UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
PRE-FILED DIRECT TESTIMONY OF JAMES K. WINFIELD CHIEF EXECUTIVE OFFICER & PRESIDENT RIDGELINE MIDSTREAM SERVICES LLC
ON BEHALF OF RIDGELINE MIDSTREAM SERVICES LLC
Filed: December 5, 2022
TABLE OF CONTENTS
UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
PRE-FILED DIRECT TESTIMONY OF JAMES K. WINFIELD ON BEHALF OF RIDGELINE MIDSTREAM SERVICES LLC
I. INTRODUCTION AND QUALIFICATIONS
Q. Please state your name, title, and business address.
1 A. My name is James K. Winfield. I am the Chief Executive Officer and 2 President of Ridgeline Midstream Services LLC. My business address is 3 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301.
Q. On whose behalf are you submitting this testimony?
4 A. I am submitting this pre-filed direct testimony on behalf of Ridgeline 5 Midstream Services LLC ("Ridgeline" or "RMS"), the applicant in these 6 proceedings. Ridgeline is the applicant in Docket No. RP22-847-000, which 7 concerns Ridgeline's initial tariff rate filing for interstate natural gas 8 transportation service, and in Docket No. RP22-847-001, which concerns the 9 proposed physical interconnection between the Ridgeline Pipeline System and 10 the existing pipeline facilities of Appalachian Trunk Pipeline Company, LLC 11 ("ATPC") at the Wetzel County Interconnect in Wetzel County, West Virginia.
Q. Please describe your professional background and qualifications.
12 A. I have more than twenty years of experience in the midstream natural gas 13 industry, spanning pipeline operations, infrastructure project development, 14 commercial negotiations, and executive management. I hold a Bachelor of 15 Science degree in Mechanical Engineering from the West Virginia University 16 Institute of Technology and a Master of Business Administration from the 17 Tepper School of Business at Carnegie Mellon University.
18 Prior to assuming my current position with Ridgeline, I held positions 19 of increasing responsibility in the midstream sector. From 2001 to 2008, I 20 served as a pipeline operations engineer and subsequently as a regional 21 operations manager for Ashgrove Corporation (now Halcyon Life Insurance 22 Energy's Eastern Gas Transmission and Storage subsidiary), where I was 23 responsible for the safe and reliable operation of over 300 miles of 24 transmission pipeline in West Virginia. From 2008 to 2014, I served as 25 Vice President of Project Development at Brindoval Pipeline Partners LLC, 26 where I led the development and permitting of two new-build interstate 27 pipeline projects totaling approximately 220 miles in the Appalachian Basin. 28 From 2014 to 2019, I served as Senior Vice President of Operations and 29 Business Development at Dunmore Asset Advisors Midstream Holdings LP, where I was 30 responsible for a portfolio of midstream gathering systems and processing 31 facilities in West Virginia, Ohio, and Pennsylvania.
32 I was appointed Chief Executive Officer and President of Ridgeline upon 33 its formation as a Delaware limited liability company in February 2020. In 34 this capacity, I have been responsible for overseeing all aspects of the 35 Ridgeline Pipeline System's development, construction, commissioning, and 36 commercial operations since the system's in-service date of October 1, 2021. 37 I am directly responsible for the company's strategic direction, commercial 38 negotiations with shippers and interconnecting pipelines, regulatory affairs, 39 and overall corporate governance.
40 I am a member of the Interstate Natural Gas Association of America 41 ("INGAA"), the American Gas Association ("AGA"), the Southern Gas Association 42 ("SGA"), and the Appalachian Gas Working Group. I have testified before state 43 regulatory bodies in West Virginia and Pennsylvania on matters relating to 44 natural gas pipeline operations and safety.
Q. What is the purpose of your testimony?
45 A. The purpose of my testimony is fivefold:
46 First, I provide a corporate overview of Ridgeline and its parent 47 company, Dunmore Energy Holdings Ltd. ("DEH"), including a description of the 48 corporate organizational structure, governance, and the entities relevant to 49 this proceeding.
50 Second, I describe the Ridgeline Pipeline System and its physical 51 characteristics, including the pipeline route, design capacity, compression 52 facilities, and construction history.
53 Third, I explain the public interest need for the proposed initial 54 tariff rate for interstate transportation service and describe the critical 55 market demand for incremental natural gas transportation capacity in the 56 Appalachian Basin that the Ridgeline Pipeline System is designed to serve.
57 Fourth, I present the rationale for the proposed physical 58 interconnection between the Ridgeline Pipeline System and the existing 59 facilities of Appalachian Trunk Pipeline Company, LLC ("ATPC") at the Wetzel 60 County Interconnect, and I describe the benefits that this interconnection 61 will provide to shippers, producers, and consumers in the region.
62 Fifth, I provide an overview of the application filed on May 12, 2022, 63 introduce the other witnesses whose testimony is being presented in support 64 of that application, and address certain procedural matters and the positions 65 of the intervenors in this proceeding.
66 My testimony provides the policy, factual, and need-based context for 67 Ridgeline's filing. The detailed cost-of-service analysis, rate design, 68 engineering specifications, and return on equity analysis are addressed in 69 the separate testimony of other witnesses, as I will identify later in my 70 testimony.
Q. Are you sponsoring any exhibits with your testimony?
71 A. Yes. I am sponsoring or co-sponsoring the following exhibits, which were 72 filed with Ridgeline's application on May 12, 2022, and which are being 73 updated and refiled with this testimony:
•  Exhibit No. RMS-1 (JKW-1): System Map of the Ridgeline Pipeline System, depicting the 187-mile pipeline route from the Wetzel County Interconnect in Wetzel County, West Virginia, to the Waynesburg Compressor Station in Greene County, Pennsylvania, including all compressor station locations, valve sites, and proposed interconnection points.
•  Exhibit No. RMS-2 (JKW-2): Corporate Organizational Chart of Dunmore Energy Holdings Ltd. and its subsidiaries, including Ridgeline Midstream Services LLC.
•  Exhibit No. RMS-3 (JKW-3): Market Demand Analysis for Incremental Natural Gas Transportation Capacity in the Appalachian Basin, prepared under my direction and supervision.
•  Exhibit No. RMS-4 (JKW-4): Summary of Shipper Interest and Executed Precedent Agreements.
•  Exhibit No. RMS-5 (JKW-5): Interconnection Facilities Overview and Preliminary Design Drawings for the Wetzel County Interconnect.
•  Exhibit No. RMS-6 (JKW-6): Production Data and Growth Projections for the Marcellus and Utica Shale Formations (sourced from the U.S. Energy Information Administration and independent third-party analyses).
