June 25, 2004
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Name of Petitioner: Vessels Gas Processing Company/
Enron Corporation
Date of Filing: May 30, 1996
Case Number: RF354-00008
On December 21, 1995, the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) issued a Decision and Order under the provisions of 10 C.F.R. Part 205, Subpart V, instituting special refund procedures for the distribution of monies obtained by the DOE through a Consent Order with the Vessels Gas Processing Company (Vessels). (1) See Vessels Gas Processing Company, 25 DOE ¶ 85,085 (1995)(Vessels). Under the Consent Order, Vessels paid $1,564,222.74 to the DOE in settlement of all claims and disputes concerning Vessels compliance with DOE price regulations in sales of Natural Gas Liquids (NGLs) and Natural Gas Liquid Products (NGLPs) from its Irondale, Colorado, gas plant during the period September 1, 1973, through December 31, 1977, and from its Brighton, Colorado, plant during the period April 1, 1975, through December 31, 1977.
This determination involves an Application for Refund filed in the Vessels proceeding by Enron Corporation, (Enron), a reseller of propane, butane and natural gasoline. Enron purchased these petroleum products from Vessels during periods involved in the Consent Order and has been identified as one of the parties overcharged in the Vessels sales transactions. (2) In its application, Enron has documented purchases of 11,456,189 gallons of propane, natural gasoline and butane from Vessels.
In the Vessels proceeding, end-user applicants may receive a refund based solely upon documentation of purchases from the consent order firm. An end-user, for example a firm that actually consumed the products which it purchased is assumed to have experienced injury from any overcharges in the prices it paid to the consent order firm and may therefore receive a full volumetric refund (i.e., its proportionate share of the consent order funds) based solely upon documentation of its volume of purchases from the consent order firm. (3) See Vessels, 25 DOE at 88,213. A firm that purchased products for resale, however, had an opportunity to escape overcharge injury by increasing its resale prices to its customers by the amount of any increased prices which it paid. However, in lieu of making a detailed econometric showing of economic harm, reseller applicants, such as Enron, may receive a refund based upon a presumption of injury.(4) See Vessels, 25 DOE at 88,214. Under this presumption, a claimant will receive as its refund the larger of $10,000 or 60 percent of its allocable share up to $50,000. See Vessels, 25 DOE at 88,214. Enron has requested a refund using the medium-range presumption of injury.
After examining Enrons application, we find that Enron has substantiated its gallonage claim and we will approve Enrons application for refund. Enrons allocable share amounts to the maximum $50,000 principal amount (11,456,189 gallons x $0.0261 per gallon x .60 = $179,404 > $50,000). The total refund approved is $98,421, representing $50,000 in principal and $48,421 in interest. (5)
Although we have carefully examined Enron's claim and supporting data, the determinations reached in this Decision are based on the representations made in the application. If the factual basis underlying any of our determinations is later shown to be inaccurate, this Office has the authority to order appropriate remedial action, including rescission or reduction of the refund ordered.
(1) The Application for Refund filed by Enron Corporation, Case No. RF354-00008, is hereby granted 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 check in the amount of $98,421 (representing $50,000 in principal and $48,421 in interest) from the DOE deposit fund escrow account funded by Vessels Gas Processing Company maintained at the Department of the Treasury (Account No. 999DOE035W) made payable to Enron Corporation or Michael ON. Barron, Esq. and send it to the address below:
Enron Corporation
or Michael ON. Barron, Esq.
12417 Conway Road
St. Louis, MO 63141
(3) The determinations made in this Decision and Order are based upon the presumed validity of statements and documentary material submitted by the applicant. The determinations may be revoked or modified at any time upon a finding 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 25, 2004
(1)In this proceeding Vessels refers to Vessels Gas Processing Company (VGPC) and Vessels Gas Processing, Limited (VGPL). In addition, Vessels refers to the operations of Halliburton Resource Management (HRM) at the Irondale and Brighton plants on behalf of VGPC and VGPL. Vessels operated these plants under a contract with HRM, a division of Halliburton Company.
(2)During the course of a compliance audit which led to the Vessels consent order, Enron was identified by the DOE Economic Regulatory Administration has having been overcharged in its purchases from Vessels. As a result, Enron is eligible to seek a refund in the Vessels proceeding.
(3)Because the money paid in a consent order settlement does not equal the value of the violations alleged, full refunds of the amount of the overcharges actually levied cannot be paid. Instead, the total principal amount of the consent order fund is allocated among eligible purchasers. We first divide the fund by the total number of gallons of regulated products sold. Vessels, at 88,213 n.8. The resulting figure is termed a volumetric factor. This figure is then multiplied by the total volume of the applicants purchases for which a refund is appropriate. Id. at 88,213. This is the applicants allocable share. On August 13, 1997, the DOE issued a Supplemental Decision and Order increasing the per gallon volumetric factor for the Vessels refund proceeding from $0.0185 to $0.0261. The modification was necessary because of an error OHA made in its initial calculation of the volumetric factor in Vessels. See Vessels Gas Processing Company, 26 DOE ¶ 85,052 (1997).
(4)In the Vessels proceeding, a reseller claimant who sought a full volumetric refund would be required to demonstrate injury by showing that it possessed a bank of unrecovered cost, see infra, and that at the time it purchased products from Vessels, market conditions would not permit it to pass through the additional costs associated with the alleged overcharges. See Vessels, 28 DOE at 88,214.
(5)Enron Corporation is currently in bankruptcy. The counsel representing Enron in this proceeding has certified that the refund will be paid to Enrons bankruptcy trustee.