Case No. RR340-00002

December 23, 1999

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Motion for Reconsideration

Name of Petitioner: Enron Corporation/

Amoco Corporation

Date of Filing: March 21, 1994

Case Number: RR340-00002

On July 30, 1993, the Office of Hearings and Appeals (OHA) issued a Decision and Order granting a refund of $68,540 to Amoco Corporation (Amoco) in the Enron Corporation (Enron) refund proceeding. On March 21, 1994, Amoco filed a Motion for Reconsideration of the July 30 Order.(1) The details of the original Amoco refund claim and the overall Enron refund proceeding are set forth in Enron Corp./Amoco Corp., Case No. RF340-124, July 30, 1993 (unpublished Decision and Order)(hereinafter Enron/Amoco). See also Enron Corp., 21 DOE ¶ 85,323 (1991) (hereinafter Enron). For purposes of the instant Motion for Reconsideration, the relevant facts are as follows.

In its original refund application, Amoco claimed that it purchased 136,364,652 gallons of NGLPs from Enron, and elected to receive the maximum refund under the applicable presumption of injury set forth in Enron. Accordingly, we granted Amoco a principal refund of $50,000. The firm also received interest on that amount of $18,540.

In its Motion for Reconsideration, Amoco seeks to reopen the injury showing issue. The firm asks that we now consider whether the firm is eligible for a full volumetric refund based upon a showing of injury, rather than limiting the firm’s refund to the maximum payment of $50,000 available under a presumption of injury.

The Motion for Reconsideration is a vehicle that permits the OHA to correct errors in and make appropriate adjustments to prior Decisions and Orders. See Oceana County Road Commission, 20 DOE ¶ 85,081 (1990). It generally is not appropriate for an applicant to use the Motion for Reconsideration to reopen a question that has been previously closed at its own request. However, in this instance, Amoco only discovered subsequent to our initial decision that the monthly purchase information necessary to prove injury existed in sources outside of the company. Moreover, Amoco submitted this additional information aimed at establishing injury in a timely fashion and within the time period when we were accepting Enron refund applications. Accordingly, in this instance we will grant this request and consider Amoco’s injury claim.

I. Background.

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.(2)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 allow certain types of claimants to receive a refund without a detailed demonstration of injury. As noted above, Amoco initially chose to rely upon these presumptions of injury, and in a Decision and Order dated July 30, 1993, we granted Amoco a refund, including interest, of $68,540. In its Motion for Reconsideration, the firm has submitted additional information aimed at showing that it was injured with respect to the product that it purchased from Enron and resold to third parties or used in its refining operations. Accordingly, we now will consider granting Amoco a refund up to its full allocable share based on our analysis of this information concerning injury.

However, in Enron we also 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. This presumption is based upon the general conclusion that purchasers on the spot market tend to have considerable discretion in where and when to make purchases. Therefore, a firm would not have made spot purchases of Enron product without evaluating the full financial effect of those purchases. Accordingly, we believe that a spot purchaser would not generally have made a spot purchase unless it was to its financial advantage. A spot purchaser can rebut this presumption by demonstrating that it was in fact injured by its spot purchases. See generally Sauvage Gas Co./NGL Supply, Inc., 19 DOE ¶ 85,622 (1989). In prior proceedings we have allowed applicants to rebut the spot purchaser presumption by demonstrating that: 1) they were forced to make the purchases to meet their base period supply obligations; or 2) they resold the product at a loss which was not subsequently recovered. E.g., Saber Energy, Inc./Mobil Oil Corp., 14 DOE ¶ 85,170 (1986). As indicated below, we conclude that Amoco’s purchases of propane and natural gasoline from Enron are subject to the spot purchaser presumption of non- injury.

II. Analysis.

A. Amoco Was Not Injured by Its Spot Purchases of Enron Propane and Natural Gasoline.

Amoco’s Enron purchases occurred at the wholesale marketer level of NGLP distribution. They therefore appear to meet the characteristics of sales in the producer/wholesaler market that often involve large volumes and a price that is usually negotiated for each transaction.

Accordingly, it appears that Amoco purchased Enron product primarily on the spot market. As noted above, spot purchasers are generally presumed not to have been injured by the alleged overcharges. The OHA has adopted this presumption because firms usually made spot purchases only when those transactions were beneficial to them and provided the best available terms. Thus, it is unlikely that they would have been injured on those purchases by the consent order firm's pricing practices.

