Contract analysis

I. Executive Summary The purpose of this memorandum is to set forth a comprehensive regulatory strategy for the proceeding initiated today, May 12, 2022, before the Federal Energy Regulatory Commission ("FERC" or the "Commission") on behalf of Ridgeline Midstream Services LLC ("Ridgeline" or the "Applicant"). In the application filed today, Ridgeline seeks (a) approval of an initial tariff rate for interstate natural

1. Obtain FERC approval of an initial recourse rate of $0.2265/Dth for open-access firm and interruptible transportation service on the Ridgeline Pipeline System;

2. Secure interconnection authorization at the Wetzel County Interconnect with ATPC, including approval of the interconnection facilities and associated cost allocation;

3. Protect Ridgeline's rate base of $612.40 million, which reflects the original construction cost of the System, adjusted for accumulated depreciation, working capital, accumulated deferred income taxes, and other standard rate base items; and

4. Achieve a favorable cost allocation for the $22.3 million in interconnection facilities between Ridgeline and ATPC, with Ridgeline's proposed allocation placing 34.1% of costs on Ridgeline ($7.6 million) and 65.9% on ATPC ($14.7 million). At the outset of this memorandum, we note the dual role of Patricia Dunmore in this engagement. Ms. Dunmore serves as Chairperson and 72% controlling shareholder of DEH, the pare

II. Client and System Overview A. Dunmore Energy Holdings Ltd. Dunmore Energy Holdings Ltd. ("DEH") is a Cayman Islands exempted limited company, registered and existing under the laws of the Cayman Islands. DEH's registered address is 4th Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1002, Cayman Islands. The company was founded by Patricia Dunmore and serves as a strategic private ene

III. Regulatory Framework and Legal Authority A. Natural Gas Act Provisions The proceeding initiated today implicates three core provisions of the Natural Gas Act, each of which plays a distinct but interrelated role in the regulatory framework governing Ridgeline's application.

Section 4 — Rate Authority (15 U.S.C. § 717c). Section 4 of the NGA provides the statutory authority for Ridgeline's initial rate filing. Under Section 4, a natural gas company may file with the Commission "schedules showing all rates and charges for any transportation or sale subject to the jurisdiction of the Commission." Section 4(e) of the NGA establishes the foundational standard that "all rates and charges . .

Section 5 — Commission Investigation Authority (15 U.S.C. § 717d). Section 5 of the NGA provides the Commission with independent authority to investigate rates and, upon a finding that existing rates are unjust, unreasonable, or unduly discriminatory, to determine and fix just and reasonable rates. Although Ridgeline's filing is made under Section 4, Section 5 remains relevant for two reasons. First, if the Commissio

Section 7 — Certificate Authorization (15 U.S.C. § 717f). Section 7 of the NGA governs the issuance of certificates of public convenience and necessity for the construction, extension, acquisition, or operation of natural gas facilities. Section 7 is directly relevant to the interconnection component of this proceeding (Docket No. RP22-847-001), as the proposed Wetzel County Interconnect constitutes new natural gas f

IV. Filing Strategy A. Rate Case (Docket No. RP22-847-000)

1. Cost-of-Service Methodology Ridgeline's rate filing follows the traditional cost-of-service methodology prescribed by FERC under 18 C.F.R. Part 154. Under this methodology, the pipeline's total cost of service — comprising return on rate base, depreciation, operating expenses, taxes, and revenue credits — is divided by the applicable billing determinants to derive the proposed unit rate. The cost of service is bas

2. Capital Structure and Return Ridgeline's proposed capital structure and rate of return are summarized as follows: The proposed capital structure of 55% equity and 45% debt reflects the actual capital structure of Ridgeline, based on DEH's equity contribution and the outstanding debt under Ridgeline's Senior Secured Credit Facility and Second Lien Notes. The cost of debt of 5.25% represents the weighted average cos

3. Cost-of-Service Components The total cost of service, which represents the revenue requirement that Ridgeline must recover through its tariff rates, is composed of the following elements: Depreciation expense of $14.68 million reflects annual straight-line depreciation at a rate of 2.5% applied to gross plant in service. The 2.5% depreciation rate implies a 40-year useful life for the pipeline system, which is con