74 In addition, I am familiar with and have reviewed the remaining exhibits 75 filed in support of Ridgeline's application, designated as Exhibit Nos. 76 RMS-7 through RMS-16 (Exhibits A through P of the application), which are 77 sponsored by the other Ridgeline witnesses identified later in my testimony.
Q. Were your exhibits prepared by you or under your direction and supervision?
78 A. Yes. Each of the exhibits that I am sponsoring was prepared by me or under 79 my direct supervision and direction. I have reviewed each exhibit and can 80 confirm that, to the best of my knowledge, information, and belief, the 81 information contained in each exhibit is true and accurate as of the date of 82 this filing.
II. CORPORATE OVERVIEW
A. Dunmore Energy Holdings Ltd.
Q. Please describe Dunmore Energy Holdings Ltd.
83 A. Dunmore Energy Holdings Ltd. ("DEH") is the sole member and parent 84 company of Ridgeline Midstream Services LLC. DEH is an exempted limited 85 company organized under the laws of the Cayman Islands. Its Cayman Islands 86 Registry Number is CR-381204. DEH's registered address is 4th Floor, Harbour 87 Place, 103 South Church Street, George Town, Grand Cayman KY1-1002, Cayman 88 Islands.
89 DEH is a strategic private energy company that focuses on two principal 90 business segments: (1) oil and gas midstream infrastructure, including 91 natural gas gathering, processing, and transportation pipeline systems; and 92 (2) renewable energy development, including wind energy projects. DEH's 93 midstream portfolio includes approximately 1,200 miles of midstream 94 gathering and transportation pipelines located across the Appalachian Basin 95 and the mid-continent region of the United States. In addition to its 96 pipeline assets, DEH owns and operates two cryogenic natural gas processing 97 plants with a combined processing capacity of approximately 600 MMcf/d. 98 On the renewable energy side, DEH has a 250-megawatt onshore wind 99 portfolio under active development in the Upper Midwest, with initial 100 commercial operations targeted for 2025.
101 DEH was founded by Patricia Dunmore, who serves as the company's 102 Chairperson and is the controlling shareholder of DEH, holding a 72 percent 103 equity interest. Ms. Dunmore is a well-known figure in the energy sector, 104 having been involved in midstream infrastructure development for over three 105 decades. The remaining 28 percent equity interest in DEH is held by a 106 combination of management investors and select institutional co-investors.
107 Based on the most recent internal valuation available at the time of 108 this testimony, dated as of December 31, 2021 and updated as of June 30, 109 2022, DEH's estimated enterprise value is approximately $2.4 billion. On a 110 consolidated basis, DEH's annual revenue for the twelve months ended 111 June 30, 2022 was approximately $432 million. I note that DEH's enterprise 112 value and revenue have continued to grow as the Ridgeline system and other 113 portfolio assets have ramped up operations. The most recently available 114 audited financial statements reflect consolidated annual revenue of 115 approximately $485 million for the fiscal year ended December 31, 2023, 116 and an estimated enterprise value of approximately $2.8 billion as of that 117 same date, although these figures postdate the filing of this testimony and 118 are provided for informational context only.
119 DEH maintains its principal U.S. management offices at 700 Kanawha 120 Boulevard East, Suite 1400, Charleston, West Virginia 25301, which is also 121 the principal office of Ridgeline. DEH's Chief Financial Officer, Margaret 122 Sullivan, is based in the Cayman Islands registered office and oversees the 123 company's corporate finance and treasury functions at the parent level.
B. Ridgeline Midstream Services LLC
Q. Please describe Ridgeline Midstream Services LLC.
124 A. Ridgeline Midstream Services LLC ("Ridgeline" or "RMS") is a limited 125 liability company organized under the laws of the State of Delaware. Its 126 registered agent for service of process in Delaware is Capitol Filings Inc., 127 located at 1209 Orange Street, Wilmington, Delaware 19801. Ridgeline's 128 principal office and place of business is 700 Kanawha Boulevard East, 129 Suite 1400, Charleston, West Virginia 25301.
130 DEH is the sole member of Ridgeline, holding a 100 percent ownership 131 interest. Ridgeline's Employer Identification Number ("EIN") is 87-4231956. 132 Its FERC Code is 960442.
133 Ridgeline's sole business is the ownership and operation of the 134 Ridgeline Pipeline System, a 187-mile, 24-inch-diameter high-pressure 135 natural gas pipeline that provides interstate transportation service in the 136 Appalachian Basin. The Ridgeline Pipeline System originates at the Wetzel 137 County Interconnect in Wetzel County, West Virginia, and terminates at the 138 Waynesburg Compressor Station in Greene County, Pennsylvania. The system 139 has a design capacity of 1.2 billion cubic feet per day ("Bcf/d"), 140 equivalent to 1,200,000 dekatherms per day ("Dth/d") at an assumed British 141 thermal unit ("BTU") content of 1,000 BTU per cubic foot.
142 In this proceeding, Ridgeline is seeking authorization from the Federal 143 Energy Regulatory Commission ("FERC" or "the Commission") for approval of 144 its initial tariff rate under the FERC Gas Tariff, Original Volume No. 1, 145 for open-access interstate natural gas transportation service. Ridgeline is 146 also seeking authorization for the construction and operation of a new 147 physical interconnection with ATPC's existing pipeline network at the Wetzel 148 County Interconnect, as described in greater detail in Section VII of my 149 testimony.
150 Ridgeline was formed as a Delaware LLC in February 2020, and construction 151 of the Ridgeline Pipeline System commenced in May 2020 following receipt of 152 all necessary federal, state, and local permits and authorizations. 153 Construction was completed and the system was placed in service on 154 October 1, 2021. Since the in-service date, the system has been operating 155 continuously, transporting natural gas on an interstate basis under interim 156 transportation arrangements while this initial tariff rate proceeding is 157 pending before the Commission.
C. Corporate Structure and Governance
Q. Please describe the corporate organizational structure relevant to this proceeding.
158 A. The corporate organizational structure is straightforward and is depicted 159 in Exhibit No. RMS-2 (JKW-2). Dunmore Energy Holdings Ltd., the Cayman 160 Islands exempted limited company, is the sole member of Ridgeline Midstream 161 Services LLC, the Delaware limited liability company. DEH holds a 100 percent 162 ownership interest in Ridgeline.
163 As I noted above, Patricia Dunmore is the founder, Chairperson, and 72 164 percent controlling shareholder of DEH. Through her controlling equity 165 interest in DEH, Ms. Dunmore exercises ultimate control over Ridgeline and 166 its operations. The remaining 28 percent equity interest in DEH is held by 167 management investors and institutional co-investors who do not exercise 168 day-to-day management or operational control.
