ROBERTS, Circuit Judge.

This petition arises out of a proceeding before the Federal Energy Regulatory Commission to set rates for the transmission of electricity over lines operated by a regional transmission organization. Over *55a century ago, the first Justice Harlan noted that regulated rates must ensure just compensation, but confessed that “[h]ow such compensation may be ascertained, and what are the necessary elements in such an inquiry, will always be an embarrassing question.” Smyth v. Ames, 169 U.S. 466, 546, 18 S.Ct. 418, 42 L.Ed. 819 (1898) (quoted in Duquesne Light Co. v. Barasch, 488 U.S. 299, 308, 109 S.Ct. 609, 102 L.E.2d 646 (1989)). For our part, we have recognized that “agency ratemaking is far from an exact science,” Time Warner Entm’t Co. v. FCC, 56 F.3d 151, 163 (D.C.Cir.1996), and that it involves “complex industry analyses,” Ass’n of Oil Pipe Lines v. FERC, 83 F.3d 1424, 1431 (D.C.Cir.1996), and “[¡Issues of rate design [that] are fairly technical,” Town of Norwood v. FERC, 962 F.2d 20, 22 (D.C.Cir.1992). For these reasons, and because ratemaking “involves policy determinations in which the agency is acknowledged to have expertise, our review thereof is particularly deferential.” Time Warner, 56 F.3d at 163 (internal quotation marks omitted).

Given the deferential standard, we uphold FERC’s decisions to calculate the pertinent rate of return on equity in this case by reference to a particular “proxy group” of publicly-traded companies, and to base the rate of return on the midpoint, rather than the median or mean, of the rates in that group. But FERC is entitled to deference only if it plays fair, and we conclude that the Commission failed to give adequate notice that it would add 50 basis points to the rate of return generated by its calculations, to encourage participation in regional transmission organizations. We accordingly grant the petition in part.

I.

Midwest Independent Transmission System Operator, Inc. (MISO) is a regional transmission organization (RTO) — a company that combines multiple power grids into a single transmission system. In recent years, FERC has promoted the formation of RTOs as a means of increasing competition and driving down the price of electricity. According to the Commission, RTOs provide a large and stable transmission system that reduces regional pricing disparities and creates an efficient market for new power generators. See generally Regional Transmission Organizations, Order No.2000, 65 Fed.Reg. 809 (Dec. 20, 1999); Order No.2000-A, 65 Fed.Reg. 12,088 (Feb. 25, 2000). MISO, the first such organization in the nation, came into being when a series of midwestern utilities placed their grids under its centralized control. See Midwest ISO Transmission Owners, Inc. v. FERC, 373 F.3d 1361, 1365 (D.C.Cir.2004).

The rates charged by electric utilities such as MISO are regulated by FERC to ensure that they are just and reasonable, and not unduly discriminatory. See 16 U.S.C. §§ 824d, 824e. Utilities themselves initiate the ratemaking process by submitting proposals to the Commission, but FERC retains authority to modify such proposals to ensure compliance with the statutory standards. Id. §§ 824d(c)-(d), 824e(a).

A major component of the rates charged by MISO is the return on equity (ROE) paid to its member utilities. This rate compensates the utilities for the capital cost of the grids they placed under MISO’s control. FERC derives the rate by estimating the annual return an equity investor in the utility would expect on such capital, had the utility continued to operate the grid outside the RTO. See generally Canadian Ass’n of Petroleum Producers v. FERC, 254 F.3d 289, 293-94 (D.C.Cir.2001). Calculating this rate would be relatively easy if a utility’s interest in its grid — its business as a transmission owner *56(TO) — were publicly traded, but “there are no publicly traded independent pure electric transmission companies.” MISO Initial Decision, 99 FERC ¶ 63,011, 65,040, 2002 WL 32056864 (2002). The Commission must therefore resort to more roundabout estimations.

In December 2001, MISO and certain of its member TOs petitioned the Commission to increase the ROE component of MISO’s charges from a previously approved level of 10.5 percent to 13 percent. The Commission set the matter for hearing, at which all interested parties were allowed to present evidence. Among those availing themselves of this opportunity were the petitioners in this case — the Public Service Commission of the Commonwealth of Kentucky (PSCKY) and a group of private consumers and municipal entities (the Intervenor Group) — who appeared on behalf of ratepayers and argued against any rate increase or, in any event, for a more modest one.1 At the hearing, an administrative law judge selected a proxy group of public companies to use in estimating the appropriate return on equity for the MISO TOs. The judge chose a group consisting of the parent companies of certain MISO TOs themselves — which, unlike the transmission-owning subsidiaries, are publicly traded. The judge rejected several other proposals, including one submitted by the Intervenor Group. Id. at 65,038-42.

Once she had made her choice, the judge sought to extract a single ROE value, representative of the proxy group as a whole, to be applied to all the MISO TOs. She chose the midpoint of the range — the average of the highest and lowest data points— which yielded a return of 12.38 percent. She rejected the recommendation of FERC staff to use the mean — the average of all values in the proxy group (11.74 percent) — as well as the Intervenor Group’s proposal to use the median — the middle data point in the group (11.85 percent). Id. at 65,047-52. The judge also rejected competing pleas from MISO and the Intervenor Group to derive ROE using only part of the proxy range, such as the top or bottom half. Id.

FERC affirmed the ALJ’s choice of the proxy group and her use of the midpoint. Speaking to the latter, the Commission noted that its electrical industry precedents — unlike its oil and gas cases — had relied on the midpoint as a measure of central tendency. The Commission, however, also decided sua sponte to increase the final return by 50 basis points, to 12.88 percent, as an incentive for companies to join a regional transmission organization. MISO Order Affirming Initial Decision, 100 FERC ¶ 61,292, 62,313-15, 2002 WL 31986513 (2002). FERC explained that it “will be clarifying [this] incentive rate policy in the near future.” Id. at 62,315. Several months later, the Commission indeed issued a proposal to give “any entity that transfers operational control of transmission facilities to a Commission-approved RTO ... an incentive adder of 50 basis points on its ROE for all such facilities transferred.” Proposed Pricing Policy for Efficient Operation and Expansion of Transmission Grid, 102 FERC ¶ 61,032, 61,065, 2003 WL 245747 (2003).

In the meantime, petitioners sought rehearing of FERC’s order, which the Commission denied. Besides affirming its earlier findings, FERC rejected petitioners’ contention that they had not been given sufficient notice of the possibility of an *57incentive-based adder. FERC explained that petitioners should have been aware of the possibility of such an adder, given the Commission’s statutory power to amend proposals to ensure just and reasonable rates. FERC also noted that the final value of 12.88 percent was less than the 13 percent initially requested by MISO, and thus presumably within the range of petitioners’ expectations at the outset of the proceedings. See MISO Order Denying Rehearing, 102 FERC ¶ 61,143, 61,395, 2003 WL 257395 (2003).

Petitioners then sought review in this court, but the Commission moved for a voluntary remand to allow further consideration of the rate of return. On remand, the Commission maintained its position, but offered a different rationale for the use of the midpoint in this case. FERC explained that the question here “is not what constitutes the best overall method for determining ROE generically (i.e. the midpoint versus the median or mean).” MISO Order on Remand, 106 FERC ¶ 61,302, 62,192, 2004 WL 598168 (2004). Rather, the Commission observed that under the “unique ... circumstances” of this case, in which the chosen value will apply “to a diverse group of companies,” the midpoint provides the best measure because it emphasizes the endpoints of the proxy group range, ensuring that outlier as well as average TOs receive just and fair compensation. Id. at 62,192-93. The Commission also found that the proxy group was not too skewed to permit a midpoint analysis. Id. at 62,193.

PSCKY and the Intervenor Group now seek review of the FERC orders, challenging the selection of the proxy group, the use of the midpoint, and the incentive-based adder.

II.

The “arbitrary and capricious” standard of the Administrative Procedure Act governs our review. See 5 U.S.C. § 706(2)(A). Under this standard, FERC must consider relevant data and “articulate a rational connection between the facts found and the choices made.” Williston Basin Interstate Pipeline Co. v. FERC, 165 F.3d 54, 60 (D.C.Cir.1999) (citations omitted). The Commission must also respond meaningfully to the arguments raised before it. See Canadian Ass’n of Petroleum Producers, 254 F.3d at 299. The Commission’s factual findings are conclusive if supported by substantial evidence. See 16 U.S.C. § 8251 (b).

A. Petitioners first question the proxy group chosen to represent the MISO TOs’ expected return on equity. They assert that the ALJ improperly dismissed the Intervenor Group’s proposal, which would have considered (and heavily weighted) four generation-divested electric utilities in addition to the companies ultimately chosen. They also maintain that the Commission failed to engage their petition on this issue, and erroneously saddled them with the burden of proof in the group selection process. We find these arguments unavailing.

The judge chose a group submitted by MISO, consisting of the publicly-owned parent companies of the TOs themselves. She reasoned that “[t]his is the best proxy group since it involves companies that are currently in the MISO; the group includes comparable risk companies, similar in business profiles and size.” Initial Decision, 99 FERC at 65,041. She also relied on a prior FERC decision that approved a proxy group in part because that group contained parent companies of the utility whose rates were being set. Id. (citing Southern California Edison, 92 FERC ¶ 61,070, 2000 WL 1100260 (2000)). She dismissed the Intervenor Group’s proposal because “it consisted of distribution companies, not transmission companies.” Id. *58at 65,042. FERC summarily affirmed these findings. Order Affirming Initial Decision 100 FERC at 62,312.

Petitioners provide us with insufficient reason for overturning the selection of the proxy group. At the hearing before the ALJ, the Intervenor Group’s own expert conceded that MISO’s proposal was one of “the two most appropriate groups to use in establishing the range” and that “[t]he TOs or their parent companies have rates at issue in this proceeding and are therefore an appropriate group to use as a reasonable starting point.” Testimony of J. Bertram Solomon at 67. On appeal, petitioners note that the parents’ businesses extend well beyond transmission, and maintain that the judge underestimated the transmission component of the additional companies in their own proposal.

Given the deferential standard of review, this is just nibbling at the margins. The Supreme Court explained long ago that ratemaking is a pragmatic exercise, see FPC v. Hope Natural Gas Co., 320 U.S. 591, 602, 64 S.Ct. 281, 88 L.Ed. 333 (1944), and more than second-guessing close judgment calls is required to show that a rate order is arbitrary and capricious. Id. FERC chose reasonably from the options presented, based on the testimony offered and the Commission’s own precedent.

Petitioners’ remaining challenges to the proxy group also fall short of the mark. Their contention that FERC failed to engage their petition finds no support in our case law. While we have held that FERC may not ignore an argument presented to it, our cases addressed situations where neither the Commission nor an ALJ addressed the issue. See Canadian Ass’n of Petroleum Producers, 254 F.3d at 298-99; NorAm Gas Transmission Co. v. FERC, 148 F.3d 1158, 1165 (D.C.Cir.1998). Here, by contrast, FERC reviewed the ALJ’s extensive discussion of proxy groups and expressly adopted her rejection of petitioners’ proposal. See Order Affirming Initial Decision, 100 FERC at 62,312 (“For the reasons set forth in the Initial Decisions, we find that the Intervenor Group has failed to set forth convincing evidence [regarding its proposal].”).

As for the burden of proof, petitioners rely on a handful of isolated statements in the rulings under review. At one point in her decision, the judge noted that the Intervenor Group’s witness did not “prove[ ]” that the companies in its proposal had risks comparable to the TOs. Initial Decision, 99 FERC at 65,042. In affirming the ALJ, the Commission observed that, the Intervenor Group “has not demonstrated that the [chosen proxy] group is unrepresentative,” and “has failed to set, forth convincing evidence” of the superiority of their own proposal. Order Affirming Initial Decision, 100 FERC at 62,312. Based on these statements, petitioners argue that FERC improperly saddled them with the burden of proving the validity of the rate increase at issue — a burden statutorily assigned to the proponent of the increase, in this case MISO. See 16 U.S.C. 824d(e) (“the burden of proof to show that the increased rate or charge is just and reasonable shall be upon the public utility”).

In proceedings before the ALJ, however, MISO expressly assumed the burden of justifying the proposed rate increase. Prehearing Conference at 25 (“PRESIDING JUDGE: And you have the burden of proof, don’t you? MR. SMALL [counsel for MISO]: Yes, your Honor .... ”). In selecting MISO’s proposal, the judge explained that she found it “consistent with Commission precedent,” and described the Intervenor Group’s alternative as “more speculative and statistically less reliable.” Initial Decision, 99 FERC at 65,042. MISO acknowledged and carried its burden of proof before the ALJ. As for the *59statements in FERC’s order, these are best read as merely affirming the reasonableness of the judge’s decision. See Town of Norwood, 962 F.2d at 26 (interpreting similar phrasing as “a rather perfunctory restatement of the Commission’s finding ... and not an indication that the FERC improperly shifted the burden of proof to the petitioner”).

B. PSCKY and the Intervenor Group next challenge the Commission’s use of the midpoint. They question the cogency of FERC’s reasoning in general, and dispute its application on the facts of this case. They also point to language in FERC’s order on remand suggesting that the Commission chose the midpoint simply because it yielded the highest rate of return.

In the order on remand the Commission stepped back from its prior reliance on electrical industry precedents, and even acknowledged that the median, and not the midpoint, may be “the most refined measure of central tendency.” Order on Remand, 106 FERC at 62,192. The Commission rested its use of the midpoint on a wholly different ground: it distinguished between “cases in which a ROE is set for one gas pipeline or electric utility” and cases where “applicants proposed setting a single ROE for across-the-board application.” Id. In the latter situation, where “the ROE will apply to a diverse set of companies,” FERC reasoned that the range of results becomes as important as the central value. Id. The midpoint — unlike the other measures of central tendency — “fully considers that range,” because it is derived directly from the endpoints of the range. Id.

This justification provides a reasoned approach that lends itself to consistent application over a series of cases. While petitioners highlight the shortcomings of the Commission’s method, they fail to debunk its fundamental premises. For instance, petitioners are correct in noting that all measures of central tendency “consider” the entire proxy group range, in the sense that all are influenced — at least indirectly — by each data point in the range. Pet. Br. at 23. But only the midpoint emphasizes that range, as it is equally placed between the top and bottom values. Likewise, petitioners rightly suggest that using the midpoint undermines the statistical sampling of the proxy group process, id. at 28-30, as only the mean places equal weight on every point in a sample. But the Commission made clear that it was less interested in particular data points than in the full range covered by the group.

Petitioners’ more technical challenges fare no better. First, they contend that the Commission erred in calculating the midpoint of a range containing two values for each company — a high and a low estimate — because FERC meant to “fully consider” the range of companies in the proxy group, and high or low estimates by themselves do not reflect a company’s ROE without considering the corresponding low or high estimate. Pet. Br. at 26-27. The Commission’s use of a high estimate to mark the high end for its midpoint calculation was, however, balanced to some extent by its use of a low estimate to mark the low end. It is true that this balance is imperfect, particularly on this record, where the company whose high estimate marks the high end also had a low estimate among the lowest values in the range. But it is certainly consistent with FERC’s rationale to calculate the midpoint of the entire range, rather than — as petitioners now seem to suggest — averaging each company’s high and low estimates and then determining the midpoint of that narrower range. See Pet. Br. at 27. At any rate, no such alternative proposal was ever presented to the Commission. *60Second, petitioners maintain that the data in this case were too skewed for a midpoint analysis. Pet. Br. at 33-87. This too is a matter squarely within the Commission’s expertise. The proxy group clearly has some skew — otherwise all measures of central tendency would have produced the same result — but this is part of the reason FERC used the midpoint in the first place. FERC acknowledged that some distributions are too skewed for such an analysis, but the Commission evaluated the distortion here and found it not to be excessive. Order on Remand, 106 FERC at 62,193; compare Northwest Pipeline Corp., 99 FERC ¶ 61,305 (2002) (employing a similar method for evaluating skew). As the Commission explained, this is not a case where one end-point is considerably out of line with the rest of the range; ratemaking is not an “exact science,” Time Warner, 56 F.3d at 163, and FERC was not required to adopt petitioners’ mathematical model for determining when some skew becomes too much skew.

All this notwithstanding, the order on remand does contain language clouding the clarity of FERC’s midpoint rationale. In a footnote, the Commission observes that:

The results of our proxy group yielded a midpoint of 12.38, a median of 11.85, and a mean of 11.74. Relying on the median or mean in this case would result in an unreasonably low ROE in light of the high end values in the proxy group and could substantially under-compensate those utilities at the upper end of the range.

106 FERC at 62,192 n. 14. Elsewhere, FERC notes that “the midpoint does not have as deleterious an effect as the median on those [MISO] TOs whose returns are higher than what we allow for [MISO] TOs here,” and that this “offers additional incentive for such companies to join RTOs.” Id. at 62,193-94. According to petitioners, these passages indicate that FERC chose the midpoint simply because it yielded the highest result.

If FERC’s orders premised a policy of using the midpoint on an effort to obtain the highest rate of return, the orders could not withstand APA review. This is because there would be no logical connection between the rationale and the result: nothing about the midpoint ensures it will be higher than the median or the mean in any particular case. Of course, FERC could have explained that it would always choose the measure that yields the highest result, and tried to defend that rationale here. But the Commission cannot justify a commitment to the midpoint on the ground that it produced the highest return, because that is pure happenstance.

We think the most reasonable reading of FERC’s order on remand as a whole is that it selected the midpoint because the rate of return would apply to a diverse group of companies, and that the language petitioners point to simply reflects FERC’s view that the resulting rate gave it confidence that it was not undercompensating MISO TOs. The bulk of the order sets forth the “diverse companies” rationale. The contrary language appears in a footnote and a single paragraph near the end of the opinion. The Commission emphasized the rate’s across-the-board applicability to MISO TOs — rather than the greater value of the midpoint — in both its brief and at oral argument. In light of all this, we read the order as resting on its principal rationale. Should the Commission elect to abandon that rationale to rely on a higher median or mean in the next case involving applicability of the chosen rate to several companies, it will have to justify its departure from the precedent established by this case.

C. Finally, PSCKY and the Inter- ' venor Group argue that FERC arbitrarily adopted the 50-point premium, and that *61the Commission violated due process by announcing its decision sua sponte without prior notice to the parties. We focus on the latter claim.

The Due Process Clause and the APA require that an agency setting a matter for hearing provide parties “with adequate notice of the issues that would be considered, and ultimately resolved, at that hearing.” Williston, 165 F.3d at 63; see 5 U.S.C. § 554(b)(3). This requirement ensures the parties’ right to present rebuttal evidence on all matters decided at the hearing. See Bowman Tramp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 288 n. 4, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974); Hatch v. FERC, 654 F.2d 825, 835 (D.C.Cir.1981); Hill v. FPC, 335 F.2d 355, 363 (5th Cir.1964). In addition, the Federal Power Act authorizes FERC to approve rate increases only “after full hearings” — a requirement that itself “unquestionably imposes the duty to give adequate notice of the subject to which the orders pertain.” 16 U.S.C. § 824d(e); City of Winnfield v. FERC, 744 F.2d 871, 876 (D.C.Cir.1984).

Here, the Commission failed to place the parties on notice that its post-hearing order would contemplate an incentive-based premium for the MISO TOs. When MISO and its TOs first filed for the subject rate increase, they sought an incentive adder of 100 basis points, but FERC declined to consider such “innovative ratemaking proposals,” limiting the subject matter of the hearing to “ROE rates that essentially provide for appropriate cost-recovery.” Order Accepting in Part and Rejecting in Part Proposed Tariff Changes and Establishing Hearing Procedures, 98 FERC ¶ 61,064, 61,165, 2002 WL 123313 (2002). The ALJ refused to consider premium-related proposals, noting “that establishing an incentive based ROE seems to be outside the scope of this proceeding.” Initial Order, 99 FERC at 65,052. As a result, the record compiled at the hearing contained no evidence on the need for — or appropriate size of — such a premium.

On appeal, FERC maintains that it gave petitioners all the process they were due by considering their requests for rehearing, which contained extensive challenges to the premium. FERC Br. at 47; see PSCKY Req. for Reh’g at 9-14; Intervenor Group Req. for Reh’g at 41-49. Considering petitioners’ arguments, however, is not the same thing as allowing them to present evidence on the issue — as at least one of the petitioners pointed out to the Commission. See PSCKY Req. for Reh’g at 10 (“the parties were not given the opportunity to present evidence, or refute the use of such innovative rate making policy”); see also Williston, 165 F.3d at 63-64 (granting petition to review based on insufficient notice and lack of substantial evidence).

Nor did FERC obviate the need for such a presentation by relying, in the order denying rehearing, on its proposed policy to reward any entity that joins an RTO with a bonus of 50 basis points. The Commission issued that proposal after its sua sponte order and after the filing deadline for rehearing requests in MISO’s case. Moreover, the proposed policy is just that — it is not a rule binding on the public, or even on the agency itself. See Proposed Pricing Policy, 102 FERC at 61,066-67 (inviting public comment and holding off implementation until the issuance of a final policy statement). As such, it plainly cannot govern the outcome of this case.

Likewise, FERC’s assertion that petitioners should have been aware that it always possesses the power to modify rate proposals to ensure that they meet statutory standards plainly proves too much; FERC’s power to take such action does not carry with it the authority to exercise such power without adequate notice of the basis for doing so.

*62In sum, FERC failed to place petitioners on notice that it would consider an incentive-based premium, and ultimately applied the adder in MISO’s case without considering any record evidence. In so doing, FERC denied petitioners — and the other parties to the proceeding, for that matter — a chance to present their side of the case. We express no view on petitioners’ substantive challenges to the incentive-based adder, but grant the petition because FERC failed to provide adequate notice that it would consider such an element in assessing the pending rate proposal. In all other respects, we affirm the Commission.

*523Mr. Justice Rehnquist

delivered the opinion of the Court.

In 1946, Congress enacted the Administrative Procedure Act, which as we have noted elsewhere was not only “a new, basic and comprehensive regulation of procedures in many agencies,” Wong Yang Sung v. McGrath, 339 U. S. 33 (1950), but was also a legislative enactment which settled “long-continued and hard-fought contentions, and enacts a formula upon which opposing social and political forces have come to rest.” Id., at 40. Section 4 of the Act, 5 U. S. C. § 553 (1976 ed.), dealing with rulemaking, requires in subsection (b) that *524“notice of proposed rule making shall be published in the Federal Register . . . describes the contents of that notice, and goes on to require in subsection (c) that after the notice the agency “shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose.” Interpreting this provision of the Act in United States v. AlleghenyLudlum Steel Corp., 406 U. S. 742 (1972), and United States v. Florida East Coast R. Co., 410 U. S. 224 (1973), we held that generally speaking this section of the Act established the maximum procedural requirements which Congress was willing to have the courts impose upon agencies in conducting rulemaking procedures.1 Agencies are free to grant additional procedural rights in the exercise of their discretion, but reviewing courts are generally not free to impose them if the agencies have not chosen to grant them. This is not to say necessarily that there are no circumstances- which would ever justify a court in overturning agency action because of a failure to employ procedures beyond those required by the statute. But such circumstances, if they exist, are extremely rare.

Even apart from the Administrative Procedure Act this Court has for more than four decades emphasized that the formulation of procedures was basically to be left within the discretion of the agencies to which Congress had confided the responsibility for substantive judgments. In FCC v. Schreiber, 381 U. S. 279, 290 (1965), the Court explicated *525this principle, describing it as “an outgrowth of the congressional determination that administrative agencies and administrators will be familiar with the industries which they regulate and will be in a better position than federal courts or Congress itself to design procedural rules adapted to the peculiarities of the industry and the tasks of the agency involved.” The Court there relied on its earlier ease of FCC v. Pottsville Broadcasting Co., 309 U. S. 134, 138 (1940), where it had stated that a provision dealing with the conduct of business by the Federal Communications Commission delegated to the Commission the power to resolve “subordinate questions of procedure . . . [such as] the scope of the inquiry, whether applications should be heard contemporaneously or successively, whether parties should be allowed to intervene in one another’s proceedings, and similar questions.”

It is in the light of this background of statutory and decisional law that we granted certiorari to review two judgments of the Court of Appeals for the District of Columbia Circuit because of our concern that they had seriously misread or misapplied this statutory and decisional law cautioning reviewing courts against engrafting their own notions of proper procedures upon agencies entrusted with substantive functions by Congress. 429 U. S. 1090 (1977). We conclude that the Court of Appeals has done just that in these cases, and we therefore remand them to it for further proceedings. We also find it necessary to examine the Court of Appeals’ decision with respect to agency action taken after full adjudicatory hearings. We again conclude that the court improperly intruded into the agency’s decisionmaking process, making it necessary for us to reverse and remand with respect to- this part of the cases also.

I

A

Under the Atomic Energy Act of 1954, 68 Stat. 919, as amended, 42 U. S. C. § 2011 et seq., the Atomic Energy Comm*526ission2 was given broad regulatory authority over the development of nuclear energy. Under the terms of the Act, a utility seeking to construct and operate a nuclear power plant must obtain a separate permit or license at both the construction and the operation stage of the project. See 42 U. S. C. §§ 2133, 2232, 2235, 2239. In order to obtain the construction permit, the utility must file a preliminary safety analysis report, an environmental report, and certain information regarding the antitrust implications of the proposed project. See 10 CFR §§2.101, 50.30 (f), 50.33a, 50.34 (a) (1977). This application then undergoes exhaustive review by the Commission’s staff and by the Advisory Committee on Reactor Safeguards (ACRS), a group of distinguished experts in the field of atomic energy. Both groups submit to the Commission their own evaluations, which then become part of the record of the utility’s application.3 See 42 U. S. C. §§ 2039, 2232 (b). The Commission staff also undertakes the review required by the National Environmental Policy Act of 1969 (NEPA), 83 Stat. 852, 42 U. S. C. §4321 et seq., and prepares a draft environmental impact statement, which, after being circulated for comment, 10 CFR §§ 51.22-51.25 (1977), is revised and becomes a final environmental impact statement. § 51.26. Thereupon a three-member Atomic Safety and Licensing Board conducts a public adjudicatory hearing, 42 U. S. C. § 2241, and reaches a decision4 which can be *527appealed to the Atomic Safety and Licensing Appeal Board, and currently, in the Commission’s discretion, to the Commission itself. 10 CFR §§ 2.714, 2.721, 2.786, 2.787 (1977). The final agency decision may be appealed to the courts of appeals. 42 U. S. C. § 2239; 28 U. S. C. § 2342. The same sort of process occurs when the utility applies for a license to operate the plant, 10 CFR § 50.34 (b) (1977), except that a hearing need only be held in contested cases and may be limited to the matters in controversy. See 42 U. S. C. § 2239 (a); 10 CFR §2.105 (1977); 10 CFR pt. 2, App. A, V (f) (1977).5

These cases arise from two separate decisions of the Court of Appeals for the District of Columbia Circuit. In the first, the court remanded a decision of the Commission to grant a license to petitioner Vermont Yankee Nuclear Power Corp. to operate a nuclear power plant. Natural Resources Defense Council v. NRC, 178 U. S. App. D. C. 336, 547 F. 2d 633 (1976). In the second, the court remanded a decision of that same agency to grant a permit to petitioner Consumers Power Co. to construct two pressurized water nuclear reactors to generate electricity and steam. Aeschliman v. NRC, 178 U. S. App. D. C. 325, 547 F. 2d 622 (1976).

B

In December 1967, after the mandatory adjudicatory hearing and necessary review, the Commission granted petitioner Vermont Yankee a permit to build a nuclear power plant in Vernon, Vt. See 4 A. E. C. 36 (1967). Thereafter, Vermont Yankee applied for an operating license. Respondent Natural Resources Defense Council (NRDC) objected to the granting *528of a license, however, and therefore a hearing on the application commenced on August 10, 1971. Excluded from consideration at the hearings, over NRDC’s objection, was the issue of the environmental effects of operations to reprocess fuel or dispose of wastes resulting from the reprocessing operations.6 This ruling was affirmed by the Appeal Board in June 1972.

In November 1972, however, the Commission, making specific reference to the Appeal Board’s decision with respect to the Vermont Yankee license, instituted rulemaking proceed-' ings “that would specifically deal with the question of consideration of environmental effects associated with the uranium fuel cycle in the individual cost-benefit analyses for light water cooled nuclear power reactors.” App. 352.' The notice of proposed rulemaking offered two alternatives, both predicated on a report prepared by the Commission’s staff entitled Environmental Survey of the Nuclear Euel Cycle. The first would have required no quantitative evaluation of the environmental hazards of fuel reprocessing or disposal because the Environmental Survey had found them to be slight. The second would have specified numerical values for the environmental impact of this part of the fuel cycle, which values would then be incorporated into a table, along with the other relevant factors, to determine the overall cost-benefit balance for each operating license. See id., at 356-357.

Much of the controversy in this case revolves around the *529procedures used in the rulemaking hearing which commenced in February 1973. In a supplemental notice of hearing the Commission indicated that while discovery or cross-examination would not be utilized, the Environmental Survey would be available to the public before the hearing along with the extensive background documents cited therein. All participants would be given a reasonable opportunity to present their position and could be represented by counsel if they so desired. Written and, time permitting, oral statements would be received and incorporated into the record. All persons giving oral statements would be subject to questioning by the Commission. At the conclusion of the hearing, a transcript would be made available to the public and the record would remain open for 30 days to allow the filing of supplemental written statements. See generally id., at 361-363. More than 40 individuals and organizations representing a wide variety of interests submitted written comments. On January 17, 1973, the Licensing Board held a planning session to schedule the appearance of witnesses and to discuss methods for compiling a record. The hearing was held on February 1 and 2, with participation by a number of groups, including the Commission’s staff, the United States Environmental Protection Agency, a manufacturer of reactor equipment, a trade association from the nuclear industry, a group of electric utility companies, and a group called Consolidated National Intervenors which represented 79 groups and individuals including respondent NRDC.

After the hearing, the Commission’s staff filed a supplemental document for the purpose of clarifying and revising the Environmental Survey. Then the Licensing Board forwarded its report to the Commission without rendering any decision. The Licensing Board identified as the principal procedural question the propriety of declining to use full formal adjudicatory procedures. The major substantive issue was the technical adequacy of the Environmental Survey.

*530In April 1974, the Commission issued a rule which adopted the second of the two proposed alternatives described above. The Commission also approved the procedures used at the hearing,7 and indicated that the record, including the Environmental Survey, provided an “adequate data base for the regulation adopted.” Id., at 392. Finally, the Commission ruled that to the extent the rule differed from the Appeal Board decisions in Vermont Yankee “those decisions have no further precedential significance,” id., at 386, but that since “the environmental effects of the uranium fuel cycle have been shown to be relatively insignificant, ... it is unnecessary to apply the amendment to applicant’s environmental reports submitted prior to its effective date or to Final Environmental Statements for which Draft Environmental Statements have been circulated for comment prior to the effective date,” id., at 395.

Respondents appealed from both the Commission’s adoption of the rule and its decision to grant Vermont Yankee’s license to the Court of Appeals for the District of Columbia Circuit.

C

In January 1969, petitioner Consumers Power Co. applied for a permit to construct two nuclear reactors in Midland, *531Mich. Consumers Power’s application was examined by the Commission’s staff and the ACRS. The ACRS issued reports which discussed specific problems and recommended solutions. It also made reference to “other problems” of a more generic nature and suggested that efforts should be made to resolve them with respect to these as well as all other projects.8 Two groups, one called Saginaw and another called Mapleton, intervened and opposed the application.9 Saginaw filed with the Board a number of environmental contentions, directed over 300 interrogatories to the ACRS, attempted to depose the chairman of the ACRS, and requested discovery of various ACRS documents. The Licensing Board denied the various discovery requests directed to the ACRS. Hearings were then held on numerous radiological health and safety issues.10 Thereafter, the Commission’s staff issued a draft *532environmental impact statement. Saginaw submitted 119 environmental contentions which were both comments on the proposed draft statement and a statement of Saginaw’s position in the upcoming hearings. The staff revised the statement and issued a final environmental statement in March 1972. Further hearings were then conducted during May and June 1972. Saginaw, however, choosing not to appear at or participate in these latter hearings, indicated that it had “no conventional findings of fact to set forth” and had not “chosen to search the record and respond to this proceeding by submitting citations of matters which we believe were proved or disproved.” See App. 190 n. 9. But the Licensing Board, recognizing its obligations to “independently consider the final balance among conflicting environmental factors in the record,” nevertheless treated as contested those issues “as to which intervenors introduced affirmative evidence or engaged in substantial cross examination.” Id., at 205, 191.

At issue now are 17 of those 119 contentions which are claimed to raise questions of “energy conservation.”', The Licensing Board indicated that as far as appeared from the record, the demand for the plant was made up, of normal industrial and residential use. Id., at 207. It went on to state that it was “beyond our province to inquire into whether the customary uses being made of electricity in our society are ‘proper’ or ‘improper.’ ” Ibid. With respect to claims that Consumers Power stimulated demand by its advertising the Licensing Board indicated that “[n]o evidence was offered on this point and absent some evidence that Applicant is creating abnormal demand, the Board did not consider the *533question.” Id., at 207-208. The Licensing Board also' failed to consider the environmental effects of fuel reprocessing or disposal of radioactive wastes. The Appeal Board ultimately-affirmed the Licensing Board’s grant of a construction permit and the Commission declined to further review the matter.

At just about the same time, the Council on Environmental Quality revised its regulations governing the preparation of environmental impact statements. 38 Fed. Reg. 20550 (1973). The regulations mentioned for the first time the necessity of considering in impact statements energy conservation as one of the alternatives to a proposed project. The new guidelines were to apply only to final impact statements filed after January 28, 1974. Id., at 20557. Thereafter, on November 6, 1973, more than a year after the record had been closed in the Consumers Power case and while that case was pending before the Court of Appeals, the Commission ruled in another case that while its statutory power to compel conservation was not clear, it did not follow that all evidence of energy conservation issues should therefore be barred at the threshold. In re Niagara Mohawk Power Corp., 6 A. E. C. 995 (1973). Saginaw then moved the Commission to clarify its ruling and reopen the Consumers Power proceedings.

In a lengthy opinion, the Commission declined to reopen the proceedings. The Commission first ruled it was required to consider only energy conservation alternatives which 'were “ ‘reasonably available,’ ” would in their aggregate effect curtail demand for electricity to a level at which the proposed facility would not be needed, and were susceptible of a reasonable degree of proof. App. 332. It then determined, after a thorough examination of the record, that not all of Saginaw’s contentions met these threshold tests. Id., at 334-340. It further determined that the Board had been willing at all times to take evidence on the other contentions. Saginaw had simply failed to present any such evidence. The *534Commission further criticized Saginaw for its total disregard of even those minimal procedural formalities necessary to give the Board some idea of exactly what was at issue. The Commission emphasized that “[particularly in these circumstances, Saginaw’s complaint that it was not granted a hearing on alleged energy conservation issues comes with ill grace.”11 Id., at 342. And in response to Saginaw’s contention that regardless of whether it properly raised the issues, the Licensing Board must consider all environmental issues, the Commission basically agreed, as did the Board itself, but further reasoned that the Board must have some workable procedural rules and these rules

“in this setting must take into account that energy conservation is a novel and evolving concept. NEPA 'does not require a “crystal ball” inquiry.’ Natural Resources Defense Council v. Morton, [148 U. S. App. D. C. 5, 15, 458 F. 2d 827, 837 (1972) ]. This consideration has led us to hold that we will not apply Niagara retroactively. As we gain experience on a case-by-case basis and hopefully, feasible energy conservation techniques emerge, the applicant, staff, and licensing boards will have obligations to develop an adequate record on these issues in appropriate cases, whether or not they are raised by intervenors.

