1016-00005 · Dunmore Energy Holdings · Interconnection Agreement

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KELLNER, ROYCE & DILLARD LLP Attorneys at Law

One PPG Place, Suite 2800 Pittsburgh, Pennsylvania 15222

Telephone: (412) 391-7400 Facsimile: (412) 391-7401

William Pratt Senior Partner Direct Dial: (412) 391-7418 wpratt@krd-law.com

January 17, 2023

VIA EMAIL AND OVERNIGHT COURIER

George Trujillo, Esq. Responsible Partner, Energy & Infrastructure Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006

cc: Brett Callahan, Esq. Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006

cc: Sandra K. Fenton Vice President, Regulatory Affairs Appalachian Trunk Pipeline Company, LLC 2200 Penn Center West, Suite 300 Pittsburgh, PA 15276

cc: Thomas Greaves Vice President, Engineering & Operations Ridgeline Midstream Services LLC 700 Kanawha Boulevard East, Suite 1400 Charleston, WV 25301

Re: FERC Docket Nos. RP22-847-000 and RP22-847-001 — Interconnection Agreement Between Appalachian Trunk Pipeline Company, LLC and Ridgeline Midstream Services LLC — ATPC Counterproposal

Dear Mr. Trujillo:

We write on behalf of our client, Appalachian Trunk Pipeline Company, LLC ("ATPC"), in response to the letter dated November 18, 2022 from your colleague Brett Callahan transmitting Ridgeline Midstream Services LLC's ("Ridgeline") counterproposal on metering station design at the proposed Wetzel County Interconnect. ATPC also acknowledges receipt of Ridgeline's Draft Interconnection Agreement Version 2.0, which was transmitted by Mr. Callahan's email of December 12, 2022 as a redline against the original draft agreement dated September 2022.

ATPC has carefully and thoroughly reviewed Ridgeline's proposed terms as reflected in the Version 2.0 redline, including the revised cost allocation methodology, the metering station design schematics, the pigging facility specifications, and the various operational protocols set forth therein. Having completed that review in consultation with ATPC's engineering and regulatory teams, ATPC hereby submits this counterproposal on the terms set forth below.

As a threshold matter, we note that this counterproposal is being submitted without prejudice to any and all positions taken by ATPC in the above-captioned proceeding, including but not limited to the positions set forth in ATPC's protest and motion to intervene filed on August 15, 2022, and ATPC's answering testimony filed on January 9, 2023. Nothing in this letter or in the enclosed materials shall be construed as a waiver, modification, or limitation of ATPC's rights under the Natural Gas Act, the Commission's regulations, or any applicable order of the Commission in this proceeding. ATPC expressly reserves the right to supplement, amend, or withdraw any aspect of this counterproposal in the course of further negotiations or proceedings before the Commission.

> [C&H Annotation – Trujillo: "Standard reservation of rights language — note they are preserving all protest arguments."]

1. Interconnection Cost Allocation — ATPC's Core Position

A. Rejection of Ridgeline's Proposed 34.1% / 65.9% Cost Split

ATPC respectfully but firmly rejects Ridgeline's proposed cost allocation as set forth in the Version 2.0 draft, under which Ridgeline would bear only $7.6 million (34.1%) of the total $22.3 million estimated interconnection facilities cost, with the remaining $14.7 million (65.9%) allocated to ATPC. ATPC considers this proposed allocation to be fundamentally inconsistent with longstanding Commission cost-causation principles and, if adopted, would impose an unjust and unreasonable burden on ATPC and its existing firm transportation shippers.

The proposed interconnection arises from Ridgeline's independent decision to construct a new 187-mile natural gas gathering and transmission pipeline system in Wetzel, marshall, and Doddridge Counties, West Virginia, and to seek interconnection with ATPC's existing 640-mile, 3.8 Bcf/d interstate pipeline system. Ridgeline, as the new entrant seeking physical interconnection with ATPC's established mainline infrastructure, is the primary cost-causer of the interconnection facilities that must be constructed, installed, and commissioned at the Wetzel County Interconnect. ATPC's existing shippers — who entered into their firm transportation service agreements based on ATPC's existing system configuration and mainline capacity — bear no responsibility for, and derived no initial expectation of benefit from, Ridgeline's unilateral decision to construct a new pipeline requiring a physical tie-in to the ATPC system.

The interconnection point is located at ATPC Milepost 412.6 on the ATPC mainline. The physical modifications required at this location — including the hot tap on ATPC's 30-inch mainline, the installation of meter station facilities, pig launcher/receiver equipment, SCADA communications infrastructure, and associated civil works — are necessitated entirely by Ridgeline's application for interconnection. ATPC did not initiate, propose, or request these modifications, and but for Ridgeline's interconnection application, no modifications to the ATPC mainline at Milepost 412.6 would be required.

Accordingly, any cost allocation methodology that assigns nearly two-thirds of the interconnection cost to ATPC fundamentally misapplies the Commission's cost-causation principles and improperly shifts the financial consequences of Ridgeline's business decisions onto ATPC and its shippers.

> [C&H Annotation – Callahan: "Their cost-causation argument is weak — interconnection benefits ATPC shippers by providing access to new Marcellus/Utica supply. See our Oct 2022 memo on FERC precedent re Order No. 2004."]

B. ATPC's Proposed 50/50 Cost Allocation

Notwithstanding ATPC's position that the weight of cost-causation principles would support a cost allocation more heavily weighted toward Ridgeline, ATPC recognizes that the proposed interconnection will generate mutual benefits for both pipeline systems and their respective shippers. Ridgeline gains access to downstream markets served by the ATPC system, including deliveries into the Tarrant & Co. ("Transco") system, the Harborline Group system, and multiple local distribution company city gates in the mid-Atlantic region. Concurrently, ATPC gains access to incremental natural gas supply from Ridgeline's receipt points in the prolific Marcellus and Utica shale formations, including supply delivered through Ridgeline's receipt point at the Wetzel County Interconnect in Wetzel County, West Virginia.

In recognition of these mutual benefits, ATPC proposes an equal 50/50 allocation of the interconnection facilities cost: $11.15 million to Ridgeline and $11.15 million to ATPC, based on the agreed total interconnection facilities estimate of $22.3 million. ATPC submits that this equal allocation represents a reasonable and balanced compromise that reflects the shared economic advantages that both parties and their shippers will derive from the interconnection.

This 50/50 allocation approach is consistent with Commission policy and precedent favoring equitable cost sharing where an interconnection produces demonstrable mutual benefits for the interconnecting parties. The Commission has repeatedly recognized that where both the requesting party and the interconnecting pipeline stand to benefit from a new interconnection — whether through enhanced market access, supply diversification, or system operational flexibility — a balanced cost allocation is appropriate and consistent with the public interest.

ATPC's parent company, Tidewater Infrastructure Partners LP, has reviewed and authorized the 50/50 cost allocation position set forth herein.

> [C&H Annotation – Trujillo: "50/50 is their opening. May be room to negotiate toward 40/60. Client's floor per Patricia Dunmore is no more than 45% Ridgeline share ($10.035M). Flag for settlement strategy."]

> [C&H Annotation – Callahan: "Their 'mutual benefit' theory undercuts their own argument — if ATPC benefits mutually, why should its shippers bear only 50% when the interconnect is at ATPC's milepost? Run numbers on a benefit-based allocation methodology as alternative."]

C. Allocation of Specific Facility Components

ATPC provides the following detailed breakdown of the total $22.3 million interconnection facilities cost under its proposed 50/50 allocation framework. This breakdown is based on the cost estimates mutually exchanged during the parties' September 2022 technical meetings and reflects the scope of facilities as described in Ridgeline's Version 2.0 draft agreement:

This allocation table is also presented in greater detail in Enclosure 1, which includes ATPC's proposed interconnection cost allocation summary in spreadsheet format.

> [C&H Annotation – Callahan: "Their breakdown is useful — compare against our engineering estimates. Thomas Greaves should review the $4.2M for pig launcher/receiver — seems high relative to our estimate. Also note they've included site prep costs that should arguably be 100% Ridgeline since the interconnect is on Ridgeline's receipt point side."]

2. Alternative Metering Station Design

A. Rejection of Ridgeline's Proposed Ultrasonic Flow Meter Configuration

ATPC has carefully reviewed the metering station design proposed by Ridgeline in Mr. Callahan's December 2022 email and the revised schematics accompanying the Version 2.0 draft agreement. Ridgeline proposes the installation of three (3) ultrasonic flow meter runs of 12-inch nominal diameter in a parallel configuration at the Wetzel County Interconnect meter station. ATPC respectfully objects to this metering configuration on both engineering and regulatory grounds.

First, ATPC believes that three 12-inch ultrasonic flow meter runs are undersized for the proposed 800 MMcf/d bidirectional design capacity at the interconnect, which under the terms contemplated by both parties is expandable to 1.2 Bcf/d. At the full initial design capacity of 800 MMcf/d, three 12-inch meter runs would require each run to measure flow rates at or near the upper end of the meter's rangeability envelope, resulting in unacceptable pressure drop across the metering station and increased measurement uncertainty. The problem is compounded at the expandable capacity of 1.2 Bcf/d, at which point three 12-inch runs would be inadequate to maintain the measurement accuracy required by Commission regulations and applicable industry standards.

Second, ATPC notes that its own mainline system operates at high pressures — the maximum allowable operating pressure ("MAOP") at Milepost 412.6 is 1,480 psig — and requires metering accuracy consistent with FERC measurement standards as well as the American Gas Association's Report No. 9, Measurement of Gas by Multipath Ultrasonic Meters ("AGA Report No. 9"), which establishes performance criteria for custody transfer measurement applications. At the flow velocities and pressure conditions anticipated at the Wetzel County Interconnect, the 12-inch meter runs proposed by Ridgeline would not, in ATPC's engineering judgment, meet the accuracy and repeatability requirements of AGA Report No. 9 across the full range of operating conditions.

> [C&H Annotation – Callahan: "Disagree on the sizing concern. Three 12-inch runs at 800 MMcf/d is well within ultrasonic meter capacity at typical operating pressures of 800-1,000 psig. Thomas Greaves confirmed this in his December 2022 direct testimony. ATPC is inflating engineering concerns to justify higher costs."]

