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D.C. Court of Appeals Denies Challenge to NERC Cost Allocation Methodology


May 8, 2009
On May 8, 2009, the D.C. Circuit Court of Appeals denied Alcoa, Inc.’s (Alcoa) petition for review of FERC’s approval of NERC’s proposed methodology for apportioning the costs of its services as the FERC-approved ERO for the nation’s bulk electric system.  Specifically, NERC proposed, and FERC accepted, a cost-apportionment methodology that allocates NERC’s costs on the basis of energy consumption alone (i.e., a “net energy for load” methodology).  Alcoa objected to the net energy for load cost-allocation methodology and argued that it would inequitably distribute NERC’s costs among electric energy customers. Alcoa ultimately appealed FERC’s decision to the D.C. Court of Appeals but the Court found the net energy for load methodology to be reasonable and, thus, denied Alcoa’s petition.  To read the entire text of the Court’s decision, click here.