“However, at this emergent stage of energy conservation principles, intervenors also have their responsibilities. They must state clear and reasonably specific energy conservation contentions in a timely fashion. Beyond that, they have a burden of coming forward with some *535affirmative showing if they wish to have these novel contentions explored further.”12 Id., at 344 (footnotes omitted).

Respondents then challenged the granting of the construction permit in the Court of Appeals for the District of Columbia Circuit.

D

With respect to the challenge of Vermont Yankee’s license, the court first ruled that in the absence of effective rulemaking proceedings,13 the Commission must deal with the environmental impact of fuel reprocessing and disposal in individual licensing proceedings. 178 U. S. App. D. C., at 344, 547 P. 2d, at 641. The court then examined the rulemaking proceedings and, despite the fact that it appeared that the agency employed all the procedures required by 5 U. S. C. § 553 (1976 ed.) and more, the court determined the proceedings to be inadequate and overturned the rule. Accordingly, the Commission’s determination with respect to Vermont Yankee’s license was also remanded for further proceedings.14 178 U. S. App. D. C., at 358, 547 P. 2d, at 6.55.

*536With respect to the permit to Consumers Power, the court first held that the environmental impact statement for construction of the Midland reactors was fatally defective for *537failure to examine energy conservation as an alternative to a plant of this size. 178 U. S. App. D. C., at 331,547F. 2d, at 628. The uourt also thought the report by ACRS was inadequate, although it did not agree that discovery from individual ACRS members was the proper way to obtain further explication of the report. Instead, the court held that the Commission should have sua sponte sent the report back to the ACRS for further elucidation of the “other problems” and their resolution. Id., at 335, 547 F. 2d, at 632. Finally, the court ruled that the fuel cycle issues in this case were controlled by NRDC v. NRC, discussed above, and remanded for appropriate consideration of waste disposal and other unaddressed fuel cycle issues as described in that opinion. 178 U. S. App. D. C., at 335, 547 F. 2d, at 632.

*538II

A

Petitioner Vermont Yankee first argues that the Commission may grant a license to operate a nuclear reactor without any consideration of waste disposal and fuel reprocessing. We find, however, that this issue is no longer presented by the record in this case. The Commission does not contend that it is not required to consider the environmental impact of the spent fuel processes when licensing nuclear power plants. Indeed, the Commission has publicly stated subsequent to the Court of Appeals’ decision in the instant case that consideration of the environmental impact of the back end of the fuel cycle in “the environmental impact statements for individual LWR’s [light-water power reactors] would represent a full and candid assessment of costs and benefits consistent with the legal requirements and spirit of NEPA.” 41 Fed. Reg. 45849 (1976). Even prior to the Court of Appeals’ decision the Commission implicitly agreed that it would consider the back end of the fuel cycle in all licensing proceedings: It indicated that it was not necessary to reopen prior licensing proceedings because “the environmental effects of the uranium fuel cycle have been shown to be relatively insignificant,” and thus incorporation of those effects into the cost-benefit analysis would not change the results of such licensing proceedings. App. 395. Thus, at this stage of the proceedings the only question presented for review in this regard is whether the Commission may consider the environmental impact of the fuel processes when licensing nuclear reactors. In addition to the weight which normally attaches to the agency’s determination of such a question, other reasons support the Commission’s conclusion.

Vermont Yankee will produce annually well over 100 pounds of radioactive wastes, some of which will be highly toxic. The Commission itself, in a pamphlet published by its *539information office, clearly recognizes that these wastes “pose the most severe potential health hazard . . . U. S. Atomic Energy Commission, Radioactive Wastes 12 (1965). Many of these substances must be isolated for anywhere from 600 to hundreds of thousands of years. It is hard to argue that these wastes do not constitute “adverse environmental effects which cannot be avoided should the proposal be implemented,” or that by operating nuclear power plants we are not making “irreversible and irretrievable commitments of resources.” 42 U. S. C. §§ 4332 (2) (C) (ii), (v). As the Court of Appeals recognized, the environmental impact of the radioactive wastes produced by a nuclear power plant is analytically indistinguishable from the environmental effects of “the stack gases produced by a coal-burning power plant.” 178 U. S. App. D. C., at 341, 547 F. 2d, at 638. For these reasons we hold that the Commission acted well within its statutory authority when it considered the back end of the fuel cycle in individual licensing proceedings.

B

We next turn to the invalidation of the fuel cycle rule. But before determining whether the Court of Appeals reached a permissible result, we must determine exactly what result it did reach, and in this case that is no mean feat. Vermont Yankee argues that the court invalidated the rule because of the inadequacy of the procedures employed in the proceedings. Brief for Petitioner in No. 76-419, pp. 30-38. Respondents, on the other hand, labeling petitioner’s view of the decision a “straw man,” argue to this Court that the court merely held that the record was inadequate to enable the reviewing court to determine whether the agency had fulfilled its statutory obligation. Brief for Respondents in No. 76 — A19, pp. 28-30, 40. But we unfortunately have not found the parties’ characterization of the opinion to be entirely reliable; it appears here, as in Orloff v. Willoughby, 345 U. S. 83, 87 (1953), that *540“in this Court the parties changed positions as nimbly as if dancing a quadrille.” 15

After a thorough examination of the opinion itself, we con-*541elude that while the matter is not entirely free from doubt, the majority of the Court of Appeals struck down the rule because of the perceived inadequacies of the procedures employed in the rulemaking proceedings. The court first determined the intervenors’ primary argument to be “that the decision to preclude 'discovery or cross-examination’ denied them a meaningful opportunity to participate in the proceedings as guaranteed by due process.” 178 U. S. App. D. C., at 346, 547 F. 2d, at 643. The court then went on to frame the issue for decision thus:

“Thus, we are called upon to decide whether the procedures provided by the agency were sufficient to ventilate the issues.” Ibid., 547 F. 2d, at 643.

The court conceded that absent extraordinary circumstances it is improper for a reviewing court to prescribe the procedural format an agency must follow, but it likewise clearly thought it entirely appropriate to “scrutinize the record as a whole to insure that genuine opportunities to participate in a meaningful way were provided . . . .” Id., at 347, 547 F. 2d, at 644. The court also refrained from actually ordering the agency to follow any specific procedures, id., at 356-357, 547 F. 2d, at 653-654, but there is little doubt in our minds that *542the ineluctable mandate of the court’s decision is that the procedures afforded during the hearings were inadequate. This conclusion is particularly buttressed by the fact that after the court examined the record, particularly the testimony of Dr. Pittman, and declared it insufficient, the court proceeded to discuss at some length the necessity for further procedural devices or a more “sensitive” application of those devices employed during the proceedings. Ibid. The exploration of the record and the statement regarding its insufficiency might initially lead one to conclude that the court was only examining the sufficiency of the evidence, but the remaining portions of the opinion dispel any doubt that this was certainly not the sole or even the principal basis of the decision. Accordingly, we feel compelled to address the opinion on its own terms, and we conclude that it was wrong.

In prior opinions we have intimated that even in a rule-making proceeding when an agency is making a “ 'quasi-judicial’ ” determination by which a very small number of persons are “ 'exceptionally affected, in each case upon individual grounds,’ ” in some circumstances additional procedures may be required in order to afford the aggrieved individuals due process.16 United States v. Florida East Coast R. Co., 410 U. S., at 242, 245, quoting from Bi-Metallic Investment Co. v. State Board of Equalization, 239 U. S. 441, 446 (1915). It might also be true, although we do not think the issue is presented in this case and accordingly do not decide it, that a totally unjustified departure from well-settled agency procedures of long standing might require judicial correction.17

*543But this much is absolutely clear. Absent constitutional constraints or extremely compelling circumstances the “administrative agencies ‘should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties.’ ” FCC v. Schreiber, 381 U. S., at 290, quoting from FCC v. Pottsville *544Broadcasting Co., 309 U. S., at 143. Indeed, our cases could hardly be more explicit in this regard. The Court has, as we noted in FCC v. Schreiber, supra, at 290, and n. 17, upheld this principle in a variety of applications,18 including that case where the District Court, instead of inquiring into the validity of the Federal Communications Commission’s exercise of its rulemaking authority, devised procedures to be followed by the agency on the basis of its conception of how the public and private interest involved could best be served. Examining §4 (j) of the Communications Act of 1934, the Court unanimously held that the Court of Appeals erred in upholding that action. And the basic reason for this decision was the Court of Appeals’ serious departure from the very basic tenet of administrative law that agencies should be free to fashion their own rules of procedure.

We have continually repeated this theme through the years, most recently in FPC v. Transcontinental Gas Pipe Line Corp., 423 U. S. 326 (1976), decided just two Terms ago. In that case, in determining the proper scope of judicial review of agency action under the Natural Gas Act, we held that while a court may have occasion to remand an agency decision because of the inadequacy of the record, the agency should normally be allowed to “exercise its administrative discretion in deciding how, in light of internal organization considerations, it may best proceed to develop the needed evidence and how its prior decision should be modified in light of such evidence as develops.” Id., at 333. We went on to emphasize:

“At least in the absence of substantial justification for doing otherwise, a reviewing court may not, after determining that additional evidence is requisite for adequate *545review, proceed by dictating to the agency the methods, procedures, and time dimension of the needed inquiry and ordering the results to be reported to the court without opportunity for further consideration on the basis of the new evidence by the agency. Such a procedure clearly runs the risk of ‘propel [ling] the court into the domain which Congress has set aside exclusively for the administrative agency.’ SEC v. Chenery Corp., 332 U. S. 194, 196 (1947).” Ibid.

Respondent NRDC argues that § 4 of the Administrative Procedure Act, 5 U. S. C. § 553 (1976 ed.), merely establishes lower procedural bounds and that a court may routinely require more than the minimum when an agency’s proposed rule addresses complex or technical factual issues or “Issues of Great Public Import.” Brief for Respondents in No. 76-419, p. 49. We have, however, previously shown that our decisions reject this view. Supra, at 542 to this page. We also think the legislative history, even the part which it cites, does not bear out its contention. The Senate Report explains what eventually became § 4 thus:

“This subsection states . . . the minimum requirements of public rule making procedure short of statutory hearing. Under it agencies might in addition confer with industry advisory committees, consult organizations, hold informal ‘hearings,’ and the like. Considerations of practicality, necessity, and public interest . . . will naturally govern the agency’s determination of the extent to which public proceedings should go. Matters of great import, or those where the public submission of facts will be either useful to the agency or a protection to the public, should naturally be accorded more elaborate public procedures.” S. Rep. No. 752, 79th Cong., 1st Sess., 14-15 (1945).

The House Report is in complete accord:

“ ‘[U]niformity has been found possible and desirable for all classes of both equity and law actions in the courts .... *546It would seem to require no argument to demonstrate that the administrative agencies, exercising but a fraction of the judicial power may likewise operate under uniform rules of practice and procedure and that they may be required to remain within the terms of the law as to the exercise of both quasi-legislative and quasi-judicial power/

“The bill is an outline of minimum essential rights and procedures. ... It affords private parties a means of knowing what their rights are and how they may protect them ....

"... [The bill contains] the essentials of the different forms of administrative proceedings . . . H. R. Rep. No. 1980, 79th Cong., 2d Sess., 9,16-17 (1946).

And the Attorney General’s Manual on the Administrative Procedure Act 31, 35 (1947), a contemporaneous interpretation previously given, some deference by this Court because of the role played by the Department of Justice in drafting the legislation,19 further confirms that view. In short, all of this leaves little doubt that Congress intended that the discretion of the agencies and not that of the courts be exercised in determining when extra procedural devices should be employed.

There are compelling reasons for construing § 4 in this manner. In the first place, if courts continually review agency proceedings to determine whether the agency employed procedures which were, in the court’s opinion, perfectly tailored to reach what the court perceives to be the “best” or “correct” result, judicial review would be totally unpredictable. And the agencies, operating under this vague injunction to employ *547the “best” procedures and facing the threat of reversal if they did not, would undoubtedly adopt full adjudicatory procedures in every instance. Not only would this totally disrupt the statutory scheme, through which Congress enacted “a formula upon which opposing social and political forces have come to rest,” Wong Yang Sung v. McGrath, 339 U. S., at 40, but all the inherent advantages of informal rulemaking would be totally lost.20

Secondly, it is obvious that the court in these cases reviewed the agency’s choice of procedures on the basis of the record actually produced at the hearing, 178 U. S. App. D. C., at 347, 547 F. 2d, at 644, and not on the basis of the information available to the agency when it made the decision to structure the proceedings in a certain way. This sort of Monday morning quarterbacking not only encourages but almost compels the agency to conduct all rulemaking proceedings with the full panoply of procedural devices normally associated only with adjudicatory hearings.

Finally, and perhaps most importantly, this sort of review fundamentally misconceives the nature of the standard for judicial review of an agency rule. The court below uncritically assumed that additional procedures will automatically result in a more adequate record because it will give interested parties more of an opportunity to participate in and contribute to the proceedings. But informal rulemaking need not be based solely on the transcript of a hearing held before an agency. Indeed, the agency need not even hold a formal hearing. See 5 U. S. C. § 553 (c) (1976 ed.). Thus, the adequacy of the “record” in this type of proceeding is not correlated directly to the type of procedural devices employed, but .rather turns on whether the agency has followed the statutory mandate of the Administrative Procedure Act or other relevant statutes. If the agency is compelled to sup*548port the rule which it ultimately adopts with the type of record produced only after a full adjudicatory hearing, it simply will have no choice but to conduct a full adjudicatory hearing prior to promulgating every rule. In sum, this sort of unwarranted judicial examination of perceived procedural shortcomings of a rulemaking proceeding can do nothing but seriously interfere with that process prescribed by Congress.

Respondent NRDC also argues that the fact that the Commission's inquiry was undertaken in the context of NEPA somehow permits a court to require procedures beyond those specified in § 4 of the APA when investigating factual issues through rulemaking. The Court of Appeals was apparently also of this view, indicating that agencies may be required to “develop new procedures to accomplish the innovative task of implementing NEPA through rulemaking. 178 U. S. App. D. C., at 356, 547 F. 2d, at 653. But we search in vain for something in NEPA which would mandate such a result. We have before observed that “NEPA does not repeal by implication any other statute.” Aberdeen & Bockfish B. Co. v. SCRAP, 422 U. S. 289, 319 (1975). See also United States v. SCBAP, 412 U. S. 669, 694 (1973). In fact, just two Terms ago, we emphasized that the only procedural requirements imposed by NEPA are those stated in the plain language of the Act. Kleppe v. Sierra Club, 427 U. S. 390, 405-406 (1976). Thus, it is clear NEPA cannot serve as the basis for a substantial revision of the carefully constructed procedural specifications of the APA.

In short, nothing in the APA, NEPA, the circumstances of this case, the nature of the issues being considered, past agency practice, or the statutory mandate under which the Commission operates permitted the court to review and overturn the rulemaking proceeding on the basis of the procedural devices employed (or not employed) by the Commission so long as the Commission employed at least the statutory minima, a matter about which there is no doubt in this case.

*549There remains, of course, the question of whether the challenged rule finds sufficient justification in the administrative proceedings that it should be upheld by the reviewing court. Judge Tamm, concurring in the result reached by the majority of the Court of Appeals, thought that it did not. There are also intimations in the majority opinion which suggest that the judges who joined it likewise may have thought the administrative proceedings an insufficient basis upon which to predicate the rule in question. We accordingly remand so that the Court of Appeals may review the rule as the Administrative Procedure Act provides. We have made it abundantly clear before that when there is a contemporaneous explanation of the agency decision, the validity of that action must “stand or fall on the propriety of that finding, judged, of course, by the appropriate standard of review. If that finding is not sustainable on the administrative record made, then the Comptroller’s decision must be vacated and the matter remanded to him for further consideration.” Camp v. Pitts, 411 U. S. 138, 143 (1973). See also SEC v. Chenery Corp., 318 U. S. 80 (1943). The court should engage in this kind of review and not stray beyond the judicial province to explore the procedural format or to impose upon the agency its own notion of which procedures are “best” or most likely to further some vague, undefined public good.21

Ill

A

We now turn to the Court of Appeals’ holding “that rejection of energy conservation on the basis of the 'threshold test’ *550was capricious and arbitrary,” 178 U. S. App. D. C., at 332, 547 F. 2d, at 629, and again conclude the court was wrong.

The Court of Appeals ruled that the Commission’s “threshold test” for the presentation of energy conservation contentions was inconsistent with NEPA’s basic mandate to the Commission. Id., at 330, 547 F. 2d, at 627. The Commission, the court reasoned, is something more than an umpire who sits back and resolves adversary contentions at the hearing stage. Ibid., 547 F. 2d, at 627. And when an intervenor’s comments “bring sufficient attention to the issue to stimulate the Commission’s consideration of it,’ ” the Commission must “undertake its own preliminary investigation of the proffered alternative sufficient to reach a rational judgment whether it is worthy of detailed consideration in the EIS. Moreover, the Commission must explain the basis for each conclusion that further consideration of a suggested alternative is unwarranted.” Id., at 331, 547 F. 2d, at 628, quoting from Indiana & Michigan Electric Co. v. FPC, 163 U. S. App. D. C. 334, 337, 502 F. 2d 336, 339 (1974), cert. denied, 420 U. S. 946 (1975).

While the court’s rationale is not entirely unappealing as an abstract proposition, as applied to this case we think it basically misconceives not only the scope of the agency’s statutory responsibility, but also the nature of the administrative process, the thrust of the agency’s decision, and the type of issues the intervenors were trying to raise.

There is little doubt that under the Atomic Energy Act of 1954, state public utility commissions or similar bodies are empowered to make the initial decision regarding the need for power. 42 U. S. C. § 2021 (k). The Commission’s prime area of concern in the licensing context, on the other hand, is national security, public health, and safety. §§ 2132, 2133, 2201. And it is clear that the need, as that term is conventionally used, for the power was thoroughly explored in the hearings. Even the Federal Power Commission, which regu*551lates sales in interstate commerce, 16 U. S. C. § 824 et seq. (1976 ed.), agreed with Consumers Power’s analysis of projected need. App. 207.

NEPA, of course, has altered slightly the statutory balance, requiring “a detailed statement by the responsible official on . . . alternatives to the proposed action.” 42 U. S. C. § 4332 (C). But, as should be obvious even upon a moment’s reflection, the term “alternatives” is not self-defining. To make an impact statement something more than an exercise in frivolous boilerplate the concept of alternatives must be bounded by some notion of feasibility. As the Court of Appeals for the District of Columbia Circuit has itself recognized:

“There is reason for concluding that NEPA was not meant to require detailed discussion of the environmental effects of 'alternatives’ put forward in comments when these effects cannot be readily ascertained and the alternatives are deemed only remote and speculative possibilities, in view of basic changes required in statutes and policies of other agencies — making them available, if at all, only after protracted debate and litigation not meaningfully compatible with the time-frame of the needs to which the underlying proposal is addressed.” Natural Resources Defense Council v. Morton, 148 U. S. App. D. C. 5, 15-16, 458 F. 2d 827, 837-838 (1972).

See also Life of the Land v. Brinegar, 485 F. 2d 460 (CA9 1973), cert. denied, 416 U. S. 961 (1974). Common sense also teaches us that the “detailed statement of alternatives” cannot be found wanting simply because the agency failed to include every alternative device and thought conceivable by the mind of man. ' Time and resources are simply too limited to hold that an impact statement fails because the agency failed to ferret out every possible alternative, regardless of how uncommon or unknown that alternative may have been at the time the project was approved.

*552With these principles in mind we now turn to the notion of “energy conservation,” an alternative the omission of which was thought by the Court of Appeals to have been “forcefully pointed out by Saginaw in its comments on the draft EIS.” 178 U. S. App. D. C., at 328, 547 F. 2d, at 625. Again, as the Commission pointed out, “the phrase 'energy conservation’ has a deceptively simple ring in this context. Taken literally, the phrase suggests a virtually limitless range of possible actions and developments that might, in one way or another, ultimately reduce projected demands for electricity from a particular proposed plant.” App. 331. Moreover, as a practical matter, it is hard to dispute the observation that it is largely the events of recent years that have emphasized not only the need but also a large variety of alternatives for energy conservation. Prior to the drastic oil shortages incurred by the United States in 1973, there was little serious thought in most Government circles of energy conservation alternatives. Indeed, the Council on Environmental Quality did not promulgate regulations which even remotely suggested the need to consider energy conservation in impact statements until August 1, 1973. See 40 CFR § 1500.8 (a) (4) (1977); 38 Fed. Reg. 20554 (1973). And even then the guidelines were not made applicable to draft and final statements filed with the Council before January 28, 1974. Id., at 20557, 21265. The Federal Power Commission likewise did not require consideration of energy conservation in applications to build hydroelectric facilities until June 19, 1973. 18 CFR pt. 2, App. A., §8.2 (1977); 38 Fed. Reg. 15946, 15949 (1973). And these regulations were not made retroactive either. Id., at 15946. All this occurred over a year and a half after the draft environmental statement for Midland had been prepared, and over a year after the final environmental statement had been prepared and the hearings completed.

We think these facts amply demonstrate that the concept of “alternatives” is an evolving one, requiring the agency to *553explore more or fewer alternatives as they become better known and understood. This was well understood by the Commission, which, unlike the Court of Appeals, recognized that the Licensing Board’s decision had to be judged by the information then available to it. And judged in that light we have little doubt the Board’s actions were well within the proper bounds of its statutory authority. Not only did the record before the agency give every indication that the project was actually needed, but also there was nothing before the Board to indicate to the contrary.

We also think the court’s criticism of the Commission’s “threshold test” displays a lack of understanding of the historical setting within which the agency action took place and of the nature of the test itself. In the first place, while it is true that NEPA places upon an agency the obligation to consider every significant aspect of the environmental impact of a proposed action, it is still incumbent upon intervenors who wish to participate to structure their participation so that it is meaningful, so that it alerts the agency to the intervenors’ position and contentions. This is especially true when the intervenors are requesting the agency to embark upon an exploration of uncharted territory, as was the question of energy conservation in the late 1960’s and early 19'70’s.

“[C]omments must be significant enough to step over a threshold requirement of materiality before any lack of agency response or consideration becomes of concern. The comment cannot merely state that a particular mistake was made ... ; it must show why the mistake was of possible significance in the results . . . .” Portland Cement Assn. v. Ruckelshaus, 158 U. S. App. D. C. 308, 327, 486 F. 2d 375, 394 (1973), cert. denied sub nom. Portland Cement Corp. v. Administrator, EPA, 417 U. S. 921 (1974).

Indeed, administrative proceedings should not be a game or a forum to engage in unjustified obstructionism by making *554cryptic and obscure reference to matters that “ought to' be” considered and then, after failing to do more to bring the matter to the agency’s attention, seeking to have that agency determination vacated on the ground that the agency failed to consider matters “forcefully presented.” In fact, here the agency continually invited further clarification of Saginaw’s contentions. Even without such clarification it indicated a willingness to receive evidence on the matters. But not only did Saginaw decline to further focus its contentions, it virtually declined to participate, indicating that it had “no conventional findings of fact to set forth” and that it had not “chosen to search the record and respond to this proceeding by submitting citations of matter which we believe were proved or disproved.”

We also think the court seriously mischaracterized the Commission’s “threshold test” as placing “heavy substantive burdens ... on intervenors . . . .” 178 U. S. App. D. C., at 330, and n. 11, 547 F. 2d, at 627, and n. 11. On the contrary, the Commission explicitly stated:

“We do not equate this burden with the civil litigation concept of a prima jade case, an unduly heavy burden in this setting. But the showing should be sufficient to require reasonable minds to inquire further.” App. 344 n. 27.

We think this sort of agency procedure well within the agency’s discretion.

In sum, to characterize the actions of the Commission as “arbitrary or capricious” in light of the facts then available to it as described at length above, is to deprive those words of any meaning. As we have said in the past:

“Administrative consideration of evidence . . . always creates a gap between the time the record is closed and the time the administrative decision is promulgated [and, we might add, the time the decision is judicially reviewed]. ... If upon the coming down of the order *555litigants might demand rehearings as a matter of law because some new circumstance has arisen, some new trend has been observed, or some new fact discovered, there would be little hope that the administrative process could ever be consummated in an order that would not be subject to reopening.” ICC v. Jersey City, 322 U. S. 503, 514 (1944).

See also Northern Lines Merger Cases, 396 U. S. 491, 521 (1970).

We have also made it clear that the role of a court in reviewing the sufficiency of an agency’s consideration of environmental factors is a limited one, limited both by the time at which the decision was made and by the statute mandating review.

“Neither the statute nor its legislative history contemplates that a court should substitute its judgment for that of the agency as to the environmental consequences of its actions.” Kleppe v. Sierra Club, 427 U. S., at 410 n. 21.

We think the Court of Appeals has forgotten that injunction here and accordingly its judgment in this respect must also be reversed.22

*556B

Finally, we turn to the Court of Appeals’ holding that the Licensing Board should have returned the ACRS report to ACRS for further elaboration, understandable to a layman, of the reference to other problems.

The Court of Appeals reasoned that since one function of the report was “that all concerned may be apprised of the safety or possible hazard of the facilities,” the report must be in terms understandable to a layman and replete with cross-references to previous reports in which the “other problems” are detailed. Not only that, but if the report does not so elaborate, and the Licensing Board fails to sun sponte return the report to ACRS for further development, the entire agency action, made after exhaustive studies, reviews, and 14 days of hearings, must be nullified.

Again the Court of Appeals has unjustifiably intruded into the administrative process. It is true that Congress thought publication of the ACRS report served an important function. But the legislative history shows that the function of publication was subsidiary to its main function, that of providing technical advice from a body of experts uniquely qualified to provide assistance. See 42 U. S. C. § 2039; S. Rep. No. 296, 85th Cong., 1st Sess., 24 (1957); Joint Committee on Atomic Energy, A Study of AEC Procedures and Organization in the Licensing of Reactor Facilities, 85th Cong., 1st Sess., 32-34 (Comm. Print 1957). The basic information to be conveyed to the public is not necessarily a full technical exposition of every facet of nuclear energy, but rather the ACRS’s position, and reasons therefor, with respect to the safety of a proposed nuclear reactor. Accordingly, the ACRS cannot be faulted for not dealing with every facet of nuclear energy in every report it issues.

Of equal significance is the fact that the ACRS was not obfuscating its findings. The reports to which it referred were matters of public record, on file in the Commission’s *557public-documents room. Indeed, all ACRS reports are on file there. Furthermore, we are informed that shortly after the Licensing Board’s initial decision, ACRS prepared a list which identified its “generic safety concerns.” In light of all this it is simply inconceivable that a reviewing court should find it necessary or permissible to order the Board to sua sponte return the report to ACRS. Our view is confirmed by the fact that the putative reason for the remand was that the public did not understand the report, and yet not one member of the supposedly uncomprehending public even asked that the report be remanded. This surely is, as petitioner Consumers Power claims, “judicial intervention run riot.” Brief for Petitioner in No. 76-528, p. 37.

We also think it worth noting that we find absolutely nothing in the relevant statutes to justify what the court did here. The Commission very well might be able to remand a report for further clarification, but there is nothing to support a court’s ordering the Commission to take that step or to support a court’s requiring the ACRS to give a short explanation, understandable to a layman, of each generic safety concern.

All this leads us to make one further observation of some relevance to this case. To say that the Court of Appeals’ final reason for remanding is insubstantial at best is a gross understatement. Consumers Power first applied in 1969 for a construction permit — not even an operating license, just a construction permit. The proposed plant underwent an incredibly extensive review. The reports filed and reviewed literally fill books. The proceedings took years, and the actual hearings themselves over two weeks. To then nullify that effort seven years later because one report refers to other problems, which problems admittedly have been discussed at length in-other reports available to the public, borders on the Kafkaesque. Nuclear energy may some day be a cheap, safe source of power or it may not. But Congress has made a *558choice to at least try nuclear energy, establishing a reasonable review process in which courts are to play only a limited role. The fundamental policy questions appropriately resolved in Congress and in the state legislatures are not subject to reexamination in the federal courts under the guise of judicial review of agency action. Time may prove wrong the decision to develop nuclear energy, but it is Congress or the States within their appropriate agencies which must eventually make that judgment. In the meantime courts should perform their appointed function. NEPA does set forth significant substantive goals for the Nation, but its mandate to the agencies is essentially procedural. See 42 IT. S. C. § 4332. See also Aberdeen & Bockfish R. Co. v. SCRAP, 422 U. S., at 319. It is to insure a fully informed and well-considered decision, not necessarily a decision the judges of the Court of Appeals or of this Court would have reached had they been members of the decisionmaking unit of the agency. Administrative decisions should be set aside in this context, as in every other, only for substantial procedural or substantive reasons as mandated by statute, Consolo v. FMC, 383 U. S. 607, 620 (1966), not simply because the court is unhappy with the result reached. And a single alleged oversight on a peripheral issue, urged by parties who never fully cooperated or indeed raised the issue below, must not be made the basis for overturning a decision properly made .after an otherwise exhaustive proceeding.

Reversed and remanded.

Mr. Justice Blackmun and Mr. Justice Powell took no part in the consideration or decision of these cases.

Me. Chief Justice Stone

delivered the opinion of the Court.

This is a rate case involving numerous questions which arise out of the Federal Power Commission’s regulation, under §§ 5 (a) and 13 of the Natural Gas Act of 1938, 52 Stat. 821, 15 U. S. C. § 717, of the rates to be charged for the sale of natural gas by cross-petitioners, Natural Gas Pipeline Company of America and Texoma Natural Gas Company.

The two companies are engaged in business as a single enterprise. They produce natural gas from their own reserves in the Panhandle gas fields in Texas, and purchase gas produced there by others. They transport the gas by their own pipeline in interstate commerce to Illinois, where they sell the bulk of it at wholesale to utilities, which distribute and sell it for domestic, commercial and industrial uses.

The companies began operations in 1932 with a capital structure of $60,000,000 of six per cent bonds, later increased by $999,000, and $3,500,000 of common stock, of which $500,000 is stock of the Texoma Company, a nonprofit corporation paying no dividends on its stock. During the first seven years of operation, beginning January 1, 1932, and extending through 1938, the companies charged against gross income various depreciation and depletion deductions aggregating $13,077,48s,1 and in addition *579charged $6,481,322 for “retirements” of property. In that period they paid dividends amounting in all to $9,150,000. Although there were book deficits in earnings for the first two years, the total “net profit” available for dividends and surplus after payment of interest on the bonds was $8,224,436,2 or an annual average of $1,174,919, which is 33.6% per annum on the $3,500,000 stock. The earnings available during the period for return on the capital investment of both stockholders and bondholders — after taking out of income $19,558,810 for depreciation, depletion and retirements — totalled $34,040,883; this makes an average of $4,862,983 annually, which is about 8% on the book figures for investment undepreciated, or 8.8% after deducting from investment the average depreciation and depletion reserves actually charged to earnings by the companies.3 At the time of the hearing, over one-fourth of the bonds issued had been retired out of earnings.

On complaint of the Illinois Commerce Commission, and on its own motion, the Power Commission began separate investigations of the companies’ rates. These proceedings were consolidated and after extensive hearings the Commission, for the purpose of issuing an interim order, accepted the companies’ statement that the book cost of their property existing at the end of 1938 was $6(^172,843, including working capital of $975,000. *580Likewise for the purpose of the order, it accepted the companies’ estimate that the value of all physical property — calculated at reproduction cost new (except for gas reserves taken on the companies’ statement to have a present value of $13,334,775) — was $74,420,424, which the Commission adopted as the rate base. It took the companies’ own estimate of twenty-three years' ending in 1954 as the life of the business, and for the amortization base used their cost figure of $78,284,009 for the total past and estimated future investment after deduction of estimated salvage. It calculated the “annual amortization expense” on that amount for the twenty-three year period, at a 6%% sinking fund interest rate, as $1,557,852, which it allowed.

The Commission also accepted, for the purpose of its interim order, the companies’ estimate of prospective income available for amortization and return for the period 1939 to 1942 inclusive, as averaging $9,511,454 per annum. But making allowance for higher income tax rates under the Revenue Act of 1940, it found that the income available for amortization and return would be decreased to $9,362,032. It concluded that the companies’ estimate of return, less the amortization allowance, ($9,362,032 less $1,557,852), — or $7,804,180 — exceeded the fair return, $4,837,328 (which is 6%% of the rate base of $74,420,424), by $2,966,852, which , amount was available for reduction of net revenues. Taking into account the decrease of $783,909 in federal income taxes which would result from such a decline in revenues, the Commission decided there was a total of $3,750,000 annually available for reduction of rates. It found the existing rates were “unjust, unreasonable and excessive,” and made its interim order directing the companies to file a new schedule of rates and charges effective after September 1, 1940, which would bring about an annual reduction of $3,750,000 in operating revenues. The *581order also provided that the record should “remain open” for such further proceedings as the Commission may deem necessary or desirable.

On the companies’ petition for review of the order pursuant to § 19 (b) of the Act, the Court of Appeals for the Seventh Circuit, 120 F. 2d 625, upheld the validity of the rate regulation provisions of the Act, and the Commission’s authority under the statute to issue the interim order directing reduction of the rates and requiring respondents to file new schedules reflecting that reduction. But the court vacated the Commission’s order on the sole grounds that “going concern value” to the extent of $8,500,000 should have been included in the rate base, and that the amortization period for the entire property, instead of the full twenty-three year estimated life of the business taken by the Commission, should have been dated from the passage of the Act or the time of the Commission’s order.

We granted certiorari, 314 U. S. 593, because of the novelty and importance of the questions presented upon the Commission’s petition challenging the grounds of reversal below, and on the companies’ cross petition assailing the constitutionality of the Act, the authority of the Commission to make the interim order, the prescribed 6y%°fo return, the computation of the amortization allowance on the same rate of interest as the fair rate of return, and other features of the Commission’s order presently to be discussed.

The Natural Gas Act declares that “the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest,” and that federal regulation of interstate commerce in natural gas “is necessary in the public interest.” § 1 (a). The Act directs that all rates and charges in connection with the transportation or sale of natural gas, subject to the jurisdiction of the Commission, shall be “just and rea*582sonable” and declares to be unlawful any rate or charge which is not just and reasonable. § 4 (a). By § 5 the Commission, on its own motion or the complaint of a State, municipality, state commission or gas distributing company, is empowered to investigate the rates charged by any natural gas company in connection with any transportation or sale of any natural gas subject to the jurisdiction of the Commission, and after a hearing to determine just and reasonable rates.