B. ATPC's Proposed Alternative Metering Configuration

In lieu of Ridgeline's proposed three 12-inch ultrasonic flow meter runs, ATPC proposes the installation of four (4) ultrasonic flow meter runs of 16-inch nominal diameter in a parallel configuration. The four 16-inch meter runs would provide adequate measurement capacity and accuracy at the full expandable design capacity of 1.2 Bcf/d without requiring future meter station upgrades, additional construction outages, or supplemental capital investment. The proposed configuration would also provide built-in redundancy, as the station could continue to operate within measurement accuracy tolerances with one of the four runs temporarily out of service for maintenance or calibration.

ATPC acknowledges that the use of four 16-inch meter runs in place of three 12-inch runs increases the estimated meter station cost from approximately $9.8 million (as reflected in the Version 2.0 draft) to approximately $12.4 million — an increase of approximately $2.6 million. This increase is attributable to the larger meter body sizes, associated piping and header modifications, additional valve assemblies, expanded meter station footprint, and related civil works.

Consistent with ATPC's proposed 50/50 cost allocation methodology, ATPC proposes that the incremental $2.6 million also be allocated equally between the parties, with each party bearing $1.3 million of the incremental cost. Under this approach, the revised total interconnection cost — inclusive of the metering station upgrade — would be $24.9 million, with each party responsible for $12.45 million under the 50/50 framework.

ATPC has engaged its own independent engineering consultants to prepare detailed metering station design specifications reflecting the four 16-inch meter run configuration. A preliminary plan view and elevation drawing are provided as Enclosure 2 to this letter. Full engineering specifications, including equipment vendor quotations and hydraulic calculations, are available for technical review and will be provided upon request by Ridgeline's engineering team.

> [C&H Annotation – Trujillo: "This is a material escalation — they're trying to increase total cost by $2.6M AND split it 50/50. Net effect: Ridgeline's share goes from $7.6M under our proposal to $12.45M under theirs. That's a $4.85M swing. Unacceptable without strong engineering justification."]

> [C&H Annotation – Callahan: "Request their engineering study. 16-inch runs are overkill for 800 MMcf/d. Even at 1.2 Bcf/d expansion, four 12-inch runs would suffice. The 16-inch specification appears designed to gold-plate the facility. Check whether ATPC has used 16-inch meters elsewhere on its system for comparable capacities."]

C. Gas Chromatograph Requirements

ATPC accepts in principle the gas chromatograph specifications proposed by Ridgeline in the Version 2.0 draft, including the proposed make, model, and sampling frequency for the primary gas chromatograph at the Wetzel County Interconnect. The gas chromatograph is essential for real-time determination of gas composition, heating value, and specific gravity, which in turn are necessary for accurate custody transfer measurement and for compliance with ATPC's tariff-specified gas quality requirements.

However, ATPC requests the addition of a redundant (backup) gas chromatograph at the interconnection point to ensure measurement continuity during periods of scheduled and unscheduled maintenance of the primary unit. Redundancy in gas quality measurement instrumentation is standard industry practice at custody transfer points on interstate natural gas pipelines, and the absence of a backup chromatograph creates an unacceptable risk of measurement gaps that could result in disputes over gas quality specifications, heating value calculations, and ultimately, financial settlements between the parties.

ATPC estimates the installed cost of the redundant gas chromatograph — including the instrument, sampling system, analyzer shelter, and integration with the meter station's flow computer — at approximately $175,000. ATPC proposes that this cost be included in the total shared interconnection facilities cost, subject to the 50/50 allocation methodology described in Section 1 above.

> [C&H Annotation – Callahan: "Redundant GC is reasonable and standard industry practice. No objection, but should be included in the base cost, not treated as an add-on."]

3. Pig Launcher/Receiver Specifications

A. ATPC's Requirements for Pig Launcher/Receiver Design

ATPC requires that the pig launcher and receiver facilities to be installed at the Wetzel County Interconnect be designed as full-opening, barrel-type units capable of accommodating pigs of 30-inch nominal diameter, corresponding to the nominal diameter of the ATPC mainline at Milepost 412.6. ATPC does not accept Ridgeline's proposed specification of 24-inch diameter pig launcher/receiver facilities, which corresponds to the nominal diameter of the Ridgeline pipeline system but is inadequate for ATPC's operational requirements.

The rationale for this requirement is straightforward. ATPC regularly conducts inline inspections ("ILI") of its 30-inch mainline using smart pig tools — including magnetic flux leakage ("MFL") tools, geometry tools, and caliper pigs — as required under the Department of Transportation Pipeline and Hazardous Materials Safety Administration ("PHMSA") regulations at 49 C.F.R. Part 192, Subpart O, and ATPC's own integrity management program. The interconnection point at Milepost 412.6 must allow the launching and receiving of 30-inch ILI tools at or through the interconnection facilities without requiring the construction of separate, dedicated pig trap facilities on the ATPC side of the interconnect. A 24-inch pig launcher/receiver at the interconnection point would create a diameter restriction that would prevent passage of 30-inch ILI tools, effectively creating a dead zone in ATPC's ILI program coverage and potentially placing ATPC in non-compliance with its PHMSA-approved integrity management plan.

ATPC further requires that the pig launcher/receiver facilities comply in all respects with the American Society of Mechanical Engineers standard ASME B31.8, Gas Transmission and Distribution Piping Systems, and with all applicable DOT PHMSA regulations under 49 C.F.R. Part 192, including but not limited to the requirements for design, fabrication, testing, and operation of pipeline facilities.

Specifically, ATPC requires that the pig launcher and receiver facilities include the following design features and components:

(a) Quick-opening closure mechanisms equipped with safety interlock systems to prevent opening of the closure under pressurized conditions;

(b) Pig signaler and indicator devices installed at both the launcher and receiver barrels to confirm pig passage;

(c) Drain and vent connections on both the launcher and receiver barrels, sized and configured in accordance with ATPC's standard pigging facility specifications;

(d) Minimum design pressure rating of 1,480 psig, corresponding to the MAOP of the ATPC mainline at Milepost 412.6; and

(e) Bypass piping designed and sized to allow continued gas flow through the interconnection point during pigging operations, thereby avoiding service interruptions to shippers on either the ATPC or Ridgeline systems during routine or emergency pigging activities.

The detailed specification sheet for the 30-inch pig launcher/receiver is provided as Enclosure 3 to this letter.

> [C&H Annotation – Callahan: "30-inch pig requirement is problematic — Ridgeline's system is 24-inch. A 30-inch launcher/receiver only benefits ATPC's ILI operations on its own mainline. This cost should be 100% ATPC under cost-causation principles. Prepare separate argument."]

> [C&H Annotation – Trujillo: "Agree with Brett. The 30-inch pig spec is a back-door attempt to shift ATPC's own ILI compliance costs to the shared interconnection. We should propose a dual-diameter design: 24-inch for Ridgeline pigging, 30-inch for ATPC pigging, with costs allocated to each party for its own diameter. Discuss with Thomas Greaves."]

B. Cost Implications of 30-Inch Pig Specifications

ATPC acknowledges that the specification of 30-inch full-opening, barrel-type pig launcher and receiver facilities increases the estimated cost of the pig launcher/receiver component from Ridgeline's estimate of $4.2 million (based on a 24-inch specification) to approximately $5.1 million — an incremental increase of approximately $0.9 million. The cost increase is attributable to the larger barrel diameter, heavier wall thickness required at 1,480 psig design pressure, larger closure mechanisms, and associated piping and support structure modifications.

ATPC maintains that this incremental $0.9 million should be included in the total shared interconnection facilities cost and allocated on a 50/50 basis, consistent with the overall cost allocation methodology proposed in Section 1 of this letter. The pig launcher/receiver facilities are integral components of the interconnection infrastructure that will serve both pipeline systems and benefit both parties through enhanced operational flexibility, including the ability to conduct pigging and ILI operations through the interconnection point.

> [C&H Annotation – Callahan: "Absolutely not. $0.9M increase is 100% attributable to ATPC's 30-inch mainline ILI requirements. Counter-propose that any costs attributable to pig facilities exceeding 24-inch diameter be borne solely by ATPC."]

4. SCADA Integration and Operational Protocols

ATPC requires full integration between the SCADA (Supervisory Control and Data Acquisition) system at the Wetzel County Interconnect metering station and ATPC's existing SCADA system at ATPC's central gas control facility located in Pittsburgh, Pennsylvania. Real-time operational data from the interconnection point is essential for ATPC's dispatchers to manage system flows, maintain system integrity, and ensure compliance with ATPC's tariff obligations, including its obligation to schedule and confirm nominations on an hourly and daily basis in accordance with NAESB standards.

ATPC specifies that the following data points must be transmitted in real time from the Wetzel County Interconnect meter station to ATPC's Pittsburgh control center:

(a) Instantaneous and totalized flow rate (MMcf/d and Dth/d);

(b) Static and differential pressure at each meter run;

(d) Gas quality parameters as reported by the gas chromatograph (including heating value, specific gravity, and individual component analysis);

(e) Meter station operational status and alarm conditions, including high/low pressure alarms, high/low flow alarms, meter run isolation status, and chromatograph fault conditions; and

(f) Valve position status for all remotely operated valves at the interconnection point.

ATPC requires that Ridgeline configure its SCADA and communications systems at the Wetzel County Interconnect to utilize the Distributed Network Protocol version 3.0 ("DNP3") communication protocol, which is the standard protocol currently deployed across ATPC's SCADA architecture. Communications between the interconnection point and ATPC's nearest communication node shall be conducted over a dedicated fiber optic communication link, and ATPC proposes that the cost of installing this dedicated fiber optic link be shared equally between the parties as part of the overall interconnection facilities cost.

Ridgeline shall also ensure that its remote terminal unit ("RTU") or programmable logic controller ("PLC") at the Wetzel County Interconnect is configured for DNP3 master-slave communication with ATPC's SCADA host, and that appropriate cyber security measures — including encryption, authentication, and access control consistent with TSA Pipeline Security Directives — are implemented on all SCADA communication pathways associated with the interconnection.

