1016-00005 · Dunmore Energy Holdings · Quarterly Status Reports

second-quarterly-status-report.docx DOCUMENT Finance & Banking

37 / 77 ← → ✕

UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

FERC Code: 960442

SECOND QUARTERLY STATUS REPORT OF RIDGELINE MIDSTREAM SERVICES LLC

Filed: September 14, 2024

Filed Pursuant to the Order of Administrative Law Judge Hon. Clara Whitfield, Dated March 4, 2024, Granting Ridgeline's Third Extension of Time and Requiring Quarterly Status Reports

Filing Deadline for Redesigned Tariff and Supplemental Testimony: February 21, 2025

I. INTRODUCTION AND PURPOSE

Ridgeline Midstream Services LLC ("Ridgeline" or "Applicant"), a Delaware limited liability company and the wholly-owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Cayman Registry No. CR-381204), hereby submits its Second Quarterly Status Report ("Second Report") in the above-captioned proceedings before the Federal Energy Regulatory Commission ("FERC" or the "Commission").

This Second Report is filed pursuant to the conditions imposed by Administrative Law Judge the Honorable Clara Whitfield in her Order dated March 4, 2024 (the "Extension Order"), which granted Ridgeline's third motion for extension of time to file its redesigned FERC Gas Tariff, Original Volume No. 1 ("Tariff"), and supplemental pre-filed testimony. The Extension Order extended the filing deadline to February 21, 2025, and required Ridgeline to file quarterly status reports with the Commission to keep the Commission, the Administrative Law Judge, the Settlement Judge, FERC Trial Staff, and all parties of record informed of the progress being made toward the redesigned Tariff filing.

Ridgeline filed its First Quarterly Status Report in this proceeding on June 15, 2024, covering the period from the issuance of the Extension Order through June 15, 2024. This Second Report covers the subsequent reporting period from June 16, 2024 through September 14, 2024, and provides updated information regarding the status of the Tariff redesign, the resolution of deficiency items identified by the Commission's Office of Energy Market Regulation, the status of interconnection negotiations with Appalachian Trunk Pipeline Company, LLC ("ATPC"), the status of settlement discussions, and the anticipated timeline for filing the completed redesigned Tariff and supplemental testimony by the February 21, 2025 deadline.

Ridgeline's principal office is located at 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301. Ridgeline's federal employer identification number is 87-4231956.

The interconnecting pipeline in this proceeding is Appalachian Trunk Pipeline Company, LLC ("ATPC"), FERC Code 840117, with its principal office at 2200 Penn Center West, Suite 300, Pittsburgh, Pennsylvania 15276. ATPC is represented by Kellner, Royce & Dillard LLP, through William Pratt, Senior Partner, One PPG Place, Suite 2800, Pittsburgh, Pennsylvania 15222.

The intervenors in this proceeding are: (i) the Mountainside Gas Producers Coalition ("MGPC"), represented by Whitmore & Sable LLP, through Rebekah Montague, Partner; and (ii) the Clearwater Municipal Gas Authority ("CMGA"), represented by Fordham Municipal Law Group PC, through Stephen Greer, Principal.

II. BACKGROUND AND PROCEDURAL HISTORY

In order to provide appropriate context for the progress described in this Second Report, Ridgeline respectfully summarizes the relevant background and procedural history of these consolidated proceedings.

A. The Application

On May 12, 2022, Ridgeline filed an application with the Commission for initial tariff rate authorization and interconnection authorization under Sections 4 and 7 of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717c and 717f, and the Commission's regulations at 18 C.F.R. Parts 154, 157, and 284 (the "Application"). The Application sought Commission authorization for Ridgeline to provide open-access transportation service on the Ridgeline Pipeline System and to establish a tariff rate for such service, as well as authorization to construct and operate interconnection facilities with the ATPC pipeline system.