In determining whether Amoco’s purchases from Enron were spot purchases, it is important to first understand the purpose and scope of the presumption, so that it may be correctly applied to the facts of this case. In this regard, Enron's extensive discussion of the spot purchaser presumption in the context of responding to comments on the proposed Enron implementation order provides a detailed explanation of the meaning of the presumption, and can provide a basis for our analysis of whether the presumption is applicable to Amoco’s purchases and sales of Enron products.

In Enron, we concluded that the concept of spot purchaser is sufficiently well defined to allow applicants to understand the theoretical basis for the presumption.

The term spot purchase is commonly used and understood in the petroleum industry to mean a contract for the purchase and sale of petroleum products on a short term basis. Sauvage Gas Company/NGL Supply, Inc., 19 DOE ¶ 85,622 at 89,142 (1989)(Supply). The OHA has interpreted the term spot purchaser to mean any firm that purchased significant volumes of covered products from a supplier on a sporadic or isolated basis outside of a long term supply obligation.

Enron at 88,955. It is clear from this discussion that the purchaser's discretion in selecting its supplier of product is a key element underlying the presumption of non-injury.

We have consistently determined that spot purchasers tend to have considerable discretion in where and when to make purchases and therefore would not have made spot market purchases from a firm at increased prices unless they were able to pass through the full price of the purchases to their own customers. The OHA has utilized this spot purchaser presumption of non-injury in numerous special refund proceedings.

Id., citing Sauvage, 17 DOE ¶ 85,304. We recognize that short term, discretionary sales and purchases may have been a normal business arrangement in certain portions of the NGL industry, particularly in the producer and wholesale reseller markets. Nevertheless, we believe such spot market purchases of Enron product establish a presumption that the purchaser was not injured. Such a purchaser may submit additional information concerning its business operations to rebut the presumption on a case-specific basis. As we noted in Enron,

The OHA examines the circumstances of each case to make an initial determination whether the applicant's purchases were likely to have been spot purchases. Where it appears likely that an applicant's purchases were spot purchases, the applicant is generally notified of our tentative conclusion and offered an opportunity to show either that it was not a spot purchaser or that it was injured by its spot purchases. Since this analysis focuses on the fundamental refund issue, viz., whether the applicant was injured, there is no merit to the claim that it is based on an impermissibly vague definition. ...

In Supply, ... we stated that "the determination of whether a [sic] individual's purchases from a particular supplier are spot purchases is a question of fact and therefore must be made on a case-by-case basis." Id. at 89,143.

Id. at 88,955-56. This case-by-case injury analysis is a broad one. Under this method, "we consider the circumstances under which a claimant made its purchases and any information submitted by the applicant that might aid our determination concerning whether its purchases were spot purchases." [Emphasis added] Our determination of whether a spot purchaser was injured is similarly based on a case-by-case analysis of information submitted by the claimant. Id. at 88,956-57. Accordingly, we will proceed with an evaluation of Amoco’s relevant business operations and the circumstances under which it purchased butane, propane, and natural gasoline from Enron.

In its Motion, Amoco submitted information concerning its purchases of butane, propane and natural gasoline from Enron. With respect to butane, sales records provided to the DOE by Enron indicate that Amoco purchased 107,743,000 gallons of Enron butane from 1973 through 1979. In a September 1998 Memorandum in support of its Motion, Amoco states that its butane purchases from Enron were used by Amoco’s refineries in the production of motor gasoline. September 1998 Memorandum at 3. The monthly Enron sales summaries for butane that Amoco has submitted with its Motion indicate that Amoco was a steady purchaser of butane from Enron in 1973 and early 1974. These records are sufficient for us to conclude that it is likely that Amoco was a base period purchaser of butane from Enron. As Enron’s base period customer for purposes of being allocated a supply of product under the regulatory framework, Amoco may well have been required throughout the refund period to depend on Enron as a supplier of butane in order to meet its own requirements for that product, regardless of the prices being charged by Enron for butane. Accordingly, with respect to the butane that it purchased from Enron, we conclude that the information submitted by Amoco rebuts the presumption of non-injury for purchases of product made on the spot market.

