# Volume 3 — Schedules D-1.1 through D-7 (Doc. 47, Vol. 3) 72 pages. Cost of Capital. Schedules D-1.1, D-1.2, D-1.3, D-2.1–D-2.3, D-3.1–D-3.3, D-4, D-5.1–D-5.3, D-6.1–D-6.3, D-7. The basis for the 9.90% ROE ask and the capital structure proposed. ## Key takeaways - Schedule D-1.1 (per-books cost of capital, historical test year) is not required for a partially projected test year and is blank. - Schedule D-1.2 (cost of capital, projected test year) shows the capital-structure components: - Long-Term Debt: $4,911,038,918 at the projected test year (per books $4,907,793,866 + adjustments) - Common Equity: $4,591,828,866 — **rate 9.90%** - Accumulated Deferred Income Taxes: $2,133,522,826 — 0.00% - Post-1970 ADITC: $24,133,475 — 7.10% - Customer Deposits: $130,741,686 — 2.15% - **Short-Term/Interim Debt: $5,498,734 — 4.06%** (the AG-contested item — see below) - Other Capital Items: $221,996,655 — 4.23% - Total projected capital: $16,842,672,017 - The Schedule D-2.2 (cost of long-term debt) and D-5.2 series build up the individual rate components. ### The cost-of-debt question The AG's challenge in the [[Attorney General Testimony on the GAJA Rider|GAJA Rider docket]] — and the Commission's pre-hearing directive in [[Order No. 5 Pre-Hearing Issues|Order No. 5]] of 26-008-TF — focuses on the **short-term debt balance**, here $5,498,734 (which Ark. Code Ann. § 23-4-1304(m)(1)(D) ties to the most recent rate-case or FRP filing). The AG argues this balance is unreasonably low, overstating the return on the $1.24B CWIP. The Commission asked the parties to reconcile this number against the 2025 Formula Rate Plan Compliance Filing in Docket 16-036-FR. ## People and orgs mentioned - [[Entergy Arkansas]] ## Concepts invoked - [[Cost-of-service study]] — cost of capital is the rate-base return component - Cost of debt under § 23-4-1304(m)(1)(D) - Formula Rate Plan (Docket 16-036-FR) ## Cross-references - The 9.90% ROE is itself below witness [[Matthew S. Klucher|McKenzie]]'s recommendation per [[26-001-U Doc 47 Volume 1 Application and Schedules A-B|the Application]] (Item 1). Witness page for Adrien McKenzie not yet anchored. - The cost-of-debt reconciliation is also at issue in [[Order No. 5 Pre-Hearing Issues|the GAJA Rider docket]].