B. The Ridgeline Pipeline System

The Ridgeline Pipeline System (the "System") consists of approximately 187 miles of 24-inch-diameter high-pressure natural gas transmission pipeline extending from the Wetzel County Interconnect in Wetzel County, West Virginia, to the Waynesburg Compressor Station in Greene County, Pennsylvania. The System has a design capacity of 1.2 billion cubic feet per day ("Bcf/d"), equivalent to 1,200,000 dekatherms per day ("Dth/d"). Current throughput on the System is approximately 680 million cubic feet per day ("MMcf/d"), representing approximately 56.67% utilization of design capacity.

The System includes three compressor stations with aggregate installed compression of 45,000 horsepower ("HP"): (i) Wetzel Station, located in Wetzel County, West Virginia; (ii) Mannington Station, located in Marion County, West Virginia; and (iii) Waynesburg Station, located in Greene County, Pennsylvania. The System's in-service date was October 1, 2021, and the original construction cost was $587.2 million.

C. Interventions and Early Proceedings

The Commission issued its Notice of Filing on June 14, 2022, establishing an intervention deadline of August 15, 2022. Three parties timely intervened in the proceeding. MGPC filed its motion to intervene on July 28, 2022. CMGA filed its motion to intervene on August 1, 2022. ATPC filed a combined protest and motion to intervene on August 15, 2022, challenging various aspects of Ridgeline's proposed tariff rates and the proposed cost allocation for the interconnection facilities.

On September 22, 2022, the Commission issued an order granting all three interventions and establishing a Track II procedural schedule for the proceeding. In that same order, the Commission appointed the Honorable Howard Margolis as Settlement Judge to facilitate settlement discussions among the parties.

D. Hearing Proceedings

On November 14, 2022, the Commission appointed the Honorable Clara Whitfield as Administrative Law Judge to preside over the hearing proceedings. A prehearing conference was held on November 14, 2022, at which the procedural schedule was refined and discovery deadlines were established.

Ridgeline filed the direct testimony of seven witnesses on December 5, 2022, covering all aspects of its proposed tariff rates, cost of service, rate design, and interconnection facilities. On January 9, 2023, answering testimony was filed by ATPC, MGPC, and CMGA, challenging various elements of Ridgeline's filing.

E. The Deficiency Letter

On January 19, 2023, the Commission's Office of Energy Market Regulation ("OEMR"), through Lead Economic Analyst Dr. Miriam Okafor, issued a Deficiency Letter identifying fourteen (14) specific deficiency items in Ridgeline's tariff filing (the "Deficiency Letter"). The Deficiency Letter identified substantive deficiencies across a range of tariff provisions, including cost-of-service methodology, rate design, tariff structure, compliance with Commission policies and orders, and interconnection-related matters.

In light of the Deficiency Letter, ALJ Whitfield issued an order on February 6, 2023, staying the procedural schedule pending Ridgeline's response to the deficiency items.

F. Ridgeline's Partial Response and Engagement of Braswell

On March 15, 2023, Ridgeline filed a partial response to the Deficiency Letter addressing eight (8) of the fourteen (14) identified deficiency items. Recognizing the complexity and scope of the remaining deficiency items and the need for comprehensive tariff redesign, Ridgeline engaged Braswell Energy Consulting Group LLC ("Braswell"), led by Dr. Raymond Braswell, a former Commission economist, on April 15, 2023 (Engagement No. BEC-2023-0041) to assist with the comprehensive redesign of the Tariff to address all fourteen deficiency items.

G. Extensions of Time

The complexity of the tariff redesign effort and the scope of the revisions necessitated by the Deficiency Letter required Ridgeline to seek extensions of time to complete the redesigned Tariff filing. The procedural history of those extensions is as follows:

First Extension. On April 28, 2023, Ridgeline filed its first motion for a 120-day extension of time. The motion was granted by ALJ Whitfield on May 10, 2023, establishing a filing deadline of August 28, 2023.

Second Extension. On August 25, 2023, Ridgeline filed its second motion for a 180-day extension of time. The motion was granted by ALJ Whitfield on September 8, 2023, establishing a revised filing deadline of February 23, 2024. In connection with the grant of the second extension, the proceeding status was changed to "dormant" on the Commission's docket.