Constitutionality of the Act. The argument that the provisions of the statute applied in this case are unconstitutional on their face is without merit. The sale of natural gas originating in one State and its transportation and delivery to distributors in any other State constitutes interstate commerce, which is subject to regulation by Congress. Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U. S. 498. It is no objection to the exercise of the power of Congress that it is attended by the same incidents which attend the exercise of the police power of a State. The authority of Congress to regulate the prices of commodities in interstate commerce is at least as great under the Fifth Amendment as is that of the States under the Fourteenth to regulate the prices of commodities in intrastate commerce. Compare United States v. Carolene Products Co., 304 U. S. 144; United States v. Rock Royal Co-op., 307 U. S. 533, 569; Sunshine Coal Co. v. Adkins, 310 U. S. 381, 393-97; United States v. Darby, 312 U. S. 100, with Nebbia v. New York, 291 U. S. 502; Olsen v. Nebraska, 313 U. S. 236.

The price of gas distributed through pipelines for public consumption has been too long and consistently recognized as a proper subject of regulation under the Fourteenth Amendment to admit of doubts concerning the propriety of like regulations under the Fifth. Willcox v. Consolidated Gas Co., 212 U. S. 19; Cedar Rapids *583 Gas Co. v. Cedar Rapids, 223 U. S. 655; Railroad Commission v. Pacific Gas Co., 302 U. S. 388. And the fact that the distribution here involved is by wholesale rather than retail sales presents no differences of significance to the protection of the public interest which is the object of price regulation. Cf. Illinois Natural Gas Co. v. Central Illinois Public Service Co., supra. The business of cross-petitioners is not any the less subject to regulation now because the Government has not seen fit to regulate it in the past. Cf. Nebbia v. New York, supra, 538-39.

Validity of the Interim Order. The companies contend that the Federal Power Commission has no authority under the Act to enter the type of order now under review, and that the order is invalid because the Commission did not itself fix reasonable rates as required by the Act but instead merely directed the companies to file a new rate schedule which would result in the prescribed reduction in operating revenues. Section 5 (a) of the Act provides: “Whenever the Commission, after a hearing . . ., shall find that any rate ... is in just, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate . . . and shall fix the same by order.” It also contains a proviso that the Commission shall not have power to order an increase of rates on file unless in accordance with a new schedule filed by the company. But without mention of new rate schedules the proviso adds that the Commission “may order a decrease where existing rates are unjust ... or are not the lowest reasonable rates.” And § 16 gives the Commission “power to . . . issue . . . such orders ... as it may find necessary or appropriate to carry out the provisions of this Act.”

The first prerequisite to an order by the Commission is that it shall be preceded by a hearing and findings. In this case, while the proceedings were not ended by the *584interim, order, the companies had full opportunity to offer all their evidence both direct and in rebuttal, and full opportunity to cross-examine every witness offered by both the Federal Power Commission and the Illinois Commerce Commission. All the evidence tendered was received and considered by the Commission, and before the interim order was entered counsel for the companies stated to the Commission that they had concluded the direct testimony in support of their case. So far as the order is supported by the evidence, the companies cannot complain that they were denied a full hearing because they had not been able to examine on redirect their own witnesses who had not been cross-examined or because they had no opportunity to cross-examine or rebut witnesses who were not offered by the Commission. The right to a full hearing before any tribunal does not include the right to challenge or rely on evidence not offered or considered. See New England Divisions Case, 261 U. S. 184, 201.

The establishment of a rate for a regulated industry often involves two steps of different character, one of which may appropriately precede the other. The first is the adjustment of the general revenue level to the demands of a fair return. The second is the adjustment of a rate schedule conforming to that level so as to eliminate discriminations and unfairness from its details. Such an orderly procedure for establishing the rates prescribed by the Act would seem to be an appropriate means of carrying out its provisions. Section 5 of the Act was modelled on the provisions of the Transportation Act, 49 U. S. C. §§ 13, 15, which have been interpreted as giving to the Interstate Commerce Commission authority to establish a general level of rates and divisions in advance of a schedule to be filed by the carriers. See New England Divisions Case, supra, 201-202, 203, n. 21. Cf. Sharfman, The Interstate Commerce *585Commission, vol. 2, pp. 381-82; Driscoll v. Edison Co., 307 U. S. 104.

We think that the proviso of § 5, already quoted, contemplates that, when existing rates are found to be unjust and unreasonable, an order decreasing revenues may be filed without establishing a specific schedule of rates. Since such an order may be in the interests of the public, as well as the regulated company, and is in harmony with the purposes of the Act, it is one which the Commission has discretion to make under § 16 as appropriate to carry out the provisions of the Act.

The Scope of Judicial Review of Rates Prescribed by the Commission. The ultimate question for oar decision is whether the rate prescribed by the Commission is too low. The statute declares, § 4 (a), that the rates of natural gas companies subject to the Act “shall be just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful.” Section 5 (a) directs the Commission to “determine the just and reasonable rate” to be observed, and requires the Commission to “fix the same by order.” It also provides that “the Commission may order a decrease where existing rates are unjust . . . unlawful, or are not the lowest reasonable rates.” On review of the Commission’s orders by a Circuit Court of Appeals as authorized by § 19 (b), the Commission’s findings of fact “if supported by substantial evidence, shall be conclusive.”

By long standing usage in the field of rate regulation, the “lowest reasonable rate” is one which is not confiscatory in the constitutional sense. Los Angeles Gas Co. v. Railroad Commission, 289 U. S. 287, 305; Railroad Commission v. Pacific Gas Co., supra, 394, 395; Denver Stock Yard Co. v. United States, 304 U. S. 470, 475. Assuming that there is a zone of reasonableness within which the Commission is free to fix a rate varying in amount and higher than a confiscatory rate, see Banton v. Belt *586 Line Ry. Corp., 268 U. S. 413, 422, 423; Columbus Gas Co. v. Commission, 292 U. S. 398, 414; Denver Stock Yard Co. v. United States, supra, 483, the Commission is also free under § 5 (a) to decrease any rate which is not the “lowest reasonable rate.” It follows that the Congressional standard prescribed by this statute coincides with that of the Constitution, and that the courts are without authority under the statute to set aside as too low any “reasonable rate” adopted by the Commission which is consistent with constitutional requirements.

The Constitution does not bind rate-making bodies to the service of any single formula or combination of formulas. Agencies to whom this legislative power has been delegated are free, within the ambit of their statutory authority, to make the pragmatic adjustments which may be called for by particular circumstances. Once a fair hearing has been given, proper findings made and other statutory requirements satisfied, the courts cannot intervene in the absence of a clear showing that the limits of due process have been overstepped. If the Commission’s order, as applied to the facts before it and viewed in its entirety, produces no arbitrary result, our inquiry is at an end.

Going Concern Value. The companies insist that their business has a going concern value of $8,500,000, which the Commission did not include in the rate base and on which they are entitled to earn a return. In establishing the rate base for the purposes of the interim order the Commission “reluctantly” accepted the estimates of value, presented by the companies’ own witnesses, as follows:

Reproduction Cost New of Physical Properties (exclusive of Gas Reserves)......$56,302,250 4

Value of Gas Reserves as of June 1,1939.. 13,334,775

*587Capital Additions from June 1,1939, to December 31,1942...................... 13,808,399* **5

Working Capital...................... 975, 000

Total Rate Base................. $74,420,424

While no item for going concern value is separately stated in the rate base, the computation of cost new of physical equipment included — in addition to labor and cost of materials — large amounts for overhead, interest, taxes, administration, legal and supervisory charges, and expenses paid or incurred in assembling the plant as that of a going concern.

The Commission spoke of the rate base thus arrived at as “liberal” and as a “generous allowance.” That the estimate of reproduction costs new is liberal is indicated by the circumstances that the companies’ structures other than gas reserves were built in 1930-1931 at a time, as the record shows, of relatively high prices, and that their reproduction cost depreciated is greater than actual cost, which was about $50,000,000. And the allowed “present-value” of leases as of June 1,1939, $13,334,775, is approximately $4,000,000 more than book cost, even without taking into account a substantial reduction for depletion reserves of $1,152,854, which the companies had accrued on *588their own books by the end of 1938. The Commission declined to include going concern value as an additional item in the rate base.

The companies urge, as the Court of Appeals held, that there are items of cost or expense incurred in the establishment and development of the business during the seven-year period prior to regulation, which were not included in the companies’ estimate of value accepted by the Commission, and which, in view of the special characteristics of the business, should be capitalized and added to the rate base to the extent of $8,500,000 for going concern value. They include, in amounts not now material, the following: expenditures for securing new business; interest on money invested in non-productive plant capacity; taxes paid on non-productive capacity; fixed operating expenses attributable to non-productive capacity, and depreciation on non-productive capacity.6 The companies’ contentions with respect to all these items are predicated upon the limited life of the business, twenty-three years, and on testimony that in anticipation of its growth larger gas mains and facilities were constructed than were required during the earlier years of the business. The reproduction cost new of this excess of equipment is admittedly included in- the rate base.

None of these items appears in the companies’ capital account. With the possible exception of expenditures for securing new business, they are synthetic figures arrived at by estimating the amount of expense attributable to the current cost of maintenance of the excess capacity of the plant during periods when the excess capacity was not *589used. But the interest charges, taxes and other costs of maintaining this excess capacity during the period when not in use have not been capitalized by the companies on their books and so far as appears were paid from current-earnings. The same is true of the expenditure for advertising and other expenses of acquiring new business. .

The novel question is thus presented whether confiscation, proscribed by Congress as well as the Constitution, results from the exclusion from the rate base of the previous costs of maintaining excess plant capacity and of getting new business. The Commission gave full consideration to this contention. It said: “The companies’ claim for $8,500,000 for going concern value must be disallowed. The amount obviously is an arbitrary claim, not supported by substantial evidence warranting its allowance. Its allowance would mean the acceptance of a deceptive fiction, resulting in an unfair imposition upon consumers. We are convinced that we are allowing in our rate base more than an adequate amount to cover all elements of value.”

There is no constitutional requirement that going concern value, even when it is an appropriate element to be included in a rate base, must be separately stated and appraised as such. This Court has often sustained valuations for rate purposes of a business assembled as a whole, without separate appraisal of the going concern element. Columbus Gas Co. v. Commission, 292 U. S. 398, 411; Dayton P. & L. Co. v. Commission, 292 U. S. 290, 309; Denver Stock Yard Co. v. United States, supra, 478-480; Driscoll v. Edison Co., supra, 117. When that has been done, the burden rests on the regulated company to show that this item has neither been adequately covered in the rate base nor recouped from prior earnings of the business. Des Moines Gas Co. v. Des Moines, 238 U. S. 153, 166.

*590The total value of the companies’ plant, including equipment in excess of immediate needs when beginning business, has been included in the rate base adopted. If rightly included, as the Commission has assumed for purposes of the order, the companies would have been entitled to earn a fair return upon its value, had the business been regulated from the start. But it does not follow that the companies’ property would be confiscated by denying to them the privilege of capitalizing the maintenance cost of excess plant capacity, which would allow them to earn a return and amortization allowance upon such costs during the entire life of the business. It is only on the assumption that excess capacity is a part of the utility’s equipment used and useful in the regulated business, that it can be included as a part of the rate base on which a return may be earned. When so included, the utility gets its return not from capitalizing the maintenance cost, but from current earnings by rates sufficient, having in view the character of the business, to secure a fair return upon the rate base, provided the business is capable of earning it. But regulation does not insure that the business shall produce net revenues, nor does the Constitution require that the losses of the business in one year shall be restored from future earnings by the device of capitalizing the losses and adding them to the rate base on which a fair return and depreciation allowance is to be earned. Galveston Electric Co. v. Galveston, 258 U. S. 388; San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 446-47. The deficiency may not be thus added to the rate base, for the obvious reason that the hazard that the property will not earn a profit remains on the company in the case of a regulated, as well as an unregulated, business.

Here the companies, though unregulated, always treated their entire original investment, together with subsequent additions, as capital on which profit was to be earned. *591They charged the out-of-pocket cost of maintenance of plant, whether used to capacity or not, as operating expenses deductible from earnings before arriving at net profits. They have thus treated the items now sought to be capitalized in the rate base as operating expenses to be compensated from earnings, as in the case of regulated companies. The history of the first seven years of operation before regulation shows an average annual return,7 after deduction of operating expenses, of approximately 8% on the undepreciated investment. This high return was earned during a period which included the severest depression in our history.

Whether there is going concern value in any case depends upon the financial history of the business. Houston v. Southwestern Tel. Co., 259 U. S. 318, 325. This is peculiarly true of a business which derives its estimates of going concern value from a financial history preceding regulation. That history here discloses no basis for going concern value, both because the elements relied upon for that purpose could rightly be rejected as capital investment in the case of a regulated company, and because in the present case it does not appear that the items, which have never been treated as capital investment, have not been recouped during the unregulated period.

We cannot say that the Commission has deprived the companies of their property by refusing to permit them to earn for the future a fair return and amortization on the costs of maintenance of initial excess capacity — costs which the companies fail to show have not already been recouped from earnings before computing the substantial “net profits” earned during the first seven years. The items for advertising and acquiring new business have been treated in the same way by the companies, and do *592not, in the circumstances of this case, stand on any different footing. Cf. West Ohio Gas Co. v. Commission, 294 U. S. 63, 72.

The Amortization Base. The Commission took as the amortization base the sum of $78,284,009. This was made up of the companies’ total investment, at the end of 1938, of $67,173,761 (without deduction of property retirements already made), plus estimated future capital additions through 1954, including replacements, amounting to $12,159,380,8 less estimated salvage at the predicted end of the project in 1954. It is not questioned that the Commission’s annual amortization allowance of $1,557,852, accumulated at the sinking fund interest rate of 6y%°/o adopted by the order, will be sufficient in 1954 to restore the capital investment so computed.

The companies argue that the amortization base, computed on a basis of reproduction cost, should be $84,-341,218 9 rather than cost plus estimated future capital additions. But the purpose of the amortization allowance and its justification is that it is a means of restoring from current earnings the amount of service capacity of the business consumed in each year. Lindheimer v. Illinois *593 Tel. Co., 292 U. S. 151, 167. When the property is devoted to a business which can exist for only a limited term, any scheme of amortization which will restore the capital investment at the end of the term involves no deprivation of property. Even though the reproduction cost of the property during the period may be more than its actual cost, this theoretical accretion to value represents no profit to the owner, since the property dedicated to the business, save for its salvage value, is destined for the scrap-heap when the business ends. The Constitution does not require that the owner who embarks in a wasting-asset business of limited life shall receive at the end more than he has put into it. We need not now consider whether, as the Government urges, there can in no circumstances be a constitutional requirement that the amortization base be the reproduction value rather than the actual cost of the property devoted to a regulated business. Cf. United Railways Co. v. West, 280 U. S. 234, 265. It is enough that here the business, by hypothesis, will end in 1954, and that the amortization base, computed at cost and including property already retired, will be completely restored by 1954 by the annual amortization allowances. As the Commission declared: “The amounts of amortization are recognized and treated as operating expenses. Operating expenses are stated on the basis of cost. . . . We refuse to make an allowance of amortization in excess of cost. To do so would not be the computation of a proper expense, but instead the allowance of additional profit over and above a fair return. Manifestly such an additional return would unjustly penalize consumers.”

The Amortization Period. The court below held that, since the business was unregulated for the first seven years, the adoption by the Commission of the estimated twenty-three year life of the business as the amortization period involved a denial of due process. In view of the estimate by the Commission and the companies that the *594gas properties would be exhausted in about sixteen years from the date of the Act, the court thought, as the companies argue, that a rate of return would be confiscatory which would not provide, in addition to a fair return, an annual amortization allowance sufficient to restore the total investment over the final sixteen-year period. But this argument overlooks the fact that the depreciation of physical property attributed to use, and the obsolescence of the entire property attributable to lapse of time in the case of a business having a limited life, had been taking place during the seven years before regulation and that those items must be recouped if at all from earnings. Capital investment loss at the end of the life of a business can only be avoided by restoration of the investment from earnings, and is avoidable so far as is humanly possible only by an appropriate charge of amortization to earnings as they accrue.

Here, there is no question but that the Commission’s annual amortization allowance, if applied over the entire twenty-three year life of the business, is sufficient to restore the total capital investment at the end, or that earnings of the past and those estimated for the future together are sufficient to provide for the amortization allowance and a fair return, given an appropriate rate base and rate of return. Making that assumption, we cannot say that adequate provision has not been made for restoration of the companies’ investment from earnings, and a fair return on the investment. Even though the companies were unregulated for seven years, earnings during that period were available and adequate for amortization. In fact, the companies’ charges to earnings, for depreciation, depletion and retirements, totalled $19,558,810, or an average of $2,794,115 per annum. This was in conformity with the established business practice, in the case of unregulated as well as regulated businesses, to make such a depreciation or amortization *595allowance chargeable annually to earnings as an operating expense in order to provide adequately for annual consumption of capital in the business. Lindheimer v. Illinois Tel. Co., supra.

The companies are not deprived of property by a requirement that they credit in the amortization account so much of the earnings received during the prior period as are appropriately allocable to it for amortization. Only by that method is it possible to determine the amount of earnings which may justly be required for amortization during the remaining life of the business.

Amortization Interest Rate. The annual amortization allowances of $1,557,852, if accumulated at a 6%% compound interest rate until the assumed exhaustion of the gas reserves in 1954, will be sufficient to restore the undepreciated total investment less the salvage value of the property. The companies urge that the interest rate should have been lower, say 2%, on the assumption that only some such lower rate would be earned by a hypothetical sinking fund to be created from the annual amortization allowances. But the argument ignores the fact that the amortization method adopted by the Commisssion contemplates not a sinking fund of segregated securities purchased with cash withdrawn from the business, but merely a sinking fund reserve charged to earnings and not distributable as ordinary dividends. Under this method there is no deduction of the amortization allowances from the rate base on which a fair return— 6under the current interim order — is to be allowed during the life of the business.

The companies are thus allowed to earn in each year, in addition to the amortization allowance, 6%% on both the amortized and the unamortized portions of the base. If the amortization interest were computed at a 2% rate without deducting the amortized portion from the rate base, the companies would continue to receive a 6%% *596instead of only a 2% return on that portion of the investment. True, the method of amortization adopted means that the companies look to the earnings of the business for the hypothetical interest on amortization reserve. This, it is argued, may involve more business risk than a method of amortization contemplating the actual withdrawal from the business of the amortization allowances and their investment in segregated securities bearing a lower rate of interest. But here the 6%% rate of return allowed on the amortized portion of the rate base includes compensation for the business risk, and the risk is an incident of the business in which the companies have hazarded their capital and in which they propose to invest additional capital. The Commission declared it adopted this method to avoid the inequitable result which would follow if the companies were permitted to include in their charges to the public 6%% on the amortized portion of the base, while treating it as earning only 2%. The Commission’s conclusion that this is an appropriate method is supported by the evidence, and in any case it does not appear that it has deprived or will deprive the companies of property.

Fair Rate of Return. The Commission found that “6% per cent is a fair annual rate of return upon the rate base allowed,” which it had characterized as “a generous allowance.” The courts are required to accept the Commission’s findings if they are supported by substantial evidence. § 19(b). We cannot say, on this record, that the Commission was bound to allow a higher rate.

The evidence shows that profits earned by individual industrial corporations declined from 11.3% on invested capital in 1929 to 5.1% in 1938. The profits of utility corporations declined during the same period from 7.2% to 5.1%. For railroad corporations, the decline was from 6.4% to 2.3%. Interest rates were at a low level on all forms of investment, and among the lowest that have *597ever existed. The securities of natural gas companies were sold at rates of return of from 3% to 6%, with yields on most of their bond issues between 3% and 4%. The interest on large loans ranged from 2% to 3.25%.

The regulated business here seems exceptionally free from hazards which might otherwise call for special consideration in determining the fair rate of return. Substantially all its product is distributed in the metropolitan area of Chicago, a stable and growing market, through distributing companies which own 26% of the investment of the Natural Gas Pipeline Company. Ninety per cent of its gas is taken under contract by the Chicago District Pipeline Company. The contract runs until 1946 or until 1951, at the option of the companies. Under it the District Company is bound to take, or at least pay for, 66%% of the companies’ gas, and performance is guaranteed by the three companies distributing the gas in Chicago.

The danger of early exhaustion of the gas field was fully taken into account in the estimate of its life, and the companies’ estimate was accepted. Provision for the complete amortization of the investment within that period affords a security to the investment which is lacking to those industries whose capital investments must be continued for an indefinite period. The companies’ affiliation with the six large corporations which directly or indirectly own all the stock, places them in a strong position for their future financing. The business is in the same position as other similar businesses with respect to increased taxation, inflation and costs of operation. Other factors, such as credit risks, risks of technological changes, varying demands for product, relatively small labor requirements, and conversion of inventory into cash, compare more favorably. After a full consideration of all of these factors and of expert testimony, the Commission concluded that the prescribed reduction in *598revenues was just and reasonable, and that the 6%% was a fair rate of return.

Disposition of Excess Charges Collected Since the Commission’s Order. The Circuit Court of Appeals stayed the Commission’s order pending appeal. The companies state that, as a condition of the stay, the court required them to give a bond in the sum of 11,000,000, conditioned upon their refund of excess charges to customers, in the event that the Commission’s order should be sustained. The bond is not in the record and its precise terms are not before us.

The companies point out that substantially all the gas affected by the reduction in revenues is sold to wholesalers who distribute it for ultimate consumption. They argue that the purpose of the rate regulation is the protection of consumers, and that the purposes of the Act will not be effectuated by the refunds to wholesalers. They insist that such refunds, being the wholesalers’ profits from past business, cannot be resorted to for reducing future rates to the consumers. Cf. Knoxville v. Knoxville Water Co., 212 U. S. 1, 14; Galveston Electric Co. v. Galveston, supra, 258 U. S. at 395.

Of this contention it is enough to say that the question of the disposition of the excess charges is not before us for determination on the present record. Cf. Morgan v. United States, 304 U. S. 1, 26. Amounts collected in excess of the Commission’s order are declared to be unlawful by § 4 (a) of the Act. If there is any basis, either in the bond or the circumstances relied upon by the companies, for not compelling the companies to surrender these illegal exactions, it does not appear from the record.

We have considered but find it unnecessary to discuss other objections of lesser moment to the Commission’s order. We sustain the validity of the order and reverse the judgment below.

Reversed.

*599Me. Justice Black, Mr. Justice Douglas, and Mr. Justice Murphy,

concurring.

I

We concur with the Court’s judgment that the rate order of the Federal Power Commission, issued after a fair hearing upon findings of fact supported by substantial evidence, should have been sustained by the court below. But insofar as the Court assumes that, regardless of the terms of the statute, the due process clause of the Fifth Amendment grants it power to invalidate an order as unconstitutional because it finds the charges to be unreasonable, we are unable to join in the opinion just announced.

Rate making is a species of price fixing. In a recent series of cases, this Court has held that legislative price fixing is not prohibited by the due process clause.1 We believe that, in so holding, it has returned, in part at least, to the constitutional principles which prevailed for the first hundred years of our history. Munn v. Illinois, 94 U. S. 113; Peik v. Chicago & N. W. Ry. Co., 94 U. S. 164. Cf. McCart v. Indianapolis Water Co., 302 U. S. 419, 427-*600428. The Munn and Peik cases, decided in 1877, Justices Field and Strong dissenting, emphatically declared price fixing to be a constitutional prerogative of the legislative branch, not subject to judicial review or revision.

In 1886, four of the Justices who had voted with him in the Munn and Peik cases no longer being on the Court, Chief Justice Waite expressed views in an opinion of the Court which indicated a yielding in part to the doctrines previously set forth in Mr. Justice Field’s dissenting opinions, although the decision, upholding a state regulatory statute, did not require him to reach this issue. See Railroad Commission Cases, 116 U. S. 307, 331. For an interesting discussion of the evolution of this change of position, see Swisher, Stephen J. Field, 372-392. By 1890, six Justices of the 1877 Court, including Chief Justice Waite, had been replaced by others. The new Court then clearly repudiated the opinion expressed for the Court by Chief Justice Waite in the Munn and Peik cases, in a holding which accorded with the views of Mr. Justice Field. Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418. Under those views, first embodied in a holding of this Court in 1890, “due process” means no less than “reasonableness judicially determined.” 2 3In accordance with this elastic meaning which, in the words of Mr. Justice Holmes, makes the sky the limit3 of judicial power to declare legislative acts unconstitutional, the conclusions of judges, substituted for those of legislatures, become a broad and varying standard of constitutionality.4 ***We *601shall not attempt now to set out at length the reasons for our belief that acceptance of such a meaning is historically unjustified and that it transfers to courts powers which, under the Constitution, belong to the legislative branch of government. But we feel that we must record our disagreement from an opinion which, although upholding the action of the Commission on these particular facts, nevertheless gives renewed vitality to a “constitutional” doctrine which we are convinced has no support in the Constitution.

The doctrine which makes of “due process” an unlimited grant to courts to approve or reject policies selected by legislatures in accordance with the judges’ notion of reasonableness had its origin in connection with legislative attempts to fix the prices charged by public utilities. And in no field has it had more paralyzing effects.5

II

We have here, to be sure, a statute which expressly provides for judicial review. Congress has provided in § 5 of the Natural Gas Act that the rates fixed by the Commission shall be “just and reasonable.” The provision for judicial review states that the “finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive.” § 19 (b). But we are not satisfied that the opinion of the Court properly delimits the scope of that review under this Act. Furthermore, since this case starts *602a new chapter in the regulation of utility rates, we think it important to indicate more explicitly than has been done the freedom which the Commission has both under the Constitution and under this new statute. While the opinion of the Court erases much which has been written in rate cases during the last half century, we think this is an appropriate occasion to lay the ghost of Smyth v. Ames, 169 U. S. 466, which has haunted utility regulation since 1898. That is especially desirable lest the reference by the majority to “constitutional requirements” and to “the limits of due process” be deemed to perpetuate the fallacious “fair value” theory of rate making in the limited judicial review provided by the Act.

Smyth v. Ames held (pp. 546-547) that “the basis of all calculations as to the reasonableness of rates to be charged by a corporation maintaining a highway under legislative sanction must be the fair value of the property being used by it for the convenience of the public. And in order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the original cost of construction, the probable earning capacity of the property under particular rates prescribed by statute, and the sum required to meet operating expenses, are all matters for consideration, and are to be given such weight as may be just and right in each case. We do not say that- there may not be other matters to be regarded in estimating the value of the property. What the company is entitled to ask is a fair return upon the value of that which it employs for the public convenience. On the other hand, what the public is entitled to demand is that no more be exacted from it for the use of a public highway than the services rendered by it are reasonably worth.”

(1) This theory derives from principles of eminent domain. See Mr. Justice Brewer, Ames v. Union Pacific Ry. *603 Co., 64 F. 165, 177; West v. Chesapeake & Potomac Telephone Co., 295 U. S. 662, 671; Hale, Conflicting Judicial Criteria of Utility Rates, 38 Col. L. Rev. 959. In condemnation cases the “value of property, generally speaking, is determined by its productiveness — the profits which its use brings to the owner.” Monongahela Navigation Co. v. United States, 148 U. S. 312, 328, 329. Cf. Consolidated Rock Products Co. v. Du Bois, 312 U. S. 510, 525-526. But those principles have no place in rate regulation. In the first place, the value of a going concern in fact depends on earnings under whatever rates may be anticipated. The present fair value rule creates, but offers no solution to, the dilemma that value depends upon the rates fixed and the rates upon value. See Mr. Justice Brandeis, Southwestern Bell Telephone Co. v. Public Service Commission, 262 U. S. 276, 292; Hale, The Fair Value Merry-Go-Round, 33 Ill. L. Rev. 517; 2 Bonbright, Valuation of Property, pp. 1094 et seq. In the second place, when property is taken under the power of eminent domain the owner is “entitled to the full money equivalent of the property taken, and thereby to be put in as good position pecuniarily as it would have occupied if its property had not been taken.” United States v. New River Collieries Co., 262 U. S. 341, 343. But in rate-making, the owner does not have any such protection. We know, without attempting any valuation, that if earnings are reduced the value will be less. But that does not stay the hand of the legislature or its administrative agency in making rate reductions. As we have said, rate-making is one species of price-fixing. Price-fixing, like other forms of social legislation, may well diminish the value of the property which is regulated. But that is no obstacle to its validity. As stated by Mr. Justice Holmes in Block v. Hirsh, 256 U. S. 135, 155: “The fact that tangible property is also visible tends to give a rigidity to our conception of our rights in it that we do not attach to others less con*604cretely clothed. But the notion that the former are exempt from the legislative modification required from time to time in civilized life is contradicted not only by the doctrine of eminent domain, under which what is taken is paid for, but by that of the police power in its proper sense, under which property rights may be cut down, and to that extent taken, without pay.” Somewhat the same view was expressed in Nebbia v. New York, 291 U. S. 502, 532, where this Court said: “The due process clause makes no mention of sales or of prices any more than it speaks of business or contracts or buildings or other incidents of property. The thought seems nevertheless to have persisted that there is something peculiarly sacrosanct about the price one may charge for what he makes or sells, and that, however able to regulate other elements of manufacture or trade, with incidental effect upon price, the state is incapable of directly controlling the price itself. This view was negatived many years ago. Munn v. Illinois, 94 U. S. 113.” Explicit recognition of these principles will place the problems of rate-making in their proper setting under this statute.

(2) The rule of Smyth v. Ames, as construed and applied, directs the rate-making body in forming its judgment as to “fair value” to take into consideration various elements — capitalization, book cost, actual cost, prudent investment, reproduction cost. See Mr. Justice Brandeis, Southwestern Bell Telephone Co. v. Public Service Commission, supra, pp. 294-295. But as stated by Mr. Justice Brandéis: “Obviously 'value’ cannot be a composite of all these elements. Nor can it be arrived at on all these bases. They are very different; and must, when applied in a particular case, lead to widely different results. The rule of Smyth v. Ames, as interpreted and applied, means merely that all must be considered. What, if any, weight shall be given to any one, must practically rest in the judicial discretion of the tribunal which makes the deter*605mination. Whether a desired result is reached may depend upon how any one of many elements is treated.” Id., pp. 295-296. The risks of not giving weight to reproduction cost have been great. Southwestern Bell Telephone Co. v. Public Service Commission, supra; St. Louis & O’Fallon Ry. Co. v. United States, 279 U. S. 461. The havoc raised by insistence on reproduction cost is now a matter of historical record. Mr. Justice Brandéis in the Southwestern Bell Telephone case demonstrated how the rule of Smyth v. Ames has seriously impaired the power of rate-regulation and how the “fair value” rule has proved to be unworkable by reason of the time required to make the valuations, the heavy expense involved, and the unreliability of the results obtained.6 And see Mr. Justice Brandeis concurring, St. Joseph Stock Yards Co. v. United States, 298 U. S. 38, 73; dissenting opinion, McCart v. Indianapolis Water Co., 302 U. S. 419, 423 et seq.; Mr. Justice Stone dissenting, West v. Chesapeake Potomac Telephone Co., supra. The result of this Court’s rulings in rate cases since Smyth v. Ames has recently been summarized as follows: “Under the influence of these precedents, commission regulation has become so cumbersome and so ineffective that it may be said, with only slight exaggeration, to have broken down. Even the investor,7 on whose behalf the constitutional safeguards have *606been developed, has received no protection against the rebounds from the inflated stock-market prices that are stimulated by the ‘fair-value’ doctrine.” Bonbright, op. cit., p. 1164.

As we read the opinion of the Court, the Commission is now freed from the compulsion of admitting evidence on reproduction cost or of giving any weight to that element of “fair value.” The Commission may now adopt, if it chooses, prudent investment as a rate base— the base long advocated by Mr. Justice Brandéis. And for the reasons stated by Mr. Justice Brandéis in the Southwestern Bell Telephone case, there could be no constitutional objection if the Commission adhered to that formula and rejected all others.

Yet it is important to note, as we have indicated, that Congress has merely provided in § 6 of the Natural Gas Act that the rates fixed by the Commission shall be “just and reasonable.” It has provided no standard beyond that. Congress, to be sure, has provided for judicial review. But § 19(b) states that the “finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive.” In view of these provisions, we do not think it is permissible for the courts to concern themselves with any issues as to the economic merits of a rate base. The Commission has a broad area of discretion for selection of an appropriate rate base. The requirements of “just and reasonable” embrace, among other factors, two phases of the public interest: (1) the *607investor interest; (2) the consumer interest. The investor interest is adequately served if the utility is allowed the opportunity to earn the cost of the service. That cost has been defined by Mr. Justice Brandéis as follows: “Cost includes not only operating expenses, but also capital charges. Capital charges cover the allowance, by way of interest, for the use of the capital, whatever the nature of the security issued therefor; the allowance for risk incurred; and enough more to attract capital.” Southwestern Bell Telephone Co. v. Public Service Commission, supra, 262 U. S. at p. 291. Irrespective of what the return may be on “fair value,” if the rate permits the company to operate successfully and to attract capital all questions as to “just and reasonable” are at an end so far as the investor interest is concerned. Various routes to that end may be worked out by the expert administrators charged with the duty of regulation. It is not the function of the courts to prescribe what formula should be used. The fact that one may be fair to investors does not mean that another would be unfair. The decision in each case must turn on considerations of justness and fairness which cannot be cast into a legalistic formula. The rate of return to be allowed in any given case calls for a highly expert judgment. That judgment has been entrusted to the Commission. There it should rest.

One caveat, however, should be entered. The consumer interest cannot be disregarded in determining what is a “just and reasonable” rate. Conceivably, a return to the company of the cost of the service might not be “just and reasonable” to the public. The correct principle was announced by this Court in Covington & Lexington Turnpike Co. v. Sandford, 164 U. S. 578, 596: “It cannot be said that a corporation is entitled, as of right, and without reference to the interests of the pub-*608lie, to realize a given per cent upon its capital stock. When the question arises whether the legislature has exceeded its constitutional power in prescribing rates to be charged by a corporation controlling a public highway, stockholders are not the only persons whose rights or interests are to be considered. The rights of the public are not to be ignored. It is alleged here that the rates prescribed are unreasonable and unjust to the company and its stockholders. But that involves an inquiry as to what is reasonable and just for the public. If the establishing of new lines of transportation should cause a diminution in the number of those who need to use a turnpike road, and, consequently, a diminution in the tolls collected, that is not, in itself, a sufficient reason why the corporation, operating the road, should be allowed to maintain rates that would be unjust to those who must or do use its property. The public cannot properly be subjected to unreasonable rates in order simply that stockholders may earn dividends.” Cf. Chicago & Grand Trunk Ry. Co. v. Wellman, 143 U. S. 339, 345-346; United Gas Co. v. Texas, 303 U. S. 123, 150-151.

This problem carries into a field not necessary to develop here. It reemphasizes, however, that the investor interest is not the sole interest for protection. The investor and consumer interests may so collide as to warrant the rate-making body in concluding that a return on historical cost or prudent investment, though fair to investors, would be grossly unfair to the consumers. The possibility of that collision reinforces the view that the problem of rate-making is for the administrative experts, not the courts, and that the ex post facto function previously performed by the courts should be reduced to the barest minimum which is consistent with the statutory mandate for judicial review. That review should be as confined and restricted as the review, under similar statutes, of orders of other administrative agencies.

*609Mr. Justice Feankfubtee,

concurring:

I wholly agree with the opinion of the Chief Justice.

