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The U.S. Court of Appeals for the Sixth Circuit, following an earlier decision by the District of Columbia Circuit, has rejected claims by Ohio municipal utilities that the Federal Energy Regulatory Commission (FERC) erred when it allowed Ohio Power Co. to recover the full cost of coal paid to affiliated suppliers without applying a "comparable market test" to make sure the costs were reasonable. Since the Securities and Exchange Commission had approved the coal-supply contract, the court found that the Public Utility Holding Company Act justified a "conclusive presumption" in line with the FERC's long-standing policy that affiliated-supplier costs should be "deemed reasonable" and included in wholesale electric rates if subject to the jurisdiction of another regulatory agency. Municipal Resale Service Customers v. Federal Energy Regulatory Commission, No. 93-3942, Jan. 10, 1995 (6th Cir.).
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