169 Ridgeline's day-to-day management is conducted by its senior management 170 team, which reports to the DEH Board of Directors through me. The senior 171 management team consists of the following individuals:
•  James K. Winfield, Chief Executive Officer and President. I am responsible for the overall strategic direction of Ridgeline, including commercial negotiations, regulatory affairs, government relations, and corporate governance.
•  Angela Moretti, Vice President, Finance and Treasurer. Ms. Moretti is responsible for Ridgeline's financial management, accounting, treasury operations, and financial reporting. She oversees the preparation of Ridgeline's cost-of-service study and rate base calculations, and she is sponsoring separate direct testimony in this proceeding.
•  Thomas Greaves, Vice President, Engineering and Operations. Mr. Greaves is responsible for all aspects of the engineering, construction, maintenance, and safe operation of the Ridgeline Pipeline System, including the design and construction of the proposed interconnection facilities at the Wetzel County Interconnect. He is sponsoring separate direct testimony in this proceeding.
•  Dr. Natasha Orlov, Director of Rates and Regulatory. Dr. Orlov is responsible for Ridgeline's tariff administration, rate design, regulatory compliance, and interactions with the Commission and state regulatory authorities. She is sponsoring separate direct testimony in this proceeding addressing rate design and tariff provisions.
172 In addition to the internal management team, Ridgeline has engaged 173 outside consultants to support this proceeding. Dr. Raymond Braswell of 174 Braswell Energy Consulting Group LLC has been retained to provide expert 175 testimony on the proposed return on equity and capital structure. 176 Ridgeline's outside legal counsel in this proceeding is Calderwood & Harkness 177 LLP, with George Trujillo serving as the responsible partner.
III. DESCRIPTION OF THE RIDGELINE PIPELINE SYSTEM
A. Physical Characteristics
Q. Please describe the Ridgeline Pipeline System in detail.
178 A. The Ridgeline Pipeline System is a 187-mile, 24-inch-diameter 179 high-pressure natural gas interstate transportation pipeline located in 180 the Appalachian Basin. The system is designed, constructed, and operated in 181 compliance with all applicable federal safety regulations under 49 C.F.R. 182 Part 192 (Transportation of Natural and Other Gas by Pipeline: Minimum 183 Federal Safety Standards), as well as all applicable state safety and 184 environmental regulations in West Virginia and Pennsylvania.
185 The pipeline originates at its receipt point, the Wetzel County 186 Interconnect, located in Wetzel County, West Virginia, at approximate 187 coordinates 39.6120° North latitude, 80.7540° West longitude. The Wetzel 188 County Interconnect is the point at which Ridgeline proposes to construct a 189 new physical interconnection with ATPC's existing 30-inch mainline pipeline, 190 as described in detail in Section VII of my testimony.
191 From the Wetzel County Interconnect, the pipeline traverses in a 192 generally northeasterly direction through portions of Wetzel, Marion, 193 Monongalia, and Preston Counties in West Virginia, crossing the 194 West Virginia-Pennsylvania state line and continuing through portions of 195 Fayette and Greene Counties in Pennsylvania.
196 The pipeline terminates at its delivery point, the Waynesburg 197 Compressor Station, located in Greene County, Pennsylvania, at approximate 198 coordinates 39.8965° North latitude, 80.1810° West longitude. The 199 Waynesburg Compressor Station is a major compression and metering facility 200 that provides access to downstream pipeline interconnections, local 201 distribution company ("LDC") systems, power generation facilities, and 202 industrial consumers in the region.
203 The pipeline is constructed of API 5L X-70 grade steel pipe with a 204 24-inch outside diameter and a wall thickness ranging from 0.375 inches to 205 0.500 inches, depending on the class location and terrain. The maximum 206 allowable operating pressure ("MAOP") of the pipeline is 1,480 pounds per 207 square inch gauge ("psig"). The pipeline is externally coated with fusion- 208 bonded epoxy and protected by an impressed current cathodic protection 209 system along its entire length. The system includes 42 mainline Block 210 valves, spaced at intervals not exceeding 7.5 miles, in accordance with 211 49 C.F.R. § 192.179.
212 The system is shown on the map attached as Exhibit No. RMS-1 (JKW-1), 213 which depicts the pipeline route, compressor station locations, valve sites, 214 and the proposed interconnection point with ATPC.
B. Design Capacity and Current Throughput
Q. What is the design capacity of the Ridgeline Pipeline System?
215 A. The design capacity of the Ridgeline Pipeline System is 1.2 Bcf/d, 216 which is equivalent to 1,200,000 Dth/d at an assumed BTU content of 1,000 217 BTU per cubic foot. This design capacity represents the maximum sustainable 218 throughput of the system at full compression, assuming operation at the 219 MAOP of 1,480 psig and standard pipeline flow conditions.
220 The design capacity of 1.2 Bcf/d was established based on detailed 221 hydraulic modeling performed during the engineering design phase by 222 Ridgeline's engineering team under the direction of Thomas Greaves, VP of 223 Engineering and Operations. The hydraulic modeling accounted for the 224 pipeline's physical characteristics, including its 24-inch diameter, 225 187-mile length, elevation profile, and the aggregate installed compression 226 of 45,000 horsepower ("HP") across three compressor stations. Mr. Greaves 227 will address the engineering and hydraulic modeling analysis in his separate 228 direct testimony.
Q. What is the current throughput?
229 A. As of the most recent reporting period, the Ridgeline Pipeline System 230 is transporting approximately 680 million cubic feet per day ("MMcf/d") of 231 natural gas, which is equivalent to approximately 680,000 Dth/d. This 232 represents a utilization rate of approximately 56.7 percent of the system's 233 design capacity of 1,200,000 Dth/d (680,000 Dth/d divided by 1,200,000 234 Dth/d equals 56.67 percent).
235 The current utilization rate reflects the normal ramp-up trajectory 236 that would be expected for a newly constructed interstate pipeline system. 237 The Ridgeline system was placed in service on October 1, 2021, and in its 238 first full month of operation (November 2021), average daily throughput was 239 approximately 210 MMcf/d. Throughput has increased steadily since then as 240 additional producer interconnections have come online and as new shippers 241 have executed firm and interruptible transportation agreements with 242 Ridgeline. Between January 2022 and October 2022, average monthly 243 throughput increased from approximately 380 MMcf/d to the current level of 244 approximately 680 MMcf/d, representing a compound growth rate of 245 approximately 6.0 percent per month over that period.