However, the information provided by Amoco presents very different circumstances with respect to its purchases of propane and natural gasoline from Enron. Information provided to the DOE by Enron indicates that Amoco purchased 15,246,380 gallons of propane and 13,375,272 gallons of natural gasoline from Amoco during the entire refund period. Schedule A attached to the Amoco’s Motion shows that Amoco made the following monthly purchases:

Propane

1977 July 2,100,000 gallons

October 4,200,000 gallons

December 4,200,000 gallons

1979 June 4,620,000 gallons

1980 July 86,853 gallons

October 39,527 gallons

Natural Gasoline

1978 January 684,600 gallons

May 1,470,000 gallons

July 9,240,000 gallons

September 630,000 gallons

1979 June 420,000 gallons

These sporadic and generally high volume purchases of Enron propane and natural gasoline by Amoco fit the pattern of short term, discretionary purchases of product that were a normal business arrangement in the producer and wholesale reseller spot market for NGLPs. As such, we find that the pattern and volume of these purchases establish a presumption that Amoco was not injured by its spot market purchases of Enron propane and natural gasoline, and that Amoco must make a factual showing to refute this presumption.

In its September 1998 Memorandum, Amoco makes the following assertions concerning these purchases:

Because of the scale of Amoco’s operations there is no realistic possibility of its tracing its Enron propane and natural gasoline purchases. Almost all of these purchases were made in storage at Hutchinson, Kansas, or in Enron’s HTI pipeline that was connected to the Hutchinson storage and to the MAPCO system of pipelines.

Amoco had many base period propane customers - independent retailers as well as industrial users throughout the Midwest who had allocation rights for Amoco product and it was its practice to keep propane in storage for their future use as well as to buy propane in the gas liquids pipelines for immediate resale to them.

It also had many base period refiner customers for natural gasoline. These customers were located throughout the Midwest and the Gulf Coast. As with propane, the scale of Amoco’s operations makes it impossible to connect the Enron purchases with any Amoco customer.

September 1998 Memorandum at 3-4.

After reviewing the evidence submitted by Amoco, we conclude that it has not rebutted our finding that it purchased propane and natural gasoline from Enron on the spot market, nor has it made the affirmative showings of injury required of spot market purchasers. The assertion of Amoco that it had base period propane and natural gasoline customers is insufficient, by itself, to establish that its purchases of these products from Enron were not discretionary purchases. As indicated by the schedule of purchases, Amoco’s purchases of propane and natural gasoline from Enron consisted chiefly of very large volumes of product made on a very sporadic basis. Since Amoco acknowledges that it had storage facilities, we believe it is likely that the bulk of its purchases from Enron were discretionary in nature and not to meet the immediate supply requirements of base period customers.(3)

In view of these circumstances, we have determined that Amoco has not shown injury from its spot market purchases of propane and natural gasoline from Enron and has therefore failed to rebut the spot purchaser presumption. Accordingly, we conclude that Amoco was not injured by Enron’s alleged overcharges on propane and natural gasoline, and we will therefore subtract these volumes of Amoco’ purchases from its refund claim.

B. Amoco’s Injury Showing for Its Enron Butane Purchases.

1. The Bases for Showing Injury in this Proceeding.

A refiner whose allocable share exceeds $10,000 must demonstrate that it was injured by Enron's alleged overcharges in order to receive a refund equal to its full volumetric allocation of the consent order fund. The procedures in Enron outline a two-step requirement for applicants attempting to make an injury showing. First, a claimant must show that it accumulated banks of unrecovered increased product costs large enough to justify the amount of the refund claimed during the period from either November 1973, the first month of the banking period, or the first month in which it purchased from Enron, whichever was later, through the end of the banking period. Second, it must show that market conditions forced it to absorb the alleged overcharges. Id. at 88,960.

