1016-00005 · Dunmore Energy Holdings · Correspondence/FERC

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-7800 Facsimile: (202) 555-7801 www.calderwoodharkness.com

March 15, 2023

VIA ELECTRONIC FILING (eFiling)

The Honorable Kimberly D. Bose Secretary Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426

Re: Ridgeline Midstream Services LLC — Partial Response to Deficiency Letter FERC Docket Nos. RP22-847-000 (Rate Case) and RP22-847-001 (Interconnection) FERC Gas Tariff, Original Volume No. 1

Dear Secretary Bose:

I. Purpose of This Filing

Calderwood & Harkness LLP, on behalf of Ridgeline Midstream Services LLC ("Ridgeline" or "RMS"), a Delaware limited liability company and wholly owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), hereby submits the enclosed Partial Response to the Deficiency Letter issued by the Commission's Office of Energy Market Regulation on January 19, 2023 (the "Deficiency Letter"). The Deficiency Letter identified fourteen (14) deficiency items in Ridgeline's application for initial tariff rate approval and interconnection authorization filed on May 12, 2022, in the above-captioned dockets.

This Partial Response addresses eight (8) of the fourteen (14) identified deficiency items — specifically, Items 1, 2, 3, 4, 7, 8, 9, and 10. Each of these items is discussed in detail below, and the corresponding supplemental materials are provided in Attachments A through H, which are enclosed herewith and incorporated by reference into this filing. Ridgeline has endeavored to provide complete and responsive information for each of the eight items addressed herein and believes that the materials submitted satisfy the Commission's stated requirements with respect to those items.

Ridgeline intends to address the remaining six (6) deficiency items — Items 5, 6, 11, 12, 13, and 14 — in a subsequent filing following further analysis and consultation with its tariff redesign advisors. As discussed more fully in Section V below, Ridgeline has recently engaged Braswell Energy Consulting Group LLC to assist with the comprehensive redesign of certain tariff provisions implicated by those remaining items. Ridgeline anticipates filing a separate motion for extension of time in the near future to establish a schedule for the supplemental response.

II. Background and Procedural History

On May 12, 2022, Ridgeline filed its application in the above-captioned dockets seeking: (i) approval of an initial recourse rate of $0.2265 per dekatherm ("Dth") for interstate natural gas transportation service on the Ridgeline Pipeline System, consisting of a reservation charge of $0.2223 per Dth and a usage charge of $0.0042 per Dth; and (ii) authorization for physical interconnection with Appalachian Trunk Pipeline Company, LLC ("ATPC") at the Wetzel County Interconnect in Wetzel County, West Virginia. Transportation service on the Ridgeline Pipeline System would be rendered under Part 284, Subpart G of the Commission's regulations, 18 C.F.R. § 284.221 et seq., pursuant to a blanket transportation certificate.

The application was filed pursuant to Sections 4 and 7 of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717c and 717f, and in accordance with the Commission's regulations at 18 C.F.R. Parts 154, 157, and 284. Ridgeline's proposed rate was derived from a total cost of service of $97.36 million and a rate base of $612.40 million, as set forth in the Statement of Rates and the cost-of-service schedules accompanying the original filing.

On June 14, 2022, the Commission issued a Notice of Filing in the above-captioned dockets, which was published in the Federal Register at 87 Fed. Reg. 37,412 (June 21, 2022). The Notice established August 15, 2022, as the deadline for motions to intervene and protests.

Three parties filed timely interventions in the proceeding:

1. Mountainside Gas Producers Coalition ("MGPC") filed a timely motion to intervene on July 28, 2022, asserting interests as a coalition of natural gas producers holding firm transportation service agreements on the Ridgeline Pipeline System.

2. Clearwater Municipal Gas Authority ("CMGA") filed a timely motion to intervene on August 1, 2022, asserting interests as a municipal gas distribution authority and prospective shipper on the Ridgeline Pipeline System.

3. Appalachian Trunk Pipeline Company, LLC ("ATPC") filed a motion to intervene and protest on August 15, 2022. ATPC's protest raised objections to, inter alia, (a) the proposed allocation of interconnection facilities costs at the Wetzel County Interconnect, (b) Ridgeline's proposed return on equity, and (c) certain operational provisions in Ridgeline's proposed General Terms and Conditions.

By order dated September 22, 2022, the Commission granted all three motions to intervene, established a Track II procedural schedule for the rate case proceeding, and appointed the Honorable Howard Margolis as Settlement Judge. The Commission directed the parties to participate in settlement discussions and to report to the Commission within sixty (60) days on the status of those discussions.

On November 14, 2022, Administrative Law Judge ("ALJ") Clara Whitfield was appointed as the presiding judge for purposes of the evidentiary hearing. ALJ Whitfield conducted a prehearing conference on November 14, 2022, at which the procedural schedule for the evidentiary proceeding was established.

On December 5, 2022, Ridgeline filed the direct testimony of seven witnesses in support of its application:

• James K. Winfield, CEO & President (policy testimony);

• Dr. Natasha Orlov, Director of Rates & Regulatory (cost of service and rate design);

• Angela Moretti, VP Finance & Treasurer (capital structure and cost of debt);

• Dr. Michael Harrington, Engineering Consultant (system design and capacity);

• Kevin Sturgis, VP Pipeline Operations (operations and throughput);

• Professor Elizabeth Garza, Financial Expert (return on equity);

• Carl Pemberton, Director of Gas Control (scheduling and operational flow orders).

On January 9, 2023, answering testimony was filed by ATPC, the Mountainside Gas Producers Coalition, and the Clearwater Municipal Gas Authority, addressing various aspects of Ridgeline's proposed rates, terms, and conditions of service.

On January 19, 2023, the Commission's Office of Energy Market Regulation issued the Deficiency Letter, which identified fourteen (14) items in Ridgeline's application and accompanying tariff sheets requiring supplementation or correction. The Deficiency Letter directed Ridgeline to file a response within sixty (60) days of the date of the letter — i.e., by March 20, 2023.

On February 6, 2023, ALJ Whitfield issued an order staying the procedural schedule in the evidentiary proceeding pending Ridgeline's response to the Deficiency Letter. The ALJ's order provided that the procedural schedule would be reestablished upon the Commission's acceptance of Ridgeline's deficiency response or upon further order of the ALJ.

III. Summary of the Fourteen Deficiency Items

For context and ease of reference, the fourteen (14) deficiency items identified in the Deficiency Letter are summarized below:

Item 1: Inadequate cost-of-service support for the proposed 14.00% return on equity ("ROE"), including the absence of an updated proxy group analysis incorporating market data subsequent to 2021.

Item 2: Failure to include a fuel-use and lost-and-unaccounted-for gas ("FL&U") tracker mechanism in the proposed tariff.

Item 3: Missing interruptible transportation ("IT") rate derivation and corresponding rate schedule.

Item 4: Insufficient support for the 100% load factor billing determinant assumption used in deriving the proposed recourse rates.

Item 5: Absence of capacity release provisions in the General Terms and Conditions of the proposed tariff.

Item 6: Incomplete compliance with NAESB Wholesale Gas Quadrant ("WGQ") Version 3.2 standards in the operational flow order provisions of the proposed tariff.

Item 7: Missing electronic bulletin board ("EBB") posting requirements in the General Terms and Conditions.

Item 8: Inadequate shipper-must-have-title provisions in the proposed tariff.

Item 9: Failure to file the Interconnection Agreement with ATPC as a FERC rate schedule, as required by Commission regulations.

Item 10: Absence of a penalty revenue crediting mechanism in the proposed tariff.

Item 11: Inadequate creditworthiness provisions in the proposed tariff.

Item 12: Missing segmentation and flexible receipt/delivery point provisions.

Item 13: Absence of provisions addressing greenhouse gas emission cost recovery.

Item 14: Failure to address Order No. 2222 distributed energy resource aggregation implications, particularly as they relate to renewable energy interconnection.

As noted above, this Partial Response addresses Items 1, 2, 3, 4, 7, 8, 9, and 10. The remaining Items 5, 6, 11, 12, 13, and 14 will be addressed in a subsequent filing.

