Opinion ID: 329424
Heading Depth: 3
Heading Rank: 5

Heading: Underrecovery of Fixed Costs

Text: 60 United argues that the Commission's orders deprive United of a reasonable opportunity to recover fixed costs allocated to its jurisdictional customers, 72 because volumes will shrink between the test year, when unit rates for commodity charges are calculated, and the actual sales which determine recovery through the commodity charge. 61 This risk of underrecovery is inherent to some extent whenever any fixed costs are allocated to the commodity component. The Commission has leeway to protect pipelines by adjusting the test-period volumes for fluctuations that may reasonably be projected to occur in the future. We cannot say on this record that the FPC's shift to a 25%-75% allocation will necessarily produce a confiscatory result. 62 In a separate proceeding 73 United has proposed a volume variation adjustment clause (VVAC), which would allow United to adjust its commodity component to reflect variations from test-year volumes. No similar proposal was included in the tariff submitted in these proceedings.