4. Rate Design Ridgeline's proposed tariff is structured as a Part 284, Subpart G, open-access transportation tariff, designated as FERC Gas Tariff, Original Volume No. 1. The tariff provides for two principal rate schedules: • Rate Schedule FT-1 (Firm Transportation): Provides for firm transportation service under long-term and short-term contracts. Firm transportation service is subject to a two-part rate consistin

5. Testimony Plan Ridgeline plans to present direct testimony from seven witnesses in support of its rate filing. The filing of direct testimony is targeted for approximately November–December 2022, consistent with the anticipated procedural schedule. The planned testimony assignments are as follows:

1. James K. Winfield, CEO & President — Mr. Winfield will provide policy testimony addressing the need for service on the Ridgeline Pipeline System, the public interest benefits of the System, Ridgeline's corporate structure and management, and the overall reasonableness of the proposed rate and tariff.

2. Angela Moretti, VP Finance & Treasurer — Ms. Moretti will present the detailed cost-of-service analysis, including rate base calculations, capital structure, cost of debt, depreciation, O&M and A&G expenses, taxes, and revenue credits. Ms. Moretti will also address the financial condition of Ridgeline and its ability to provide reliable service.

3. Thomas Greaves, VP Engineering & Operations — Mr. Greaves will provide engineering testimony addressing the design, construction, and operational characteristics of the Ridgeline Pipeline System, including the pipeline itself, the three compressor stations, the metering and SCADA systems, and the proposed interconnection facilities at the Wetzel County Interconnect.

4. Dr. Natasha Orlov, Director of Rates & Regulatory — Dr. Orlov will present the rate design testimony, addressing the derivation of the proposed recourse rate from the cost of service, the structure of the two-part rate, the load factor assumptions, the tariff provisions (including the General Terms and Conditions), and the compliance of the tariff with Commission regulations and open-access requirements.

5. Dr. Raymond Braswell (outside expert, Braswell Energy Consulting Group LLC) — Dr. Braswell will present expert testimony on the proposed return on equity and capital structure. His testimony will include a detailed DCF proxy group analysis, a discussion of alternative ROE methodologies (including capital asset pricing model and risk premium approaches), and an assessment of project-specific risk factors that justi

6. Two additional Ridgeline witnesses (to be confirmed) — These witnesses will address operational and market topics, including throughput projections, shipper demand, market conditions in the Appalachian Basin, and competitive alternatives. The identity and specific testimony assignments for these witnesses will be confirmed as the pre-hearing phase progresses. All testimony will be prepared in accordance with FERC'

1. Proposed Interconnection The interconnection application seeks authorization for the construction and operation of new interconnection facilities at the Wetzel County Interconnect, where Ridgeline's System will physically tie into ATPC's existing 30-inch mainline. The proposed interconnection is located at Milepost 0.0 of the Ridgeline Pipeline System (equivalent to ATPC Milepost 412.6 on ATPC's mainline), in Wetz

2. Interconnection Facilities The total estimated cost of the interconnection facilities is $22.3 million. This cost encompasses the meter station, pig launcher/receiver, associated piping and valves, metering equipment, SCADA integration, site preparation, civil works, and engineering and project management costs. The proposed cost allocation between Ridgeline and ATPC is as follows: Ridgeline's proposed cost alloca

3. Interconnection Agreement A draft Interconnection Agreement will be prepared by Calderwood & Harkness and filed as an exhibit to the interconnection application. The Interconnection Agreement is intended to serve as the governing document for the operational and commercial relationship between Ridgeline and ATPC at the Wetzel County Interconnect. The draft agreement will address the following key topics: • Meterin

V. Anticipated Parties and Their Positions A. Appalachian Trunk Pipeline Company, LLC (ATPC) Appalachian Trunk Pipeline Company, LLC ("ATPC") is a limited liability company organized under the laws of the Commonwealth of Pennsylvania. ATPC's Employer Identification Number is 25-1987643 and its FERC Code is 840117. ATPC's principal office is located at 2200 Penn Center West, Suite 300, Pittsburgh, Pennsylvania 15276.

VI. Anticipated Procedural Timeline The following timeline reflects our best assessment of the anticipated procedural milestones in this proceeding, based on current FERC practice and the complexity of the issues presented. We caution that procedural schedules in FERC rate cases are subject to extension, modification, and delay, and the actual schedule may differ materially from these estimates. We will update this t