A REHABILITATION OF FULLY ALLOCATED COST: CAPACITY UTILIZATION, PUMPABILITY, AND RATE DESIGN ON THE TRANS ALASKA PIPELINE SYSTEM (TAPS). PART 2

This second part of a two part article addresses the economics of alternative rate design proposals and objections to the use of pumpability factors (fully allocated costs). Calculations of "Fully Distributed Cost" (FDC) or Fully Allocated Cost (FAC) in regulatory ratemaking proceedings are routinely disparaged as "arbitrary" and having "zero economic content". Many of the reasons given for rejecting the FAC concept apply with equal force to a specific case of FAC: Average Total Cost (ATC). It might initially appear that the acceptance of ATC as a standard tool of the economic literature lies in the purported difference between a multi-product (FAC) and a single product (ATC) firm. Use of FDC or FAC on the Trans Alaska Pipeline System (TAPS) shows that this is not necessarily the case. On TAPS, there is an economically rational explanation for use of FAC rates.

• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/oclc/31144651
• Corporate Authors:

  Association for Transportation Law, Logistics and Policy

  PMB 250
  3 Church Cir.
  Annapolis, MD  United States  21401-1933
• Authors:
  • Tye, W P
• Publication Date: 2000-3

Language

• English

Media Info

• Pagination: p. 109-161
• Serial:
  • Journal of Transportation Law, Logistics and Policy
  • Volume: 67
  • Issue Number: 2
  • Publisher: Association for Transportation Law, Logistics and Policy
  • ISSN: 1078-5906
  • Serial URL: http://www.atlp.org/journal.html

Subject/Index Terms

• TRT Terms: Capacity restraint; Cost allocation; Cost recovery; Economic analysis; Economic factors; Pipelines; Rate making
• Geographic Terms: Alaska
• Subject Areas: Economics; Pipelines; Terminals and Facilities;

Filing Info

• Accession Number: 00791254
• Record Type: Publication
• Files: TRIS
• Created Date: Apr 26 2000 12:00AM