246 Looking forward, Ridgeline expects throughput to continue increasing as 247 additional producer interconnections are completed and additional shipper 248 commitments are secured. As I will discuss in Section VI of my testimony, 249 there is substantial demand for incremental natural gas transportation 250 capacity in the Appalachian Basin, and Ridgeline is actively negotiating 251 additional firm transportation agreements that are expected to bring 252 utilization to approximately 75 to 85 percent within the next 18 to 24 253 months.
C. Compression Facilities
Q. Please describe the compression facilities on the Ridgeline system.
254 A. The Ridgeline Pipeline System is served by three compressor stations, 255 which provide the compression necessary to maintain adequate operating 256 pressures along the 187-mile pipeline route and to maximize throughput 257 capacity. The three compressor stations are:
1.  Wetzel Compressor Station — Located at or near the pipeline's receipt point at the Wetzel County Interconnect in Wetzel County, West Virginia. The Wetzel Station houses two Solar Taurus 70 gas turbine-driven centrifugal compressor units with a combined installed horsepower of 15,000 HP. This station provides the initial compression required to receive gas from the interconnection with ATPC and to launch it into the Ridgeline system at operating pressure.
2.  Mannington Compressor Station — Located at an intermediate point on the pipeline in Marion County, West Virginia, approximately 72 miles downstream of the Wetzel County Interconnect. The Mannington Station houses two Solar Taurus 70 gas turbine-driven centrifugal compressor units with a combined installed horsepower of 15,000 HP. This station provides the mid-point recompression necessary to maintain pipeline pressures and throughput over the system's total length.
3.  Waynesburg Compressor Station — Located at or near the pipeline's delivery point in Greene County, Pennsylvania. The Waynesburg Station houses two Solar Mars 100 gas turbine-driven centrifugal compressor units with a combined installed horsepower of 15,000 HP. This station provides delivery compression and pressure regulation for gas being delivered to downstream pipeline interconnections and end-user facilities.
258 The aggregate installed compression across the three stations is 259 45,000 HP. All compressor units are equipped with modern emissions control 260 technology, including dry low-NOx combustion systems, and are operated in 261 compliance with all applicable federal and state air quality permits. The 262 compressor stations are monitored and controlled remotely through Ridgeline's 263 Supervisory Control and Data Acquisition ("SCADA") system, which provides 264 real-time monitoring of all critical operational parameters, including 265 pressures, temperatures, flow rates, and compressor unit performance.
266 The compression facilities are essential to achieving the system's 267 design capacity of 1.2 Bcf/d. Without the intermediate compression provided 268 by the Mannington Station, the pipeline's throughput capacity would be 269 significantly reduced due to pressure losses over the 187-mile route. The 270 compressor stations were designed with expansion capability, and additional 271 compressor units can be installed at each station to increase capacity in 272 the future as demand warrants.
D. Construction and In-Service Date
Q. When was the Ridgeline Pipeline System placed in service, and what was the construction cost?
273 A. The Ridgeline Pipeline System was placed in service on October 1, 2021. 274 The original construction cost of the system was $587.2 million, which 275 includes all costs associated with the design, engineering, procurement, 276 construction, and commissioning of the 187-mile pipeline, three compressor 277 stations, metering and regulation facilities, SCADA and communications 278 systems, and all associated rights-of-way and land acquisitions.
279 Construction of the Ridgeline Pipeline System commenced in May 2020, 280 following receipt of all necessary federal, state, and local permits and 281 authorizations, including the FERC Certificate of Public Convenience and 282 Necessity, U.S. Army Corps of Engineers Section 404 permits for wetland and 283 waterbody crossings, and all applicable state environmental and construction 284 permits in West Virginia and Pennsylvania. The construction period spanned 285 approximately 17 months, from May 2020 through September 2021, and the 286 system was completed on schedule and within its approved construction 287 budget.
288 The system has been operating continuously since its in-service date. 289 During the period from October 1, 2021 through the date of this testimony, 290 the system has maintained an operational availability rate of approximately 291 99.2 percent, with scheduled maintenance outages accounting for the 292 remainder. The system has experienced no reportable safety incidents or 293 unplanned outages since it was placed in service.
IV. PUBLIC INTEREST NEED FOR THE RIDGELINE PIPELINE SYSTEM
A. Growing Production in the Appalachian Basin
Q. Why is the Ridgeline Pipeline System needed to serve the public interest?
294 A. The Ridgeline Pipeline System was developed to address the critical and 295 growing need for incremental natural gas transportation capacity in the 296 Appalachian Basin, which is the largest natural gas producing region in the 297 United States. The Marcellus Shale and Utica Shale formations, which 298 underlie portions of West Virginia, Pennsylvania, Ohio, and New York, 299 have experienced extraordinary production growth over the past decade, 300 transforming the Appalachian Basin from a mature producing region with 301 declining output into the single most prolific natural gas supply basin in 302 the nation.
303 According to the U.S. Energy Information Administration ("EIA"), 304 natural gas production from the Appalachian Basin has increased from 305 approximately 7.8 Bcf/d in 2012 to approximately 35.2 Bcf/d in 2022, 306 representing a more than fourfold increase over a ten-year period. The 307 Marcellus Shale alone accounts for approximately 27 Bcf/d of that total, 308 making it the single largest natural gas producing formation in the 309 United States. The Utica Shale, which is geologically deeper and is being 310 developed primarily in Ohio and western West Virginia, contributes an 311 additional 7 to 8 Bcf/d and continues to grow.
312 This growth in production has placed significant strain on existing 313 pipeline infrastructure in the region, as I will discuss in greater detail 314 below. The resulting transportation constraints have led to depressed 315 wellhead prices for Appalachian producers, wider basis differentials between 316 Appalachian production points and downstream market centers, and a general 317 inability of producers to realize the full economic value of their natural 318 gas reserves.
319 The need for additional takeaway capacity in the Appalachian Basin is 320 broadly recognized by producers in the region. The Mountainside Gas 321 Producers Coalition ("MGPC"), which consists of 14 independent natural gas 322 producers operating in the Marcellus and Utica shale formations in 323 West Virginia, Ohio, and Pennsylvania, filed a motion to intervene and 324 comments in this proceeding on July 28, 2022. The MGPC generally supports 325 the construction of the proposed interconnection between the Ridgeline 326 system and ATPC's pipeline network, and its members have expressed support 327 for the additional takeaway capacity that the Ridgeline system provides. 328 Mr. Calvin Dreyer, the Executive Director of the MGPC, has communicated on 329 behalf of the coalition's 14 member companies that the incremental capacity 330 provided by Ridgeline is essential to enabling continued responsible 331 development of natural gas resources in the basin.
