The Public Utilities Regulatory Authority continued its evidentiary hearing in docket 25-07-12, taking testimony and ordering follow-up filings on several technical but consequential issues raised by Authority staff and intervenors.

Authority staff opened cross-examination of the company’s cost-of-capital witnesses with detailed questions about the calculation of the company’s embedded long-term debt cost. Jonathan Norton of PURA asked the company to reconcile its testimony that the embedded cost is 3.96% with lower interest rates shown on Schedule D‑1. Norton also pressed the company on whether an interest-rate swap tied to a $2.5 million construction loan was accounted for in that calculation and, if not, asked for a late-file calculation “that shows the embedded cost of debt for the construction loan that includes the effects of the interest swap agreement” dating from loan commencement (late-file request LFE 24).

Company witnesses agreed the swap reduces the net interest the company pays on the loan and that the firm will provide the requested calculations and supporting amortization schedules. Chair Weil and staff also directed the company to file finalized loan terms and swap documentation for its long-term financings (LFE 25) and to update existing tables to show expected average carrying loan balances and expected interest owed or received for the pro forma year (LFE 26).

The panel also examined the company’s planned near-term financing. Staff identified a projected construction loan of about $3,931,277 and noted the company’s exhibit showing that, if that financing is secured, the pro forma equity ratio would move to about 43.45%. Company witnesses said the financing is targeted for early 2026 and that the firm does not plan to use the new proceeds to retire existing long-term debt.

PURA staff and OCC asked the company to justify the variable performance adder the company has requested to its proposed return on equity. The authority asked for examples of “exemplary performance” that would support a 50‑basis‑point adder and asked the company to file a narrative explanation and supporting examples (LFE 28).

On the O&M side, staff probed large proposed increases in chemical and other operating costs, questioned several apparent misclassifications (for example, pounds vs gallons in chemical worksheets), and ordered the company to provide invoices and unit-price histories for treatment chemicals back to the last rate case (LFE 35 and read-in S referencing RU96/RU127). Staff also requested supporting invoices for contract services (Deep) and the current lease between the company and Illinois Real Estate, a related-party owner of the office building, which the company said it would produce as a read-in.

Staff and OCC asked detailed questions about payroll, director fees, profit-sharing and board composition after discovering discrepancies between payroll schedules and company reconciliations. The company agreed to correct an identified $1,400 overtime coding error and to make related pro forma adjustments (to be filed as LFE 1) and to provide reconciliations keyed to interrogatory responses (LFE 39).

At multiple points the panel ordered read-ins and late‑file exhibits so that parties could review supporting papers and permit focused follow-up cross-examination. The Authority scheduled further submissions and set the next in-person continuation of the hearing for Thursday at 10:00 a.m.

Why it matters: the late-filed calculations and loan documents staff requested will affect the company’s claimed cost of debt and pro forma interest expense, the capital-structure mix used to set the cost of capital, and—ultimately—the rates charged to customers. PURA’s orders for granular invoices and reconciliations also reflect staff scrutiny of operating expense increases and related-party transactions.

The hearing record remains open for the many ordered submissions and for additional questioning once those documents are in the record.