IV. Description of Deficiency Items Addressed in This Filing

A. Item 1 — Return on Equity Support

The Deficiency Letter noted that Ridgeline's proposed return on equity of 14.00% was supported by a discounted cash flow ("DCF") proxy group analysis utilizing market data through the end of calendar year 2021 and that no updated analysis had been provided incorporating more recent data. The Office of Energy Market Regulation directed Ridgeline to submit supplemental support for the proposed ROE, including an updated proxy group analysis reflecting current market conditions.

In response, Ridgeline provides supplemental support for its proposed return on equity, which is enclosed as Attachment A to this filing. While the original filing proposed a 14.00% ROE based on a DCF proxy group analysis using pre-2022 market data, Ridgeline has now submitted an updated analysis incorporating market data through the fourth quarter of 2022. The updated analysis utilizes the Commission's established two-step DCF methodology, as set forth in Composition of Proxy Groups for Determining Gas and Oil Pipeline Return on Equity, Opinion No. 414-A, 84 FERC ¶ 61,084 (1998), and subsequent precedent.

The updated proxy group consists of twelve (12) publicly traded natural gas pipeline companies and master limited partnerships, screened for comparability in accordance with the Commission's screening criteria. The updated analysis yields a range of reasonableness for the ROE of 10.88% to 16.72%, with a median of 13.14%. Ridgeline submits that its proposed ROE of 14.00% falls within the upper half of the range of reasonableness and is appropriate given the risk profile of the Ridgeline Pipeline System as a recently constructed greenfield pipeline with a limited operating history (having achieved its in-service date on October 1, 2021), exposure to volumetric risk in an actively developing Appalachian Basin production area, and the company's status as an initial rate applicant.

Ridgeline acknowledges that further updates to the proxy group analysis may be warranted as the proceeding progresses, and reserves the right to submit additional supplemental analysis in connection with any rebuttal testimony or updated filings. However, Ridgeline submits that the supplemental analysis enclosed herewith demonstrates the reasonableness of the proposed ROE within the range of returns permitted under the Commission's two-step DCF methodology.

Ridgeline's capital structure, which is utilized in the derivation of the overall rate of return, remains unchanged from the original filing: 55% equity and 45% debt. The weighted average cost of debt is 5.25%, reflecting the blended cost of (i) the Pinnacle National Bank-led $400 million senior secured term loan, bearing interest at the Secured Overnight Financing Rate ("SOFR") plus 325 basis points, and (ii) the $150 million in 7.875% Second Lien Senior Secured Notes due 2029. Based on the proposed capital structure and costs of equity and debt, the resulting overall rate of return is 10.06%, which is used in the derivation of the return allowance component of the cost of service.

B. Item 2 — Fuel-Use and Lost-and-Unaccounted-For Gas (FL&U) Tracker Mechanism

The Deficiency Letter noted that Ridgeline's proposed tariff did not include a fuel-use and lost-and-unaccounted-for gas tracker mechanism, as is customary for interstate natural gas pipelines operating compressor stations, and directed Ridgeline to include such a mechanism in its tariff or explain why one is not necessary.

In response, Ridgeline provides a proposed framework for an FL&U tracker mechanism, which is enclosed as Attachment B to this filing. Ridgeline acknowledges that an FL&U tracker mechanism is appropriate and necessary for the Ridgeline Pipeline System given the system's three compressor stations and the fuel consumption associated therewith.

The proposed mechanism establishes a baseline FL&U percentage based on current operating data from the three compressor stations on the Ridgeline Pipeline System: (i) the Wetzel Compressor Station, located at Milepost 0.0 in Wetzel County, West Virginia (15,000 installed horsepower); (ii) the Mannington Compressor Station, located at Milepost 47.3 in Marion County, West Virginia (15,000 installed horsepower); and (iii) the Waynesburg Compressor Station, located at Milepost 93.8 in Greene County, Pennsylvania (15,000 installed horsepower). The aggregate installed compression on the system is 45,000 horsepower.

The proposed baseline FL&U retention rate is 2.15%, derived from actual fuel consumption and unaccounted-for gas volumes during the twelve-month period ending September 30, 2022. The proposed FL&U tracker includes an annual true-up mechanism pursuant to which the FL&U retention rate will be adjusted on October 1 of each year to reflect actual fuel consumption and lost-and-unaccounted-for gas volumes during the preceding twelve-month period ending June 30. Any over- or under-recovery of fuel and lost-and-unaccounted-for gas resulting from the application of the prior year's retention rate will be reflected in the adjusted retention rate for the subsequent year.

Ridgeline notes that the detailed tariff language for the FL&U tracker mechanism is currently under development and will be included in the comprehensively redesigned tariff that Ridgeline anticipates filing in connection with the supplemental deficiency response. The framework enclosed herewith is intended to demonstrate the general structure and methodology of the proposed mechanism for the Commission's review and comment.

C. Item 3 — Interruptible Transportation Rate Derivation

The Deficiency Letter noted that Ridgeline's original filing proposed only a firm transportation rate schedule (Rate Schedule FT-1) and did not include a rate schedule for interruptible transportation service or a derivation of the interruptible transportation rate. The Office of Energy Market Regulation directed Ridgeline to provide an IT rate derivation and corresponding rate schedule, or to explain why interruptible transportation service is not proposed.

In response, Ridgeline provides a framework for the derivation of the interruptible transportation ("IT") rate, which is enclosed as Attachment C to this filing. Ridgeline acknowledges that the Commission's regulations and longstanding policy require interstate natural gas pipelines to offer interruptible transportation service on a non-discriminatory basis, and Ridgeline intends to include a complete interruptible transportation rate schedule in its tariff.

The IT rate will be derived from the firm transportation ("FT") reservation and usage rates in a manner consistent with Commission policy and precedent. Specifically, the maximum daily IT rate will be calculated as the sum of (i) the maximum daily reservation rate divided by the applicable billing period, and (ii) the maximum daily usage rate. The resulting maximum IT rate is proposed to be $0.2265 per Dth, equivalent to the combined FT reservation and usage charges on a 100% load factor basis.

Ridgeline proposes to credit IT revenues to firm shippers on a pro rata basis, consistent with Commission policy as articulated in Alternatives to Traditional Cost-of-Service Ratemaking for Natural Gas Pipelines and Regulation of Negotiated Transportation Services of Natural Gas Pipelines, 74 FERC ¶ 61,076 (1996), and subsequent orders. The specific mechanics of the revenue crediting methodology will be set forth in the complete IT rate schedule.

The complete IT rate schedule, to be designated as Rate Schedule IT-1, will be included in the comprehensively redesigned tariff filing. The framework enclosed herewith provides the Commission with the proposed methodology for deriving the IT rate and the associated revenue crediting mechanism.

D. Item 4 — Load Factor Billing Determinant Assumption

The Deficiency Letter noted that Ridgeline's proposed recourse rates were derived using a 100% load factor billing determinant assumption and that the original filing did not provide adequate support for this assumption, particularly in light of the pipeline's relatively recent in-service date and the absence of a demonstrated track record of full utilization. The Office of Energy Market Regulation directed Ridgeline to provide additional support for the 100% load factor assumption or to propose an alternative load factor.

In response, Ridgeline provides additional support for the 100% load factor billing determinant assumption, which is enclosed as Attachment D to this filing. As set forth in the original filing, the billing determinants used in the rate derivation were calculated as follows:

Design Capacity: 1,200,000 Dth/d × Days per Year: 365 × Load Factor: 100% = Annual Billing Determinants: 438,000,000 Dth/yr

Ridgeline provides data on system utilization trends since the October 1, 2021 in-service date. Since commencement of service, throughput on the Ridgeline Pipeline System has increased steadily from an initial level of approximately 320 MMcf/d in October 2021 to approximately 680 MMcf/d as of December 31, 2022. Current throughput of approximately 680 MMcf/d represents a utilization rate of approximately 56.67% of design capacity. Ridgeline projects that system utilization will continue to increase as additional firm transportation service agreements are executed and as production development in the upstream supply basins connected to the Ridgeline Pipeline System continues to accelerate.

