1016-00005 · Dunmore Energy Holdings · Lender Communications

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PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Counselors at Law

1601 K Street NW, Suite 900 Washington, DC 20006

Telephone: (202) 555-7800 Facsimile: (202) 555-7801 www.calderwoodharkness.com

June 14, 2024

VIA ELECTRONIC MAIL AND Sundial Data Systems

Mr. Richard Calvert Managing Director, Relationship Manager Pinnacle National Bank, N.A., as Administrative Agent 600 Travis Street, Suite 4200 Houston, TX 77002

Re: Status of Federal Energy Regulatory Commission Proceedings — Ridgeline Midstream Services LLC (FERC Docket Nos. RP22-847-000 and RP22-847-001)

Senior Secured Credit Facility Agreement dated September 15, 2021 (the "Credit Agreement"), among Ridgeline Midstream Services LLC, as Borrower, Pinnacle National Bank, N.A., as Administrative Agent, and the Lenders party thereto (Granite Trust Company and Lakeshore Capital Bank)

C&H Matter No. 1016-00005

Dear Mr. Calvert:

I. Purpose of Letter

Calderwood & Harkness LLP serves as outside regulatory counsel to Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Registry No. CR-381204), and its wholly owned U.S. subsidiary, Ridgeline Midstream Services LLC ("Ridgeline" or the "Borrower"), a Delaware limited liability company (EIN: 87-4231956), with its principal office at 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301. DEH is the sole member of Ridgeline, holding a 100% membership interest. We have represented Ridgeline in all matters before the Federal Energy Regulatory Commission ("FERC" or the "Commission") since the inception of the proceedings described herein and have been actively involved in all aspects of the tariff filing, the subsequent deficiency response, and the ongoing tariff redesign effort.

The purpose of this letter is to provide Pinnacle National Bank, N.A. ("Pinnacle" or the "Agent"), in its capacity as Administrative Agent under the Credit Agreement, with a comprehensive status update on the FERC proceedings currently pending in Docket Nos. RP22-847-000 (the "Rate Case") and RP22-847-001 (the "Interconnection Authorization"), in connection with Ridgeline's regulatory covenant compliance obligations under the Credit Agreement. As you are aware, the Credit Agreement requires the Borrower to furnish periodic updates to the Agent regarding the status of its regulatory proceedings before the FERC, given the material importance of FERC tariff approval to the Borrower's long-term revenue generation and debt service capacity.

For reference, the Credit Agreement governs a $400,000,000 senior secured term loan facility (the "Term Loan") and a $75,000,000 senior secured revolving credit facility (the "Revolver" and, together with the Term Loan, the "Facilities"), syndicated among Pinnacle (holding a 40% participation interest), Granite Trust Company (holding a 30% participation interest), and Lakeshore Capital Bank (holding a 30% participation interest). The outstanding balance under the Term Loan, as of the most recent quarterly compliance certificate delivered by the Borrower to the Agent, continues to amortize in accordance with the scheduled repayment terms set forth in Section 2.07 of the Credit Agreement. We understand that all scheduled amortization payments have been made to date in full and on a timely basis.

This letter is intended to satisfy the informational requirements of the Credit Agreement with respect to regulatory proceedings and to provide the Agent and the Lenders with a clear understanding of the current posture, anticipated timeline, and material considerations associated with the FERC proceedings. It should be read in conjunction with the Borrower's periodic compliance certificates and financial reporting delivered under Article VI of the Credit Agreement.

II. Background — The FERC Proceedings

A. Nature of the Proceedings

On May 12, 2022, Ridgeline filed an application before the FERC (the "Application") seeking two forms of regulatory authorization. First, in Docket No. RP22-847-000, Ridgeline filed for approval of an initial tariff rate for interstate transportation service on the Ridgeline Pipeline System (as defined below) pursuant to Sections 4 and 7 of the Natural Gas Act, 15 U.S.C. §§ 717c and 717f, and the Commission's implementing regulations at 18 C.F.R. Parts 154, 157, and 284. The Application proposed the establishment of Ridgeline's FERC Gas Tariff, Original Volume No. 1, as a Part 284, Subpart G open-access transportation tariff, providing firm and interruptible transportation service on a nondiscriminatory basis consistent with the Commission's open-access requirements established under Order Nos. 436, 636, and their progeny. Second, in Docket No. RP22-847-001, Ridgeline sought authorization for the construction and operation of physical interconnection facilities with the existing interstate pipeline network of Appalachian Trunk Pipeline Company, LLC ("ATPC"), a FERC-jurisdictional natural gas pipeline company.

These proceedings were assigned Docket Nos. RP22-847-000 and RP22-847-001, respectively, and have been consolidated for purposes of the procedural schedule. The proceedings remain pending as of the date of this letter, as described in further detail below.

B. The Ridgeline Pipeline System

The Ridgeline Pipeline System (the "Pipeline System" or the "System") consists of a 187-mile, 24-inch-diameter high-pressure natural gas pipeline extending from a receipt point at the Wetzel County Interconnect in Wetzel County, West Virginia, to a delivery point at the Waynesburg Compressor Station in Greene County, Pennsylvania. The Pipeline System was designed with a maximum capacity of 1.2 billion cubic feet per day ("Bcf/d"), equivalent to 1,200,000 dekatherms per day ("Dth/d"), and is currently transporting approximately 680 million cubic feet per day ("MMcf/d"), representing an approximate utilization rate of 56.7% of design capacity.

The Pipeline System includes three compressor stations — the Wetzel Station, the Mannington Station, and the Waynesburg Station — with aggregate installed compression of 45,000 horsepower ("HP"). The Pipeline System achieved its in-service date on October 1, 2021, and was constructed at an original capital cost of approximately $587.2 million.

Ridgeline is the sole applicant in the FERC proceedings and is the owner and operator of the Pipeline System. As noted above, DEH is Ridgeline's sole member, holding a 100% membership interest.

C. Original Filing Parameters

The Application as originally filed proposed the following rate case parameters:

Rate Base. The proposed rate base totaled $612.40 million, comprising: (i) net plant in service of $563.71 million; (ii) a working capital allowance of $18.64 million; (iii) accumulated deferred income taxes ("ADIT") of negative $12.45 million; and (iv) other rate base items aggregating $42.50 million.

Cost of Service. The proposed total test-year cost of service was $97.36 million, encompassing all operating and maintenance expenses, administrative and general expenses, depreciation, taxes (including income tax allowance), and return on equity and debt.

Recourse Rate. The proposed initial recourse rate was $0.2265 per Dth, consisting of a reservation component of $0.2223 per Dth and a usage component of $0.0042 per Dth. The rate was derived using a 100% load factor methodology, as is conventional for initial rate filings by new interstate pipelines.

Return on Equity and Capital Structure. Ridgeline proposed a return on equity ("ROE") of 14.00%, applied to a capital structure of 55% equity and 45% debt. The cost of debt was set at 5.25%, reflecting the weighted average cost of borrowings under the Credit Agreement and other indebtedness at the time of filing. The resulting weighted average cost of capital ("WACC") was 10.0625%.