> [C&H Annotation – Callahan: "SCADA integration is standard and expected. DNP3 over fiber is fine — consistent with industry practice. No objection to this section in principle, but confirm with Thomas Greaves that Ridgeline's SCADA system at the Wetzel Station can interface with DNP3."]

5. Operational Flow Requirements at the Interconnect

ATPC concurs with the general design premise that the Wetzel County Interconnect shall support bidirectional gas flow between the ATPC and Ridgeline systems. As contemplated by both parties, the initial design capacity of the interconnection shall be 800 MMcf/d, with the facilities designed and constructed to be expandable to 1.2 Bcf/d through the addition of compression or looping on the respective pipeline systems without requiring physical modifications to the interconnection facilities themselves (other than any metering upgrades, which are addressed in Section 2 above).

ATPC specifies the following minimum pressure requirements at the interconnection point:

(a) Primary Flow Direction (Ridgeline to ATPC): When gas flows from the Ridgeline system into the ATPC mainline at the Wetzel County Interconnect, Ridgeline shall deliver gas at a minimum pressure of 800 psig at the interconnection point flange. This minimum delivery pressure is necessary to ensure that gas can be received into the ATPC mainline — which typically operates at pressures ranging from 850 psig to 1,200 psig in the vicinity of Milepost 412.6 — without adversely affecting ATPC's mainline hydraulics or the service commitments to ATPC's existing firm shippers.

(b) Reverse Flow Direction (ATPC to Ridgeline): When gas flows from the ATPC mainline into the Ridgeline system at the Wetzel County Interconnect, ATPC shall deliver gas at a minimum pressure of 750 psig at the interconnection point flange. The lower minimum pressure for reverse flow reflects the lower operating pressure of the Ridgeline system relative to the ATPC mainline.

ATPC notes that the current throughput on the Ridgeline system is approximately 680 MMcf/d, which represents approximately 56.67% utilization of the 1.2 Bcf/d ultimate design capacity. ATPC further notes that Ridgeline's system includes three compressor stations with an aggregate installed horsepower of approximately 45,000 HP. ATPC requests that, prior to execution of the Interconnection Agreement, Ridgeline provide a demonstration — supported by hydraulic modeling data and compressor performance curves — confirming that Ridgeline's existing and planned compression facilities are sufficient to maintain the minimum delivery pressure of 800 psig at the interconnection point at all throughput levels from current operations up to and including the full 1.2 Bcf/d design capacity. This demonstration is necessary for ATPC to confirm that the interconnection will not impose adverse hydraulic impacts on the ATPC mainline during periods of high throughput on the Ridgeline system.

> [C&H Annotation – Callahan: "Pressure specs are reasonable and consistent with Thomas Greaves's testimony. The 800/750 psig split is workable. Note however that ATPC's request for Ridgeline to 'demonstrate' compression adequacy is a discovery tactic — they want our compression data. Coordinate with Greaves on what to share vs. what is commercially sensitive."]

6. Interconnection Agreement as FERC Rate Schedule

ATPC acknowledges the Deficiency Letter issued by the Commission's Office of Energy Market Regulation on January 19, 2023, in Docket No. RP22-847-000, which includes, at Item 9, a requirement that the Interconnection Agreement between ATPC and Ridgeline be filed with the Commission as a FERC rate schedule under Section 4 of the Natural Gas Act, 15 U.S.C. § 717c.

ATPC does not oppose in principle the filing of the Interconnection Agreement as a FERC rate schedule. However, ATPC expressly reserves the right to protest any tariff sheet, rate schedule, or other filing submitted by Ridgeline to the extent that such filing improperly allocates interconnection costs to ATPC or to ATPC's existing firm transportation shippers, or to the extent that such filing is inconsistent with the cost allocation terms ultimately agreed upon by the parties or determined by the Commission.

In addition, ATPC requests that the Interconnection Agreement include provisions for periodic review and adjustment of the interconnection cost allocations. ATPC proposes that such reviews occur not less frequently than every five (5) years from the in-service date of the interconnection facilities, with adjustments to the cost allocation to reflect any material changes in the usage, throughput, or operational benefits derived by each party from the interconnection. ATPC believes that periodic review is essential to ensure that the cost allocation remains just and reasonable over the operational life of the interconnection facilities, particularly given the anticipated expansion of the interconnection capacity from 800 MMcf/d to 1.2 Bcf/d and the evolving nature of supply patterns in the Appalachian Basin.

Finally, ATPC insists that any filing of the Interconnection Agreement as a FERC rate schedule must be fully coordinated between the parties and filed simultaneously by both ATPC and Ridgeline with the Commission. Unilateral filing of the Interconnection Agreement by either party is unacceptable and would be prejudicial to the non-filing party's interests.

> [C&H Annotation – Trujillo: "Five-year review cycle is aggressive — we proposed no periodic review in V2.0. Consider countering with ten-year review or review only upon material change in circumstances. Simultaneous filing requirement is reasonable."]

7. Construction and In-Service Timeline

ATPC notes that the original target in-service date for the Wetzel County Interconnect was the fourth quarter of 2023, as contemplated in the parties' initial discussions and reflected in the preliminary project schedule exchanged during the September 2022 technical meetings. That target date is no longer achievable due to the pendency of the FERC proceeding in Docket Nos. RP22-847-000 and RP22-847-001, and the parties' inability to date to reach agreement on the terms of the Interconnection Agreement.

ATPC proposes the following revised construction and in-service timeline:

(a) Construction Commencement: Construction of the interconnection facilities shall commence no later than ninety (90) days after the date on which the Commission issues a final, non-appealable order approving the Interconnection Agreement in the above-captioned proceeding.

(b) In-Service Date: The interconnection facilities shall be completed, tested, and placed in service no later than eighteen (18) months after the date of the Commission's order approving the Interconnection Agreement.

(c) Liquidated Damages: In the event that either party's actions or omissions cause a delay in achieving the in-service date beyond the eighteen (18) month deadline specified above, the responsible party shall pay to the non-responsible party liquidated damages in the amount of Fifty Thousand Dollars ($50,000) per calendar day for each day of delay beyond the deadline. The parties acknowledge that actual damages from such delay would be difficult to calculate and that the stipulated liquidated damages amount represents a reasonable estimate of the anticipated harm. Liquidated damages shall not be payable for delays caused by force majeure events, as defined in the Interconnection Agreement.

(d) Joint Construction Management: The construction of the interconnection facilities shall be managed by a Joint Project Management Committee ("JPMC") consisting of two (2) representatives designated by ATPC and two (2) representatives designated by Ridgeline. The JPMC shall be responsible for overseeing the design, procurement, construction, testing, and commissioning of the interconnection facilities, and shall meet no less frequently than bi-weekly during active construction. Decisions of the JPMC shall be made by unanimous consent; in the event of a deadlock, the disputed matter shall be escalated to the senior officers of each party designated in the Interconnection Agreement for resolution.

> [C&H Annotation – Trujillo: "Liquidated damages at $50K/day is punitive and non-standard for interconnection agreements. Reject. Propose mutual hold-harmless for delays caused by regulatory proceedings, force majeure, or third-party permitting delays. 18-month timeline is workable but aggressive given current procurement lead times — Thomas Greaves should weigh in."]

8. Insurance and Indemnification

ATPC requires that Ridgeline maintain, at its sole cost and expense, the following insurance coverages during the construction and operation of the interconnection facilities at the Wetzel County Interconnect:

(a) Comprehensive General Liability Insurance: Coverage in an amount not less than Ten Million Dollars ($10,000,000) per occurrence and Twenty-Five Million Dollars ($25,000,000) in the aggregate, covering bodily injury, property damage, personal injury, and advertising injury arising from or related to the construction, operation, maintenance, or repair of the interconnection facilities. The policy shall name ATPC as an additional insured and shall include contractual liability coverage.

(b) Umbrella/Excess Liability Insurance: Coverage in an amount not less than Twenty-Five Million Dollars ($25,000,000) per occurrence and in the aggregate, in excess of the comprehensive general liability and any automobile liability coverages.

(c) Pollution Liability Insurance: Coverage in an amount not less than Fifteen Million Dollars ($15,000,000) per occurrence, covering claims for bodily injury, property damage, and environmental remediation costs arising from the release, discharge, or migration of pollutants or contaminants from or through the interconnection facilities. The pollution liability policy shall include coverage for both sudden and accidental releases and for gradual releases discovered during the policy period.

All insurance policies required hereunder shall be issued by carriers with an A.M. Best rating of not less than "A-" (Excellent) and a financial size category of not less than "VIII." Ridgeline shall provide ATPC with certificates of insurance evidencing the required coverages prior to the commencement of construction and annually thereafter during the operational life of the interconnection facilities.

ATPC further proposes that the Interconnection Agreement include mutual indemnification provisions under which each party shall indemnify, defend, and hold harmless the other party, its affiliates, and their respective officers, directors, employees, and agents from and against any and all claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from or related to the indemnifying party's negligence or willful misconduct in connection with the construction, operation, maintenance, or repair of the interconnection facilities.

> [C&H Annotation – Callahan: "Insurance minimums are in the standard range for midstream interconnections. Indemnification language needs to be mutual and carve out sole negligence and willful misconduct. Review against Ridgeline's existing insurance program — coordinate with Angela Moretti."]

9. Reservation of Rights and Proceeding Positions

ATPC expressly reserves all rights, claims, defenses, and positions asserted in its protest and motion to intervene filed on August 15, 2022 in Docket No. RP22-847-000, and in all subsequent filings, pleadings, testimony, and submissions made by ATPC in the above-captioned proceeding. This counterproposal is made solely for the purpose of advancing negotiations toward a mutually acceptable Interconnection Agreement and is without prejudice to ATPC's positions on any issue in the rate case under Docket No. RP22-847-000 or any related proceeding under Docket No. RP22-847-001, including but not limited to issues of cost allocation, rate design, tariff structure, recourse rate levels, return on equity, and depreciation methodology.

ATPC specifically notes that the answering testimony filed by ATPC on January 9, 2023 — including the testimony of ATPC's witnesses challenging Ridgeline's proposed recourse rate of $0.2265 per dekatherm and proposing an alternative return on equity of 10.75% for the Ridgeline pipeline system — remains in full force and effect and is not affected, modified, or withdrawn by virtue of this counterproposal or any negotiation arising therefrom.