332 The data and analysis supporting these conclusions are set forth in 333 greater detail in Exhibit No. RMS-3 (JKW-3) (Market Demand Analysis) and 334 Exhibit No. RMS-6 (JKW-6) (Production Data and Growth Projections).
B. Insufficient Existing Transportation Capacity
Q. Is existing pipeline infrastructure sufficient to serve the region's needs?
335 A. No. Despite significant investment in pipeline infrastructure over the 336 past decade, the existing network of interstate and intrastate pipelines in 337 the Appalachian Basin is insufficient to transport the region's growing 338 natural gas production to downstream markets. The constraints on existing 339 infrastructure are well documented and have been the subject of extensive 340 industry analysis, regulatory proceedings, and public comment.
341 The most significant existing interstate pipeline system in the 342 immediate area served by the Ridgeline system is the pipeline network owned 343 and operated by Appalachian Trunk Pipeline Company, LLC ("ATPC"). ATPC owns 344 and operates an approximately 640-mile interstate natural gas pipeline 345 system with a current system capacity of approximately 3.8 Bcf/d. ATPC's 346 system serves markets in Pennsylvania, Ohio, and New York and is one of the 347 principal transportation corridors for Marcellus and Utica shale production 348 in the region. ATPC is a Pennsylvania limited liability company with its 349 principal office at 2200 Penn Center West, Suite 300, Pittsburgh, 350 Pennsylvania 15276. ATPC is a FERC-jurisdictional pipeline holding FERC 351 Code 840117 and is owned by Tidewater Infrastructure Partners LP, a 352 Delaware limited partnership (EIN: 51-0438712), which is controlled by the 353 Alderman family — specifically, Harrison J. Alderman serves as Chairman 354 and Marcus R. Alderman serves as President and Chief Executive Officer of 355 Tidewater.
356 While ATPC's system provides substantial transportation capacity, 357 its 3.8 Bcf/d of system capacity is heavily subscribed, with firm 358 transportation commitments from existing shippers consuming the vast 359 majority of available capacity. As a result, producers seeking to move 360 incremental gas volumes through ATPC's system often face limited 361 availability and must rely on interruptible service or secondary market 362 capacity releases, both of which are inherently less reliable and 363 predictable than firm service.
364 The Ridgeline Pipeline System provides a complementary and alternative 365 transportation path that relieves these bottlenecks and provides producers 366 with additional access to downstream markets. Unlike an expansion of 367 existing facilities, the Ridgeline system is a new, independently owned 368 pipeline that introduces competitive pressure into the transportation 369 market and gives shippers a meaningful alternative to incumbent pipeline 370 operators.
371 The proposed interconnection at the Wetzel County Interconnect would 372 link the Ridgeline system to ATPC's 30-inch mainline at ATPC Milepost 373 412.6, creating additional market access for Ridgeline's shippers by 374 enabling them to deliver gas into ATPC's system for onward transportation 375 to markets in Pennsylvania, Ohio, and New York. Conversely, the 376 interconnection would also enable shippers on ATPC's system to access 377 the Ridgeline system as an alternative transportation path, further 378 enhancing competition and shipper choice.
C. Benefits to Shippers and Consumers
Q. What benefits does the Ridgeline Pipeline System provide to shippers and consumers?
379 A. The Ridgeline Pipeline System provides a number of significant benefits 380 to shippers and consumers in the Appalachian Basin and in downstream 381 markets. These benefits include, but are not limited to, the following:
Increased Competition. The Ridgeline system introduces a new, independently owned pipeline into the Appalachian Basin transportation market, providing shippers with a competitive alternative to incumbent pipeline operators such as ATPC. Increased competition among transportation providers benefits shippers by restraining transportation costs, improving service quality, and providing greater flexibility in structuring their gas marketing and transportation arrangements.
Enhanced Supply Reliability. By adding 1.2 Bcf/d of new transportation capacity to the region, the Ridgeline system enhances supply reliability for end users, including residential, commercial, industrial, and power generation consumers. The availability of redundant transportation paths reduces the risk of supply disruptions caused by maintenance outages, operational constraints, or force majeure events affecting any single pipeline system.
Reduced Basis Differentials. The addition of incremental takeaway capacity from the Appalachian Basin reduces the basis differential between Appalachian production-area price indices and downstream market-area price indices. By providing producers with additional pathways to move their gas to market, the Ridgeline system helps to close the gap between the prices received by Appalachian producers and the prices prevailing at major market hubs such as the Henry Hub and Transco Zone 6, benefiting producers and promoting continued investment in natural gas development in the region.
Fuel Security and Supply Diversity. The Ridgeline system contributes to fuel security and supply diversity by connecting prolific Appalachian production areas to downstream markets that depend on natural gas for power generation, space heating, and industrial processes. Municipal gas authorities such as the Clearwater Municipal Gas Authority ("CMGA"), which serves communities in Pennsylvania, benefit from the enhanced supply options that the Ridgeline system and the proposed interconnection with ATPC provide.
Regional Economic Development. The construction and operation of the Ridgeline Pipeline System support regional economic development in West Virginia and Pennsylvania. During the construction phase, the project created approximately 2,500 construction jobs and generated significant economic activity for local communities along the pipeline route. On an ongoing basis, the system employs approximately 85 full-time workers and contributes to the local tax base through property tax and other payments.
D. Alignment with National Energy Policy
Q. How does the Ridgeline Pipeline System align with national energy policy?
382 A. The Ridgeline Pipeline System is fully aligned with the Commission's 383 mandate under the Natural Gas Act to ensure adequate and reliable natural 384 gas transportation at just and reasonable rates. The system supports the 385 orderly development of the nation's abundant natural gas resources and 386 provides the transportation infrastructure necessary to move those 387 resources from producing areas to consuming markets.
388 The system operates as an open-access pipeline under Part 284, 389 Subpart G of the Commission's regulations, 18 C.F.R. Part 284, Subpart G, 390 which ensures that all shippers have non-discriminatory access to 391 transportation service on terms and conditions that are just and 392 reasonable. This open-access framework is a cornerstone of the Commission's 393 regulatory policy and is designed to promote competition, prevent the 394 exercise of market power by pipeline operators, and ensure that the 395 benefits of natural gas infrastructure are broadly shared among producers, 396 shippers, and consumers.
397 Furthermore, the Ridgeline Pipeline System was designed with future 398 expansion capability. The interconnection facilities at the Wetzel County 399 Interconnect are designed to accommodate future increases in capacity, and 400 the compressor stations along the pipeline route are designed to accept 401 additional compressor units. This expandability ensures that the Ridgeline 402 system can respond efficiently to future growth in production and demand, 403 consistent with the Commission's policy of encouraging efficient 404 development of natural gas infrastructure to serve the evolving needs of the 405 marketplace.