Ridgeline submits that the 100% load factor assumption is consistent with the straight-fixed-variable ("SFV") rate design methodology underlying the proposed tariff, which allocates all fixed costs to the reservation charge. Under the SFV methodology, use of a 100% load factor in deriving billing determinants ensures that the full cost of service is recovered through the reservation charge, thereby promoting rate stability and reducing the pipeline's exposure to volumetric risk.

Notwithstanding the foregoing, Ridgeline acknowledges that this issue is under further evaluation and that the comprehensively redesigned tariff may adopt a different load factor assumption. In particular, Ridgeline notes that a modified fixed-variable ("MFV") methodology is being considered, under which a portion of fixed costs would be allocated to the usage charge and the billing determinant assumption would be adjusted to reflect a load factor below 100%. Ridgeline will provide a complete analysis of the load factor and rate design methodology in the redesigned tariff filing.

E. Item 7 — Electronic Bulletin Board (EBB) Posting Requirements

The Deficiency Letter noted that Ridgeline's proposed tariff did not include provisions establishing requirements for an electronic bulletin board, as required by the Commission's regulations at 18 C.F.R. § 284.13(b) and the Commission's orders in Regulations Governing the Conduct of Open Season Conferences and the Availability of Information Held by Interstate Natural Gas Pipelines, Order No. 636-A, FERC Stats. & Regs. ¶ 30,950 (1992), and subsequent orders.

In response, Ridgeline provides proposed EBB posting requirements for inclusion in the General Terms and Conditions of the tariff, which are enclosed as Attachment E to this filing. The proposed provisions address the following categories of required postings:

(a) Capacity Availability Postings. Ridgeline will post on its EBB, on a daily basis, information regarding the availability of firm and interruptible transportation capacity on the Ridgeline Pipeline System, including design capacity, scheduled volumes, available capacity, and any operational constraints affecting capacity availability.

(b) Transactional Reporting. Ridgeline will post on its EBB information regarding all firm and interruptible transportation service transactions, including contract terms, rates, receipt and delivery points, and contract quantities, consistent with the Commission's requirements at 18 C.F.R. § 284.13(b).

(c) Index of Customers. Ridgeline will post on its EBB, and update on a quarterly basis, an index of all firm transportation service customers, including the name of each customer, the rate schedule under which service is provided, the contract effective and termination dates, and the maximum daily quantity.

(d) Posting Timelines. All postings will be made in accordance with the timelines prescribed by the Commission's regulations and applicable NAESB standards, including posting of available capacity no later than the commencement of the nomination cycle for the applicable gas day.

Ridgeline's EBB will be maintained and accessible through Ridgeline's website at www.ridgelinemidstream.com/ebb (currently under development) and will comply with all applicable Commission regulations and NAESB WGQ standards governing EBB functionality and information posting.

F. Item 8 — Shipper-Must-Have-Title Provisions

The Deficiency Letter noted that Ridgeline's proposed tariff contained inadequate provisions addressing the requirement that shippers tendering gas for transportation must hold title to the gas at the points of receipt and delivery. The Office of Energy Market Regulation directed Ridgeline to include shipper-must-have-title provisions consistent with the Commission's policy as set forth in Tenneco Inc., 90 FERC ¶ 61,258 (2000), and subsequent precedent.

In response, Ridgeline provides revised tariff language for shipper-must-have-title provisions, which is enclosed as Attachment F to this filing. The proposed language requires that all shippers tendering gas for transportation on the Ridgeline Pipeline System must hold title to, or have a contractual right to, the natural gas at both the receipt point and the delivery point. Specifically:

(a) At the receipt point — the Wetzel County Interconnect, located in Wetzel County, West Virginia, at ATPC Milepost 412.6 — the shipper must hold title to or have a contractual right to the natural gas being tendered for transportation at the time such gas is delivered into the Ridgeline Pipeline System.

(b) At the delivery point — the Waynesburg Compressor Station, located in Greene County, Pennsylvania, at Ridgeline Milepost 93.8 — the shipper must hold title to or have a contractual right to the natural gas being received from the Ridgeline Pipeline System at the time such gas is redelivered by Ridgeline.

The revised provisions further specify that Ridgeline may require shippers to provide documentation establishing title or contractual rights upon request, and that failure to maintain title or contractual rights in accordance with the tariff provisions may result in the suspension of transportation service. The proposed shipper-must-have-title provisions are consistent with Commission policy and are modeled on analogous provisions in tariffs approved by the Commission for similarly situated interstate natural gas pipelines.

G. Item 9 — Interconnection Agreement as Rate Schedule

The Deficiency Letter noted that the Interconnection Agreement between Ridgeline and ATPC was submitted as a supporting exhibit to the application but was not filed as a FERC rate schedule, as required by Section 4 of the NGA, 15 U.S.C. § 717c, and the Commission's regulations at 18 C.F.R. § 154.1 et seq. The Office of Energy Market Regulation directed Ridgeline to reformat and refile the Interconnection Agreement as a rate schedule.

In response, Ridgeline submits a revised Interconnection Agreement with ATPC, reformatted and designated as a FERC rate schedule, which is enclosed as Attachment G to this filing. The revised Interconnection Agreement has been designated as Rate Schedule ICA-1 in the FERC Gas Tariff, Original Volume No. 1.

Ridgeline notes that the terms of the Interconnection Agreement remain subject to ongoing negotiation with ATPC. In particular, the parties have not yet reached agreement on the allocation of the $22.3 million in total interconnection facilities costs between Ridgeline and ATPC. Ridgeline's proposed allocation assigns $7.6 million (34.1%) of the interconnection facilities costs to Ridgeline and $14.7 million (65.9%) to ATPC, reflecting Ridgeline's position that cost allocation should be governed by cost-causation principles and that the majority of the interconnection facilities are necessitated by ATPC's system design and operating requirements. ATPC has proposed a 50/50 allocation of costs ($11.15 million to each party), which Ridgeline opposes. Ridgeline submits that its proposed allocation is consistent with Commission precedent on the allocation of interconnection costs, including Crowne Albany Group, LLC, 158 FERC ¶ 61,125 (2017), and Tennessee Gas Pipeline Co., L.L.C., 162 FERC ¶ 61,167 (2018).

The Interconnection Agreement covers the facilities at the Wetzel County Interconnect, located at ATPC Milepost 412.6 in Wetzel County, West Virginia. The interconnection facilities include:

• Metering station with custody transfer measurement capabilities;

• Pig launcher/receiver for pipeline inspection and maintenance;

• Ultrasonic flow meters (three runs, 12-inch nominal pipe size);

• Gas chromatographs for gas quality measurement and monitoring;

• SCADA integration for real-time data exchange between Ridgeline and ATPC control centers.

The interconnection facilities have a design capacity of 800 MMcf/d bidirectional flow, expandable to 1.2 Bcf/d with the addition of supplemental compression and metering runs. The revised Interconnection Agreement sets forth the respective responsibilities of Ridgeline and ATPC with respect to the construction, ownership, operation, and maintenance of the interconnection facilities.

H. Item 10 — Penalty Revenue Crediting Mechanism

The Deficiency Letter noted that Ridgeline's proposed tariff contained provisions authorizing the assessment of penalties for violations of operational flow orders, scheduling requirements, and other operational provisions, but did not include a mechanism for the crediting or distribution of penalty revenues. The Office of Energy Market Regulation directed Ridgeline to include a penalty revenue crediting mechanism consistent with Commission policy.

In response, Ridgeline provides proposed tariff language establishing a penalty revenue crediting mechanism, which is enclosed as Attachment H to this filing. Under the proposed mechanism, penalties assessed under the operational flow order and scheduling provisions of the tariff — including penalties for unauthorized overrun, failure to comply with operational flow orders, and imbalance violations — will be credited to non-offending firm shippers on a pro rata basis, based on each non-offending shipper's maximum daily quantity as a proportion of the total maximum daily quantities of all non-offending firm shippers.

The proposed penalty revenue crediting mechanism is consistent with Commission precedent on the distribution of penalty revenues, including Northwest Pipeline GP, 141 FERC ¶ 61,097 (2012), and Colorado Interstate Gas Co., L.L.C., 146 FERC ¶ 61,194 (2014). Penalty revenue credits will be calculated and distributed on a quarterly basis, within forty-five (45) days following the end of each calendar quarter. Ridgeline will include a report on its EBB summarizing the total penalties assessed, the total penalty revenues collected, and the credits distributed to non-offending firm shippers in each quarter.

