Case NO. RF354-00007
March 17, 1997
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Petitioner: Vessels Gas Processing Company/
Gas Engineering & Equipment Co.
Date of Filing: May 29, 1996
Case Number: RF354-00007
On December 21, 1995, the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) issued a Decision and Order instituting special refund procedures for distribution of a fund obtained by the DOE through a Consent Order entered into with Vessels Gas Processing Company (Vessels) of Colorado.(1) See Vessels Gas Processing Company, 25 DOE ¶ 85,085 (1995)(Vessels). The Consent Order settled an enforcement proceeding initiated when the DOEs Economic Regulatory Administration (ERA) performed an audit of Vessels business records. Under the terms of the Consent Order, Vessels agreed to remit $1,564,222.74 to the DOE in order to settle all claims and disputes between Vessels and DOE regarding Vessels compliance with DOE price regulations in sales of Natural Gas Liquids (NGLs) and Natural Gas Liquid Products (NGLPs) during the period from September 1, 1973 through December 31, 1977 at the firms Irondale gas plant and April 1, 1975 through December 31, 1977 at its Brighton gas plant.
This determination involves an Application for Refund in the Vessels refund proceeding filed by Gas Engineering & Equipment Company (GE&E), a natural gas liquid products reseller located in Grand Junction, CO. GE&E is one of the overcharged Vessels NGL/NGLP customers identified by the ERA audit of Vessels.
In Vessels, the DOE established procedures for the distribution of the funds held in the Vessels escrow account. Applicants for refunds from that account must certify that they purchased NGLs or NGLPs from Vessels during the audit period from one of the two Vessels gas plants. Vessels requires applicants to demonstrate that they were injured by Vessels pricing practices in order to receive a refund. In order to establish injury an applicant must show that the Vessels overcharges were absorbed by the applicant rather than simply passed along to the applicants customers. However, Vessels also identifies two classes of potential claimants for whom refunds are not available. Claimants with corporate affiliations with Vessels are ineligible to participate in this proceeding since any refunds granted such a party would in practice be a payment to Vessels itself. Also, parties advancing refund claims based upon spot purchases from Vessels are presumed to have suffered no injury as a result of their purchases. Vessels at 88,214. This presumption is rebuttable however and may be vitiated by a showing that the spot purchases were made to fulfill a base period supplier obligation and the Vessels product was sold at prices which were below the cost of the product. Id.
In the present case, GE&E claims a refund based upon its purchase of 24,004 gallons of natural gasoline and butane from Vessels Irondale plant. In support of this refund claim the firm has submitted a Vessels invoice which documents its purchase volume claim. However it appears from the record that the transactions covered by this invoice were the sum of the firms purchases from Vessels during the consent order period. Since the audit at the Irondale plant covered the period from September 1973 through December 1977, a period of approximately 51 months, we believe the GE&E claim, which involves three transactions during the month of October 1973, is based upon spot purchases. Under the criteria established in Vessels GE&E is not eligible for a refund since the firm has not demonstrated that it was injured by its purchases from Vessels. For this reason we have determined that the GE&E refund claim be denied.
It Is Therefore Ordered That:
(1) The Application for Refund filed by Gas Engineering and Equipment Company (Case No. RF354-00007) is hereby denied.
(2) This is a final order of the Department of Energy.
George B. Breznay
Director
Office of Hearings and Appeals
Date: March 17, 1997
(1)In this proceeding Vessels refers to Vessels Gas Processing Company (VGPC) and Vessels Gas Processing, Limited (VGPL). In addition, Vessels refers to the operations of Halliburton Resource Management (HRM) at the Irondale and Brighton plants on behalf of VGPC and VGPL. Vessels operated under a contract with HRM, a division of Halliburton Company (Halliburton). Under that agreement, the natural gas owned by Vessels was processed and sold at three plants owned and operated by HRM. HRM was paid or retained a service fee from the sales proceeds.