> [C&H Annotation – Trujillo: "Standard reservation. Note their ROE position of 10.75% — significant gap from our original 14.00% and even our revised 12.50%."]

We respectfully request that Calderwood & Harkness, on behalf of Ridgeline Midstream Services LLC, respond to this counterproposal within thirty (30) days of the date of this letter — that is, by no later than February 16, 2023. ATPC believes that a prompt exchange of positions on the remaining open issues will facilitate timely resolution of the interconnection terms and allow the parties to focus their efforts on the broader rate case proceeding.

In addition, ATPC invites Ridgeline to schedule a joint technical meeting between the parties' respective engineering teams to discuss the metering station design and pig launcher/receiver specifications in greater detail. On the ATPC side, the technical meeting would be led by Sandra K. Fenton, ATPC's Vice President of Regulatory Affairs, together with ATPC's engineering consultants. We understand that Thomas Greaves, Ridgeline's Vice President of Engineering & Operations, would lead the Ridgeline team. ATPC proposes that this technical meeting take place during the week of February 6, 2023, either in person in Pittsburgh or by videoconference, at Ridgeline's convenience.

ATPC also remains willing to participate in further settlement conferences before Settlement Judge Howard Margolis, and views the interconnection agreement negotiations as an integral component of any comprehensive settlement of the pending proceeding. It is ATPC's sincere hope that the parties can reach agreement on the terms of the Interconnection Agreement even as the broader rate case issues — including the cost-of-service and rate design matters now subject to the Commission's January 19, 2023 Deficiency Letter and the potential tariff redesign — remain subject to further proceedings.

We look forward to your response.

Respectfully submitted,

KELLNER, ROYCE & DILLARD LLP

By: ________

William Pratt Senior Partner One PPG Place, Suite 2800 Pittsburgh, PA 15222 Telephone: (412) 391-7418

Email: wpratt@krd-law.com

On behalf of Appalachian Trunk Pipeline Company, LLC

Enclosures:

Enclosure 1: ATPC's Proposed Interconnection Cost Allocation Summary Table (one-page spreadsheet showing $22.3M base + $2.6M metering station upgrade + $0.9M pig launcher/receiver upgrade = revised total of $25.8M under ATPC's proposed scope; 50/50 allocation = $12.9M per party)

Enclosure 2: ATPC's Preliminary Metering Station Design Schematic — Four (4) 16-Inch Ultrasonic Flow Meter Runs (plan view and elevation drawing)

Enclosure 3: ATPC's Pig Launcher/Receiver Specification Sheet — 30-Inch Full-Opening Barrel-Type, ASME B31.8 Compliant, 1,480 psig MAOP Design Pressure

> [C&H Annotation – Callahan: "Review all three enclosures with Thomas Greaves by end of month. Schedule call for January 25. Need engineering response before we draft our counter."]

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Internal Routing Memorandum

Distribution.

1. George Trujillo — Responsible Partner

2. Patricia Dunmore — Billing Partner / DEH Chairperson

3. David Stanton — Working Associate

4. File

Summary of Key Issues for Response

1. Cost Allocation

ATPC proposes a 50/50 cost allocation: $11.15 million to each party based on the $22.3 million base interconnection facilities cost. Under ATPC's expanded scope (which includes the metering station upgrade and pig launcher upsizing), ATPC proposes $12.9 million to each party on a total of $25.8 million. By contrast, Ridgeline's current position under the Version 2.0 draft is 34.1% Ridgeline ($7.6 million) / 65.9% ATPC ($14.7 million). The gap between the parties' positions is approximately $3.55 million on the base scope and approximately $5.3 million on ATPC's expanded scope. Per instructions from Patricia Dunmore (communicated in her December 20, 2022 email), the client's floor is a maximum Ridgeline share of 45%, which equates to $10.035 million on the $22.3 million base. Recommend countering at a 40/60 split on the original $22.3 million scope: Ridgeline $8.92 million / ATPC $13.38 million. This preserves room to move to 45% if necessary during settlement discussions while maintaining meaningful distance from ATPC's 50/50 position.

2. Metering Station Design

ATPC proposes four (4) 16-inch ultrasonic flow meter runs in place of Ridgeline's proposed three (3) 12-inch runs. This change increases the meter station cost by $2.6 million (from $9.8 million to $12.4 million). Engineering review is needed — consult Thomas Greaves. Preliminary assessment: 16-inch meter runs are oversized for the 800 MMcf/d initial design capacity and are likely unnecessary even at the 1.2 Bcf/d expandable capacity. As a potential compromise, consider counter-proposing four (4) 12-inch ultrasonic flow meter runs. This adds one run for redundancy (addressing ATPC's operational flexibility concern) without upsizing to 16-inch diameter (avoiding the cost escalation). This approach would add approximately $800,000–$1.0 million to the meter station cost — substantially less than ATPC's $2.6 million increase — and would provide adequate measurement capacity through 1.2 Bcf/d at operating pressures of 800–1,200 psig.

3. Pig Launcher/Receiver

ATPC insists on 30-inch pig launcher/receiver facilities to accommodate its own inline inspection tools on the 30-inch ATPC mainline. This increases the pig launcher/receiver cost by $0.9 million (from $4.2 million to $5.1 million). ATPC proposes including this cost in the 50/50 shared allocation. Strong cost-causation argument available: the 30-inch pig specification is attributable solely to ATPC's need to run 30-inch ILI tools on its own mainline and provides no benefit to Ridgeline's 24-inch system. Recommend proposing a dual-diameter pig launcher/receiver design: 24-inch facilities for Ridgeline pigging operations (costs shared) and 30-inch facilities for ATPC ILI operations (costs borne 100% by ATPC). Discuss engineering feasibility of a dual-diameter design with Thomas Greaves.

4. Total Cost Impact

Under ATPC's full counterproposal (expanded scope + 50/50 allocation), Ridgeline's share of the interconnection cost increases from $7.6 million (Ridgeline's current position) to $12.9 million — a $5.3 million increase representing a 69.7% escalation in Ridgeline's share. This is unacceptable. The response strategy must push back on both vectors: (a) reject the scope expansion (or limit it through engineering-based compromises), and (b) reject the 50/50 allocation in favor of an allocation more consistent with cost-causation principles that recognizes ATPC as the primary beneficiary of the expanded supply access provided by the interconnection.

5. Timeline

ATPC's proposed 18-month construction timeline from FERC order to in-service is workable in principle, subject to confirmation from Thomas Greaves regarding current procurement lead times for ultrasonic meters, pig launcher/receiver equipment, and SCADA components. However, the proposed liquidated damages provision of $50,000 per day for construction delays is excessive and non-standard for interconnection agreements of this type. Recommend rejecting the liquidated damages provision in its entirety and proposing instead a mutual hold-harmless provision for delays caused by regulatory proceedings, force majeure events, permitting delays attributable to federal, state, or local governmental authorities, and third-party actions beyond either party's reasonable control.

6. Rate Schedule Filing

The FERC Deficiency Letter issued January 19, 2023 includes, at Item 9, a requirement that the Interconnection Agreement be filed as a FERC rate schedule. This is a mandatory requirement and must be incorporated into Version 3.0 of the draft Interconnection Agreement. Coordinate the response to Item 9 with the ongoing tariff redesign work being performed by the Braswell Energy Consulting Group LLC under engagement BEC-2023-0041. Dr. Raymond Braswell should be consulted on the cost-of-service implications of different interconnection cost allocation scenarios, as the interconnection facility costs allocated to Ridgeline will be included in Ridgeline's rate base and will affect the recourse rate calculations.

7. Next Steps

(a) Schedule engineering review call with Thomas Greaves (VP Engineering & Operations, Ridgeline) by January 25, 2023 to review ATPC's three enclosures (cost allocation table, metering station schematic, pig launcher/receiver specification);

(b) Draft response letter to KRD (William Pratt) by February 15, 2023, targeting transmission to KRD no later than February 16, 2023 (the 30-day deadline requested by ATPC);

(c) Coordinate with Braswell Energy Consulting Group LLC (Dr. Raymond Braswell, engagement BEC-2023-0041) on the cost implications of the various interconnection cost allocation scenarios for Ridgeline's revised rate base, cost of service, and recourse rate;

(d) Report to Patricia Dunmore (Billing Partner / DEH Chairperson) on settlement implications — the interconnection cost allocation is one of three key sticking points in the overall proceeding, together with the return on equity (ATPC position: 10.75%; Ridgeline original: 14.00%; Ridgeline revised: 12.50%) and the load factor used in rate design;

(e) Note that the FERC Deficiency Letter was issued on January 19, 2023 — the same day this letter from KRD was received at the office. The Deficiency Letter and the KRD counterproposal create parallel response tracks that must be coordinated. Ensure that the response to the Deficiency Letter and the response to the KRD counterproposal are internally consistent, particularly with respect to the interconnection cost allocation and the rate schedule filing requirements.

