Case Nos. RF340-00023, RF340-00071 & RF340-00177

August 21, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Applications for Refund

Names of Petitioners: Enron Corp./

Amerigas Propane, Inc.

Larry’s Bottled Gas Company

Field & McGrady Special

Dates of Filing: October 21, 1991

February 20, 1992

November 16, 1992

Case Numbers: RF340-23

RF340-71

RF340-177

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., 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 Applications for Refund

submitted by Amerigas Propane, Inc. (Amerigas), Larry’s Bottled Gas Company (Larry’s Bottled Gas) and Field & McGrady Special (Field & McGrady).

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 the presumption that end-users or ultimate consumers whose businesses are unrelated to the petroleum industry were injured by Enron's alleged overcharges. Therefore, end-users of Enron NGLs need only document their purchase volumes of those products to make a sufficient showing of injury. Id. at 88,960.

In Enron, we also 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. Under this "small claim" presumption of injury, an applicant whose total Enron purchases correspond to an allocable share of $10,000 or less need only document its purchases of covered Enron products in order to receive a refund of its full allocable share. Id. at 88,960.

Larry’s Bottled Gas has submitted all of the information required of applicants in the Enron proceeding under the "small claim" presumption of injury. Larry Wagner, the owner of Larry’s Bottled Gas, claims that in 1979 and 1980, Larry’s Bottled Gas made regular purchases of Enron propane in order to supply its customers, all of whom were end-users in the Capac, Michigan area. Mr. Wagner estimated that Larry’s Bottled Gas purchased 3,075 gallons of Enron branded propane during the consent order period. He submitted company records to support his estimate. In light of the small size of this claim, and the corroborating company records, we believe that it is reasonable to accept Mr. Wagner’s explanation concerning the nature of his business and its Enron purchases.

Larry’s Bottled Gas has not claimed that it was disproportionately overcharged. Nor has it attempted to prove that it was injured by Enron's alleged overcharges. Therefore, under the "small claim" presumption of injury, Larry’s Bottled Gas will receive a principal refund of $18 (3,075 x $.00601 = $18). Larry’s Bottled Gas will also receive $12 as its pro rata share of the interest that has accrued on the consent order funds since they were placed in escrow.(2) Accordingly, the total refund granted to Larry’s Bottled Gas, including interest, is $30.

We further established in Enron 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 under this “mid-range” presumption of injury 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.

Amerigas has applied for a refund based on purchases of propane from UPG made by California Liquid Gas Corporation during the consent order period. Amerigas stated in its application that California Liquid Gas Corporation changed its name to Cal Gas Corporation on July 31, 1980. On June 10, 1987, AP Propane, Inc., acquired the stock of Cal Gas Corporation. Cal Gas Corporation was then merged into AP Propane, Inc. On November 15, 1990, AP Propane, Inc., changed its name to Amerigas Propane, Inc. Through our own research, we have verified that the ownership history of California Liquid Gas Corporation provided by Amerigas is accurate. Therefore, we believe Amerigas is the proper recipient of any refund based on California Liquid Gas Corporation’s petroleum purchases.

Amerigas has submitted all of the information required of applicants in the Enron proceeding under the "mid-range" presumption of injury. Amerigas claims that from 1978 until the end of the consent order period, California Liquid Gas Corporation made regular purchases of Enron propane in order to supply its retail customers. Enron records in DOE’s possession of the sales of UPG indicate that California Liquid Gas Corporation purchased 11,406,033 gallons of propane from UPG from 1978 through January 1981. A 1987 Wall Street Journal report states that Cal Gas Corporation was a retail propane distributor in 25 states. In light of this report and the UPG records, we believe that it is reasonable to accept United’s explanation concerning the nature of its business and its Enron purchases.

Amerigas has not claimed that it was disproportionately overcharged. Nor has it attempted to prove that it was injured by Enron's alleged overcharges. Therefore, under the "mid-range" presumption of injury, Amerigas will receive a principal refund of $41,130 (11,406,033 x $.00601 x 60 percent = $41,130). Amerigas will also receive $28,001 as its pro rata share of the interest that has accrued on the consent order funds since they were placed in escrow. Accordingly, the total refund granted to Amerigas, including interest, is $69,131.

Field & McGrady’s application is based upon petroleum purchases from UPG that were made by Val-Cap, Inc., during the consent order period. On February 21, 1981, Val-Cap sold most of its assets to Tesoro Petroleum Corporation (Tesoro). Michael Barron, Field & McGrady’s representative in this proceeding, stated in a letter to us dated May 8, 1996 that he had originally agreed to file an application on behalf of Tesoro for Val-Cap’s Enron refund. However, after reviewing the sales agreement, Mr. Barron realized that Tesoro had not purchased any stock in Val-Cap nor had the right to Enron refunds been transferred to Tesoro. Therefore, he realized Tesoro was not entitled to Val-Cap’s refund.

