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UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

FIRST QUARTERLY STATUS REPORT OF RIDGELINE MIDSTREAM SERVICES LLC

Filed: June 15, 2024

I. INTRODUCTION AND PURPOSE

Ridgeline Midstream Services LLC ("Ridgeline" or "Applicant"), by and through its undersigned counsel, Calderwood & Harkness LLP, hereby submits this First Quarterly Status Report ("Status Report") to the Federal Energy Regulatory Commission ("Commission" or "FERC") pursuant to the Order of Administrative Law Judge Clara Whitfield dated March 4, 2024 (the "March 4 Order"). This Status Report is filed in accordance with the reporting obligations imposed by the March 4 Order and is intended to provide the Commission, the presiding Administrative Law Judge, and all parties of record with a comprehensive update on the progress of the tariff redesign, the status of outstanding deficiency items, and the anticipated timeline for completion of the redesigned FERC Gas Tariff, Original Volume No. 1, and supplemental testimony.

The March 4 Order was issued in response to Ridgeline's third motion for extension of time, filed on February 20, 2024, in which Ridgeline sought a twelve-month extension of the filing deadline to accommodate material scope changes to the ongoing tariff redesign. The March 4 Order granted the requested extension, establishing a new deadline of February 21, 2025, for filing the redesigned FERC Gas Tariff, Original Volume No. 1, and supplemental testimony. As a condition of granting this extension, ALJ Whitfield ordered that Ridgeline file quarterly status reports with the Commission providing updates on the progress of the tariff redesign, the status of outstanding deficiency items, and the anticipated timeline for completion of the filing.

This is the first such quarterly status report. Subsequent reports are anticipated on or about September 14, 2024, and December 13, 2024, such that three quarterly reports will have been filed in advance of the February 21, 2025 filing deadline.

For purposes of the Commission's records, Ridgeline's principal office is located at 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301. Ridgeline is a Delaware limited liability company, bearing Employer Identification Number 87-4231956 and FERC Code 960442. Ridgeline is a wholly-owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Cayman Registry No. CR-381204). DEH is the ultimate parent entity of the Ridgeline organization and is responsible for certain financing and corporate governance functions relevant to the matters discussed in this Status Report.

II. PROCEDURAL BACKGROUND

The following procedural history is provided to place this Status Report in context for the Commission and for any party that may be newly reviewing the record. The procedural history encompasses the initial filing, the interventions and protest, the Deficiency Letter and resulting stay of proceedings, and the three extensions of time that have been granted in this proceeding.

A. Initial Filing and Proceeding History

On May 12, 2022, Ridgeline filed its application for initial tariff rate and interconnection authorization with the Commission in Docket Nos. RP22-847-000 and RP22-847-001. The application was filed pursuant to Sections 4 and 7 of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717c, 717f, and Parts 154, 157, and 284 of the Commission's regulations, 18 C.F.R. Parts 154, 157, and 284.

In its initial application, Ridgeline sought approval of an initial recourse rate of $0.2265 per dekatherm ("Dth") for interstate transportation service on the Ridgeline Pipeline System under Part 284, Subpart G of the Commission's regulations. The proposed rate was composed of a reservation charge of $0.2223 per Dth and a usage charge of $0.0042 per Dth. The proposed rate was derived from a total cost of service of $97.36 million and a rate base of $612.40 million, utilizing a 100% load factor billing determinant assumption. Ridgeline's initial application also sought authorization for a physical interconnection with the pipeline system of Appalachian Trunk Pipeline Company, LLC ("ATPC") at the Wetzel County Interconnect in Wetzel County, West Virginia.

The Ridgeline Pipeline System is a 187-mile, 24-inch-diameter high-pressure natural gas pipeline extending from the Wetzel County Interconnect in Wetzel County, West Virginia, to the Waynesburg Compressor Station in Greene County, Pennsylvania. The pipeline system has a design capacity of 1.2 billion cubic feet per day ("Bcf/d"), equivalent to 1,200,000 Dth per day, and, as of the date of this filing, has current throughput of approximately 680 million cubic feet per day ("MMcf/d"), representing approximately 56.7% utilization of design capacity. The Ridgeline Pipeline System has been in commercial service since October 1, 2021.

B. Interventions and Protest

On June 14, 2022, the Commission issued a Notice of Filing in this proceeding and established an intervention and protest deadline of August 15, 2022. Three entities sought intervention in this proceeding during the intervention period:

The Mountainside Gas Producers Coalition ("MGPC") filed its motion to intervene on July 28, 2022. MGPC is a trade association representing natural gas producers with production operations in the Marcellus and Utica shale formations in West Virginia and Pennsylvania. MGPC is represented in this proceeding by Whitmore & Sable LLP, with Rebekah Montague serving as lead counsel.

The Clearwater Municipal Gas Authority ("CMGA") filed its motion to intervene on August 1, 2022. CMGA is a municipal gas distribution authority serving residential and commercial customers in the Clearwater, Pennsylvania area. CMGA is represented in this proceeding by Fordham Municipal Law Group PC, with Stephen Greer serving as lead counsel.

Appalachian Trunk Pipeline Company, LLC ("ATPC") filed its protest and motion to intervene on August 15, 2022, the final day of the intervention period. ATPC's protest opposed the proposed interconnection configuration at the Wetzel County Interconnect and specifically contested Ridgeline's proposed allocation of $14.7 million in interconnection facilities costs to ATPC shippers. ATPC is represented in this proceeding by Kellner, Royce & Dillard LLP, with William Pratt serving as lead counsel.

By order dated September 22, 2022, the Commission granted all three motions to intervene. In the same order, the Commission established a Track II procedural schedule for the consolidated proceeding and appointed Settlement Judge Howard Margolis to facilitate settlement discussions among the parties.

Subsequent to the granting of interventions, the following procedural steps occurred:

On October 17, 2022, Ridgeline filed its answer to ATPC's protest, responding to ATPC's objections to the proposed interconnection configuration and cost allocation methodology. Ridgeline's answer argued that the proposed allocation of 34.1% of interconnection costs to Ridgeline and 65.9% to ATPC was just and reasonable, reflecting the proportional benefits to each party's respective shippers and the relative usage of the interconnection facilities.

On November 14, 2022, ALJ Clara Whitfield was appointed as the presiding Administrative Law Judge in this proceeding, and a prehearing conference was held to establish the hearing schedule, identify contested issues, and discuss the scope of testimony.

On December 5, 2022, Ridgeline filed pre-filed direct testimony of seven witnesses, addressing all aspects of the rate application, cost of service, rate design, interconnection, and public convenience and necessity.

On January 9, 2023, ATPC, MGPC, and CMGA filed answering testimony through their respective witnesses, contesting various aspects of Ridgeline's proposed rate, cost of service, and interconnection configuration.

C. Deficiency Letter and Stay of Proceedings

On January 19, 2023, the Commission's Office of Energy Market Regulation ("OEMR") issued a Deficiency Letter identifying fourteen (14) deficiencies in Ridgeline's tariff filing. The Deficiency Letter concluded that the identified deficiencies were of sufficient magnitude to require a comprehensive tariff redesign before the proceeding could advance to hearing.

In response to the Deficiency Letter, on February 6, 2023, ALJ Whitfield issued an order staying the procedural schedule pending Ridgeline's response. The stay was entered to permit Ridgeline an opportunity to address the identified deficiencies without the burden of an ongoing hearing schedule.

On March 15, 2023, Ridgeline filed a partial response to the Deficiency Letter, addressing eight (8) of the fourteen (14) deficiency items — specifically, Items 1 through 4 and Items 7 through 10. The partial response provided revised tariff language, supporting analysis, and explanatory narrative for each of the eight addressed items.

Six deficiency items remained outstanding as of the date of the partial response and continue to be the subject of the ongoing tariff redesign. The six outstanding items are:

Item 5: Capacity release provisions;

Item 6: NAESB standards compliance in operational flow order provisions;

Item 11: Creditworthiness provisions;

Item 12: Segmentation and flexible receipt/delivery point provisions;

Item 13: Greenhouse gas emission cost recovery;

Item 14: Order No. 2222 distributed energy resource aggregation implications.

D. Extensions of Time

Since the issuance of the Deficiency Letter, Ridgeline has sought and obtained three extensions of time to complete the tariff redesign, as described below.

First Extension. On 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. ALJ Whitfield granted the first extension by order dated May 10, 2023, establishing a revised deadline of August 28, 2023.

Second Extension. On August 25, 2023, Ridgeline filed its second motion for extension of time, requesting an additional 180 days. In its second motion, Ridgeline cited the complexity of the ongoing tariff redesign and the need for additional time to complete stakeholder negotiations, particularly with respect to the capacity release provisions and NAESB compliance. ALJ Whitfield granted the second extension by order dated September 8, 2023, establishing a revised deadline of February 23, 2024. In the same order, ALJ Whitfield changed the proceeding status to "dormant" to reflect the ongoing nature of the tariff redesign process.