In order to determine the degree to which market conditions forced an applicant to absorb the alleged overcharges, we apply a three part competitive disadvantage analysis that has been upheld by the courts. See Behm Family Corp. v. DOE, 903 F.2d 830 (Temp. Emer. Ct. App. 1990); Atlantic Richfield Co. v. DOE, 618 F. Supp. 1199 (D. Del. 1985). Under this methodology, we infer that purchases made at above average market prices indicate that the firm was unable to pass through the alleged overcharges. Conversely, we infer that purchases made at prices below the market average placed a firm at a competitive advantage and did not injure the firm. The analysis produces three measures which the OHA uses as guidelines in determining the claimant's level of injury. The first measure, "gross excess cost," is the sum of the amounts by which an applicant's monthly purchase costs exceeded the market average. The second measure, "net excess cost," equals an applicant's gross excess cost minus the sum of the amounts by which its purchase costs were below the market average. This measure provides an indication of the cumulative impact of the alleged overcharges, balancing the adverse effect of the comparatively expensive purchases against the positive effect of comparatively inexpensive purchases. The third measure, the "above-market volumetric share," is the number of gallons purchased at prices which exceed market prices multiplied by the volumetric factor. This measure is indifferent to the magnitude of the excess costs incurred, accounting only for the number of gallons of uncompetitively priced product purchased by the applicant. We consider all of these indicators of competitive disadvantage in determining whether, and to what extent, an applicant was injured by its purchases, and thereby we calculate an appropriate refund amount. See Texas Oil and Gas Corp./Gulf Oil Corp., 13 DOE ¶ 85,135 (1985); see also Texaco Inc./Oakwood Oil Co., 22 DOE ¶ 85,262 (1993) (Oakwood).

2. Amoco’s Injury Showing for Butane.

As noted above, Amoco states that it purchased large quantities of butane from Enron which was "blended with gasoline" at its refineries in order to increase the volume and octane rating of the gasoline. September 1998 Memorandum at 3. In its September 1998 filing, Amoco also submitted data which documents its bank of unrecovered increased product costs for its motor gasoline. The compilation of unrecovered costs was prepared by Mr. F. J. Saathoff, head of accounting for Amoco’s gas liquids division. The data indicates that Amoco maintained a positive bank for motor gasoline from February 1974 through January 1981. The Amoco bank data was calculated contemporaneously and was subject to review by the Federal Energy Administration (FEA) and the DOE. A February 14, 1980 Consent Order between Amoco (Standard Oil Company - Indiana) and the DOE indicates that Amoco agreed to subtract $170,000,000 from its bank of unrecovered increased motor gasoline costs. Additional information submitted by Amoco indicates that the bank data that it submitted reflect this correction. See September 2, 1998 Amoco submission, Attachments 1-3. The Amoco data indicates that at the end of January 1981, Amoco had banks of unrecovered increased product costs for motor gasoline of $536,539,000. Accordingly, we conclude that Amoco’s banks for motor gasoline are substantially in excess of the firm's full allocable share of the Enron consent order fund for its purchases of butane.

However, as noted above, Amoco did not maintain consistently positive banks for motor gasoline prior to February 1974. The data submitted by Amoco indicates that in January 1974, its banked costs for motor gasoline were a negative 1.5 million dollars. Whenever a cost bank goes to zero, that indicates that all previous banked costs have been passed through and that future banked costs were all accumulated from that point forward. If a firm’s cost bank drops to zero at any time during the price control period, it is reasonable to conclude that any increased product costs incurred prior to that point have been passed through to the firm’s customers. If the costs of purchased product have been passed through, we believe that the firm was not injured by any overcharges included in those costs. See Standard Oil Co. (Indiana)/Suburban Propane Gas Corp., 13 DOE ¶ 85,030 (1985)(the refund applicant’s negative cost banks in February 1980 signify that, during the consent order period ending in December 1979, the applicant did not suffer economic injury as a result of its purchases). Accordingly, Enron(4) overcharges that Amoco incurred before its banked costs dropped to zero in January 1974 all were passed through to the firm’s customers in the form of higher selling prices for Amoco gasoline. Amoco therefore was not injured by these pre-February 1974 Enron overcharges, and we will exclude the volumes of Enron butane purchases prior to February 1974 from Amoco’s refund claim.

We therefore conclude that, for the period from February 1, 1974 through January 1981, Amoco has satisfied the first part of the two-part injury requirement by demonstrating that it incurred increased costs that it was unable to pass through to its customers. See Atlantic Richfield Co./Gast Fuel and Service, Inc., 20 DOE ¶ 85,127 (1990)(ARCO/Gast).

