July 29, 1997
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Names of Petitioners: Enron Corp./
Nebraska Public Power District
United LP Gas Corporation
Dates of Filing: January 18, 1994
November 8, 1994
Case Numbers: RF340-196
RF340-201
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 Nebraska Public Power District (Nebraska) and United LP Gas Corporation (United).
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 public utilities would not be required to demonstrate injury in order to receive refunds equal to their full allocable shares. In Subpart V proceedings, we generally treat public utilities with fuel cost pass through provisions as end-users because they certify that they will pass through any refund on a dollar for dollar basis to their customers. E.g., Atlantic Richfield Company/Northern Illinois Gas Company, 20 DOE ¶ 85,093 (1990). Any overcharges incurred by a public utility with rate adjustment clauses would have been channeled to its customers, the ultimate consumers of the covered products, through price increases. Therefore, we require only that a public utility refund claimant (i) document the volume of covered products that it used or sold, and (ii) certify that it will pass any refund on to its customers so that it channels the refund to end-users. Any public utilities that meet these requirements receive refunds equal to their full allocable shares. Enron at 88,960.
Nebraska was an electric generating public utility. It has submitted all of the information required of public utility applicants in the Enron proceeding. It submitted its own company records which indicate that it purchased 709,598 gallons of petroleum products from Northern between January 1973 and January 1981. In a letter to the OHA dated May 5, 1993, R.L. Gangel, Vice President of Finance and Administration for Nebraska, certified that Nebraska will notify the applicable state and regulatory agencies of any refunds that it may receive in the Enron refund proceeding, and that it will pass through the refund to its customers through fuel adjustment mechanisms which govern its rates.
Nebraska has not claimed that it was disproportionately overcharged. Therefore, as a public utility, Nebraska will receive a principal refund of $4,265 (709,598 x $.00601 = $4,265). Nebraska will also receive $2,872 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 Nebraska, including interest, is $7,137.
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 needs only document its purchases of covered Enron products in order to receive a refund of its full allocable share. Id. at 88,960.
United has submitted all of the information required of applicants in the Enron proceeding under the "small claim" presumption of injury. United claims that in 1980 and 1981, it made regular purchases of Enron natural gasoline in order to supply its customers, all of whom were natural gasoline retailers in the Dallas, Texas area. Enron records in DOE's possession of the sales of UPG indicate that United purchased 1,271,310 gallons of natural gasoline from UPG in 1980 and January 1981. In light of the small size of this claim, and the corroborating UPG records, we believe that it is reasonable to accept United's explanation concerning the nature of its business and its Enron purchases.
United has not claimed that it was disproportionately overcharged. Nor has United attempted to prove that it was injured by Enron's alleged overcharges. Therefore, under the "small claim" presumption of injury, United will receive a principal refund of $7,641 (1,271,310 x $.00601 = $7,641). United will also receive $5,145 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 United, including interest, is $12,786.
The total volume approved in this Decision and Order is therefore 1,980,908 gallons of Enron product and the total refund granted, including interest, is $19,923.
It Is Therefore Ordered That:
(1) The Applications for Refund submitted by Nebraska Public Power District (Case No. RF340-196) and United LP Gas Company (Case No. RF340-201) 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 $7,137 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. RF340-196):
Nebraska Public Power District
c/o Bill Nickeson, Purchasing Manager
P.O. Box 499
Columbus, NE 68602-0499
and $12,786 to (Case No. RF340-201):
United LP Gas Corporation
Or Energy Refunds, Inc.
31 Small Lane
Hardin, KY 42048
(3) Nebraska Public Power District shall pass through to its electric utility customers the entire amount of the refund made available to it pursuant to this determination, without deduction for any expense.
(4) No later than six months after the issuance of this Decision and Order, Nebraska Public Power District shall file a report with the Office of Hearings and Appeals of the Department of Energy. That report shall indicate the manner in which it has complied with paragraph (3) above.
(5) 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.
(6) This is a final Order of the Department of Energy.
George B. Breznay
Director
Office of Hearings and Appeals
Date: July 29, 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 roughly two to three.