Third Extension. On February 20, 2024, Ridgeline filed its third motion for extension of time, requesting an additional twelve (12) months. In its third motion, Ridgeline cited material scope changes to the tariff redesign that had developed since the second extension, including Ridgeline's decision to adopt a modified fixed-variable rate methodology based on a 75% load factor (replacing the original 100% load factor assumption) and a revised return on equity of 12.50% (reduced from the original 14.00% proposal). These material scope changes necessitated a fundamental reworking of the rate design, cost of service, and related tariff provisions.

On March 4, 2024, ALJ Whitfield granted the third extension with conditions. The March 4 Order established the current deadline of February 21, 2025, for filing of the redesigned tariff and supplemental testimony. As a condition of the extension, ALJ Whitfield ordered Ridgeline to file quarterly status reports with the Commission providing updates on the progress of the tariff redesign, the status of outstanding deficiency items, and the anticipated timeline for completion. This filing constitutes the first of those quarterly status reports.

III. STATUS OF TARIFF REDESIGN

A. Engagement of Braswell Energy Consulting Group LLC

Ridgeline, through its parent company DEH, engaged Braswell Energy Consulting Group LLC ("Braswell") on April 15, 2023, under Engagement No. BEC-2023-0041, to serve as the lead tariff redesign consultant for this proceeding. Braswell is a Virginia limited liability company with offices at 8300 Greensboro Drive, Suite 450, McLean, Virginia 22102. Braswell specializes in FERC rate case support, tariff design, and regulatory economics for natural gas pipelines and related energy infrastructure.

Dr. Raymond Braswell, the founding principal of Braswell Energy Consulting Group LLC, serves as the lead consultant on the engagement. Dr. Braswell is a former economist with the Commission who brings extensive experience in natural gas pipeline rate design, cost of service analysis, and FERC regulatory proceedings. The Commission and the parties should be aware that Dr. Braswell previously provided pre-filed direct testimony on behalf of Ridgeline on December 5, 2022, regarding return on equity ("ROE") and capital structure, prior to the commencement of his engagement as the tariff redesign consultant. His role has since transitioned from testifying witness to consulting advisor, and Ridgeline does not anticipate that Dr. Braswell will serve as a testifying witness in connection with the redesigned tariff filing.

Braswell's scope of engagement encompasses a full revision of the FERC Gas Tariff, Original Volume No. 1, to address all fourteen (14) deficiency items identified in the January 19, 2023 Deficiency Letter. The engagement includes rate design analysis, cost of service modeling, tariff drafting and review, NAESB compliance assessment, and preparation of supporting work papers.

B. Overview of Redesign Approach

The tariff redesign represents a material departure from Ridgeline's original filing in several key respects. The redesign was undertaken to address the deficiencies identified by OEMR, to incorporate updated market data and regulatory developments, and to produce a tariff that more closely aligns with current Commission precedent and policy. The principal changes are summarized below.

Rate Methodology. The original filing employed a 100% load factor billing determinant assumption, which was challenged by the Commission in Deficiency Item 4 as lacking adequate justification. The redesign transitions to a modified fixed-variable rate methodology using a 75% load factor. This approach more accurately reflects the anticipated utilization of the Ridgeline Pipeline System and is consistent with the Commission's treatment of similarly situated pipeline systems.

Billing Determinants. The billing determinants have been revised to reflect the change in load factor. Under the original filing, the annual billing determinants were 438,000,000 Dth per year (calculated as 1,200,000 Dth per day × 365 days × 100% load factor). Under the redesign, the annual billing determinants have been revised to 328,500,000 Dth per year (calculated as 1,200,000 Dth per day × 365 days × 75% load factor). This change results in a higher unit rate, as the total cost of service is spread over fewer billing units.

Return on Equity. The proposed return on equity has been revised from 14.00% in the original filing to 12.50% in the redesign. The original ROE of 14.00% was derived from a discounted cash flow ("DCF") proxy group analysis that did not incorporate post-2021 market data. The revised ROE of 12.50% is based on an updated DCF proxy group analysis incorporating market data through the third quarter of 2024, which is currently being finalized by Braswell.

Capital Structure. The proposed capital structure remains unchanged from the original filing at 55% equity and 45% debt. Ridgeline continues to believe that this capital structure is reasonable and reflects the actual financing of the Ridgeline Pipeline System.

Cost of Debt. The weighted average cost of debt remains unchanged at 5.25%. The cost of debt reflects the weighted average of two debt instruments: (i) a $400 million term loan facility led by Pinnacle National Bank, N.A., bearing interest at SOFR plus 325 basis points; and (ii) $150 million in 7.875% Second Lien Senior Secured Notes held by Harborview Capital Management LLC and Sentinel Ridge Fund LP.

Revised Weighted Average Cost of Capital. Based on the revised ROE of 12.50% and the unchanged capital structure and cost of debt, the revised weighted average cost of capital ("WACC") is 9.2375%, calculated as follows:

WACC = (0.55 × 12.50%) + (0.45 × 5.25%) = 6.875% + 2.3625% = 9.2375%

Revised Return on Rate Base. Applying the revised WACC to the unchanged rate base of $612.40 million yields a revised return on rate base of approximately $56.57 million (calculated as $612.40 million × 9.2375%).

Revised Total Cost of Service. The revised total cost of service is estimated at approximately $103.15 million. The components of the revised cost of service reflect 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 revised revenue credits of $6.00 million. These figures are subject to further refinement as the tariff redesign progresses and as updated data becomes available.

Revised Proposed Recourse Rate. Based on the revised total cost of service of $103.15 million and the revised annual billing determinants of 328,500,000 Dth per year, the revised proposed recourse rate is $0.3140 per Dth, composed of a reservation charge of $0.3102 per Dth and a usage charge of $0.0038 per Dth. This represents an increase of $0.0875 per Dth from the originally proposed rate of $0.2265 per Dth, driven primarily by the reduction in billing determinants resulting from the adoption of a 75% load factor.

C. Progress on Individual Deficiency Items

The following subsections provide a detailed status update on each of the fourteen deficiency items identified in the January 19, 2023 Deficiency Letter.

Items Previously Addressed in Partial Response (March 15, 2023). Items 1 through 4 and 7 through 10 were addressed in the partial response filed on March 15, 2023. However, because the tariff redesign entails a fundamental reworking of the rate design and related provisions, the responses to each of these items are being updated to reflect the new rate design parameters. The status of each is as follows:

Item 1 (ROE Support). The Deficiency Letter noted that Ridgeline's original filing proposed an ROE of 14.00% supported by a DCF proxy group analysis that did not incorporate market data from the post-2021 period. In the partial response, Ridgeline provided additional analysis supporting the 14.00% ROE. However, in connection with the redesign, Ridgeline has determined to propose a revised ROE of 12.50%, and an updated DCF proxy group analysis incorporating current market data through the third quarter of 2024 is now under way under the direction of Braswell. This analysis is expected to be completed in October 2024.

Item 2 (FL&U Tracker Mechanism). The Deficiency Letter required Ridgeline to develop a fuel-use and lost-and-unaccounted-for ("FL&U") gas tracker mechanism with periodic true-up procedures. The design of this mechanism is substantially complete. The FL&U tracker incorporates annual true-up procedures consistent with Commission precedent, and the related tariff language has been drafted and is under review by Braswell.

Item 3 (IT Rate Derivation). The Deficiency Letter identified deficiencies in the derivation of the interruptible transportation rate. The interruptible transportation rate schedule (Rate Schedule IT-1) is under development, consistent with the modified fixed-variable methodology and Commission policy regarding IT rate floors. Draft tariff language for Rate Schedule IT-1 is being prepared and will be included in the redesigned tariff.

Item 4 (100% Load Factor Justification). The Deficiency Letter required Ridgeline to provide adequate justification for its use of a 100% load factor billing determinant assumption. This deficiency item has been mooted by the redesign's adoption of a 75% load factor assumption, which eliminates the need for the justification previously requested. The redesigned tariff will reflect the 75% load factor assumption throughout.

Item 7 (EBB Posting Requirements). The Deficiency Letter required Ridgeline to include electronic bulletin board ("EBB") provisions consistent with Commission requirements. Draft EBB provisions have been prepared and are under review by Braswell and Calderwood & Harkness for consistency with the Commission's regulations at 18 C.F.R. § 284.13 and applicable NAESB standards.

Item 8 (Shipper-Must-Have-Title). The Deficiency Letter required Ridgeline to include shipper-must-have-title provisions in the tariff's General Terms and Conditions. These provisions have been drafted and incorporated into the working draft of the General Terms and Conditions.

Item 9 (Interconnection Agreement as Rate Schedule). The Deficiency Letter required that the Interconnection Agreement between Ridgeline and ATPC be filed as a FERC rate schedule rather than as a separate contractual agreement. The Interconnection Agreement (Version 3.0), initially drafted in April 2023, is being revised to conform to the requirements for filing as a rate schedule. Further revisions are under negotiation with ATPC's counsel, William Pratt of Kellner, Royce & Dillard LLP. The status of these negotiations is discussed further in Section IV below.

Item 10 (Penalty Revenue Crediting). The Deficiency Letter required Ridgeline to develop a mechanism for crediting penalty revenues to shippers. A penalty revenue crediting mechanism has been designed and incorporated into the revised tariff, consistent with Commission policy on the disposition of penalty revenues collected under operational flow order and scheduling penalty provisions.

