Case No. RF340-00009
July 10, 1998
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Petitioner: Enron Corp./
Liquid Petroleum Corp.
Date of Filing: August 1, 1991
Case Number: RF340-9
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 an Application for Refund submitted by Liquid Petroleum Corporation (LPC), a reseller of Enron butane.
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.
We further 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 their purchases of covered Enron products in order to receive a refund of their full volumetric share. Id. at 88,960.
In Enron, we also 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 under the "mid-range" presumption of injury.
Finally, we adopted a rebuttable presumption that firms that purchased Enron covered products on the spot market were not injured by Enron's alleged overcharges. A claimant is a spot purchaser if it made only sporadic purchases of significant volumes of Enron's covered products. Id. at 88,961.
We first considered whether LPCs purchases from Enron were spot purchases. After reviewing the firms purchase patterns, we note that it made purchases from Enron in every month for 14 months beginning in November 1978 and ending in December 1979. It also made purchases during the three-month period from January through March 1978. Moreover, with the exception of one unusually large purchase in November 1978, the LPC purchases from Enron were all under 1 million gallons per month. Consistent purchases of product at this rather moderate level over a period of more than one year do not constitute spot purchases of product in this case.
LPC claims that it purchased a total of 6,920,970 gallons of butane from Enron from 1978 through 1979. However, it has not provided any documentation for this assertion. Enron has provided us with its own data showing that LPC purchased only 6,122,970 gallons of butane during that period. In view of the fact that LPC has not offered any documentary support for the levels of its Enron purchases, we have decided to refer to the volume indicated in Enrons own data in order to calculate LPCs refund share.
LPC has not claimed that it was disproportionately overcharged with respect to any of the product that it purchased from Enron. Nor does LPC seek to prove that it was injured by Enron's alleged overcharges. (2) Therefore, under the "mid-range" presumption of injury, LPC will receive a principal refund of $22,079 (the greater of $10,000 or 6,122,970 x $.00601 x .6 = $22,079). LPC will also receive $16,334 as its pro rata share of the interest that has accrued on the consent order funds since they were placed in escrow.(3)Accordingly, the total refund granted to LPC, including interest, is $38,413.
The total volume approved in this Decision and Order is therefore 6,122,970 gallons of Enron product and the total refund granted, including interest, is $38,413.
LPC is no longer in business. The record in this case indicates that the assignee of the right to receive the LPC refund and former owner of LPC, Mrs. Ruth Daman, is now deceased. The firms representative has submitted a copy of a trust established by Mrs. Daman. That document indicates that the proper party to receive the refund in this case is the trust, which has not yet been dissolved. Accordingly, the refund will be disbursed in that manner.
It Is Therefore Ordered That:
(1) The Application for Refund submitted by Liquid Petroleum Corporation (Case No. RF340-9) is hereby granted as specified in Paragraph (2) below.
(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 $38,413 ($22,079 principal and $16,334 interest) from the DOE deposit fund escrow account maintained at the Department of the Treasury and funded by Enron Corp., Consent Order No. 730V00221Z, to:
Liquid Petroleum Corp. OR Ruth Daman Trust
c/o Michael O'N. Barron
Attorney at Law
12417 Conway Road
St. Louis, Missouri 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 applicant. Any of those determinations may be revoked or modified at any time upon a determination that the factual bases underlying the Application 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: July 10, 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) See Letter of June 20, 1997, from Michael Barron.
(3)Interest is now being paid on Enron refunds at the rate of $.7398 per dollar of refund.