B-126439, MAY 14, 1956

B-126439: May 14, 1956

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W-359-ENG-4848 WAS ENTERED INTO BETWEEN THE CITY OF BRYAN AND THE CORPS OF ENGINEERS. PAYMENT FOR THE ELECTRICITY FURNISHED WAS TO BE MADE UNDER ARTICLE XXI OF THE CONTRACT AT THE RATE OF 1.25 CENTS PER KILOWATT HOUR. WHEN THE RATE WAS INCREASED TO $0.012575 PER KWH. TEMPORARY RIGHTS FOR THE USE OF THE AIRFIELD PROPERTY WERE GRANTED TO TEXAS AGRICULTURAL AND MECHANICAL COLLEGE. DURING THE PERIOD OF DEACTIVATION ELECTRICITY APPEARS TO HAVE BEEN FURNISHED THE COLLEGE. 1951 WAS $3.59 PER BARREL AS EVIDENCED BY INVOICES IN OUR FILES. ASIDE FROM THE FACT THAT FUEL OIL WAS NOT USED BY THE CITY OF BRYAN IN ANY APPRECIABLE QUANTITY FOR THE GENERATION OF ELECTRICITY AFTER MAY 1951. THE INVOICES SUBMITTED BY IT FROM THEN UNTIL AUGUST 1954 WOULD INDICATE THAT THERE WAS NO CHANGE IN THE PRICE OF $3.59 PER BARREL FOR FUEL OIL DURING THAT PERIOD.

B-126439, MAY 14, 1956

TO THE SECRETARY OF THE AIR FORCE:

AN INVESTIGATION MADE BY THE DIVISION OF INVESTIGATIONS OF THIS OFFICE IN CONNECTION WITH ELECTRIC POWER PURCHASED BY THE BRYAN AIR FORCE BASE FROM THE CITY OF BRYAN, TEXAS, DISCLOSED CERTAIN FACTS ON WHICH WE WOULD APPRECIATE A REPORT FROM YOUR DEPARTMENT.

UNDER DATE OF AUGUST 8, 1942, CONTRACT NO. W-359-ENG-4848 WAS ENTERED INTO BETWEEN THE CITY OF BRYAN AND THE CORPS OF ENGINEERS, WAR DEPARTMENT, FOR FURNISHING ELECTRIC SERVICE TO BRYAN AIRFIELD, NEAR BRYAN, TEXAS. PAYMENT FOR THE ELECTRICITY FURNISHED WAS TO BE MADE UNDER ARTICLE XXI OF THE CONTRACT AT THE RATE OF 1.25 CENTS PER KILOWATT HOUR, SUBJECT TO INCREASE OR DECREASE OF .0025 CENTS PER KILOWATT HOUR FOR EACH ONE CENT INCREASE OR DECREASE IN THE AVERAGE COST PER BARREL OF FUEL OIL ABOVE $1.75 OR BELOW $1.65.

THE CITY OF BRYAN CHARGED BRYAN AIRFIELD $0.0125 PER KILOWATT HOUR UNTIL MAY 1943, WHEN THE RATE WAS INCREASED TO $0.012575 PER KWH, AT WHICH IT REMAINED UNTIL DEACTIVATION OF BRYAN AIRFIELD IN JANUARY 1946. FOLLOWING DEACTIVATION, TEMPORARY RIGHTS FOR THE USE OF THE AIRFIELD PROPERTY WERE GRANTED TO TEXAS AGRICULTURAL AND MECHANICAL COLLEGE, AND THIS USE CONTINUED UNTIL MAY 1951, WHEN THE AIR FORCE REACTIVATED THE BASE. DURING THE PERIOD OF DEACTIVATION ELECTRICITY APPEARS TO HAVE BEEN FURNISHED THE COLLEGE, WHICH REIMBURSED THE GOVERNMENT THEREFOR.

ARTICLE XXI OF THE CONTRACT PROVIDED THAT FOR THE PURPOSE OF DETERMINING THE COST OF FUEL FOR ESCALATION PURPOSES:

"* * * THE AVERAGE COST PER BARREL OF FUEL OIL SHALL BE THE AVERAGE COST (DELIVERED TO CONTRACTOR'S PLANT) OF ALL FUEL OIL RECEIVED AND IN STORAGE AT CONTRACTOR'S POWER PLANT DURING THE PRECEDING CALENDAR MONTH.'