Third Extension. On February 20, 2024, Ridgeline filed its third motion for a twelve-month extension of time. By order dated March 4, 2024, ALJ Whitfield granted the third extension with conditions, establishing the current filing deadline of February 21, 2025, and imposing the requirement that Ridgeline file quarterly status reports to keep the Commission and parties informed of progress. This Second Report is filed in compliance with that requirement.

III. PROGRESS ON TARIFF REDESIGN

A. Overview of Redesign Scope

As described in the First Quarterly Status Report and further elaborated herein, Ridgeline is undertaking a comprehensive revision of its FERC Gas Tariff, Original Volume No. 1, to address all fourteen (14) deficiency items identified in the January 19, 2023 Deficiency Letter issued by OEMR through Dr. Miriam Okafor. The redesign is being performed in coordination with Braswell Energy Consulting Group LLC, located at 8300 Greensboro Drive, Suite 450, McLean, Virginia 22102, under the direction of Dr. Raymond Braswell.

The scope of the tariff redesign encompasses the following key structural changes to the Tariff as originally filed:

(a) Adoption of a modified fixed-variable rate methodology, replacing the straight fixed-variable methodology as originally proposed;

(b) Revision of the billing determinant calculation from a 100% load factor assumption to a 75% load factor assumption, consistent with the System's current and projected utilization characteristics;

(d) New tariff provisions for a fuel, losses, and unaccounted-for gas ("FL&U") tracker mechanism;

(e) Revised and expanded capacity release provisions consistent with current Commission policy;

(f) Updated tariff language to achieve compliance with North American Energy Standards Board ("NAESB") Wholesale Gas Quadrant ("WGQ") Version 3.2 standards;

(g) Revised electronic bulletin board ("EBB") posting requirements consistent with Commission regulations;

(h) New creditworthiness provisions reflecting current Commission policy on collateral requirements, unsecured credit limits, and credit rating thresholds;

(i) New greenhouse gas ("GHG") emission cost recovery provisions, including a GHG cost tracker and passthrough mechanism; and

(j) Tariff provisions addressing the implications of Commission Order No. 2222 regarding distributed energy resource ("DER") aggregation, particularly as relevant to DEH's 250-megawatt wind portfolio currently under development.

B. Revised Cost-of-Service Model

During this reporting period, Ridgeline and Braswell have continued to refine the revised cost-of-service model that will underpin the redesigned Tariff. The principal elements of the revised cost-of-service model, reflecting updates through the current reporting period, are set forth below.

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

No party has challenged the overall rate base amount, and Ridgeline does not propose any revisions to rate base in the redesigned Tariff.

Return on Equity. Ridgeline has revised its proposed ROE to 12.50%, reduced from the 14.00% originally proposed in the Application. This revision is based on an updated DCF proxy group analysis as of the third quarter of 2024, performed by Braswell. The updated proxy group analysis reflects current market conditions, including prevailing interest rate levels, equity risk premiums, and the financial profiles of comparable natural gas pipeline companies. For context, ATPC has proposed an ROE of 10.75%, and MGPC's expert, Dr. Eleanor Vasquez, has advocated an ROE of 11.25%. The parties' respective ROE positions remain a significant area of disagreement, as discussed further in Section VI below.

Capital Structure. The capital structure remains unchanged from the original filing at 55% equity and 45% debt. This capital structure reflects Ridgeline's actual capitalization and is consistent with Commission-approved capital structures for comparable natural gas pipeline companies.

Cost of Debt. The weighted average cost of debt is 5.25%, reflecting the blended interest cost of Ridgeline's two tranches of outstanding indebtedness:

(i) A $400 million senior secured term loan facility led by Pinnacle National Bank, bearing interest at SOFR plus 325 basis points; and

(ii) $150 million aggregate principal amount of 7.875% Second Lien Senior Secured Notes due 2030, privately placed with Harborview Capital Management LLC and Sentinel Ridge Fund LP.

Weighted Average Cost of Capital. The revised weighted average cost of capital ("WACC") is calculated as follows:

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

Return on Rate Base. The revised return on rate base is $56.57 million, calculated as the product of the $612.40 million rate base and the 9.2375% WACC. This compares to a return on rate base of $61.62 million in the original filing, reflecting the reduction in proposed ROE from 14.00% to 12.50%.