Outstanding Deficiency Items. The six outstanding deficiency items that were not addressed in the March 15, 2023 partial response remain the primary focus of the tariff redesign effort. The status of each outstanding item is as follows:

Item 5 (Capacity Release Provisions). Capacity release provisions are being drafted for inclusion in the General Terms and Conditions of the redesigned tariff. These provisions will address the requirements for capacity release transactions, including the posting, bidding, and awarding processes, maximum rate caps, prearranged deal requirements, and the relationship between releasing and replacement shippers. Drafting of the capacity release provisions is approximately 75% complete as of the date of this Status Report. Calderwood & Harkness and Braswell anticipate completion of a full draft of the capacity release provisions by July 2024. The provisions are being designed to comply with the Commission's capacity release policies as set forth in Order No. 636 and subsequent orders, including the requirements of 18 C.F.R. § 284.8.

Item 6 (NAESB Standards Compliance). The Deficiency Letter identified deficiencies in Ridgeline's operational flow order provisions with respect to compliance with the standards promulgated by the North American Energy Standards Board ("NAESB"), Wholesale Gas Quadrant ("WGQ"). Ridgeline, with the assistance of Braswell, has conducted a comprehensive gap analysis of the original tariff against NAESB WGQ Version 3.2 standards. The gap analysis is substantially complete and has identified the specific areas where the original tariff provisions fell short of full NAESB compliance. The operational flow order provisions are being revised to achieve full compliance with the applicable NAESB standards. Estimated completion of the NAESB compliance revisions is August 2024.

Item 11 (Creditworthiness Provisions). The Deficiency Letter required Ridgeline to develop creditworthiness provisions consistent with Commission policy, including provisions addressing collateral requirements, unsecured credit limits, and credit rating thresholds. Analysis of FERC policy on creditworthiness requirements is ongoing, and draft creditworthiness provisions are approximately 60% complete as of the date of this Status Report. The provisions are being designed to balance the need to protect the pipeline against credit risk with the need to ensure that the creditworthiness requirements do not impose unreasonable barriers to service. Estimated completion of the creditworthiness provisions is August 2024.

Item 12 (Segmentation and Flexible Receipt/Delivery Point Provisions). The Deficiency Letter required Ridgeline to develop provisions for segmentation of capacity and flexible receipt and delivery point rights. These provisions are being developed in coordination with Braswell and require careful integration with the interconnection provisions, as the Wetzel County Interconnect receipt point and the Waynesburg Compressor Station delivery point must be specifically addressed. The segmentation and flexible point provisions will allow shippers to disaggregate their firm capacity rights into smaller segments and to utilize receipt and delivery points other than their primary points, subject to operational constraints. Estimated completion of these provisions is September 2024.

Item 13 (Greenhouse Gas Emission Cost Recovery). The Deficiency Letter requested that Ridgeline address the treatment of greenhouse gas ("GHG") emission costs in its tariff. This deficiency item reflects emerging Commission policy and state-level regulatory developments regarding the allocation and recovery of GHG emission costs for midstream pipeline operations. Ridgeline and Braswell are analyzing the current regulatory landscape, including recent state-level carbon pricing programs and Commission guidance on the treatment of environmental compliance costs in pipeline rates. Proposed tariff language for a GHG cost tracker and passthrough mechanism is being developed that would permit Ridgeline to recover prudently incurred GHG emission costs through an annual surcharge with periodic true-up. Estimated completion of the GHG cost recovery provisions is October 2024.

Item 14 (Order No. 2222 DER Aggregation Implications). The Deficiency Letter requested that Ridgeline analyze the implications of FERC Order No. 2222 and the potential for distributed energy resource ("DER") aggregation at or near pipeline interconnection points. This deficiency item is in early stages of analysis. The analysis is complicated by the fact that DEH, Ridgeline's parent company, has a 250-megawatt wind portfolio under development, which could create potential DER aggregation opportunities at pipeline interconnection points. Ridgeline and Braswell are evaluating how Order No. 2222's requirements for regional transmission organizations and independent system operators to accommodate DER aggregation may interact with the Ridgeline Pipeline System's tariff and interconnection arrangements. Estimated completion of the Order No. 2222 provisions is November 2024.

D. Tariff Drafting Status

The tariff redesign has progressed through multiple drafting iterations since the commencement of the redesign process. The following is a summary of the drafting timeline to date and anticipated future milestones:

A first full draft of the Revised FERC Gas Tariff, Original Volume No. 1, was completed in August 2023. This draft reflected the initial work product of the Braswell engagement and addressed the basic structural framework of the redesigned tariff but did not yet incorporate the revised rate design parameters.

A second draft, incorporating Braswell's recommendations on rate design methodology, the modified fixed-variable methodology, and the revised billing determinants at 75% load factor, was completed in January 2024. The second draft represented a significant advancement of the redesign, including the revised cost of service and rate calculations.

A third draft addressing NAESB compliance, EBB provisions, and capacity release provisions is targeted for completion in June 2024, contemporaneous with the filing of this Status Report. Calderwood & Harkness and Braswell are in the final stages of incorporating these provisions into the third draft.

A fourth, near-final draft addressing all fourteen (14) deficiency items is targeted for completion in November 2024. This draft will represent the substantially complete tariff, subject only to final review and refinement.

The final version of the redesigned tariff for filing with the Commission is targeted for completion by mid-January 2025, approximately five weeks in advance of the February 21, 2025 filing deadline. This timeline provides a reasonable period for final review by Ridgeline management, counsel, and Braswell, as well as for the preparation and finalization of supplemental pre-filed testimony.

IV. STATUS OF INTERCONNECTION NEGOTIATIONS

Negotiations with ATPC regarding the Interconnection Agreement and cost allocation for the interconnection facilities at the Wetzel County Interconnect remain ongoing. The parties have made progress on certain technical and design issues but continue to differ on the fundamental question of cost allocation.

The total cost of the interconnection facilities at the Wetzel County Interconnect is $22.3 million. Ridgeline has proposed an allocation of $7.6 million (34.1%) to Ridgeline and $14.7 million (65.9%) to ATPC, reflecting Ridgeline's view that the allocation should be based on the proportional benefits to each party's respective shippers and the relative usage of the interconnection facilities. ATPC continues to insist on a 50/50 split of the interconnection costs, which would result in an allocation of $11.15 million to each party. The difference between the parties' positions represents approximately $3.55 million.

The Interconnection Agreement (Version 3.0), initially drafted in April 2023, is being further revised to address the requirement of Deficiency Item 9 that the Interconnection Agreement be filed as a FERC rate schedule. This requirement adds additional complexity to the negotiation, as the parties must agree not only on the substantive terms of the agreement but also on the format and structure of the agreement as a rate schedule.

The proposed interconnection design capacity remains at 800 MMcf/d bidirectional, expandable to 1.2 Bcf/d. The metering station at the Wetzel County Interconnect is designed to include three ultrasonic flow meter runs (12-inch diameter), gas chromatographs for gas quality measurement, and SCADA integration for real-time monitoring and control. The parties continue to negotiate the detailed design specifications of the metering station, including the selection of meter technology, gas quality measurement protocols, and data sharing arrangements.

Calderwood & Harkness continues to correspond with Kellner, Royce & Dillard LLP (William Pratt, lead counsel for ATPC) regarding the metering station design specifications, cost allocation methodology, and the structure of the Interconnection Agreement as a rate schedule. The parties have exchanged multiple rounds of comments and proposed revisions and are currently working from a markup of Version 3.0 that reflects both parties' comments.

The target in-service date for the interconnection facilities, originally scheduled for the fourth quarter of 2023, has been delayed pending resolution of this proceeding. Ridgeline does not anticipate that the interconnection facilities can be placed in service until after the Commission has approved the Interconnection Agreement and resolved the cost allocation dispute, either through settlement or adjudication.

V. STATUS OF SETTLEMENT DISCUSSIONS

Settlement Judge Howard Margolis has convened four settlement conferences to date in this proceeding: November 30, 2022; March 8, 2023; July 12, 2023; and January 18, 2024. The settlement conferences have provided a constructive forum for the parties to exchange views on the contested issues, but no settlement has been reached to date.

As of the most recent settlement conference on January 18, 2024, the parties remain approximately $0.058 per Dth apart on the recourse rate. Ridgeline's current negotiating floor is $0.3140 per Dth, reflecting the revised cost of service and rate design described in Section III of this Status Report. ATPC and MGPC jointly advocate a ceiling of approximately $0.2560 per Dth.

Three key sticking points continue to impede settlement:

1. Return on Equity. The parties remain significantly apart on the appropriate ROE for the Ridgeline Pipeline System. ATPC proposes an ROE of 10.75%, which Ridgeline believes is unsupported by market data and inadequate to compensate equity investors for the risks associated with the Ridgeline Pipeline System. MGPC proposes a somewhat higher ROE of 11.25%, but this remains well below Ridgeline's proposal of 12.50%. Ridgeline believes that the updated DCF proxy group analysis currently under way will provide robust support for a 12.50% ROE, and that the intervenors' lower proposals do not adequately account for the business risks of a relatively new pipeline system operating at approximately 57% of design capacity.