V. PROPOSED INITIAL TARIFF RATE
A. Overview of the Rate Filing
Q. Please summarize the initial tariff rate filing.
406 A. On May 12, 2022, Ridgeline filed its application in Docket Nos. 407 RP22-847-000 and RP22-847-001 with the Federal Energy Regulatory Commission 408 seeking approval of an initial tariff rate for interstate natural gas 409 transportation service and authorization for the proposed physical 410 interconnection with ATPC at the Wetzel County Interconnect. The application 411 was filed pursuant to Sections 4 and 7 of the Natural Gas Act, 15 U.S.C. 412 §§ 717c and 717f, and the Commission's regulations at 18 C.F.R. Parts 154, 413 157, and 284.
414 The proposed tariff is designated as the FERC Gas Tariff, Original 415 Volume No. 1, and provides for open-access interstate natural gas 416 transportation service under Part 284, Subpart G of the Commission's 417 regulations. The tariff sets forth the rates, terms, and conditions under 418 which Ridgeline will provide firm and interruptible transportation service 419 on the Ridgeline Pipeline System.
420 The application was supported by extensive exhibits and supporting 421 documentation, including the proposed tariff sheets, a detailed cost-of- 422 service study, rate design workpapers, engineering and system design data, 423 environmental compliance documentation, market demand analysis, corporate 424 and financial information, and the interconnection facilities description 425 and cost allocation proposal for the Wetzel County Interconnect.
B. Proposed Recourse Rate
Q. What is the proposed initial recourse rate?
426 A. The total proposed initial recourse rate for firm transportation service 427 on the Ridgeline Pipeline System is $0.2265 per dekatherm ("Dth"). This 428 total rate consists of two components:
•  Reservation Charge: $0.2223/Dth — This is the demand component of the rate, which the shipper pays based on its contracted maximum daily quantity ("MDQ") regardless of the volume of gas actually transported on any given day. The reservation charge is designed to recover the fixed costs of providing firm transportation service, including the pipeline's capital costs, depreciation, return on investment, and fixed operating and maintenance expenses.
•  Usage Charge: $0.0042/Dth — This is the commodity component of the rate, which the shipper pays based on the actual volume of gas transported each day. The usage charge is designed to recover the variable costs of providing transportation service, principally compressor fuel and variable operating and maintenance expenses.
429 Together, the reservation charge and usage charge sum to a total rate 430 of $0.2265/Dth at a 100 percent load factor. The proposed rate is based on 431 a levelized cost of service over a 25-year period, which is the expected 432 economic life of the Ridgeline Pipeline System. Levelization ensures that 433 the rate remains stable over time, avoiding the front-loading of costs that 434 would result from a traditional declining-rate-base methodology and 435 providing rate certainty for shippers over the life of their firm 436 transportation commitments.
C. Cost of Service
Q. What is the basis for the proposed rate?
437 A. The proposed recourse rate of $0.2265/Dth is derived from a test-year 438 cost of service of $97.36 million. The cost of service represents the total 439 annual revenue requirement that Ridgeline must recover through its 440 transportation rates in order to cover all costs of operating the pipeline 441 system and to earn a reasonable return on its invested capital.
442 The billing determinants used to convert the total cost of service into 443 a per-unit rate are 438,000,000 Dth per year, calculated as follows: 444 1,200,000 Dth/d (design capacity) multiplied by 365 days per year, 445 multiplied by 100 percent load factor, equals 438,000,000 Dth/yr. The 446 total cost of service of $97.36 million divided by the billing determinants 447 of 438,000,000 Dth/yr yields the total rate of approximately $0.2223/Dth 448 on a demand basis, with the remaining $0.0042/Dth allocated to the 449 commodity (usage) charge.
450 I want to be clear that while I am providing the overall context and 451 policy rationale for the proposed initial tariff rate in my testimony, the 452 detailed cost-of-service analysis is being sponsored by Angela Moretti, 453 Vice President of Finance and Treasurer of Ridgeline, in her separate 454 pre-filed direct testimony. The detailed rate design analysis, including 455 the allocation of costs between the reservation and usage charges and the 456 specific tariff provisions governing the terms and conditions of service, 457 is being sponsored by Dr. Natasha Orlov, Director of Rates and Regulatory, 458 in her separate pre-filed direct testimony. My testimony is intended to 459 provide the factual and policy foundation upon which the cost-of-service 460 and rate design testimony of those witnesses rests.
D. Rate Base
Q. What is the filed rate base?
461 A. The total rate base as filed in Ridgeline's application is $612.40 462 million. The rate base is comprised of the following components:
463 Net Plant in Service of $563.71 million represents the original 464 construction cost of the Ridgeline Pipeline System of $587.2 million, 465 less accumulated depreciation of $23.49 million. The accumulated 466 depreciation reflects the depreciation accrued from the system's in-service 467 date of October 1, 2021 through the end of the test year. The original 468 construction cost of $587.2 million includes all capital costs of designing, 469 engineering, procuring, constructing, and commissioning the 187-mile 470 pipeline system, three compressor stations, metering and regulation 471 facilities, SCADA and communications systems, and associated rights-of-way 472 and land acquisitions.
473 The Working Capital Allowance of $18.64 million represents the cash 474 working capital required to fund Ridgeline's day-to-day operations, 475 calculated using the lead-lag methodology prescribed by Commission 476 regulations and precedent.
477 Accumulated Deferred Income Taxes ("ADIT") of negative $12.45 million 478 represents the accumulated timing differences between book and tax 479 depreciation, which reduce the rate base. This treatment is consistent with 480 the Commission's normalization requirements and standard ratemaking 481 principles.
482 Other Rate Base Items of $42.50 million include gas stored in the 483 pipeline (line pack), prepayments, and materials and supplies inventory. 484 These items represent the additional working assets necessary to support the 485 continuous operation of the pipeline system.
486 The sum of these components yields the total rate base of $612.40 487 million ($563.71 million plus $18.64 million minus $12.45 million plus 488 $42.50 million equals $612.40 million). The detailed calculations and 489 supporting workpapers for each component of the rate base are set forth in 490 the testimony and exhibits of Angela Moretti.
E. Capital Structure and Return
Q. What capital structure and return on equity are proposed?
491 A. Ridgeline proposes a capital structure consisting of 55 percent common 492 equity and 45 percent long-term debt. The proposed return on equity ("ROE") 493 is 14.00 percent, and the weighted average cost of long-term debt is 5.25 494 percent.