Depreciation Expense. Depreciation expense remains unchanged at $14.68 million, based on a 2.5% annual straight-line depreciation rate applied to original plant in service.

Operations and Maintenance Expense. Revised O&M expense is $13.92 million, updated from the originally filed amount of $12.44 million to reflect current operating costs, including increased compressor station maintenance costs, right-of-way maintenance, and pipeline integrity management program expenditures.

Administrative and General Expense. Revised A&G expense is $5.14 million, updated from the originally filed amount of $4.82 million to reflect current administrative costs, including regulatory compliance, insurance premiums, and corporate allocations from DEH.

Taxes Other Than Income. Taxes other than income remain unchanged at $3.80 million, reflecting property taxes, state franchise taxes, and other applicable non-income taxes.

Income Tax Allowance. The revised income tax allowance is $15.04 million, adjusted to reflect the lower proposed ROE and grossed-up at the effective combined federal and state income tax rate of approximately 26.13%, comprising the federal corporate income tax rate of 21% and the West Virginia corporate income tax rate of 6.5%.

Revenue Credits. Revised revenue credits total ($6.00 million), reduced from the originally filed amount of ($16.10 million). The reduction in revenue credits reflects a decline in interruptible transportation revenues and other miscellaneous revenues since the original filing.

Total Revised Cost of Service. The revised total cost of service is summarized as follows:

The revised total cost of service of $103.15 million compares to the originally filed total cost of service of $97.36 million. The increase is primarily attributable to (i) higher O&M and A&G expenses reflecting current operating costs, and (ii) the significant reduction in revenue credits, partially offset by (iii) the lower return on rate base resulting from the reduction in proposed ROE.

C. Revised Rate Design and Proposed Recourse Rate

The revised rate design reflects the adoption of a 75% load factor for the calculation of billing determinants, replacing the 100% load factor originally proposed. The revised billing determinants are calculated as follows:

Billing Determinants = 1,200,000 Dth/d × 365 days × 75% = 328,500,000 Dth/yr

This represents a reduction from the originally filed billing determinants of 438,000,000 Dth/yr (calculated using a 100% load factor). The revision to a 75% load factor is supported by Braswell's analysis of Ridgeline's actual and projected throughput data, which demonstrates that the System is currently operating at approximately 56.67% utilization of design capacity (680 MMcf/d actual throughput against 1,200 MMcf/d design capacity) and is projected to achieve approximately 75% utilization within the initial five-year rate period.

The revised proposed total recourse rate is calculated as follows:

Total Recourse Rate = $103.15M ÷ 328,500,000 Dth/yr = $0.3140/Dth

• Reservation component: $0.3102/Dth

• Usage component: $0.0038/Dth

This compares to the original proposed recourse rate of $0.2265/Dth, comprising a reservation component of $0.2223/Dth and a usage component of $0.0042/Dth. The higher per-unit rate in the redesigned Tariff reflects the substantially lower billing determinants under the 75% load factor assumption, which reduces the denominator over which the cost of service is spread, partially offset by the reduction in ROE from 14.00% to 12.50%, which lowers the total cost of service relative to what it would have been under a 75% load factor at the originally proposed ROE.

The redesigned Tariff adopts the modified fixed-variable rate methodology as recommended by Braswell, and maintains a Part 284, Subpart G, open-access transportation tariff structure.

D. Tariff Drafting Progress

Substantial progress has been made on the drafting of the redesigned Tariff during this reporting period. The third draft of the revised FERC Gas Tariff, Original Volume No. 1, was completed in June 2024 and was prepared in redline form against the second draft dated January 2024. The third draft specifically addressed the following deficiency items from the Deficiency Letter:

(a) NAESB WGQ Version 3.2 compliance (Deficiency Item 6), including detailed provisions for standardized nomination and scheduling procedures, capacity release posting timelines, and gas quality specifications consistent with WGQ standards;

(b) Electronic bulletin board posting requirements (Deficiency Item 7), including specifications for posting intervals, data fields, and availability of historical data;

(c) Capacity release provisions (Deficiency Item 5), including prearranged deal posting requirements, bidding procedures, recall rights, and permanent and temporary release mechanisms; and

(d) Segmentation and flexible receipt-delivery point provisions (Deficiency Item 12), including operational procedures for segmented capacity and alternative receipt and delivery point elections.