2. Interconnection Cost Allocation. As described in Section IV above, ATPC insists on a 50/50 allocation of the $22.3 million interconnection costs ($11.15 million each), while Ridgeline maintains its proposed allocation of 34.1% to Ridgeline ($7.6 million) and 65.9% to ATPC ($14.7 million). This issue is central to the cost of service and rate for both Ridgeline and ATPC, and its resolution will likely be a prerequisite to any comprehensive settlement.

3. Load Factor. All three intervenors — ATPC, MGPC, and CMGA — advocate for a load factor of 85% or higher, which would result in greater billing determinants and, consequently, a lower unit rate. Ridgeline proposes a 75% load factor, which it believes more accurately reflects the expected utilization of the pipeline system and is consistent with Commission precedent for similarly situated systems.

Ridgeline remains open to continued settlement discussions and anticipates that the filing of the redesigned tariff and supplemental testimony will facilitate more productive negotiations. The completion of the tariff redesign will provide the intervenors with a comprehensive and fully developed rate proposal to evaluate, which should narrow the range of contested issues and potentially create opportunities for compromise.

Ridgeline notes that MGPC, through its counsel Rebekah Montague of Whitmore & Sable LLP, has previously filed the testimony of rate expert Dr. Eleanor Vasquez. Dr. Vasquez advocates for a cost-of-service rate no higher than $0.1740 per Dth, a position that remains distant from all other parties' positions in this proceeding, including those of ATPC and CMGA. Ridgeline respectfully submits that Dr. Vasquez's proposed rate is not supported by the record and is inconsistent with Commission precedent on the components of a just and reasonable rate for a pipeline of Ridgeline's characteristics. Nonetheless, Ridgeline remains prepared to engage in good-faith settlement discussions with MGPC and all other parties.

CMGA, through its counsel Stephen Greer of Fordham Municipal Law Group PC, continues to support ATPC's position on cost allocation. CMGA has expressed concern about potential rate increases on ATPC's system that could result from the allocation of a disproportionate share of interconnection costs to ATPC. CMGA's concerns reflect the interests of its municipal customers, who receive gas through ATPC's distribution system and would ultimately bear the costs of the interconnection allocation.

VI. RIDGELINE PIPELINE SYSTEM — OPERATIONAL UPDATE

Ridgeline provides the following operational update on the Ridgeline Pipeline System for the Commission's information and for the record in this proceeding.

The Ridgeline Pipeline System has been in continuous commercial service since October 1, 2021. The system continues to operate safely and reliably, with no material operational disruptions, safety incidents, or force majeure events occurring since the prior filing in this proceeding.

Current throughput on the Ridgeline Pipeline System is approximately 680 MMcf/d, representing approximately 56.7% utilization of the system's 1.2 Bcf/d design capacity. Ridgeline anticipates that throughput volumes will increase over time as additional shippers execute service agreements and as upstream production in the Marcellus and Utica shale formations continues to develop.

All three compressor stations on the Ridgeline Pipeline System — the Wetzel Station (located in Wetzel County, West Virginia), the Mannington Station (located in Marion County, West Virginia), and the Waynesburg Station (located in Greene County, Pennsylvania) — are operating within design parameters. The three compressor stations have aggregate installed compression of 45,000 horsepower and provide the necessary pressure to transport gas through the 187-mile pipeline at design capacity.

The original construction cost of the Ridgeline Pipeline System was $587.2 million. The current rate base of $612.40 million reflects the construction cost plus additional capital expenditures incurred since the system was placed in service, including modifications to the compressor stations and pipeline appurtenances.

VII. ANTICIPATED TIMELINE AND MILESTONES

Based on the current status of the tariff redesign and the progress described in this Status Report, Ridgeline anticipates the following timeline and milestones for the completion of the redesigned tariff and supplemental testimony:

Ridgeline currently anticipates meeting the February 21, 2025 filing deadline established by the March 4 Order. The redesigned tariff filing will be accompanied by supplemental pre-filed testimony of at least the following witnesses:

Dr. Natasha Orlov, Director of Rates & Regulatory, Ridgeline Midstream Services LLC, who will present testimony addressing the redesigned tariff provisions and Ridgeline's response to all fourteen (14) deficiency items identified in the Deficiency Letter; and

Angela Moretti, Vice President of Finance & Treasurer, Ridgeline Midstream Services LLC, who will present testimony addressing the revised cost of service of $103.15 million, the revised capital structure and WACC, and the revised proposed recourse rate of $0.3140 per Dth.

Ridgeline reserves the right to designate additional witnesses as the tariff redesign progresses and as the scope of the supplemental testimony is further defined.

VIII. REQUEST FOR CONTINUED DORMANT STATUS

Ridgeline respectfully requests that this proceeding remain on dormant status pending the February 21, 2025 filing deadline. The dormant status was established by ALJ Whitfield's order dated September 8, 2023, in connection with the granting of Ridgeline's second motion for extension of time, and was continued by the March 4 Order. Maintaining the proceeding on dormant status will permit Ridgeline and its consultants to devote their full attention to the completion of the tariff redesign without the distraction of an active hearing schedule.

Ridgeline does not anticipate the need for any further extension of time at this juncture. Based on the progress described in this Status Report and the timeline set forth in Section VII, Ridgeline is confident that the redesigned tariff and supplemental testimony will be ready for filing on or before February 21, 2025.

Ridgeline will file its second quarterly status report on or about September 14, 2024, as required by the March 4 Order. The second quarterly status report will provide updated information on the progress of the tariff redesign, the status of the outstanding deficiency items, the status of interconnection negotiations with ATPC, and any developments in settlement discussions.

IX. SERVICE AND COMMUNICATION

A copy of this First Quarterly Status Report is being served on all parties on the Commission's official service list for Docket Nos. RP22-847-000 and RP22-847-001. The parties on the service list, and their respective counsel and representatives, are as follows:

FERC Trial Staff:

Jonathan Briggs, Lead Trial Attorney Dr. Miriam Okafor, Lead Economic Analyst Office of Energy Market Regulation Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426

Appalachian Trunk Pipeline Company, LLC ("ATPC"):

William Pratt, Esq. Kellner, Royce & Dillard LLP One PPG Place, Suite 2800 Pittsburgh, PA 15222

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

Mountainside Gas Producers Coalition ("MGPC"):

Rebekah Montague, Esq. Whitmore & Sable LLP 1200 New Hampshire Avenue NW, Suite 600 Washington, DC 20036

Calvin Dreyer, Executive Director Mountainside Gas Producers Coalition 1100 Main Street, Suite 210 Morgantown, WV 26505

Clearwater Municipal Gas Authority ("CMGA"):

Stephen Greer, Esq. Fordham Municipal Law Group PC 312 Adams Avenue, Suite 100 Scranton, PA 18503

Dennis Ott, General Manager Clearwater Municipal Gas Authority 455 Market Street Clearwater, PA 15330

All communications regarding this Status Report and this proceeding should be directed to the undersigned counsel for Ridgeline.

X. CONCLUSION

For the reasons set forth above, Ridgeline respectfully submits this First Quarterly Status Report and requests that the Commission take note of the progress described herein. Ridgeline remains committed to completing the tariff redesign and filing the redesigned FERC Gas Tariff, Original Volume No. 1, and supplemental testimony on or before the February 21, 2025 deadline established by the March 4 Order. Ridgeline further requests that the proceeding remain on dormant status pending the filing deadline.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

George Trujillo Responsible Partner

Brett Callahan Lead Associate

David Stanton Working Associate

Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006

Counsel for Ridgeline Midstream Services LLC and Dunmore Energy Holdings Ltd.

C&H Matter No. 1016-00005

Date: June 15, 2024

CERTIFICATE OF SERVICE

I hereby certify that on this 15th day of June, 2024, a true and correct copy of the foregoing First Quarterly Status Report of Ridgeline Midstream Services LLC was served upon all parties on the official service list maintained by the Secretary of the Federal Energy Regulatory Commission in Docket Nos. RP22-847-000 and RP22-847-001. Service was accomplished by electronic filing through the Commission's eFiling system, and by first-class United States mail, postage prepaid, to those parties for whom electronic service is not available or for whom the Commission's rules require service by mail.