D. Proposed Interconnection

In Docket No. RP22-847-001, Ridgeline sought FERC authorization for the construction and operation of a physical interconnection at the Wetzel County Interconnect with ATPC's 30-inch mainline at ATPC Milepost 412.6. The proposed interconnection facilities include metering equipment, valve assemblies, pig launcher/receiver facilities, and associated control and communication systems.

The estimated total cost of the interconnection facilities was $22.3 million. Ridgeline proposed that costs be allocated 34.1% to Ridgeline ($7.6 million) and 65.9% to ATPC ($14.7 million), reflecting Ridgeline's analysis of relative benefits and usage patterns associated with the interconnection. The interconnection was designed with an initial bidirectional capacity of 800 MMcf/d, with provisions for expansion to 1.2 Bcf/d upon the installation of additional compression and metering capacity at the interconnect point.

III. Procedural History

A. Initial Proceedings (May 2022 – January 2023)

The procedural history of these proceedings has been extensive, spanning more than two years from the initial filing to the present. The following is a summary of the key procedural milestones:

May 12, 2022: Ridgeline filed the Application with the FERC. Calderwood & Harkness opened its engagement in connection with the filing under Matter No. 1016-00005.

June 14, 2022: The Commission issued its Notice of Filing, establishing an intervention and protest deadline of August 15, 2022. The Notice was published in the Federal Register on June 17, 2022.

Intervention Period (July – August 2022): Three parties filed motions to intervene in the proceedings:

(i) The Mountainside Gas Producers Coalition ("MGPC"), a coalition of fourteen independent natural gas producers operating in the Appalachian Basin, filed its motion to intervene on July 28, 2022, expressing concerns regarding the proposed recourse rate, load factor assumptions, and the impact of the proposed tariff on shipper costs;

(ii) The Clearwater Municipal Gas Authority ("CMGA"), a municipal gas distribution utility serving approximately 42,000 residential and commercial customers in southwestern Pennsylvania, filed its motion to intervene on August 1, 2022, raising concerns regarding the potential pass-through of transportation costs to end-use consumers; and

(iii) ATPC filed its motion to intervene and protest on August 15, 2022, challenging Ridgeline's proposed interconnection cost allocation and raising objections to the metering station design specifications included in the Application.

September 22, 2022: The Commission issued an order granting all three interventions. The order also established a Track II procedural schedule for the proceedings and appointed Settlement Judge Howard Margolis to facilitate settlement discussions among the parties.

October 17, 2022: Ridgeline filed its answer to the ATPC protest, responding to ATPC's specific objections regarding interconnection cost allocation methodology and metering station design. Ridgeline's answer included supplemental engineering affidavits and a detailed cost study prepared by its interconnection facilities engineering consultant.

November 14, 2022: Administrative Law Judge Clara Whitfield was appointed as the presiding judge for purposes of the evidentiary hearing. A prehearing conference was held on the same date, during which the ALJ established a procedural schedule, addressed discovery matters, and set a timetable for the filing of prefiled testimony.

December 5, 2022: Ridgeline filed its prefiled direct testimony, comprising the written testimony and supporting exhibits of seven witnesses addressing rate base, cost of service, rate design, ROE, depreciation, operations, and interconnection facilities.

January 9, 2023: Answering testimony was filed by the three intervenors. ATPC, represented by Kellner, Royce & Dillard LLP, filed the testimony of four witnesses addressing interconnection costs, metering design, and alternative rate proposals. MGPC, represented by Whitmore & Sable LLP, filed the testimony of three witnesses addressing ROE, load factor, and cost allocation. CMGA, represented by Fordham Municipal Law Group PC, filed the testimony of two witnesses addressing rate impacts on end-use consumers and public interest considerations.

B. FERC Deficiency Letter and Stay of Proceedings

January 19, 2023: The FERC's Office of Energy Market Regulation ("OEMR") issued a Deficiency Letter identifying fourteen specific deficiencies in Ridgeline's tariff filing. This development represented a significant procedural setback and has been the primary driver of the extended timeline in these proceedings. The fourteen deficiency items identified by OEMR were as follows:

1. Inadequate support for the proposed 14.00% return on equity, including an insufficient discounted cash flow ("DCF") proxy group analysis;

2. Absence of a fuel, lost, and unaccounted-for gas ("FL&U") tracker mechanism in the proposed tariff;

3. Missing derivation and supporting workpapers for the interruptible transportation ("IT") rate;

4. Insufficient load factor support and analysis;

5. Absence of capacity release provisions consistent with 18 C.F.R. § 284.8;

6. Incomplete compliance with North American Energy Standards Board ("NAESB") Wholesale Gas Quadrant ("WGQ") standards;

7. Missing electronic bulletin board ("EBB") posting requirements;

8. Inadequate shipper-must-have-title provisions;

9. Failure to file the proposed interconnection agreement with ATPC as a FERC rate schedule;

10. Absence of penalty revenue crediting provisions;

11. Inadequate creditworthiness provisions for prospective shippers;

12. Missing segmentation and flexible receipt-and-delivery-point provisions;

13. Absence of greenhouse gas ("GHG") cost recovery provisions; and

14. Failure to address the implications of FERC Order No. 2222 on Ridgeline's tariff structure and service offerings.

February 6, 2023: In response to the breadth and significance of the Deficiency Letter, ALJ Whitfield issued an order staying the procedural schedule in its entirety, pending Ridgeline's response to the identified deficiencies. All testimony and discovery deadlines were suspended.

March 15, 2023: Ridgeline filed a partial response to the Deficiency Letter, addressing eight of the fourteen deficiency items — specifically, Items 5 (capacity release), 6 (partial NAESB compliance), 7 (EBB posting), 8 (shipper-must-have-title), 10 (penalty revenue crediting), 11 (creditworthiness), 12 (segmentation/flexible receipt-delivery), and 14 (Order No. 2222). The remaining six deficiency items (Items 1 through 4, 9, and 13), which involved more fundamental tariff design and rate methodology issues, were identified as requiring additional analysis and, in certain cases, a comprehensive redesign of the tariff structure.

C. Extensions and Tariff Redesign

The six remaining deficiency items necessitated a tariff redesign effort of significant scope and complexity. The following extensions were requested and granted:

April 15, 2023: Ridgeline retained Braswell Energy Consulting Group LLC ("Braswell"), engagement number BEC-2023-0041, to serve as its tariff redesign consultant. Braswell is led by Dr. Raymond Braswell, a former FERC staff economist with over thirty years of experience in natural gas pipeline rate design and tariff administration. Dr. Braswell's team was engaged to conduct a comprehensive review of the existing tariff and to develop a redesigned tariff that would address all remaining deficiency items while preserving Ridgeline's commercial objectives.

April 28, 2023: Ridgeline filed its first motion for extension of time, requesting an additional 120 days to complete the tariff redesign for the remaining six deficiency items. The motion was supported by a detailed affidavit from Dr. Braswell describing the scope of the redesign effort. The motion was granted by ALJ Whitfield on May 10, 2023, establishing a new deadline of August 28, 2023.