V. Items Not Addressed — Items 5, 6, 11, 12, 13, and 14

Ridgeline acknowledges that the following six (6) deficiency items are not addressed in this Partial Response and will be addressed in a subsequent supplemental filing:

Item 5: Capacity Release Provisions. The Deficiency Letter directed Ridgeline to include capacity release provisions in the General Terms and Conditions of its tariff, consistent with the Commission's regulations at 18 C.F.R. § 284.8 and the Commission's capacity release policies as set forth in Order No. 636, Order No. 636-A, and subsequent orders. Development of comprehensive capacity release provisions requires substantial tariff drafting and coordination with NAESB standards, and this item is being addressed as part of the comprehensive tariff redesign.

Item 6: NAESB WGQ Version 3.2 Standards Compliance. The Deficiency Letter noted that Ridgeline's operational flow order provisions do not fully comply with the NAESB Wholesale Gas Quadrant Version 3.2 standards incorporated by reference into the Commission's regulations at 18 C.F.R. § 284.12. Achieving full NAESB compliance requires a detailed review and revision of the operational provisions throughout the tariff, and this item is being addressed as part of the comprehensive tariff redesign.

Item 11: Creditworthiness Provisions. The Deficiency Letter directed Ridgeline to include creditworthiness provisions that comply with the Commission's policy statement on creditworthiness standards for interstate natural gas pipelines. See Policy Statement on Creditworthiness Standards for Interstate Natural Gas Pipelines, 111 FERC ¶ 61,412 (2005). Development of compliant creditworthiness provisions is underway and will be included in the redesigned tariff.

Item 12: Segmentation and Flexible Receipt/Delivery Point Provisions. The Deficiency Letter directed Ridgeline to include provisions addressing segmentation of firm capacity and the designation of flexible receipt and delivery points. These provisions require coordination with the system's operational capabilities and the capacity release framework, and are being addressed as part of the comprehensive tariff redesign.

Item 13: Greenhouse Gas Emission Cost Recovery Provisions. The Deficiency Letter directed Ridgeline to address the recovery of costs associated with greenhouse gas emissions, including potential future costs arising from federal or state carbon pricing mechanisms. This item requires an analysis of Ridgeline's exposure to greenhouse gas-related costs and the development of appropriate cost-tracking and recovery mechanisms. This analysis is ongoing.

Item 14: Order No. 2222 Distributed Energy Resource Aggregation Implications. The Deficiency Letter directed Ridgeline to address the implications of the Commission's Order No. 2222, Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, 172 FERC ¶ 61,247 (2020), for Ridgeline's interconnection and service provisions, particularly as they relate to potential renewable energy interconnections. Ridgeline is evaluating the applicability of Order No. 2222 to its facilities and services and will address this item in the supplemental filing.

These six items require substantial tariff redesign and further analysis that could not be completed within the sixty-day response period specified in the Deficiency Letter. Accordingly, Ridgeline has engaged Braswell Energy Consulting Group LLC ("BEC"), a regulatory consulting firm based in McLean, Virginia, to assist with the comprehensive redesign of Ridgeline's FERC Gas Tariff, Original Volume No. 1. BEC is led by Dr. Raymond Braswell, a former economist at the Federal Energy Regulatory Commission with over twenty-five years of experience in natural gas pipeline rate design and tariff development. The engagement with BEC became effective on April 15, 2023, under engagement number BEC-2023-0041, and work on the tariff redesign is expected to commence immediately.

Ridgeline anticipates filing a separate motion for extension of time to address the remaining six deficiency items and to file a comprehensively redesigned FERC Gas Tariff, Original Volume No. 1. Ridgeline will propose a schedule for the supplemental filing in its motion for extension and will coordinate with ALJ Whitfield and the parties regarding any necessary adjustments to the procedural schedule.

VI. Enclosures and Attachments

The following materials are enclosed with this filing:

Attachment A: Supplemental ROE Support — Updated DCF Proxy Group Analysis (responsive to Item 1)

Attachment B: FL&U Tracker Mechanism Framework (responsive to Item 2)

Attachment C: IT Rate Derivation Framework (responsive to Item 3)

Attachment D: Load Factor Billing Determinant Support (responsive to Item 4)

Attachment E: Proposed EBB Posting Requirements (responsive to Item 7)

Attachment F: Revised Shipper-Must-Have-Title Provisions (responsive to Item 8)

Attachment G: Interconnection Agreement — Revised as FERC Rate Schedule (Rate Schedule ICA-1) (responsive to Item 9)

Attachment H: Penalty Revenue Crediting Mechanism (responsive to Item 10)

Certificate of Service

VII. Service and Filing Information

This filing is submitted electronically via the Commission's eFiling system in accordance with the Commission's regulations at 18 C.F.R. § 385.2010.

Copies of this filing and all accompanying attachments have been served on all parties on the official service list in Docket Nos. RP22-847-000 and RP22-847-001, including:

• Kellner, Royce & Dillard LLP (William Pratt, Esq.), counsel for Appalachian Trunk Pipeline Company, LLC, One PPG Place, Suite 2800, Pittsburgh, PA 15222;

• Whitmore & Sable LLP (Rebekah Montague, Esq.), counsel for Mountainside Gas Producers Coalition, 1200 New Hampshire Avenue NW, Suite 600, Washington, DC 20036;

• Fordham Municipal Law Group PC (Stephen Greer, Esq.), counsel for Clearwater Municipal Gas Authority, 312 Adams Avenue, Suite 100, Scranton, PA 18503;

• FERC Trial Staff: Jonathan Briggs, Esq., Office of the General Counsel, and Dr. Miriam Okafor, Office of Energy Market Regulation, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426.

A Certificate of Service is attached to this filing as indicated above.

VIII. Request for Further Proceedings

Ridgeline respectfully requests that the Commission accept this Partial Response as responsive to Items 1, 2, 3, 4, 7, 8, 9, and 10 of the Deficiency Letter. Ridgeline further requests that the Commission permit Ridgeline to file supplemental responses addressing the remaining six (6) deficiency items — Items 5, 6, 11, 12, 13, and 14 — on a schedule to be established by ALJ Whitfield, in coordination with the parties and the Commission's Office of Energy Market Regulation.

Ridgeline anticipates filing a motion for extension of time in the near future, requesting a period of approximately ninety (90) days from the date of the Commission's acceptance of this Partial Response (or such other period as the Commission or the ALJ may deem appropriate) within which to file its supplemental response and comprehensively redesigned tariff.

IX. Contact Information

Any inquiries regarding this filing should be directed to:

George Trujillo, Responsible Partner Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-7823

Email: gtrujillo@calderwoodharkness.com

C&H Matter No. 1016-00005

Brett Callahan, Lead Associate Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-7841

Email: bcallahan@calderwoodharkness.com

Ridgeline client contacts for this matter are:

James K. Winfield CEO & President Ridgeline Midstream Services LLC 700 Kanawha Boulevard East, Suite 1400 Charleston, WV 25301 Telephone: (304) 555-2200

Email: jwinfield@ridgelinemidstream.com

Dr. Natasha Orlov Director of Rates & Regulatory Ridgeline Midstream Services LLC 700 Kanawha Boulevard East, Suite 1400 Charleston, WV 25301 Telephone: (304) 555-2218

Email: norlov@ridgelinemidstream.com

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

George Trujillo Responsible Partner Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-7823

Email: gtrujillo@calderwoodharkness.com

Counsel for Ridgeline Midstream Services LLC

Enclosures: Attachments A through H; Certificate of Service

cc:

Patricia Dunmore, Chairperson, Dunmore Energy Holdings Ltd. James K. Winfield, CEO, Ridgeline Midstream Services LLC Angela Moretti, VP Finance & Treasurer, Ridgeline Midstream Services LLC Dr. Natasha Orlov, Director of Rates & Regulatory, Ridgeline Midstream Services LLC Brett Callahan, Calderwood & Harkness LLP David Stanton, Calderwood & Harkness LLP All parties on the official service list (per Certificate of Service)