The fourth draft of the revised Tariff, which will constitute the near-final working version, is currently in preparation. Ridgeline and Braswell anticipate completion of the fourth draft by November 2024. The fourth draft will integrate all remaining tariff revisions, including:

(a) Greenhouse gas emission cost recovery provisions (Deficiency Item 13), incorporating a GHG cost tracker and passthrough mechanism to allow Ridgeline to recover direct and allocated costs of compliance with federal and state greenhouse gas regulations, including potential costs associated with methane emission monitoring and reporting requirements; and

(b) Order No. 2222 distributed energy resource aggregation implications (Deficiency Item 14), addressing renewable energy interconnection provisions relevant to DEH's 250-megawatt wind portfolio currently under development, including the coordination of gas-fired generation scheduling with variable renewable energy output.

Upon completion of the fourth draft, Ridgeline will proceed with internal management review, finalization of supplemental pre-filed testimony, preparation of supporting exhibits and workpapers, and final quality assurance, all as described in Section VIII below.

IV. STATUS OF DEFICIENCY ITEM RESOLUTION

The following table summarizes the current status of all fourteen (14) deficiency items identified in the January 19, 2023 Deficiency Letter, as of the end of this reporting period on September 14, 2024.

In summary, of the fourteen (14) deficiency items identified in the Deficiency Letter, eleven (11) are complete or substantially complete, and three (3) remain in progress (Items 11, 13, and 14). All three items that remain in progress are on track for inclusion in the fourth draft of the revised Tariff, which is anticipated to be completed in November 2024. Ridgeline is confident that all fourteen deficiency items will be fully addressed in the redesigned Tariff to be filed on February 21, 2025.

V. INTERCONNECTION MATTERS (DOCKET NO. RP22-847-001)

A. Proposed Interconnection Facilities

The interconnection at issue in Docket No. RP22-847-001 involves the proposed construction and operation of facilities at the Wetzel County Interconnect, located at milepost 0.0 of the Ridgeline Pipeline System. The proposed interconnection facilities consist of a new meter station and pig launcher/receiver, designed to tie into ATPC's existing 30-inch mainline at ATPC Milepost 412.6 in Wetzel County, West Virginia.

The proposed design capacity at the interconnect is 800 MMcf/d bidirectional, expandable to 1.2 Bcf/d with the addition of supplemental metering runs and associated equipment. Metering equipment includes ultrasonic flow meters configured in three runs of 12-inch diameter, along with gas chromatographs for gas quality and heating value determination, and full SCADA integration for remote monitoring and operational control.

B. Interconnection Facilities Cost Allocation

The total estimated cost of the interconnection facilities is $22.3 million. The proposed cost allocation between the parties remains a significant area of disagreement.

Ridgeline has proposed a cost allocation based on a benefits analysis that assigns each party's share in proportion to the relative benefits each party derives from the interconnection facilities. Under Ridgeline's proposal, the cost allocation is as follows:

• Ridgeline's proposed share: $7.6 million (34.08%)

• ATPC's proposed share: $14.7 million (65.92%)

ATPC continues to oppose the proposed cost allocation and insists on a 50/50 split of the interconnection facilities cost, which would result in each party bearing $11.15 million. ATPC has articulated its position that the interconnection provides approximately equal benefits to both pipeline systems and that a 50/50 split is consistent with Commission precedent for comparable interconnection facilities. ATPC also challenges the adequacy of the proposed receipt-point metering station design, contending that additional metering redundancy and gas quality monitoring equipment should be incorporated into the design, which would increase the overall facility cost.

C. Interconnection Agreement Status

The current working draft of the Interconnection Agreement is Version 3.0, dated April 2023. This agreement was drafted as a FERC rate schedule to address Deficiency Item 9 from the Deficiency Letter. The Interconnection Agreement Version 3.0 addresses operational procedures, measurement standards, gas quality specifications, maintenance responsibilities, scheduling protocols, and force majeure provisions.

