Contract analysis

I. INTRODUCTION AND PROCEDURAL BACKGROUND A. Nature of This Filing Ridgeline Midstream Services LLC ("Ridgeline" or "Applicant"), a Delaware limited liability company and wholly owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Cayman Registry No. CR-381204), hereby submits this Partial Response to the Deficiency Letter issued by the Commission's Office of Energy Mar

II. RESPONSE TO DEFICIENCY ITEM 1: UPDATED ROE SUPPORT A. Text of Deficiency Item 1 The Deficiency Letter states, in pertinent part: Item 1 — Updated Return on Equity Support. Ridgeline's proposed 14.00% return on equity ("ROE") was supported only by a proxy group discounted cash flow ("DCF") analysis using dividend yield and expected growth rate data through year-end 2021, as set forth in the pre-filed direct testim

1. Acknowledgment and Summary of Remedial Action Ridgeline acknowledges that the original DCF proxy group analysis, submitted with the pre-filed direct testimony of Dr. Raymond Braswell on December 5, 2022, utilized dividend yield and expected growth rate data through December 31, 2021. At the time of the original filing, those data represented the most current full-year dataset available and were drawn from publicly

2. Updated DCF Proxy Group Analysis The proxy group used in the updated analysis was selected in accordance with the Commission's established criteria for proxy group construction in natural gas pipeline rate proceedings. The following selection criteria were applied: (a) FERC-Jurisdictional Status. Each proxy company is a FERC-jurisdictional natural gas pipeline company or a parent entity deriving a substantial port

3. Original Filing Parameters (Retained) While the ROE analysis has been updated as described above, the remaining components of Ridgeline's proposed capital structure and cost of capital remain as originally filed: Capital Structure: 55% equity / 45% debt. This capital structure reflects the actual capitalization of the Ridgeline Pipeline System as of the filing date and is consistent with the capital structures emp

4. Response to Intervenor ROE Proposals Ridgeline acknowledges that the intervenors in this proceeding have proposed substantially lower returns on equity in their answering testimony. Specifically, ATPC proposed an ROE of 10.75%, and MGPC, through the testimony of Dr. Eleanor Vasquez, proposed an ROE of 11.25%. Both proposals would result in significant reductions to Ridgeline's cost of service and revenue requireme

III. RESPONSE TO DEFICIENCY ITEM 2: FL&U TRACKER MECHANISM A. Text of Deficiency Item 2 The Deficiency Letter states, in pertinent part: Item 2 — Fuel-Use and Lost-and-Unaccounted-For Gas Tracker Mechanism. The proposed tariff fails to include a fuel-use and lost-and-unaccounted-for gas ("FL&U") tracker mechanism as required for pipeline tariffs offering firm transportation service under Part 284, Subpart G of the Co

1. Overview of Proposed FL&U Tracker Ridgeline acknowledges that its originally filed tariff did not include an FL&U tracker mechanism and recognizes the necessity of such a mechanism for a pipeline offering firm and interruptible transportation services under Part 284, Subpart G of the Commission's regulations. Ridgeline proposes to remedy this deficiency by adding a new Section 21 to the General Terms and Condition

2. Design Elements The proposed FL&U tracker incorporates the following key design elements: Fuel Retention Percentage. Ridgeline proposes an initial fuel retention percentage of 2.0% of scheduled quantities. This percentage is based on engineering estimates of compressor fuel consumption at the three compressor stations comprising the Ridgeline Pipeline System: the Wetzel Compressor Station (15,000 HP installed comp

3. Proposed Tariff Language The proposed tariff language for the FL&U tracker mechanism, including the new General Terms and Conditions provisions establishing the tracker, the initial FL&U percentages, and the annual true-up procedures, is set forth in Appendix B to this filing. The proposed tariff sheets are presented in clean and redline format, with the redline reflecting additions to the currently filed tariff.

4. Engineering Support The engineering basis for the proposed initial fuel retention percentage of 2.0% and LAUF percentage of 0.3% is supported by the analysis of Thomas Greaves, Ridgeline's Vice President of Engineering and Operations, as presented in his pre-filed direct testimony of December 5, 2022, and as further elaborated in the supplemental engineering data submitted herewith. Mr. Greaves's analysis is based

IV. RESPONSE TO DEFICIENCY ITEM 3: INTERRUPTIBLE TRANSPORTATION RATE DERIVATION A. Text of Deficiency Item 3 The Deficiency Letter states, in pertinent part: Item 3 — Interruptible Transportation Rate Derivation. The proposed tariff contains a placeholder for interruptible transportation ("IT") service rates under Rate Schedule IT-1, but does not include a complete rate derivation or identify the methodology used to