CALDERWOOD & HARKNESS LLP Attorneys at Law
1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-7800 Facsimile: (202) 555-7801 www.calderwoodharkness.com
March 15, 2023
VIA ELECTRONIC FILING (eFiling)
The Honorable Kimberly D. Bose Secretary Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426
Re: Ridgeline Midstream Services LLC — Partial Response to Deficiency Letter FERC Docket Nos. RP22-847-000 (Rate Case) and RP22-847-001 (Interconnection) FERC Gas Tariff, Original Volume No. 1
Dear Secretary Bose:
I. Purpose of This Filing
Calderwood & Harkness LLP, on behalf of Ridgeline Midstream Services LLC ("Ridgeline" or "RMS"), a Delaware limited liability company and wholly owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), hereby submits the enclosed Partial Response to the Deficiency Letter issued by the Commission's Office of Energy Market Regulation on January 19, 2023 (the "Deficiency Letter"). The Deficiency Letter identified fourteen (14) deficiency items in Ridgeline's application for initial tariff rate approval and interconnection authorization filed on May 12, 2022, in the above-captioned dockets.
This Partial Response addresses eight (8) of the fourteen (14) identified deficiency items — specifically, Items 1, 2, 3, 4, 7, 8, 9, and 10. Each of these items is discussed in detail below, and the corresponding supplemental materials are provided in Attachments A through H, which are enclosed herewith and incorporated by reference into this filing. Ridgeline has endeavored to provide complete and responsive information for each of the eight items addressed herein and believes that the materials submitted satisfy the Commission's stated requirements with respect to those items.
Ridgeline intends to address the remaining six (6) deficiency items — Items 5, 6, 11, 12, 13, and 14 — in a subsequent filing following further analysis and consultation with its tariff redesign advisors. As discussed more fully in Section V below, Ridgeline has recently engaged Braswell Energy Consulting Group LLC to assist with the comprehensive redesign of certain tariff provisions implicated by those remaining items. Ridgeline anticipates filing a separate motion for extension of time in the near future to establish a schedule for the supplemental response.
II. Background and Procedural History
On May 12, 2022, Ridgeline filed its application in the above-captioned dockets seeking: (i) approval of an initial recourse rate of $0.2265 per dekatherm ("Dth") for interstate natural gas transportation service on the Ridgeline Pipeline System, consisting of a reservation charge of $0.2223 per Dth and a usage charge of $0.0042 per Dth; and (ii) authorization for physical interconnection with Appalachian Trunk Pipeline Company, LLC ("ATPC") at the Wetzel County Interconnect in Wetzel County, West Virginia. Transportation service on the Ridgeline Pipeline System would be rendered under Part 284, Subpart G of the Commission's regulations, 18 C.F.R. § 284.221 et seq., pursuant to a blanket transportation certificate.
The application was filed pursuant to Sections 4 and 7 of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717c and 717f, and in accordance with the Commission's regulations at 18 C.F.R. Parts 154, 157, and 284. Ridgeline's proposed rate was derived from a total cost of service of $97.36 million and a rate base of $612.40 million, as set forth in the Statement of Rates and the cost-of-service schedules accompanying the original filing.
On June 14, 2022, the Commission issued a Notice of Filing in the above-captioned dockets, which was published in the Federal Register at 87 Fed. Reg. 37,412 (June 21, 2022). The Notice established August 15, 2022, as the deadline for motions to intervene and protests.
Three parties filed timely interventions in the proceeding:
1. Mountainside Gas Producers Coalition ("MGPC") filed a timely motion to intervene on July 28, 2022, asserting interests as a coalition of natural gas producers holding firm transportation service agreements on the Ridgeline Pipeline System.
2. Clearwater Municipal Gas Authority ("CMGA") filed a timely motion to intervene on August 1, 2022, asserting interests as a municipal gas distribution authority and prospective shipper on the Ridgeline Pipeline System.
3. Appalachian Trunk Pipeline Company, LLC ("ATPC") filed a motion to intervene and protest on August 15, 2022. ATPC's protest raised objections to, inter alia, (a) the proposed allocation of interconnection facilities costs at the Wetzel County Interconnect, (b) Ridgeline's proposed return on equity, and (c) certain operational provisions in Ridgeline's proposed General Terms and Conditions.
By order dated September 22, 2022, the Commission granted all three motions to intervene, established a Track II procedural schedule for the rate case proceeding, and appointed the Honorable Howard Margolis as Settlement Judge. The Commission directed the parties to participate in settlement discussions and to report to the Commission within sixty (60) days on the status of those discussions.
On November 14, 2022, Administrative Law Judge ("ALJ") Clara Whitfield was appointed as the presiding judge for purposes of the evidentiary hearing. ALJ Whitfield conducted a prehearing conference on November 14, 2022, at which the procedural schedule for the evidentiary proceeding was established.
On December 5, 2022, Ridgeline filed the direct testimony of seven witnesses in support of its application:
• James K. Winfield, CEO & President (policy testimony);
• Dr. Natasha Orlov, Director of Rates & Regulatory (cost of service and rate design);
• Angela Moretti, VP Finance & Treasurer (capital structure and cost of debt);
• Dr. Michael Harrington, Engineering Consultant (system design and capacity);
• Kevin Sturgis, VP Pipeline Operations (operations and throughput);
• Professor Elizabeth Garza, Financial Expert (return on equity);
• Carl Pemberton, Director of Gas Control (scheduling and operational flow orders).
On January 9, 2023, answering testimony was filed by ATPC, the Mountainside Gas Producers Coalition, and the Clearwater Municipal Gas Authority, addressing various aspects of Ridgeline's proposed rates, terms, and conditions of service.
On January 19, 2023, the Commission's Office of Energy Market Regulation issued the Deficiency Letter, which identified fourteen (14) items in Ridgeline's application and accompanying tariff sheets requiring supplementation or correction. The Deficiency Letter directed Ridgeline to file a response within sixty (60) days of the date of the letter — i.e., by March 20, 2023.
On February 6, 2023, ALJ Whitfield issued an order staying the procedural schedule in the evidentiary proceeding pending Ridgeline's response to the Deficiency Letter. The ALJ's order provided that the procedural schedule would be reestablished upon the Commission's acceptance of Ridgeline's deficiency response or upon further order of the ALJ.
III. Summary of the Fourteen Deficiency Items
For context and ease of reference, the fourteen (14) deficiency items identified in the Deficiency Letter are summarized below:
Item 1: Inadequate cost-of-service support for the proposed 14.00% return on equity ("ROE"), including the absence of an updated proxy group analysis incorporating market data subsequent to 2021.
Item 2: Failure to include a fuel-use and lost-and-unaccounted-for gas ("FL&U") tracker mechanism in the proposed tariff.
Item 3: Missing interruptible transportation ("IT") rate derivation and corresponding rate schedule.
Item 4: Insufficient support for the 100% load factor billing determinant assumption used in deriving the proposed recourse rates.
Item 5: Absence of capacity release provisions in the General Terms and Conditions of the proposed tariff.
Item 6: Incomplete compliance with NAESB Wholesale Gas Quadrant ("WGQ") Version 3.2 standards in the operational flow order provisions of the proposed tariff.
Item 7: Missing electronic bulletin board ("EBB") posting requirements in the General Terms and Conditions.
Item 8: Inadequate shipper-must-have-title provisions in the proposed tariff.
Item 9: Failure to file the Interconnection Agreement with ATPC as a FERC rate schedule, as required by Commission regulations.
Item 10: Absence of a penalty revenue crediting mechanism in the proposed tariff.
Item 11: Inadequate creditworthiness provisions in the proposed tariff.
Item 12: Missing segmentation and flexible receipt/delivery point provisions.
Item 13: Absence of provisions addressing greenhouse gas emission cost recovery.
Item 14: Failure to address Order No. 2222 distributed energy resource aggregation implications, particularly as they relate to renewable energy interconnection.
As noted above, this Partial Response addresses Items 1, 2, 3, 4, 7, 8, 9, and 10. The remaining Items 5, 6, 11, 12, 13, and 14 will be addressed in a subsequent filing.
IV. Description of Deficiency Items Addressed in This Filing
A. Item 1 — Return on Equity Support
The Deficiency Letter noted that Ridgeline's proposed return on equity of 14.00% was supported by a discounted cash flow ("DCF") proxy group analysis utilizing market data through the end of calendar year 2021 and that no updated analysis had been provided incorporating more recent data. The Office of Energy Market Regulation directed Ridgeline to submit supplemental support for the proposed ROE, including an updated proxy group analysis reflecting current market conditions.
