Used in determining the total cost of Magicka required to cast a spell. If the CS indicates a cost of X for a spell, you can use the following formula to determine what the cost will be ingame based on the appropriate skill:
Where BaseCost is the BaseCost to cast the spell as indicated by the spell (not the spell effects) in the CS.
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modifier = ( 1 - skill/100 ) * fMagicCasterSkillCostMult + fMagicCasterSkillCostBase
effect cost = raw effect cost * modifier
(raw effect cost is the base cost of the effect modified by the effect's area, duration, magnitude, and whether or not it's a target spell. I didn't want to call it "base cost" here because that's the value you see for an effect in the Magic Effects window).
For a spell with multiple effects, this is calculated for each effect and added up to arrive at the total cost, unless the spell has the cost overridden in the editor, in which case the overridden cost is multiplied for the modifier and the skill is that for the dominant effect of the spell.
Also, luck will modify the skill somewhat before it's plugged into the formula (the game should be set up so that luck=50 will have no effect).