Negotiations with ATPC's counsel, William Pratt of Kellner, Royce & Dillard LLP, are ongoing but no agreement has been reached on either the cost allocation for the interconnection facilities or the metering station design specifications. The original target in-service date for the interconnection facilities was the fourth quarter of 2023; this timeline has been delayed pending resolution of the proceeding before the Commission.

D. Ridgeline's Position Going Forward

Ridgeline remains willing to engage in further technical discussions with ATPC regarding metering specifications and cost allocation methodology. Ridgeline believes that productive discussions on interconnection matters may be facilitated following the filing of the redesigned Tariff on February 21, 2025, which will provide a comprehensive and updated framework for evaluating the interconnection terms and cost allocation as part of the overall rate case proceeding.

VI. SETTLEMENT DISCUSSIONS

A. Settlement Conference History

Settlement Judge the Honorable Howard Margolis was appointed on September 22, 2022, to facilitate settlement discussions among the parties. Four settlement conferences have been held to date:

1. November 30, 2022 — Initial settlement conference; parties exchanged preliminary positions on key disputed issues.

2. March 8, 2023 — Second settlement conference; held after issuance of the Deficiency Letter; discussion focused on the scope and timeline for Ridgeline's tariff redesign.

3. July 12, 2023 — Third settlement conference; parties discussed potential resolution of cost-of-service and rate design issues in light of Braswell's preliminary analyses.

4. January 18, 2024 — Fourth settlement conference; parties reviewed updated positions but were unable to narrow the gap on key disputed issues.

B. Status of Settlement Discussions

No settlement has been reached among the parties. The key sticking points that continue to impede settlement are as follows:

Return on Equity. The parties remain significantly apart on the appropriate ROE for Ridgeline. ATPC proposes an ROE of 10.75%, contending that Ridgeline's business risk profile and the prevailing interest rate environment support a lower return. MGPC, through its expert Dr. Eleanor Vasquez, proposes an ROE of 11.25%, asserting that while Ridgeline is entitled to a reasonable return, the originally proposed 14.00% ROE and even the revised 12.50% ROE exceed the range of returns approved by the Commission for comparable pipelines. Ridgeline's revised position, as reflected in the updated DCF proxy group analysis performed by Braswell, is an ROE of 12.50%.

Interconnection Cost Allocation. ATPC insists on a 50/50 split of the $22.3 million interconnection facilities cost, which would require each party to bear $11.15 million. Ridgeline maintains its proposed allocation of 34.08% ($7.6 million) to Ridgeline and 65.92% ($14.7 million) to ATPC, based on the relative benefits each party derives from the interconnection.

Load Factor. All three intervenors — ATPC, MGPC, and CMGA — advocate for a load factor assumption of 85% or higher for the calculation of billing determinants, which would result in a lower per-unit recourse rate. Ridgeline's revised position, supported by Braswell's analysis of actual and projected throughput data, is a 75% load factor assumption.

C. Rate Gap Analysis

Taking into account the foregoing disputes, the parties remain approximately $0.058/Dth apart on the overall recourse rate. ATPC and MGPC advocate a rate ceiling of approximately $0.2560/Dth, reflecting their preferred positions on ROE, load factor, and other cost-of-service inputs. Ridgeline's current position reflects a rate floor of $0.3140/Dth, as described in Section III.C above.

D. CMGA's Position

CMGA, through its General Manager Dennis Ott and its counsel Stephen Greer of Fordham Municipal Law Group PC, continues to align with ATPC's position on cost allocation for the interconnection facilities. CMGA's primary concern is the potential for rate increases on ATPC's system resulting from the interconnection, which could affect CMGA's gas procurement costs as a municipal distribution utility receiving service from ATPC.