Prepared by: Brett Callahan, Esq., Calderwood & Harkness LLP Reviewed by: George Trujillo, Esq., Calderwood & Harkness LLP

Date: January 19, 2023

Facility Component	Total Estimated Cost	ATPC Share (50%)	Ridgeline Share (50%)
Meter station facilities	$9,800,000	$4,900,000	$4,900,000
Pig launcher/receiver facilities	$4,200,000	$2,100,000	$2,100,000
Mainline tie-in and hot tap	$3,700,000	$1,850,000	$1,850,000
SCADA integration and communications	$2,100,000	$1,050,000	$1,050,000
Site preparation, civil works, and right-of-way	$2,500,000	$1,250,000	$1,250,000
Total	$22,300,000	$11,150,000	$11,150,000
Date Received:	January 19, 2023
Received by:	Brett Callahan
C&H Matter No.:	1016-00005
Client:	Dunmore Energy Holdings Ltd. / Ridgeline Midstream Services LLC
Document:	Letter from W. Pratt (KRD) dated January 17, 2023, presenting ATPC counterproposal on Interconnection Agreement terms
FERC Docket:	RP22-847-000; RP22-847-001

KELLNER, ROYCE & DILLARD LLP Attorneys at Law
One PPG Place, Suite 2800 Pittsburgh, Pennsylvania 15222
Telephone: (412) 391-7400 Facsimile: (412) 391-7401
William Pratt Senior Partner Direct Dial: (412) 391-7418 wpratt@krd-law.com
January 17, 2023
VIA EMAIL AND OVERNIGHT COURIER
George Trujillo, Esq. Responsible Partner, Energy & Infrastructure Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006
cc: Brett Callahan, Esq. Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006
cc: Sandra K. Fenton Vice President, Regulatory Affairs Appalachian Trunk Pipeline Company, LLC 2200 Penn Center West, Suite 300 Pittsburgh, PA 15276
cc: Thomas Greaves Vice President, Engineering & Operations Ridgeline Midstream Services LLC 700 Kanawha Boulevard East, Suite 1400 Charleston, WV 25301
Re: FERC Docket Nos. RP22-847-000 and RP22-847-001 — Interconnection Agreement Between Appalachian Trunk Pipeline Company, LLC and Ridgeline Midstream Services LLC — ATPC Counterproposal
Dear Mr. Trujillo:
We write on behalf of our client, Appalachian Trunk Pipeline Company, LLC ("ATPC"), in response to the letter dated November 18, 2022 from your colleague Brett Callahan transmitting Ridgeline Midstream Services LLC's ("Ridgeline") counterproposal on metering station design at the proposed Wetzel County Interconnect. ATPC also acknowledges receipt of Ridgeline's Draft Interconnection Agreement Version 2.0, which was transmitted by Mr. Callahan's email of December 12, 2022 as a redline against the original draft agreement dated September 2022.
ATPC has carefully and thoroughly reviewed Ridgeline's proposed terms as reflected in the Version 2.0 redline, including the revised cost allocation methodology, the metering station design schematics, the pigging facility specifications, and the various operational protocols set forth therein. Having completed that review in consultation with ATPC's engineering and regulatory teams, ATPC hereby submits this counterproposal on the terms set forth below.
As a threshold matter, we note that this counterproposal is being submitted without prejudice to any and all positions taken by ATPC in the above-captioned proceeding, including but not limited to the positions set forth in ATPC's protest and motion to intervene filed on August 15, 2022, and ATPC's answering testimony filed on January 9, 2023. Nothing in this letter or in the enclosed materials shall be construed as a waiver, modification, or limitation of ATPC's rights under the Natural Gas Act, the Commission's regulations, or any applicable order of the Commission in this proceeding. ATPC expressly reserves the right to supplement, amend, or withdraw any aspect of this counterproposal in the course of further negotiations or proceedings before the Commission.
> [C&H Annotation – Trujillo: "Standard reservation of rights language — note they are preserving all protest arguments."]
1. Interconnection Cost Allocation — ATPC's Core Position
A. Rejection of Ridgeline's Proposed 34.1% / 65.9% Cost Split
ATPC respectfully but firmly rejects Ridgeline's proposed cost allocation as set forth in the Version 2.0 draft, under which Ridgeline would bear only $7.6 million (34.1%) of the total $22.3 million estimated interconnection facilities cost, with the remaining $14.7 million (65.9%) allocated to ATPC. ATPC considers this proposed allocation to be fundamentally inconsistent with longstanding Commission cost-causation principles and, if adopted, would impose an unjust and unreasonable burden on ATPC and its existing firm transportation shippers.
The proposed interconnection arises from Ridgeline's independent decision to construct a new 187-mile natural gas gathering and transmission pipeline system in Wetzel, marshall, and Doddridge Counties, West Virginia, and to seek interconnection with ATPC's existing 640-mile, 3.8 Bcf/d interstate pipeline system. Ridgeline, as the new entrant seeking physical interconnection with ATPC's established mainline infrastructure, is the primary cost-causer of the interconnection facilities that must be constructed, installed, and commissioned at the Wetzel County Interconnect. ATPC's existing shippers — who entered into their firm transportation service agreements based on ATPC's existing system configuration and mainline capacity — bear no responsibility for, and derived no initial expectation of benefit from, Ridgeline's unilateral decision to construct a new pipeline requiring a physical tie-in to the ATPC system.
The interconnection point is located at ATPC Milepost 412.6 on the ATPC mainline. The physical modifications required at this location — including the hot tap on ATPC's 30-inch mainline, the installation of meter station facilities, pig launcher/receiver equipment, SCADA communications infrastructure, and associated civil works — are necessitated entirely by Ridgeline's application for interconnection. ATPC did not initiate, propose, or request these modifications, and but for Ridgeline's interconnection application, no modifications to the ATPC mainline at Milepost 412.6 would be required.
Accordingly, any cost allocation methodology that assigns nearly two-thirds of the interconnection cost to ATPC fundamentally misapplies the Commission's cost-causation principles and improperly shifts the financial consequences of Ridgeline's business decisions onto ATPC and its shippers.
> [C&H Annotation – Callahan: "Their cost-causation argument is weak — interconnection benefits ATPC shippers by providing access to new Marcellus/Utica supply. See our Oct 2022 memo on FERC precedent re Order No. 2004."]
B. ATPC's Proposed 50/50 Cost Allocation
Notwithstanding ATPC's position that the weight of cost-causation principles would support a cost allocation more heavily weighted toward Ridgeline, ATPC recognizes that the proposed interconnection will generate mutual benefits for both pipeline systems and their respective shippers. Ridgeline gains access to downstream markets served by the ATPC system, including deliveries into the Tarrant & Co. ("Transco") system, the Harborline Group system, and multiple local distribution company city gates in the mid-Atlantic region. Concurrently, ATPC gains access to incremental natural gas supply from Ridgeline's receipt points in the prolific Marcellus and Utica shale formations, including supply delivered through Ridgeline's receipt point at the Wetzel County Interconnect in Wetzel County, West Virginia.
In recognition of these mutual benefits, ATPC proposes an equal 50/50 allocation of the interconnection facilities cost: $11.15 million to Ridgeline and $11.15 million to ATPC, based on the agreed total interconnection facilities estimate of $22.3 million. ATPC submits that this equal allocation represents a reasonable and balanced compromise that reflects the shared economic advantages that both parties and their shippers will derive from the interconnection.
This 50/50 allocation approach is consistent with Commission policy and precedent favoring equitable cost sharing where an interconnection produces demonstrable mutual benefits for the interconnecting parties. The Commission has repeatedly recognized that where both the requesting party and the interconnecting pipeline stand to benefit from a new interconnection — whether through enhanced market access, supply diversification, or system operational flexibility — a balanced cost allocation is appropriate and consistent with the public interest.
ATPC's parent company, Tidewater Infrastructure Partners LP, has reviewed and authorized the 50/50 cost allocation position set forth herein.
> [C&H Annotation – Trujillo: "50/50 is their opening. May be room to negotiate toward 40/60. Client's floor per Patricia Dunmore is no more than 45% Ridgeline share ($10.035M). Flag for settlement strategy."]
> [C&H Annotation – Callahan: "Their 'mutual benefit' theory undercuts their own argument — if ATPC benefits mutually, why should its shippers bear only 50% when the interconnect is at ATPC's milepost? Run numbers on a benefit-based allocation methodology as alternative."]
C. Allocation of Specific Facility Components
ATPC provides the following detailed breakdown of the total $22.3 million interconnection facilities cost under its proposed 50/50 allocation framework. This breakdown is based on the cost estimates mutually exchanged during the parties' September 2022 technical meetings and reflects the scope of facilities as described in Ridgeline's Version 2.0 draft agreement:
This allocation table is also presented in greater detail in Enclosure 1, which includes ATPC's proposed interconnection cost allocation summary in spreadsheet format.
> [C&H Annotation – Callahan: "Their breakdown is useful — compare against our engineering estimates. Thomas Greaves should review the $4.2M for pig launcher/receiver — seems high relative to our estimate. Also note they've included site prep costs that should arguably be 100% Ridgeline since the interconnect is on Ridgeline's receipt point side."]
2. Alternative Metering Station Design
A. Rejection of Ridgeline's Proposed Ultrasonic Flow Meter Configuration
ATPC has carefully reviewed the metering station design proposed by Ridgeline in Mr. Callahan's December 2022 email and the revised schematics accompanying the Version 2.0 draft agreement. Ridgeline proposes the installation of three (3) ultrasonic flow meter runs of 12-inch nominal diameter in a parallel configuration at the Wetzel County Interconnect meter station. ATPC respectfully objects to this metering configuration on both engineering and regulatory grounds.
First, ATPC believes that three 12-inch ultrasonic flow meter runs are undersized for the proposed 800 MMcf/d bidirectional design capacity at the interconnect, which under the terms contemplated by both parties is expandable to 1.2 Bcf/d. At the full initial design capacity of 800 MMcf/d, three 12-inch meter runs would require each run to measure flow rates at or near the upper end of the meter's rangeability envelope, resulting in unacceptable pressure drop across the metering station and increased measurement uncertainty. The problem is compounded at the expandable capacity of 1.2 Bcf/d, at which point three 12-inch runs would be inadequate to maintain the measurement accuracy required by Commission regulations and applicable industry standards.
Second, ATPC notes that its own mainline system operates at high pressures — the maximum allowable operating pressure ("MAOP") at Milepost 412.6 is 1,480 psig — and requires metering accuracy consistent with FERC measurement standards as well as the American Gas Association's Report No. 9, Measurement of Gas by Multipath Ultrasonic Meters ("AGA Report No. 9"), which establishes performance criteria for custody transfer measurement applications. At the flow velocities and pressure conditions anticipated at the Wetzel County Interconnect, the 12-inch meter runs proposed by Ridgeline would not, in ATPC's engineering judgment, meet the accuracy and repeatability requirements of AGA Report No. 9 across the full range of operating conditions.
