## Facts

- Boston Edison Company, an electric utility, filed wholesale electric rates subject to regulation under the Federal Power Act.
- FERC conducted a cost-of-service ratemaking proceeding covering the end of 1984 forward and issued two principal orders: Opinion No. 299 and Opinion No. 299-A (rehearing denied).
- The orders set Boston Edison’s wholesale rates by determining components such as rate base, allowed return, and allocations of costs among customer classes, including municipal purchasers.
- Boston Edison sought higher revenues, arguing FERC’s rulings made rates too low.
- Municipal purchasers (the Towns of Concord, Norwood, and Wellesley) sought lower rates, arguing different aspects of FERC’s rulings made rates too high.
- The petitions for review were consolidated in the First Circuit, which reviewed the administrative record under deferential standards applicable to agency ratemaking.

## Issues

1. Whether FERC acted within its statutory authority and discretion in selecting ratemaking methodologies and cost allocations for Boston Edison’s wholesale rates.
2. Whether FERC’s methodological and evidentiary choices produced rates that were unlawful under the Federal Power Act’s “just and reasonable” requirement, including whether the agency provided adequate explanation and process.

## Decision

- The First Circuit affirmed FERC’s Opinions 299 and 299-A.
- The court denied Boston Edison’s petition for review seeking higher rates.
- The court denied the towns’ petitions for review seeking lower rates.
- The court held that, on each contested ratemaking point, FERC had legal authority to decide the issues as it did and that no reversible procedural or evidentiary error was shown.

## Legal Principles

- Under the Federal Power Act, the reviewing court focuses on whether the resulting rates fall within a permissible “zone of reasonableness,” not whether an alternative method might also be reasonable.
- Consistent with the end-result approach associated with *Hope Natural Gas*, courts do not set aside rate orders based on disagreement with particular ratemaking components if the overall outcome is just and reasonable.
- FERC may choose among reasonable ratemaking methodologies; the statute generally does not mandate a single formula for rate base, return, or cost allocation.
- FERC must adequately explain its decisions and support them with record evidence; a rate order will be upheld where the agency’s reasoning is coherent and responsive to the parties’ challenges.
- Procedural challenges fail where affected parties had a meaningful opportunity to participate and to contest the agency’s data and reasoning, including through the rehearing process.

## Conclusion

The First Circuit upheld FERC’s wholesale rate orders for Boston Edison, concluding that the agency’s technical choices, explanations, and procedures fell within its broad ratemaking discretion and yielded just and reasonable rates under the Federal Power Act.


Boston Edison Co. v. FERC, 885 F.2d 962 (1st Cir. 1989)