Case No. RF272-67318

OCTOBER 3, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Applicant:Puerto Rico Electric Power Authority

Date of Filing: June 30, 1988

Case Number: RF272-67318

This Decision and Order will consider an Application for Refund submitted by Puerto Rico Electric Power Authority (PREPA). PREPA operates an electricity generating utility. In its Application, PREPA has requested a refund from crude oil overcharge funds. These funds are available for disbursement by the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) under the provisions of 10 C.F.R. Part 205, Subpart V.

Formerly, purchasers of refined petroleum products during the crude oil price control period could apply to the DOE for a refund from crude oil overcharge funds.(1)51 Fed. Reg. 27899 (August 4, 1986). The crude oil overcharge funds had been collected by the DOE through consent orders with certain firms that sold crude oil during the price control period. E.g., Berry Holding Co., 16 DOE ¶ 85,405 (1987); A. Tarricone, Inc., 15 DOE ¶ 85,495 (1987); Mountain Fuel Supply Co., 14 DOE ¶ 85,475 (1986).

We established refund procedures for these funds. The procedures specify that, to receive a refund, an applicant generally must document its purchase volumes and show that it suffered injury from crude oil overcharges. If an applicant

is an end-user, however, it does not have to make a showing of injury. We have found it reasonable to presume that an end- user absorbed rather than passed through the crude oil overcharges.(2)52 Fed. Reg. 11737 (April 10, 1987); City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987).

In addition, we established that an electricity generating utility is eligible to receive a refund under the presumption of end-user injury only to the extent that it passes through the entire refund to its retail customers. 52 Fed. Reg. 11737 at 11742-43; see also Pacific Gas & Electric, 17 DOE ¶ 85,234 (1988) (PG&E); enforced sub nom. In re: The Department of Energy Stripper Well Exemption Litigation, 707 F.Supp. 1269 (D.Kan. 1989). We found that granting a refund to a utility for the benefit of its injured customers "will assist us in distributing refunds in an efficient, cost-effective and equitable manner." Office of Special Counsel/ Tenneco Oil Co., 9 DOE ¶ 82,538 at 85,203 (1982). This is because "utilities simply 'stood in the shoes' of their customers and, having detailed records, were ideally situated to apply for and funnel back the refunds for oil overcharges to the very persons who were injured in the first place — namely, their customers." PG&E at 88,465.

PREPA filed a certification with the OHA stating that it would pass through the refund to its customers.(3)As a result, PREPA's claim can be considered under the presumption of end- user injury.

PREPA purchased petroleum products from several suppliers, including the Commonwealth Oil Refining Company (CORCO). Based on our experience administering the crude oil price and allocation controls, we believe that, in general, CORCO’s contracts did not allow it to pass through crude oil overcharges to its customers. Commonwealth Oil Refining Co., 24 DOE ¶ 82,723 at 82,725-26 (1995). PREPA therefore would not have suffered injury in its purchases from CORCO, and would not be eligible for a refund for these purchases.

We invited PREPA to provide a demonstration that it was injured by its purchases from CORCO. It was unable to do so. Consequently, in this Decision we will consider PREPA’s application only for the volume of products purchased from suppliers other than CORCO. If PREPA wishes us to consider a refund for the volume of products it purchased from CORCO, it must submit a Motion for Reconsideration demonstrating that it suffered injury from crude oil overcharges in its purchases from CORCO.

PREPA's claim is for fuel it used to generate electricity. As a generating utility certifying pass-through, PREPA is presumed injured by the crude oil overcharges and is entitled to receive its full allocable share of the crude oil overcharge funds. PREPA’s gallonage claim was computed from monthly fuel purchase reports that PREPA compiled during the price control period. We find that PREPA's gallonage figure is reasonable.

We calculate the refund amount by multiplying the applicant's approved gallonage claim by the volumetric refund amount of $.0016 per gallon. The total volume that we have approved for PREPA is 4,361,022,172 gallons of refined petroleum product. The total refund that we will grant PREPA is therefore $6,977,635.

The final deadline for the crude oil refund proceeding was June 30, 1995. It is the current policy of the DOE to pay eligible crude oil refund applicants at the rate of $0.0016 per gallon. We will decide whether sufficient crude oil overcharge funds are available for additional refunds for this and other successful applicants when we are better able to determine how much additional money will be collected from firms that have either outstanding obligations to the DOE or enforcement cases currently in litigation.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Puerto Rico Electric Power Authority (Case No. RF272-67318) is hereby approved as set forth in Paragraph (2) below.

(2) The Director of Special Accounts and Payroll, Office of Departmental Accounting and Financial Systems Development, Office of the Controller of the Department of Energy shall take appropriate action to disburse a total of $6,977,635 from the DOE deposit fund escrow account denominated Crude Tracking - Claimants II, Account Number 999DOE010Z, maintained at the Department of the Treasury. The Director shall disperse the refund directly to Puerto Rico Electric Power Authority via wire transfer. Instructions concerning the wire transfer are being submitted to the Director by separate memorandum.

(3) Within 60 days of the date of issuance of this Decision and Order, Puerto Rico Electric Power Authority shall notify the appropriate regulatory agency of the amount of its refund as approved in this Decision and Order. Any future refund amounts shall be reported to the appropriate agency within 60 days of receipt of those funds. Puerto Rico Electric Power Authority shall pass through to its customers the entire amount of the refunds made available to it pursuant to this Decision and Order without deduction of any expense.

(4) No later than six months after the receipt of each refund disbursed pursuant to this Decision and Order, Puerto Rico Electric Power Authority shall file a report with the Office of Hearings and Appeals of the Department of Energy indicating the manner in which it has complied with Paragraph (3) above.

(5) To facilitate the payment of future refunds, Puerto Rico Electric Power Authority shall notify the Office of Hearings and Appeals in the event that there is a change of address, or if an address correction is necessary. Such notification shall be sent to:

Director of Management Information

Office of Hearings and Appeals

Department of Energy

1000 Independence Avenue, S.W.

Washington, D.C. 20585-0107

(6) The determinations made in this Decision and Order are based upon the presumed validity of the statements and documentary materials submitted by Puerto Rico Electric Power Authority. These determinations may be revoked or modified at any time upon a finding that the factual basis underlying the Application for Refund is incorrect.

(7) This is a final Order of the Department of Energy.

George B. Breznay

Director

Office of Hearings and Appeals

Date: October 3, 1997

(1)The crude oil price control period extended from August 19, 1973 through January 27, 1981.

(2)We define an end-user as the ultimate consumer of the petroleum products, who was in a business unrelated to the petroleum industry, and who was not subject to the price regulations of the DOE or its predecessors.

(3)Letter from PREPA to the OHA dated September 4, 1997.