> [C&H Annotation – Callahan: "Disagree on the sizing concern. Three 12-inch runs at 800 MMcf/d is well within ultrasonic meter capacity at typical operating pressures of 800-1,000 psig. Thomas Greaves confirmed this in his December 2022 direct testimony. ATPC is inflating engineering concerns to justify higher costs."]
B. ATPC's Proposed Alternative Metering Configuration
In lieu of Ridgeline's proposed three 12-inch ultrasonic flow meter runs, ATPC proposes the installation of four (4) ultrasonic flow meter runs of 16-inch nominal diameter in a parallel configuration. The four 16-inch meter runs would provide adequate measurement capacity and accuracy at the full expandable design capacity of 1.2 Bcf/d without requiring future meter station upgrades, additional construction outages, or supplemental capital investment. The proposed configuration would also provide built-in redundancy, as the station could continue to operate within measurement accuracy tolerances with one of the four runs temporarily out of service for maintenance or calibration.
ATPC acknowledges that the use of four 16-inch meter runs in place of three 12-inch runs increases the estimated meter station cost from approximately $9.8 million (as reflected in the Version 2.0 draft) to approximately $12.4 million — an increase of approximately $2.6 million. This increase is attributable to the larger meter body sizes, associated piping and header modifications, additional valve assemblies, expanded meter station footprint, and related civil works.
Consistent with ATPC's proposed 50/50 cost allocation methodology, ATPC proposes that the incremental $2.6 million also be allocated equally between the parties, with each party bearing $1.3 million of the incremental cost. Under this approach, the revised total interconnection cost — inclusive of the metering station upgrade — would be $24.9 million, with each party responsible for $12.45 million under the 50/50 framework.
ATPC has engaged its own independent engineering consultants to prepare detailed metering station design specifications reflecting the four 16-inch meter run configuration. A preliminary plan view and elevation drawing are provided as Enclosure 2 to this letter. Full engineering specifications, including equipment vendor quotations and hydraulic calculations, are available for technical review and will be provided upon request by Ridgeline's engineering team.
> [C&H Annotation – Trujillo: "This is a material escalation — they're trying to increase total cost by $2.6M AND split it 50/50. Net effect: Ridgeline's share goes from $7.6M under our proposal to $12.45M under theirs. That's a $4.85M swing. Unacceptable without strong engineering justification."]
> [C&H Annotation – Callahan: "Request their engineering study. 16-inch runs are overkill for 800 MMcf/d. Even at 1.2 Bcf/d expansion, four 12-inch runs would suffice. The 16-inch specification appears designed to gold-plate the facility. Check whether ATPC has used 16-inch meters elsewhere on its system for comparable capacities."]
C. Gas Chromatograph Requirements
ATPC accepts in principle the gas chromatograph specifications proposed by Ridgeline in the Version 2.0 draft, including the proposed make, model, and sampling frequency for the primary gas chromatograph at the Wetzel County Interconnect. The gas chromatograph is essential for real-time determination of gas composition, heating value, and specific gravity, which in turn are necessary for accurate custody transfer measurement and for compliance with ATPC's tariff-specified gas quality requirements.
However, ATPC requests the addition of a redundant (backup) gas chromatograph at the interconnection point to ensure measurement continuity during periods of scheduled and unscheduled maintenance of the primary unit. Redundancy in gas quality measurement instrumentation is standard industry practice at custody transfer points on interstate natural gas pipelines, and the absence of a backup chromatograph creates an unacceptable risk of measurement gaps that could result in disputes over gas quality specifications, heating value calculations, and ultimately, financial settlements between the parties.
ATPC estimates the installed cost of the redundant gas chromatograph — including the instrument, sampling system, analyzer shelter, and integration with the meter station's flow computer — at approximately $175,000. ATPC proposes that this cost be included in the total shared interconnection facilities cost, subject to the 50/50 allocation methodology described in Section 1 above.
> [C&H Annotation – Callahan: "Redundant GC is reasonable and standard industry practice. No objection, but should be included in the base cost, not treated as an add-on."]
3. Pig Launcher/Receiver Specifications
A. ATPC's Requirements for Pig Launcher/Receiver Design
ATPC requires that the pig launcher and receiver facilities to be installed at the Wetzel County Interconnect be designed as full-opening, barrel-type units capable of accommodating pigs of 30-inch nominal diameter, corresponding to the nominal diameter of the ATPC mainline at Milepost 412.6. ATPC does not accept Ridgeline's proposed specification of 24-inch diameter pig launcher/receiver facilities, which corresponds to the nominal diameter of the Ridgeline pipeline system but is inadequate for ATPC's operational requirements.
The rationale for this requirement is straightforward. ATPC regularly conducts inline inspections ("ILI") of its 30-inch mainline using smart pig tools — including magnetic flux leakage ("MFL") tools, geometry tools, and caliper pigs — as required under the Department of Transportation Pipeline and Hazardous Materials Safety Administration ("PHMSA") regulations at 49 C.F.R. Part 192, Subpart O, and ATPC's own integrity management program. The interconnection point at Milepost 412.6 must allow the launching and receiving of 30-inch ILI tools at or through the interconnection facilities without requiring the construction of separate, dedicated pig trap facilities on the ATPC side of the interconnect. A 24-inch pig launcher/receiver at the interconnection point would create a diameter restriction that would prevent passage of 30-inch ILI tools, effectively creating a dead zone in ATPC's ILI program coverage and potentially placing ATPC in non-compliance with its PHMSA-approved integrity management plan.
ATPC further requires that the pig launcher/receiver facilities comply in all respects with the American Society of Mechanical Engineers standard ASME B31.8, Gas Transmission and Distribution Piping Systems, and with all applicable DOT PHMSA regulations under 49 C.F.R. Part 192, including but not limited to the requirements for design, fabrication, testing, and operation of pipeline facilities.
Specifically, ATPC requires that the pig launcher and receiver facilities include the following design features and components:
(a) Quick-opening closure mechanisms equipped with safety interlock systems to prevent opening of the closure under pressurized conditions;
(b) Pig signaler and indicator devices installed at both the launcher and receiver barrels to confirm pig passage;
(c) Drain and vent connections on both the launcher and receiver barrels, sized and configured in accordance with ATPC's standard pigging facility specifications;
(d) Minimum design pressure rating of 1,480 psig, corresponding to the MAOP of the ATPC mainline at Milepost 412.6; and
(e) Bypass piping designed and sized to allow continued gas flow through the interconnection point during pigging operations, thereby avoiding service interruptions to shippers on either the ATPC or Ridgeline systems during routine or emergency pigging activities.
The detailed specification sheet for the 30-inch pig launcher/receiver is provided as Enclosure 3 to this letter.
> [C&H Annotation – Callahan: "30-inch pig requirement is problematic — Ridgeline's system is 24-inch. A 30-inch launcher/receiver only benefits ATPC's ILI operations on its own mainline. This cost should be 100% ATPC under cost-causation principles. Prepare separate argument."]
> [C&H Annotation – Trujillo: "Agree with Brett. The 30-inch pig spec is a back-door attempt to shift ATPC's own ILI compliance costs to the shared interconnection. We should propose a dual-diameter design: 24-inch for Ridgeline pigging, 30-inch for ATPC pigging, with costs allocated to each party for its own diameter. Discuss with Thomas Greaves."]
B. Cost Implications of 30-Inch Pig Specifications
ATPC acknowledges that the specification of 30-inch full-opening, barrel-type pig launcher and receiver facilities increases the estimated cost of the pig launcher/receiver component from Ridgeline's estimate of $4.2 million (based on a 24-inch specification) to approximately $5.1 million — an incremental increase of approximately $0.9 million. The cost increase is attributable to the larger barrel diameter, heavier wall thickness required at 1,480 psig design pressure, larger closure mechanisms, and associated piping and support structure modifications.
ATPC maintains that this incremental $0.9 million should be included in the total shared interconnection facilities cost and allocated on a 50/50 basis, consistent with the overall cost allocation methodology proposed in Section 1 of this letter. The pig launcher/receiver facilities are integral components of the interconnection infrastructure that will serve both pipeline systems and benefit both parties through enhanced operational flexibility, including the ability to conduct pigging and ILI operations through the interconnection point.
> [C&H Annotation – Callahan: "Absolutely not. $0.9M increase is 100% attributable to ATPC's 30-inch mainline ILI requirements. Counter-propose that any costs attributable to pig facilities exceeding 24-inch diameter be borne solely by ATPC."]
4. SCADA Integration and Operational Protocols
ATPC requires full integration between the SCADA (Supervisory Control and Data Acquisition) system at the Wetzel County Interconnect metering station and ATPC's existing SCADA system at ATPC's central gas control facility located in Pittsburgh, Pennsylvania. Real-time operational data from the interconnection point is essential for ATPC's dispatchers to manage system flows, maintain system integrity, and ensure compliance with ATPC's tariff obligations, including its obligation to schedule and confirm nominations on an hourly and daily basis in accordance with NAESB standards.
ATPC specifies that the following data points must be transmitted in real time from the Wetzel County Interconnect meter station to ATPC's Pittsburgh control center:
(a) Instantaneous and totalized flow rate (MMcf/d and Dth/d);
(b) Static and differential pressure at each meter run;
(c) Gas temperature at the meter station;
(d) Gas quality parameters as reported by the gas chromatograph (including heating value, specific gravity, and individual component analysis);
(e) Meter station operational status and alarm conditions, including high/low pressure alarms, high/low flow alarms, meter run isolation status, and chromatograph fault conditions; and
(f) Valve position status for all remotely operated valves at the interconnection point.
ATPC requires that Ridgeline configure its SCADA and communications systems at the Wetzel County Interconnect to utilize the Distributed Network Protocol version 3.0 ("DNP3") communication protocol, which is the standard protocol currently deployed across ATPC's SCADA architecture. Communications between the interconnection point and ATPC's nearest communication node shall be conducted over a dedicated fiber optic communication link, and ATPC proposes that the cost of installing this dedicated fiber optic link be shared equally between the parties as part of the overall interconnection facilities cost.