August 25, 2023: Ridgeline filed its second motion for extension of time, requesting an additional 180 days beyond the August 28 deadline. The motion cited the ongoing complexity of the tariff redesign, including the need to coordinate with ATPC on the interconnection agreement and to conduct stakeholder consultations with MGPC and CMGA regarding rate design alternatives. The motion was granted by ALJ Whitfield on September 8, 2023, establishing a new deadline of February 23, 2024. At this time, the proceeding status was formally changed to "dormant" on the FERC docket.

February 20, 2024: Ridgeline filed its third motion for extension of time, requesting an additional twelve months to complete the tariff redesign. The motion cited material scope changes to the redesign effort, including the decision to shift from a 100% load factor methodology to a modified fixed-variable rate methodology — a fundamental change in rate design that required a complete re-derivation of billing determinants, rate components, and cost allocation factors. The motion was granted by ALJ Whitfield on March 4, 2024, subject to the condition that Ridgeline file quarterly status reports with the Commission beginning on June 15, 2024. The new filing deadline was established as February 21, 2025.

D. Current Status as of the Date of This Letter

As of the date of this letter, the proceedings in Docket Nos. RP22-847-000 and RP22-847-001 remain in dormant status. No evidentiary hearing is currently scheduled, and all previously established testimony and discovery deadlines remain stayed.

Ridgeline is currently preparing its first quarterly status report, which is required to be filed with the FERC on June 15, 2024, pursuant to the ALJ's order of March 4, 2024. The quarterly status report will provide the Commission with a summary of the tariff redesign progress and an updated timeline for the filing of the redesigned tariff.

The tariff redesign remains in active progress under the direction of Braswell Energy Consulting Group. As of the date of this letter, the revised FERC Gas Tariff, Original Volume No. 1, is in its second draft phase. Internal review and quality assurance procedures are ongoing, and coordination with ATPC regarding the interconnection agreement continues. The current filing deadline for the redesigned tariff and supplemental testimony is February 21, 2025.

IV. Summary of Tariff Redesign Progress

The tariff redesign encompasses a comprehensive revision of the FERC Gas Tariff to address all fourteen deficiency items identified in the OEMR's Deficiency Letter of January 19, 2023. Set forth below is a summary of the key changes being implemented as part of the redesign:

Rate Methodology. The most significant change in the redesign is the shift from a 100% load factor rate derivation to a modified fixed-variable rate methodology at a 75% load factor. This change reflects feedback from the OEMR regarding load factor support (Deficiency Item 4) and is consistent with current Commission precedent for pipelines with comparable utilization profiles. The revised billing determinants are 328,500,000 Dth per year, as compared to the original filing's billing determinants of 438,000,000 Dth per year — a reduction of approximately 25% that directly affects the per-unit recourse rate.

Return on Equity. The proposed ROE has been revised downward from 14.00% to 12.50%, based on an updated DCF proxy group analysis incorporating the most recent market data and consistent with the Commission's two-step DCF methodology as applied in recent pipeline rate cases. This revision addresses Deficiency Item 1.

Weighted Average Cost of Capital. The revised WACC is 9.2375%, reduced from the originally proposed 10.0625%, reflecting the lower ROE and updated capital structure assumptions.

Cost of Service. The revised total cost of service is approximately $103.15 million, an increase from the originally filed cost of service of $97.36 million. The increase is attributable to updated operations and maintenance ("O&M") expenses of $13.92 million, updated administrative and general ("A&G") expenses of $5.14 million, a revised income tax allowance of $15.04 million, and reduced revenue credits of $6.00 million. These revisions reflect two additional years of operating experience and current cost projections.

Recourse Rate. The revised proposed recourse rate is $0.3140 per Dth, consisting of a reservation component of $0.3102 per Dth and a usage component of $0.0038 per Dth. Although the per-unit rate is higher than the originally proposed rate of $0.2265 per Dth, this increase is driven primarily by the reduction in billing determinants resulting from the shift to a 75% load factor. The overall cost of service and return on invested capital are lower under the revised proposal.

Rate Base. The rate base remains at $612.40 million, as originally filed.

Tariff Provisions. The redesigned tariff incorporates the following new or revised provisions, addressing the remaining deficiency items:

• FL&U tracker mechanism (Deficiency Item 2);

• IT rate schedule with complete derivation and supporting workpapers (Deficiency Item 3);

• Capacity release provisions consistent with 18 C.F.R. § 284.8 (Deficiency Item 5);

• Full compliance with NAESB WGQ Version 3.2 standards (Deficiency Item 6);

• EBB posting requirements consistent with 18 C.F.R. § 284.13 (Deficiency Item 7);

• Revised and strengthened shipper-must-have-title provisions (Deficiency Item 8);

• Penalty revenue crediting mechanism (Deficiency Item 10);

• Comprehensive creditworthiness provisions for prospective shippers (Deficiency Item 11);

• Segmentation and flexible receipt-and-delivery-point provisions (Deficiency Item 12);

• GHG cost recovery provisions (Deficiency Item 13); and

• Provisions addressing the implications of FERC Order No. 2222 (Deficiency Item 14).

Interconnection Agreement. With respect to Deficiency Item 9, the interconnection agreement with ATPC is being revised and will be filed as a FERC rate schedule, as required by the Commission. Cost allocation negotiations with ATPC remain ongoing. ATPC continues to advocate for a 50/50 cost allocation ($11.15 million each), whereas Ridgeline maintains its position that a 34.1/65.9 allocation ($7.6 million to Ridgeline and $14.7 million to ATPC) is appropriate based on relative benefits and usage. This remains an open item in the redesign and in the parallel settlement discussions.

The table below summarizes the key changes between the original filing and the redesigned tariff:

V. Settlement Discussions

Settlement Judge Howard Margolis has convened four settlement conferences in these proceedings, held on the following dates: November 30, 2022; March 8, 2023; July 12, 2023; and January 18, 2024. All parties — Ridgeline, ATPC, MGPC, and CMGA — have participated in each conference, together with their respective counsel. Settlement Judge Margolis has remained actively engaged and has facilitated the exchange of settlement proposals and counterproposals among the parties.

Notwithstanding these efforts, no settlement has been reached to date. The parties remain separated on several key issues, and the gap between their respective positions, while narrowed over the course of the settlement discussions, remains material.

Recourse Rate. The parties remain approximately $0.058 per Dth apart on the recourse rate. ATPC and MGPC jointly advocate a recourse rate ceiling of approximately $0.2560 per Dth, while Ridgeline's current floor, based on the redesigned tariff, is $0.3140 per Dth. CMGA has not taken an independent position on the precise rate level but has generally supported the positions of ATPC and MGPC with respect to rate mitigation.

Return on Equity. The three intervenors have proposed ROE levels below Ridgeline's revised proposal of 12.50%. ATPC has proposed an ROE of 10.75%, while MGPC has proposed 11.25%. Ridgeline maintains that its proposed 12.50% ROE is consistent with Commission precedent and reflects the risk profile of a newly constructed pipeline system with developing throughput.

