Case No. RR340-00005
May 12, 1998
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Motion for Reconsideration
Name of Applicant: Enron Corp./
Heritage Propane
Date of Filing: April 24, 1998
Case Number: RR340-00005
On April 24, 1998, Heritage Propane (Heritage) filed a Motion for Reconsideration with the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE). If the Motion were granted, the OHA would reconsider the Application for Refund filed by Heritages subsidiary, Ikard & Newsom, in the Enron Corporation special refund proceeding (Case No. RF340-00134) that was dismissed on April 1, 1998.
On April 29, 1992, Bob Blackman of Ikard & Newsom submitted an Application for Refund. This Application was based upon purchases of refined petroleum products which were made by Arrow Butane Company (Arrow) between June 13, 1973 and January 1981 (the refund period). After receiving two other submissions from Ikard & Newsom, we found that we still needed additional information regarding the business relationship between Ikard & Newsom and Arrow. On January 29, 1998, we contacted Mr. Blackman by letter and requested that he submit documents to show that Ikard & Newsom is the proper recipient of Arrows refund. We requested that he submit this information by March 6, 1998. On February 17, 1998, Ralph Berger of Heritage contacted the OHA by telephone. He stated that he received our letter, but that Mr. Blackman was no longer working for Heritage and that Ikard & Newsom was no longer in business. At Mr. Bergers request, we faxed him a copy of the Application and asked that he include with his response a description of the business relationship between Ikard & Newsom and Heritage. We did not receive a response from Mr. Berger, and we dismissed the Application on April 1, 1998, more than three weeks past the March 6 deadline. Shortly after the dismissal, we received a telephone call from Mr. Berger, who stated that he had forgotten to submit the request on time because his office was in the process of moving from New Mexico to California.
In its April 24, 1998 Motion for Reconsideration, Heritage asks us to reconsider our dismissal. With its Motion, Heritage included the information we requested in our letter of January 29. Because Heritage responded to our request immediately after receiving our dismissal letter, and was involved in a large office move at the time of our request, we believe that a dismissal would unfairly penalize Heritage, and we have decided to grant its Motion for Reconsideration. We will therefore analyze the Application.
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.
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.
In Enron, we 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 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.
Heritage has applied for a refund based on purchases of propane from Northern made by Arrow during the consent order period. Heritage submitted numerous documents with the purpose of showing that it is entitled to a refund based on Arrows purchases. We have carefully reviewed these documents and we find that Heritage has adequately shown that it is the proper recipient of any refund based on Arrows petroleum purchases.
Heritage has submitted all of the information required of applicants in the Enron proceeding under the "mid-range" presumption of injury. Heritage claims that Arrow made regular purchases of propane from Enrons affiliate Northern throughout the refund period (June 13, 1973 through January 1981) in order to supply its retail customers. Heritage submitted a copy of a certification required by the Mandatory Propane Allocation Program dated December 1973 which shows that Arrow purchased approximately 720,875 gallons of propane per year. In light of this certification, we believe that it is reasonable to accept Heritages explanation concerning the nature of its business and its Enron purchases. Therefore, the total approved gallonage claim granted to Heritage in this Decision is 5,500,276 gallons (720,875 gallons per year x 7.63 years in the refund period = 5,500,276 gallons).
Heritage has not claimed that Arrow was disproportionately overcharged. Nor has it attempted to prove that Arrow was injured by Enron's alleged overcharges. Therefore, under the "mid-range" presumption of injury, Heritage will receive a principal refund of $19,834 (5,500,276 x $.00601 x 60 percent = $19,834). Heritage will also receive $14,673 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 Heritage, including interest, is $34,507.
It Is Therefore Ordered That:
(1) The Motion for Reconsideration submitted by Heritage Propane (Case No. RR340-00005) is 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 $34,507 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. RR340-00005):
Heritage Propane
c/o William V. Cody
Vice President - Supply & Wholesale
11768 Atwood Road, Suite 21-A
Auburn, CA 95603
(3) The determination made in this Decision and Order is based on the presumed validity of the statements and documentary material submitted by the applicant. The determination may be revoked or modified at any time upon a determination that the factual basis underlying the Application for Refund is incorrect.
(4) This is a final Order of the Department of Energy.
George B. Breznay
Director
Office of Hearings and Appeals
Date: May 12, 1998
(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 is paid on Enron refunds at the rate of $0.7398 per dollar of refund.