495 The resulting weighted average cost of capital ("WACC") is calculated 496 as follows:
497 The return on rate base is calculated by multiplying the total rate base 498 of $612.40 million by the WACC of 10.0625 percent, yielding a return on 499 rate base of approximately $61.62 million. This return component is the 500 largest single element of the total cost of service and is essential to 501 ensure that Ridgeline's investors receive a return on their invested capital 502 that is commensurate with the risks of providing interstate natural gas 503 transportation service.
504 The proposed ROE of 14.00 percent is based on a discounted cash flow 505 ("DCF") proxy group analysis performed by Dr. Raymond Braswell of Braswell 506 Energy Consulting Group LLC. Dr. Braswell's analysis uses a proxy group 507 of publicly traded natural gas pipeline companies with comparable risk 508 characteristics to estimate the cost of equity for a pipeline with 509 Ridgeline's risk profile. Dr. Braswell is sponsoring separate pre-filed 510 direct testimony in this proceeding that sets forth the details of his 511 DCF analysis and the basis for his recommended ROE.
512 The proposed capital structure of 55 percent equity and 45 percent 513 debt is consistent with the capital structures approved by the Commission 514 for comparable new-build interstate pipeline projects and reflects the 515 actual and expected financing of the Ridgeline Pipeline System, as I 516 describe in greater detail below.
F. Financing Structure
Q. How was the Ridgeline Pipeline System financed?
517 A. The construction of the Ridgeline Pipeline System was financed through 518 a combination of project-level debt and equity contributed by DEH. The 519 financing structure consists of the following components:
520 Senior Secured Credit Facility. Ridgeline entered into a Senior 521 Secured Credit Facility Agreement dated September 15, 2021 with a syndicate 522 of commercial banks led by Pinnacle National Bank, N.A. as administrative 523 agent. The credit facility consists of two components: (i) a $400 million 524 senior secured term loan and (ii) a $75 million senior secured revolving 525 credit facility. The syndicate lenders and their respective commitments are 526 as follows:
527 The term loan was fully drawn on September 15, 2021 to fund the 528 remaining construction costs and provide initial working capital for the 529 system. The revolving credit facility is available for general corporate 530 purposes and working capital needs. The credit facility matures on 531 October 1, 2028 and bears interest at the Secured Overnight Financing Rate 532 ("SOFR") plus 325 basis points. As of the date of this testimony, the 533 outstanding balance on the term loan is approximately $388 million, 534 reflecting scheduled amortization payments made since the initial draw. 535 The revolving credit facility has not been drawn.
536 Second Lien Notes. Ridgeline issued $150 million in principal amount 537 of 7.875% Second Lien Senior Secured Notes due 2030 on September 22, 2021. 538 These notes were privately placed with two institutional investors: 539 Harborview Capital Management LLC and Sentinel Ridge Fund LP. The Second 540 Lien Notes are secured by a second-priority lien on substantially all of 541 Ridgeline's assets, subordinate to the first-priority lien of the Senior 542 Secured Credit Facility. The notes pay interest semi-annually at a fixed 543 rate of 7.875 percent per annum and mature on September 22, 2030.
544 Equity Contribution. DEH contributed equity of $37.2 million to 545 fund the balance of the system's $587.2 million construction cost not 546 covered by the debt financing. The equity contribution is calculated as 547 follows: $587.2 million total construction cost, less $400 million term 548 loan proceeds, less $150 million Second Lien Notes proceeds, equals $37.2 549 million in equity contributed by DEH.
550 The financing structure described above supports the proposed 55 percent 551 equity / 45 percent debt capital structure. The weighted average cost of 552 debt of 5.25 percent reflects the blended cost of the two debt tranches: 553 the variable-rate Senior Secured Credit Facility and the fixed-rate Second 554 Lien Notes. Ms. Moretti will address the derivation of the weighted average 555 cost of debt in greater detail in her testimony.
G. Other Witnesses
Q. Who are the other witnesses sponsoring direct testimony in this proceeding?
556 A. In total, Ridgeline is presenting seven witnesses in support of its 557 direct testimony filed on December 5, 2022. In addition to my own 558 testimony, the following six witnesses are sponsoring separate pre-filed 559 direct testimony:
1.  Angela Moretti, Vice President, Finance and Treasurer, Ridgeline Midstream Services LLC. Ms. Moretti is sponsoring testimony on Ridgeline's cost of service and rate base, including the detailed calculation of each component of the rate base, the test-year cost of service, depreciation rates, income taxes, and the derivation of the weighted average cost of debt.
2.  Thomas Greaves, Vice President, Engineering and Operations, Ridgeline Midstream Services LLC. Mr. Greaves is sponsoring testimony on the engineering design and system specifications of the Ridgeline Pipeline System, including the pipeline's physical characteristics, hydraulic modeling, compression design, and the engineering design of the proposed interconnection facilities at the Wetzel County Interconnect. Mr. Greaves' testimony also addresses ATPC's objections regarding the adequacy of the proposed receipt-point metering station design.
3.  Dr. Natasha Orlov, Director of Rates and Regulatory, Ridgeline Midstream Services LLC. Dr. Orlov is sponsoring testimony on rate design and tariff provisions, including the allocation of costs between the reservation charge and usage charge, the proposed rate schedules and general terms and conditions of the FERC Gas Tariff, Original Volume No. 1, and the cost allocation methodology for the proposed interconnection facilities.
4.  Dr. Raymond Braswell, Principal, Braswell Energy Consulting Group LLC. Dr. Braswell is sponsoring testimony on the proposed return on equity and capital structure for Ridgeline. His testimony presents a DCF proxy group analysis supporting the proposed 14.00 percent ROE and addresses the overall reasonableness of the proposed 55 percent equity / 45 percent debt capital structure.
5.  Margaret Chen, Director of Market Analysis, Ridgeline Midstream Services LLC. Ms. Chen is sponsoring testimony on market conditions in the Appalachian Basin, including current and projected natural gas production trends, pipeline capacity utilization data, basis differential analysis, and shipper demand forecasts supporting the need for the Ridgeline Pipeline System's capacity.
6.  Robert Fitzgerald, Vice President of Safety and Environmental Compliance, Ridgeline Midstream Services LLC. Mr. Fitzgerald is sponsoring testimony on the safety and environmental compliance record of the Ridgeline Pipeline System, including the system's compliance with 49 C.F.R. Part 192, environmental permitting, and the operational safety protocols governing the proposed interconnection facilities.
560 Each of these witnesses has prepared their testimony under my general 561 supervision and in coordination with the other members of Ridgeline's 562 testimony team. Together, the seven witnesses' testimony provides a 563 comprehensive record supporting Ridgeline's application for an initial 564 tariff rate and authorization for the proposed interconnection with ATPC.