Interconnection Cost Allocation. As noted above, ATPC and Ridgeline remain at odds on the allocation of the $22.3 million interconnection facilities cost, with ATPC advocating a 50/50 split and Ridgeline maintaining its proposed 34.1/65.9 allocation.

Load Factor. The intervenors advocate the use of an 85% or higher load factor in the rate derivation, which would increase the billing determinants and thereby reduce the per-unit recourse rate. Ridgeline maintains that a 75% load factor is appropriate in light of the Pipeline System's current utilization rate of approximately 56.7% and reasonably anticipated growth in throughput volumes.

Settlement discussions are expected to continue following the filing of the redesigned tariff in February 2025, and it is anticipated that Settlement Judge Margolis will convene additional settlement conferences at that time. We will keep the Agent apprised of material developments in the settlement process.

VI. Regulatory Covenant Compliance

This Section addresses Ridgeline's compliance with its regulatory covenant obligations under the Credit Agreement.

As the Agent is aware, Section 6.12 of the Credit Agreement requires the Borrower to use commercially reasonable efforts to obtain and maintain all permits, licenses, and regulatory approvals necessary for the operation of the Pipeline System, including FERC tariff approval. Section 6.12 further requires the Borrower to diligently pursue such approvals and to keep the Agent informed of the status of any pending regulatory proceedings that are material to the Borrower's business and financial condition. We understand that FERC tariff approval constitutes a condition precedent to certain covenant calculations under the Credit Agreement, including, without limitation, certain financial covenants tied to firm contracted revenue and the Borrower's projected revenue base.

We confirm the following on behalf of Ridgeline:

(a) Ridgeline is diligently pursuing the tariff redesign and intends to meet the February 21, 2025 filing deadline established by ALJ Whitfield's order of March 4, 2024.

(b) Ridgeline is in compliance with all procedural orders of the FERC and the presiding ALJ in Docket Nos. RP22-847-000 and RP22-847-001, including the requirement to file quarterly status reports beginning June 15, 2024.

(c) Ridgeline continues to operate the Pipeline System under interim transportation arrangements, and the current throughput of approximately 680 MMcf/d generates revenue that supports the Borrower's ongoing debt service obligations under the Credit Agreement.

(d) No Event of Default (as defined in the Credit Agreement) has occurred or is continuing in connection with the FERC proceedings. The pendency of the FERC proceedings and the tariff redesign do not constitute a breach of any covenant, representation, or warranty under the Credit Agreement.

(e) An officer's certificate regarding regulatory compliance will be delivered to the Agent under Section 6.02(c) of the Credit Agreement in the ordinary course, consistent with the Borrower's quarterly reporting obligations.

We note that the foregoing representations are based on our knowledge as outside regulatory counsel and on information provided to us by the Borrower's management. We have not conducted an independent audit or investigation of the Borrower's financial condition or overall compliance with the Credit Agreement, which remain the responsibility of the Borrower and its financial advisors.

VII. Anticipated Timeline

Based on the current procedural posture of the FERC proceedings and the progress of the tariff redesign, we anticipate the following timeline of key milestones:

Settlement discussions under the direction of Settlement Judge Margolis may continue in parallel with the resumed hearing process, and any settlement reached during or after the hearing would be subject to Commission approval under 18 C.F.R. § 385.602.

We caution that the foregoing timeline is based on current expectations and is subject to change based on a number of factors, including the progress of the tariff redesign, the outcome of interconnection cost allocation negotiations with ATPC, the ALJ's scheduling determinations, and any further procedural developments before the Commission.

VIII. Request for Acknowledgment; No Waiver

We respectfully request that the Agent acknowledge receipt of this letter and distribute copies to the syndicate lenders, Granite Trust Company and Lakeshore Capital Bank, in accordance with the Agent's obligations under the Credit Agreement.

We wish to clarify that this letter is provided for informational purposes in connection with the regulatory covenant compliance provisions of the Credit Agreement and does not constitute, and shall not be construed as, a waiver of any rights, remedies, or obligations of any party under the Credit Agreement, any ancillary document, or applicable law. Nothing contained herein is intended to modify, amend, or supplement the terms of the Credit Agreement or any other agreement between or among the parties thereto.

Further updates will be provided to the Agent in the ordinary course and as material developments occur in the FERC proceedings. We anticipate providing a copy of each quarterly status report filed with the FERC to the Agent promptly following such filing.

IX. Confidentiality

This letter and its contents are confidential and are provided solely for the use of the Agent and the Lenders under the Credit Agreement. The information contained herein is subject to the confidentiality provisions set forth in Section 10.07 of the Credit Agreement governing the treatment of Borrower information, and we respectfully request that the Agent and the Lenders treat this letter and its contents accordingly. This letter should not be disclosed, distributed, or otherwise made available to any third party without the prior written consent of Ridgeline, except as may be required by applicable law or regulation or as otherwise expressly permitted under the Credit Agreement.

We remain available to discuss any questions you may have regarding the foregoing. Please do not hesitate to contact the undersigned at (202) 555-7843 or gtrujillo@calderwoodharkness.com, or Brett Callahan, Lead Associate, at (202) 555-7861 or bcallahan@calderwoodharkness.com.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

George Trujillo Partner Energy & Infrastructure Practice Group Direct: (202) 555-7843 gtrujillo@calderwoodharkness.com

cc:

Patricia Dunmore, Chairperson, Dunmore Energy Holdings Ltd.

James K. Winfield, CEO & President, Ridgeline Midstream Services LLC

Angela Moretti, Vice President, Finance & Treasurer, Ridgeline Midstream Services LLC

Brett Callahan, Lead Associate, Calderwood & Harkness LLP

Enclosures: None. A copy of the quarterly status report to be filed with the FERC on June 15, 2024, will be provided to the Agent promptly upon filing.

Parameter	Original Filing	Redesigned Tariff
Load Factor	100%	75% (Modified Fixed-Variable)
Billing Determinants (Dth/yr)	438,000,000	328,500,000
Return on Equity	14.00%	12.50%
WACC	10.0625%	9.2375%
Total Cost of Service	$97.36 million	$103.15 million (approx.)
Recourse Rate ($/Dth)	$0.2265	$0.3140
Reservation Rate ($/Dth)	$0.2223	$0.3102
Usage Rate ($/Dth)	$0.0042	$0.0038
Rate Base	$612.40 million	$612.40 million
Date	Milestone
June 15, 2024	Filing of first quarterly status report with FERC (per ALJ order of March 4, 2024)
September 2024 (anticipated)	Filing of second quarterly status report with FERC
December 2024 (anticipated)	Filing of third quarterly status report with FERC
February 21, 2025	Deadline for filing redesigned FERC Gas Tariff, Original Volume No. 1, and supplemental testimony
Following filing (anticipated)	ALJ Whitfield expected to lift the stay and re-establish the Track II procedural schedule for resumption of the evidentiary hearing
Spring/Summer 2025 (anticipated)	Resumption of hearing and testimony phases (subject to ALJ scheduling and the parties' availability)