1. IT Rate Derivation Framework Ridgeline acknowledges that the originally filed tariff included only a placeholder rate for Rate Schedule IT-1 and did not set forth a complete rate derivation or the methodology for calculating the maximum and minimum interruptible transportation rates. Ridgeline proposes to derive its IT-1 rate from the firm FT-1 recourse rate in a manner consistent with the Commission's established

2. IT Revenue Crediting Consistent with Commission policy, all revenues received from IT-1 service in excess of the variable costs of providing that service will be credited to firm FT-1 shippers through a periodic revenue crediting mechanism. The revenue crediting mechanism proposed by Ridgeline is as follows: (a) Calculation of Creditable Revenues. The creditable IT revenue for each accounting period will be calcul

3. IT Service Priority and Scheduling Interruptible transportation service under Rate Schedule IT-1 will be provided on an as-available basis, subordinate to firm FT-1 service in all respects. IT service will be subject to curtailment or interruption at Ridgeline's sole discretion whenever the available capacity on the Ridgeline Pipeline System is insufficient to accommodate both firm and interruptible nominations. T

4. Proposed Tariff Language The complete proposed Rate Schedule IT-1, including the maximum and minimum IT rates, the rate derivation methodology, the IT revenue crediting mechanism, and the scheduling and curtailment provisions, is set forth in Appendix C to this filing. Supporting workpapers demonstrating the derivation of the maximum and minimum IT rates from the FT-1 cost of service are also included in Appendix

V. RESPONSE TO DEFICIENCY ITEM 4: LOAD FACTOR JUSTIFICATION A. Text of Deficiency Item 4 The Deficiency Letter states, in pertinent part: Item 4 — Load Factor Justification. Ridgeline's proposed recourse rate is based on billing determinants derived using a 100% load factor. The use of a 100% load factor results in billing determinants of 438,000,000 Dth per year, based on a design capacity of 1,200,000 Dth per day m

1. Justification for 100% Load Factor (As Filed) Ridgeline's original filing employed a 100% load factor for billing determinant purposes, yielding total annual billing determinants of 438,000,000 Dth (1,200,000 Dth/d × 365 days × 100%). Ridgeline submits that the use of a 100% load factor is appropriate and well-supported for the following reasons: First, the Ridgeline Pipeline System was designed, constructed, and

2. Current Throughput Data Ridgeline acknowledges that the current actual throughput on the Ridgeline Pipeline System is approximately 680 MMcf/d, representing approximately 56.67% utilization of the 1.2 Bcf/d design capacity. However, Ridgeline respectfully submits that actual throughput is not the appropriate measure for determining the load factor used in rate design for a firm transportation pipeline. The distinc

3. Alternative Load Factor Analysis Notwithstanding its position that a 100% load factor is justified for rate design purposes, Ridgeline acknowledges the Commission's concerns and is evaluating alternative load factor assumptions as part of its broader assessment of rate design options. Ridgeline notes that certain intervenors in this proceeding have advocated for load factors of 85% or higher: ATPC proposed an 85%

4. Supporting Data The complete load factor analysis, including historical throughput data by month for the period from October 2021 through December 2022, contracted firm capacity data, and the sensitivity table set forth above, is presented in Appendix D to this filing.

VI. RESPONSE TO DEFICIENCY ITEM 7: ELECTRONIC BULLETIN BOARD (EBB) REQUIREMENTS A. Text of Deficiency Item 7 The Deficiency Letter states, in pertinent part: Item 7 — Electronic Bulletin Board Requirements. The proposed tariff lacks provisions requiring Ridgeline to maintain and post information on an electronic bulletin board ("EBB"), as required by the Commission's regulations at 18 C.F.R. § 284.12 and the Commissi

1. Proposed EBB Provisions Ridgeline acknowledges the omission and proposes to add a new Section 22 to the General Terms and Conditions of its FERC Gas Tariff, Original Volume No. 1, requiring Ridgeline to establish and maintain an Internet-based Electronic Bulletin Board in compliance with 18 C.F.R. § 284.12 and applicable NAESB Wholesale Gas Quadrant ("WGQ") standards. The proposed EBB provisions will obligate Ridg

2. Content of EBB Postings The proposed EBB provisions require Ridgeline to post the following categories of information on its EBB: (a) Available Capacity. Available firm and interruptible capacity on each segment of the Ridgeline Pipeline System, updated on a daily basis and reflecting the most current scheduling information. (b) Scheduled Quantities and Nominations. Aggregate scheduled quantities and nominations f

3. Technical Specifications The proposed EBB will comply with the following technical specifications: (a) NAESB WGQ Compliance. The EBB will comply with NAESB WGQ Version 3.2 electronic delivery mechanism standards, including the data content, format, and communication protocol standards established by the WGQ for pipeline EBB systems. (b) Availability. The EBB will be available for access by shippers and the public

4. Proposed Tariff Language The complete proposed EBB tariff provisions, including the new General Terms and Conditions section establishing the EBB requirements, the categories of required postings, the technical specifications, and the data retention and archival provisions, are set forth in Appendix E to this filing.