Congress has in the Natural Gas Act specifically cast upon courts the duty to review orders of the Federal Power Commission fixing “just and reasonable” rates. The constitutional scope of judicial review of rate orders where Congress has denied judicial review is therefore not in issue in this case. Discussion of the problem is academic, especially since we all concur in the Chief Justice’s conclusions on the rate order here made by the Commission. But since the issue has been stirred, I add a few words because legal history still has its claims.

While the doctrine of “confiscation,” as a limitation to be enforced by the judiciary upon the legislative power

to fix utility rates, was first applied in Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418, that decision followed principles expounded in Stone v. Farmers’ Loan & Trust Co., 116 U. S. 307, especially at 331. See 134 U. S. at 465-56. Mr. Chief Justice Waite, who delivered the opinion in the Stone case as well as in the earlier decision in Munn v. Illinois, 94 U. S. 113, was therefore the author of the doctrine of “confiscation” and its corollary, “judicial review.” His view was shared by such stout respecters of legislative power over utilities as Mr. Justice Miller (see Fairman, Mr. Justice Miller and the Supreme Court, passim), Mr. Justice Bradley (see his dissent in Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418, 461), and Mr. Justice Harlan. The latter, indeed, agreed with Mr. Justice Field' that the regulatory power exercised in the Railroad Commission Cases, 116 U. S. 307, constituted an impairment of the obligation of contract. By no one was the doctrine of judicial review more emphatically accepted, and applied in favor of a public utility, than by Mr. Justice Harlan in the decision and opinion in Covington & Lexington Turnpike Co. v. Sandford, 164 U. S. 578, especially at 591-95.

*610But while this historic controversy over the constitutional limitations upon the power of courts in rate cases is not presented here, if it be deemed that courts have nothing to do with rate-making because that task was committed exclusively to the Commission, surely it is a usurpation of the Commission’s function to tell it how it should discharge this task and how it should protect the various interests that are deemed to be in its, and not in our, keeping.

Me. Justice McReynolds

delivered the opinion of the Court.

The Supreme Court of Missouri (233 S. W. 425) affirmed a judgment of the Cole County Circuit Court *282which sustained an order of the Public Service Commission of Missouri, effective -December 1, 1919. That order undertook to reduce rates for exchange service and to abolish the installation and moving charges theretofore demanded by plaintiff in error. It is challenged as confiscatory and in conflict with the Fourteenth Amendment.

During the period of federal control — August 1, 1918, to August 1, 1919 — the Postmaster General advanced the rates for telephone service and prescribed a schedule of charges for installing and moving instruments. The Act of Congress approved July 11, 1919, c. 10, 41 Stat. 157, directed that the lines be returned to their owners at midnight July 31, 1919, and further—

“That the existing toll and exchange telephone rates as established or approved by the Postmaster General on or prior to June 6, 1919^ shall continue in force for a period not to exceed four months after this Act takes effect, unless sooner modified or changed by the public authorities — State, municipal, or otherwise — having control or jurisdiction of tolls, charges, and rates or by contract or by voluntary reduction.”

August 4, 1919, the Commission directed plaintiff in error to show why exchange service rates and charges for installation and moving as fixed by the Postmaster General should be continued. After a hearing, it made an elaborate report and directed that the service rates should be reduced and the charges discontinued.

The Company produced voluminous evidence, including its books, to establish the value of its property dedicated to public use. The books showed that the actual cost of “total plant, supplies, equipment and working capital,” amounted to $22,888,943. Its engineers estimated the reproduction cost new as of June 30, 1919, thus — Physical telephone property, $28,454,488; working capital, $1,051,564; establishing business, $5,594,816; total $35,100,868. They also estimated existing values *283(after allowing depreciation) upon the same date — Physical telephone property, $24,709,295; working capital, $1,051,564; establishing business, $5,594,816; total; $31,355,675.

The only evidence offered in opposition to values claimed by the Company, were appraisals of its property at St. Louis, Caruthersville and Springfield, respectively, as of December 1913, February 1914 and September 1916, prepared by the Commission’s engineers and accountants, together with statements showing actual cost of additions subsequent to those dates.

Omitting a paragraph relative to an unimportant reduction — $17,513.52—from working capital account, that part of the Commission’s report which deals with property values follows.

“The Company offered in evidence exhibits showing the value of its property in the entire State (outside the cities of Kansas City and Independence, whose rates are not involved in this case), and also at forty-six of its local exchanges in the State. It shows by such exhibits that the value of the property in the entire State (and when speaking of the property in the State in this report we mean exclusive of Kansas City and Independence) is as follows: Reproduction cost new, $35,100,471; reproduction cost new, less depreciation, $31,355,278; and cost as per books, $22,888,943. It also shows the Company’s estimate of reproduction cost new, reproduction cost new less depreciation, and the prorated book cost, at each of the forty-six local exchanges mentioned.

“The engineers of this Commission have made a detailed inventory and appraisal and this Commission has formally valued the Company’s property at only three of its exchanges, viz: at the City of Caruthersville, reported in re Southwestern Tel. & Tel. Company, 2 Mo. P. S. C. 492; at the City of St. Louis in cases No. 234 and No. 235 as yet unreported; and at the City of Springfield, reported *284in re Missouri and Kansas Telephone Company, 6 Mo. P. S. C. 279, and as a result we have only the estimates and appraisals of the Company before us -in relation to the value of the property at the other exchanges. We think it is clear, however, from the data at hand that the values placed by the Company upon the property are excessive and not a just basis for rate making.

“ The values fixed by this Commission at Caruthers-ville, St. Louis and Springfield in the cases above mentioned aggregate $11,003,898, while the Company estimates the aggregate cost of reproduction new of these plants in this case at $18,971,011. The ratio of the latter figure is 172.4 per cent. This percentage divided into' $35,100,471, the Company’s estimate of the aggregate cost of reproduction new of its property in Missouri in this case, equals $20,350,000, which might be said to be one measure of the value of the property.

“Again, the Company’s estimate of the aggregate cost of reproduction new, less depreciation, of its properties at Caruthersville, St. Louis and Springfield, in this case is $16,913,673. The ratio of this figure to the aggregate value fixed by the Commission at these exchanges, plus additions reported by the Company, is 153.7 per cent. This percentage divided into $31,355,278, the Company’s estimate of the aggregate cost of reproduction new, less depreciation, of Jts .property in Missouri in this case, equals $20,400,000, which may be said to be another measure of the value of the property.

“ The Company also shows by Exhibits 19 and 212 that its return under the Postmaster General’s rates on $22,888,943, the book value of its property in the State, is at the rate of 11.65 per cent per annum for depreciation and return on the investment, which would yield the Company 6 per cent for depreciation and 5.65 per cent for return on the book cost of the property. As stated, however, we do not think that the book cost or the *285‘ prorated book cost ’ of the property as claimed by the Company would be a fair basis for rate making.

“As we understand it, the ‘ prorated book cost ’ given in evidence by the Company for the various exchanges is simply the percentage relation of reproduction cost new which the original cost of all property bears to reproduction cost new of all property and in individual instances the actual cost might vary greatly, either up or down, from what an appraisal would show. If the Company, to eliminate competition, paid a price in excess of the value or because of discouraged local operation were enabled to purchase a plant far below its actual value, the ‘ prorated book cost ’ basis would not reflect anything like the original cost.

“We also think that the figure of $22,888,943, claimed by the Company to represent the book cost or original cost of its property in the State, is subject to certain adjustments with reference to the amount of non-useful property included, working capital, and the amount to be deducted account extinguished value recouped from patrons by charges to depreciation.

“ In the St. Louis case, supra, the original cost of the non-useful property deducted and disallowed by the Commission amounted to $454,689.16. It appears from the Company’s Exhibit 256 that the ‘ prorated book cost ’ of the St. Louis exchange is just about half of that given for the State. However, it is clear that the proportion of non-used and non-useful property in St. Louis bears a much larger percentage relation to useful property than would obtain throughout the State. It would appear that estimating the Company’s property not used and useful for the entire State at $500,000 would be a fair approximation. This sum at least should be deducted. . . .

“The depreciation reserve applicable to the Missouri property is not shown by the Company. However, on *286the Company’s Exhibit 15, the balance sheet as of June 30, 1919, of the Southwestern Bell Telephone Company (Missouri corporation) operating in Missouri, Kansas and Arkansas, the reserve for accrued depreciation and reserve for amortization of intangibles is given as $7,963,082.37. The same exhibit shows the original cost of fixed capital for Missouri, Kansas and Arkansas property as $46,061,162.76. The total fixed capital of the Missouri property shown on the Company’s Exhibit 19 is $21,837,759, which is 47.4 per cent of $46,061,162.76 and 47.4 per cent of the reserve for depreciation, $7,963,082.37 equals $3,774,501, or the portion assignable to the Missouri property.

“Adjusting in accordance with the above, we have: Total plant and equipment, including working capital, as per Company’s Exhibit No. 19, $22,888,943. Deduct property not used or useful, $500,000.00; deduct excess working capital, $17,513.52; deduct depreciation reserve, $3,774,501.00; [total to be deducted] $4,292,014.52. [Net total] $18,596,928.48; add for intangibles, 10 per cent, $1,859,692.85; total adjusted original cost, $20,-456,621.33.

“After carefully considering all the evidence as to values before us in this case, we are of the opinion that the value of the Company’s property in the State, exclusive of Kansas.City and Independence, devoted to exchange service, will not exceed the sum of $20,400,000, and we will tentatively adopt this sum as the value of the property for the purposes of this case. As stated supra, this Commission has formally valued only a part of this property, and we should not be understood as authoritatively fixing the value of the property at this time.”

The three earlier valuations to which the Commission referred are — St. Louis, December 1913, $8,500,000; Caruthersville, February 1914, $25,000; Springfield, Sep*287tember 1916, $815,000; total, $9,340,000. Between those dates and June 30, 1919, additions were made to these properties which cost, respectively, $1,623,765, $5,992 and $34,141. Adding these to the original valuations gives $11,003,898, the base sum used by the Commission for the estimates now under consideration.

Obviously, the Commission undertook to value the property without according any weight to the greatly enhanced costs of material, labor, supplies, etc., over those prevailing in 1913, 1914 and 1916. As matter of common knowledge, these increases were large. Competent witnesses estimated them as 45 to 50 per centum.

In Willcox v. Consolidated Gas Co., 212 U. S. 19, 41, 52, this Court said:

“ There must be a fair return upon the reasonable value of the property at the time it is being used for the public. .. . And we concur with the court below in holding that the value of the property is to be determined as of the time when the inquiry is made regarding the rates. If the property, which legally enters into the consideration of the question of rates, has increased in value since it was acquired, the company is entitled to the benefit of such increase.”

In the Minnesota Rate Cases, 230 U. S. 352, 454, this was said:

“ The making of a just return for the use of the property involves the recognition of its fair value if it be more than its cost. The property is held in private ownership and it is that property, and not the original cost of it, of which the owner may not be deprived without due process of law.”

See also Denver v. Denver Union Water Co., 246 U. S. 178, 191; Newton v. Consolidated Gas Co., 258 U. S. 165 (March 6, 1922); and Galveston Electric Co. v. Galveston, 258 U. S. 388 (April 10, 1922).

It'is impossible to ascertain what will amount to a fair return upon properties devoted to public service with*288out giving consideration to the cost of labor, supplies, etc., at the time the investigation is made. An honest and intelligent forecast of probable future values made upon a view of all the relevant circumstances, is essential. If the highly important element of present costs is wholly disregarded such a.forecast becomes impossible. Estimates for to-morrow cannot ignore prices of to-day.

Witnesses for the Company asserted — and there was no substantial evidence to the contrary — that excluding cost of establishing the business the property was worth at least 25% more than the Commission’s estimates, and we think the proof shows that for the purposes of the present case the valuation should be at least $25,000,000.

After disallowing an actual expenditure of $174,048.60 for rentals and services by the American Telephone & Telegraph Company and some other items not presently important, the Commission estimated the annual net profits on operations available for depreciation and return as $2,828,617.60 — approximately 114% of $25,000,-000. That 6% should be allowed for depreciation appears to be accepted by the Commission. Deducting this would leave a possible 54% return upon the minimum value of the property, which is wholly inadequate considering the character of the investment and interest rates then prevailing.

The important item of expense disallowed by the Commission — $174,048.60—is 55% of the 4|% of gross revenues paid by plaintiff in error to the American Telephone & Telegraph Company as rents for receivers, transmitters, induction coils, etc., and for licenses and services under the customary form of contract between the latter Company and its subsidiaries. Four and one-half per cent, is the ordinary charge paid voluntarily by local companies of the general system; There is nothing to indicate bad faith. So far as appears, plaintiff in error’s board of directors has exercised a proper discretion about this matter *289requiring business judgment. It must never be forgotten that while the State may regulate with a view to enforcing reasonable rates and charges, it is not the owner of the property of public utility companies and is not clothed with the general power of management incident to ownership. The applicable general rule is well expressed in State Public Utilities Commission ex rel. Springfield v. Springfield Gas and Electric Company, 291 Ill. 209, 234.

“ The commission is not the financial manager of the corporation and it is not empowered to substitute its judgment for that of the directors of the corporation; nor can it ignore items charged by the utility as operating expenses unless there is an abuse of discretion in that regard by the corporate officers.”

See Interstate Commerce Commission v. Chicago Great Western Ry. Co., 209 U. S. 108; Chicago, Milwaukee & St. Paul R. R. Co. v. Wisconsin, 238 U. S. 491; People ex rel. v. Stevens, 197 N. Y. 1.

Reversed.

Mr. Justice Brandéis

dissenting from opinion,

with whom Mr. Justice Holmes

concurs.

I concur in the judgment of reversal.. But I do so on the ground that the order of the state commission prevents the utility from earning a fair return on the amount prudently1 invested in it. Thus, I differ fundamentally from my brethren concerning the rule to be applied in determining whether a prescribed rate is confiscatory. The Court, adhering to the so-called rule of Smyth v. Ames, *290169 U. S. 466, and further defining it, declares that what is termed value must be ascertained by giving weight, among other things, to estimates of what it would cost to reproduce the property at the time of the rate hearing.

The so-called rule of Smyth v. Ames is, in my opinion, legally and economically unsound. The thing devoted by the investor to the public use is not specific property, tangible and intangible, but capital embarked in the enterprise. Upon the capital so invested the Federal Constitution guarantees to the utility the opportunity to earn a fair return.2 Thus, it sets the limit to the power of the State to regulate rates. The Constitution does not guarantee to the utility the opportunity to earn a return on the value of all items of property used by the utility, or of any of them. The several items of property constituting the utility, taken singly, and freed from the public use, may conceivably have an aggregate value greater than if the items are used in combination. The owner is at liberty, in the absence of controlling statutory provision, to withdraw his property from the public service; and, if he does so, may obtain for it exchange value. Compare Brooks-Scanlon Co. v. Railroad Commission of Louisiana, 251 U. S. 396; Erie R. R. Co. v. Public Utility Commissioners, 254 U. S. 394, 411; Texas v. Eastern Texas R. R. Co., 258 U. S. 204. But so long as the specific items of property are employed by the utility, their exchange value is not of legal significance.

The investor agrees, by embarking capital in a utility, that its charges to the public shall be reasonable. *291His company is the substitute for the State in the performance of the public service; thus becoming a public servant. The compensation which the Constitution guarantees an opportunity to earn is the reasonable cost of conducting the business. Cost includesl not only operating expenses, but also capital charges. Capital charges cover the allowance, by way of interest, for the use of the capital, whatever the nature of the security issued therefor; the allowancé for risk incurred; and enough more to attract capital. The reasonable rate to be prescribed by a commission may allow an efficiently managed utility much more. But a rate is constitutionally compensatory, if it allows to the utility the opportunity to earn the cost of the service as thus defined.

To decide whether a proposed fate is confiscatory, the tribunal must determine both what sum would be earned under it, and whether that sum would be a fair return. The decision involves ordinarily the making of four subsidiary ones:

1. What the gross earnings from operating the utility under the rate in controversy would be. (A prediction.)

2. What the operating expenses and charges, while so operating, would be. (A prediction.)

3. The rate-base, that is, what the amount is on which a return should be earned. (Under Smyth v. Ames, an opinion, largely.)

4. What rate of return should be deemed fair. (An opinion, largely.)

A decision that a rate is confiscatory (or compensatory) is thus the resultant of four subsidiary determinations. Each of the four involves forming a judgment, as distinguished from ascertaining facts. And as to each factor, there is usually room for difference in judgment. But the first two factors do not ordinarily present serious difficulties. The doubts and uncertainties incident to *292prophecy, which affect them, can, often, be resolved by a test period; and meanwhile protection may be afforded by giving a bond. Knoxville v. Knoxville Water Co., 212 U. S. 1, 18, 19; St. Louis, Iron Mountain & Southern Ry. Co. v. McKnight, 244 U. S. 368. The doubts and uncertainties incident to the last two factors can be eliminated, or lessened, only by redefining the rate base, called value, and the measure of fairness in return, now applied under the rule of Smyth v. Ames. The experience of the twenty-five years since that case was decided has demonstrated that the rule there enunciated is delusive. In the attempt to apply it insuperable obstacles have been encountered. It has failed to afford adequate protection either to capital or to the public. It leaves open the door to grave injustice. To give to capital embarked in public utilities the protection guaranteed by the Constitution, and to secure for the public reasonable rates, it is essential that the rate base be definite, stable, and readily ascertainable; and that the percentage to be earned on the rate base be measured by the cost, or charge, of the capital employed in the enterprise. It is consistent with the Federal Constitution for this Court now to lay down a rule which will establish such a rate base and such a measure of the rate of return deemed fair. In my opinion, it should do so.

The rule of Smyth v. Ames sets the laborious and baffling task of finding the present value of the utility. It is impossible to find an exchange value for a utility, since utilities, unlike merchandise or land, are not commonly bought and sold in the market. Nor can the present value of the utility be determined by capitalizing its net earnings, since the earnings are determined, in large measure, by the rate which the company will be permitted to charge; and, thus, the vicious circle would be encountered. So, under the rule of Smyth v. Ames, it is usually sought to prove the present value of a utility by ascer-*293taming what it actually cost to construct and instal it; or by estimating what it should have cost; or by estimating what it would cost to reproduce, or to replace, it. To this end an enumeration is made of the component elements of the utility, tangible, and intangible.3 Then the actual, or the proper, cost of producing, or of reproducing, each part is sought. And finally, it is estimated how much less than the new each part, or the whole, is *294worth. That is, the depreciation is estimated.4 Obviously each step in the process of estimating the cost of reproduction, or replacement, involves forming an opinion, or exercising judgment, as distinguished from merely ascertaining facts. And this is true, also, of each step in the process of estimating how much less the existing plant is worth, than if it were new. There is another potent reason why, under the rule of Smyth v. Ames, the room for difference in opinion as to the present value of a utility is so wide. The rule does not measure the present value either by what the utility cost to produce; or by what it should have cost; or by what it would cost to reproduce, or to replace, it.5 Under that rule the tribunal is directed, in forming its judgment, to take into consideration all those and also, other elements, called relevant facts.6

*295Obviously “ value ” cannot be a composite of all these elements. Nor can it be arrived at on all these bases. They are very different; and must, when applied in a particular case, lead to widely different results. The rule of Smyth v. Ames, as interpreted and applied, means merely that all must be considered. What, if any, weight shall be given to any one, must practically rest in the judicial discretion of the tribunal which makes the deter*296mination. Whether a desired result is reached may depend upon how any one of many elements is treated. It is true that the decision is usually rested largely upon records of financial transactions, on statistics and calculations. But as stated in Louisville v. Cumberland Telegraph & Telephone Co., 225 U. S. 430, 436, “ every figure . . . that we have set down with delusive exactness ” is “speculative.”

The efforts of courts to control commissions’ findings of value have largely failed. The reason lies in the character of the rule declared in Smyth v. Ames. The rule there stated was to be applied solely as a means of determining whether rates already prescribed by the legislature were confiscatory. It was to be applied judicially after the rate had been made; and by a court which had had no part in making the rate. When applied under such circumstances the rule, although cumbersome, may occasionally be effective in destroying an obstruction to justice, as the action of a court is, when it sets aside the verdict of a jury. But the commissions undertook to make the rule their standard for constructive action. They used it as a guide for making, or approving, rates. And the tendency developed to fix as reasonable, the rate which is not so low as to be confiscatory.7 Thus the rule which assumes that rates of utilities will ordinarily be higher than the minimum required by the Constitution has, by the practice of the commissions, eliminated the margin between a reasonable rate and a merely compensatory rate; and, in the process of rate making, effective judicial review is very often rendered impossible.8 The *297result, inherent in the rule itself, is arbitrary action, on the part of the rate regulating body. For the rule not *298only fails to furnish any applicable standard of judgment, but directs consideration of so many elements, that almost any result may be justified.

The adoption of present value of the utility’s property, as the rate base, was urged in 1893, on behalf of the community; and it was adopted by the courts, largely, as a protection against inflated claims based on what were then deemed inflated prices of the past. See argument in Smyth v. Ames, 169 U. S. 466, 479, 480; San Diego Land & Town Co. v. National City, 174 U. S. 739, 757, 758; San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 442, 443; Stanislaus County v. San Joaquin & Kings River Canal & Irrigation Co., 192 U. S. 201, 214. Reproduction cost, as the measure, or as evidence, of present value was, also, pressed then by representatives of the public who sought to justify legislative reductions of railroad rates.9 The long depression which followed the panic of 1893 had brought prices to the lowest level reached in the Nineteenth Century. Insistence upon reproduction cost was the shippers’ protest against burdens believed to have resulted from watered stocks, reckless financing, and unconscionable construction contracts. Those were, the days before state legislation prohibited the issue of public utility securities without authorization from state officials; before accounting was prescribed and supervised; when outstanding bonds and stocks were hardly an indication of the amount of capital embarked in the enterprise; when depreciation accounts were unknown; and when book values, or property accounts, furnished no trustworthy evidence either of cost or of real value. Estimates of reproduction cost were then offered, largely as a means, either of supplying lacks in the proof of actual cost and investment, or of testing *299the credibility of evidence adduced, or of showing that the cost of installation had been wasteful. For these purposes evidence of the cost of reproduction is obviously appropriate.

At- first reproduction cost was welcomed by commissions as evidence of present value. Perhaps it was because the estimates then indicated values lower than the actual cost of installation. For, even after the price level had begun to rise, improved machinery and new devices tended for some years to reduce construction costs.10 Evidence of reproduction costs was certainly welcomed, because it seemed to offer a reliable means for performing the difficult task of fixing, in obedience to Smyth v. Ames, the value of a new species of property to which the old tests — selling price or net earnings— were not applicable. The engineer spoke in figures — a language implying certitude. His estimates seemed to be free of the infirmities which had stamped as untrustworthy the opinion evidence of experts common in condemnation cases. Thus, for some time, replacement cost, on the basis of prices prevailing at the date of the valuation, was often adopted by state commissions as the standard for fixing the rate base. But gradually it came to be realized that the definiteness of the engineer’s calculations was delusive; that they rested upon shifting theories; and that their estimates varied so widely as to intensify, rather than -to allay doubts.11 When the price *300levels had risen largely, and estimates of replacement cost indicated values much greater than the actual cost of installation, many commissions refused to consider valuable what one declared to be assumptions based on things that never happened and estimates requiring the projection of the engineer’s imagination into the future and methods of construction and installation that have never been and never will be adopted by sane men.12 Finally, the great fluctuation in price levels incident to the World War led to the transfusion of the engineer’s estimate of cost with the economist’s prophecies concerning the future price plateaus. Then, the view that these estimates were not to be trusted as evidence of present *301value, was frequently expressed. And state utility commissions, while admitting the evidence in obedience to Smyth v. Ames, failed, in ever-increasing numbers, to pay heed to it in fixing the rate base.13 The conviction is wide-spread that a sound conclusion as to the actual value of a utility is not to be reached by a meticulous study of conflicting estimates of the cost of reproducing new the congeries of old machinery and equipment, called the plant, and the still more fanciful estimates concerning the value of the intangible elements of an established business.14 Many commissions, like that of Massachusetts, have declared recently that “ capital honestly and *302prudently invested must, under normal conditions, be taken as the controlling factor in fixing the basis for computing fair and reasonable rates.” 15

To require that reproduction cost at the daté of the rate hearing be given weight in fixing the rate base, may subject investors to heavy losses when the high war and post-war price levels pass — and the price trend is again *303downward.16 The aggregate of the investments which have already been made at high costs since 1914, and of those which will be made before prices and costs can fall heavily, may soon exceed by far the depreciated value of all the public utility investments made theretofore at relatively low cost. For it must be borne in mind that depreciation is an annual charge. That accrued on plants constructed in the long years prior to 1914 is much larger than that *304accruing on the properties installed in the shorter period since.17

That part of the rule of Smyth v. Ames which fixes the rate of return deemed fair, at the percentage customarily paid on similar investments at the time of the rate hearing, also exposes the investor and the public to danger of serious injustice. If the replacement-cost measure of value and the prevailing-rate measure of fairness of return should be applied, a company which raised, in 1920, *305for additions to plant, $1,000,000 en a 9 per cent, basis, by a stock issue, or by long-term bond issue, may find a decade later, that the value of the plant (disregarding depreciation) is only $600,000, and that the fair return on money then invested in such enterprise is only 6 per cent. Under the test of a compensatory rate, urged in reliance upon Smyth v. Ames, a prescribed rate would not be confiscatory, if it appeared that the utility could earn under it $36,000 a year; whereas $90,000 would be required to earn the capital charges. On the other hand, if a plant had been built in times of low costs, at $1,00Q,000 and the capital had been raised to the extent of $750,000 by an issue at par of 5 per cent. 30-year bonds and to the extent of $250,000 by stock at par, and ten years later the price level was 75 per cent, higher and the interest rates 8 per cent., it would be a fantastic result to hold that a rate was confiscatory, unless it yielded 8 per cent, on the then reproduction cost of $1,750,000. For that would yield an income of $140,000, which would give the bondholders $37,500; and to the holders of the $250,000 stock $102,500, a return of 41 per cent, per annum. Money required to establish in 1920 many necessary plants has cost the utility 10 per cent, on thirty-year bonds. These long-time securities, issued to raise needed capital, will in 1930 and thereafter continue to bear the extra high rates of interest, which it was necessary to offer in 1920 in order to secure the required capital. The prevailing rate for such investments may in 1930 be only 7 per cent.; or indeed 6 per cent.; as it was found to be in 1904, in Stanislaus County v. San Joaquin & Kings River Canal & Irrigation Co., 192 U. S. 201; in 1909, in Knoxville v. Knoxville Water Co., 212 U. S. 1; and in 1912, in Cedar Rapids Gas Light Co. v. Cedar Rapids, 223 U. S. 655, 670. A rule which limits the guaranteed rate of return on utility investments to that which *306may prevail at the time* of the rate hearing, may fall far short of the capital charge then resting upon the company.

In essence, there is no difference between the capital charge and operating expenses, depreciation, and taxes. Each is a part of the current cost of supplying the service; and each should be met from current income. When the capital charges are for interest on the floating debt paid at the current rate, this is readily seen. But it is no less true of a legal obligation to pay interest on long-term bonds, entered into, years before the rate hearing and to continue for years"thereafter; and it is true also of the economic obligation to pay dividends on stock, preferred or common. The necessary cost, and hence the capital charge, of the money embarked recently in utilities, and of that which may. be invested in the near future, may be more, as it may be less, than the prevailing rate of return required to induce capital to enter upon like enterprises at the time of a rate hearing ten years hence. To fix the return by the rate which happens to prevail at such future day, opens the door to great hardships. Where the financing has been proper, the cost to the utility of the capital, required to construct, equip and operate its plant, should measure the rate of return which the Constitution guarantees opportunity to earn.18

The adoption of the amount prudently invested as the rate base and the amount of the capital charge as the measure of the rate of return would give definiteness to these two factors involved in rate controversies which are now shifting and treacherous, and whicfi render the proceedings peculiarly burdensome and largely futile. Such measures offer a basis for decision which is certain and stable. The rate base would be ascertained as a fact, not determined as matter of opinion. It would not fluctuate *307with the market price of labor, or materials, or money. It would not change with hard times or shifting populations. It would not be distorted by the fickle and varying judgments of appraisers, commissions, or courts. It would, when once made in respect to any utility, be fixed, for all time, subject only to increases to represent additions to plant, after allowance for the depreciation included in the annual operating charges. The wild uncertainties of the present method of fixing the rate base under the so-called rule of Smyth v. Ames would be avoided; and likewise the fluctuations which introduce into the enterprise unnecessary elements of speculation, create useless expense, and impose upon the public a heavy, unnecessary burden.

In speculative enterprises the capital cost of money is always high; partly because the risks involved must be covered; partly because speculative enterprises appeal only to the relatively small number of investors who are unwilling to accept a low return on their capital. It is to the interest both of the utility and of the community that the capital be obtained at as low a cost as possible. About 75 per cent, of the capital invested in utilities is represented by bonds. He who buys bonds seeks primarily safety. If he can obtain it, he is content with a low rate of interest. Through a fluctuating rate base the bondholder can only lose. He can receive no benefit from a rule which increases the rate base as the price leVel rises; for his return, expressed in dollars, would be the same, whatever the income of the company.19 That *308the stockholder does not in fact receive an increased return in time of rapidly rising prices under the rule of Smyth v. Ames, as applied, the financial record of the last six years demonstrates. But the burden upon the community is heavy because the risk makes the capital cost high.

The expense and loss now incident to recurrent rate controversies is also very large. The most serious vice of the present rule for fixing the rate base is not the existing uncertainty; but that the method does not lead to certainty. Under it, the value for rate-making purposes must ever be an unstable factor. Instability is a standing menace of renewed controversy. The direct expense to the utility of maintaining an army of experts and of counsel is appalling. The indirect cost is far greater. The attention of officials high and low is, necessarily, diverted from the constructive tasks .of efficient operation and of development. The public relations of the utility to the community are apt to become more and more strained. And a victory for the utility, may in the end, prove more disastrous than defeat would have been. The community defeated, but unconvinced, remembers; and may refuse aid when the company has occasion later to require its consent or cooperation in the conduct and development of its enterprise. Controversy with utilities is obviously injurious also to the public interest. The prime needs of the community are that facilities be ample and that rates be as low and as stable as possible. The community can get cheap service from private companies, only through cheap capital. It can get efficient service, only if managers of the utility are free to devote themselves to problems of operation and of development. It can get ample service through private companies, only if investors may be assured of receiving continuously a fair return upon the investment.

What is now termed the prudent investment is, in essence, the same thing as that which the Court has always *309sought to protect in using the term present value.20 Twenty-five years ago, when Smyth v. Ames was decided, it was impossible to ascertain with accuracy, in respect to most of the utilities, in most of the States in which rate controversies arose, what it cost in money to establish the utility; or what the money cost with which the utility was established; or what income had been earned by it; or how the income had been expended. It was, therefore, not feasible, then, to adopt, as the rate base, the amount properly invested or, as the rate of fair return, the amount of the capital charge. Now the situation is fundamentally different. These amounts are, now, readily ascertainable in respect to a large, and rapidly increasing, proportion of the utilities. The change in this respect is due to the enlargement, meanwhile, of the powers and functions of state utility commissions. The issue of securities is now, and for many years has been, under the control of commissions, in the leading States. Hence the amount of capital raised (since the conferring of these powers) and its cost are definitely known, through current supervision and prescribed accounts, supplemented by inspection of the commission’s engineering force. Like knowledge concerning the investment of that part of the capital raised and expended before these broad functions were exercised by the utility commissions has been secured, in many cases, through investigations undertaken later, in connection with the issue of new securities or the regulation of rates. The amount and disposition of current earnings of all the *310companies are also known. It is, therefore, feasible now to adopt as the measure of a compensatory rate — the annual cost, or charge, of the capital prudently invested in the utility.21 And, hence, it should be done.

Value is a word of many meanings. That with which commissions and courts in these proceedings are concerned, in so-called confiscation cases, is a special value for rate-making purposes, not exchange value. This is illustrated by our decisions which deal with the elements to be included in fixing the rate base. In Cedar Rapids Gas Light Co. v. Cedar Rapids, 223 U. S. 655, 669; and Des Moines Gas Co. v. Des Moines, 238 U. S. 153, 165, good will and franchise value were excluded from the rate base in determining whether the prescribed charges *311of the public utility were confiscatory. In Galveston Electric Co. v. Galveston, 258 U. S. 388, the cost of developing the business as a financially successful concern was excluded from the rate base. In Des Moines Gas Co. v. Des Moines, 238 U. S. 153, 171, the fact that the street had been paved (and hence the reproduction cost of laying gas mains greatly increased), was not allowed as an element of value. But, obviously, good will and franchise value are important elements when exchange value is involved. And where the community acquires a public utility by purchase or condemnation, compensation must be made for its good will and earning power; at least under some circumstances. Omaha v. Omaha Water Co., 218 U. S. 180, 202, 203; National Waterworks Co. v. Kansas City, 62 Fed. 853, 865. Likewise, as between buyer and seller, the good will and earning power due to effective organization are often more important elements than tangible property. These cases would seem to require rejection of a rule which measured the rate base by cost of reproduction or by value in its ordinary sense.

The rulé by which the utilities are seeking to measure the return is, in essence, reproduction cost of the utility or prudent investment, whichever is the higher. This is indicated by the instructions contained in the Special Report on Valuation of Public Utilities, made to the American Society of Civil Engineers, October 28, 1916, Proceedings, Vol. 42:

“ So long as the company owner keeps a sum equivalent to the total investment at work for the public, either as property serving the public, or funds held in reserve for such property, no policy should be followed in estimating depreciation that will reduce the property to a value less than the investment. . . . ” (p. 1726).

“ Estimates of the cost of reproduction should be based on the assumption that the identical property is to be *312reproduced,rather than a substitute property” (p. 1719), —“ although such a substitute property, much less costly than the existing plant, might furnish equal or better service, it is not reproduction of service, but of property, that is under consideration; and clearly the estimate should be of existing property created with public approval, rather than of a substituted property ” (p. 1772).

If the aim were to ascertain the value (in its ordinary sense) of the utility property, the enquiry would be, not what it would cost to reproduce the identical property, but what it would cost to establish a plant which could render the service, or in other words, at what cost could an equally efficient substitute be then produced. Surely the cost of an equally efficient substitute must be the maximum of the rate base, if prudent investment be rejected as the measure. The utilities seem to claim that the constitutional protection against confiscation guarantees them a return both upon unearned increment and upon the cost of property rendered valueless by obsolescence.

Opinion for the Court filed by

Circuit Judge BORK.

Concurring opinion filed by Circuit Judge STARR.

Dissenting opinion filed by Circuit Judge MIKVA, with whom Chief Judge WALD and Circuit Judges SPOTTSWOOD W. ROBINSON, III and HARRY T. EDWARDS join.

BORK, Circuit Judge:

Jersey Central Power and Light Company petitions for review of Federal Energy Regulatory Commission orders modifying the electric utility’s proposed rate schedules and requiring the company to file reduced rates. Jersey Central charges that it alleged facts which, if proven, show that the reduced rates are confiscatory and violate its statutory and constitutional rights as defined by the Supreme Court in FPC v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1944). Though it is probable that the facts alleged, if true, would establish an invasion of the company’s rights, the Commission refused the company a hearing and reduced its rates summarily.

