have a twenty first century electrical system twentieth century regulation what i mean by twentieth century very well i think that paradigm utility would spend money first and then come to the i c c to make its case that it's entitle to recover those expenditures rates but the needs of the electrical system in illinois have come so great that that model is no longer tracked it's simply too risky for illinois utilities to spend hundreds of millions if not billions of dollars in create certain number of jobs in the described form and standards and do all of the other things that they're supposed to do under a formula raise then they are entitled under the bill under the law to recover their actual cost of delivery performance rates they don't if an actual cost is imprudent or and reasonable the commission can still disallow that cost just like it always happens so for example turning in to receive for a ferrari he can pass that cost along to a great horse those aren't the types of costs talked about this case so eric is not claiming that the commission has no authority under formula rates to rea that's not what was sam our position is simply that the formula rate lied to rex the commission to address certain costs in a certain way that commission cannot address those costs differently i'm grounds that it thinks its treatment  compensated for their expenses but we look at her and says the issue on the actual capital structure issue you have this language that says that they have to do this subject to the determination  to the extent it does not conflict with this act so the formula rate law by its express terms trumps prior law to the extent there's any a consistency and i went out on the capital structure show repeated instances of the commission inventing impunity in the form of rape where it doesn't exist and then resolving the idea of the do it to fit its own preferences the commission orders and facts straight so far out of bounds the return authorized still since equity financing is more expensive that a greater percentage of actually the capital structure will lead to greater terms so by reducing amorous capital structure from roughly fifty four percent equity to fifty one percent equity the commission took away millions of dollars from eric in the initial case twelve zero zero zero a windy and act was about three point two billion and a little over four million in the update so this is this is real money talks and again section sixteen want to wait point five c requires formula rates to reflect to quote reflect the utilities actual capital structure affirmative obligation in the form of the rape law that tilly has to make some demonstration of reasonableness other than what demonstrates what its actual capital commission made a finding that the commission finds the company's actual capital structure is unreasonable or imprudent if they make that finding they can change the the problem here is that they didn't make that finding the finding they may is frankly bizarre in its own right where the commission basically assange well rather than paraphrase it  individually the concerns raised by staff are insufficient to win the day but tuman to leave the commission is persuaded that status imputed capital structure is appropriate there simply is no finding here that  actual capital structure is inappropriate imprudent wrong whatever adjective you want to use and certainly if that were the case and its mission factor was evidence of impropriety in th capital structure that ought to be communicated to you till you so it can conform its conduct in america's system with expectations none of that was done here were just went with the commission saying we've considered this eventually the arguments don't persuade us but apparently if there are enough bad arguments those will add up to a good argument so we will agree a step that's essentially what the mission  results from those appellate court cases to obtain a formula rates that it could've sent so it did so it was aware of the issue especially provided two of the adjustments but not the third issue private commission isn't bound by stirred sizes that well it's not your honor but i think those cases also say that where the commission are from its practices should articulate some ground and it did benefits are earned throughout the year the account increases and then there is a pot of money for the employee to go on vacation and then the company gives the money to the employee and it's just not how it works employees are continuously earning vacation they're continuously taking vacation there are governors in credits and are in the books and records of company the act of writing down what setting up to take my kids to disney world results in a pot of money for us to go on these are really accounting entries there is a pot of cash that was let me just unnecessary and therefore unlawful the commission's expertise and its actual experience implementing this law led the commission to the opposite of the determinations were required explicitly listed in the statute in addition under the formula rate law rates must recover amerinds actual proof and reasonable rate base costs and reflect its actual capital  of cap under article nine specifically section nine to eleven a utility straight base is limited to the value of investment that is prudently incurred and actually used to provide service it's at all costs which excludes capital not invested by the utility thus the a t t adjustment is required both under the new formula rate and under the old article nine rate making every incorrectly the significance of a less than comprehensive list has as been the subject of a number and with respect to that this court has held quote the force of the  capital structure issue but all the orders and review rejected the equity component claimed by amarin in this capital structure old rejections are based on evidence in the first case and won both cases it's commission adopted staff's evidence and it dechen be seen there then page one twenty eight of the original order it said the commission by its myriad of staff's arguments in the reconciliation case unpaid want to wait they that caught in the first case step on page one hundred forty order said it was not the capital structure and yet the component was not proven a reasonable but the time the annual reconciliation case the first case comes they a provision of the station to change how capital structure is required to be done by the commission prior to nine hundred thirty the commission usually accepted the the structure shown company it's holding company course has many other subsidiaries many of which are in competitive markets which usually require more equity that is the theory about the level that would be that a company needs more equity if you're in competition for one that's good enough and that isn't good in the first case of the said that they needed an equity range between forty five and fifty five percent in order to piece the stock the stock market and the ratings organizations and the reconciliation case and the other orders where we don't know how they can raise this issue in the first place because the statute sixty eight sixteen want to wait twenty five to one specifically provided the first such reconciliation is not intended to provide for recovery costs previously excluded from rates based on a prior commission order finding purpose or reason with us the vacation pay was exploded in the original formulates setting and we came back and asked for it again on the commission  look at the relatives we did but they didn't explain how to get around the fact that they weren't supposed to be changing the formula on the first reconciliation council talks about certainty well that was part of the certainty is that is that after your first decision legislature open house in the senate passed resolutions say no we know what we would say in the express their will to us we don't ignore they will go back every year for a shit you don't tell legislators right but nonetheless isn't the same as passing amendment or you wal if it varied no more than two hundred fifteen thousand dollars a month so the company has this money sitting to you for use and isn't it committed to their application is a bit crude vacation of the employees well yes but if they would case the company itself posed twenty million dollars to raise the commission decreased rates by fifty million dollars and three months later in the update case the commission reduced revenues by another fifty million dollars were in an update case now there's no work out but parties are proposing reductions of forty to fifty million dollars ok so to say that the commission has no role or we're taking the position of mission has no role in the process that you know expertise to offer that just isn't the case it's not a lie by fa with respect to the capital structure issue i think that her counsel basically said that the commission for certain it was implied that the commission has basically ignored the legislative presumption that the actual capital structure structure as an equity component that exceeds its parent there is automatically something untoward in that and now you really have the burden to show us on what they want us to show is sort of like trying to explain the