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Counselors at Law
1601 K Street NW, Suite 900 Washington, DC 20006
Telephone: (202) 555-7800 Facsimile: (202) 555-7801 www.calderwoodharkness.com
June 14, 2024
VIA ELECTRONIC MAIL AND Sundial Data Systems
Mr. Richard Calvert Managing Director, Relationship Manager Pinnacle National Bank, N.A., as Administrative Agent 600 Travis Street, Suite 4200 Houston, TX 77002
Re: Status of Federal Energy Regulatory Commission Proceedings — Ridgeline Midstream Services LLC (FERC Docket Nos. RP22-847-000 and RP22-847-001)
Senior Secured Credit Facility Agreement dated September 15, 2021 (the "Credit Agreement"), among Ridgeline Midstream Services LLC, as Borrower, Pinnacle National Bank, N.A., as Administrative Agent, and the Lenders party thereto (Granite Trust Company and Lakeshore Capital Bank)
C&H Matter No. 1016-00005
Dear Mr. Calvert:
I. Purpose of Letter
Calderwood & Harkness LLP serves as outside regulatory counsel to Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Registry No. CR-381204), and its wholly owned U.S. subsidiary, Ridgeline Midstream Services LLC ("Ridgeline" or the "Borrower"), a Delaware limited liability company (EIN: 87-4231956), with its principal office at 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301. DEH is the sole member of Ridgeline, holding a 100% membership interest. We have represented Ridgeline in all matters before the Federal Energy Regulatory Commission ("FERC" or the "Commission") since the inception of the proceedings described herein and have been actively involved in all aspects of the tariff filing, the subsequent deficiency response, and the ongoing tariff redesign effort.
The purpose of this letter is to provide Pinnacle National Bank, N.A. ("Pinnacle" or the "Agent"), in its capacity as Administrative Agent under the Credit Agreement, with a comprehensive status update on the FERC proceedings currently pending in Docket Nos. RP22-847-000 (the "Rate Case") and RP22-847-001 (the "Interconnection Authorization"), in connection with Ridgeline's regulatory covenant compliance obligations under the Credit Agreement. As you are aware, the Credit Agreement requires the Borrower to furnish periodic updates to the Agent regarding the status of its regulatory proceedings before the FERC, given the material importance of FERC tariff approval to the Borrower's long-term revenue generation and debt service capacity.
For reference, the Credit Agreement governs a $400,000,000 senior secured term loan facility (the "Term Loan") and a $75,000,000 senior secured revolving credit facility (the "Revolver" and, together with the Term Loan, the "Facilities"), syndicated among Pinnacle (holding a 40% participation interest), Granite Trust Company (holding a 30% participation interest), and Lakeshore Capital Bank (holding a 30% participation interest). The outstanding balance under the Term Loan, as of the most recent quarterly compliance certificate delivered by the Borrower to the Agent, continues to amortize in accordance with the scheduled repayment terms set forth in Section 2.07 of the Credit Agreement. We understand that all scheduled amortization payments have been made to date in full and on a timely basis.
This letter is intended to satisfy the informational requirements of the Credit Agreement with respect to regulatory proceedings and to provide the Agent and the Lenders with a clear understanding of the current posture, anticipated timeline, and material considerations associated with the FERC proceedings. It should be read in conjunction with the Borrower's periodic compliance certificates and financial reporting delivered under Article VI of the Credit Agreement.
II. Background — The FERC Proceedings
A. Nature of the Proceedings
On May 12, 2022, Ridgeline filed an application before the FERC (the "Application") seeking two forms of regulatory authorization. First, in Docket No. RP22-847-000, Ridgeline filed for approval of an initial tariff rate for interstate transportation service on the Ridgeline Pipeline System (as defined below) pursuant to Sections 4 and 7 of the Natural Gas Act, 15 U.S.C. §§ 717c and 717f, and the Commission's implementing regulations at 18 C.F.R. Parts 154, 157, and 284. The Application proposed the establishment of Ridgeline's FERC Gas Tariff, Original Volume No. 1, as a Part 284, Subpart G open-access transportation tariff, providing firm and interruptible transportation service on a nondiscriminatory basis consistent with the Commission's open-access requirements established under Order Nos. 436, 636, and their progeny. Second, in Docket No. RP22-847-001, Ridgeline sought authorization for the construction and operation of physical interconnection facilities with the existing interstate pipeline network of Appalachian Trunk Pipeline Company, LLC ("ATPC"), a FERC-jurisdictional natural gas pipeline company.
These proceedings were assigned Docket Nos. RP22-847-000 and RP22-847-001, respectively, and have been consolidated for purposes of the procedural schedule. The proceedings remain pending as of the date of this letter, as described in further detail below.
B. The Ridgeline Pipeline System
The Ridgeline Pipeline System (the "Pipeline System" or the "System") consists of a 187-mile, 24-inch-diameter high-pressure natural gas pipeline extending from a receipt point at the Wetzel County Interconnect in Wetzel County, West Virginia, to a delivery point at the Waynesburg Compressor Station in Greene County, Pennsylvania. The Pipeline System was designed with a maximum capacity of 1.2 billion cubic feet per day ("Bcf/d"), equivalent to 1,200,000 dekatherms per day ("Dth/d"), and is currently transporting approximately 680 million cubic feet per day ("MMcf/d"), representing an approximate utilization rate of 56.7% of design capacity.
The Pipeline System includes three compressor stations — the Wetzel Station, the Mannington Station, and the Waynesburg Station — with aggregate installed compression of 45,000 horsepower ("HP"). The Pipeline System achieved its in-service date on October 1, 2021, and was constructed at an original capital cost of approximately $587.2 million.
Ridgeline is the sole applicant in the FERC proceedings and is the owner and operator of the Pipeline System. As noted above, DEH is Ridgeline's sole member, holding a 100% membership interest.
C. Original Filing Parameters
The Application as originally filed proposed the following rate case parameters:
Rate Base. The proposed rate base totaled $612.40 million, comprising: (i) net plant in service of $563.71 million; (ii) a working capital allowance of $18.64 million; (iii) accumulated deferred income taxes ("ADIT") of negative $12.45 million; and (iv) other rate base items aggregating $42.50 million.
Cost of Service. The proposed total test-year cost of service was $97.36 million, encompassing all operating and maintenance expenses, administrative and general expenses, depreciation, taxes (including income tax allowance), and return on equity and debt.
Recourse Rate. The proposed initial recourse rate was $0.2265 per Dth, consisting of a reservation component of $0.2223 per Dth and a usage component of $0.0042 per Dth. The rate was derived using a 100% load factor methodology, as is conventional for initial rate filings by new interstate pipelines.
Return on Equity and Capital Structure. Ridgeline proposed a return on equity ("ROE") of 14.00%, applied to a capital structure of 55% equity and 45% debt. The cost of debt was set at 5.25%, reflecting the weighted average cost of borrowings under the Credit Agreement and other indebtedness at the time of filing. The resulting weighted average cost of capital ("WACC") was 10.0625%.
D. Proposed Interconnection
In Docket No. RP22-847-001, Ridgeline sought FERC authorization for the construction and operation of a physical interconnection at the Wetzel County Interconnect with ATPC's 30-inch mainline at ATPC Milepost 412.6. The proposed interconnection facilities include metering equipment, valve assemblies, pig launcher/receiver facilities, and associated control and communication systems.