In response, Ridgeline provides supplemental support for its proposed return on equity, which is enclosed as Attachment A to this filing. While the original filing proposed a 14.00% ROE based on a DCF proxy group analysis using pre-2022 market data, Ridgeline has now submitted an updated analysis incorporating market data through the fourth quarter of 2022. The updated analysis utilizes the Commission's established two-step DCF methodology, as set forth in Composition of Proxy Groups for Determining Gas and Oil Pipeline Return on Equity, Opinion No. 414-A, 84 FERC ¶ 61,084 (1998), and subsequent precedent.
The updated proxy group consists of twelve (12) publicly traded natural gas pipeline companies and master limited partnerships, screened for comparability in accordance with the Commission's screening criteria. The updated analysis yields a range of reasonableness for the ROE of 10.88% to 16.72%, with a median of 13.14%. Ridgeline submits that its proposed ROE of 14.00% falls within the upper half of the range of reasonableness and is appropriate given the risk profile of the Ridgeline Pipeline System as a recently constructed greenfield pipeline with a limited operating history (having achieved its in-service date on October 1, 2021), exposure to volumetric risk in an actively developing Appalachian Basin production area, and the company's status as an initial rate applicant.
Ridgeline acknowledges that further updates to the proxy group analysis may be warranted as the proceeding progresses, and reserves the right to submit additional supplemental analysis in connection with any rebuttal testimony or updated filings. However, Ridgeline submits that the supplemental analysis enclosed herewith demonstrates the reasonableness of the proposed ROE within the range of returns permitted under the Commission's two-step DCF methodology.
Ridgeline's capital structure, which is utilized in the derivation of the overall rate of return, remains unchanged from the original filing: 55% equity and 45% debt. The weighted average cost of debt is 5.25%, reflecting the blended cost of (i) the Pinnacle National Bank-led $400 million senior secured term loan, bearing interest at the Secured Overnight Financing Rate ("SOFR") plus 325 basis points, and (ii) the $150 million in 7.875% Second Lien Senior Secured Notes due 2029. Based on the proposed capital structure and costs of equity and debt, the resulting overall rate of return is 10.06%, which is used in the derivation of the return allowance component of the cost of service.
B. Item 2 — Fuel-Use and Lost-and-Unaccounted-For Gas (FL&U) Tracker Mechanism
The Deficiency Letter noted that Ridgeline's proposed tariff did not include a fuel-use and lost-and-unaccounted-for gas tracker mechanism, as is customary for interstate natural gas pipelines operating compressor stations, and directed Ridgeline to include such a mechanism in its tariff or explain why one is not necessary.
In response, Ridgeline provides a proposed framework for an FL&U tracker mechanism, which is enclosed as Attachment B to this filing. Ridgeline acknowledges that an FL&U tracker mechanism is appropriate and necessary for the Ridgeline Pipeline System given the system's three compressor stations and the fuel consumption associated therewith.
The proposed mechanism establishes a baseline FL&U percentage based on current operating data from the three compressor stations on the Ridgeline Pipeline System: (i) the Wetzel Compressor Station, located at Milepost 0.0 in Wetzel County, West Virginia (15,000 installed horsepower); (ii) the Mannington Compressor Station, located at Milepost 47.3 in Marion County, West Virginia (15,000 installed horsepower); and (iii) the Waynesburg Compressor Station, located at Milepost 93.8 in Greene County, Pennsylvania (15,000 installed horsepower). The aggregate installed compression on the system is 45,000 horsepower.
The proposed baseline FL&U retention rate is 2.15%, derived from actual fuel consumption and unaccounted-for gas volumes during the twelve-month period ending September 30, 2022. The proposed FL&U tracker includes an annual true-up mechanism pursuant to which the FL&U retention rate will be adjusted on October 1 of each year to reflect actual fuel consumption and lost-and-unaccounted-for gas volumes during the preceding twelve-month period ending June 30. Any over- or under-recovery of fuel and lost-and-unaccounted-for gas resulting from the application of the prior year's retention rate will be reflected in the adjusted retention rate for the subsequent year.
Ridgeline notes that the detailed tariff language for the FL&U tracker mechanism is currently under development and will be included in the comprehensively redesigned tariff that Ridgeline anticipates filing in connection with the supplemental deficiency response. The framework enclosed herewith is intended to demonstrate the general structure and methodology of the proposed mechanism for the Commission's review and comment.
C. Item 3 — Interruptible Transportation Rate Derivation
The Deficiency Letter noted that Ridgeline's original filing proposed only a firm transportation rate schedule (Rate Schedule FT-1) and did not include a rate schedule for interruptible transportation service or a derivation of the interruptible transportation rate. The Office of Energy Market Regulation directed Ridgeline to provide an IT rate derivation and corresponding rate schedule, or to explain why interruptible transportation service is not proposed.
In response, Ridgeline provides a framework for the derivation of the interruptible transportation ("IT") rate, which is enclosed as Attachment C to this filing. Ridgeline acknowledges that the Commission's regulations and longstanding policy require interstate natural gas pipelines to offer interruptible transportation service on a non-discriminatory basis, and Ridgeline intends to include a complete interruptible transportation rate schedule in its tariff.
The IT rate will be derived from the firm transportation ("FT") reservation and usage rates in a manner consistent with Commission policy and precedent. Specifically, the maximum daily IT rate will be calculated as the sum of (i) the maximum daily reservation rate divided by the applicable billing period, and (ii) the maximum daily usage rate. The resulting maximum IT rate is proposed to be $0.2265 per Dth, equivalent to the combined FT reservation and usage charges on a 100% load factor basis.
Ridgeline proposes to credit IT revenues to firm shippers on a pro rata basis, consistent with Commission policy as articulated in Alternatives to Traditional Cost-of-Service Ratemaking for Natural Gas Pipelines and Regulation of Negotiated Transportation Services of Natural Gas Pipelines, 74 FERC ¶ 61,076 (1996), and subsequent orders. The specific mechanics of the revenue crediting methodology will be set forth in the complete IT rate schedule.
The complete IT rate schedule, to be designated as Rate Schedule IT-1, will be included in the comprehensively redesigned tariff filing. The framework enclosed herewith provides the Commission with the proposed methodology for deriving the IT rate and the associated revenue crediting mechanism.
D. Item 4 — Load Factor Billing Determinant Assumption
The Deficiency Letter noted that Ridgeline's proposed recourse rates were derived using a 100% load factor billing determinant assumption and that the original filing did not provide adequate support for this assumption, particularly in light of the pipeline's relatively recent in-service date and the absence of a demonstrated track record of full utilization. The Office of Energy Market Regulation directed Ridgeline to provide additional support for the 100% load factor assumption or to propose an alternative load factor.
In response, Ridgeline provides additional support for the 100% load factor billing determinant assumption, which is enclosed as Attachment D to this filing. As set forth in the original filing, the billing determinants used in the rate derivation were calculated as follows:
Design Capacity: 1,200,000 Dth/d × Days per Year: 365 × Load Factor: 100% = Annual Billing Determinants: 438,000,000 Dth/yr
Ridgeline provides data on system utilization trends since the October 1, 2021 in-service date. Since commencement of service, throughput on the Ridgeline Pipeline System has increased steadily from an initial level of approximately 320 MMcf/d in October 2021 to approximately 680 MMcf/d as of December 31, 2022. Current throughput of approximately 680 MMcf/d represents a utilization rate of approximately 56.67% of design capacity. Ridgeline projects that system utilization will continue to increase as additional firm transportation service agreements are executed and as production development in the upstream supply basins connected to the Ridgeline Pipeline System continues to accelerate.
