July 22, 1997
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Applicant:West Penn Power Company
Date of Filing: July 3, 1995
Case Number: RG272-633
This Decision and Order will consider the Application for Refund filed by West Penn Power Company (West Penn). The application is based upon West Penn's purchases of refined petroleum products during the crude oil price control period (August 19, 1973 through January 27, 1981). West Penn has requested a refund from crude oil funds 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. As explained below, we will deny the application.
In the past, purchasers of refined petroleum products were allowed to apply to the OHA for a refund from crude oil overcharge funds collected by the DOE. 51 Fed. Reg. 27899 (August 4, 1986). We have established refund procedures for these funds, which have been made available through consent orders between the DOE and numerous 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). The refund procedures that we have established specify that, to receive a refund, an applicant generally must: (1) document its purchase volumes; and (2) show that it was injured by crude oil overcharges.
We have further established that an applicant is presumed to have absorbed rather than passed on crude oil overcharges if it (1) was an end-user (ultimate consumer) of petroleum products; (2) was in a business unrelated to the petroleum industry; and, (3) was not subject to the price regulations of the DOE or its predecessors. 52 Fed. Reg. 11737 (April 10, 1987); City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987). Such an applicant is presumed to have been injured and does not need to provide a showing of injury.
In addition, we have established that an electric utility that had a fuel adjustment pass through provision during the overcharge period is eligible to receive a refund under the presumption of end-user injury only to the extent that it passes on 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.
West Penn is an electric utility. In a letter dated June 30, 1997, we requested that West Penn submit a statement in writing that it will pass through any refund received to its customers. We received a response from Patricia Clark of Allegheny Power, West Penn's parent company, dated July 17, 1997. In the response, Ms. Clark made the following statement.
There is no reconciliation mechanism that will automatically pass through this refund to West Penn's customers. West Penn will, however, include the amount of the refund in its deferred fuel account upon receipt of the refund. The deferred balance reflects a net credit and will be included in West Penn's Pennsylvania restructuring filing (due August 1) as a reduction to West Penn's quantification of
stranded costs and request for a competitive transition charge. In this way, ... West Penn's customers will receive the full benefit of this refund.
This statement does not meet the requirements for West Penn to receive a refund. It does not give any indication that the refund will be disbursed to the individuals injured by the overcharges. Consequently, granting a refund to West Penn would not provide restitution to the injured parties, West Penn's customers. Therefore, we will deny West Penn's application.
It Is Therefore Ordered That:
(1) The Application for Refund filed by West Penn Power Company is hereby denied.
(2) This is a final Order of the Department of Energy.
George B. Breznay
Director
Office of Hearings and Appeals
Date: July 22, 1997