Cite as: 535 U. S. 467 (2002)
Syllabus
the technical realm, the incumbents are still unconvincing. "Cost" as used in calculating the rate base under the traditional cost-of-service method did not stand for all past capital expenditures, but at most for those that were prudent, while prudent investment itself could be denied recovery when unexpected events rendered investment useless. Duquesne Light Co. v. Barasch, 488 U. S. 299, 312. And even when investment was wholly includable in the rate base, ratemakers often rejected the utilities' "embedded costs," their own book-value estimates, which typically were geared to maximize the rate base with high statements of past expenditures and working capital, combined with unduly low depreciation rates. See, e. g., Hope Natural Gas Co., supra, at 597-598. Equally important, the incumbents' plain-meaning argument ignores the statutory setting in which the mandate to use "cost" in valuing network elements occurs. First, the Act uses "cost" as an intermediate term in the calculation of "just and reasonable rates," § 252(d)(1), and it was the very point of Hope Natural Gas that regulatory bodies required to set rates expressed in these terms have ample discretion to choose methodology, 320 U. S., at 602. Second, it would be strange to think Congress tied "cost" to historical cost without a more specific indication, when the very same sentence that requires "cost" pricing also prohibits any reference to a "rate-of-return or other rate-based proceeding," § 252(d)(1), each of which has been identified with historical cost ever since Hope Natural Gas was decided. Without any better indication of meaning than the unadorned term, the word "cost" in § 252(d)(1) gives ratesetting commissions broad methodological leeway, but says little about the method to be employed. Iowa Utilities Bd., supra, at 423. Pp. 497-501.
(B) Also rejected is the incumbents' alternative argument that, because TELRIC calculates the forward-looking cost by reference to a hypothetical, most efficient element at existing wire centers, not the actual network element being provided, the FCC's particular methodology is neither consistent with § 252(d)(1)'s plain language nor within the zone of reasonable interpretation subject to Chevron deference. Pp. 501-522.
(1) The term "cost" is simply too protean to support the incumbents' argument that plain language bars a definition of "cost" untethered to historical investment. What the incumbents call the "hypothetical" element is simply the element valued in terms of a piece of equipment an incumbent may not own. P. 501.
(2) Similarly, the claim that TELRIC exceeds reasonable interpretative leeway is open to the objection that responsibility for "just and reasonable" rates leaves methodology largely subject to discretion. E. g., Permian Basin Area Rate Cases, 390 U. S. 747, 790.
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