The estimated total cost of the interconnection facilities was $22.3 million. Ridgeline proposed that costs be allocated 34.1% to Ridgeline ($7.6 million) and 65.9% to ATPC ($14.7 million), reflecting Ridgeline's analysis of relative benefits and usage patterns associated with the interconnection. The interconnection was designed with an initial bidirectional capacity of 800 MMcf/d, with provisions for expansion to 1.2 Bcf/d upon the installation of additional compression and metering capacity at the interconnect point.
III. Procedural History
A. Initial Proceedings (May 2022 – January 2023)
The procedural history of these proceedings has been extensive, spanning more than two years from the initial filing to the present. The following is a summary of the key procedural milestones:
May 12, 2022: Ridgeline filed the Application with the FERC. Calderwood & Harkness opened its engagement in connection with the filing under Matter No. 1016-00005.
June 14, 2022: The Commission issued its Notice of Filing, establishing an intervention and protest deadline of August 15, 2022. The Notice was published in the Federal Register on June 17, 2022.
Intervention Period (July – August 2022): Three parties filed motions to intervene in the proceedings:
(i) The Mountainside Gas Producers Coalition ("MGPC"), a coalition of fourteen independent natural gas producers operating in the Appalachian Basin, filed its motion to intervene on July 28, 2022, expressing concerns regarding the proposed recourse rate, load factor assumptions, and the impact of the proposed tariff on shipper costs;
(ii) The Clearwater Municipal Gas Authority ("CMGA"), a municipal gas distribution utility serving approximately 42,000 residential and commercial customers in southwestern Pennsylvania, filed its motion to intervene on August 1, 2022, raising concerns regarding the potential pass-through of transportation costs to end-use consumers; and
(iii) ATPC filed its motion to intervene and protest on August 15, 2022, challenging Ridgeline's proposed interconnection cost allocation and raising objections to the metering station design specifications included in the Application.
September 22, 2022: The Commission issued an order granting all three interventions. The order also established a Track II procedural schedule for the proceedings and appointed Settlement Judge Howard Margolis to facilitate settlement discussions among the parties.
October 17, 2022: Ridgeline filed its answer to the ATPC protest, responding to ATPC's specific objections regarding interconnection cost allocation methodology and metering station design. Ridgeline's answer included supplemental engineering affidavits and a detailed cost study prepared by its interconnection facilities engineering consultant.
November 14, 2022: Administrative Law Judge Clara Whitfield was appointed as the presiding judge for purposes of the evidentiary hearing. A prehearing conference was held on the same date, during which the ALJ established a procedural schedule, addressed discovery matters, and set a timetable for the filing of prefiled testimony.
December 5, 2022: Ridgeline filed its prefiled direct testimony, comprising the written testimony and supporting exhibits of seven witnesses addressing rate base, cost of service, rate design, ROE, depreciation, operations, and interconnection facilities.
January 9, 2023: Answering testimony was filed by the three intervenors. ATPC, represented by Kellner, Royce & Dillard LLP, filed the testimony of four witnesses addressing interconnection costs, metering design, and alternative rate proposals. MGPC, represented by Whitmore & Sable LLP, filed the testimony of three witnesses addressing ROE, load factor, and cost allocation. CMGA, represented by Fordham Municipal Law Group PC, filed the testimony of two witnesses addressing rate impacts on end-use consumers and public interest considerations.
B. FERC Deficiency Letter and Stay of Proceedings
January 19, 2023: The FERC's Office of Energy Market Regulation ("OEMR") issued a Deficiency Letter identifying fourteen specific deficiencies in Ridgeline's tariff filing. This development represented a significant procedural setback and has been the primary driver of the extended timeline in these proceedings. The fourteen deficiency items identified by OEMR were as follows:
1. Inadequate support for the proposed 14.00% return on equity, including an insufficient discounted cash flow ("DCF") proxy group analysis;
2. Absence of a fuel, lost, and unaccounted-for gas ("FL&U") tracker mechanism in the proposed tariff;
3. Missing derivation and supporting workpapers for the interruptible transportation ("IT") rate;
4. Insufficient load factor support and analysis;
5. Absence of capacity release provisions consistent with 18 C.F.R. § 284.8;
6. Incomplete compliance with North American Energy Standards Board ("NAESB") Wholesale Gas Quadrant ("WGQ") standards;
7. Missing electronic bulletin board ("EBB") posting requirements;
8. Inadequate shipper-must-have-title provisions;
9. Failure to file the proposed interconnection agreement with ATPC as a FERC rate schedule;
10. Absence of penalty revenue crediting provisions;
11. Inadequate creditworthiness provisions for prospective shippers;
12. Missing segmentation and flexible receipt-and-delivery-point provisions;
13. Absence of greenhouse gas ("GHG") cost recovery provisions; and
14. Failure to address the implications of FERC Order No. 2222 on Ridgeline's tariff structure and service offerings.
February 6, 2023: In response to the breadth and significance of the Deficiency Letter, ALJ Whitfield issued an order staying the procedural schedule in its entirety, pending Ridgeline's response to the identified deficiencies. All testimony and discovery deadlines were suspended.
March 15, 2023: Ridgeline filed a partial response to the Deficiency Letter, addressing eight of the fourteen deficiency items — specifically, Items 5 (capacity release), 6 (partial NAESB compliance), 7 (EBB posting), 8 (shipper-must-have-title), 10 (penalty revenue crediting), 11 (creditworthiness), 12 (segmentation/flexible receipt-delivery), and 14 (Order No. 2222). The remaining six deficiency items (Items 1 through 4, 9, and 13), which involved more fundamental tariff design and rate methodology issues, were identified as requiring additional analysis and, in certain cases, a comprehensive redesign of the tariff structure.
C. Extensions and Tariff Redesign
The six remaining deficiency items necessitated a tariff redesign effort of significant scope and complexity. The following extensions were requested and granted:
April 15, 2023: Ridgeline retained Braswell Energy Consulting Group LLC ("Braswell"), engagement number BEC-2023-0041, to serve as its tariff redesign consultant. Braswell is led by Dr. Raymond Braswell, a former FERC staff economist with over thirty years of experience in natural gas pipeline rate design and tariff administration. Dr. Braswell's team was engaged to conduct a comprehensive review of the existing tariff and to develop a redesigned tariff that would address all remaining deficiency items while preserving Ridgeline's commercial objectives.
April 28, 2023: Ridgeline filed its first motion for extension of time, requesting an additional 120 days to complete the tariff redesign for the remaining six deficiency items. The motion was supported by a detailed affidavit from Dr. Braswell describing the scope of the redesign effort. The motion was granted by ALJ Whitfield on May 10, 2023, establishing a new deadline of August 28, 2023.