OUR INVESTIGATORS REPORT THAT IN MARCH 1950 THE CITY OF BRYAN CONVERTED FROM THE USE OF FUEL OIL TO NATURAL GAS IN THE OPERATION OF ITS POWER PLANT; THAT THE CITY HAS NOT USED FUEL OIL TO ANY APPRECIABLE EXTENT SINCE THAT TIME; AND THAT NO FUEL OIL HAS BEEN PURCHASED BY THE CITY SINCE FEBRUARY 20, 1953. NOTWITHSTANDING THESE FACTS, THE RECORD SHOWS THAT DURING THE PERIOD FROM MAY 15, 1951, TO AUGUST 14, 1954, THE INVOICES RENDERED BY THE CITY CONTAINED CERTIFICATES SIMILAR TO THE FOLLOWING:

"I CERTIFY THAT THE AVERAGE COST OF FUEL OIL FOR THE PERIOD MAY 15, 1951 TO JUNE 15, 1951 WAS $3.59 PER BARREL AS EVIDENCED BY INVOICES IN OUR FILES. THIS INCREASES THE ELECTRIC SERVICE RATE IN BRYAN FIELD CONTRACT (W-359-ENG-4848) .0025 OF A CENT PER KWH FOR ONE CENT IN EXCESS OF $1.75 PER KWH, MAKING RATE FOR THIS PERIOD .0171 IN PLACE OF THE ORIGINAL CONTRACT .0125.'

ASIDE FROM THE FACT THAT FUEL OIL WAS NOT USED BY THE CITY OF BRYAN IN ANY APPRECIABLE QUANTITY FOR THE GENERATION OF ELECTRICITY AFTER MAY 1951, THE INVOICES SUBMITTED BY IT FROM THEN UNTIL AUGUST 1954 WOULD INDICATE THAT THERE WAS NO CHANGE IN THE PRICE OF $3.59 PER BARREL FOR FUEL OIL DURING THAT PERIOD. IT IS REQUESTED THAT WE BE ADVISED WHETHER THE OFFICIALS AT BRYAN AIRFIELD WERE AWARE OF ANY CHANGE IN THE PRICE OF FUEL OIL DURING THE PERIOD MENTIONED.

THE CONTRACT INVOLVED ALSO PROVIDED, BY ARTICLE XV THEREOF, AS FOLLOWS:

"THE CONTRACTOR HEREBY AGREES THAT IF, AFTER FURNISHING ELECTRICAL ENERGY FOR ANY NINETY (90) DAY PERIOD DURING THE LIFE OF THIS CONTRACT, IT WOULD HAVE BEEN MORE ADVANTAGEOUS TO THE UNITED STATES TO HAVE TAKEN SERVICE UNDER ANY OTHER OF THE CONTRACTOR'S STANDARD RATE SCHEDULES IN EFFECT DURING ANY SUCH PERIOD FOR LIKE CONDITIONS OF SERVICE TO THE CLASS OF SERVICE FURNISHED HEREUNDER, THE RATE SHALL BE CHANGED TO CONFORM TO THE SCHEDULE AND AN ADJUSTMENT OF THE CHARGES FOR THE LAST OF SUCH PERIODS SHALL BE MADE, BASED ON SUCH SCHEDULE.'

DURING THE INVESTIGATION MADE BY US IN THIS CASE THE ABOVE-QUOTED ARTICLE WAS BROUGHT TO THE ATTENTION OF THE CITY MANAGER AND HE WAS QUESTIONED CONCERNING THE FAILURE OF THE CITY TO MAKE ANY ADJUSTMENT IN THE RATE BEING CHARGED. THE CITY MANAGER REPLIED, IN EFFECT, THAT HE AND OFFICIALS OF THE CITY'S RURAL ELECTRIC DIVISION HAD DISCUSSED THE CONTRACT SEVERAL TIMES BUT THAT SINCE THE AIR FORCE HAD NOT REQUESTED A CHANGE IN RATE THEY WERE RELUCTANT TO TAKE ANY ACTION UNDER THE CONTRACT. IT IS REQUESTED THAT A REPORT BE FURNISHED AS TO WHETHER THE OFFICIALS OF BRYAN AIR FORCE BASE HAD KNOWLEDGE OF THE FACT THAT IN MARCH 1950 THE CITY OF BRYAN CONVERTED FROM THE USE OF FUEL OIL TO NATURAL GAS IN THE OPERATION OF ITS POWER PLANT AND, IF SO, WHETHER SUCH OFFICIALS TOOK ANY ACTION LOOKING TOWARD A REDUCTION IN THE CONTRACT RATE. IN THIS CONNECTION, THERE IS ON FILE HERE A CERTIFIED COPY OF A CONTRACT DATE MARCH 30, 1951, BETWEEN THE CITY OF BRYAN AND THE CITY OF COLLEGE STATION, UNDER WHICH THE FORMER AGREED TO FURNISH ELECTRICITY TO THE LATTER AT THE RATE OF $0.01 PER KWH UNDER CONDITIONS SIMILAR TO THOSE UNDER THE INSTANT CONTRACT.

UNDER THE CIRCUMSTANCES, IT APPEARS THAT THE CITY OF BRYAN MAY HAVE BEEN OVERPAID FOR ELECTRIC ENERGY FURNISHED TO BRYAN AIR FORCE BASE. IT IS REQUESTED THAT YOUR DEPARTMENT FURNISH A REPORT OF THE FACTS AS THEY MAY BE SHOWN BY YOUR RECORDS, TOGETHER WITH ANY RECOMMENDATION YOU MAY CARE