In its Application for Refund, Amoco also has performed the three step competitive disadvantage analysis outlined above. As its source of data, the firm used the Energy Information Administration's (EIA) Monthly Petroleum Product Price Report (MPPPR). When determining competitive injury, the OHA generally relies on Platt's as the best source of regional average market price data for the purpose of determining the months in which an applicant purchased refined products at prices higher than the regional average. See Atlantic Richfield Company/Phillips Petroleum Company, 22 DOE ¶ 85,217 (1992)(ARCO/Phillips), and cases cited therein at 88,575. We believe that price information assembled on a nationwide basis (like the EIA prices) does not adequately reflect competitive conditions characterizing the regional product markets. See Atlantic Richfield Company/BTU Energy Corp., 22 DOE ¶ 85,074 at 88,231 (1992)(ARCO/BTU). Accordingly, we will substitute appropriate Platt's postings for the MPPPR data used by Amoco in its analysis of competitive disadvantage concerning the propane and natural gasoline that it purchased from Enron. We believe that Platt’s postings covering the Kansas/Oklahoma area are the most appropriate to use in this analysis, because of the location of Enron’s Bushton Kansas NGL plant and the general predominance of Enron business activity in that area. We will therefore use the Platt's postings for Oklahoma (Group 3) in our revised analysis of Amoco's Enron purchases.

Because Platt's regional price postings are not available for butane, we have developed a methodology for extrapolating regional butane prices from the Platt's postings for propane, based on a finding that butane follows a regional pricing pattern similar to propane, the most widely used NGL product. Enron Corp./Moon Scott Joint Venture, 27 DOE ¶ 85,014 at 88,079-80 (1998)(Enron/Moon Scott); Eason Oil Company/Koch Hydrocarbon Company, 26 DOE ¶ 85,065 at 88,187 (1997)(Eason/Koch); ARCO/BTU, 22 DOE at 88,231 and cases cited therein. Our estimation method takes the known monthly ratio between national prices for propane and butane and uses that ratio in conjunction with a regional propane price to estimate the regional price for butane. Thus, any potentially divergent pricing patterns between propane and butane will be accounted for through the use of this ratio between national propane and butane prices. Also, the impact of any regional, seasonal divergences in pricing patterns will be neutralized by our summation of price differences over the entire refund period. We therefore conclude that regional butane prices calculated according to our established methodology are reasonably accurate measures of the difference in prices over the refund period.

Accordingly, we have revised Amoco's analysis of its butane purchases. Our revised analysis extrapolates comparative regional prices for butane using the Platt's wholesale propane price postings for "Oklahoma Group 3," and available EIA nationwide data. In Enron Corp./MAPCO, Inc., 27 DOE § 85,018 (1998), Enron/Moon Scott, and Eason/Koch, we used EIA prices for propane, natural gasoline and butane to arrive at monthly price ratios between propane and the other two products. We will use that method here. We will use these monthly ratios as conversion factors to extrapolate monthly regional prices for butane in this case. Accordingly, in our analysis of Amoco's butane purchases, we have multiplied the monthly Platt's propane price by the ratio of EIA propane to EIA butane for that month to arrive at extrapolated monthly regional prices for butane.(5)

Our competitive disadvantage analysis, as detailed in the Appendix to this Decision and Order and summarized in the Table below, shows that there is an indication that Amoco experienced injury.

TABLE

Butane

65,038,344 Gallons

Allocable Share for those Gallons: $390,880

Total Gross Excess Cost$4,309,014

Total Net Excess Cost$4,279,987

Above-Market Volumetric Share $358,974

Volumetric Share [92%]

While none of these figures is intended to represent an absolute measure of the injury suffered by the firm, taken together they reveal whether an applicant was placed at a competitive disadvantage by its refined petroleum product costs during the period in which it was allegedly being overcharged. Amoco's gross excess costs and net excess costs substantially exceed the firm's full allocable share of the Enron consent order funds. Its gross excess costs and net excess costs are both about 12 times the amount of its full allocable share. Moreover, 92% of Amoco's purchases from Enron were made at above-market prices. Collectively, the measures used in the competitive disadvantage analysis strongly suggest that Amoco experienced a substantial and consistent competitive disadvantage as a result of its purchases of butane from Enron. See, e.g., Enron Corp./Unocal Corp., 26 DOE ¶ 85,041 at 88,104 (1997); Enron Corp./Odessa L.P.G. Transport, Inc., 24 DOE ¶ 85,038 at 88,106 (1994); Texaco Inc./Oakwood Oil Co., 22 DOE ¶ 85,262 (1993); Marathon Petroleum Co./Acme Oil Co., 17 DOE ¶ 85,634 (1988); Conoco Inc./Power Pak Co., 17 DOE ¶ 85,016 (1988).