August 25, 2023: Ridgeline filed its second motion for extension of time, requesting an additional 180 days beyond the August 28 deadline. The motion cited the ongoing complexity of the tariff redesign, including the need to coordinate with ATPC on the interconnection agreement and to conduct stakeholder consultations with MGPC and CMGA regarding rate design alternatives. The motion was granted by ALJ Whitfield on September 8, 2023, establishing a new deadline of February 23, 2024. At this time, the proceeding status was formally changed to "dormant" on the FERC docket.
February 20, 2024: Ridgeline filed its third motion for extension of time, requesting an additional twelve months to complete the tariff redesign. The motion cited material scope changes to the redesign effort, including the decision to shift from a 100% load factor methodology to a modified fixed-variable rate methodology — a fundamental change in rate design that required a complete re-derivation of billing determinants, rate components, and cost allocation factors. The motion was granted by ALJ Whitfield on March 4, 2024, subject to the condition that Ridgeline file quarterly status reports with the Commission beginning on June 15, 2024. The new filing deadline was established as February 21, 2025.
D. Current Status as of the Date of This Letter
As of the date of this letter, the proceedings in Docket Nos. RP22-847-000 and RP22-847-001 remain in dormant status. No evidentiary hearing is currently scheduled, and all previously established testimony and discovery deadlines remain stayed.
Ridgeline is currently preparing its first quarterly status report, which is required to be filed with the FERC on June 15, 2024, pursuant to the ALJ's order of March 4, 2024. The quarterly status report will provide the Commission with a summary of the tariff redesign progress and an updated timeline for the filing of the redesigned tariff.
The tariff redesign remains in active progress under the direction of Braswell Energy Consulting Group. As of the date of this letter, the revised FERC Gas Tariff, Original Volume No. 1, is in its second draft phase. Internal review and quality assurance procedures are ongoing, and coordination with ATPC regarding the interconnection agreement continues. The current filing deadline for the redesigned tariff and supplemental testimony is February 21, 2025.
IV. Summary of Tariff Redesign Progress
The tariff redesign encompasses a comprehensive revision of the FERC Gas Tariff to address all fourteen deficiency items identified in the OEMR's Deficiency Letter of January 19, 2023. Set forth below is a summary of the key changes being implemented as part of the redesign:
Rate Methodology. The most significant change in the redesign is the shift from a 100% load factor rate derivation to a modified fixed-variable rate methodology at a 75% load factor. This change reflects feedback from the OEMR regarding load factor support (Deficiency Item 4) and is consistent with current Commission precedent for pipelines with comparable utilization profiles. The revised billing determinants are 328,500,000 Dth per year, as compared to the original filing's billing determinants of 438,000,000 Dth per year — a reduction of approximately 25% that directly affects the per-unit recourse rate.
Return on Equity. The proposed ROE has been revised downward from 14.00% to 12.50%, based on an updated DCF proxy group analysis incorporating the most recent market data and consistent with the Commission's two-step DCF methodology as applied in recent pipeline rate cases. This revision addresses Deficiency Item 1.
Weighted Average Cost of Capital. The revised WACC is 9.2375%, reduced from the originally proposed 10.0625%, reflecting the lower ROE and updated capital structure assumptions.
Cost of Service. The revised total cost of service is approximately $103.15 million, an increase from the originally filed cost of service of $97.36 million. The increase is attributable to updated operations and maintenance ("O&M") expenses of $13.92 million, updated administrative and general ("A&G") expenses of $5.14 million, a revised income tax allowance of $15.04 million, and reduced revenue credits of $6.00 million. These revisions reflect two additional years of operating experience and current cost projections.
Recourse Rate. The revised proposed recourse rate is $0.3140 per Dth, consisting of a reservation component of $0.3102 per Dth and a usage component of $0.0038 per Dth. Although the per-unit rate is higher than the originally proposed rate of $0.2265 per Dth, this increase is driven primarily by the reduction in billing determinants resulting from the shift to a 75% load factor. The overall cost of service and return on invested capital are lower under the revised proposal.
Rate Base. The rate base remains at $612.40 million, as originally filed.
Tariff Provisions. The redesigned tariff incorporates the following new or revised provisions, addressing the remaining deficiency items:
• FL&U tracker mechanism (Deficiency Item 2);
• IT rate schedule with complete derivation and supporting workpapers (Deficiency Item 3);
• Capacity release provisions consistent with 18 C.F.R. § 284.8 (Deficiency Item 5);
• Full compliance with NAESB WGQ Version 3.2 standards (Deficiency Item 6);
• EBB posting requirements consistent with 18 C.F.R. § 284.13 (Deficiency Item 7);
• Revised and strengthened shipper-must-have-title provisions (Deficiency Item 8);
• Penalty revenue crediting mechanism (Deficiency Item 10);
• Comprehensive creditworthiness provisions for prospective shippers (Deficiency Item 11);
• Segmentation and flexible receipt-and-delivery-point provisions (Deficiency Item 12);
• GHG cost recovery provisions (Deficiency Item 13); and
• Provisions addressing the implications of FERC Order No. 2222 (Deficiency Item 14).
Interconnection Agreement. With respect to Deficiency Item 9, the interconnection agreement with ATPC is being revised and will be filed as a FERC rate schedule, as required by the Commission. Cost allocation negotiations with ATPC remain ongoing. ATPC continues to advocate for a 50/50 cost allocation ($11.15 million each), whereas Ridgeline maintains its position that a 34.1/65.9 allocation ($7.6 million to Ridgeline and $14.7 million to ATPC) is appropriate based on relative benefits and usage. This remains an open item in the redesign and in the parallel settlement discussions.
The table below summarizes the key changes between the original filing and the redesigned tariff:
V. Settlement Discussions
Settlement Judge Howard Margolis has convened four settlement conferences in these proceedings, held on the following dates: November 30, 2022; March 8, 2023; July 12, 2023; and January 18, 2024. All parties — Ridgeline, ATPC, MGPC, and CMGA — have participated in each conference, together with their respective counsel. Settlement Judge Margolis has remained actively engaged and has facilitated the exchange of settlement proposals and counterproposals among the parties.
Notwithstanding these efforts, no settlement has been reached to date. The parties remain separated on several key issues, and the gap between their respective positions, while narrowed over the course of the settlement discussions, remains material.
Recourse Rate. The parties remain approximately $0.058 per Dth apart on the recourse rate. ATPC and MGPC jointly advocate a recourse rate ceiling of approximately $0.2560 per Dth, while Ridgeline's current floor, based on the redesigned tariff, is $0.3140 per Dth. CMGA has not taken an independent position on the precise rate level but has generally supported the positions of ATPC and MGPC with respect to rate mitigation.
Return on Equity. The three intervenors have proposed ROE levels below Ridgeline's revised proposal of 12.50%. ATPC has proposed an ROE of 10.75%, while MGPC has proposed 11.25%. Ridgeline maintains that its proposed 12.50% ROE is consistent with Commission precedent and reflects the risk profile of a newly constructed pipeline system with developing throughput.
Interconnection Cost Allocation. As noted above, ATPC and Ridgeline remain at odds on the allocation of the $22.3 million interconnection facilities cost, with ATPC advocating a 50/50 split and Ridgeline maintaining its proposed 34.1/65.9 allocation.
