Case No. RF340-00173
June 11, 1998
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Petitioner: Enron Corp./
Wallace Oil Reclaiming Company
Date of Filing: July 10, 1992
Case Number: RF340-173
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, 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 Wallace Energy, Inc., which is based on purchases made during the refund period (June 13, 1973 through January 1981) by Wallace Oil Reclaiming Company. Wallace Oil Reclaiming Company incorporated in 1982 and changed its name to Wallace Energy, Inc.
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 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.
Wallace Energy has submitted all of the information required of applicants in the Enron proceeding under the "small claim" presumption of injury. Richard Wallace, the president of Wallace Energy, claims that in 1979 and 1980, Wallace Oil Reclaiming Company made regular purchases of Enron NGLs from UPG. The NGLs were used as fuel to heat non-pipeline quality crude oil in a pre- refining process. The treated crude oil was then sold to refineries. UPG records in the possession of the DOE, indicate that Wallace Oil Reclaiming Company purchased 427,352 gallons of Enron branded NGLs in 1980. In light of the small size of this claim and the UPG records, we believe that it is reasonable to accept Mr. Wallaces explanation concerning the nature of his business and its Enron purchases.
Wallace Energy 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, Wallace Energy will receive a principal refund of $2,568 (427,352 x $.00601 = $2,568). Wallace Energy will also receive $1,900 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 Wallace Energy, including interest, is $4,468.
It Is Therefore Ordered That:
(1) The Application for Refund submitted by Wallace Energy, Inc., (Case No. RF340-173) 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 $4,468 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. RF340-173):
Wallace Energy, Inc.
f/k/a Wallace Oil Reclaiming Company
c/o Richard Wallace
771 Steele Street
Denver, CO 80206
(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 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: June 11, 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.