Throughout the extensive proceedings before both the Commission and this court, the Commission has steadfastly maintained that its summary dismissal of Jersey Central’s filing was justified by prior Commission precedent. Faced with the claim that the rate order was inconsistent with the Commission's statutory responsibility to provide just and reasonable rates and with the constitutional prohibition against uncompensated takings, the Commission briefs advance a legal theory which, if *191adopted by this court, would immunize virtually all rate orders from this type of challenge. The Commission’s theory flies in the face of every Supreme Court decision that addresses this subject, and we are bound to reject it.

The intervenors, customers of Jersey Central, advance a quite different rationale for affirming the Commission. They attempt to justify the denial of a hearing with the argument that Jersey Central followed the wrong procedures and therefore lost the opportunity to have its substantive claims heard. Thus, it is said, it was the company’s fault, not the Commission’s, that no hearing was held.

That reasoning provides no basis for affirming the Commission. It fails to come to grips with the character of the Commission decision we review. That decision does not rest on adjective law. The Commission in fact reached and peremptorily decided the merits of the utility’s claim. The substantive Hope Natural Gas issue is, therefore, squarely before us and cannot be avoided by faulting the utility for employing defective tactics. The Commission ruled that Jersey Central’s allegations and proffered testimony would not support a higher rate. That substantive ruling means that a hearing would have been pointless. The ruling is inconsistent with Hope as well as with other controlling precedent of the Supreme Court and of this court. Reversal and remand for a hearing are thus required.

Though the fact that the Commission reached the merits renders irrelevant the intervenors’ procedural rationale, it should be noted that if procedural fault is to be assigned, it should be laid at the Commission’s doorstep. In dealing with Jersey Central’s rate filings, the Commission applied unclear rules arbitrarily. Moreover, the Commission made plain, contrary to the intervenors’ rationale, that no procedure could have been followed that would have guaranteed the hearing sought. The explanation for what has taken place in these convoluted proceedings appears to be less that Jersey Central followed incorrect procedures than that the Commission resists “end result” examination at the agency level, and is deeply antagonistic to court review of ratemaking under the guidelines laid down by Hope.

The decision of the Commission is vacated and the case remanded for a hearing at which Jersey Central may finally have its claim addressed.

I.

This case has already prompted two opinions from this court, both of which we have since vacated. See Jersey Central Power & Light Co. v. FERC, 730 F.2d 816 (D.C. Cir.1984) (“Jersey Central I”); Jersey Central Power & Light Co. v. FERC, 768 F.2d 1500 (D.C.Cir.1985) (“Jersey Central II”). The case has now been reheard en banc, and the court has had the benefit of supplemental briefing and oral argument from the parties, the intervenors, and several amici curiae. 1

On March 31, 1982, Jersey Central filed proposed rate schedules with the Commission for wholesale service to six customers. Jersey Central divided its filing into two separate rate increases designated Phase A and Phase B. Phase A has gone into effect, and Phase B is the subject of this litigation.

At issue is the utility’s proposed treatment of the $397 million investment lost when it suspended construction of its nuclear generating station at Forked River, New Jersey. The Forked River project was initiated about a decade and a half ago, when federal and state agencies were encourag*192ing utilities to commit substantial amounts of capital to nuclear generating plants that required lead times of eight to twelve years. The consensus prediction was of substantial and steady increases in the demand for electricity and substantial and continued increases in the price of oil due to the operation of an international oil cartel. Regulated public utilities are under statutory obligations to plan and build the facilities necessary to meet the projected needs of their customers. See, e.g., 16 U.S.C. § 824a(g) (1982); N.J.Stat.Ann. 48:3-3 (West 1969). If firms and households were not to face catastrophic energy prices in the future, it was thought essential that nuclear generating plants be built. All parties agree that Jersey Central’s investment at Forked River was prudent when made.

The forecasts of both demand and supply proved wrong: Due to conservation, demand did not rise nearly as much as expected, and, with the collapse of the international cartel, the oil market has experienced a world-wide glut and a dramatic decline in prices. Furthermore, the protracted litigation and political controversy which attended the construction of nuclear power projects resulted in extensive delays and dramatic increases in their ultimate cost. Thus, many investments which were prudent, indeed considered essential, when made, have now by necessity been can-celled. Forked River was one, and in 1980 Jersey Central abandoned it, having concluded “that it must devote whatever resources it had available to ... less capital intensive and more politically acceptable alternatives.” Testimony of Dennis Baldassari at 7, Joint Appendix (“J.A.”) at 34.

Jersey Central sought to recover the cost of the Forked River investment by amortizing the $397 million over a fifteen-year period, a proposal to which the Commission agreed. Jersey Central also requested, however, that the unamortized portions be included in the rate base, with a rate of return sufficient to cover the carrying charges on the debt and the preferred stock portions of that unamortized investment. Jersey Central expressly did not seek a return on that portion of the unamortized investment allocable to its common equity investors.

In support of its proposal, Jersey Central submitted to the Commission the testimony of Dennis Baldassari, its Vice-President and Treasurer. J.A. at 28-39. Baldassari sought to demonstrate that the financial problems faced by Jersey Central made necessary earnings and revenues at the level contemplated by its filing. Baldassari characterized the utility’s financial condition as “delicate.” Testimony of Dennis Baldassari at 9, J.A. at 36. Jersey Central was wholly dependent for short-term credit, he explained, on a Revolving Credit Agreement which was subject to termination at any time. The only long-term securities it was able to issue were themselves subject to mandatory repurchase by the utility should the short-term credit then available to it be for any reason terminated. Jersey Central’s credit standing was, therefore, predictably low. Standard & Poor’s Corporation rated its senior debt securities “BB-”, i.e., “regarded, on-balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation.” Moody’s Investors Service had also downgraded Jersey Central’s rating, classifying its securities “Ba”, i.e., “judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.” Id. at 4, J.A. at 31.

Jersey Central’s lack of access to long-term capital, and the precariousness of its short-term credit, placed it in serious financial difficulty. Baldassari described the rate increase requested as “the minimum amount necessary to restore the financial integrity of the Company thereby providing the means by which Jersey Central will be able to meet its obligation to provide safe and dependable service in the future.” Testimony of Dennis Baldassari at 12, J.A. *193at 39. The focus of his testimony, therefore, was on the overall rate necessary to preserve his company’s access to capital markets and its financial integrity.

The Commission responded by issuing an order summarily excluding the unamortized portion of the investment from the rate base. Order Accepting for Filing and Suspending Revised Rates, Granting Interventions, Granting in Part and Denying in Part Motions for Summary Disposition, and Establishing Procedures, 19 F.E.R.C. (CCH) fl 61,208 (May 28, 1982). No discussion or analysis accompanied this portion of the order. The Commission simply noted that “consistent with Commission precedent ... unamortized investment in can-celled plants must be excluded from rate base.” Id. at 61,403 (footnote omitted). The precedent to which the Commission referred was New England Power Co., 8 F.E.R.C. (CCH) ¶ 61,054 (July 19, 1979), affd sub nom. NEPCO Municipal Rate Comm. v. FERC, 668 F.2d 1327 (D.C.Cir. 1981), cert. denied sub nom. New England Power Co. v. FERC, 457 U.S. 1117, 102 S.Ct. 2928, 73 L.Ed.2d 1329 (1982) (“NEP-CO”). The utility in NEPCO had been permitted to recover the costs of its failed investment by amortizing it over a five-year period, but was denied its request to include the unamortized portion in the rate base.

NEPCO’s proposal differed from that later made by Jersey Central in several respects. NEPCO’s requested amortization period was only one-third as long as that proposed by Jersey Central; NEPCO proposed a full return on the unamortized portion of the investment, including that allocable to common equity, as opposed to simply a return sufficient to cover the carrying charges on debt and preferred stock portions; and NEPCO never alleged that its financial integrity and its ability to maintain access to capital markets depended upon the rate it was requesting.

Upon receiving the Commission’s order, Jersey Central filed an Application for Rehearing, J.A. at 99-135, seeking a full evidentiary hearing in which its proposal, and the factual foundation supporting it, could be examined. Jersey Central argued that NEPCO did not control because the allocation of risk in Jersey Central’s proposal was different from, and more favorable to consumers than, the allocation proposed and rejected in NEPCO. Jersey Central argued as well that more recent Commission precedent on the treatment of abandoned investments in gas pipeline facilities provided support for its proposal. Finally, Jersey Central advanced a position that became the central issue briefed and argued in this appeal. It is axiomatic that the end result of Commission rate orders must be “just and reasonable” to both consumers and investors, and that, in achieving this balance, the Commission must consider the impact of its rate orders on the financial integrity of the utility. Jersey Central argued that, for these reasons, the Commission may not summarily exclude an investment from the rate base when the utility has alleged that its ability to attract capital will be seriously jeopardized as a result. Jersey Central contended that it was entitled to a hearing at which it would have the opportunity to prove its allegations and demonstrate that the end result of the Commission's orders violated the applicable statutory and constitutional standards, a hearing that would create a record through which the Commission’s effort to balance the relevant consumer and investor interests would be subject to judicial review.

Alternatively, since Jersey Central’s concern was with the end result of the rate order, it requested an evidentiary hearing at which it could justify a rate of return higher than that included in its original filing to compensate for the rate base limitation that the agency claimed was necessitated by Commission precedent. The rate allowed a utility is the sum of (1) its cost of service, and (2) its rate base multiplied by its rate of return. Since the Commission’s order had excluded Forked River from the rate base, Jersey Central suggested that the necessary rate could be achieved through raising the rate of return.

*194The Commission again refused to grant Jersey Central a hearing. The Commission explained, somewhat cryptically:

We recognize that, in accord with Hope Natural Gas Co., supra, it is the “end result” which must be just and reasonable.. Nonetheless, the reasonableness of that end result cannot be evaluated without regard to the individual components which comprise a rate____

... JCP & L’s argument that our decision to exclude cancelled project costs from rate base is not mandated by Commission precedent is ... without merit. Furthermore, the argument that a hearing is required in order to implement this policy determination, is erroneous. Since Opinion No. 49, the Commission has consistently resolved this issue through summary disposition.

Order Granting in Part and Denying in Part Application for Rehearing, 20 F.E. R.C. (CCH) 1161,083, at 61,181-82 (July 23, 1982) (footnote omitted). The Commission then denied the request for a hearing on the alternative proposal of a higher rate of return, on the grounds that modifying the filing at that stage would unfairly present the Commission and the intervenors with a “moving target,” and, further, that Jersey Central’s “case-in-chief contained] no testimony or exhibits which would support a higher return.” Id. at 61,182. When the Commission denied Jersey Central’s Application for Rehearing and Reconsideration as well, this appeal was filed.

A unanimous panel of this court affirmed the Commission. The utility claimed that the Commission’s orders were not the product of reasoned decisionmaking because they were inconsistent with the gas pipeline cases and because application of the NEPCO precedent to the facts of this case was irrational. The utility also claimed that it was entitled to an evidentiary hearing in which it could justify its alternative request for a higher rate of return. All these claims were rejected. We then turned to Jersey Central’s contention that Hope Natural Gas required that there be a hearing to ensure that the “end result” of the rate order was “just and reasonable.” The path we took in resolving this issue was later challenged by both parties:

Jersey Central argues that, as a result of the Commission’s orders, its rate of return overall will be too low to be characterized as “just and reasonable.” In denying rehearing, however, the Commission responded that “the reasonableness of that end result cannot be evaluated without regard to the individual components which comprise a rate.” Commission Order at 61,181. This is a rather terse explanation and we wish that in the future the Commission would share its undoubted expertise with us a bit more generously. We understand the Commission to be saying, however, that the end result is to be judged by the rate of return allowed on items for which a rate of return is allowable, the Forked River expenditure is not such an item, and the rates are just and reasonable as to those cost items that are properly in the rate base. The dispute thus boils down to the question of whether the end result test is to be applied to a utility overall or only to those assets which valid Commission rules permit to be included in the rate base.

Jersey Central /, 730 F.2d at 823. Having thus defined the dispute, we accepted what we thought to be the Commission’s position and concluded that the end result test applied only “to those assets which valid Commission rules permit to be included in the rate base.”

In its petition for rehearing before this court, Jersey Central stated that we had mischaracterized the “end result” test by focusing not on the result of the rate order but on the determination of the rate base, which is only one component of that order. We asked the Commission for a response, and it provided one we found incomprehensible:

In the Commission’s view the Court characterized the “end result” test more narrowly than the Commission would have; and, accordingly, it believes it would be appropriate for the Court to amend this aspect of its opinion. Nevertheless, the *195Commission believes the Court properly affirmed the Commission’s orders in this case, since it is well-settled that the end-result test only has application to items which are legitimately included in the rate base as “used and useful.”

Response of Respondent FERC to Petition for Rehearing at 2. Since this response seemed both to reject and accept our reasoning, the Commission had still not offered us any guidance as to how it construed Hope’s “end result” test. Dissatisfied, the court entered a further order which read, in pertinent part:

[W]e direct the Commission to elaborate on its cryptic comment that, “[i]n the Commission’s view the Court characterized the ‘end result’ test more narrowly than the Commission would have; and, accordingly, it believes it would be appropriate for the Court to amend this aspect of its opinion.” Response at 2. This statement is unhelpful. The Commission should explain how and why it believes that the opinion should be amended. We therefore order that the Commission provide further explanation of its position in the brief we have today directed it to file. Throughout these proceedings the court has found the Commission’s submissions singularly terse and uninformative.

Order of July 16, 1984. The Commission filed a second response in which it now agreed with Jersey Central that the end result test does not only apply to those assets which valid Commission rules permit to be included in the rate base. Brief for Respondent FERC in Response to the Court’s Order of July 16, 1984, at 4. The second response described the “end result” test as “simply an expression for broadly gauging whether, based on all the facts before it, the Commission’s orders in a particular' case produce a reasonable result.” Id. at 5. The Commission nevertheless suggested that the end result test was not a standard under which a court was authorized to set aside an unjust end result, but rather “was designed to accord the Commission broad discretion over all aspects of rate-making methodology.” Id. at 6.

This response meant that the “end result” test applied to the overall situation produced by the Commission's action but that the Commission not only refused to hold a hearing on that subject but also believed its refusal to be virtually immune from judicial review. Finding no support for the arresting proposition that the Commission was immune from challenges in court over rate orders alleged to violate statutory and constitutional guarantees explicated by the Supreme Court, the panel-now divided — vacated its prior decision. Jersey Central had alleged that “for four years [it] had been unable to pay any dividends on its common stock”; that in part as a consequence of the Commission’s orders it had been “repeatedly on the edge of being forced into bankruptcy”; and that since 1979 it

has had no access to the long-term capital markets and has been wholly dependent upon a short-term revolving credit agreement which was subject to termination at a moment’s notice. [The company] has been allowed sufficient cash flow to enable [it] to avoid bankruptcy (but not to provide earnings [sufficient] to enable [it] to attract capital or maintain credit).

Petition for Rehearing and Suggestion for Hearing En Banc at 14. Since the Commission had never held a hearing, there was no way of knowing whether these allegations were true, but we noted that if they were, it “would suggest that FERC’s actions were illegal under the end result test of Hope Natural Gas,” Jersey Central II, 768 F.2d at 1502, because the Commission might well have failed to achieve “a reasonable balancing of investor and consumer interests in keeping with the requirement that rates be ‘reasonable, just, and non-discriminatory.’ ” Id. at 1503. We therefore remanded the case to the Commission for a hearing at which Jersey Central would have the opportunity to present its evidence on the inadequacy of the rates allowed it. Jersey Central II was vacated when a majority of the court voted to rehear this case en banc.

*196II.

"A.

The parties offer radically differing views of the Commission’s obligations under Hope Natural Gas, a decision in which the Supreme Court set forth the applicable standard of judicial review when rates ordered by an agency are challenged in court as failing to meet the statutory requirement that they be “just and reasonable.” The Hope Court was construing the Natural Gas Act of 1938, §§ 4(a), 5(a), 52 Stat. 821, 822, 823-24 (codified as amended at 15 U.S.C. §§ 717c(a), 717d(a) (1982)). The Federal Power Act, 16 U.S.C. § 824d(a) (1982), the source of the claim in this case, also requires that rates be “just and reasonable,” and courts rely interchangeably on cases construing each of these Acts when interpreting the other. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577 n. 7, 101 S.Ct. 2925, 2930 n. 7, 69 L.Ed.2d 856 (1981). Since the Court had previously indicated that “the Congressional standard prescribed by this statute coincides with that of the Constitution,” FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 586, 62 S.Ct. 736, 743, 86 L.Ed. 1037 (1942), the Hope test defines the point at which a rate becomes unconstitutionally confiscatory as well.

In these proceedings the Commission itself has never stated what the “end result” test of Hope Natural Gas requires of it or of a reviewing court. In Jersey Central I and II, the Commission’s appellate counsel offered us only the vague statements of the Commission’s duties already quoted. As to the reviewing court’s power under Hope, counsel told the panel in those proceedings essentially that the reviewing court had little, if any, function to perform. However, at oral argument before the court en banc, counsel finally advanced the novel proposition that the “end result” test empowers a court to set aside a rate order on the utility’s petition only if the order would put the utility into bankruptcy. In order to show how dramatically at odds with the law that position is, we review the history of the doctrine at issue.

Hope Natural Gas reaffirmed a doctrinal shift, begun in FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037 (1942), away from the more exacting and detailed standard of judicial review exemplified by Smyth v. Ames, 169 U.S. 466, 185 S.Ct. 418, 42 L.Ed. 819 (1898). Under Smyth v. Ames, courts had meticulously scrutinized rate orders to ensure that investors received the “fair value” of the property dedicated to public use. The “fair value” standard required courts to estimate the current market value of the property, and rates that provided anything less were deemed confiscatory. The governing theory required that consumers pay the market value of the property they were using because the property was regarded as having been taken. Recovery was therefore required only on property “used and useful” to the public, for property that was not being used could not be considered to have been taken. The Supreme Court cases of the 1940's eliminated the requirement that the market value of the property be recovered, and regulated industries now collect rates calculated to generate a reasonable return on the original cost of the investment. The companies are still generally permitted to include in the rate base only property considered used and useful, but with the demise of “fair value,” “used and useful” ceased to have any constitutional significance, and the Commission has at times departed from this standard. It is now simply one of several permissible tools of ratemaking, one that need not be, and is not, employed in every instance. See Washington Gas Light Co. v. Baker, 188 F.2d 11 (D.C.Cir.1950), cert. denied, 340 U.S. 952, 71 S.Ct. 571, 95 L.Ed. 686 (1951).

In setting aside the rigorous judicial scrutiny that had previously characterized review of rate orders, the Supreme Court substituted a far more deferential standard of review:

Once a fair hearing has been given, proper findings made and other statutory requirements satisfied, the courts cannot intervene in the absence of a clear showing that the limits of due process have *197been overstepped. If the Commission’s order, as applied to the facts before it and reviewed in its entirety, produces no arbitrary result, our inquiry is at an end.

FPC v. Natural Gas Pipeline Co., 315 U.S. at 586, 62 S.Ct. at 743. This new emphasis — on whether the order “viewed in its entirety” was the product of “proper findings” and was not “arbitrary” — evolved two years later into the “end result” test of Hope Natural Gas.

The Hope Court made clear that when a rate was claimed to be beyond “just and reasonable” boundaries, the focus of analysis was to be the end result of that order:

[I]t is the result reached not the method employed which is controlling____ It is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end____ And he who would upset the rate order under the Act carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.

320 U.S. at 602, 64 S.Ct. at 287 (citations omitted). Judging a rate order’s consequences, the Court held, necessarily required a “balancing of the investor and the consumer interests.” Id. at 603, 645 S.Ct. at 288. The legitimate investor interest, which is the interest Jersey Central claims received inadequate attention in the proceedings before the Commission, was defined in Hope to include:

the financial integrity of the company whose rates are being regulated. From the investor or company point of view it is important that there be enough revenue not only for operating expenses but also for the capital costs of the business. These include service on the debt and dividends on the stock.

Id. The return, therefore, “should be sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital.” Id.

Thus, in reviewing the rate order challenged in Hope, the Court considered the detailed findings made by the Commission concerning the financial condition of Hope Natural Gas Company. 320 U.S. at 603-05, 64 S.Ct. 288-89. After examining all of the relevant figures, the Commission had concluded that “[t]he company’s efficient management, established markets, financial record, affiliations, and its prospective business place it in a strong position to attract capital upon favorable terms when it is required.” 44 P.U.R. (N.S.) 1, 33 (1942), quoted in Hope, 320 U.S. at 605, 64 S.Ct. at 289. After summarizing the Commission’s findings and conclusions concerning the company’s financial health, the Court held:

In view of these various considerations we cannot say that an annual return of $2,191,314 is not “just and reasonable” within the meaning of the Act. Rates which enable the company to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed certainly cannot be condemned as invalid, even though they might produce only a meager return on the so-called “fair value” rate base.

320 U.S. at 605, 64 S.Ct. at 289.

In Hope Natural Gas, the rate was challenged as too low to account adequately for the legitimate interests of the investor. In Washington Gas Light Co. v. Baker, 188 F.2d 11 (D.C.Cir.1950), cert. denied, 340 U.S. 952, 71 S.Ct. 571, 95 L.Ed. 686 (1951), this court heard a challenge by a consumer who claimed that a rate increase approved by the Public Utilities Commission of the District of Columbia was too high to account adequately for the legitimate interests of the purchaser. The court applied the same analytical framework. Because the local public utilities commission was governed by the same standard as the Federal Power Commission, 188 F.2d at 14, Judge Bazelon’s opinion examined the rate order under the rule set forth in Hope Natural Gas:

So long as the public interest — i.e., that of investors and consumers — is safeguarded, it seems that the Commission *198may formulate its own standards. But there are limits inherent in the statutory mandate that rates be “reasonable, just, and nondiscriminatory.” Among those limits are the minimal requirements for protection of investors outlined in the Hope case. And from the earliest cases, the end of public utility regulation has been recognized to be protection of consumers from exorbitant rates. Thus, there is a zone of reasonableness within which rates may properly fall. It is bounded at one end by the investor interest against confiscation and at the other by the consumer interest against exorbitant rates.

Id. at 15 (footnotes omitted). The court then set aside the rate order and remanded for further proceedings, on the ground that the Commission had not made sufficiently detailed findings of fact concerning the financial health of the company involved to support the reasonableness of its rate increase. “Despite the broad limits allowed the Commission, it remains imperative that its findings, under whatever formula adopted, be based upon substantial evidence in the record.” Id. (footnote omitted). In that case, this court also indicated that the Commission was not obligated to exclude from the rate base all property not presently “used and useful,” but was free to include prudent but cancelled investments. Id. at 19.

The Supreme Court has repeatedly reaffirmed the “end result” standard of Hope Natural Gas. See, e.g., FPC v. Memphis Light, Gas & Water Division, 411 U.S. 458, 474, 93 S.Ct. 1723, 1732, 36 L.Ed.2d 426 (1973) (“under Hope Natural Gas rates are ‘just and reasonable’ only if consumer interests are protected and if the financial health of the pipeline in our economic system remains strong”); Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 605, 65 S.Ct. 829, 840, 89 L.Ed. 1206 (1945) (“end result” test “is not a standard so vague and devoid of meaning as to render judicial review a perfunctory process. It is a standard of finance resting on stubborn facts.”). In Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968), the Court reviewed Commission orders setting area-wide rates for gas producers. Writing for the majority, Justice Harlan stated that a court reviewing rate orders must assure itself both that “each of the order’s essential elements is supported by substantial evidence” and that “the order may reasonably be expected to maintain financial integrity, attract necessary capital, and fairly compensate investors for the risks they have assumed, and yet provide appropriate protection to the relevant public interests, both existing and foreseeable.” Id. at 792, 88 S.Ct. at 1373. In examining the end result of the rate order, he made clear, a court cannot affirm simply because each of the component decisions of that order, taken in isolation, was permissible; it must be the case “that they do not together produce arbitrary or unreasonable consequences.” Id. at 800, 88 S.Ct. at 1377 (emphasis added). The Court in Permian Basin emphasized the necessity for Commission findings, the existence of which is a necessary predicate to judicial deference:

The court's responsibility is not to supplant the Commission’s balance of these interests with one more nearly to its liking, but instead to assure itself that the Commission has given reasoned consideration to each of the pertinent factors. Judicial review of the Commission’s orders will therefore function accurately and efficaciously only if the Commission indicates fully and carefully the methods by which, and the purposes for which, it has chosen to act, as well as its assessment of the consequences of its orders for the character and future development of the industry.'

Id. at 792,'88 S.Ct. at 1373. And the Court once again reviewed the findings below and affirmed upon concluding that “the record before the Commission contained evidence sufficient to establish that these rates, as adjusted, will maintain the industry’s credit and continue to attract capital.” Id. at 812, 88 S.Ct. at 1383.

The teaching of these cases is straightforward. In reviewing a rate order courts must determine whether or not the *199end result of that order constitutes a reasonable balancing, based on factual findings, of the investor interest in maintaining financial integrity and access to capital markets and the consumer interest in being charged non-exploitative rates. Moreover, an order cannot be justified simply by a showing that each of the choices underlying it was reasonable; those choices must still add up to a reasonable result. Because the language of these cases is so plain, and the standard applied in each is the same, the preceding lengthy account may have appeared unduly repetitious. We have set out guiding precedent comprehensively, however, because the legal position taken by the Commission is at odds with every one of the requirements specified by these decisions.

In the face of a serious Hope challenge, the Commission made no findings, performed' nó balancing, offered no reasoned consideration of Jersey Central’s allegations and proffered testimony, misstated the law by saying that the reasonableness of the end result cannot be evaluated without regard to the individual components that go into a rate, and, most recently, claimed that our reviewing function was ended if the rate order did not cast Jersey Central into bankruptcy.

This performance alone would justify reversal and a remand for a Hope hearing. But there was more: the Commission reached the merits and ruled that Jersey Central’s allegations and testimony did not even raise a Hope issue. That was plain legal error.

B.

The allegations made by Jersey Central and the testimony it offered track the standards of Hope and Permian Basin exactly. The Hope Court stated that the return ought to be “sufficient to ensure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital,” and that “it is important that there be enough revenue not only for operating expenses but also for the capital costs of the business. These include service on the debt and dividends on the stock.” 320 U.S. at 603, 64 S.Ct. at 288. Permian Basin reaffirmed that the reviewing court “must determine” whether the Commission’s rate order may reasonably be expected to “maintain financial integrity” and “attract necessary capital.” 390 U.S. at 792, 88 S.Ct. at 1373. Jersey Central alleged that it had paid no dividends on its common stock for four years and faced a further prolonged inability to pay such dividends. Baldassari’s testimony explained that the company was unable to sell senior securities; that its only source of external capital was the Revolving Credit Agreement, which was subject to termination and which placed the outstanding bank loans the company was allowed to maintain below the level necessary for the upcoming year; that the need to pay interest on the company’s debt and dividends on its preferred stock meant that common equity investors not only were earning a zero return, but were also forced to pay these interest costs and dividends and that “continued confiscation of earnings from the common equity holder ... will prolong the Company’s inability to restore itself to a recognized level of credit worthiness”; that its “inability to realize fully its operating and capital costs so as to provide a fair rate of return on its invested capital has pushed its financial capability to the limits”; that “[a]dequate and prompt relief is necessary in order to maintain the past high quality of service”; and that the rate increase requested was “the minimum necessary to restore the financial integrity of the Company.” Testimony of Dennis Baldassari at 5-6, 7, 10, 12, J.A. at 32-33, 34, 37, 39.

Inexplicably, the Commission ruled that Jersey Central’s showing did not require a hearing because there were “no testimony or exhibits which would support a higher return.” That ruling is flatly at odds with Hope and Permian Basin. Moreover, the Commission, having held no hearing, made no findings in support of its ruling and gave not a single reason for it. If the Commission and this court are bound by *200Supreme Court precedent, and we are, the Commission’s ukase cannot stand.

C.

The Commission’s apparent understanding of Hope Natural Gas, adopted by the dissent in Jersey Central II, is that the “end result” test acts only as a limitation of, and not at all as an authorization for, judicial review of rate orders. While the Commission “may also look to the criteria of Hope in determining whether its rate order is just and reasonable and may make pragmatic adjustments based on the perceived need to balance investor and consumer interests,” Brief on Rehearing En Banc for Respondent FERC at 16 (emphasis added), it apparently considers a decision whether or not to do so completely within its discretion. While the Commission’s briefs have never explicitly claimed that courts are without authority to set aside rate orders deemed unjust and unreasonable in their consequences, or based upon insufficient findings, at no point in response to our numerous requests for briefing has the Commission indicated any role it believes proper for courts to play in reviewing the reasonableness of rate orders, save that of passively affirming them. Only at oral argument before the en banc court did Commission counsel concede that a court might set aside a rate order under Hope if the order would drive the company into bankruptcy, but that was the limit of the judicial power acknowledged.

The rationale for the Commission’s position is difficult to discern, for, as noted in Section IIA, supra, that position can derive no support from the case law it purports to embody. The Commission, it appears, rests its theory in part on the fact that Hope Natural Gas represented a shift from strict to deferential judicial review, and, in the historical context in which it was decided, constituted a limitation on judicial review when compared to the standard it was replacing. But judicial review, while limited, was not eliminated, and the “end result” standard — like any standard of judicial review — confines judicial power not by eliminating review but by defining its reach. The delineation marked by the “end result” test thus simultaneously authorizes and constrains the courts that apply it. This is elementary jurisprudence.

The Commission also apparently locates support in language set forth in Hope: “If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end.” Hope, 320 U.S. at 602, 64 S.Ct. at 288. See also Jersey Central II, 768 F.2d at 1511 (Mikva, J., dissenting). The Commission’s litigating stance appears to interpret the Court’s statement as if it were but one half of a larger proposition the Court meant to enunciate: judicial review is at an end if either the end result is just and reasonable or if it is not. Had he meant any such thing, Justice Douglas would simply have said that there is no more judicial review. Instead, he said that “he who would upset the rate order under the Act carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.” Hope, 320 U.S. at 602, 64 S.Ct. at 288 (emphasis added). He then went on to review the financial situation of the company, an exercise that would have been wholly superfluous if he had just announced the demise of judicial review. If the contrary view apparently embraced by the Commission were adopted, the end result standard would become “so vague and devoid of meaning as to render judicial review a perfunctory process.” Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 605, 65 S.Ct. 829, 840, 89 L.Ed. 1206 (1945).

The Commission maintains that because excluding the unamortized portion of a can-celled plant investment from the rate base had previously been upheld as permissible, any rate order that rests on such a decision is unimpeachable. But that would turn our focus from the end result to the methodology, and evade the question whether the component decisions together produce just and reasonable consequences. We would be back with the assertion made in Jersey Central I that “the end result test is to be *201applied ... only to those assets which valid Commission rules permit to be included in the rate base.” 730 F.2d at 823. That statement was one which neither party endorsed. It was incorrect. The fact that a particular ratemaking standard is generally permissible does not per se legitimate the end result of the rate orders it produces. Justice Harlan said just that in Permian Basin.

The position presented on behalf of the Commission, as we earlier observed, shifted to a minor extent during the course of these proceedings. At oral argument before the en banc court, counsel for the Commission indicated that the “end result” test did allow a court to set aside a rate order when the company would otherwise go bankrupt and the Commission had refused to take that into account. The source of this constricted standard is elusive, not to say invisible. Hope Natural Gas talks not of an interest in avoiding bankruptcy, but an interest in maintaining access to capital markets, the ability to pay dividends, and general financial integrity. While companies about to go bankrupt would certainly see such interests threatened, companies less imminently imperiled will sometimes be able to make that claim as well. Jersey Central alleges that it is such a company. The contention that no company that is not clearly headed for bankruptcy has a judicially enforceable right to have its financial status considered when its rates are determined must be rejected.

The dissent agrees with the Commission that Hope stands generally for a restriction on judicial review of a rate order, but erects its own constricted standard to determine when a company may obtain consideration of its financial status in review of a rate order. According to the dissent, Jersey Central could get a Hope hearing only by first making a sufficient showing on three critical points: that a “critical nexus” exists between the rate order and the utility’s financial plight; that the proposed rate filing would not lead to the exploitation of consumers; and that the overall return allowed on this project is not reasonable, and thus puts the company in need of protection at this phase of the ratemaking process. Dissent at 1205-09. It is remarkable that the dissent would affirm the Commission on a legal theory that neither the Commission nor its counsel ever advanced. The Commission offered no legal theory and counsel offered the unique bankruptcy-only theory. It is impossible to affirm on the basis of the Commission’s silence or counsel’s rationale. It should be equally impossible to suggest affirmance on the basis of a legal theory never surfaced until today. Indeed, the only correspondence between the three different positions taken by the Commission, its counsel, and the dissent, aside from their common hostility to Hope, is that none of them has any basis in any decision of any previous court. The dissent’s new three-part barrier flatly ignores the factors that, according to the Supreme Court’s controlling opinion in Hope, would necessitate an “end result” hearing into whether any revision of a rate order is necessary in light of a company’s financial plight. Since Jersey Central submitted figures and testimony to support its claim that the rate order caused its financial distress, that its proposed rates would not exploit consumers, and that the overall rate of return allowed is not just and reasonable, one can only suppose that the dissent demands proof beyond doubt of its three criteria before the hearing is even held. That, most certainly, is not what Hope requires. The dissent thus joins the Commission in rejecting the Supreme Court's law.

In addition to prohibiting rates so low as to be confiscatory, the holding of Hope Natural Gas makes clear that exploitative rates are illegal as well. If the inclusion of property not currently used and useful in the rate base automatically constituted exploitation of consumers, as one of the amici maintains, then the Commission would be justified in excluding such property summarily even in cases where the utility pleads acute financial distress. A regulated utility has no constitu*202tional right to a profit, see FPC v. Natural Gas Pipeline Co., 315 U.S. at 590, 62 S.Ct. at 745, and a company that is unable to survive without charging exploitative rates has no entitlement to such rates. Market Street Ry. v. Railroad Comm’n of Cal., 324 U.S. 548, 65 S.Ct. 770, 89 L.Ed. 1171 (1945). But we have already held that including prudent investments in the rate base is not in and of itself exploitative, Washington Gas Light Co. v. Baker, and no party has denied that the Forked River investment was prudent. Indeed, when the regulated company is permitted to earn a return not on the market value of the property used by the public, see Smyth v. Ames, but rather on the original cost of the investment, placing prudent investments in the rate base would seem a more sensible policy than a strict application of “used and useful,” for under this approach it is the investment, and not the property used, which is viewed as having been taken by the public. The investor interest described in Hope, after all, is an interest in return on investment. Hope, 320 U.S. at 603, 64 S.Ct. at 288.2

The central point, however, is this: it is impossible for us to say at this juncture whether including the unamortized portion of Forked River in the rate base would exploit consumers in this case, or whether its exclusion, on the facts of this case, constitutes confiscation, for no findings of fact have been made concerning the consequences of the rate order.3 Nor, for the same reason, can we make a judgment about the higher rate of return the utility sought as an alternative to inclusion in the rate base of its unamortized investment. Jersey Central has presented allegations which, if true, suggest that the rate order almost certainly does not meet the requirements of Hope Natural Gas, for the company has been shut off from long-term capital, is wholly dependent for short-term capital on a revolving credit arrangement that can be cancelled at any time, and has been unable to pay dividends for four years. In addition, Jersey Central points out that the rates proposed in its filing would remain lower than those of neighboring utilities, see, e.g., Petition for Rehearing and Suggestion for Hearing En Banc at 8, which at least suggests, though it does not demonstrate, that the proposed rates would not exploit consumers. The Commission treated those allegations as irrelevant and hence has presented us with no basis on which to affirm its rate order. The necessary findings are simply not there for us to review. When the Commis*203sion conducts the requisite balancing of consumer and investor interests, based upon factual findings, that balancing will be judicially reviewable and will be affirmed if supported by substantial evidence. That is the point at which deference to agency expertise will be appropriate and necessary. But where, as here, the Commission has reached its determination by flatly refusing to consider a factor to which it is undeniably required to give some weight, its decision cannot stand. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971).4 The case should therefore be remanded to the Commission for a hearing at which the Commission can determine whether the rate order it issued constituted a reasonable balancing of the interests the Supreme Court has designated as relevant to the setting of a just and reasonable rate.5

III.