VI. MARKET DEMAND FOR INCREMENTAL CAPACITY
A. Producer Demand
Q. What evidence supports market demand for the Ridgeline system's capacity?
565 A. There is substantial and well-documented market demand for the 566 transportation capacity that the Ridgeline Pipeline System provides. As I 567 discussed in Section IV of my testimony, the Marcellus and Utica shale 568 formations are among the most prolific natural gas producing regions in 569 the United States, with combined production of approximately 35.2 Bcf/d 570 as of 2022. This production has been growing steadily and is projected to 571 continue growing over the coming years as producers expand their drilling 572 programs and bring new wells online.
573 The need for additional pipeline takeaway capacity is a pervasive 574 concern among producers in the region. The growth in production has 575 consistently outpaced the development of new pipeline capacity, resulting 576 in transportation bottlenecks that constrain the ability of producers to 577 move their gas to market and depress the prices they receive for their 578 production. The basis differential between the Dominion South production- 579 area price index and the Henry Hub benchmark averaged approximately $0.65 580 per MMBtu during the period from January 2021 through October 2022, 581 reflecting the cost to producers of inadequate transportation 582 infrastructure.
583 The Mountainside Gas Producers Coalition ("MGPC") represents 14 584 independent natural gas producers operating in the Marcellus and Utica 585 shale formations in West Virginia, Ohio, and Pennsylvania. The MGPC's 586 member companies collectively produce approximately 4.2 Bcf/d of natural 587 gas and have invested billions of dollars in exploration and production 588 activities in the basin. These producers require reliable, cost-effective 589 pipeline transportation to move their gas from the wellhead to downstream 590 markets, and they have expressed strong support for the additional takeaway 591 capacity that the Ridgeline system provides.
592 The MGPC filed its motion to intervene and comments in this proceeding 593 on July 28, 2022, represented by the law firm of Whitmore & Sable LLP, 594 with Rebekah Montague serving as lead counsel. In its comments, the MGPC 595 stated that incremental transportation capacity is essential to enabling 596 continued responsible development of natural gas resources in the 597 Appalachian Basin and that the proposed interconnection between the 598 Ridgeline system and ATPC's pipeline network would create significant 599 benefits for producers and the public. Mr. Calvin Dreyer, the Executive 600 Director of the MGPC, has communicated directly with Ridgeline's 601 management regarding the coalition's support for the project.
602 The detailed market demand analysis, including producer-level demand 603 data and growth projections, is set forth in Exhibit No. RMS-3 (JKW-3) and 604 in the testimony of Margaret Chen, Director of Market Analysis.
B. Existing Shipper Commitments
Q. Does Ridgeline have existing shipper commitments?
605 A. Yes. As I noted earlier, the Ridgeline Pipeline System is currently 606 transporting approximately 680 MMcf/d of natural gas, which represents 607 approximately 56.7 percent of the system's design capacity of 1.2 Bcf/d. 608 This throughput is supported by a combination of firm transportation 609 agreements and interruptible service arrangements with shippers who are 610 actively utilizing the system.
611 Ridgeline has executed firm transportation service agreements with 612 multiple shippers, representing a total contracted firm capacity of 613 approximately 550,000 Dth/d. These firm commitments are supplemented by 614 interruptible transportation service, which accounts for the balance of 615 the current throughput. A summary of shipper interest and executed 616 precedent agreements, with confidential shipper names redacted, is 617 provided in Exhibit No. RMS-4 (JKW-4).
618 The trajectory of shipper demand has been consistently upward since 619 the system's in-service date. As I described in Section III.B, throughput 620 has increased from approximately 210 MMcf/d in November 2021 to 621 approximately 680 MMcf/d as of the most recent reporting period, and 622 Ridgeline is actively negotiating additional firm transportation agreements 623 with producers and marketers in the region. Based on current negotiations 624 and expressions of shipper interest, Ridgeline expects to increase firm 625 contracted capacity to approximately 900,000 to 1,000,000 Dth/d within the 626 next 18 to 24 months, which would bring utilization to the 75 to 85 627 percent range.
628 The proposed recourse rate was designed on the basis of 100 percent 629 load factor billing determinants, which is consistent with Commission 630 precedent for new-build pipeline rate filings. This assumption reflects 631 the expectation that, at full build-out, the system's firm transportation 632 contracts will fully subscribe the system's design capacity. As with all 633 new-build pipelines, there is an inherent ramp-up period during which 634 actual throughput is below design capacity. The rate design accounts for 635 this ramp-up period through the levelization methodology described earlier.
C. Downstream Market Demand
Q. What downstream markets does the Ridgeline system serve?
636 A. The Ridgeline Pipeline System transports natural gas from its receipt 637 point at the Wetzel County Interconnect in Wetzel County, West Virginia, 638 to its delivery point at the Waynesburg Compressor Station in Greene 639 County, Pennsylvania. At the Waynesburg Compressor Station, gas transported 640 on the Ridgeline system can access range downstream markets through 641 existing and proposed pipeline interconnections.
642 The Waynesburg Compressor Station is strategically located in the heart 643 of the Appalachian Basin's producing region and is in close proximity to 644 multiple downstream pipeline systems, local distribution company ("LDC") 645 delivery points, natural gas-fired power generation facilities, and 646 industrial end users. Gas delivered to the Waynesburg station can be 647 transported onward to major market centers in the Mid-Atlantic, 648 Northeastern, and Midwestern United States.
649 The proposed interconnection with ATPC at the Wetzel County Interconnect 650 would significantly expand the downstream market access available to 651 Ridgeline's shippers. ATPC's 640-mile, 3.8 Bcf/d pipeline system provides 652 transportation service to markets in Pennsylvania, Ohio, and New York. By 653 establishing a physical interconnection with ATPC's 30-inch mainline at 654 ATPC Milepost 412.6, Ridgeline shippers would gain direct access to ATPC's 655 pipeline system and the downstream markets it serves. This interconnection 656 would be bidirectional, meaning that shippers on ATPC's system would also 657 gain the ability to access the Ridgeline system and the delivery points it 658 serves.
659 The importance of downstream market access is particularly significant 660 for municipal gas authorities and other end-use consumers who depend on 661 reliable and competitively priced natural gas supply. The Clearwater 662 Municipal Gas Authority ("CMGA"), for example, is a municipal authority 663 organized under the Pennsylvania Municipality Authorities Act that serves 664 residential, commercial, and industrial gas consumers in communities in 665 Pennsylvania. CMGA has intervened in this proceeding, and while its 666 interests relate primarily to