# Google SRC Order No. 6 — Commission Questions on the CIAC Classification **The single most substantively important order in this docket.** The Commission, citing Ark. Code Ann. § 23-4-1304(x)(1) and (2) — the GAJA Act's Contribution-in-Aid-of-Construction (CIAC) provisions — directs EAL and Staff to file Supplemental Testimony answering pointed questions on whether Google's "second category of payments" should be classified as CIAC (immediately reducing Cypress Solar's rate base by the contribution amount) or as "other form of payment" (recognized as offset revenue over Cypress's life). ## Key takeaways ### The statutory framework cited **Ark. Code Ann. § 23-4-1304(x)(1):** "If a customer pays or multiple customers pay for a portion of any strategic investments through a contribution in aid of construction or through other form of payment, the strategic investments shall continue to be considered strategic investments and classified as part of the investor-owned electric utility's or the investor-owned natural gas utility's retail assets and recoverable through investor-owned electric utility's or the investor-owned natural gas utility's retail rates..." **(x)(2)(A):** "A payment by a customer or customers for any portion of any strategic investments through a contribution in aid of construction shall be **deducted from the cost of the strategic investments capitalized and recovered through rates**." **(x)(2)(B):** "A payment by a customer or customers through any other forms of payment shall be recorded for ratemaking purposes, when the strategic investments are first included in rates and shall be recognized as payment **over a period not to exceed the life of the strategic investments**, in a manner that provides comparable benefits for other customers over the life of the strategic investments." ### The Commission's pointed questions 1. **Question 1**: How is Stipulation (b) (deferral of certain Google payments to a regulatory liability) compliant with § 23-4-1304(x)(2)(A)? - **1(a)** Hunt testifies that Google's "second category of payments" is NOT a CIAC but rather "payments for electric service that... exceed the rates Google would otherwise pay under the Large General Service rate schedule during its ramp period." **"How can these payments be considered 'for electric service' before Google's West Memphis data center is constructed and in service?"** - **1(b)** Even if Google's payments exceed revenue requirements, doesn't this "inure to the benefit of EAL's current customers by offsetting increasing rates in the near term as a result of other strategic investments expected to be recovered through EAL's GAJA Rider, as well as EAL's Formula Rate Plan Rider (Rider FRP) and base rate increases expected in 2026 and 2027, respectively?" - **1(c)** Are customer benefits more immediate / certain via Rider FRP than via the GAJA Rider given Rider FRP's 4% cap? - **1(d)** "Why should the transmission capital investment needed to serve Google be considered a CIAC while the generation capital investment needed to serve Google should not be considered a CIAC?" — **the central question**. - **1(e)** "Distinguish a payment to 'financially support the development' of a project from a contribution in aid of the construction of a project?" - **1(f)** If the Commission determines the payments ARE a CIAC, do the parties agree the ratemaking treatment is to deduct from Cypress costs recovered through the GAJA Rider? 2. **Question 2**: Explain Stipulation (d) compliance with § 23-4-1304(x)(2)(B) timing. 3. **Question 3**: Eight additional RIM Test sensitivities directed: - Maximum Contract Demand × with/without ITCs — using revenue requirements from EAL Direct Exhibit ALM-1 in 25-054-U Doc 78 (HSPI). - Minimum Bill Demand × with/without ITCs — same source. - Each of the above × CIAC-10yr-amortization vs other-form-amortize-over-life of Cypress. - Plus a narrative on how the termination-fee provision affects each sensitivity. 4. **Question 4**: **"Please describe the analysis conducted by EAL to determine the percentage of Google's data center load to be served by Cypress Solar?"** — the precise load-allocation question the Commission wants nailed down. ### Why this order matters The CIAC classification is the **mechanism by which the "$1.7B savings" claim is operationalized**: - If Google's payments are CIAC → Cypress Solar's rate base is reduced immediately by Google's contribution, and the GAJA Rider charges other customers a smaller amount. - If Google's payments are "other form of payment" → Cypress Solar's full cost stays in rate base / GAJA Rider, and Google's offsetting revenue is recognized over Cypress's useful life (decades). The two treatments are mathematically equivalent in present value if the discount rate equals the regulatory return — but the rate impact on other customers in any given year is very different. EAL and Staff's stipulation prefers the "other form" approach (per Hunt's testimony), which keeps Cypress's nominal rate base larger and gives all customers a smaller annual offset benefit. The Commission's challenge tests whether that approach actually satisfies the statute. Supplemental Testimony was directed for 2025-11-10. ## Cross-references See the [[psc/docket-25-055-p-special-contract-2026-05-22/_overview|Docket 25-055-P production overview]] for context.