The intervenors, Allegheny Electric Cooperative and four boroughs of New Jersey, all purchasers of energy from Jersey Central, present an argument different from that advanced by the Commission. Intervenors urge that we affirm the Commission on the sole ground that Jersey Central made the wrong filing. The dissent agrees.

The argument made by the dissent and the intervenors is purely procedural. They assert that the Commission has a “rule” against including the unamortized portion of an abandoned investment in the rate base; that Jersey Central “ignored” this “rule” when it made its filing; that Jersey Central could have “received what it wanted” — i.e., a hearing before the Commission on its Hope claim — had it filed instead a request for a higher rate of return or a shorter amortization period; that those filings, in contrast to the filing actually made, would have been consistent with Commission rules; and that Jersey Central has therefore forfeited whatever claim it might have had to a higher rate, and, accordingly, that the summary dismissal ought to be affirmed. Supplementary Brief Submitted by Intervenors at 9-11, 14-15.

This procedural rationale, it is worth noting, was never advanced by the Commis*204sion: not m the orders under review, not at the original hearing before a panel of this court, not in its first response to the petition for rehearing, not in its second response, and not in its submission to the en banc court. Moreover, the point that the intervenors and the dissent seek to make the pivot of this case was not perceived by the panel in its unanimous first decision or by either the majority or the dissent in the panel’s second decision. The point was not the reason we granted rehearing era banc. That was done entirely to rehear the Hope “end result” issue. The procedural argument was raised only at the era banc stage.

But the oddest aspect of this entire history is that the Commission has never said what the intervenors and the dissent say: that Jersey Central could have had a hearing on the Hope “end result” test if only it had followed some other procedure. The fact that the Commission never relied on this argument might be reason enough to reject it. And, in any event, because the Commission did rule that Jersey Central’s proffer was inadequate, and thus committed legal error under Hope, it is not strictly necessary that we discuss the procedural point. The merits were reached and the claims were wrongly dispatched without any provision of the “end result” hearing required by Hope. Nonetheless, even though it makes no difference to the ultimate resolution of this case, we think it well to show this procedural contention is wrong. The intervenors’ characterization of the utility’s filing and its interpretation of the available Commission procedures do not withstand analysis.

A..

The intervenors and the dissent assert that in requesting rate-base treatment for the unamortized portion of the costs of the cancelled plant, Jersey Central violated the “rule” established by the Commission in NEPCO. There was, however, no suggestion in that case that the Commission was establishing any ironclad rule. The subject of that, proceeding was the proper treatment of a cancelled generating unit at NEPCO’s Salem Harbor facility. The Commission was faced with a number of issues, such as the length of the amortization period and the percentage of costs the utility would be permitted to amortize. It was also faced with the question of whether the unamortized portion of those costs should be included in the rate base. The Commission resolved that question by simply quoting from, and indicating its agreement with, the findings of the Administrative Law Judge, who had concluded that “[tjhere is no precedent, or reasonable justification in the record of this proceeding, to require ratepayers to pay a return on an expenditure that has not resulted in productive plant that is used or useful in the public service." NEPCO, 8 F.E.R.C. (CCH) at 61,175 (emphasis added). The Commission had decided that application of the used and useful principle in that case, on the basis of the facts presented, would yield a reasonable balancing of the competing interests. It was not, as the intervenors suggest and the dissent states, establishing a rigid rule.

When NEPCO challenged the Commission’s decision before this court, it was unsuccessful. NEPCO Municipal Rate Comm. v. FERC, 668 F.2d 1327 (D.C.Cir. 1981), cert. denied sub nom. New England Power Co. v. FERC, 457 U.S. 1117, 102 S.Ct. 2928, 73 L.Ed.2d 1329 (1982). NEP-CO argued that any application of the used and useful principle that led to the denial of a return on prudently-invested capital was unconstitutionally confiscatory. We rejected that argument, and accepted that advanced by the Commission in its brief: “In The Circumstances Of This Case, The Commission Correctly Allowed The Utility To Recover Costs (But No Profit) For Can-celled Facilities,” Brief for Respondent FERC at 18 (Argument Subheading I.B. 2) (emphasis added). We did not hold that the balance struck in NEPCO would be upheld in any future proceeding to which it was applied, regardless of the facts involved. Instead, we simply declined to hold, as urged by the utility, that failure to allow a return on prudently-invested capital was per se unconstitutional, and we affirmed *205the Commission’s decision to employ the “used and useful” principle, finding that NEPCO had “set forth no compelling reason for departing from that approach in this case.” NEPCO, 668 F.2d at 1335 (emphasis added).

In at least four subsequent proceedings, the Commission relied on NEPCO in summarily excluding the unamortized costs of cancelled plants from the rate base. While the intervenors overstate the matter by referring to the NEPCO precedent as a rule, it is fair to say that application of the precedent to routine cases like those was becoming a practice. Jersey Central’s filing, however, was anything but routine. It presented allegations suggesting material differences between its situation and those presented in the NEPCO line of cases. First, the amount of the loss was on an entirely different scale. The Commission had never applied NEPCO to a loss at the order of magnitude of nearly $400 million. (Ohio Edison Co., 18 F.E.R.C. (CCH) ¶ 61,010 (Jan. 8, 1982), for example, involved a loss of $773,146.) Second, in none of the previous cases had the petitioner suggested that it was facing financial distress of the sort threatening Jersey Central. Third, Jersey Central’s filing proposed an amortization period three times longer than that established in NEPCO. A longer amortization period strikes a balance more favorable to ratepayers, and Jersey Central was apparently willing to accept lower revenues in exchange for the higher recorded earnings which would have accompanied rate-base treatment of the cancelled plant, since it needed to record earnings in order to regain its access to the capital markets.

These factual differences distinguishing NEPCO from the case before us are substantial. In Michigan Wisconsin Pipe Line Co. v. FPC, 520 F.2d 84 (D.C.Cir. 1975), we explained that “the Commission may attach precedential, and even controlling weight to principles developed in one proceeding and then apply them under appropriate circumstances in a stare decisis manner.” Id. at 89. In that case, however, the Commission’s decision to attach such weight to a prior proceeding was remanded, because

a rudimentary prerequisite to such an application is that the factual composition of the case to which the principle is being applied bear something more than a modicum of similarity to the case from which the principle derives. This is not to say that factual patterns must be virtually identical for a principle to control, but rather that there is a point where the patterns are so diverse that a per se application of the principle, without at least recognition and accommodation of the factual distinctions, brings into question the rationality of the application.

Id. Given the importance of a utility’s financial condition to the balancing required of the Commission, and Jersey Central’s willingness to accept smaller revenues in order to record higher earnings so as to maintain that integrity, Jersey Central must have thought, as we do, that it had presented allegations that required reasoned examination, not summary dismissal in reliance on a precedent dealing with vastly different facts.

Trailblazer Pipeline Co., 18 F.E.R.C. (CCH) ¶ 61,244 (Mar. 12, 1982), presented Jersey Central with some additional grounds for believing that the Commission would take a more flexible approach. While the procedural posture was different — this was not a rate filing, but a proceeding brought to obtain Commission certification to construct and operate a gas pipeline — the Commission discussed in its opinion what rate treatment would be accorded gas projects in the event of abandonment. When prudent, conventionally-financed projects were cancelled, the Commission indicated that the company would be able to recover debt service and a return of, but not on, the equity portion of the investment. Id. at 61,502-03. The Commission explained in a footnote:

The rationale is that while companies should be able to recover the amount of their investment in failed projects, they should not be allowed to profit from their failures. Correlatively, loss of the time *206value of their equity in failed projects represents a reasonable sharing with ratepayers of the losses of a failed project.

Id. at 61,511 n. 17. The application of these principles to electric utilities was suggested by the Commission’s statement that “[tjhere is no obvious reason why the treatment of abandoned plant costs as between gas and electric companies should differ.” Id. at 61,511 n. 15. And though this statement was made in a context where electric companies are treated more generously than gas companies, see id. at 61,511 & n. 15, the clear implication was that treatment of the two should in every sense be the same. Given Trailblazer’s holding that gas companies would be able to recover debt service and a return of, but not on, the equity portion of the investment, id. at 61,502-03, this statement strongly suggests that the Commission would also consider extending the same treatment to electric companies.6

The proposed pipeline in Trailblazer was financed through project financing. The discussion of conventionally-financed projects was not, however, dicta. The Commission was presenting Trailblazer Co. with a choice between conventional and project financing, and explaining the consequences of each alternative. The Commission was offering to be bound by the rule it laid down for conventional financing if Trailblazer elected to proceed in that fashion. Trailblazer’s discussion of “Commission policy with respect to abandoned plant,” 18 F.E.R.C. (CCH) at 61,501, plausibly led Jersey Central to believe that what the intervenors and the dissent characterize as a well-established rule in fact was open to further evolution. Indeed, the Commission’s discussion of the question (published two weeks before Jersey Central made its filing) was prompted by its recognition that “Commission treatment of the issue of abandoned plant in rate proceedings has been uncertain. In fact, it has been characterized by a somewhat distressing degree of inconsistency. That inconsistency is important because it tends to leave both lenders and equity investors with a sense of uncertainty____” Id. 7

The intervenors’ and the dissent’s characterization of Jersey Central’s filing as an intentional deviation from the Commission’s “rules” is an unreasonable one. There was no reason for the company to adopt a suicidal course and it is wrong to impute an intent for which there is no evidence. This characterization is particularly unfair since, under that analysis, one must read into the filing an implied waiver of statutory and constitutional rights. Jersey Central was not mounting a frontal assault on a firm rule. To the contrary, it argued throughout the proceedings below that the cases in which the practice had developed were not similar enough to what was now at issue to warrant their application as dispositive precedent, and that recently articulated Commission policy and the threat in Jersey Central’s situation to the investor interests that the Supreme *207Court had deemed protected required some consideration more detailed than that given by summary dismissal.8

B.

Essential to the intervenors’ and the dissent’s analysis is the assertion that Jersey Central had other means of getting the hearing it sought. It is only by positing alternative filings through which Jersey Central would have received a hearing on financial integrity that the intervenors and the dissent are able to place the responsibility for what occurred on the utility. Quite clearly, the Commission may not maintain a system of rules that provides no opportunity at all for Hope allegations to be raised, heard, considered, and made the subject of findings. Yet that opportunity is precisely what the Commission tells us it routinely denies. For this reason, too, the intervenors’ and the dissent’s argument fails.

As noted earlier, supra p. 1179, the Commission in its brief will say only that it “may also look to the criteria of Hope in determining whether its rate order is just and reasonable.” There is in that no promise of a Hope hearing under any circumstances; only a declaration that one is not required.

The following exchange from the en banc oral argument further illuminates the Commission’s belief that it owes no one a hearing on Hope issues:

COURT: Suppose everything else in this case were the same, you would apply the NEPCO rule, et cetera, but the utility came in with even stronger showing and they came in and showed that if this rate went into effect, by God, they would be the first utility in the history of American utilities to go into actual bankruptcy or—

COUNSEL: I think there is no—

COURT: Let me finish the question.

COUNSEL: All right.

COURT: If that kind of showing were made, do you think that the Commission under Hope Natural Gas had a responsibility to, despite the fact that it applied some general rules, to look at the situation and say, gee, the end results are pretty scary and maybe we had better do some fooling around with—

COUNSEL: I think the answer is yes, Your Honor, and it reminds us of the—

COURT: Well, my second question then is do you, and, if so, how? In most cases that are close, a little closer than that, do you do anything comparable at the end of the day after you have applied the NEPCO and other rules, to look back over your shoulder and say this is the situation, we ought to do some tinkering around and, if so, do you make any such findings?

COUNSEL: The answer to the question is yes, we do tinker around after we pursue these normal ratemaking policies. And the tinkering around or making those pragmatic adjustments, the nice adjustments is the way the Commission has in the past viewed its responsibility under the end result test—

COURT: Do we ever know, do we—

COUNSEL: No, you don’t. As long—

COURT: We don’t know whether you did that or not?

COUNSEL: It essentially turns on the rate of return, the tinkering with the rate of return.

Tr. at 28-30 (emphasis added). The Commission’s apparent practice of taking these issues into account by “tinkering” and without making open, factual findings follows quite naturally from its mistaken premise that meaningful judicial review of these decisions is never, or almost never, in order. For us to hold now that Jersey *208Central could have had its Hope claim considered had it made a different filing would be to rest upon a theory that the Commission has never put forward, indeed, a theory the Commission apparently has rejected.

The only constant in these proceedings has been the Commission’s manifest hostility to serious “end result” examination under Hope. That alone can account for the Commission’s peremptory ruling on the merits. That hostility, and not the Commission’s desire, made clear only in this proceeding, to elevate its used-and-useful principle to the status of an impregnable barrier, appears to underlie the Commission’s abrupt and uninformative procedural rulings. At the time of Jersey Central’s filing, counsel could well have concluded that used-and-useful was a rule of thumb that would be modified when circumstances warranted. But if the Commission wished to eliminate its previous circumstance-bound enunciation of the rule and to make it universal and unyielding, it should have allowed Jersey Central to get to the merits of its Hope “end result” claim in some other way. Instead, it met each of Jersey Central’s renewed efforts with a fresh procedural rebuff and never once gave the slightest indication of how Jersey Central could get the hearing it sought.

The intervenors and the dissent suggest that Jersey Central could have requested a shorter amortization period, perhaps the period allowed in NEPCO, and received higher rates through that method. That technique would have been of little help, however, for while it would have led to quicker, higher revenues, Jersey Central needed to record earnings in order to lay a foundation for the issuance of securities and regain access to the capital markets. That could not be done through faster recovery of costs.

The intervenors and the dissent also state that Jersey Central could have requested a higher rate of return, and, had it done so, would have received the Hope hearing it wanted. Given the excerpt we have quoted from oral argument, it is impossible to know why they believe that to be true. Nothing the Commission has said provides any such assurance. To the contrary, when Jersey Central suggested a higher rate of return in its petition for rehearing, the Commission dismissed the request as presenting a “moving target.” That maneuver was particularly pointless since it would merely have required the company to come back with a new filing requesting the same higher rate of return based upon the same data. The Commission thus saved no effort of its own but cost the company the higher return in the interval. (Of course, in the same order the Commission made it clear that a fresh filing would be futile.) The Commission could have entertained the company’s request for a higher rate of return. Given the very unusual circumstances here, which may have amounted to a denial of constitutional rights, that course would not have jeopardized deployment of the “moving target” doctrine in the ordinary case.

The Commission has yet to articulate anything approaching a coherent conception of what Hope requires, when hearings and findings are necessary, which facts are relevant, or how judicial review of rate orders should proceed. It is clear that the Commission would not have granted Jersey Central a Hope hearing if the company had somehow anticipated and followed every one of the dissent’s freshly-invented prescriptions. The Commission below and its counsel here have said as much. It is, therefore, preposterous to contend that the Commission's multiple failures with respect to the “end result” test were caused, and hence excused, by Jersey Central’s alleged procedural intransigence.

IV.

The Commission is not precluded from employing “used and useful,” or any other specific rate-setting formula. It must ensure, however, that the resulting rate is just and reasonable. A remand will afford the Commission the opportunity to find the facts necessary to a determination of whether the rate order meets the requirements of Hope Natural Gas, and, if it *209finds that it does not, the Commission has the flexibility to determine how the rate order should be modified — whether through enlarging the rate base, increasing the rate of return, or a combination of both. That will fulfill its obligations under the law.

So Ordered.

STARR, Circuit Judge,

concurring:

Although I agree with my dissenting colleagues that Jersey Central has mounted an ill-conceived and overly broad attack on the “used and useful” principle, see Dissenting Opinion at 1197,1 am satisfied that under the circumstances presented this case must be returned to the Commission. For the reasons that follow, I concur in the opinion of the court and in the decision to vacate and remand the Commission’s orders.

I

The Commission has acted cavalierly in this case. As the court’s opinion persuasively demonstrates, the Commission failed to take seriously the allegations of severe financial plight confronting Jersey Central. Its discussion of that plight is intolerably terse. In its order on reconsideration, the Commission stated that no testimony or exhibits had been proffered to justify a higher return. Yet the allegations of financial plight were highly detailed and specific, indicating that the utility was skating on the edge of bankruptcy.

The Commission’s stated justification for summarily dismissing these allegations was the weight of its prior “used and useful” precedent. But as the court’s opinion shows, that body of precedent did not constitute as ironclad a rule as the Commission would have us believe. It is certainly not evident from those precedents that the rule could be summarily applied in the face of the financial demise of the regulated entity.

Indeed, the Commission as a matter of policy has departed over the years from the strictures of the “used and useful” rule. This is illustrated by its treatment of “construction work in progress” (CWIP), part of which, the Commission recently determined, can be included in a utility’s rate base. See Mid-Tex Electric Corporation v. FERC, 773 F.2d 327 (D.C.Cir.1985). In that proceeding, the Commission recognized that its own practice admits of “widely recognized exceptions and departures” from the “used and useful” rule, “particularly when there are countervailing public interest considerations.” See 48 Fed.Reg. 24,323, 24,335 (June 1, 1983) (CWIP final rule). In that setting, financial difficulties in the electric utility industry played a significant role in the Commission’s decision to bend the rule. See id. at 24,332; 773 F.2d at 332-34. See also, e.g., Tennessee Gas Pipeline Co. v. FERC, 606 F.2d 1094, 1109-10 (D.C.Cir.1979) (departure from “used and useful” to permit rate base treatment of natural gas prepayment is justified as means of encouraging development of additional gas reserves), cert. denied, 445 U.S. 920, 100 S.Ct. 1284, 63 L.Ed.2d 605 (1980).

This policy of flexibility, it seems to me, reflects the practical reality of the electric utility industry, namely that investments in plant and equipment are enormously costly. Rigid adherence to “used and useful” doctrines would doubtless imperil the viability of some utilities; thus, while not articulating its results in Hope or “takings” terms, the Commission — whether as a matter of policy or perceived constitutional obligation — has in the past taken these realities into account and provided relief for utilities in various forms.

What the Commission now confronts in Jersey Central’s rate filing is an investment, prudent when made, in a nuclear power facility that was doomed to failure. The cost of that project prior to abandonment was enormous — $397 million. Under these circumstances, the Commission, in order to engage in reasoned decisionmaking, has a duty to consider the entire financial circumstances confronting the utility, as it did in the CWIP context, not to rely blindly on precedents which do not involve similarly situated utilities facing the most dire *210financial consequences. Should the Commission nonetheless choose to adhere to the “used and useful” principle in these circumstances, it must provide a reasoned explanation for that decision. “Judicial review of the Commission’s order [ ] will ... function accurately and efficaciously only if the Commission indicates fully and carefully the methods by which, and the purposes for which, it has chosen to act, as well as its assessment of the consequences of its order [ ] for the character and future development of the industry.” Permian Basin Area Rate Cases, 390 U.S. 747, 792, 88 S.Ct. 1344, 1373, 20 L.Ed.2d 312 (1968). It is scarcely reasoned decisionmaking to dismiss out of hand allegations that go to the heart of the utility’s financial viability.

II

The Commission’s arbitrary and capricious treatment of the issues presented by Jersey Central necessitates the return of this case for further proceedings. The specific questions on remand will be whether the Commission’s treatment of Jersey Central’s request is consistent with prior precedent and whether the rate order entered in this instance violates Hope’s “end result” test. To address the latter question, it will be necessary to take into account the constitutional considerations at stake, namely whether the rate order or any other agency action which preceded that order worked a “taking” within the compass of the Fifth Amendment’s Takings Clause. Those would appear to be novel issues for a Commission that seems determined to avoid an “end result” inquiry as such, while at the same time making various adjustments to bring relief to troubled, parts of the electric utility industry. Under these circumstances, a comment or two is in order as to why I have concluded that, notwithstanding the Commission’s agnosticism, Jersey Central’s complaint “sounds” in the constitutional demands of the Fifth Amendment. Whether the facts would indeed make out a constitutional violation is obviously not before us, Majority Opinion at 1174, and must await the Nope-mandated hearing which must now be held.

The utility business represents a compact of sorts; a monopoly on service in a particular geographical area (coupled with state-conferred rights of eminent domain or condemnation) is granted to the utility in exchange for a regime of intensive regulation, including price regulation, quite alien to the free market. Cf Permian Basin, 390 U.S. at 756-57, 88 S.Ct. at 1354-55 (unlike public utilities, producers of natural gas “enjoy no franchises or guaranteed areas of service” and are “intensely competitive”). Each party to the compact gets something in the bargain. As a general rule, utility investors are provided a level of stability in earnings and value less likely to be attained in the unregulated or moderately regulated sector; in turn, ratepayers are afforded universal, non-discriminatory service and protection from monopolistic profits through political control over an economic enterprise. Whether this regime is wise or not is, needless to say, not before us. See generally Posner, Natural Monopoly and Its Regulation, 21 Stan.L.Rev. 548 (1969); Demsetz, Why Regulate Utilities?, 11 J. Law & Econ. 55 (1969).

In the setting of rate regulation, when does a taking from the investors occur? It seems to me that it occurs only when a regulated rate is confiscatory, which is a short-hand way of saying that an unreasonable balance has been struck in the regulation process so as unreasonably to favor ratepayer interests at the substantial expense of investor interests. Thus, in my view, a taking does not occur when financial resources are committed to the enterprise. That is especially so since a utility's capital investment is made not simply in satisfaction of legal obligations to provide service to the public but in anticipation of profits on the investment. The utility is not a servant to the state; it is a for-profit enterprise which incurs legal obligations in exchange for state-conferred benefits. A profit-seeking capital investment is scarcely the sort of deprivation of possession, use, enjoyment, and ownership of property which can conceptually be deemed a taking. See generally R. Epstein, Takings 63-92 *211(1985). Indeed, it would seem odd to consider as a taking government’s disavowal of any interest in property which remains unregulated and which reflects a profit-seeking investment.

It is also of significance to the constitutional inquiry whether the regulators forbade completion of construction. Cf. In re Public Service Co., 122 N.H. 1062, 454 A.2d 435 (1982) (holding that under the New Hampshire constitution, the State cannot prevent completion of construction of the Seabrook nuclear power facility without providing just compensation). But see Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978) (New York City historic preservation law employed to forbid development of office building). It would seem that, at least conceptually, a taking of investment funds in the Forked River project would have occurred if government so regulated as to prevent the property, in whole or in part, from being employed in the manner desired by the owner. But as we know, these ■ conditions did not occur.

Nor would a taking (pro tanto) automatically occur when regulation itself takes place, for that was part of the original compact between investors and the state. Rate regulaton is, in theory, the substitute for competition. The state stands in the shoes, as it were, of competitors, keeping the utility within bounds that would be drawn by market forces in a non-monopolistic market. Whether economically sound or not, utility rate regulation in itself raises no constitutional concerns.

Under one line of analysis, inclusion of prudent investments in the rate base is not in and of itself exploitative. See Washington Gas Light Co. v. Baker, 188 F.2d 11 (D.C.Cir.1950), cert. denied, 340 U.S. 952, 71 S.Ct. 571, 95 L.Ed. 686 (1951). I am not so sure that such an easy rule can automatically be properly employed consistent with the demands of the Fifth Amendment. Prudence is, of course, relevant to the process of striking a reasonable balance in rate-setting for public utilities. Requiring an investment to be prudent when made is one safeguard imposed by regulatory authorities upon the regulated business for benefit of ratepayers. As I see it, the “used and useful” rule is but another such safeguard. The prudence rule looks to the time of investment, whereas the “used and useful” rule looks toward a later time. The two principles are designed to assure that the ratepayers, whose property might otherwise of course be “taken” by regulatory authorities, will not necessarily be saddled with the results of management’s defalcations or mistakes, or as a matter of simple justice, be required to pay for that which provides the ratepayers with no discernible benefit.1

The two principles thus provide assurances that ill-guided management or management that simply proves in hindsight to have been wrong will not automatically be bailed out from conditions which government did not force upon it. That is, government forced upon the utility an obligation to provide service, but that obligation, as we have seen, is the quid pro quo for a protected area of service (and eminent domain authority). What is fundamental is that government did not force upon the utility a specific course of action for achieving the mandated goal.

Indeed, it would be curious if the Constitution protected utility investors entirely from business dangers experienced daily in the free market, the danger that managers will prove to have been overly sanguine about business prospects or the danger that a particular capital investment will not prove successful. In the face of anticipated demand, an airline may acquire additional aircraft, only to face unhappy consequences when passenger traffic does not meet expectations, perhaps due to economic *212factors entirely beyond management’s control. Utilities are not exempt from comparable forces.2 As the cases have repeatedly held, the Fifth Amendment does not provide utility investors with a haven from the operation of market forces. See, e.g., FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 590, 62 S.Ct. 736, 745, 86 L.Ed. 1037 (1942) (“[Regulation does not insure that the business shall produce net revenues.”). Yet, the prudent investment rule, in full vigor, would accomplish virtually that state of insulation, all in the guise of preventing government from effecting a taking without just compensation.

For me, the prudent investment rule is, taken alone, too weighted for constitutional analysis in favor of the utility. It lacks balance. But so too, the “used and useful” rule, taken alone, is skev/ed heavily in favor of ratepayers.3 It also lacks balance. In the modern setting, neither regime, mechanically applied with full rigor, will likely achieve justice among the competing interests of investor and ratepayers so as to avoid confiscation of the utility’s property or a taking of the property of ratepayers through unjustifiably exorbitant rates. Each approach, however, provides important insights about the ultimate object of the regulatory process, which is to achieve a just result in rate regulation. And that is the mission commanded by the Fifth Amendment. Unlike garden-variety takings, the requirements of the Takings Clause are satisfied in the rate regulatory setting when justice is done, that is to say the striking of a reasonable balance between competing interests.

Thus it is that a taking occurs not when an investment is made (even one under legal obligation), but when the balance between investor and ratepayer interests— the very function of utility regulation — is struck unjustly. Although the agency has broad latitude in striking the balance, the Constitution nonetheless requires that the end result reflect a reasonable balancing of the interests of investors and ratepayers. As we have seen, both investors and ratepayers were the intended beneficiaries of the Forked River investment; both should presumptively have to share in the loss.4 Filling in the gaps, the making of the specific judgments that constitutes the difficult part of this enterprise, belongs in the first instance to the politically accountable branches, specifically to the experts in the agency, not to generalist judges.

It is here that Hope’s “end result” test comes into play. The judiciary is not to micromanage the rate regulation process, just as we are to be restrained in reviewing the other work of administrative agencies. We are not to impose procedures that we think are wise or methodologies that we think strike a better balance than that *213struck by the regulators. Our limited but vital role is to ensure that the end result of a rate order reasonably balances investor and ratepayer interests.

We are, fortunately, not left completely in a web of subjectivity in making these judgments. To be sure, Takings Clause law has not been marked by analytical consistency, as Professor Epstein has brilliantly demonstrated in his recent book. Nor has it been characterized, as much as we might care for them, by bright-line rules. In the words of then-justice Rehnquist speaking for the Court in Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332 (1979), the inquiry is “essentially ... ad hoc [and] factual” in nature. Nonetheless, we have been taught that several factors are worthy of consideration in determining whether regulation works a taking, including “the economic impact of the regulation, the extent to which it interferes with investment-backed expectations, and the character of the gov-< ernmental action.” Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 432, 102 S.Ct. 3164, 3174, 73 L.Ed.2d 868 (1982); see also PruneYard Shopping Center v. Robins, 447 U.S. 74, 83, 100 S.Ct. 2035, 2041, 64 L.Ed.2d 741 (1980); Kaiser Aetna, 444 U.S. at 175, 100 S.Ct. at 390.

While it is premature to pass ultimate judgment on the question, some preliminary observations are in order. The first of the three considerations enumerated in Supreme Court decisions points powerfully in favor of Jersey Central. Forked River represents an enormous loss, and the very enormity of it must weigh heavily in the balance. No one maintains that exclusion of the abandoned plant from the rate base is de minimis, not affecting the return on property. Cf. Loretto, 458 U.S. at 445, 102 S.Ct. at 3181. (Blackmun, J., dissenting); PruneYard, 447 U.S. at 83, 100 S.Ct. at 2041. To the contrary, Jersey Central represents that it is perilously close to the edge of bankruptcy, unable to secure long-term credit, and unable to attract capital to the enterprise.

The second consideration — the extent to which the agency’s action interferes with investment-backed expectations — is mixed. As a general rule, it would appear that investors purchase utility stocks as a mechanism for conservative, safe investments. Drobak, From Turnpike to Nuclear Power: The Constitutional Limit on Utility Rate Regulation, 65 B.U.L.Rev. 65, 106-107 (1985). Potentially high rewards are foresworn in favor of stability and safety. And now the situation of Jersey Central’s investors is grim. There is no prospect, we are told, for those investors to earn a return on their investment. Thus, in holding over strenuous dissents that no taking was occasioned by New York City’s interference with Penn Central's plans to erect an office building atop Grand Central Station, the Supreme Court emphasized that the property owner could still earn a reasonable return on the investment notwithstanding the restrictive effects of the historic preservation law.5 Jersey Central’s investors have nothing but bleak days ahead, we are told, unless regulatory relief is forthcoming.6

On the other hand, FERC has already moved somewhat in the direction of balancing competing interests by permitting recovery of the costs of building the plant in the cost of service. Investor interests have not, therefore, been entirely ignored. In addition, as I indicated above, utilities are not shielded by the Constitution from the forces of competition and the uncertainties of economic life, and investors purchasing common stock are after all engaged in *214economic risk-taking. In addition, it surely cannot be reasonable for an investor to assume that each and every expenditure by a utility will be allowed by regulatory authorities. The very existence of regulation carries with it the hard fact that not every rate increase will be granted, not every expenditure will be allowed. Yet, “reasoned consideration” of investor interests requires more than the mechanical application of everyday rules to the loss of a $397 million investment in a power plant. Permian Basin, 390 U.S. at 792, 88 S.Ct. at 1373.

Finally, the character of the government action weighs for takings analysis in favor of the agency. The classic taking is when government invades and possesses property, partly or entirely. Permanent physical occupation provides the clearest example. United States v. Lynah, 188 U.S. 445, 468-70, 23 S.Ct. 349, 356-57, 47 L.Ed. 539 (1903). Occupation can, of course, be partial, and the taking can be the consequence of a private invasion if accomplished under the state’s auspices. Loretto, 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). A taking can occur when government imposes a right of access on private property, at least when the landowner had reasonably relied on government consent in making the improvements that purportedly opened the property to uninvited outsiders. Kaiser Aetna, 444 U.S. 164, 100 S.Ct. 383, 62 L.Ed.2d 332 (1979). The latter case teaches that the elimination of a basic incident of ownership — the right to exclude unwanted visitors from property — can constitute a taking. And, while the issue was sharply disputed in the Court and the resolution seemingly in conflict with Kaiser Aetna, it appears from the PruneYard case that the conduct of the landowner is of relevance in the constitutional analysis. That case teaches that willfully surrendering one of the “bundle” of property rights may result in greater, state-protected intrusion by outsiders than the property owner intended. Specifically, a shopping center owner may find that individuals may be permitted, over his objection, to exercise certain noncommercial rights on the shopping center property.7 PruneYard, 447 U.S. at 83, 100 S.Ct. at 2041. Thus, in contrast to Kaiser Aetna, the owner of the PruneYard Shopping Center found that he had lost the right to exclude some visitors by issuing an invitation to the public generally to visit the center for commercial purposes.8

The nature of the government action in this case obviously seems unintrusive in contrast to more typical takings cases. There has been no invasion, temporary or permanent. As I have previously indicated, the regulatory entity has not forbidden the Forked River project to proceed. What government has done is to forbid the investment to garner a return, thus balancing competing principles of utility regulation. Forbidding a profit on an investment gone sour strikes me, conceptually, as recreating in part the marketplace environment; indeed, FERC’s permitting recovery of the investment itself through cost of service works an interference with what would otherwise occur in the unregulated setting, since the investors as risk takers would obviously bear the entire risk that the investment would not pan out. In addition, FERC’s obligation to consider consumer needs and expectations must be evaluated in determining whether its order arbitrarily limited the return to investors. Permian Basin, 390 U.S. at 769, 88 S.Ct. at 1361 (“[IJnvestors’ interests provide only one of the variables in the constitutional calculus of reasonableness.”).

*215But it is not for us to finally resolve these questions in the first instance. That job, as I have said, belongs to regulators, not judges. See Permian Basin, 390 U.S. at 792, 88 S.Ct. at 1373. In my view, this case must now be resolved by the Commission, facing up to the hard question of whether, under all the circumstances, a violation of Hope has been worked by this rate order. That determination, it seems to me, can only be made by a careful balancing of the competing considerations that are inevitably present in the setting of utility regulation. Id. While I am unable to pass judgment on the ultimate issue in this case, I am convinced that FERC has completely failed to come to grips with the question and that the question is now squarely before it for resolution.

MIKVA, Circuit Judge, with whom Chief Judge WALD, and Circuit Judges SPOTTSWOOD W. ROBINSON, III and HARRY T. EDWARDS join, dissenting:

After two prior opinions, confounded by the Commission’s ever-shifting position, it is small wonder that this court is having difficulty seeing the forest for the trees. In its attempt to beat a clear path to resolution of the issues, however, the majority treads with heavy foot over some well-held doctrines regarding takings, unreasonableness of return, and the obligation of the Federal Energy Regulatory Commission (the Commission or FERC) to guarantee the financial solvency of a utility. Perhaps the greatest damage is rendered by the implications of the majority opinion for the scope of judicial review of Commission ratemaking procedures. Although we believe the Commission has been less than forthright in defending its action, we cannot join in the havoc our colleagues have wreaked in order to slap its hands.

The ramifications of today’s decision are inescapably broad. Whenever a utility files a proposed rate schedule and alleges that the revenues and earnings contemplated produce the “minimum amount” necessary for it to have access to capital markets and to maintain its financial integrity, the Commission is constrained to take no interim rate-reducing action without first holding a hearing and making findings pursuant to the test formulated in Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1944). The majority reads Hope as authorizing the court to direct FERC, when faced with such allegations, to abandon its otherwise permissible summary disposition procedures. This holding constitutes a blatant interference with the ratemaking procedures adopted by the Commission. Such intrusion into the Commission’s authority would have been deemed outrageous even in the days before Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978). We cannot believe that it is unobjectionable in this age of judicial deference. Therefore, we respectfully dissent.

