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Court Upholds FERC's PBOP Ruling

Fortnightly Magazine - July 15 1995

The U.S. Circuit Court of Appeals for the District of Columbia has upheld a Federal Energy Regulatory Commission policy allowing utilities to recover costs to switch from cash to accrualaccounting for post-retirement benefits other than pensions (PBOP) under SFAS 106. It rejected arguments by the town of Norwood, MA, a wholesale customer of New England Power Co., that forecasts of future retiree medical costs were too speculative to warrant recovery, or that imposing costs for the accumulated but unrecognized PBOP "transition obligation" would transfer wealth unfairly between generations of ratepayers. Town of Norwood v. FERC, No. 93-1785, May 12, 1995 (D.C.Cir.Ct.).


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