________________________________________

David Stanton Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006

Date: June 15, 2024

Ridgeline Midstream Services LLC

(Rate Case)

Docket No. RP22-847-001

(Interconnection)

Milestone	Target Date
Third draft of revised tariff (NAESB/EBB/capacity release)	June 2024
Completion of capacity release provisions (Item 5)	July 2024
Completion of NAESB compliance revisions (Item 6)	August 2024
Completion of creditworthiness provisions (Item 11)	August 2024
Completion of segmentation/flexible point provisions (Item 12)	September 2024
Second quarterly status report	September 14, 2024
Updated DCF proxy group analysis (Q3 2024 data)	October 2024
Completion of GHG cost recovery provisions (Item 13)	October 2024
Fourth draft of revised tariff (near-final)	November 2024
Completion of Order No. 2222 provisions (Item 14)	November 2024
Third quarterly status report	December 13, 2024
Final tariff and supplemental testimony completion	Mid-January 2025
Filing of redesigned tariff and supplemental testimony	February 21, 2025

UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
FIRST QUARTERLY STATUS REPORT OF RIDGELINE MIDSTREAM SERVICES LLC
Filed: June 15, 2024
I. INTRODUCTION AND PURPOSE
Ridgeline Midstream Services LLC ("Ridgeline" or "Applicant"), by and through its undersigned counsel, Calderwood & Harkness LLP, hereby submits this First Quarterly Status Report ("Status Report") to the Federal Energy Regulatory Commission ("Commission" or "FERC") pursuant to the Order of Administrative Law Judge Clara Whitfield dated March 4, 2024 (the "March 4 Order"). This Status Report is filed in accordance with the reporting obligations imposed by the March 4 Order and is intended to provide the Commission, the presiding Administrative Law Judge, and all parties of record with a comprehensive update on the progress of the tariff redesign, the status of outstanding deficiency items, and the anticipated timeline for completion of the redesigned FERC Gas Tariff, Original Volume No. 1, and supplemental testimony.
The March 4 Order was issued in response to Ridgeline's third motion for extension of time, filed on February 20, 2024, in which Ridgeline sought a twelve-month extension of the filing deadline to accommodate material scope changes to the ongoing tariff redesign. The March 4 Order granted the requested extension, establishing a new deadline of February 21, 2025, for filing the redesigned FERC Gas Tariff, Original Volume No. 1, and supplemental testimony. As a condition of granting this extension, ALJ Whitfield ordered that Ridgeline file quarterly status reports with the Commission providing updates on the progress of the tariff redesign, the status of outstanding deficiency items, and the anticipated timeline for completion of the filing.
This is the first such quarterly status report. Subsequent reports are anticipated on or about September 14, 2024, and December 13, 2024, such that three quarterly reports will have been filed in advance of the February 21, 2025 filing deadline.
For purposes of the Commission's records, Ridgeline's principal office is located at 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301. Ridgeline is a Delaware limited liability company, bearing Employer Identification Number 87-4231956 and FERC Code 960442. Ridgeline is a wholly-owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Cayman Registry No. CR-381204). DEH is the ultimate parent entity of the Ridgeline organization and is responsible for certain financing and corporate governance functions relevant to the matters discussed in this Status Report.
II. PROCEDURAL BACKGROUND
The following procedural history is provided to place this Status Report in context for the Commission and for any party that may be newly reviewing the record. The procedural history encompasses the initial filing, the interventions and protest, the Deficiency Letter and resulting stay of proceedings, and the three extensions of time that have been granted in this proceeding.
A. Initial Filing and Proceeding History
On May 12, 2022, Ridgeline filed its application for initial tariff rate and interconnection authorization with the Commission in Docket Nos. RP22-847-000 and RP22-847-001. The application was filed pursuant to Sections 4 and 7 of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717c, 717f, and Parts 154, 157, and 284 of the Commission's regulations, 18 C.F.R. Parts 154, 157, and 284.
In its initial application, Ridgeline sought approval of an initial recourse rate of $0.2265 per dekatherm ("Dth") for interstate transportation service on the Ridgeline Pipeline System under Part 284, Subpart G of the Commission's regulations. The proposed rate was composed of a reservation charge of $0.2223 per Dth and a usage charge of $0.0042 per Dth. The proposed rate was derived from a total cost of service of $97.36 million and a rate base of $612.40 million, utilizing a 100% load factor billing determinant assumption. Ridgeline's initial application also sought authorization for a physical interconnection with the pipeline system of Appalachian Trunk Pipeline Company, LLC ("ATPC") at the Wetzel County Interconnect in Wetzel County, West Virginia.
The Ridgeline Pipeline System is a 187-mile, 24-inch-diameter high-pressure natural gas pipeline extending from the Wetzel County Interconnect in Wetzel County, West Virginia, to the Waynesburg Compressor Station in Greene County, Pennsylvania. The pipeline system has a design capacity of 1.2 billion cubic feet per day ("Bcf/d"), equivalent to 1,200,000 Dth per day, and, as of the date of this filing, has current throughput of approximately 680 million cubic feet per day ("MMcf/d"), representing approximately 56.7% utilization of design capacity. The Ridgeline Pipeline System has been in commercial service since October 1, 2021.
B. Interventions and Protest
On June 14, 2022, the Commission issued a Notice of Filing in this proceeding and established an intervention and protest deadline of August 15, 2022. Three entities sought intervention in this proceeding during the intervention period:
The Mountainside Gas Producers Coalition ("MGPC") filed its motion to intervene on July 28, 2022. MGPC is a trade association representing natural gas producers with production operations in the Marcellus and Utica shale formations in West Virginia and Pennsylvania. MGPC is represented in this proceeding by Whitmore & Sable LLP, with Rebekah Montague serving as lead counsel.
The Clearwater Municipal Gas Authority ("CMGA") filed its motion to intervene on August 1, 2022. CMGA is a municipal gas distribution authority serving residential and commercial customers in the Clearwater, Pennsylvania area. CMGA is represented in this proceeding by Fordham Municipal Law Group PC, with Stephen Greer serving as lead counsel.
Appalachian Trunk Pipeline Company, LLC ("ATPC") filed its protest and motion to intervene on August 15, 2022, the final day of the intervention period. ATPC's protest opposed the proposed interconnection configuration at the Wetzel County Interconnect and specifically contested Ridgeline's proposed allocation of $14.7 million in interconnection facilities costs to ATPC shippers. ATPC is represented in this proceeding by Kellner, Royce & Dillard LLP, with William Pratt serving as lead counsel.
By order dated September 22, 2022, the Commission granted all three motions to intervene. In the same order, the Commission established a Track II procedural schedule for the consolidated proceeding and appointed Settlement Judge Howard Margolis to facilitate settlement discussions among the parties.
Subsequent to the granting of interventions, the following procedural steps occurred:
On October 17, 2022, Ridgeline filed its answer to ATPC's protest, responding to ATPC's objections to the proposed interconnection configuration and cost allocation methodology. Ridgeline's answer argued that the proposed allocation of 34.1% of interconnection costs to Ridgeline and 65.9% to ATPC was just and reasonable, reflecting the proportional benefits to each party's respective shippers and the relative usage of the interconnection facilities.
On November 14, 2022, ALJ Clara Whitfield was appointed as the presiding Administrative Law Judge in this proceeding, and a prehearing conference was held to establish the hearing schedule, identify contested issues, and discuss the scope of testimony.
On December 5, 2022, Ridgeline filed pre-filed direct testimony of seven witnesses, addressing all aspects of the rate application, cost of service, rate design, interconnection, and public convenience and necessity.
On January 9, 2023, ATPC, MGPC, and CMGA filed answering testimony through their respective witnesses, contesting various aspects of Ridgeline's proposed rate, cost of service, and interconnection configuration.
C. Deficiency Letter and Stay of Proceedings
On January 19, 2023, the Commission's Office of Energy Market Regulation ("OEMR") issued a Deficiency Letter identifying fourteen (14) deficiencies in Ridgeline's tariff filing. The Deficiency Letter concluded that the identified deficiencies were of sufficient magnitude to require a comprehensive tariff redesign before the proceeding could advance to hearing.
In response to the Deficiency Letter, on February 6, 2023, ALJ Whitfield issued an order staying the procedural schedule pending Ridgeline's response. The stay was entered to permit Ridgeline an opportunity to address the identified deficiencies without the burden of an ongoing hearing schedule.
On March 15, 2023, Ridgeline filed a partial response to the Deficiency Letter, addressing eight (8) of the fourteen (14) deficiency items — specifically, Items 1 through 4 and Items 7 through 10. The partial response provided revised tariff language, supporting analysis, and explanatory narrative for each of the eight addressed items.
Six deficiency items remained outstanding as of the date of the partial response and continue to be the subject of the ongoing tariff redesign. The six outstanding items are:
Item 5: Capacity release provisions;
Item 6: NAESB standards compliance in operational flow order provisions;
Item 11: Creditworthiness provisions;
Item 12: Segmentation and flexible receipt/delivery point provisions;
Item 13: Greenhouse gas emission cost recovery;
Item 14: Order No. 2222 distributed energy resource aggregation implications.
D. Extensions of Time
Since the issuance of the Deficiency Letter, Ridgeline has sought and obtained three extensions of time to complete the tariff redesign, as described below.
First Extension. On 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. ALJ Whitfield granted the first extension by order dated May 10, 2023, establishing a revised deadline of August 28, 2023.