I. Background

A full appreciation of the impact of today’s decision requires an understanding of the posture in which this case comes to us. At an intermediate stage of the rate-making proceeding, the Commission summarily rejected a non-conforming portion of Jersey Central’s filing pursuant to longstanding policy and procedure. Jersey Central loudly complained and refused to go further with the ratemaking process. In rushing headlong into the Hope issue, the majority loses sight of what we have here — Jersey Central is attempting to convert its rate case into a rulemaking proceeding. The majority allows the utility to succeed. It responds to Jersey Central’s complaints by directing FERC to abandon agency rules as applied to the utility and to implement the utility’s rates according to procedures the Commission would not normally follow.

On March 31,1982, Jei^éy Central Power and Light Company (Jersey Central) filed a proposed two-phase increase in its rate schedules for six wholesale customers. Phase A has gone into effect and is not at issue here. In Phase B, the utility proposed to amortize over 15 years a $397 *216million investment lost when it abandoned construction of a nuclear power plant project at Forked River, New Jersey. That is, Jersey Central sought to recover the project expenditure from its ratepayers as costs over time. It also sought to include in its rate base the current carrying charges (computed at 5.2%) on the debt and on the preferred stock portions of the unamortized investment in the plant. The total return a public utility captures is, simply put, the product of its permitted rate base and rate of return. Thus, the inclusion of the desired items in the rate base would generate a return on them over the amortization period; current ratepayers would bear the cost. The exclusion of these items from the rate base would require Jersey Central’s common equity investors to bear a financial burden; they would not obtain a return on the investment and would pay current charges.

Jersey Central’s wholesale customers protested the increased rates tendered for filing and petitioned the Commission to intervene in the ratemaking proceedings. Among other requests, the wholesalers moved for a partial rejection of the second phase of the rate filing. Adhering to its policy regarding abandoned investments, the Commission granted the wholesalers’ motion for summary disposition of the rate base inclusion of the unamortized investment in the cancelled plant. Under settled FERC policy, expenditure for an item may be included in a public utility’s rate base only when the item is “used and useful” in rendering service to the ratepayers. Accordingly, the Commission’s interim order allowed amortization of the Forked River investment as requested, but required Jersey Central to exclude the unamortized items from its rate base. 19 FERC (CCH) ff 61,208 (May 28, 1982).

In ordering this exclusion, FERC relied on New England Power Co., 8 FERC (CCH) ¶ 61,054 (July 19, 1979), affd sub nom. NEPCO Municipal Rate Committee v. Federal Energy Regulatory Commission, 668 F.2d 1327 (D.C.Cir.1981), cert. denied, 457 U.S. 1117, 102 S.Ct. 2928, 73 L.Ed.2d 1329 (1982) (“NEPCO ”). NEPCO held that utilities could amortize the full investment loss suffered from abandoned projects, but could not include the unamortized portion of these investments in the rate base because the abandoned projects were not “used or useful.” By following NEPCO, the Commission allowed Jersey Central to recover its total investment in the project to the point of cancellation, but denied the utility any return on the capital invested in the cancelled plant.

In concluding, the Commission ordered Jersey Central to file revised Phase B rates and cost support reflecting the summary disposition. The revision ordered would presumably be downward. Notably, because its preliminary review “indicate[d] that [the Phase B increase] may produce substantially excessive revenues,” the Commission suspended implementation of Phase B and ordered that a public hearing be held “concerning the justness and reasonableness of [Jersey Central’s] rates.” 19 FERC (CCH) ¶ 61,208, at 61,404.

Jersey Central did not file the revised material ordered. Instead, on June 24, 1982, it applied for rehearing, requesting reconsideration of the summary disposition or, in the alternative, a higher rate of return than that originally proposed in order to compensate for its diminished rate base. The Commission denied rehearing as to exclusion of the investment in the cancelled nuclear facility from the rate base. It noted that its decisions since NEPCO had reaffirmed the exclusion of current charges on unamortized investments. Jersey Central Power & Light Co., 20 FERC (CCH) ¶ 61,083, at 61,181 (July 23, 1982). In rejecting Jersey Central’s alternative proposed approach, the Commission ruled that the company could not support its revenue request on rehearing simply “by inflating the rate of return to recover dollars equal to those attributable to its impermissible rate base inclusion.” Id. at 61,182. Pursuant to settled policy, the Commission refused to consider increasing the rate of return when that alternative was raised in the first instance on application for review without supporting documentation. See id.

*217After the denial of rehearing, Jersey Central again failed to revise its filings. Had it done so, an Administrative Law Judge (ALT) would have held a hearing, pursuant to the Commission’s initial order, on the “justness and reasonableness” of the rates. At this hearing, the wholesalers could have intervened and presented their arguments that the rates, although reduced from those originally proposed, were nonetheless excessive. See 19 FERC (CCH) 11 61,208, at 61,404. Similarly, Jersey Central could have testified as to its belief that the reduced rates were too low.

Furthermore, the utility had two additional avenues open to it. First, Jersey Central could have refiled for a proposed rate increase after its application for rehearing was denied by operation of law. See 18 C.F.R. § 385.714(f) (1986). In pointing out the inadequacies of Jersey Central’s initial filing, the Commission clearly left the way open for a new rate proceeding that would include testimony and exhibits supporting a higher rate of return, as required by the Commission’s rules. See id. § 35.13 (1986). In such a request the utility could have proposed a shorter amortization period than that it had initially requested or offered evidence of cost of service elements justifying a higher overall return on the remaining assets in the rate base. Second, Jersey Central could have petitioned the Commission for a rulemaking concerning the continued validity of the “used and useful” principle when applied to cancelled plants generally. See generally Administrative Procedure Act, 5 U.S.C. § 553(e) (1982). At the proposed rulemaking proceeding, Jersey Central could have presented testimony in support of its position that the Commission’s present used and useful policy unnecessarily penalizes utility investors. See 18 C.F.R. § 385.505 (1986). Instead of pursuing either, or both, of these administrative alternatives, Jersey Central appealed to this court.

The majority seems to have lost sight of the juncture at which we stand in reviewing the Commission’s orders. It is too anxious to reach the end of the road. The majority contends that the Commission “reached” and “wrongly dispatched” Jersey Central’s Hope claim. Majority Opinion (Maj. Op.) at 1183; see also id. at 1170. Its reasoning runs as follows: “The Commission ruled that Jersey Central’s allegations and proffered testimony would not support a higher rate. That substantive ruling means that a hearing would have been pointless.” Id. at 1170. Although the Commission’s interim order has implications for the utility’s Hope claim, this construction is unfounded. Furthermore, it makes a mockery of the Commission’s order to hold a hearing on the very issue of the justness and reasonableness of the revised rates.

Contrary to the majority’s postulation, it is not the Commission's position that it need not make an “end result” examination. See id. Throughout its briefings and arguments before this court, the Commission has allowed that it must construct a rate within the confines of the “zone of reasonableness” informed by Hope. Rather, the Commission maintains that it need not hold a hearing to make that inquiry before it excludes a non-conforming element from a proposed rate base — at least not on the facts alleged here. The “end result” inquiry is made at the end of the ratemaking process, not at an intermediate, summary disposition stage. Thus, a hearing on inclusion of the unamortized portion of the cancelled plant in the rate base would be “pointless.” A hearing on the resultant rates would not be. In fact, as counsel for FERC explained at oral argument, it was the post-appeal settlement adjusting Jersey Central’s rate of return that obviated the need for the rate hearing ordered by the Commission.

No one disputes Jersey Central’s right to have the end result of the ratemaking proceeding subjected to a Hope inquiry. The issue is one of timing. FERC provided for a hearing on the adequacy of the rates allowed Jersey Central after the Commission’s reduction. The final rate order that emanated from that hearing would in any event be subject to judicial review. See Hope, supra. Jersey Central demands a *218hearing before the reduction — now, not at the end. No wonder the majority and separate opinions complain of not having a record through which to examine the Commission’s effort to balance the relevant interests. Maj.Op. at 1172, 1178; Separate Opinion (Sep.Op.) at 1188-89. Jersey Central elected to forego a hearing on the reduced rates and instead chose to clamor to this court for review of the Commission’s actions taken before the final balancing was performed. It is an interim rate-reducing order of which Jersey Central seeks review, not a final rate-setting order. The majority’s decision to yield to Jersey Central’s demands directly implicates the Commission’s ratemaking authority and its capacity to exercise its valid, established procedures free of judicial improvements.

The question this court addresses is the question that Jersey Central reserved its right to appeal under the settlement agreement: whether the Commission acted properly in limiting the rate base to used and useful property. As the majority recounts, Maj.Op. at 1173, Jersey Central’s challenge to the Commission’s orders takes three principal tacks. The utility first claims that the Commission has not established a used and useful rule applicable to its proposed filing. Second, the utility claims that, even if there were such a rule, application of the doctrine under the circumstances would lead to unconstitutionally confiscatory rates; therefore, it contends, the Commission cannot summarily apply the rule and must provide an evidentiary hearing. Finally, Jersey Central complains that, in the alternative, it is entitled to a hearing on an increased rate of return on its initial filing.

The majority finds that there is no ironclad rule regarding rate base treatment of cancelled electric utility plants and holds that Jersey Central is automatically entitled to a hearing on its proposed filing. Our inquiry leads us to the firm conclusion that the Commission acted reasonably and that Jersey Central is not entitled to a hearing on rate base treatment of the unamortized cost items of its rate schedule or on an inflated rate of return. The Commission followed established agency rules and procedures and Jersey Central cannot complain. There may be times when FERC is not free to summarily apply settled doctrine during the ratemaking process, but Jersey Central has not presented such a case.

II. The Commission’s Application of the Used and Useful Rule

At the heart of Jersey Central’s complaint is its dislike of the used and useful principle, especially as elaborated in NEP-CO, supra. In its attempt to have the Commission reconsider the doctrine, Jersey Central argues that the precedent does not, or should not, apply to it. Unlike the majority, we find that, in NEPCO and subsequent cases, the Commission firmly established a valid rulé for the calculation of rate base in electric utilities’ rate filings. Unmoved by Jersey Central’s endeavors to distinguish itself, we conclude that the Commission’s summary rejection in this case precisely follows that precedent.

It is, of course, widely accepted that the Commission may develop principles in one proceeding and then attach precedential or even controlling weight to them in later proceedings. See, e.g., Michigan Wisconsin Pipe Line Co. v. Federal Power Commission, 520 F.2d 84, 89 (D.C.Cir.1975). And the Commission can properly implement that policy, in order to protect consumers, at the summary judgment stage of its proceedings. See Municipal Light Boards v. Federal Power Commission, 450 F.2d 1341 (D.C.Cir.1971), cert. denied, 405 U.S. 989, 92 S.Ct. 1251, 31 L.Ed.2d 455 (1972). The majority seems to have no quarrel with this premise. Like Jersey Central, however, it disputes that the Commission had developed a principle or rule against including the unamortized portion of an abandoned investment in the rate base. Although not the ground on which it remands the proceeding, the majority implies that the application of the used and useful doctrine to Jersey Central’s rate *219schedule was inconsistent with any practice established by the Commission. See Maj.Op. at 1185-86. The majority’s reasoning distorts the NEPCO precedent established by the Commission, contradicts this court’s interpretation of the doctrine, and manipulates inapposite Commission decisions.

A. The NEPCO Approach

The majority asserts that rather than establishing a general policy in NEPCO, the Commission was engaging in a case-specific balancing of interests. Id. at 1183. The majority thus conceives the crucial factor underlying NEPCO as the reasonable balance that was struck by the Commission’s compromise between the NEPCO rate-payers and investors. In its view, the NEPCO decision was as much dependent on the length of the amortization period, the percentage of costs the utility would be permitted to amortize, and the size of the investment as it was on the question of whether the unamortized portion of those costs should be included in the rate base. Id. Therefore, because Jersey Central proposed a different amortization period, presented a much larger investment and faced financial distress, a fact not alleged in NEPCO, the utility had substantially distinguished itself from NEPCO. Id. at 1184. Under the majority’s interpretation, the Commission must strike a new reasonable balance between ratepayers and investors in this case and cannot do so through summary adjudication. The majority’s interpretation jibes with neither the Commission’s nor this court’s decision. Moreover, it virtually destroys 'any usefulness of NEPCO as a substantive rule of policy.

NEPCO concerned the used and useful principle in general, not just as applied to one cancelled plant. In NEPCO: we approved the Commission’s policy against permitting a utility to reap a return on the unamortized portion of its investment in an abandoned generating station. This policy is based on a principle of ratemaking upheld long ago by the Supreme Court: a utility may not include in its rate base properties that are not “used and useful” in serving its ratepayers. See Denver Union Stock Yard Co. v. United States, 304 U.S. 470, 475, 58 S.Ct. 990, 994, 82 L.Ed. 1469 (1938). Thus, in NEPCO the Commission allowed the utility to recover the money it owed on a partially constructed and then cancelled generating plant, but not to receive a return on that investment over the amortization period. Abandoned projects are neither used nor useful and therefore properly can be excluded from the rate base. Only as a result of that standard did the Commission note that a reasonable balance had been attained.

The AU’s decision and the Commission’s adoption of it were based clearly — and exclusively — on the used and useful principle. In selectively cribbing from the Commission’s quote of the AU opinion, the majority strives to create the impression that the decision was fact-based. See Maj.Op. at 1184. Nothing could be farther from the truth. In reaching his conclusion, the AU indicated that “[t]he equitable method of handling this issue requires a balancing of the interest of ratepayers and security holders.” J.A. in NEPCO, 668 F.2d at 1332. In balancing these interests, the AU made no mention of the amortization period, or the size of the investment, or any other specific fact. Nor did the Commission make mention of such facts in adopting the AU’s findings. In rejecting NEP-CO’s argument that ratepayers should be required to pay a return on the expenditure related to an aborted project, the Commission simply quoted from (and thereby indicated its agreement with) the AU’s determinations:

Ratepayers are not required to insure that a utility receive a return on all monies invested in the enterprise; ratepayers are required to pay a return on only those investments in properties that are used and useful in the public service. The argument that the security holders should be fully insulated from all risk in this matter is rejected. While a regulated utility may have a lesser degree of risk than unregulated companies that *220must compete for their markets, this is not to say that it is in the public interest to shield utility security holders from all risks, including the risk that management may initiate projects that do not become productive. This is a risk of any business.

While it is clear that investors in utilities would prefer to have ratepayers absorb losses resulting from aborted projects, such preference does not constitute justification for casting the entire burden of such losses upon ratepayers.

NEP’s proposal to afford rate base treatment for the unrecovered portion of this expenditure is rejected.

NEPCO, 8 FERC (CCH) 1161.054, at 61,-175-76. Nothing in the NEPCO decision indicates that the Commission would act differently in a factually different case.

Similarly, this court’s decision in NEPCO gave Jersey Central no reason to question the veracity of the Commission’s NEPCO decision as establishing a substantive rule of ratemaking. The only question before us was “whether FERC’s refusal to include project expenditures in the rate base, while allowing their recovery as costs over time, is a valid approach to allocating the risks of project cancellation.” 668 F.2d at 1333. NEPCO complained that “[t]he sole ground for [the Commission’s NEPCO] decision was that the expenditures for those facilities did not result in the operation of any used and useful plant.” NEPCO Brief at 7. The Commission in turn defended its ruling in a justification of the used and useful rule. FERC Brief in NEPCO at 13-20. We held that FERC’s approach was valid, without reference to the specific facts of the case, based solely on the Commission’s consistent application of the used and useful doctrine. 668 F.2d at 1333-35. In rejecting NEPCO’s Hope and takings arguments and upholding the Commission’s treatment, we held that current ratepayers should bear only the legitimate costs of providing service to them; items not “used and useful” could not be included in the utility’s rate base. Id. at 1333. Nothing in our opinion could lead Jersey Central to believe we would have found differently had its factual situation been before us.

Significantly, at one time Jersey Central conceded this very point. In appealing the decision of the New Jersey Board of Public Utilities (BPU) to disallow recovery of the carrying charges on the Forked River investment, Jersey Central acknowledged that the BPU decision was consistent with this court’s decision in NEPCO. Excerpts from Brief on Behalf of Appellant Jersey Central Power and Light Company, before the Superior Court of New Jersey, Appellate Division, J.A. at 22 [hereinafter Excerpts from Jersey Central Brief]. In that proceeding, Jersey Central expended its energies in attacking the reasoning of our decision and in attempting to convince the court that it should encourage the BPU to employ the “prudent investment” rate base formulation. Jersey Central was motivated by its belief that, unlike the used and useful formulation, the prudent investment approach would afford it the recovery it sought. Id., J.A. at 22-26. Unsuccessful in its undertaking before the state court, Jersey Central apparently rethought the application of our NEPCO decision to its case. Its reconstruction does not hold up.

B. The Commission’s Generalization of the NEPCO Rule

As the majority admits, at least four subsequent decisions laid down the same rule before Jersey Central filed its rates. Maj.Op. at 1184. In NEPCO’s second attempt “to include in rate base the unamortized investment in abandoned generating projects,” the Commission admonished that it had previously “clearly stated” that such inclusions were “improper.” New England Power Co., 16 FERC (CCH) ¶ 61,249, at 61,538 (Sept. 29, 1981) (citing NEPCO and summarily disposing of nonconforming portion of filing). In Northern States Power Co., 17 FERC (CCH) ¶ 61,196 (Dec. 3, 1981), affd sub nom. South Dakota Public Utilities Commission v. Federal Energy Regulatory Commission, 690 F.2d 674 (8th Cir.1982), the Commission again held that the utility could not obtain a return on its lost investment. The case left *221no room for ambiguity; Jersey Central itself conceded that in Northern States, “FERC made clear that its intention was that the investors receive back their entire investment but be denied all return on that investment during the amortization period.” Initial Brief of Jersey Central at 19. The Commission applied the NEPCO rule summarily, rejecting tariff filings that sought a return on investments not “used and useful.” In both Ohio Edison Co., 18 FERC (CCH) tl 16,010 (Jan. 8, 1982), and Central Maine Power Co., 18 FERC (CCH) 11 61,126 (Feb. 12, 1982), the agency cited NEPCO as its authority for the summary dispositions. These decisions thus clearly established a general rule of summary denial of non-conforming filings by the time Jersey Central made its initial filing in March 1982. See Black Hills Power and Light Co., 19 FERC (CCH) 1161,302, at 61,592 (June 24, 1982) (referring to rate base treatment of cancelled plants as “contrary to well-established precedent”); see also Violet v. FERC, 800 F.2d 280, 281 n. 2 (1st Cir.1986) (referring to NEPCO’s 1982 agreement not to request reimbursement of the unamortized portion of its cancelled plant as “consistent with Commission policy”) (citing NEPCO).

The majority belittles the import of these eases by brushing them off as “routine” and comparing them to Jersey Central’s filing, which the majority characterizes as “anything but routine.” Maj.Op. at 1184. This supposed distinction misses the mark. The Commission had established firm rate-making procedure — summary disposal of unamortized costs of cancelled plants included in electric utilities’ rate base filings. The procedure did not vary with “factual differences,” no matter how substantial. As to the critical fact, Jersey Central stood in exactly the same position as each other utility — it wanted rate base treatment of its abandoned investment. Jersey Central had no reason to think it would not receive identical treatment — summary refusal.

C. The Natural Gas Pipeline Cases

In a laborious attempt to show that the Commission had begun to waiver in its policy, or indeed was inviting a utility to request the treatment that Jersey Central in fact sought, Jersey Central cites several gas pipeline cases. The utility maintains that it reasonably read the cases as suggesting a shift by the Commission away from the NEPCO rule. The majority agrees. Despite such distinguished ratification of Jersey Central’s misreading of Commission precedents regarding gas pipelines, we find nothing in those cases to indicate any waivering by the Commission in its long-standing policy toward the can-celled construction projects of electric utilities.

Trailblazer Pipeline Company, 18 FERC (CCH) ¶ 61,244 (Mar. 12, 1982), the case upon which Jersey Central relies heavily and the majority relies exclusively, fails to validate Jersey Central’s non-conforming rate filing. Trailblazer involved not a rate filing, but a preconstruction proceeding brought to obtain Commission certification of the appropriateness of the pipeline’s financing. The Commission allowed the pipeline to recover debt service on an abandoned project because it was paid for through project financing, in which the stream of income generated by the project was the primary security for the loan. See also Ozark Gas Transmission System, 16 FERC (CCH) 1116,099 (July 28, 1981) (approving recovery of actual debt interest for project paid for by project financing). It conditioned approval of inclusion of debt service in rate base “on applicants’ waiver of their right to apply for the recovery of their equity investment in this project should it fail.” 18 FERC 1161,244, at 61,503.

The majority declares that Trailblazer “presented Jersey Central with some additional grounds for believing that the Commission would take a more flexible approach” in its case because the Commission had signalled its frustration with the disparate treatment given gas and electric companies. Maj.Op. at 1184. Yet the majority fails to substantiate the grounds for this belief. In its many permutations, the majority opinion has been unable to come *222up with an interpretation of Trailblazer that both supports Jersey Central’s position and withstands scrutiny.

Trailblazer does not even announce a blanket rule allowing recovery of debt service and a return of, but not on, an investment by a natural gas company. It certainly does not hold that such a rule should or could be extended to electric utilities. More important, even if Trailblazer were read to control Jersey Central’s filing, the utility would not recover the relief it seeks. In fact, the disparity between treatment of gas and electric cases identified in Trailblazer is that treatment of cancelled electric plants was more generous than treatment of cancelled gas facilities. The majority admits as much. Id. at 1185.

As was pointed out in the panel’s first opinion in this case, the rule for gas companies would not permit Jersey Central to recover its equity investment, the debt, the carrying charges on the debt, and the preferred stock costs, all of which it attempted to do by including the Forked River investment in its rate base. Arguing that this understanding of Trailblazer is erroneous, the majority maintains that the Commission “suggest[ed]” that conventionally-financed pipelines would not have to waive their right to recover the equity investment in order to recover a return. Id. at 1185 n. 6. We cannot locate any such suggestion in anything the Commission said. Indeed, any suggestion to be found is quite to the contrary.

In dicta, Trailblazer discussed the tariff that the Commission would consider if the pipeline opted for conventional rather than project financing. The Commission indicated that it would permit the applicant to “apply for recovery of the total investment in the project should it fail.” 18 FERC (CCH) ¶ 61,244, at 61,504 (emphasis added). The Commission observed that the policy consideration of encouraging investment in prudent yet possibly risky projects pointed “in the direction of a consistent and more liberal allowance of abandoned plant costs in cost of service.” Id. at 61,502 (referring to amortization of abandoned projects) (emphasis added). This observation, however, had no bearing on the Commission’s policy of excluding a current return on an abandoned plant from the rate base. There is no suggestion that any utility should in addition receive a return on the equity portion of the investment. See id. at 61,-503 & n. 17. Indeed, the Commission expressed concern that even allowing a return of that investment creates too great an incentive for imprudent investments. See id. at 61,503 (stating that FERC’s rate-making procedures should “not promote investment in projects undertaken simply because the bill can be passed on to the ratepayers”).

The majority misunderstands the ramifications of the Commission’s assertion that there “is no obvious reason why the treatment of abandoned plant costs as between gas and electric companies should differ,” id. at 61,511 n. 15. It was saying that in an appropriate natural gas case, one not paid for by project financing, amortization of abandoned plant costs should be allowed because it was already allowed in the electric company context. See id. (citing NEP-CO, supra, and Northern States Power Company, supra); cf. Natural Gas Pipeline Co. v. Federal Energy Regulatory Commission, 765 F.2d 1155 (D.C.Cir.1985) (establishing on its facts that a pipeline was not entitled to amortize its out-of-pocket expenses, to say nothing of its debt or carrying charges, for abandoned projects), cert. denied, — U.S.-, 106 S.Ct. 794, 88 L.Ed.2d 771 (1968). Jersey Central has already benefited from this investment-fostering liberal approach. Unlike gas companies, Jersey Central was allowed to recover the expenditure made on its failed construction project.

The majority inexplicably seems to elevate Jersey Central’s reliance on Trailblazer’s supposed indication of the Commission’s “flexibility” to a point of independent legal significance. See Maj.Op. at 1185 & n. 7. Regardless of the reasonableness of the company’s expectation, one must query just how much Jersey Central “relied” upon Trailblazer in making its filing. In *223its initial brief to this court for review, the utility cited Trailblazer as additional support for its argument that the Commission should permit full amortization and a return on the debt and preferred portions of the unamortized amount. Initial Brief of Jersey Central at 20. However, it characterized the Trailblazer opinion as having been issued “shortly after Jersey’s Central filing,” id. at 8 (emphasis added), even though, as the majority notes, the opinion was published two weeks before the filing, Maj.Op. at 1185.

Whatever Jersey Central’s intent, belief, or expectation, Trailblazer cannot carry the utility where it desperately wants to go, and where the majority is all too willing to usher it. Trailblazer never questions the continuing validity of the used and useful principle, which it would have to do to raise a reasonable doubt in Jersey Central’s mind that the continuing validity of NEPCO was open to question. We therefore conclude that summary disposition of Jersey Central’s initial rate filing was appropriate under settled NEPCO used and useful doctrine. See 18 C.F.R. § 385.217 (1986) (summary disposition procedure). At the time Jersey Central filed its proposed rate revision, the requirement that the rate base exclude certain unallowable items had been upheld by this court; the Commission had stated its practice of applying this requirement; and the agency had not deviated from this position. Under these circumstances, the Commission properly rejected the non-conforming portion of Jersey Central’s filing pursuant to its standard policy.

Petitioner stated at oral argument that in its proceeding before the Commission it set out to test the NEPCO doctrine. Everyone can appreciate Jersey Central’s frustration with what it believed to be an unwise and ill-conceived rule. But the proper forum for challenging an agency rule is in a regulatory rulemaking proceeding, not in a ratemaking proceeding. See generally 1 K. Davis, Administrative Law Treatise, § 6:1 et seq. (1978). FERC is now, pursuant to a Notice of Inquiry, re-evaluating its entire approach to the regulation of wholesale electric requirements service. The agency intends to focus, in particular, on “the pricing and risk allocation policies,” including its cancelled plant policy. See 31 FERC (CCH) ¶ 61,376 (June 28, 1985); Regulation of Electricity Sales-for-Resale and Transmission Service, 50 Fed.Reg. 27,604, at 67,612-14. (July 5, 1985). That is where Jersey Central should make its stand. The utility should not be allowed to convert a rate case into an involuntary rulemaking and manipulate this court into approving procedures FERC has rejected.

The majority puts this Notice of Inquiry to preposterous use. Although it buries its point in a footnote, the majority makes the remarkable assertion that the fact that the Commission has initiated this rulemaking proceeding “indicate[s]” that the agency had no “genuine rule with respect to the treatment of cancelled plants.” Maj.Op. at 1185 n. 7. The fact that the Commission’s regulatory policy with regard to electric utilities is evolving lends absolutely no support to the majority's and Jersey Central’s contention that the agency had not established a firm rule in NEPCO and its progeny. An agency has every right, and indeed the responsibility, to reconsider and restructure its rules and policies when the circumstances warrant change. Regulatory policies are always in “a state of flux.” See id. This evolution does not render the rules promulgated any less authoritative. Indeed, Congress has chosen to regulate through agencies in order to avoid the cumbersome, legislative process and to take advantage of agencies’ ability to respond to everchanging industry practices and economic environments.

The Notice of Inquiry issued by the Commission cannot excuse the majority’s willingness to second-guess the agency’s policies. Courts have no place substituting themselves for agencies. Had Congress intended the courts to act as the supreme regulatory bodies, they would have made us subject to strictures, beyond Article III, that would preclude the freewheeling approach taken by the majority in its opinion today.

*224D. The Inappropriateness of Using Rate Base Calculation to Address Utilities' Financial Concerns

The infirmity of the majority’s decision extends beyond its disregard for NEPCO as a rule of policy regarding rate base calculation. Ratemaking is a complex process involving consideration of a myriad of factors. See generally Regulation of Electricity Sales-for-Resale and Transmission Service, 50 Fed.Reg. 27,604 (July 5, 1985) (discussing pricing and risk allocation policies toward electric utility requirements service). The more systematic the practice, the easier and more efficient the process can be for both the Commission and the individual utility. See, e.g., 18 C.F.R. §§ 35 and 290 et seq. (1986) (outlining rules and procedures for filing of rate schedules and collection of cost of service information). If the majority’s rationale is followed, items such as cancelled nuclear power plants will be included or excluded from utility rate bases dependent on the financial condition of the utility. Ad hoc rules for rate base composition invite a chaotic state of the law in a regulatory arena where certainty and predictability help ensure that just and reasonable rates are established.

Furthermore, rate base calculation is much too clumsy a tool for adjusting total return to accommodate the state of the utility’s finances. Generally, the rate base is comprised of total capital invested in facilities minus depreciation plus cash working capital. The rate of return, on the other hand, is a weighted average of different rates applied to debt, preferred stock and common stock. Thus, the rate of return is the normal and most suitable vehicle for taking account of a given utility’s fluctuating financial needs. Not surprisingly, as the Commission explained at oral argument, it is here that FERC does most of its “tinkering.” See Maj.Op. at 1186-87. Indeed, it was through adjusting rate of return that FERC and Jersey Central settled their differences in this rate filing.

In addition, the majority’s approach creates disincentives for a utility to operate efficiently. As the Commission observed, “[a] firm is more likely to work to minimize its costs if its financial health is at stake____ Thus, firms that bear significant business risk are more likely to produce efficiently than those [who] are sheltered from this risk.” 50 Fed.Reg. at 27,-612. Yet, under the majority’s rationale not only are producers able to shift the risk of loss onto their ratepayers, but they are more likely to be able to do so if the loss is great and they are otherwise under financial strain. A healthy utility does not get its prudently incurred but cancelled expenditure included in its rate base, but a sickly utility does.

The Commission has expressed its concern that allowing recovery of the expenditure through amortization may reduce incentives for utilities to “avoid embarking upon questionable construction projects, or to stop work on partially constructed ones after their economic value has become unclear,” or “to minimize construction costs.” 50 Fed.Reg. at 27,614. If the company is more likely to recover not only its out-of-pocket costs but also a return on those costs if it is in financial decline, then the incentives for efficient production are reduced even further. And, as the concurrence points out, we are not dealing with small change. See Sep.Op. at 1188. The disincentives are large ones. Thus, the majority’s method of treating rate base calculation frustrates the Commission’s goal of “achievpng] the most efficient allocation of resources possible.” See Northern Natural Gas Co. v. FPC, 399 F.2d 953, 959 (D.C.Cir.1968).

The majority asserts that it is not insisting that Jersey Central receive the financial relief it seeks through a rate base adjustment. See Maj.Op. at 1182 n. 5. The majority protests too much. Rate base treatment of Jersey Central's cancelled plant is, of course, the very thing at issue. The utility, as stated in its filing and as credited by the majority, has presented the rate package that it alleges will provide the minimum amount necessary to avoid non-*225confiscatory rates; each element of the proposed rate structure is essential. Indeed, the majority argues, in response to our point that Jersey Central had other forms of relief open to it (other than inclusion of its cancelled plant in the rate base), that other alternatives would not meet the utility’s specific financial needs. See Maj.Op. at 1186-87. The majority cannot have it -both ways, and its refusal to accept the ramifications of its opinion in this regard reveals the extent to which it is blind to Jersey Central’s real motivation— nullification of the NEPCO doctrine.

III. The Utility’s Right to an Evidentiary Hearing

There may be times when the Commission cannot issue an interim summary disposition order even when based on a long-established settled rule. Jersey Central argues that this is such a time. It claims that the substantive policies and procedural filing requirements that the Commission established for recovery of abandoned power projects, whatever their merit for utilities facing less dire financial straits, were invalid as applied to Jersey Central’s particular rate filing. The utility contends that the Commission’s rate base requirements so jeopardized Jersey Central’s financial integrity and long-term ability to attract capital that the Commission’s order threatened to confiscate the capital that its owners had invested, in contravention of the Hope end result test. Accordingly, it asserts that the Commission cannot summarily apply its NEPCO rule; rather, it must hold an evidentiary hearing concerning proper treatment of the utility’s proposed rate base items. While acknowledging the electric utility industry’s need to attract investors, we find that Jersey Central presents no valid reason why these concerns justify exemption from the Commission’s clear requirements. The majority obviously disagrees. It is here that the majority opinion may cause the most confusion and caprice.

Ratemaking calls for “pragmatic adjustments” clearly within the province of the Commission, which “must be free ... to devise methods of regulation capable of equitably reconciling diverse and conflicting interests.” Mobil Oil Corp. v. FPC, 417 U.S. 283, 331, 94 S.Ct. 2328, 2356, 41 L.Ed.2d 72 (1974) (quoting Permian Basin Area Rate Cases, 390 U.S. 747, 767, 88 S.Ct. 1344, 1360, 20 L.Ed.2d 312 (1968)). The broad discretion the Commission enjoys in its ratemaking determinations, however, must be bridled in accordance with the statutory mandate that the resulting rates be “just and reasonable.” In Hope, the Supreme Court articulated the standard by which a reviewing court examines a challenged rate. “Under the statutory standard of ‘just and reasonable’ it is the result reached not the method employed which is controlling____ If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end.” 320 U.S. at 602, 64 S.Ct. at 288 (citations omitted). Thus, Hope is a limit on judicial scrutiny, not a probing device for courts restless to enter the fray between utilities and the Commission on the actual rates to be approved.

Remarkably, the majority invokes Hope to direct the methods the Commission may employ in fashioning Jersey Central’s rates. Our colleagues accept Jersey Central’s contention that “the Commission may not summarily exclude an investment from the rate base when the utility has alleged that its ability to attract capital will be seriously jeopardized as a result.” Maj.Op. at 1172. They therefore conclude that the company is entitled to a hearing in order to have the opportunity to prove its allegations and demonstrate that the end result of the Commission’s order — were it carried out — would violate the Hope standards. Regardless of the propriety of the Commission’s used and useful policy, the majority holds that, given Jersey Central’s allegations regarding its financial status, a hearing is required in order to implement this policy. To the contrary, we find nothing in Jersey Central’s initial filing and its application for rehearing that demonstrates a need for a hearing at this stage of the proceeding.

*226Section 205 of the Federal Power Act, 16 U.S.C. § 824d(e) (1982), provides that “the Commission shall have authority ... to enter upon a hearing” on the legality of a rate increase. This provision authorizes, but does not require, the Commission to conduct full-scale evidentiary hearings; the Commission may dispose of issues summarily if there is no need for a hearing. See Cities of Batavia v. Federal Energy Regulatory Commission, 672 F.2d 64, 91 (D.C. Cir.1982). In particular, a utility is not entitled to a hearing before the non-conforming portion of its rate filing is rejected, see Southern California Edison Co. v. Federal Energy Regulatory Commission, 686 F.2d 43, 47 (D.C.Cir.1982), or when it challenges an established policy. See Papago Tribal Utility Authority v. Federal Energy Regulatory Commission, 628 F.2d 235, 242 (D.C.Cir.), cert. denied, 449 U.S. 1061, 101 S.Ct. 784, 66 L.Ed.2d 604 (1980); Municipal Light Boards v. FPC, 450 F.2d 1341, 1345-46 (D.C.Cir.1971); see also 3 K. Davis, Administrative Law Treatise § 14.5 at 26-27 (1980) (“When a utility’s entire filing consists of a legal challenge to well-entrenched policy, there is no need for the Commission to grant the challenger a hearing.”). The Commission is under an obligation to grant a hearing- only if the utility raises an “issue of adjudicative fact.” See United States v. Storer Broadcasting Co., 351 U.S. 192, 205, 76 S.Ct. 763, 771, 100 L.Ed. 1081 (1956); Citizens for Allegan County, Inc. v. FPC, 414 F.2d 1125 (D.C.Cir.1969).