Ridgeline submits that the 100% load factor assumption is consistent with the straight-fixed-variable ("SFV") rate design methodology underlying the proposed tariff, which allocates all fixed costs to the reservation charge. Under the SFV methodology, use of a 100% load factor in deriving billing determinants ensures that the full cost of service is recovered through the reservation charge, thereby promoting rate stability and reducing the pipeline's exposure to volumetric risk.
Notwithstanding the foregoing, Ridgeline acknowledges that this issue is under further evaluation and that the comprehensively redesigned tariff may adopt a different load factor assumption. In particular, Ridgeline notes that a modified fixed-variable ("MFV") methodology is being considered, under which a portion of fixed costs would be allocated to the usage charge and the billing determinant assumption would be adjusted to reflect a load factor below 100%. Ridgeline will provide a complete analysis of the load factor and rate design methodology in the redesigned tariff filing.
E. Item 7 — Electronic Bulletin Board (EBB) Posting Requirements
The Deficiency Letter noted that Ridgeline's proposed tariff did not include provisions establishing requirements for an electronic bulletin board, as required by the Commission's regulations at 18 C.F.R. § 284.13(b) and the Commission's orders in Regulations Governing the Conduct of Open Season Conferences and the Availability of Information Held by Interstate Natural Gas Pipelines, Order No. 636-A, FERC Stats. & Regs. ¶ 30,950 (1992), and subsequent orders.
In response, Ridgeline provides proposed EBB posting requirements for inclusion in the General Terms and Conditions of the tariff, which are enclosed as Attachment E to this filing. The proposed provisions address the following categories of required postings:
(a) Capacity Availability Postings. Ridgeline will post on its EBB, on a daily basis, information regarding the availability of firm and interruptible transportation capacity on the Ridgeline Pipeline System, including design capacity, scheduled volumes, available capacity, and any operational constraints affecting capacity availability.
(b) Transactional Reporting. Ridgeline will post on its EBB information regarding all firm and interruptible transportation service transactions, including contract terms, rates, receipt and delivery points, and contract quantities, consistent with the Commission's requirements at 18 C.F.R. § 284.13(b).
(c) Index of Customers. Ridgeline will post on its EBB, and update on a quarterly basis, an index of all firm transportation service customers, including the name of each customer, the rate schedule under which service is provided, the contract effective and termination dates, and the maximum daily quantity.
(d) Posting Timelines. All postings will be made in accordance with the timelines prescribed by the Commission's regulations and applicable NAESB standards, including posting of available capacity no later than the commencement of the nomination cycle for the applicable gas day.
Ridgeline's EBB will be maintained and accessible through Ridgeline's website at www.ridgelinemidstream.com/ebb (currently under development) and will comply with all applicable Commission regulations and NAESB WGQ standards governing EBB functionality and information posting.
F. Item 8 — Shipper-Must-Have-Title Provisions
The Deficiency Letter noted that Ridgeline's proposed tariff contained inadequate provisions addressing the requirement that shippers tendering gas for transportation must hold title to the gas at the points of receipt and delivery. The Office of Energy Market Regulation directed Ridgeline to include shipper-must-have-title provisions consistent with the Commission's policy as set forth in Tenneco Inc., 90 FERC ¶ 61,258 (2000), and subsequent precedent.
In response, Ridgeline provides revised tariff language for shipper-must-have-title provisions, which is enclosed as Attachment F to this filing. The proposed language requires that all shippers tendering gas for transportation on the Ridgeline Pipeline System must hold title to, or have a contractual right to, the natural gas at both the receipt point and the delivery point. Specifically:
(a) At the receipt point — the Wetzel County Interconnect, located in Wetzel County, West Virginia, at ATPC Milepost 412.6 — the shipper must hold title to or have a contractual right to the natural gas being tendered for transportation at the time such gas is delivered into the Ridgeline Pipeline System.
(b) At the delivery point — the Waynesburg Compressor Station, located in Greene County, Pennsylvania, at Ridgeline Milepost 93.8 — the shipper must hold title to or have a contractual right to the natural gas being received from the Ridgeline Pipeline System at the time such gas is redelivered by Ridgeline.
The revised provisions further specify that Ridgeline may require shippers to provide documentation establishing title or contractual rights upon request, and that failure to maintain title or contractual rights in accordance with the tariff provisions may result in the suspension of transportation service. The proposed shipper-must-have-title provisions are consistent with Commission policy and are modeled on analogous provisions in tariffs approved by the Commission for similarly situated interstate natural gas pipelines.
G. Item 9 — Interconnection Agreement as Rate Schedule
The Deficiency Letter noted that the Interconnection Agreement between Ridgeline and ATPC was submitted as a supporting exhibit to the application but was not filed as a FERC rate schedule, as required by Section 4 of the NGA, 15 U.S.C. § 717c, and the Commission's regulations at 18 C.F.R. § 154.1 et seq. The Office of Energy Market Regulation directed Ridgeline to reformat and refile the Interconnection Agreement as a rate schedule.
In response, Ridgeline submits a revised Interconnection Agreement with ATPC, reformatted and designated as a FERC rate schedule, which is enclosed as Attachment G to this filing. The revised Interconnection Agreement has been designated as Rate Schedule ICA-1 in the FERC Gas Tariff, Original Volume No. 1.
Ridgeline notes that the terms of the Interconnection Agreement remain subject to ongoing negotiation with ATPC. In particular, the parties have not yet reached agreement on the allocation of the $22.3 million in total interconnection facilities costs between Ridgeline and ATPC. Ridgeline's proposed allocation assigns $7.6 million (34.1%) of the interconnection facilities costs to Ridgeline and $14.7 million (65.9%) to ATPC, reflecting Ridgeline's position that cost allocation should be governed by cost-causation principles and that the majority of the interconnection facilities are necessitated by ATPC's system design and operating requirements. ATPC has proposed a 50/50 allocation of costs ($11.15 million to each party), which Ridgeline opposes. Ridgeline submits that its proposed allocation is consistent with Commission precedent on the allocation of interconnection costs, including Crowne Albany Group, LLC, 158 FERC ¶ 61,125 (2017), and Tennessee Gas Pipeline Co., L.L.C., 162 FERC ¶ 61,167 (2018).
The Interconnection Agreement covers the facilities at the Wetzel County Interconnect, located at ATPC Milepost 412.6 in Wetzel County, West Virginia. The interconnection facilities include:
• Metering station with custody transfer measurement capabilities;
• Pig launcher/receiver for pipeline inspection and maintenance;
• Ultrasonic flow meters (three runs, 12-inch nominal pipe size);
• Gas chromatographs for gas quality measurement and monitoring;
• SCADA integration for real-time data exchange between Ridgeline and ATPC control centers.
The interconnection facilities have a design capacity of 800 MMcf/d bidirectional flow, expandable to 1.2 Bcf/d with the addition of supplemental compression and metering runs. The revised Interconnection Agreement sets forth the respective responsibilities of Ridgeline and ATPC with respect to the construction, ownership, operation, and maintenance of the interconnection facilities.
H. Item 10 — Penalty Revenue Crediting Mechanism
The Deficiency Letter noted that Ridgeline's proposed tariff contained provisions authorizing the assessment of penalties for violations of operational flow orders, scheduling requirements, and other operational provisions, but did not include a mechanism for the crediting or distribution of penalty revenues. The Office of Energy Market Regulation directed Ridgeline to include a penalty revenue crediting mechanism consistent with Commission policy.
In response, Ridgeline provides proposed tariff language establishing a penalty revenue crediting mechanism, which is enclosed as Attachment H to this filing. Under the proposed mechanism, penalties assessed under the operational flow order and scheduling provisions of the tariff — including penalties for unauthorized overrun, failure to comply with operational flow orders, and imbalance violations — will be credited to non-offending firm shippers on a pro rata basis, based on each non-offending shipper's maximum daily quantity as a proportion of the total maximum daily quantities of all non-offending firm shippers.
