I was surprised to see some resistance to the cost causation. I think it might be helpful for our financial discussions to become more aware of the state of the art in this topic.

Here is a section of administrative law drawn from energy utility regulation

Section 791.30  Cost Causation Principle

http://www.ilga.gov/commission/jcar/admincode/083/083007910000300R.html

Here is a more detailed slide presentation about how the cost causation principle is recognized in case law and how the principle is applied to effect cost allocation – again, in an energy regulation context

https://pjm.com/-/media/committees-groups/task-forces/emustf/20141113/20141113-item-03c-cost-causation-slides.ashx

Here is a complete article from economists on “Cost-Causation and Integration Cost Analysis for Variable Generation”

https://www.nrel.gov/docs/fy11osti/51860.pdf

Dr. Milton L Mueller

Georgia Institute of Technology

School of Public Policy