In the Enron refund application that he filed on behalf of Field & McGrady, Mr. Barron submitted portions of the sales agreement between Val-Cap and Tesoro as well as the Articles of Dissolution for Val-Cap. It is clear from the documents that Tesoro did not purchase Val-Cap stock nor did it purchase the right to Val-Cap’s refund. Therefore we believe Tesoro is not entitled to Val-Cap’s refund.

Val-Cap was voluntarily dissolved on February 12, 1982. In the case of a voluntarily dissolved corporation, the Office of Hearings and Appeals generally has granted refunds to the stockholders of the corporation at the time of dissolution according to their respective ownership percentages. See Gulf Oil/Pate’s Gulf, 22 DOE ¶ 85,219 (1992). In the case of Val-Cap, however, Field & McGrady Special was set up specifically to handle any remaining issues involving Val-Cap. Field & McGrady Special is a partnership and is not incorporated. According to Mary Ann Field, the widow of Jack H. Field who was a co-managing partner of Field & McGrady Special, the partners in Field & McGrady are the same as the shareholders in Val-Cap at the time of Val-Cap’s dissolution. Ms. Field explained that Val-Cap, and subsequently Field & McGrady, was owned fifty percent by members of the McGrady family and fifty percent by members of the Field family. The articles of dissolution list only people with the names Field or McGrady as officers and directors of Val-Cap. Considering all of the information submitted with the application, we believe that granting a refund to Field & McGrady Special will provide restitution to the injured parties in this case, namely Val-Cap’s shareholders at the time of its dissolution. See Enron Corp./ Thoms Enterprises, 23 DOE ¶ 85,098; A. H. Smith Associates, 22 DOE ¶ 85,036. Therefore, we believe Field & McGrady Special is the proper recipient of a refund based on Val-Cap’s petroleum purchases during the consent order period.

Field & McGrady has submitted all of the information required of applicants in the Enron proceeding under the "mid-range" presumption of injury. Field & McGrady claims that from 1975 until the end of the consent order period, Val-Cap made regular purchases of Enron propane, natural gasoline, and butane in order to supply its commercial and retail customers in the Southwest United States. Field & McGrady stated that Val-Cap purchased 11,056,072 gallons of petroleum products from UPG during the consent order period. Enron records in DOE’s possession of the sales of UPG, however, indicate that Val-Cap purchased only 10,886,120 gallons from UPG. Since Field & McGrady has not submitted any documents to support its higher gallonage claim, we will grant it a refund based on the gallonage figure in the UPG records.

Field & McGrady has not claimed that it was disproportionately overcharged. Nor has it attempted to prove that it was injured by Enron's alleged overcharges. Therefore, under the "mid-range" presumption of injury, Field & McGrady will receive a principal refund of $41,130 (10,886,120 x $.00601 x 60 percent = $39,256). Field & McGrady will also receive $26,725 as its pro rata share of the interest that has accrued on the consent order funds since they were placed in escrow. Accordingly, the total refund granted to Field & McGrady, including interest, is $65,981.

The total volume approved in this Decision and Order is 22,295,228 gallons of Enron product and the total refund granted, including interest, is $135,142.

It Is Therefore Ordered That:

(1) The Applications for Refund submitted by Amerigas Propane, Inc. (Case No. RF340-23), Larry’s Bottled Gas Company (Case No. RF340-71) and Field & McGrady Special (Case No. RF340-177) are hereby granted as specified in paragraph (2).

(2) The Director of Special Accounts and Payroll, Office of the Controller, of the Department of Energy shall take appropriate action to disburse a total of $69,131 from the DOE deposit fund escrow account maintained at the Department of the Treasury and funded by Enron Corp., Consent Order No. 730V00221Z, to (Case No. RF340-23):

Amerigas Propane, Inc.

c/o Lynn Quinn

P.O. Box 965

Valley Forge, PA 19482

and $30 to (Case No. RF340-71):

Larry’s Bottled Gas Company

Or Energy Refunds, Inc.

31 Small Lane

Hardin, KY 42048

and $65,981 to (Case No. RF340-177):

Field & McGrady Special, a Partnership

c/o Michael O’N. Barron

Attorney at Law

12417 Conway Road

St. Louis, MO 63141

(3) The determinations made in this Decision and Order are based on the presumed validity of the statements and documentary material submitted by the applicants. Any of those determinations may be revoked or modified at any time upon a determination that the factual bases underlying the Applications for Refund are incorrect.

(4) This is a final Order of the Department of Energy.

George B. Breznay

Director

Office of Hearings and Appeals

Date: August 21, 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)Interest has accrued on the Enron consent order funds since July 27, 1988, the date that Enron remitted the consent order funds to the DOE. Almost all of this money earns interest at rates established in auctions of six month treasury bills. The current ratio of interest to principal in the Enron account is 0.6808.