FERC: 'Stamp'ing Out Inadequate Cost-Allocation Methods

Law360, New York (May 1, 2012, 1:19 PM EDT) -- On March 30, 2012, the Federal Energy Regulatory Commission (FERC, or the commission) issued an order on remand finding that the flow-based cost-allocation methodology used by PJM Interconnection LLC is inadequate to determine and allocate costs associated with new high-voltage transmission lines.[1]

Finding that PJM’s current static flow-based model for allocating these costs is unjust and unreasonable, FERC further found that a system-wide “postage stamp” method of cost allocation is a “more credible basis” on which to base rates.[2]

Importantly, FERC emphasized that its determination is...
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