Contract analysis

I. Executive Summary This memorandum analyzes the Federal Energy Regulatory Commission's ("FERC" or the "Commission") Order No. 2222 and its implications for the redesigned FERC Gas Tariff, Original Volume No. 1, of Ridgeline Midstream Services LLC ("Ridgeline"), with specific focus on addressing Deficiency Item 14 of the January 19, 2023 Deficiency Letter issued by FERC's Office of Energy Market Regulation (Dr. Miri

1. New Tariff Section. The addition of a new section to the General Terms and Conditions of the redesigned tariff titled "Gas-Electric Coordination and Distributed Energy Resource Provisions," containing subsections addressing definitions, enhanced intraday nomination and scheduling flexibility, expedited operational flow order ("OFO") procedures, information-sharing protocols, periodic billing determinant review mec

2. Conforming Amendments. Conforming amendments to existing tariff sections, including Rate Schedules FT-1 and IT-1, and multiple provisions within the General Terms and Conditions addressing nominations, OFOs, EBB, and creditworthiness.

3. Coordination with Other Deficiency Item Responses. The proposed provisions must be coordinated with responses to Deficiency Items 2 (FL&U tracker), 5 (capacity release), 6 (NAESB compliance), 7 (EBB requirements), 10 (penalty revenue crediting), 11 (creditworthiness), 12 (segmentation and flexible receipt/delivery points), and 13 (GHG cost recovery) to ensure internal consistency across the redesigned tariff.

4. Affiliate Transaction Safeguards. Robust provisions prohibiting preferential treatment of DEH's wind portfolio or affiliated generation resources, consistent with FERC's Standards of Conduct at 18 C.F.R. Part 358 and the Commission's affiliate transaction policies. The filing deadline for the supplemental response addressing all remaining deficiency items, including Item 14, is February 21, 2025, as established by

II. Background A. The Ridgeline Pipeline System and DEH's Energy Portfolio Ridgeline Midstream Services LLC is a Delaware limited liability company and a wholly owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company, Registry No. CR-381204. Patricia Dunmore, the founder and chairperson of DEH, holds a 72% equity interest in DEH, with the remaining 28% held by institutional

III. Overview of FERC Order No. 2222 A. Regulatory History and Objectives FERC Order No. 2222, titled Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, was issued on September 17, 2020 in Docket No. RM18-9-000. 172 FERC ¶ 61,247 (2020). The Order became effective on March 1, 2021, and required RTO/ISO tariff complianc

IV. Nexus Between Order No. 2222 and Natural Gas Pipeline Tariffs A. Gas-Electric Interdependence The fundamental nexus between Order No. 2222 and natural gas pipeline tariffs is the deep and growing interdependence between the natural gas and electric power sectors. Natural gas pipelines serve gas-fired electric generation facilities — including combined-cycle plants, combustion turbines, and peaking units — that ar

1. Acknowledgment of DER aggregation impact. The tariff must acknowledge the potential impact of DER aggregation growth on gas demand and pipeline scheduling. This is a threshold requirement: FERC Staff expects the tariff to demonstrate awareness that the growth of DER aggregations in the wholesale electric markets may affect the demand for gas transportation on the Ridgeline system.

2. Operational coordination provisions. The tariff must address operational coordination between gas pipeline scheduling and electric market dispatch as affected by DER aggregations. This includes provisions for enhanced intraday nomination flexibility, expedited OFO procedures, and information-sharing protocols with electric system operators.

3. Renewable energy interconnection provisions. The tariff must include provisions addressing renewable energy interconnection scenarios relevant to the Ridgeline system. This requirement is driven in part by DEH's 250 MW wind portfolio, which the Deficiency Letter specifically referenced in noting the applicant's parent company's "publicly disclosed development of renewable energy resources." Importantly, this does

4. Tariff flexibility. The tariff must include provisions ensuring flexibility to accommodate changing gas-electric dynamics driven by DER growth. This may include mechanisms for periodic reassessment of billing determinants, cost recovery provisions for DER-driven operational costs, and provisions for modification of tariff terms in response to material changes in gas-electric market conditions. We believe that the

V. Analysis of Required Tariff Provisions A. Scheduling and Nomination Flexibility The current Ridgeline tariff, as originally filed, uses the standard NAESB Wholesale Gas Quadrant ("WGQ") nomination timelines, including the Timely nomination cycle (commencing at 11:30 a.m. Central Clock Time ("CCT") for the following gas day), the Evening nomination cycle (commencing at 6:00 p.m. CCT), and Intraday nomination cycles

1. New section in the General Terms and Conditions. A new section titled "Gas-Electric Coordination and Distributed Energy Resource Provisions" (or, alternatively, "Coordination with Renewable Energy Resources") should be added to the General Terms and Conditions of the redesigned tariff. This section would serve as the primary repository for all DER-related provisions and would be cross-referenced from other relevan

2. Information sharing. The new section should include provisions for information sharing between Ridgeline and electric system operators regarding renewable energy output forecasts. This could include arrangements for Ridgeline to receive forecasted wind and solar generation data from PJM or from individual renewable energy operators (including DEH's wind facilities) to assist in pipeline operations planning and sch

3. Scheduling coordination procedures. The new section should include procedures for coordinating pipeline scheduling with electric market real-time dispatch signals. These procedures would complement the enhanced intraday nomination provisions discussed in Section V.A and would provide a framework for Ridgeline to adjust pipeline operations in response to rapid changes in electric market dispatch driven by DER outpu

4. Cost recovery mechanism. The new section should include a mechanism to address costs incurred by Ridgeline due to DER-driven demand volatility. Such costs could include additional compression fuel, increased maintenance expense associated with more frequent compressor cycling, administrative costs associated with enhanced scheduling and coordination, and capital costs associated with any system modifications neede

VI. Survey of Industry Precedent A. Other Pipeline Tariff Approaches to Order No. 2222 Our survey of recently filed or approved FERC-jurisdictional pipeline tariffs reveals that most natural gas pipelines have not yet comprehensively addressed Order No. 2222 or DER aggregation in their tariff filings. This is not surprising: Order No. 2222's direct obligations run to RTOs and ISOs, and the Commission has not issued a