“transmission planning and cost allocation requirement for public utilities to promote more these reforms is the policy objective “that the costs of transmission solutions chosen to meet regional transmission needs are allocated fairly to those who receive the benefits from them” (FERC, 2011). Although no specific cost allocation method is required, the FERC rule creates a framework in which costs and beneficiaries are directly identified to encourage investment and maintenance planning in the future.
The central idea of the BPP that costs should be allocated to those who benefit also has to be considered in the context of other criteria. In the case of user fees for government services, for example, the Government Accountability Office (GAO) recommends that efficiency concerns should also be balanced with equity (ability-to-pay), revenue adequacy, and administrative burden (GAO, 2008). Each type of government service or project may have different weights applied to these criteria, so there is not a specific blueprint for applying the BPP. There is also no clear guidance on what portion of a project costs should be user financed or funded through general revenues.
nues, will lead to the consideration of these beneficiaries being considered as potential sources of additional revenue:
Application of these principles (e.g., economic efficiency) frequently is controversial, and many government investment and operating decisions are not consistent with them. Controversy is especially likely when proposals are made for changing existing practices regarding users fees or funding sources…and when particular industries or local interests argue that a project’s national significance justifies federal or state subsidy instead of funding through project-generated revenues. It is important to economic welfare that resources be concentrated on high-payoff capital investments that are available, rather than diverted to constructing facilities that will be high-cost or underutilized.