Second Extension. On August 25, 2023, Ridgeline filed its second motion for extension of time, requesting an additional 180 days. In its second motion, Ridgeline cited the complexity of the ongoing tariff redesign and the need for additional time to complete stakeholder negotiations, particularly with respect to the capacity release provisions and NAESB compliance. ALJ Whitfield granted the second extension by order dated September 8, 2023, establishing a revised deadline of February 23, 2024. In the same order, ALJ Whitfield changed the proceeding status to "dormant" to reflect the ongoing nature of the tariff redesign process.
Third Extension. On February 20, 2024, Ridgeline filed its third motion for extension of time, requesting an additional twelve (12) months. In its third motion, Ridgeline cited material scope changes to the tariff redesign that had developed since the second extension, including Ridgeline's decision to adopt a modified fixed-variable rate methodology based on a 75% load factor (replacing the original 100% load factor assumption) and a revised return on equity of 12.50% (reduced from the original 14.00% proposal). These material scope changes necessitated a fundamental reworking of the rate design, cost of service, and related tariff provisions.
On March 4, 2024, ALJ Whitfield granted the third extension with conditions. The March 4 Order established the current deadline of February 21, 2025, for filing of the redesigned tariff and supplemental testimony. As a condition of the extension, ALJ Whitfield ordered Ridgeline to file quarterly status reports with the Commission providing updates on the progress of the tariff redesign, the status of outstanding deficiency items, and the anticipated timeline for completion. This filing constitutes the first of those quarterly status reports.
III. STATUS OF TARIFF REDESIGN
A. Engagement of Braswell Energy Consulting Group LLC
Ridgeline, through its parent company DEH, engaged Braswell Energy Consulting Group LLC ("Braswell") on April 15, 2023, under Engagement No. BEC-2023-0041, to serve as the lead tariff redesign consultant for this proceeding. Braswell is a Virginia limited liability company with offices at 8300 Greensboro Drive, Suite 450, McLean, Virginia 22102. Braswell specializes in FERC rate case support, tariff design, and regulatory economics for natural gas pipelines and related energy infrastructure.
Dr. Raymond Braswell, the founding principal of Braswell Energy Consulting Group LLC, serves as the lead consultant on the engagement. Dr. Braswell is a former economist with the Commission who brings extensive experience in natural gas pipeline rate design, cost of service analysis, and FERC regulatory proceedings. The Commission and the parties should be aware that Dr. Braswell previously provided pre-filed direct testimony on behalf of Ridgeline on December 5, 2022, regarding return on equity ("ROE") and capital structure, prior to the commencement of his engagement as the tariff redesign consultant. His role has since transitioned from testifying witness to consulting advisor, and Ridgeline does not anticipate that Dr. Braswell will serve as a testifying witness in connection with the redesigned tariff filing.
Braswell's scope of engagement encompasses a full revision of the FERC Gas Tariff, Original Volume No. 1, to address all fourteen (14) deficiency items identified in the January 19, 2023 Deficiency Letter. The engagement includes rate design analysis, cost of service modeling, tariff drafting and review, NAESB compliance assessment, and preparation of supporting work papers.
B. Overview of Redesign Approach
The tariff redesign represents a material departure from Ridgeline's original filing in several key respects. The redesign was undertaken to address the deficiencies identified by OEMR, to incorporate updated market data and regulatory developments, and to produce a tariff that more closely aligns with current Commission precedent and policy. The principal changes are summarized below.
Rate Methodology. The original filing employed a 100% load factor billing determinant assumption, which was challenged by the Commission in Deficiency Item 4 as lacking adequate justification. The redesign transitions to a modified fixed-variable rate methodology using a 75% load factor. This approach more accurately reflects the anticipated utilization of the Ridgeline Pipeline System and is consistent with the Commission's treatment of similarly situated pipeline systems.
Billing Determinants. The billing determinants have been revised to reflect the change in load factor. Under the original filing, the annual billing determinants were 438,000,000 Dth per year (calculated as 1,200,000 Dth per day × 365 days × 100% load factor). Under the redesign, the annual billing determinants have been revised to 328,500,000 Dth per year (calculated as 1,200,000 Dth per day × 365 days × 75% load factor). This change results in a higher unit rate, as the total cost of service is spread over fewer billing units.
Return on Equity. The proposed return on equity has been revised from 14.00% in the original filing to 12.50% in the redesign. The original ROE of 14.00% was derived from a discounted cash flow ("DCF") proxy group analysis that did not incorporate post-2021 market data. The revised ROE of 12.50% is based on an updated DCF proxy group analysis incorporating market data through the third quarter of 2024, which is currently being finalized by Braswell.
Capital Structure. The proposed capital structure remains unchanged from the original filing at 55% equity and 45% debt. Ridgeline continues to believe that this capital structure is reasonable and reflects the actual financing of the Ridgeline Pipeline System.
Cost of Debt. The weighted average cost of debt remains unchanged at 5.25%. The cost of debt reflects the weighted average of two debt instruments: (i) a $400 million term loan facility led by Pinnacle National Bank, N.A., bearing interest at SOFR plus 325 basis points; and (ii) $150 million in 7.875% Second Lien Senior Secured Notes held by Harborview Capital Management LLC and Sentinel Ridge Fund LP.
Revised Weighted Average Cost of Capital. Based on the revised ROE of 12.50% and the unchanged capital structure and cost of debt, the revised weighted average cost of capital ("WACC") is 9.2375%, calculated as follows:
WACC = (0.55 × 12.50%) + (0.45 × 5.25%) = 6.875% + 2.3625% = 9.2375%
Revised Return on Rate Base. Applying the revised WACC to the unchanged rate base of $612.40 million yields a revised return on rate base of approximately $56.57 million (calculated as $612.40 million × 9.2375%).
Revised Total Cost of Service. The revised total cost of service is estimated at approximately $103.15 million. The components of the revised cost of service reflect 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 revised revenue credits of $6.00 million. These figures are subject to further refinement as the tariff redesign progresses and as updated data becomes available.
Revised Proposed Recourse Rate. Based on the revised total cost of service of $103.15 million and the revised annual billing determinants of 328,500,000 Dth per year, the revised proposed recourse rate is $0.3140 per Dth, composed of a reservation charge of $0.3102 per Dth and a usage charge of $0.0038 per Dth. This represents an increase of $0.0875 per Dth from the originally proposed rate of $0.2265 per Dth, driven primarily by the reduction in billing determinants resulting from the adoption of a 75% load factor.
C. Progress on Individual Deficiency Items
The following subsections provide a detailed status update on each of the fourteen deficiency items identified in the January 19, 2023 Deficiency Letter.
Items Previously Addressed in Partial Response (March 15, 2023).  Items 1 through 4 and 7 through 10 were addressed in the partial response filed on March 15, 2023. However, because the tariff redesign entails a fundamental reworking of the rate design and related provisions, the responses to each of these items are being updated to reflect the new rate design parameters. The status of each is as follows:
Item 1 (ROE Support). The Deficiency Letter noted that Ridgeline's original filing proposed an ROE of 14.00% supported by a DCF proxy group analysis that did not incorporate market data from the post-2021 period. In the partial response, Ridgeline provided additional analysis supporting the 14.00% ROE. However, in connection with the redesign, Ridgeline has determined to propose a revised ROE of 12.50%, and an updated DCF proxy group analysis incorporating current market data through the third quarter of 2024 is now under way under the direction of Braswell. This analysis is expected to be completed in October 2024.
Item 2 (FL&U Tracker Mechanism). The Deficiency Letter required Ridgeline to develop a fuel-use and lost-and-unaccounted-for ("FL&U") gas tracker mechanism with periodic true-up procedures. The design of this mechanism is substantially complete. The FL&U tracker incorporates annual true-up procedures consistent with Commission precedent, and the related tariff language has been drafted and is under review by Braswell.
Item 3 (IT Rate Derivation). The Deficiency Letter identified deficiencies in the derivation of the interruptible transportation rate. The interruptible transportation rate schedule (Rate Schedule IT-1) is under development, consistent with the modified fixed-variable methodology and Commission policy regarding IT rate floors. Draft tariff language for Rate Schedule IT-1 is being prepared and will be included in the redesigned tariff.
Item 4 (100% Load Factor Justification). The Deficiency Letter required Ridgeline to provide adequate justification for its use of a 100% load factor billing determinant assumption. This deficiency item has been mooted by the redesign's adoption of a 75% load factor assumption, which eliminates the need for the justification previously requested. The redesigned tariff will reflect the 75% load factor assumption throughout.
Item 7 (EBB Posting Requirements). The Deficiency Letter required Ridgeline to include electronic bulletin board ("EBB") provisions consistent with Commission requirements. Draft EBB provisions have been prepared and are under review by Braswell and Calderwood & Harkness for consistency with the Commission's regulations at 18 C.F.R. § 284.13 and applicable NAESB standards.
Item 8 (Shipper-Must-Have-Title). The Deficiency Letter required Ridgeline to include shipper-must-have-title provisions in the tariff's General Terms and Conditions. These provisions have been drafted and incorporated into the working draft of the General Terms and Conditions.
Item 9 (Interconnection Agreement as Rate Schedule). The Deficiency Letter required that the Interconnection Agreement between Ridgeline and ATPC be filed as a FERC rate schedule rather than as a separate contractual agreement. The Interconnection Agreement (Version 3.0), initially drafted in April 2023, is being revised to conform to the requirements for filing as a rate schedule. Further revisions are under negotiation with ATPC's counsel, William Pratt of Kellner, Royce & Dillard LLP. The status of these negotiations is discussed further in Section IV below.