We therefore will grant Amoco a refund based on the 65,038,344 gallons of its Enron butane purchases. Accordingly, Amoco will receive a refund for purchases of butane from Enron during the period February 1974 through June 1979, or $390,880 (65,038,344 x $.00601 = $390,880). In addition, Amoco is entitled to receive a proportionate share of the interest accrued on the consent order fund, or $289,173.(6)Therefore, Amoco’s total refund in this proceeding is $680,053 ($390,880 principal and $289,173 interest) for the volumes of butane that it purchased from Enron.

However, Amoco previously received a refund for this product, based on the mid-range presumption of injury, of $68,540 ($50,000 principal and $18,540 interest). Accordingly, Amoco’s refund based on its proof of injury will be reduced by that amount to $611,513 ($340,880 principal and $270,633) to reflect this previous award.

Accordingly, the total volume approved in this Decision and Order is 65,038,344 gallons of Enron product and the total refund, including interest, is $611,513.

Although we have examined Amoco's claim and supporting data, the determination reached in this Decision is based on the representations made in the application. If the factual basis underlying our determination in the Decision is later shown to be inaccurate, this Office has the authority to order appropriate remedial action, including rescission or reduction of the refund.

C. Impact of PODRA Amendments on Amoco's Refund Payment.

The Interior and Related Agencies Appropriations Act for FY 1999 amended certain provisions of the Petroleum Overcharge Distribution and Restitution Act of 1986 (PODRA). These amendments extinguished rights that refund applicants had under PODRA to refunds for overcharges on the purchase of refined petroleum products. They also identified and appropriated a substantial portion of the funds being held by the DOE to pay refund claims. Congress specified that these funds were to be used to fund other DOE programs. As a result, the petroleum overcharge escrow accounts in the refined product area contain substantially less money than before. In fact, they may not contain sufficient funds to pay in full all pending refund claims (including those in litigation) if they should all be found meritorious. Congress directed DOE to "assure that the amount remaining in escrow to satisfy refined petroleum product claims for direct restitution is allocated equitably among all claimants." In view of this Congressional directive and the limited amount of funds available, it may become necessary to prorate the funds available among the meritorious claims. However, it could be several years before we know the full value of the meritorious claims and the precise, total amount available for distribution. It will therefore be some time before we are able to determine the amount that is available for distribution to each claimant.

We believe that it is equitable to pay the remaining small claims (less than 250) in full. To require small claimants to wait several more years for their refunds would constitute an inordinate burden and be inequitable. Cf. Atlantic Richfield Co./Major Oil, Inc., 26 DOE ¶ 85,068 at 88,195 (1997) ("The principal purpose of the presumptions of injury . . . is to reduce the burden on small claimants.").

The Amoco refund is not in this category of small claimants. Full payment of Amoco's refund of $611,513 could well have a substantial impact on the ability of this Office to make payments to other remaining claimants who are seeking large refund claims. Until these other large claims are resolved, we cannot determine whether there will be sufficient funds to provide full refund payments on all meritorious claims. We therefore will limit the current Amoco refund payment to fifty percent of the total approved refund (principal and interest). Atlantic Richfield Co./Oil Transit, Inc., et al., 27 DOE ¶ 85,026 at 88,188 (1999). Once the other pending refund claims have been resolved, the remainder of the Amoco refund, if any, will be paid to the extent that is possible through an equitable distribution of the funds remaining in the petroleum overcharge escrow accounts. Accordingly, at this time, we will disburse to Amoco a total of $305,757 ($170,440 principal and $135,317 interest) from the Enron escrow account.

It Is Therefore Ordered That:

(1) The Motion for Reconsideration submitted by Amoco Corporation (Case No. RR340-002) is hereby granted as specified 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 $305,757 ($170,440 principal and $135,317 interest) from the DOE deposit fund escrow account maintained at the Department of the Treasury titled “Product Tracking - Claimants,” Account No. 999DOE035Z, to “Amoco Oil Company” according to the instructions submitted by the firm on its “ACH Vendor Payment System Payment Information Form.”

(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: December 23, 1999

(1)On December 31, 1998, BP Corporation and Amoco Corporation merged to create BP Amoco, p.l.c. The firm has requested that we direct Amoco’s refund to be paid to “Amoco Oil Company.”