Ridgeline shall also ensure that its remote terminal unit ("RTU") or programmable logic controller ("PLC") at the Wetzel County Interconnect is configured for DNP3 master-slave communication with ATPC's SCADA host, and that appropriate cyber security measures — including encryption, authentication, and access control consistent with TSA Pipeline Security Directives — are implemented on all SCADA communication pathways associated with the interconnection.
> [C&H Annotation – Callahan: "SCADA integration is standard and expected. DNP3 over fiber is fine — consistent with industry practice. No objection to this section in principle, but confirm with Thomas Greaves that Ridgeline's SCADA system at the Wetzel Station can interface with DNP3."]
5. Operational Flow Requirements at the Interconnect
ATPC concurs with the general design premise that the Wetzel County Interconnect shall support bidirectional gas flow between the ATPC and Ridgeline systems. As contemplated by both parties, the initial design capacity of the interconnection shall be 800 MMcf/d, with the facilities designed and constructed to be expandable to 1.2 Bcf/d through the addition of compression or looping on the respective pipeline systems without requiring physical modifications to the interconnection facilities themselves (other than any metering upgrades, which are addressed in Section 2 above).
ATPC specifies the following minimum pressure requirements at the interconnection point:
(a) Primary Flow Direction (Ridgeline to ATPC): When gas flows from the Ridgeline system into the ATPC mainline at the Wetzel County Interconnect, Ridgeline shall deliver gas at a minimum pressure of 800 psig at the interconnection point flange. This minimum delivery pressure is necessary to ensure that gas can be received into the ATPC mainline — which typically operates at pressures ranging from 850 psig to 1,200 psig in the vicinity of Milepost 412.6 — without adversely affecting ATPC's mainline hydraulics or the service commitments to ATPC's existing firm shippers.
(b) Reverse Flow Direction (ATPC to Ridgeline): When gas flows from the ATPC mainline into the Ridgeline system at the Wetzel County Interconnect, ATPC shall deliver gas at a minimum pressure of 750 psig at the interconnection point flange. The lower minimum pressure for reverse flow reflects the lower operating pressure of the Ridgeline system relative to the ATPC mainline.
ATPC notes that the current throughput on the Ridgeline system is approximately 680 MMcf/d, which represents approximately 56.67% utilization of the 1.2 Bcf/d ultimate design capacity. ATPC further notes that Ridgeline's system includes three compressor stations with an aggregate installed horsepower of approximately 45,000 HP. ATPC requests that, prior to execution of the Interconnection Agreement, Ridgeline provide a demonstration — supported by hydraulic modeling data and compressor performance curves — confirming that Ridgeline's existing and planned compression facilities are sufficient to maintain the minimum delivery pressure of 800 psig at the interconnection point at all throughput levels from current operations up to and including the full 1.2 Bcf/d design capacity. This demonstration is necessary for ATPC to confirm that the interconnection will not impose adverse hydraulic impacts on the ATPC mainline during periods of high throughput on the Ridgeline system.
> [C&H Annotation – Callahan: "Pressure specs are reasonable and consistent with Thomas Greaves's testimony. The 800/750 psig split is workable. Note however that ATPC's request for Ridgeline to 'demonstrate' compression adequacy is a discovery tactic — they want our compression data. Coordinate with Greaves on what to share vs. what is commercially sensitive."]
6. Interconnection Agreement as FERC Rate Schedule
ATPC acknowledges the Deficiency Letter issued by the Commission's Office of Energy Market Regulation on January 19, 2023, in Docket No. RP22-847-000, which includes, at Item 9, a requirement that the Interconnection Agreement between ATPC and Ridgeline be filed with the Commission as a FERC rate schedule under Section 4 of the Natural Gas Act, 15 U.S.C. § 717c.
ATPC does not oppose in principle the filing of the Interconnection Agreement as a FERC rate schedule. However, ATPC expressly reserves the right to protest any tariff sheet, rate schedule, or other filing submitted by Ridgeline to the extent that such filing improperly allocates interconnection costs to ATPC or to ATPC's existing firm transportation shippers, or to the extent that such filing is inconsistent with the cost allocation terms ultimately agreed upon by the parties or determined by the Commission.
In addition, ATPC requests that the Interconnection Agreement include provisions for periodic review and adjustment of the interconnection cost allocations. ATPC proposes that such reviews occur not less frequently than every five (5) years from the in-service date of the interconnection facilities, with adjustments to the cost allocation to reflect any material changes in the usage, throughput, or operational benefits derived by each party from the interconnection. ATPC believes that periodic review is essential to ensure that the cost allocation remains just and reasonable over the operational life of the interconnection facilities, particularly given the anticipated expansion of the interconnection capacity from 800 MMcf/d to 1.2 Bcf/d and the evolving nature of supply patterns in the Appalachian Basin.
Finally, ATPC insists that any filing of the Interconnection Agreement as a FERC rate schedule must be fully coordinated between the parties and filed simultaneously by both ATPC and Ridgeline with the Commission. Unilateral filing of the Interconnection Agreement by either party is unacceptable and would be prejudicial to the non-filing party's interests.
> [C&H Annotation – Trujillo: "Five-year review cycle is aggressive — we proposed no periodic review in V2.0. Consider countering with ten-year review or review only upon material change in circumstances. Simultaneous filing requirement is reasonable."]
7. Construction and In-Service Timeline
ATPC notes that the original target in-service date for the Wetzel County Interconnect was the fourth quarter of 2023, as contemplated in the parties' initial discussions and reflected in the preliminary project schedule exchanged during the September 2022 technical meetings. That target date is no longer achievable due to the pendency of the FERC proceeding in Docket Nos. RP22-847-000 and RP22-847-001, and the parties' inability to date to reach agreement on the terms of the Interconnection Agreement.
ATPC proposes the following revised construction and in-service timeline:
(a) Construction Commencement: Construction of the interconnection facilities shall commence no later than ninety (90) days after the date on which the Commission issues a final, non-appealable order approving the Interconnection Agreement in the above-captioned proceeding.
(b) In-Service Date: The interconnection facilities shall be completed, tested, and placed in service no later than eighteen (18) months after the date of the Commission's order approving the Interconnection Agreement.
(c) Liquidated Damages: In the event that either party's actions or omissions cause a delay in achieving the in-service date beyond the eighteen (18) month deadline specified above, the responsible party shall pay to the non-responsible party liquidated damages in the amount of Fifty Thousand Dollars ($50,000) per calendar day for each day of delay beyond the deadline. The parties acknowledge that actual damages from such delay would be difficult to calculate and that the stipulated liquidated damages amount represents a reasonable estimate of the anticipated harm. Liquidated damages shall not be payable for delays caused by force majeure events, as defined in the Interconnection Agreement.
(d) Joint Construction Management: The construction of the interconnection facilities shall be managed by a Joint Project Management Committee ("JPMC") consisting of two (2) representatives designated by ATPC and two (2) representatives designated by Ridgeline. The JPMC shall be responsible for overseeing the design, procurement, construction, testing, and commissioning of the interconnection facilities, and shall meet no less frequently than bi-weekly during active construction. Decisions of the JPMC shall be made by unanimous consent; in the event of a deadlock, the disputed matter shall be escalated to the senior officers of each party designated in the Interconnection Agreement for resolution.
> [C&H Annotation – Trujillo: "Liquidated damages at $50K/day is punitive and non-standard for interconnection agreements. Reject. Propose mutual hold-harmless for delays caused by regulatory proceedings, force majeure, or third-party permitting delays. 18-month timeline is workable but aggressive given current procurement lead times — Thomas Greaves should weigh in."]
8. Insurance and Indemnification
ATPC requires that Ridgeline maintain, at its sole cost and expense, the following insurance coverages during the construction and operation of the interconnection facilities at the Wetzel County Interconnect:
(a) Comprehensive General Liability Insurance: Coverage in an amount not less than Ten Million Dollars ($10,000,000) per occurrence and Twenty-Five Million Dollars ($25,000,000) in the aggregate, covering bodily injury, property damage, personal injury, and advertising injury arising from or related to the construction, operation, maintenance, or repair of the interconnection facilities. The policy shall name ATPC as an additional insured and shall include contractual liability coverage.
(b) Umbrella/Excess Liability Insurance: Coverage in an amount not less than Twenty-Five Million Dollars ($25,000,000) per occurrence and in the aggregate, in excess of the comprehensive general liability and any automobile liability coverages.
(c) Pollution Liability Insurance: Coverage in an amount not less than Fifteen Million Dollars ($15,000,000) per occurrence, covering claims for bodily injury, property damage, and environmental remediation costs arising from the release, discharge, or migration of pollutants or contaminants from or through the interconnection facilities. The pollution liability policy shall include coverage for both sudden and accidental releases and for gradual releases discovered during the policy period.
All insurance policies required hereunder shall be issued by carriers with an A.M. Best rating of not less than "A-" (Excellent) and a financial size category of not less than "VIII." Ridgeline shall provide ATPC with certificates of insurance evidencing the required coverages prior to the commencement of construction and annually thereafter during the operational life of the interconnection facilities.
ATPC further proposes that the Interconnection Agreement include mutual indemnification provisions under which each party shall indemnify, defend, and hold harmless the other party, its affiliates, and their respective officers, directors, employees, and agents from and against any and all claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from or related to the indemnifying party's negligence or willful misconduct in connection with the construction, operation, maintenance, or repair of the interconnection facilities.
> [C&H Annotation – Callahan: "Insurance minimums are in the standard range for midstream interconnections. Indemnification language needs to be mutual and carve out sole negligence and willful misconduct. Review against Ridgeline's existing insurance program — coordinate with Angela Moretti."]
9. Reservation of Rights and Proceeding Positions