The proposed penalty revenue crediting mechanism is consistent with Commission precedent on the distribution of penalty revenues, including Northwest Pipeline GP, 141 FERC ¶ 61,097 (2012), and Colorado Interstate Gas Co., L.L.C., 146 FERC ¶ 61,194 (2014). Penalty revenue credits will be calculated and distributed on a quarterly basis, within forty-five (45) days following the end of each calendar quarter. Ridgeline will include a report on its EBB summarizing the total penalties assessed, the total penalty revenues collected, and the credits distributed to non-offending firm shippers in each quarter.
V. Items Not Addressed — Items 5, 6, 11, 12, 13, and 14
Ridgeline acknowledges that the following six (6) deficiency items are not addressed in this Partial Response and will be addressed in a subsequent supplemental filing:
Item 5: Capacity Release Provisions. The Deficiency Letter directed Ridgeline to include capacity release provisions in the General Terms and Conditions of its tariff, consistent with the Commission's regulations at 18 C.F.R. § 284.8 and the Commission's capacity release policies as set forth in Order No. 636, Order No. 636-A, and subsequent orders. Development of comprehensive capacity release provisions requires substantial tariff drafting and coordination with NAESB standards, and this item is being addressed as part of the comprehensive tariff redesign.
Item 6: NAESB WGQ Version 3.2 Standards Compliance. The Deficiency Letter noted that Ridgeline's operational flow order provisions do not fully comply with the NAESB Wholesale Gas Quadrant Version 3.2 standards incorporated by reference into the Commission's regulations at 18 C.F.R. § 284.12. Achieving full NAESB compliance requires a detailed review and revision of the operational provisions throughout the tariff, and this item is being addressed as part of the comprehensive tariff redesign.
Item 11: Creditworthiness Provisions. The Deficiency Letter directed Ridgeline to include creditworthiness provisions that comply with the Commission's policy statement on creditworthiness standards for interstate natural gas pipelines. See Policy Statement on Creditworthiness Standards for Interstate Natural Gas Pipelines, 111 FERC ¶ 61,412 (2005). Development of compliant creditworthiness provisions is underway and will be included in the redesigned tariff.
Item 12: Segmentation and Flexible Receipt/Delivery Point Provisions. The Deficiency Letter directed Ridgeline to include provisions addressing segmentation of firm capacity and the designation of flexible receipt and delivery points. These provisions require coordination with the system's operational capabilities and the capacity release framework, and are being addressed as part of the comprehensive tariff redesign.
Item 13: Greenhouse Gas Emission Cost Recovery Provisions. The Deficiency Letter directed Ridgeline to address the recovery of costs associated with greenhouse gas emissions, including potential future costs arising from federal or state carbon pricing mechanisms. This item requires an analysis of Ridgeline's exposure to greenhouse gas-related costs and the development of appropriate cost-tracking and recovery mechanisms. This analysis is ongoing.
Item 14: Order No. 2222 Distributed Energy Resource Aggregation Implications. The Deficiency Letter directed Ridgeline to address the implications of the Commission's Order No. 2222, Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, 172 FERC ¶ 61,247 (2020), for Ridgeline's interconnection and service provisions, particularly as they relate to potential renewable energy interconnections. Ridgeline is evaluating the applicability of Order No. 2222 to its facilities and services and will address this item in the supplemental filing.
These six items require substantial tariff redesign and further analysis that could not be completed within the sixty-day response period specified in the Deficiency Letter. Accordingly, Ridgeline has engaged Braswell Energy Consulting Group LLC ("BEC"), a regulatory consulting firm based in McLean, Virginia, to assist with the comprehensive redesign of Ridgeline's FERC Gas Tariff, Original Volume No. 1. BEC is led by Dr. Raymond Braswell, a former economist at the Federal Energy Regulatory Commission with over twenty-five years of experience in natural gas pipeline rate design and tariff development. The engagement with BEC became effective on April 15, 2023, under engagement number BEC-2023-0041, and work on the tariff redesign is expected to commence immediately.
Ridgeline anticipates filing a separate motion for extension of time to address the remaining six deficiency items and to file a comprehensively redesigned FERC Gas Tariff, Original Volume No. 1. Ridgeline will propose a schedule for the supplemental filing in its motion for extension and will coordinate with ALJ Whitfield and the parties regarding any necessary adjustments to the procedural schedule.
VI. Enclosures and Attachments
The following materials are enclosed with this filing:
Attachment A: Supplemental ROE Support — Updated DCF Proxy Group Analysis (responsive to Item 1)
Attachment B: FL&U Tracker Mechanism Framework (responsive to Item 2)
Attachment C: IT Rate Derivation Framework (responsive to Item 3)
Attachment D: Load Factor Billing Determinant Support (responsive to Item 4)
Attachment E: Proposed EBB Posting Requirements (responsive to Item 7)
Attachment F: Revised Shipper-Must-Have-Title Provisions (responsive to Item 8)
Attachment G: Interconnection Agreement — Revised as FERC Rate Schedule (Rate Schedule ICA-1) (responsive to Item 9)
Attachment H: Penalty Revenue Crediting Mechanism (responsive to Item 10)
Certificate of Service
VII. Service and Filing Information
This filing is submitted electronically via the Commission's eFiling system in accordance with the Commission's regulations at 18 C.F.R. § 385.2010.
Copies of this filing and all accompanying attachments have been served on all parties on the official service list in Docket Nos. RP22-847-000 and RP22-847-001, including:
• Kellner, Royce & Dillard LLP (William Pratt, Esq.), counsel for Appalachian Trunk Pipeline Company, LLC, One PPG Place, Suite 2800, Pittsburgh, PA 15222;
• Whitmore & Sable LLP (Rebekah Montague, Esq.), counsel for Mountainside Gas Producers Coalition, 1200 New Hampshire Avenue NW, Suite 600, Washington, DC 20036;
• Fordham Municipal Law Group PC (Stephen Greer, Esq.), counsel for Clearwater Municipal Gas Authority, 312 Adams Avenue, Suite 100, Scranton, PA 18503;
• FERC Trial Staff: Jonathan Briggs, Esq., Office of the General Counsel, and Dr. Miriam Okafor, Office of Energy Market Regulation, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426.
A Certificate of Service is attached to this filing as indicated above.
VIII. Request for Further Proceedings
Ridgeline respectfully requests that the Commission accept this Partial Response as responsive to Items 1, 2, 3, 4, 7, 8, 9, and 10 of the Deficiency Letter. Ridgeline further requests that the Commission permit Ridgeline to file supplemental responses addressing the remaining six (6) deficiency items — Items 5, 6, 11, 12, 13, and 14 — on a schedule to be established by ALJ Whitfield, in coordination with the parties and the Commission's Office of Energy Market Regulation.
Ridgeline anticipates filing a motion for extension of time in the near future, requesting a period of approximately ninety (90) days from the date of the Commission's acceptance of this Partial Response (or such other period as the Commission or the ALJ may deem appropriate) within which to file its supplemental response and comprehensively redesigned tariff.
IX. Contact Information
Any inquiries regarding this filing should be directed to:
George Trujillo, Responsible Partner Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-7823
Email: gtrujillo@calderwoodharkness.com
C&H Matter No. 1016-00005
Brett Callahan, Lead Associate Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-7841
Email: bcallahan@calderwoodharkness.com
Ridgeline client contacts for this matter are:
James K. Winfield CEO & President Ridgeline Midstream Services LLC 700 Kanawha Boulevard East, Suite 1400 Charleston, WV 25301 Telephone: (304) 555-2200
Email: jwinfield@ridgelinemidstream.com
Dr. Natasha Orlov Director of Rates & Regulatory Ridgeline Midstream Services LLC 700 Kanawha Boulevard East, Suite 1400 Charleston, WV 25301 Telephone: (304) 555-2218
Email: norlov@ridgelinemidstream.com
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
George Trujillo Responsible Partner Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-7823
Email: gtrujillo@calderwoodharkness.com
Counsel for Ridgeline Midstream Services LLC
Enclosures: Attachments A through H; Certificate of Service
cc:
Patricia Dunmore, Chairperson, Dunmore Energy Holdings Ltd. James K. Winfield, CEO, Ridgeline Midstream Services LLC Angela Moretti, VP Finance & Treasurer, Ridgeline Midstream Services LLC Dr. Natasha Orlov, Director of Rates & Regulatory, Ridgeline Midstream Services LLC Brett Callahan, Calderwood & Harkness LLP David Stanton, Calderwood & Harkness LLP All parties on the official service list (per Certificate of Service)

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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