(2)2/ 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.

(3)In Enron Corp./Presidio Exploration, Inc., 27 DOE ¶ 85,030 at 88,206 (1999), we found that there was a substantial likelihood that the applicant purchased higher priced Enron product for the purpose of meeting the supply requirements of its base-period customers, based in part on the relatively small volume of several of the applicant’s purchases from Enron. That is not the case here. The overwhelming volume of Amoco’s purchases of propane and natural gasoline from Enron were made in amounts of two million gallons or more.

(4)We also believe that Amoco was not injured by its Enron purchases made prior to February 1974 because they could well have been made pursuant to a fixed price contract. Firms like Amoco which had on-going supply contracts with Enron often purchased product at a contract price established prior to the refund period. Such fixed price purchases did not transfer any injury from overcharges to the purchaser. Accordingly, we do not believe that Amoco has established a significant likelihood that the butane that it purchased from Enron in 1973 was not at a contract price established prior to the refund period.

(5)Because there is no EIA data for butane available prior to July 1975, we will use the ratio between EIA propane and butane prices in July 1975, combined with the appropriate monthly Platt's propane price, to extrapolate regional butane prices for those earlier months. See Enron/Moon Scott, 27 DOE at 88,080. We are not convinced that Amoco’s use of the MPPPR crude oil price for July 1975 as an estimating tool yields a more accurate result than our use of the EIA’s July 1975 propane price.

(6)6/ Interest is now being paid on Enron refunds at the rate of $0.7398 per dollar of refund.

 
Case No. RR340-2
Competitive Disadvantage Analysis
Butane
Date Gallons UPG/Enron Platt's EIA EIA Extrapolated Above/ Net Gross Above
Price/ Propane Propane Butane Regional Price/ (Below) Excess Excess Market
Gallon Price   Butane Market Cost Cost Volumes
1974
February 1,108,968 $0.15130 $0.163422 * * $0.1699 ($0.0186) ($20,627) $0  
March 37,380 $0.21000 $0.137140 * * $0.1426 $0.0674 $2,519 $2,519 37,380
October 588,000 $0.30000 $0.130000 * * $0.1352 $0.1648 $96,902 $96,902 588,000
November 2,520,000 $0.26210 $0.130000 * * $0.1352 $0.1269 $319,788 $319,788 2,520,000
December 12,600,000 $0.24000 $0.135000 * * $0.1404 $0.0996 $1,254,960 $1,254,960 12,600,000
   
1976
September 1,680,000 $0.28630 $0.191250 $0.1739 $0.1863 $0.2049 $0.0814 $136,752 $136,752 1,680,000
October 7,233,996 $0.28770 $0.191250 $0.1706 $0.1959 $0.2196 $0.0681 $492,635 $492,635 7,233,996
November 2,100,000 $0.29000 $0.191750 $0.1763 $0.2009 $0.2185 $0.0715 $150,150 $150,150 2,100,000
December 3,780,000 $0.29000 $0.191750 $0.1913 $0.2014 $0.2019 $0.0881 $333,018 $333,018 3,780,000
1977
March 8,400,000 $0.29000 $0.223476 $0.1990 $0.2020 $0.2268 $0.0632 $530,880 $530,880 8,400,000
1978
May 4,200,000 $0.23500 $0.239506 $0.1940 $0.1920 $0.2370 ($0.0020) ($8,400) $0  
June 1,260,000 $0.24750 $0.235900 $0.1940 $0.1990 $0.2420 $0.0055 $6,930 $6,930 1,260,000
July 10,500,000 $0.23630 $0.232513 $0.1930 $0.1900 $0.2289 $0.0074 $77,700 $77,700 10,500,000
November 3,780,000 $0.28000 $0.211500 $0.1840 $0.2010 $0.2310 $0.0490 $185,220 $185,220 3,780,000
December 2,100,000 $0.33000 $0.211500 $0.1870 $0.1930 $0.2183 $0.1117 $234,570 $234,570 2,100,000
1979
June 3,150,000 $0.52000 $0.248125 $0.2750 $0.4050 $0.3654 $0.1546 $486,990 $486,990 3,150,000
Totals 65,038,344 $4,279,987 $4,309,014 59,729,376  
* The price ratio of EIA butane to EIA propane for July 1975 (1.0397) was used to compute
the Extropolated butane prices for February through December 1974.