Had Jersey Central raised a “serious Hope challenge,” as the majority believes it did, Maj.Op. at 1178, there would be an issue of adjudicative fact which necessitates a hearing rather than summary disposition. The issue would be whether any action taken by the Commission to reduce the rates permitted Jersey Central would produce an unjust and unreasonable end result; that is, whether Jersey Central had proposed the “minimum” non-confiscatory rates possible. In summarily excluding the non-conforming costs from the rate base, the Commission impliedly determined that the utility had raised no issue of fact. Based on Jersey Central’s allegations and the evidence before the Commission, we find this conclusion reasonable.

A. The Showing Necessary to Obtain a Hope Hearing

In order for Jersey Central to raise a serious Hope challenge, its allegations, if true, must suggest that the Commission's interim order — the exclusion of unamortized abandoned plant costs from the rate base — would result in unjust and unreasonable rates. According to the majority, Jersey Central has made the showing necessary to obtain a Hope hearing. Maj.Op. at 1169. The majority is convinced by the utility’s allegation that “the company has been shut off from long-term capital, is wholly dependent for short-term capital on a revolving credit arrangement that can be cancelled at any time, and has been unable to pay dividends for four years.” Id. at 1181. This proffer simply echoes the investor interest described in Hope. See 320 U.S. at 603,64 S.Ct. at 288, Maj.Op. at 1171-72. A utility must do more than recite the frustration of its stockholders’ interests in order to obtain a Hope hearing. Thus, we cannot agree with the majority that “[t]he allegations made by Jersey Central and the testimony it offered track the standards of Hope and Permian Basin exactly.” See Maj.Op. at 1178.

We need not adopt what the majority relentlessly maintains is FERC’s interpretation of the required showing--“the order would put the utility into bankruptcy” — in order to reject the showing presented by Jersey Central. See id. at 1175, 1177, 1179, 1180. Nor need we decide what precise allegations and evidence would ultimately comprise the necessary showing. The court need only find, as we do, that Jersey Central's showing does not suffice. There are at least three types of showings which, in our view, are crucial to any attempt to obtain a Hope hearing at this intermediate stage of the rate proceeding and which are largely overlooked in the majority’s opinion and absent from Jersey Central’s filing.

*2271. The Nexus Between the Rate Order and the Utility’s Financial Plight

It is axiomatic that FERC is not a guarantor of Jersey Central’s financial health and that a utility may even go bankrupt for reasons beyond the regulator’s control. See, e.g., Hope, 320 U.S. at 603, 64 S.Ct. at 288. The Act and its constitutional limits ensure that the governmental ratemaking process does not “produce arbitrary or unreasonable consequences.” Permian Basin, 390 U.S. at 800, 88 S.Ct. at 1377. They do not protect the utility from market forces. Market Street Railway Co. v. Railroad Commission of California, 324 U.S. 548, 567, 65 S.Ct. 770, 779, 89 L.Ed. 1171 (1945). Establishing a link between a utility’s bad health and the actions of the regulator is thus essential to raising a viable Hope claim.

Jersey Central has not established this critical nexus. It simply complains that the government’s ratemaking actions are the source of its problems; our colleagues never question this assumed causal connection. An examination of the evidence laid before FERC, however, leads us to doubt the validity of this assumption.

In its present financial circumstances, Jersey Central bears greater resemblance to the failing Market Street Railway Company than it does to the Hope Natural Gas Company, “which had advantage of an economic position which promised to yield what was held to be an excessive return on its investment and on its securities.” Market Street, 324 U.S. at 566, 65 S.Ct. at 779 (finding investor considerations advanced in Hope “inapplicable to a company whose financial integrity already is hopelessly undermined”). Jersey Central had not been able to pay dividends for the four years prior to its filing; its access to capital had been hampered for about as long. Essentially, the utility is asking the Commission to relieve its economic miseries by approving dramatically increased rates. See Testimony of Dennis Baldassari, J.A. at 34 (testifying that the continuation of the present rate “will prolong the Company’s inability to restore itself to a recognized level of credit worthiness”); compare Permian Basin, 390 U.S. at 812, 88 S.Ct. at 1384 (noting that the rates proposed would “maintain the industry’s credit and continue to attract capital”) (emphasis added). Jersey Central’s problems appear to stem largely from the operations of the free market, perhaps exacerbated by the actions of other regulators. FERC cannot be made responsible for curing those ills.

The Supreme Court has enunciated this principle quite frankly:

The due process clause has been applied to prevent governmental destruction of existing economic values. It has not and cannot be applied to insure values or to restore values that have been lost by the operation of economic forces.

Market Street, 324 U.S. at 567, 65 S.Ct. at 780.

The entire electric utility industry faces a “financial crisis.” See Excerpts from Jersey Central Brief, J.A. at 26 n. 19. As Baldassari remarked, the October 1973 oil embargo and the impact of inflation are problems generic to the industry. Testimony of Dennis Baldassari, J.A. at 33. Those utilities that invested heavily in nuclear facilities were particularly hard hit, not in the least by adverse public and political attitudes to nuclear power and its attendant dangers. See id. at 33-34. Any fair reading of Baldassari’s testimony before FERC leads to the conclusion that economic forces, rather than any action on the part of FERC, have strapped Jersey Central into the financial straightjacket.

It should be noted that Jersey Central’s investment portfolio places it in a uniquely tight predicament. Jersey Central is a subsidiary of the General Public Utilities Corporation, the electric utility that has among its “prudent” investments the Metropolitan Edison Company and the infamous Three Mile Island (TMI) nuclear generating plant. Jersey Central intimates that the horrendous financial burden caused by the TMI-2 accident was the pivotal force in suspending construction of Forked River. See id. Presumably it also landed a heavy blow to *228Jersey Central's credit worthiness and financial integrity.

The market is not the only force potentially at work against Jersey Central. Many regulatory bodies have influence over Jersey Central’s economic destiny; therefore, the utility must effectively link its financial distress to FERC. This showing is particularly important, since the federal government is responsible — on the whole — for the value of only about ten percent of electricity sales in the United States. The states regulate the major part of the utility business. As noted earlier, the New Jersey BPU has historically refused Jersey Central a return on unproductive facilities. See Excerpts from Jersey Central Brief, J.A. at 17 (blaming the company’s financial woes on BPU’s lack of rate relief). In addition, there are other federal agencies who share regulatory control with FERC. The Nuclear Regulatory Commission, for example, prohibited the company from starting up the unharmed TMI-1 generator, thereby severing the company’s access to its prime source of desperately needed service and revenues.

If Jersey Central’s problems derive from economic forces or from the actions of other regulatory bodies, then even FERC’s full rate base treatment of the amounts at issue will not alter the company’s inability to pay dividends or obtain long-term credit. At a minimum, a company claiming an unconstitutional taking should have to show that FERC’s actions caused or substantially contributed to the conditions alleged to be the result of the taking. Jersey Central has made no such showing. In fact, it appears as if the Commission’s interim rate-reducing order is a small factor in the forces contributing to the utility’s financial dilemma.

The majority takes the remarkable position that the Commission must alter its ratemaking procedures even if the utility can only show that the Commission’s action only affects “a minor portion of Jersey Central's business.” Maj.Op. at 1182 n. 5. Such a position is untenable. From this perspective, the agency would be obliged to abandon its ratemaking procedures in every industry which experienced financial hardship, regardless of the principal causes of those conditions. Neither Hope nor the due process clause requires as much. See Market Street, 324 U.S. at 567, 65 S.Ct. at 779.

2. The Effect on Consumers

The burden is ultimately on Jersey Central to establish that the return allowed by FERC is constitutionally inadequate; part of the showing necessary to raise an issue of fact must include attention to the consumer interests which form an important part of the Hope balancing test. Under Hope, a taking occurs only when the agency has misbalanced the interests of investors and consumers. As the Court stated in Permian Basin,

[t]he Commission cannot confine its inquiries [to the Hope investor criteria]; it is instead obliged at each step of its regulatory process to assess the requirements of the broad public interests entrusted to its protection by Congress. Accordingly, the “end result” of the Commission’s orders must be measured as much by the success with which they protect those interests as by the effectiveness with which they “maintain ... credit and ... attract capital.”

390 U.S. at 791, 88 S.Ct. at 1372.

The consumer interest essential to the just and reasonable balance is that of not being subjected to exploitative rates. The Commission stands as the watchdog providing “a complete, permanent and effective bond of protection from excessive rates and charges.” Id. at 795, 88 S.Ct. at 1374 (quoting Atlantic Refining Co. v. Public Service Commission, 360 U.S. 378, 388, 79 S.Ct. 1246, 1253, 3 L.Ed.2d 1312 (1959)). Thus, this court has described utility consumers as the agency’s “prime constituency.” See Maryland People’s Counsel v. FERC, 761 F.2d 780, 781 (D.C.Cir.1985) (citing Hope, 320 U.S. at 620, 64 S.Ct. at 296). The exact boundaries of an exorbitant rate are indeterminate. Ultimately, however, they must relate to the cost of service, see *229 Farmers Union Central Exchange, Inc. v. FERC, 734 F.2d 1486, 1502 (D.C.Cir.) (citing Hope, 320 U.S. at 602-03, 64 S.Ct. at 287-88), cert. denied sub nom., Williams Pipe Line Co. v. Farmers Union Central Exchange, Inc., 469 U.S. 1034, 105 S.Ct. 507, 83 L.Ed.2d 298 (1984), and the distribution of associated risk, see Washington Gas Light Co. v. Baker, 188 F.2d 11, 20 (D.C.Cir.1950).

Jersey Central argues that the agency has discriminated against its investors’ interests, but it does not address how the Commission’s balance weighed the consumer interests. More significantly, it does not show that paying more attention to its investors’ interests would not exploit the consumer. See 18 C.F.R. § 35.13(e)(3)(1986) (stating that the utility has the burden of “establishing that the rate increase is just and reasonable and not unduly discriminatory or preferential”).

The majority is in seeming confusion as to the showing the company made with regard to protection of consumer interests. It states, without support, that “Jersey Central submitted figures and testimony to support its claim that ... its proposed rates would not exploit consumers.” Maj.Op. at 1180. Yet, in fact, Jersey Central itself never made this “claim”; it never broached the issue. The majority resurrects an unpersuasive argument in support of its contention — namely, that “the rates proposed in its filing would remain lower than those of neighboring utilities.” Id. at 1181; see Jersey Central Power & Light Co. v. FERC, 768 F.2d 1500, 1502 (D.C.Cir.1985). Perhaps this point would lend support to the majority’s assertion were there a competitive market for electricity service. But of course there is no competition in this market; electric utilities are natural monopolies subject to rate regulation. “What rates are ‘just and reasonable’ will in general depend on a utility’s legitimate costs, and those costs can of course vary widely even among neighboring utilities____ That some utilities with monopoly markets adjacent to Jersey Central’s are allowed to charge more than Jersey Central thus presumably signifies nothing more than that Jersey Central has access to cheaper sources of power, or for some other reasons has fewer legitimate costs.” 768 F.2d at 1512 (Mikva, J., dissenting). It certainly does not show that Jersey Central’s proposed rates would not exploit its customers.

The majority admits that “it is impossible for us to say at this juncture whether including the unamortized portion of Forked River in the rate base would exploit consumers in this case.” Maj.Op. at 1181. Since Jersey Central alleges that its proposed rate schedule would yield the lowest nonconfiscatory rate possible, how can the majority then say that the company has made a Hope showing? Without a showing that its filing would not exploit consumers, Jersey Central has not presented allegations suggesting that the rate order does not meet the requirements of Hope. Contra id. at 1181. Absent such allegations, the utility is not entitled to a Hope hearing.

3. The Reasonableness of the Overall Return Allowed on the Forked River Project

Regardless of the formulation employed, the rates fixed by the Commission may not shift the risk of loss onto the consumer and then exact the practice of the loss from him in the event it occurs. Such a double taxing “would clearly violate the consumer interest against ‘exorbitant’ rates.” Washington Gas Light, 188 F.2d at 20. Before questioning the application of the used and useful rule, therefore, it is important to discover if the investors in Forked River have already been compensated for the risk that the project would be cancelled before the investment in it was entirely recovered. See id. at 19-20.

The total return received by a utility is a function of both the rate base and the rate of return, and the total return on any given investment is a function of the allowable return over a period of time. Jersey Central has focused only on the “used and useful” method of rate base calculation *230with no attention to the rate of return, especially to the manner in which that return may arguably have already compensated its investors for the exclusion of the cancelled investment from the rate base. Without an explanation of the company’s historic allowed return, it is impossible to judge the reasonableness of the Commission’s treatment of the Forked River plant.

In Washington Gas Light, the case so heavily relied upon by the majority, this court upheld a departure from the “used and useful” method of rate base calculation to the “prudent investment” approach. However, before approving the application of that formulation to the abandoned plant in that case, we remanded for further proceedings by the Commission. Contrary to the majority’s explanation, we did not require findings concerning the “financial health” of the company. See Maj.Op. at 1177. A remand was necessary because Judge Bazelon realized that it was possible that the investors had already been compensated for the risk that the plant at issue would be abandoned. As Judge Bazelon observed, “[i]t seems likely ..., in view of the prevalence in the past of the doctrine that abandoned property would not be included in the rate base (regardless of whether [rate orders] had resulted in complete recovery to the investor), that investors had been compensated for the risk of obsolescence.” 188 F.2d at 20. Thus, it was possible that the rate of return allowed the company in earlier years — if properly calculated to reflect the risks of the utility business — would have compensated the company in advance for the risk that it would not obtain full rate base treatment of its investment later on. If the rate of return had Served that risk compensation function, allowing additional recovery by switching rate base formulations midstream would overcompensate the utility and exploit the consumers. Id. at 19-20.

Jersey Central has made no allegations regarding the prior treatment of the Forked River plant in its approved rate of return. Compare Testimony of Dennis Baldassari, J.A. at 35 (“[T]he rates of return allowed in previous regulatory proceedings were never intended to compensate the investor for the risk of exposure to the costs of decontaminating TMI-2.”). If Jersey Central has been compensated for the plant all along because its rate of return has historically been set in a world where one of the risks of being a utility is having an investment declared not to be “used and useful,” then FERC has probably fulfilled its obligations under Hope.

In sum, in order to obtain a Hope hearing, Jersey Central must show that, due to the Commission's actions, it is in need of protection at this phase of the ratemaking process. That showing is conspicuously missing. Without it, the court has no business calling upon the Commission to alter its ratemaking procedures and provide a hearing at this interim stage. Once again, a protective device — the Hope end result test — is being used as a first strike weapon.

B. Limits of a “Just and Reasonable” Rate

In that Jersey Central is not entitled to a Hope hearing, it would normally be thought unnecessary to consider what the utility would have to prove, were it granted a hearing, in order to establish that the Commission’s rates are confiscatory. The concurrence’s attempt to analyze the evidence presented, while thoughtful, is premature. Because of breadth of the majority’s opinion today, however, we are compelled to discuss the issue.

The real mischief of today’s decision lies not in the majority’s belief that the utility has raised an issue of fact necessitating a hearing, but in its determination that Jersey Central has actually made out a case of constitutional confiscation. As Justice Douglas remarked, “he who would upset the rate order under the Act carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.” Hope, 320 U.S. at 602, 64 S.Ct. at 288. The majority believes that Jersey Central can meet this burden. We simply cannot swal*231low the majority’s assertion that “it is probable that the facts alleged [by Jersey Central], if true, would establish an invasion of the company’s rights.” See Maj.Op. at 1169. In our view, it is beyond cavil that Jersey Central has not presented allegations which, if true, would establish that the Commission’s orders result in unjust and unreasonable rates.

Despite the majority’s seeming confidence, the precise contours of this required showing are unclear. The just and reasonable statutory standard is imprecise. As this court once explained, “the words themselves have no intrinsic meaning applicable alike to all situations.” City of Chicago v. FPC, 458 F.2d 731, 750 (D.C.Cir.1971) (quoting City of Detroit v. FPC, 230 F.2d 810, 815 (D.C.Cir.1955)), cert. denied, 405 U.S. 1074, 92 S.Ct. 1495, 31 L.Ed.2d 808 (1972). Congress itself has provided no formula for determining an unjust and unreasonable rate. Hope, 320 U.S. at 600, 64 S.Ct. at 286. Cases subsequent to Hope have loosely defined this “deliberately broad” standard as drawing a “zone of reasonableness in which rates may properly fall. It is bounded at one end by the investor interest against confiscation and at the other by the consumer interest against exorbitant rates.” See, e.g., Washington Gas Light, 188 F.2d at 15. Thus, the only way that a rate may fall outside the zone of reasonableness, from the utility’s point of view, is if it is so low that it amounts to a unconstitutional taking under the fifth amendment. See FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 586, 62 S.Ct. 736, 743, 86 L.Ed. 1037 (1942).

Ascertaining what constitutes a taking in the rate regulatory context is difficult, in part because there is no deprivation of typical property interests, the conceptual cornerstone of takings law. The Supreme Court has repeatedly stressed that price fixing does not effect an uncompensated taking merely because investors are denied their expected return. Indeed, even in traditionally competitive industries, “loss of future profits — unaccompanied by any physical property restrictions — provides a slender reed upon which to rest a takings claim.” Andrus v. Allard, 444 U.S. 51, 66, 100 S.Ct. 318, 327, 62 L.Ed.2d 210 (1979).

In Permian Basin, the Court restated the Hope doctrine as follows:

Price control is “unconstitutional ... if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt____” ¡Nonetheless, the just and reasonable standard of the Natural Gas Act “coincides” with the applicable constitutional standards, and any rate selected by the Commission from the broad zone of reasonableness cannot be attacked as confiscatory.

Accordingly, there can be no constitutional objection if the Commission, in its calculation of rates, takes fully into account the various interests which Congress has required it to reconcile.

390 U.S. at 769-70, 88 S.Ct. at 1361 (citations omitted).

Permian Basin teaches that if the Commission reasonably balances consumer and investor interests, then the resulting rate is not confiscatory. Id. at 770, 88 S.Ct. 1361. The separate opinion ably translates this into a working definition of a confiscatory rate: it exists when “an unreasonable balance has been struck in the regulation process so as unreasonably to favor ratepayer interests at the substantial expense of investor interests.” Sep.Op. at 1189. The majority appears to agree with the teaching of Permian Basin. See Maj.Op. at 1177-78. The lesson it gleans, however, is incongruous. According to the majority, balancing competing interests is not enough; a rate is confiscatory if it does not satisfy the “legitimate investor interest” outlined by the Court in Hope. Maj.Op. at 1177-78, 1180, 1181 n. 3, 1181-82 (insisting that the factors outlined in Hope describe a taking). This interpretation of Hope and Permian Basin is implausible.

The majority’s assessment of Jersey Central’s showing evinces a fundamental misunderstanding of the context in which the Hope Court discussed investor interests. It specified the interests at issue but did not require that rates fulfill them in order *232to be non-confiscatory. In Hope, the Court faced an assertion by the utility that the rates fixed by the Commission were so low as to be unjust and unreasonable. In testing this challenge, the Court essentially questioned whether the utility’s shareholders had anything to complain about. The Court examined what was “important” “from the investor or company point of view” and found that the rate at issue fully satisfied any legitimate investor interest. 320 U.S. at 603, 64 S.Ct. at 288. Accordingly, the Court held that the rate could not be condemned from the investor viewpoint. Id. at 64 S.Ct. at 288, 289. One year later, Justice Jackson, speaking for a unanimous Court, refuted the majority’s interpretation of the Court’s holding in Hope: “All that was held was that a company could not complain if the return which was allowed made it possible for the company to operate successfully.” Market Street, 324 U.S. at 566, 65 S.Ct. at 779. The Hope Court did not define “unjust or unreasonable”; nor did it articulate when a rate would be confiscatory. It certainly did not hold that the end result could be condemned if the investor criteria defined in the case were not fulfilled. Indeed, it expressly noted that its holding made no suggestion that more or less might not be allowed. 320 U.S. at 603, 64 S.Ct. at 288; see Market Street, 324 U.S. at 566, 65 S.Ct. at 779.

This understanding of Hope is the only way to reconcile the Court’s recitation of investor interests with its avowal that “regulation does not insure that the business shall produce net revenues.” See Hope, 320 U.S. at 603, 64 S.Ct. at 288 (quoting Natural Gas Pipeline, 315 U.S. at 590, 62 S.Ct. at 745). Investor interests are only one factor in the assessment of constitutionally reasonable, therefore non-confiscatory, rates. Permian Basin, 390 U.S. at 769, 88 S.Ct. at 1361. In any instance, the rate must also “provide appropriate protection to the relevant public interests, both existing and foreseeable.” Id. at 792, 88 S.Ct. at 1373. A just and reasonable rate which results from balancing these conflicting interests might not provide “enough revenue not only for operating expenses but also for the capital costs of the business ... including] service on the debt and dividends on the stock.” See Hope, 320 U.S. at 603, 64 S.Ct. at 288.

The Court made this abundantly clear in Market Street. The Commission rate order in Market Street was claimed to be confiscatory. 324 U.S. at 562, 65 S.Ct. at 777. Like Jersey Central, the complaining company asserted that Hope “entitled [it] to a return ‘sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital’ and to ‘enable the company to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed.’ ” Id. at 566, 65 S.Ct. at 779 (quoting Hope, 320 U.S. at 603, 605, 64 S.Ct. at 288, 289). The Court dismissed the argument out of hand. In approving a rate that concededly consigned the company to operating at a loss, the Court made clear that a just and reasonable rate might not satisfy the investor “considerations” expounded in Hope. At the very least, the Court revealed that the Hope test does not guarantee rates that are fixed to provide a return “on an investment after it has vanished, even if once prudently made, or to maintain the credit of a concern whose securities already are impaired.” Id. at 567, 65 S.Ct. at 780.

Neither the regulatory process nor the fifth amendment shelter a utility from market forces. See id. Thus, contrary to the majority’s intimations, rates do not fall outside the zone of reasonableness merely because they do not enable the company to operate at a profit or do not permit investors to recover all their losses.

The zone of reasonableness can be viewed as circumscribing the appropriate allocation of costs and benefits in the regulatory context. In an unregulated environment, the customer would not be deemed a risk-taker. He invests no capital in the enterprise and therefore bears neither the upside nor the downside risk. The investors are the risk-takers. Under price regulations, which affords the utility a “natural monopoly” on service, some of the risk at *233either end of the spectrum is shifted onto the ratepayer. The transfer, however, is not so dramatic as to relieve the stockholder of the entire risk of loss.

Application of this principle is readily apparent in the Commission’s current treatment of electric utility plants, investments prudent when made but sometimes frustrated in fruition. If the investment is successful, the customer benefits from controlled rates for the service provided. But the ratepayer also shares the costs if the investment fails; he must pay for the expenditure made on an unproductive facility from which he obtains no service. From the investor’s viewpoint, price regulation cabins both his upside and downside risk. He cannot collect the windfall benefits if the project is a boon; he does not bear all costs if the project is a bust. Electric utility stockholders do not lose equity in the non-serviceable facility, as they might in the marketplace. They simply do not procure a return on the investment.

The majority quibbles with this risk allocation; it would prefer a world in which the investor is guaranteed a return on his investment, if prudent when made. See Maj.Op. at 1180-81 & n. 2. Its resultant holding today is directly at odds with fundamental principles laid out in Hope and its progeny. Adherence to the majority’s insistance on the inclusion of prudent investments in the rate base would virtually insulate investors in public utilities from the risks involved in free market business. See Sep.Op. at 1190. This would drastically diminish protection of the public interest by thrusting the entire risk of a failed investment onto the ratepayers. See id. at 1190. Jersey Central and the majority would convert utility stockholders from risk-takers into annuity holders. See Excerpts from Jersey Central Brief, J.A. at 18 (analogizing its suggested “cost-sharing” to a levelized mortgage or annuity). Neither Hope nor the fifth amendment takings clause sanctions such radical results. Cf. Hope, 320 U.S. at 603, 64 S.Ct. at 288 (stating that the “return to the equity owner should be commensurate with returns on investments in other enterprises having corresponding risks”).

In any event, this court should not ordain the drastic risk shifting that Jersey Central advocates in its filing. The proper allocation of risk between shareholders and ratepayers is a serious ongoing question. See supra page 1202. It raises cross-cutting issues too broad to be ventilated in a single rate proceeding. “The importance of this issue ... transcends the impact on a single jurisdictional utility.” New England Power Co., 32 FERC (CCH) ¶ 61,453, at 62,042 (Sept. 30, 1985). The majority’s conclusion that the allocation reached by the Commission may be unconstitutional on the facts alleged has serious and troubling implications, especially for the twenty-five states that currently exclude cancelled facility expenses from a utility’s rate base.

IV. Hearing on the Altered Rate Filing

As we have indicated, the Commission reasonably applied its settled rate base filing rule to Jersey Central according to its established summary disposition procedures. Nothing in Jersey Central's allegations automatically entitled it to a hearing. The utility was entitled to, and was afforded, a hearing on its proposed rate of return on the conforming items in its rate base. Jersey Central nevertheless makes one additional complaint against the Commission. In its final challenge, Jersey Central objects to the Commission’s refusal to entertain the utility’s attempt to inflate the rate of return proffered in its initial filing. This is yet another move by Jersey Central designed to convince this court to endorse its skirting of valid agency procedures.

In rejecting Jersey Central’s plea, the Commission invoked its long-standing rule that “utilities may not present a ‘moving target’ by offering alternative justifications for previously filed rates.” 20 FERC (CCH) ¶ 61,108, at 61,182. As this court noted in its original opinion, this rule is not arbitrary. It is justified by the “administrative necessity of closing the books at a time certain,” as well as the need for a “mechanism to prevent utilities from delay*234ing refund orders by offering alternative justifications for the rate increases [they have] filed. FPC staff and intervenors cannot be expected to follow a moving target.” New England Power Co. v. FPC, No. 75-1379, slip op. at 3 (1st Cir. Nov. 13, 1975), cited in 20 FERC (CCH) ¶ 61,108, at 61,182.

The majority never questions the Commission’s authority to implement this rule. Rather, it questions the appropriateness of its application in Jersey Central’s case. The majority seems to believe that the Commission’s refusal to grant a hearing on the higher rate of return stripped petitioner of any chance to plead its case and obtain the rates it desired. Despite the majority’s protestations to the contrary, Jersey Central had sufficient opportunities to seek the revenues it requested. We are therefore unpersuaded by the utility’s contention that it was denied a fair hearing.

As noted at the outset, the utility had at least two separate opportunities to raise its concerns and to request the full rate increase anticipated by its rejected filing. Either approach would have raised an issue of fact, precluding summary disposition. First, Jersey Central could have filed initially for a higher rate of return on its used and useful property, or for a shorter amortization period on its Forked River investment. Because a shorter amortization period would allow the utility to recover its investment sooner, it would have had the same effect of increasing total return as did Jersey Central’s attempt, flatly contradicted by the clear precedent in NEPCO and later cases, to increase the size of the rate base. Indeed, Jersey Central concedes this point. If the utility had followed NEP-CO, and supported its proposed rate increase by filing for amortization of its investment in cancelled projects over five years instead of fifteen, rates higher than those it initially proposed would have been justified.

Second, Jersey Central could have made the same requests by refiling its rates, using a proper rate base. This new filing, of course, could not have stood alone without supporting exhibits and affidavits. As the Commission observed, “the company’s [initial] case-in-chief did not include testimony seeking to support a return other than 19% based on any alternative scenario of events, including summary disposition of rate base items.” 20 FERC (CCH) ¶ 61,-108, at 61,182. In order to recover a higher return, petitioner would be required to offer cost and market data at the time of their filing that would support that rate of return. See 18 C.F.R. § 35.13(e) (1986) (testimony and exhibits supporting filing of changes in rate schedules).

Where the majority reads “in the [rehearing denial] order [that] the Commission made it clear a fresh filing would be futile” escapes comprehension. See Maj.Op. at 1187. The utility certainly did not get that message. The following exchange from en banc oral argument amplifies Jersey Central's recognition that it was free to submit a new rate filing and thereby obtain a hearing:

COURT: But you could have put in a new filing, couldn’t you?

COUNSEL: We could have, sir, but

COURT: At any time, even now?

COUNSEL: [W]e could but we believed then and we believe today that that precedent was wrong and we would not have had an opportunity to—

COURT: That is really what I wanted to clear up. Your concern really is you strongly disagree with the NEPCO precedent—

COUNSEL: Yes, we do, sir.

COURT: —I understand that, but as far as you are concerned the use of the useful rule as applied in NEPCO is a bad idea and you would like this Court to change its mind.

COUNSEL: Yes, sir, no question about it.

Tr. at 8.

As an alternative to submitting a different rate filing, Jersey Central could have asked for an individualized exemption from the NEPCO rule. The Commission’s filing requirements provide that “[i]f any filing does not comply with any applicable stat*235ute, rule, or order, the filing may be rejected, unless the filing is accompanied by a motion requesting a waiver of the applicable requirement of a rule or order and the motion is granted.” 18 C.F.R. § 385.-2001(b)(1) (1986). By providing this waiver process, the Commission exercises its inherent power to relax, modify, or waive its filing requirements. See Papago Tribal Utility Authority, 628 F.2d at 247; Municipal Electric Utility Association v. Federal Power Commission, 485 F.2d 967, 975 n. 28 (D.C.Cir.1973). Jersey Central did not move for such an exemption.

As its responses at oral argument illustrate, Jersey Central declined these multiple opportunities because it wanted to challenge the NEPCO rule directly, and none of the permissible options allowed it to do so. The hearing it would have obtained had it made a new filing would not have enabled it to address the NEPCO doctrine; nor would the filing of a complying tariff in the first instance have provided that vantage. Similarly, merely asking for an exemption would in no way threaten the viability of the doctrine. The majority demonstrates that such a “characterization” of the utility’s filings would be “an unreasonable one,” Maj.Op. at 1185, but no characterization is necessary. Jersey Central plainly stated its purpose and acted upon it.

Jersey Central could have sought review of what it perceives as an unsound rule without trampling on the Commission’s filing policies and procedures and without asking this court to become involved. It could have petitioned the Commission for a rulemaking. NEPCO took this approach in its 1985 submission for filing of a proposed rate increase. See New England Power Co., 32 FERC (CCH) ¶ 61,454 (Sept. 30, 1985) (Phase II). NEPCO “requested] that the Commission reexamine its policy regarding the treatment of the costs of cancelled plant.” Id. at 62,042 (citing NEPCO). Unlike Jersey Central, however, NEPCO did not factor its suggested treatment of abandoned plants into the rates it proposed; rather, it sought only a prospective change in the policy. Id. at 62,043 n. 5. In this way, the Commission was able to begin reexamining NEPCO “as well as the economic and legal underpinnings for a cancelled plant policy” in the rulemaking context. Id. at 62,042; see also Pennsylvania Electric Co., 34 FERC (CCH) ¶ 61,141, 61,244 n. 8 (Feb. 4, 1986) (“[A]ny change in Commission policy would be prospective only, and utilities are required to adhere to the precedent established in [NEPCO ] pending reconsideration of our policy.”); New England Power Co., 35 FERC (CCH) ¶ 61,353 (June 18, 1986) (denying motion to limit generic scope of NEPCO Phase II hearing).

In light of these opportunities, deliberately avoided, we cannot question the reasonableness of the Commission’s application of its rule against presenting a “moving target.” Of course, we do not suggest that an agency may implement any policy through;any procedure, no matter how unreasonable, and compel the applicant to adhere to them in order to preserve its right to seek relief from the agency. We find only that the Commission acted validly in requiring Jersey Central to follow reasonable policy and filing requirements. The measure of their reasonableness is that they afforded Jersey Central ample opportunity to contend that, taking its balance sheet and troubled history of investments into account, the total return it requested was just and reasonable. They also provided the company with a platform for advocating the discontinued application of the used and useful doctrine to cancelled electric utility facilities. Given these opportunities, Jersey Central cannot seek from this court the relief and the individualized attention to its financial plight that it could have obtained from the Commission.

Conclusion

This is a case of modest proportions about one segment of the sweeping rate-making responsibilities that Congress has entrusted to the Commission. Like all arms of the government, the agency must abide by its statutes and by the constitutional prohibition against taking property *236without due process of law. But the due process claims of a regulated utility are not coupons which can be exchanged for a hearing at a time, place, and manner of the utility's choosing. Such an approach would wreak havoc with the agency’s ability to administer a complex rate regulation system that must assess many rate filings annually.

There may indeed be times when the Commission is not free to employ the used and useful principle in a summary fashion. However, Jersey Central has not made the case for its exception. Its allegations do not raise a question of fact sufficient to trigger a Hope hearing before application of well-settled, court-approved ratemaking procedure and policy. The concerns about financial integrity and investor return that Jersey Central held in reserve for a hearing challenging the NEPCO rule should have been raised by following the Commission’s established rules and procedures. We express no view on substantive rate-base requirements that may come before this court in another case; we find only that on these facts the Commission was not obligated to hold a hearing before entering its interim rate-reducing order. The Commission’s administrative processes offered ample opportunities for Jersey Central to request and present supporting evidence for whichever rate of return and amortization period the utility deemed necessary to preserve its financial integrity, and to seek review of the NEPCO doctrine. Jersey Central chose not to avail itself of these opportunities, and now cries foul.

There is, in the end, only one reason that Jersey Central wants its hearing before the unamortized portion of its unproductive investment is excluded from the rate base. That timing is the only means it perceives as enabling it both to launch its frontal attack on the Commission's NEPCO doctrine and to immediately reap the rewards of any victory in the battle. The majority’s sympathy for Jersey Central appears driven by its agreement that the used and useful doctrine is outdated and should be replaced with a pure prudent investment approach. See Maj.Op. at 1175, 1180-81 & n. 2. By granting a hearing to Jersey Central at this stage of the long and complex ratemaking process, the majority provides the utility a forum in which to argue its causes. But it also interferes with the Commission’s discretion in implementing ratemaking policies and procedures. It thereby threatens the well-held maxim that the Commission is “not bound to use any single formula or combination of formulae in determining rates.” See Hope, 320 U.S. at 602, 64 S.Ct. at 287.

In an era of heightened deference to administrative decisions and procedures, this court especially ought to be sensitive to the line between legitimate judicial review and judicial substitutions for agency processes. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d'694 (1984); Vermont Yankee, supra. The majority has reordered the very filing procedures that FERC may prescribe, has redirected the kinds of hearings in which FERC may consider changes in its policies and, worst of all, has thrust the courts back into the very complicated forest of making the rates that regulated industries may charge. We ignore at our peril the hard-learned lessons of restraint expressed by the Supreme Court in Natural Gas Pipeline and Hope. The majority would have us relive that painful period.