Item 10 (Penalty Revenue Crediting). The Deficiency Letter required Ridgeline to develop a mechanism for crediting penalty revenues to shippers. A penalty revenue crediting mechanism has been designed and incorporated into the revised tariff, consistent with Commission policy on the disposition of penalty revenues collected under operational flow order and scheduling penalty provisions.
Outstanding Deficiency Items.  The six outstanding deficiency items that were not addressed in the March 15, 2023 partial response remain the primary focus of the tariff redesign effort. The status of each outstanding item is as follows:
Item 5 (Capacity Release Provisions). Capacity release provisions are being drafted for inclusion in the General Terms and Conditions of the redesigned tariff. These provisions will address the requirements for capacity release transactions, including the posting, bidding, and awarding processes, maximum rate caps, prearranged deal requirements, and the relationship between releasing and replacement shippers. Drafting of the capacity release provisions is approximately 75% complete as of the date of this Status Report. Calderwood & Harkness and Braswell anticipate completion of a full draft of the capacity release provisions by July 2024. The provisions are being designed to comply with the Commission's capacity release policies as set forth in Order No. 636 and subsequent orders, including the requirements of 18 C.F.R. § 284.8.
Item 6 (NAESB Standards Compliance). The Deficiency Letter identified deficiencies in Ridgeline's operational flow order provisions with respect to compliance with the standards promulgated by the North American Energy Standards Board ("NAESB"), Wholesale Gas Quadrant ("WGQ"). Ridgeline, with the assistance of Braswell, has conducted a comprehensive gap analysis of the original tariff against NAESB WGQ Version 3.2 standards. The gap analysis is substantially complete and has identified the specific areas where the original tariff provisions fell short of full NAESB compliance. The operational flow order provisions are being revised to achieve full compliance with the applicable NAESB standards. Estimated completion of the NAESB compliance revisions is August 2024.
Item 11 (Creditworthiness Provisions). The Deficiency Letter required Ridgeline to develop creditworthiness provisions consistent with Commission policy, including provisions addressing collateral requirements, unsecured credit limits, and credit rating thresholds. Analysis of FERC policy on creditworthiness requirements is ongoing, and draft creditworthiness provisions are approximately 60% complete as of the date of this Status Report. The provisions are being designed to balance the need to protect the pipeline against credit risk with the need to ensure that the creditworthiness requirements do not impose unreasonable barriers to service. Estimated completion of the creditworthiness provisions is August 2024.
Item 12 (Segmentation and Flexible Receipt/Delivery Point Provisions). The Deficiency Letter required Ridgeline to develop provisions for segmentation of capacity and flexible receipt and delivery point rights. These provisions are being developed in coordination with Braswell and require careful integration with the interconnection provisions, as the Wetzel County Interconnect receipt point and the Waynesburg Compressor Station delivery point must be specifically addressed. The segmentation and flexible point provisions will allow shippers to disaggregate their firm capacity rights into smaller segments and to utilize receipt and delivery points other than their primary points, subject to operational constraints. Estimated completion of these provisions is September 2024.
Item 13 (Greenhouse Gas Emission Cost Recovery). The Deficiency Letter requested that Ridgeline address the treatment of greenhouse gas ("GHG") emission costs in its tariff. This deficiency item reflects emerging Commission policy and state-level regulatory developments regarding the allocation and recovery of GHG emission costs for midstream pipeline operations. Ridgeline and Braswell are analyzing the current regulatory landscape, including recent state-level carbon pricing programs and Commission guidance on the treatment of environmental compliance costs in pipeline rates. Proposed tariff language for a GHG cost tracker and passthrough mechanism is being developed that would permit Ridgeline to recover prudently incurred GHG emission costs through an annual surcharge with periodic true-up. Estimated completion of the GHG cost recovery provisions is October 2024.
Item 14 (Order No. 2222 DER Aggregation Implications). The Deficiency Letter requested that Ridgeline analyze the implications of FERC Order No. 2222 and the potential for distributed energy resource ("DER") aggregation at or near pipeline interconnection points. This deficiency item is in early stages of analysis. The analysis is complicated by the fact that DEH, Ridgeline's parent company, has a 250-megawatt wind portfolio under development, which could create potential DER aggregation opportunities at pipeline interconnection points. Ridgeline and Braswell are evaluating how Order No. 2222's requirements for regional transmission organizations and independent system operators to accommodate DER aggregation may interact with the Ridgeline Pipeline System's tariff and interconnection arrangements. Estimated completion of the Order No. 2222 provisions is November 2024.
D. Tariff Drafting Status
The tariff redesign has progressed through multiple drafting iterations since the commencement of the redesign process. The following is a summary of the drafting timeline to date and anticipated future milestones:
A first full draft of the Revised FERC Gas Tariff, Original Volume No. 1, was completed in August 2023. This draft reflected the initial work product of the Braswell engagement and addressed the basic structural framework of the redesigned tariff but did not yet incorporate the revised rate design parameters.
A second draft, incorporating Braswell's recommendations on rate design methodology, the modified fixed-variable methodology, and the revised billing determinants at 75% load factor, was completed in January 2024. The second draft represented a significant advancement of the redesign, including the revised cost of service and rate calculations.
A third draft addressing NAESB compliance, EBB provisions, and capacity release provisions is targeted for completion in June 2024, contemporaneous with the filing of this Status Report. Calderwood & Harkness and Braswell are in the final stages of incorporating these provisions into the third draft.
A fourth, near-final draft addressing all fourteen (14) deficiency items is targeted for completion in November 2024. This draft will represent the substantially complete tariff, subject only to final review and refinement.
The final version of the redesigned tariff for filing with the Commission is targeted for completion by mid-January 2025, approximately five weeks in advance of the February 21, 2025 filing deadline. This timeline provides a reasonable period for final review by Ridgeline management, counsel, and Braswell, as well as for the preparation and finalization of supplemental pre-filed testimony.
IV. STATUS OF INTERCONNECTION NEGOTIATIONS
Negotiations with ATPC regarding the Interconnection Agreement and cost allocation for the interconnection facilities at the Wetzel County Interconnect remain ongoing. The parties have made progress on certain technical and design issues but continue to differ on the fundamental question of cost allocation.
The total cost of the interconnection facilities at the Wetzel County Interconnect is $22.3 million. Ridgeline has proposed an allocation of $7.6 million (34.1%) to Ridgeline and $14.7 million (65.9%) to ATPC, reflecting Ridgeline's view that the allocation should be based on the proportional benefits to each party's respective shippers and the relative usage of the interconnection facilities. ATPC continues to insist on a 50/50 split of the interconnection costs, which would result in an allocation of $11.15 million to each party. The difference between the parties' positions represents approximately $3.55 million.
The Interconnection Agreement (Version 3.0), initially drafted in April 2023, is being further revised to address the requirement of Deficiency Item 9 that the Interconnection Agreement be filed as a FERC rate schedule. This requirement adds additional complexity to the negotiation, as the parties must agree not only on the substantive terms of the agreement but also on the format and structure of the agreement as a rate schedule.
The proposed interconnection design capacity remains at 800 MMcf/d bidirectional, expandable to 1.2 Bcf/d. The metering station at the Wetzel County Interconnect is designed to include three ultrasonic flow meter runs (12-inch diameter), gas chromatographs for gas quality measurement, and SCADA integration for real-time monitoring and control. The parties continue to negotiate the detailed design specifications of the metering station, including the selection of meter technology, gas quality measurement protocols, and data sharing arrangements.
Calderwood & Harkness continues to correspond with Kellner, Royce & Dillard LLP (William Pratt, lead counsel for ATPC) regarding the metering station design specifications, cost allocation methodology, and the structure of the Interconnection Agreement as a rate schedule. The parties have exchanged multiple rounds of comments and proposed revisions and are currently working from a markup of Version 3.0 that reflects both parties' comments.
The target in-service date for the interconnection facilities, originally scheduled for the fourth quarter of 2023, has been delayed pending resolution of this proceeding. Ridgeline does not anticipate that the interconnection facilities can be placed in service until after the Commission has approved the Interconnection Agreement and resolved the cost allocation dispute, either through settlement or adjudication.
V. STATUS OF SETTLEMENT DISCUSSIONS
Settlement Judge Howard Margolis has convened four settlement conferences to date in this proceeding: November 30, 2022; March 8, 2023; July 12, 2023; and January 18, 2024. The settlement conferences have provided a constructive forum for the parties to exchange views on the contested issues, but no settlement has been reached to date.
As of the most recent settlement conference on January 18, 2024, the parties remain approximately $0.058 per Dth apart on the recourse rate. Ridgeline's current negotiating floor is $0.3140 per Dth, reflecting the revised cost of service and rate design described in Section III of this Status Report. ATPC and MGPC jointly advocate a ceiling of approximately $0.2560 per Dth.
Three key sticking points continue to impede settlement:
1.  Return on Equity. The parties remain significantly apart on the appropriate ROE for the Ridgeline Pipeline System. ATPC proposes an ROE of 10.75%, which Ridgeline believes is unsupported by market data and inadequate to compensate equity investors for the risks associated with the Ridgeline Pipeline System. MGPC proposes a somewhat higher ROE of 11.25%, but this remains well below Ridgeline's proposal of 12.50%. Ridgeline believes that the updated DCF proxy group analysis currently under way will provide robust support for a 12.50% ROE, and that the intervenors' lower proposals do not adequately account for the business risks of a relatively new pipeline system operating at approximately 57% of design capacity.
2.  Interconnection Cost Allocation. As described in Section IV above, ATPC insists on a 50/50 allocation of the $22.3 million interconnection costs ($11.15 million each), while Ridgeline maintains its proposed allocation of 34.1% to Ridgeline ($7.6 million) and 65.9% to ATPC ($14.7 million). This issue is central to the cost of service and rate for both Ridgeline and ATPC, and its resolution will likely be a prerequisite to any comprehensive settlement.
3.  Load Factor. All three intervenors — ATPC, MGPC, and CMGA — advocate for a load factor of 85% or higher, which would result in greater billing determinants and, consequently, a lower unit rate. Ridgeline proposes a 75% load factor, which it believes more accurately reflects the expected utilization of the pipeline system and is consistent with Commission precedent for similarly situated systems.
Ridgeline remains open to continued settlement discussions and anticipates that the filing of the redesigned tariff and supplemental testimony will facilitate more productive negotiations. The completion of the tariff redesign will provide the intervenors with a comprehensive and fully developed rate proposal to evaluate, which should narrow the range of contested issues and potentially create opportunities for compromise.
Ridgeline notes that MGPC, through its counsel Rebekah Montague of Whitmore & Sable LLP, has previously filed the testimony of rate expert Dr. Eleanor Vasquez. Dr. Vasquez advocates for a cost-of-service rate no higher than $0.1740 per Dth, a position that remains distant from all other parties' positions in this proceeding, including those of ATPC and CMGA. Ridgeline respectfully submits that Dr. Vasquez's proposed rate is not supported by the record and is inconsistent with Commission precedent on the components of a just and reasonable rate for a pipeline of Ridgeline's characteristics. Nonetheless, Ridgeline remains prepared to engage in good-faith settlement discussions with MGPC and all other parties.
CMGA, through its counsel Stephen Greer of Fordham Municipal Law Group PC, continues to support ATPC's position on cost allocation. CMGA has expressed concern about potential rate increases on ATPC's system that could result from the allocation of a disproportionate share of interconnection costs to ATPC. CMGA's concerns reflect the interests of its municipal customers, who receive gas through ATPC's distribution system and would ultimately bear the costs of the interconnection allocation.
VI. RIDGELINE PIPELINE SYSTEM — OPERATIONAL UPDATE
Ridgeline provides the following operational update on the Ridgeline Pipeline System for the Commission's information and for the record in this proceeding.
The Ridgeline Pipeline System has been in continuous commercial service since October 1, 2021. The system continues to operate safely and reliably, with no material operational disruptions, safety incidents, or force majeure events occurring since the prior filing in this proceeding.
Current throughput on the Ridgeline Pipeline System is approximately 680 MMcf/d, representing approximately 56.7% utilization of the system's 1.2 Bcf/d design capacity. Ridgeline anticipates that throughput volumes will increase over time as additional shippers execute service agreements and as upstream production in the Marcellus and Utica shale formations continues to develop.
All three compressor stations on the Ridgeline Pipeline System — the Wetzel Station (located in Wetzel County, West Virginia), the Mannington Station (located in Marion County, West Virginia), and the Waynesburg Station (located in Greene County, Pennsylvania) — are operating within design parameters. The three compressor stations have aggregate installed compression of 45,000 horsepower and provide the necessary pressure to transport gas through the 187-mile pipeline at design capacity.
The original construction cost of the Ridgeline Pipeline System was $587.2 million. The current rate base of $612.40 million reflects the construction cost plus additional capital expenditures incurred since the system was placed in service, including modifications to the compressor stations and pipeline appurtenances.
VII. ANTICIPATED TIMELINE AND MILESTONES
Based on the current status of the tariff redesign and the progress described in this Status Report, Ridgeline anticipates the following timeline and milestones for the completion of the redesigned tariff and supplemental testimony:
Ridgeline currently anticipates meeting the February 21, 2025 filing deadline established by the March 4 Order. The redesigned tariff filing will be accompanied by supplemental pre-filed testimony of at least the following witnesses:
Dr. Natasha Orlov, Director of Rates & Regulatory, Ridgeline Midstream Services LLC, who will present testimony addressing the redesigned tariff provisions and Ridgeline's response to all fourteen (14) deficiency items identified in the Deficiency Letter; and
Angela Moretti, Vice President of Finance & Treasurer, Ridgeline Midstream Services LLC, who will present testimony addressing the revised cost of service of $103.15 million, the revised capital structure and WACC, and the revised proposed recourse rate of $0.3140 per Dth.
Ridgeline reserves the right to designate additional witnesses as the tariff redesign progresses and as the scope of the supplemental testimony is further defined.
VIII. REQUEST FOR CONTINUED DORMANT STATUS
Ridgeline respectfully requests that this proceeding remain on dormant status pending the February 21, 2025 filing deadline. The dormant status was established by ALJ Whitfield's order dated September 8, 2023, in connection with the granting of Ridgeline's second motion for extension of time, and was continued by the March 4 Order. Maintaining the proceeding on dormant status will permit Ridgeline and its consultants to devote their full attention to the completion of the tariff redesign without the distraction of an active hearing schedule.
Ridgeline does not anticipate the need for any further extension of time at this juncture. Based on the progress described in this Status Report and the timeline set forth in Section VII, Ridgeline is confident that the redesigned tariff and supplemental testimony will be ready for filing on or before February 21, 2025.
Ridgeline will file its second quarterly status report on or about September 14, 2024, as required by the March 4 Order. The second quarterly status report will provide updated information on the progress of the tariff redesign, the status of the outstanding deficiency items, the status of interconnection negotiations with ATPC, and any developments in settlement discussions.
IX. SERVICE AND COMMUNICATION
A copy of this First Quarterly Status Report is being served on all parties on the Commission's official service list for Docket Nos. RP22-847-000 and RP22-847-001. The parties on the service list, and their respective counsel and representatives, are as follows:
FERC Trial Staff:
Jonathan Briggs, Lead Trial Attorney Dr. Miriam Okafor, Lead Economic Analyst Office of Energy Market Regulation Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426
Appalachian Trunk Pipeline Company, LLC ("ATPC"):
William Pratt, Esq. Kellner, Royce & Dillard LLP One PPG Place, Suite 2800 Pittsburgh, PA 15222
Sandra K. Fenton, VP Regulatory Affairs Appalachian Trunk Pipeline Company, LLC 2200 Penn Center West, Suite 300 Pittsburgh, PA 15276
Mountainside Gas Producers Coalition ("MGPC"):
Rebekah Montague, Esq. Whitmore & Sable LLP 1200 New Hampshire Avenue NW, Suite 600 Washington, DC 20036
Calvin Dreyer, Executive Director Mountainside Gas Producers Coalition 1100 Main Street, Suite 210 Morgantown, WV 26505
Clearwater Municipal Gas Authority ("CMGA"):
Stephen Greer, Esq. Fordham Municipal Law Group PC 312 Adams Avenue, Suite 100 Scranton, PA 18503
Dennis Ott, General Manager Clearwater Municipal Gas Authority 455 Market Street Clearwater, PA 15330
All communications regarding this Status Report and this proceeding should be directed to the undersigned counsel for Ridgeline.
X. CONCLUSION
For the reasons set forth above, Ridgeline respectfully submits this First Quarterly Status Report and requests that the Commission take note of the progress described herein. Ridgeline remains committed to completing the tariff redesign and filing the redesigned FERC Gas Tariff, Original Volume No. 1, and supplemental testimony on or before the February 21, 2025 deadline established by the March 4 Order. Ridgeline further requests that the proceeding remain on dormant status pending the filing deadline.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
George Trujillo Responsible Partner
Brett Callahan Lead Associate
David Stanton Working Associate
Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006
Counsel for Ridgeline Midstream Services LLC and Dunmore Energy Holdings Ltd.
C&H Matter No. 1016-00005
Date: June 15, 2024
CERTIFICATE OF SERVICE
I hereby certify that on this 15th day of June, 2024, a true and correct copy of the foregoing First Quarterly Status Report of Ridgeline Midstream Services LLC was served upon all parties on the official service list maintained by the Secretary of the Federal Energy Regulatory Commission in Docket Nos. RP22-847-000 and RP22-847-001. Service was accomplished by electronic filing through the Commission's eFiling system, and by first-class United States mail, postage prepaid, to those parties for whom electronic service is not available or for whom the Commission's rules require service by mail.
________________________________________
David Stanton Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006
Date: June 15, 2024
Ridgeline Midstream Services LLC | Docket No. RP22-847-000
(Rate Case)
Docket No. RP22-847-001
(Interconnection)
Milestone | Target Date
Third draft of revised tariff (NAESB/EBB/capacity release) | June 2024
Completion of capacity release provisions (Item 5) | July 2024
Completion of NAESB compliance revisions (Item 6) | August 2024
Completion of creditworthiness provisions (Item 11) | August 2024
Completion of segmentation/flexible point provisions (Item 12) | September 2024
Second quarterly status report | September 14, 2024
Updated DCF proxy group analysis (Q3 2024 data) | October 2024
Completion of GHG cost recovery provisions (Item 13) | October 2024
Fourth draft of revised tariff (near-final) | November 2024
Completion of Order No. 2222 provisions (Item 14) | November 2024
Third quarterly status report | December 13, 2024
Final tariff and supplemental testimony completion | Mid-January 2025
Filing of redesigned tariff and supplemental testimony | February 21, 2025