VII. RESPONSE TO DEFICIENCY ITEM 8: SHIPPER-MUST-HAVE-TITLE PROVISIONS A. Text of Deficiency Item 8 The Deficiency Letter states, in pertinent part: Item 8 — Shipper-Must-Have-Title Provisions. The proposed tariff does not include adequate shipper-must-have-title provisions, as required by Commission policy and Order No. 712, Order No. 712-A, and related orders. Pipelines providing open-access transportation service

1. Overview of Proposed Shipper-Must-Have-Title Provisions Ridgeline acknowledges the deficiency identified by the Commission and proposes to add a new Section 23 to the General Terms and Conditions of its FERC Gas Tariff, Original Volume No. 1, establishing comprehensive shipper-must-have-title provisions consistent with the Commission's policy articulated in Order No. 712, Order No. 712-A, and related orders. The p

2. Key Provisions The proposed shipper-must-have-title provisions include the following key elements: Title Demonstration Requirement. Each shipper tendering gas for transportation on the Ridgeline Pipeline System must demonstrate, at the time of nomination or upon request by Ridgeline, that it holds title to the gas to be transported, or that it has an enforceable agreement to acquire title to such gas prior to the

3. Proposed Tariff Language The complete proposed shipper-must-have-title tariff provisions, including the new General Terms and Conditions section, the title demonstration requirements, the buy/sell transaction provisions, the non-compliance consequences, and the capacity release exception, are set forth in Appendix F to this filing.

VIII. RESPONSE TO DEFICIENCY ITEM 9: INTERCONNECTION AGREEMENT AS RATE SCHEDULE A. Text of Deficiency Item 9 The Deficiency Letter states, in pertinent part: Item 9 — Interconnection Agreement as Rate Schedule. The proposed interconnection agreement between Ridgeline and Appalachian Trunk Pipeline Company, LLC ("ATPC") for the physical interconnection at the Wetzel County Interconnect has not been filed as a rate sch

1. Commitment to File as Rate Schedule Ridgeline acknowledges the Commission's directive and the requirements of 18 C.F.R. § 154.1(d), which mandate that all contracts or agreements that in any manner affect or relate to the rates, terms, conditions, or privileges of service must be filed as rate schedules under the pipeline's FERC Gas Tariff. Ridgeline commits to filing the Interconnection Agreement between Ridgelin

2. Status of Interconnection Agreement Negotiations Ridgeline filed a Draft Interconnection Agreement (Version 1.0) with its original application in July 2022. Since that time, Ridgeline and ATPC have been engaged in ongoing negotiations regarding the terms and conditions of the interconnection, including the allocation of interconnection facilities costs, technical specifications, operational protocols, and measurem

3. Interim Filing Given the ongoing nature of the interconnection negotiations, Ridgeline files herewith the current draft of the Interconnection Agreement (Version 2.0, dated December 2022) for informational purposes and as a placeholder filing under proposed Rate Schedule No. X-1 of the FERC Gas Tariff. Version 2.0 reflects the terms agreed to by the parties as of December 2022, with bracketed language indicating t

4. Supporting Materials The Draft Interconnection Agreement (Version 2.0, dated December 2022), including all exhibits and appendices thereto, together with a proposed Rate Schedule Cover Sheet for its filing as Rate Schedule No. X-1, is set forth in Appendix G to this filing.

IX. RESPONSE TO DEFICIENCY ITEM 10: PENALTY REVENUE CREDITING MECHANISM A. Text of Deficiency Item 10 The Deficiency Letter states, in pertinent part: Item 10 — Penalty Revenue Crediting Mechanism. The proposed tariff does not include a mechanism for crediting penalty revenues to non-offending shippers, as required by Commission policy. Specifically, revenues collected from shippers through penalties for scheduling v

1. Overview of Proposed Penalty Revenue Crediting Mechanism Ridgeline acknowledges that its originally filed tariff did not include a penalty revenue crediting mechanism and proposes to remedy this deficiency by adding a new Section 24 to the General Terms and Conditions of its FERC Gas Tariff, Original Volume No. 1. The proposed mechanism establishes a comprehensive framework for the collection, accounting, and cred

2. Types of Penalty Revenues Covered The proposed penalty revenue crediting mechanism covers the following categories of penalty revenues: (a) Scheduling Penalties. Penalties assessed against shippers for scheduling violations, including imbalance penalties (assessed when a shipper's actual deliveries or receipts deviate from scheduled quantities beyond applicable tolerance bands) and overrun penalties (assessed when