not subsequently recovered. See Quaker State Oil Refining Co./Certified Gasoline Co., 14 DOE ¶ 85,465 (1986); Amtel Inc./Highway Oil, Inc., 14 DOE ¶ 85,143 (1986). These are not the only grounds for rebutting the spot purchaser presumption. Any convincing evidence establishing that a spot purchaser was in fact injured by the alleged overcharges of a consent order firm would suffice to rebut the presumption. Supply, 19 DOE at 89,141 n. 2.

As we noted above, there is no indication that Gulf States was required to purchase Enron product on the spot market in order to maintain existing business relationships with its regular customers. In the absence of such special circumstances, we have consistently held that a claimant seeking to demonstrate economic injury in order to overcome the spot purchaser presumption must submit evidence to establish that it was unable to recover the price it paid to the consent order firm. Standard Oil Co. (Indiana)/Cities Service Co., 12 DOE ¶ 85,114 at 88,336 (1984); Tenneco Oil Co./J.O. Cook, Inc., 9 DOE ¶ 82,580 at 85,427 (1982)(Tenneco/Cook). This position rests on our view that where a firm is exercising its discretion to purchase and sell product on the spot market, the recovery of its costs and any level of profit on the transactions are sufficient to demonstrate that the firm did not experience injury. In Tenneco/Cook, for example, Cook attempted to claim a refund for gasoline that it purchased and sold on the spot market at a low profit margin.

We brokered all of this gasoline at 1/2 to 1 cent above our cost. . . . We did not pickup the gasoline and sell it ourselves at retail.

Tenneco/Cook, 9 DOE at 85,427. The OHA concluded that these were "precisely the type" of transactions that are not eligible for a refund. The OHA found that Cook "suffered no injury from Tenneco's regulatory practices" because it was "able to not only pass through all of any alleged overcharges, but was able to make a profit on all of its sales of Tenneco gasoline." Id. By contrast, in Waller Petroleum Company, Inc./Wooten Oil Company, 13 DOE ¶ 85,110 (1985), the OHA found that Wooten had successfully demonstrated injury in its purchases of Waller product because it bought and sold Waller product at a loss in order to meet its allocation obligations to its customers. Id., at 88,297.

It is not sufficient for Gulf States to demonstrate injury by attempting to show that higher prices charged by Enron diminished the amount of profit that Gulf States realized on its sales of Enron product. We have consistently rejected the idea that a reseller making discretionary purchases on the spot market was entitled to any particular margin of profit, and that its failure to achieve that level of profit constitutes proof that it experienced economic injury as a result of the prices that it paid for product. Enron Corporation/H. C. Oil Company, 26 DOE ¶ 85,038 at 88,094-95 (1997) and cases cited therein. The fact that such purchases were discretionary and made within an actively fluctuating spot market strongly indicates that the spot purchaser was buying product that it believed would be profitably resold. The profit margin on such sales would fluctuate naturally depending on various factors affecting the supply and demand of product. Under these circumstances, a lower profit margin does not demonstrate that a particular reseller was injured by the price charged by a particular seller. As we stated in Tenneco/Cook, spot market purchases resulting in some level of overall profitability strongly demonstrate that the purchaser suffered no injury from the seller's regulatory pricing practices. Id., 9 DOE at 85,427.

In the present case, Gulf States freely chose to enter the wholesale reseller market for NGLPs in 1974 and 1975 and to purchase large volumes of Enron products from 1978 until the end of price controls. This indicates to us that Gulf States' resales involving Enron products were generally profitable to Gulf States. Under these circumstances, Gulf States' purported banks of unrecovered increased product costs do not indicate that Gulf States experienced injury in its transactions involving Enron product. Whether Gulf States recovered its base margin of profit in its resales of Enron product is irrelevant to a showing of injury regarding discretionary, spot market purchases. Similarly, the competitive disadvantage analysis provided by Gulf States does not establish injury. Whether Gulf States paid more or less for NGLPs than its competitors, there is no indication that Gulf States was injured by freely choosing to engage in discretionary reselling transactions involving spot market product.

Finally, we note that in a letter dated June 17, 1997, ERI indicated that Gulf States "would elect the presumption of injury" in this proceeding in the event that the OHA found that there was "insufficient information to justify a full refund." As discussed above, the OHA has found that the information contained in this refund application indicates that Gulf States probably was a spot purchaser of Enron product. Spot purchasers of Enron product are presumed not to have been injured by their Enron purchases. Accordingly, they are not eligible to receive a refund under the presumptions of injury set forth in the Enron Implementation Order. Enron, 21 DOE at 88,960-61.

In view of the circumstances set forth above, we have determined that Gulf States was probably a spot market purchaser of Enron NGLPs, and that it has not shown that it suffered injury with respect to these spot market purchases. Gulf States therefore has failed to rebut the spot purchaser presumption of noninjury in this proceeding. Accordingly, we conclude that the Gulf States Application for Refund should be denied.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Gulf States Oil & Refining Company on March 6, 1992 is hereby denied.

(2) This is a final order of the Department of Energy.

George B. Breznay

Director

Office of Hearings and Appeals

Date: June 24, 1997

(1)1/ This amount was derived by dividing the fund received from Enron allocable to refined products ($43,200,000) by the estimated volume of refined products sold by Enron from June 13, 1973 through the date of decontrol of the relevant product (7,186,265,624). Id. at n. 8.

(2)This analysis produces three measures which the OHA uses as guidelines in determining the claimant's level of injury. The first measure, "gross excess cost," is the sum of the amounts by which an applicant's monthly purchase costs exceeded the market average. The second measure, "net excess cost," equals an applicant's gross excess cost minus the sum of the amounts by which its purchase costs were below the market average in other months. This measure provides an indication of the cumulative impact of the alleged overcharges, balancing the adverse effect of the comparatively expensive purchases against the positive effect of comparatively inexpensive purchases. The third measure, the "above-market volumetric share," is the number of gallons purchased at prices which exceed market prices multiplied by the volumetric factor. This measure is indifferent to the magnitude of the excess costs incurred, accounting only for the number of gallons of uncompetitively priced product purchased by the applicant. We consider all of these indicators of competitive disadvantage in determining whether, and to what extent, an applicant was injured by its purchases, and thereby to calculate an appropriate refund amount. See Texas Oil and Gas Corp./Gulf Oil Corp., 13 DOE ¶ 85,135 (1985); see also Texaco Inc./Oakwood Oil Co., 22 DOE ¶ 85,262 (1993).

(3)ERI is a filing service representing Gulf States in this proceeding.

(4)We note that the Enron purchase prices listed in the analyses may not be the actual purchase prices paid by Gulf States. For the months of January through August, 1978, Gulf States

apparently relied on "sale price information from [the Economic Regulatory Administration's Enron] consent file." These prices may have been monthly averages of all of Enron's sales of a particular product. For the period September 1978 through January 1981, Gulf States asserts that it used "estimated purchase price information from Gulf State's records." Apparently, these were monthly averages of all of Gulf States' purchases of a particular product. See March 15, 1996 Gulf States submission at 1.

(5)The document entitled "Reseller Transactions" submitted by Gulf States identifies both Gulf States' supplier and Gulf States' customer with respect to each of its initial transactions involving motor gasoline, propane, normal butane and other products. Gulf States' supplier in its initial purchase of propane was a firm called Enterprise. Enterprise also was Gulf States' customer in both of its initial transactions involving motor gasoline and normal butane. Similarly, Gulf States' supplier in its initial transaction involving normal butane was a firm called Union Texas, while Gulf States' customer in its initial transaction involving propane also was Union Texas.