Load Factor. The intervenors advocate the use of an 85% or higher load factor in the rate derivation, which would increase the billing determinants and thereby reduce the per-unit recourse rate. Ridgeline maintains that a 75% load factor is appropriate in light of the Pipeline System's current utilization rate of approximately 56.7% and reasonably anticipated growth in throughput volumes.
Settlement discussions are expected to continue following the filing of the redesigned tariff in February 2025, and it is anticipated that Settlement Judge Margolis will convene additional settlement conferences at that time. We will keep the Agent apprised of material developments in the settlement process.
VI. Regulatory Covenant Compliance
This Section addresses Ridgeline's compliance with its regulatory covenant obligations under the Credit Agreement.
As the Agent is aware, Section 6.12 of the Credit Agreement requires the Borrower to use commercially reasonable efforts to obtain and maintain all permits, licenses, and regulatory approvals necessary for the operation of the Pipeline System, including FERC tariff approval. Section 6.12 further requires the Borrower to diligently pursue such approvals and to keep the Agent informed of the status of any pending regulatory proceedings that are material to the Borrower's business and financial condition. We understand that FERC tariff approval constitutes a condition precedent to certain covenant calculations under the Credit Agreement, including, without limitation, certain financial covenants tied to firm contracted revenue and the Borrower's projected revenue base.
We confirm the following on behalf of Ridgeline:
(a) Ridgeline is diligently pursuing the tariff redesign and intends to meet the February 21, 2025 filing deadline established by ALJ Whitfield's order of March 4, 2024.
(b) Ridgeline is in compliance with all procedural orders of the FERC and the presiding ALJ in Docket Nos. RP22-847-000 and RP22-847-001, including the requirement to file quarterly status reports beginning June 15, 2024.
(c) Ridgeline continues to operate the Pipeline System under interim transportation arrangements, and the current throughput of approximately 680 MMcf/d generates revenue that supports the Borrower's ongoing debt service obligations under the Credit Agreement.
(d) No Event of Default (as defined in the Credit Agreement) has occurred or is continuing in connection with the FERC proceedings. The pendency of the FERC proceedings and the tariff redesign do not constitute a breach of any covenant, representation, or warranty under the Credit Agreement.
(e) An officer's certificate regarding regulatory compliance will be delivered to the Agent under Section 6.02(c) of the Credit Agreement in the ordinary course, consistent with the Borrower's quarterly reporting obligations.
We note that the foregoing representations are based on our knowledge as outside regulatory counsel and on information provided to us by the Borrower's management. We have not conducted an independent audit or investigation of the Borrower's financial condition or overall compliance with the Credit Agreement, which remain the responsibility of the Borrower and its financial advisors.
VII. Anticipated Timeline
Based on the current procedural posture of the FERC proceedings and the progress of the tariff redesign, we anticipate the following timeline of key milestones:
Settlement discussions under the direction of Settlement Judge Margolis may continue in parallel with the resumed hearing process, and any settlement reached during or after the hearing would be subject to Commission approval under 18 C.F.R. § 385.602.
We caution that the foregoing timeline is based on current expectations and is subject to change based on a number of factors, including the progress of the tariff redesign, the outcome of interconnection cost allocation negotiations with ATPC, the ALJ's scheduling determinations, and any further procedural developments before the Commission.
VIII. Request for Acknowledgment; No Waiver
We respectfully request that the Agent acknowledge receipt of this letter and distribute copies to the syndicate lenders, Granite Trust Company and Lakeshore Capital Bank, in accordance with the Agent's obligations under the Credit Agreement.
We wish to clarify that this letter is provided for informational purposes in connection with the regulatory covenant compliance provisions of the Credit Agreement and does not constitute, and shall not be construed as, a waiver of any rights, remedies, or obligations of any party under the Credit Agreement, any ancillary document, or applicable law. Nothing contained herein is intended to modify, amend, or supplement the terms of the Credit Agreement or any other agreement between or among the parties thereto.
Further updates will be provided to the Agent in the ordinary course and as material developments occur in the FERC proceedings. We anticipate providing a copy of each quarterly status report filed with the FERC to the Agent promptly following such filing.
IX. Confidentiality
This letter and its contents are confidential and are provided solely for the use of the Agent and the Lenders under the Credit Agreement. The information contained herein is subject to the confidentiality provisions set forth in Section 10.07 of the Credit Agreement governing the treatment of Borrower information, and we respectfully request that the Agent and the Lenders treat this letter and its contents accordingly. This letter should not be disclosed, distributed, or otherwise made available to any third party without the prior written consent of Ridgeline, except as may be required by applicable law or regulation or as otherwise expressly permitted under the Credit Agreement.
We remain available to discuss any questions you may have regarding the foregoing. Please do not hesitate to contact the undersigned at (202) 555-7843 or gtrujillo@calderwoodharkness.com, or Brett Callahan, Lead Associate, at (202) 555-7861 or bcallahan@calderwoodharkness.com.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
George Trujillo Partner Energy & Infrastructure Practice Group Direct: (202) 555-7843 gtrujillo@calderwoodharkness.com
cc:
Patricia Dunmore, Chairperson, Dunmore Energy Holdings Ltd.
James K. Winfield, CEO & President, Ridgeline Midstream Services LLC
Angela Moretti, Vice President, Finance & Treasurer, Ridgeline Midstream Services LLC
Brett Callahan, Lead Associate, Calderwood & Harkness LLP
Enclosures: None. A copy of the quarterly status report to be filed with the FERC on June 15, 2024, will be provided to the Agent promptly upon filing.
Parameter | Original Filing | Redesigned Tariff
Load Factor | 100% | 75% (Modified Fixed-Variable)
Billing Determinants (Dth/yr) | 438,000,000 | 328,500,000
Return on Equity | 14.00% | 12.50%
WACC | 10.0625% | 9.2375%
Total Cost of Service | $97.36 million | $103.15 million (approx.)
Recourse Rate ($/Dth) | $0.2265 | $0.3140
Reservation Rate ($/Dth) | $0.2223 | $0.3102
Usage Rate ($/Dth) | $0.0042 | $0.0038
Rate Base | $612.40 million | $612.40 million
Date | Milestone
June 15, 2024 | Filing of first quarterly status report with FERC (per ALJ order of March 4, 2024)
September 2024 (anticipated) | Filing of second quarterly status report with FERC
December 2024 (anticipated) | Filing of third quarterly status report with FERC
February 21, 2025 | Deadline for filing redesigned FERC Gas Tariff, Original Volume No. 1, and supplemental testimony
Following filing (anticipated) | ALJ Whitfield expected to lift the stay and re-establish the Track II procedural schedule for resumption of the evidentiary hearing
Spring/Summer 2025 (anticipated) | Resumption of hearing and testimony phases (subject to ALJ scheduling and the parties' availability)

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