ATPC expressly reserves all rights, claims, defenses, and positions asserted in its protest and motion to intervene filed on August 15, 2022 in Docket No. RP22-847-000, and in all subsequent filings, pleadings, testimony, and submissions made by ATPC in the above-captioned proceeding. This counterproposal is made solely for the purpose of advancing negotiations toward a mutually acceptable Interconnection Agreement and is without prejudice to ATPC's positions on any issue in the rate case under Docket No. RP22-847-000 or any related proceeding under Docket No. RP22-847-001, including but not limited to issues of cost allocation, rate design, tariff structure, recourse rate levels, return on equity, and depreciation methodology.
ATPC specifically notes that the answering testimony filed by ATPC on January 9, 2023 — including the testimony of ATPC's witnesses challenging Ridgeline's proposed recourse rate of $0.2265 per dekatherm and proposing an alternative return on equity of 10.75% for the Ridgeline pipeline system — remains in full force and effect and is not affected, modified, or withdrawn by virtue of this counterproposal or any negotiation arising therefrom.
> [C&H Annotation – Trujillo: "Standard reservation. Note their ROE position of 10.75% — significant gap from our original 14.00% and even our revised 12.50%."]
We respectfully request that Calderwood & Harkness, on behalf of Ridgeline Midstream Services LLC, respond to this counterproposal within thirty (30) days of the date of this letter — that is, by no later than February 16, 2023. ATPC believes that a prompt exchange of positions on the remaining open issues will facilitate timely resolution of the interconnection terms and allow the parties to focus their efforts on the broader rate case proceeding.
In addition, ATPC invites Ridgeline to schedule a joint technical meeting between the parties' respective engineering teams to discuss the metering station design and pig launcher/receiver specifications in greater detail. On the ATPC side, the technical meeting would be led by Sandra K. Fenton, ATPC's Vice President of Regulatory Affairs, together with ATPC's engineering consultants. We understand that Thomas Greaves, Ridgeline's Vice President of Engineering & Operations, would lead the Ridgeline team. ATPC proposes that this technical meeting take place during the week of February 6, 2023, either in person in Pittsburgh or by videoconference, at Ridgeline's convenience.
ATPC also remains willing to participate in further settlement conferences before Settlement Judge Howard Margolis, and views the interconnection agreement negotiations as an integral component of any comprehensive settlement of the pending proceeding. It is ATPC's sincere hope that the parties can reach agreement on the terms of the Interconnection Agreement even as the broader rate case issues — including the cost-of-service and rate design matters now subject to the Commission's January 19, 2023 Deficiency Letter and the potential tariff redesign — remain subject to further proceedings.
We look forward to your response.
Respectfully submitted,
KELLNER, ROYCE & DILLARD LLP
By: ________
William Pratt Senior Partner One PPG Place, Suite 2800 Pittsburgh, PA 15222 Telephone: (412) 391-7418
Email: wpratt@krd-law.com
On behalf of Appalachian Trunk Pipeline Company, LLC
Enclosures:
Enclosure 1: ATPC's Proposed Interconnection Cost Allocation Summary Table (one-page spreadsheet showing $22.3M base + $2.6M metering station upgrade + $0.9M pig launcher/receiver upgrade = revised total of $25.8M under ATPC's proposed scope; 50/50 allocation = $12.9M per party)
Enclosure 2: ATPC's Preliminary Metering Station Design Schematic — Four (4) 16-Inch Ultrasonic Flow Meter Runs (plan view and elevation drawing)
Enclosure 3: ATPC's Pig Launcher/Receiver Specification Sheet — 30-Inch Full-Opening Barrel-Type, ASME B31.8 Compliant, 1,480 psig MAOP Design Pressure
> [C&H Annotation – Callahan: "Review all three enclosures with Thomas Greaves by end of month. Schedule call for January 25. Need engineering response before we draft our counter."]
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Internal Routing Memorandum
Distribution.  
1.  George Trujillo — Responsible Partner
2.  Patricia Dunmore — Billing Partner / DEH Chairperson
3.  David Stanton — Working Associate
4.  File
Summary of Key Issues for Response
1. Cost Allocation
ATPC proposes a 50/50 cost allocation: $11.15 million to each party based on the $22.3 million base interconnection facilities cost. Under ATPC's expanded scope (which includes the metering station upgrade and pig launcher upsizing), ATPC proposes $12.9 million to each party on a total of $25.8 million. By contrast, Ridgeline's current position under the Version 2.0 draft is 34.1% Ridgeline ($7.6 million) / 65.9% ATPC ($14.7 million). The gap between the parties' positions is approximately $3.55 million on the base scope and approximately $5.3 million on ATPC's expanded scope. Per instructions from Patricia Dunmore (communicated in her December 20, 2022 email), the client's floor is a maximum Ridgeline share of 45%, which equates to $10.035 million on the $22.3 million base. Recommend countering at a 40/60 split on the original $22.3 million scope: Ridgeline $8.92 million / ATPC $13.38 million. This preserves room to move to 45% if necessary during settlement discussions while maintaining meaningful distance from ATPC's 50/50 position.
2. Metering Station Design
ATPC proposes four (4) 16-inch ultrasonic flow meter runs in place of Ridgeline's proposed three (3) 12-inch runs. This change increases the meter station cost by $2.6 million (from $9.8 million to $12.4 million). Engineering review is needed — consult Thomas Greaves. Preliminary assessment: 16-inch meter runs are oversized for the 800 MMcf/d initial design capacity and are likely unnecessary even at the 1.2 Bcf/d expandable capacity. As a potential compromise, consider counter-proposing four (4) 12-inch ultrasonic flow meter runs. This adds one run for redundancy (addressing ATPC's operational flexibility concern) without upsizing to 16-inch diameter (avoiding the cost escalation). This approach would add approximately $800,000–$1.0 million to the meter station cost — substantially less than ATPC's $2.6 million increase — and would provide adequate measurement capacity through 1.2 Bcf/d at operating pressures of 800–1,200 psig.
3. Pig Launcher/Receiver
ATPC insists on 30-inch pig launcher/receiver facilities to accommodate its own inline inspection tools on the 30-inch ATPC mainline. This increases the pig launcher/receiver cost by $0.9 million (from $4.2 million to $5.1 million). ATPC proposes including this cost in the 50/50 shared allocation. Strong cost-causation argument available: the 30-inch pig specification is attributable solely to ATPC's need to run 30-inch ILI tools on its own mainline and provides no benefit to Ridgeline's 24-inch system. Recommend proposing a dual-diameter pig launcher/receiver design: 24-inch facilities for Ridgeline pigging operations (costs shared) and 30-inch facilities for ATPC ILI operations (costs borne 100% by ATPC). Discuss engineering feasibility of a dual-diameter design with Thomas Greaves.
4. Total Cost Impact
Under ATPC's full counterproposal (expanded scope + 50/50 allocation), Ridgeline's share of the interconnection cost increases from $7.6 million (Ridgeline's current position) to $12.9 million — a $5.3 million increase representing a 69.7% escalation in Ridgeline's share. This is unacceptable. The response strategy must push back on both vectors: (a) reject the scope expansion (or limit it through engineering-based compromises), and (b) reject the 50/50 allocation in favor of an allocation more consistent with cost-causation principles that recognizes ATPC as the primary beneficiary of the expanded supply access provided by the interconnection.
5. Timeline
ATPC's proposed 18-month construction timeline from FERC order to in-service is workable in principle, subject to confirmation from Thomas Greaves regarding current procurement lead times for ultrasonic meters, pig launcher/receiver equipment, and SCADA components. However, the proposed liquidated damages provision of $50,000 per day for construction delays is excessive and non-standard for interconnection agreements of this type. Recommend rejecting the liquidated damages provision in its entirety and proposing instead a mutual hold-harmless provision for delays caused by regulatory proceedings, force majeure events, permitting delays attributable to federal, state, or local governmental authorities, and third-party actions beyond either party's reasonable control.
6. Rate Schedule Filing
The FERC Deficiency Letter issued January 19, 2023 includes, at Item 9, a requirement that the Interconnection Agreement be filed as a FERC rate schedule. This is a mandatory requirement and must be incorporated into Version 3.0 of the draft Interconnection Agreement. Coordinate the response to Item 9 with the ongoing tariff redesign work being performed by the Braswell Energy Consulting Group LLC under engagement BEC-2023-0041. Dr. Raymond Braswell should be consulted on the cost-of-service implications of different interconnection cost allocation scenarios, as the interconnection facility costs allocated to Ridgeline will be included in Ridgeline's rate base and will affect the recourse rate calculations.
7. Next Steps
(a) Schedule engineering review call with Thomas Greaves (VP Engineering & Operations, Ridgeline) by January 25, 2023 to review ATPC's three enclosures (cost allocation table, metering station schematic, pig launcher/receiver specification);
(b) Draft response letter to KRD (William Pratt) by February 15, 2023, targeting transmission to KRD no later than February 16, 2023 (the 30-day deadline requested by ATPC);
(c) Coordinate with Braswell Energy Consulting Group LLC (Dr. Raymond Braswell, engagement BEC-2023-0041) on the cost implications of the various interconnection cost allocation scenarios for Ridgeline's revised rate base, cost of service, and recourse rate;
(d) Report to Patricia Dunmore (Billing Partner / DEH Chairperson) on settlement implications — the interconnection cost allocation is one of three key sticking points in the overall proceeding, together with the return on equity (ATPC position: 10.75%; Ridgeline original: 14.00%; Ridgeline revised: 12.50%) and the load factor used in rate design;
(e) Note that the FERC Deficiency Letter was issued on January 19, 2023 — the same day this letter from KRD was received at the office. The Deficiency Letter and the KRD counterproposal create parallel response tracks that must be coordinated. Ensure that the response to the Deficiency Letter and the response to the KRD counterproposal are internally consistent, particularly with respect to the interconnection cost allocation and the rate schedule filing requirements.
Prepared by: Brett Callahan, Esq., Calderwood & Harkness LLP Reviewed by: George Trujillo, Esq., Calderwood & Harkness LLP
Date: January 19, 2023
Facility Component | Total Estimated Cost | ATPC Share (50%) | Ridgeline Share (50%)
Meter station facilities | $9,800,000 | $4,900,000 | $4,900,000
Pig launcher/receiver facilities | $4,200,000 | $2,100,000 | $2,100,000
Mainline tie-in and hot tap | $3,700,000 | $1,850,000 | $1,850,000
SCADA integration and communications | $2,100,000 | $1,050,000 | $1,050,000
Site preparation, civil works, and right-of-way | $2,500,000 | $1,250,000 | $1,250,000
Total | $22,300,000 | $11,150,000 | $11,150,000
Date Received: | January 19, 2023
Received by: | Brett Callahan
C&H Matter No.: | 1016-00005
Client: | Dunmore Energy Holdings Ltd. / Ridgeline Midstream Services LLC
Document: | Letter from W. Pratt (KRD) dated January 17, 2023, presenting ATPC counterproposal on Interconnection Agreement terms
FERC Docket: | RP22-847-000; RP22-847-001

KELLNER, ROYCE & DILLARD LLP Attorneys at Law

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