E. Outlook for Further Settlement Discussions

Ridgeline remains committed to good-faith settlement discussions and is willing to participate in additional settlement conferences at the direction of Settlement Judge Margolis. No settlement conference is currently scheduled during this reporting period. Ridgeline anticipates that additional settlement conferences may be productive after the redesigned Tariff and supplemental testimony are filed on February 21, 2025, at which point all parties will have the benefit of Ridgeline's updated rate design parameters, comprehensive tariff provisions, and supporting testimony for evaluation. The filing of the complete redesigned Tariff package should provide a more informed basis for settlement discussions and may facilitate narrowing the gap on the key disputed issues.

VII. CONSULTING AND ADVISORY ENGAGEMENT UPDATES

Ridgeline reports the following with respect to the status of its consulting and advisory engagements in connection with this proceeding.

Braswell Energy Consulting Group LLC. Braswell, under the direction of Dr. Raymond Braswell, Lead Consultant (Engagement No. BEC-2023-0041), continues to perform tariff redesign work in coordination with Ridgeline and Calderwood & Harkness LLP. Key deliverables received from Braswell during this reporting period include: (i) an updated DCF proxy group analysis reflecting third quarter 2024 market data; (ii) revised cost-of-service workpapers reflecting current operating expense levels and the revised ROE; and (iii) a refined modified fixed-variable rate design model incorporating the 75% load factor billing determinants. Braswell continues to be actively engaged in the preparation of the fourth draft of the revised Tariff and is expected to provide additional deliverables through the filing date.

Ridgepoint Appraisal & Valuation Inc. Ridgepoint Appraisal & Valuation Inc., based in Houston, Texas, previously completed a comprehensive pipeline valuation of the Ridgeline Pipeline System in connection with the original Application. No additional valuation work was required or performed during this reporting period.

Ashford & McBride LLP. Ashford & McBride LLP, located at 30 Rockefeller Plaza, Suite 4100, New York, New York 10112, serves as auditors and accountants for DEH and continues to provide support to Ridgeline regarding cost-of-service data, financial statement reconciliation, and verification of the financial information underlying the revised cost-of-service model. Ashford & McBride's ongoing involvement ensures that the financial data supporting the redesigned Tariff is consistent with DEH's and Ridgeline's audited financial statements and complies with applicable accounting standards.

Calderwood & Harkness LLP. Calderwood & Harkness LLP continues to serve as counsel of record for Ridgeline in this proceeding. The engagement team, consisting of George Trujillo (Responsible Partner), Brett Callahan (Lead Associate), and David Stanton (Working Associate), is actively preparing the fourth draft of the revised Tariff and is working with Ridgeline's regulatory and finance personnel to develop draft supplemental pre-filed testimony. The anticipated supplemental testimony witnesses include Dr. Natasha Orlov, Director of Rates & Regulatory at Ridgeline, who will testify regarding the redesigned tariff provisions, and Angela Moretti, Vice President of Finance & Treasurer at Ridgeline, who will testify regarding the revised cost of service.

VIII. ANTICIPATED TIMELINE TO FEBRUARY 21, 2025 DEADLINE

Ridgeline provides the following anticipated timeline for the completion of the remaining work and the filing of the redesigned Tariff and supplemental testimony by the February 21, 2025 deadline:

November 2024: Completion of the fourth (near-final) draft of the revised FERC Gas Tariff, Original Volume No. 1, incorporating all revisions necessary to address all fourteen (14) deficiency items from the Deficiency Letter, including the three items currently in progress (Items 11, 13, and 14).

November – December 2024: Internal review of the fourth draft by Ridgeline's senior management team, including James K. Winfield, Chief Executive Officer; Angela Moretti, Vice President of Finance & Treasurer; Thomas Greaves, Vice President of Engineering; and Dr. Natasha Orlov, Director of Rates & Regulatory. This review will ensure that the redesigned Tariff is consistent with Ridgeline's operational capabilities, financial projections, and strategic objectives.

December 2024: Finalization of draft supplemental pre-filed testimony of Dr. Natasha Orlov, who will testify regarding the redesigned tariff provisions, rate design methodology, and the basis for each revision, and Angela Moretti, who will testify regarding the revised cost of service, rate base, operating expenses, and capital cost inputs.

December 13, 2024: Filing of the Third Quarterly Status Report, covering the period from September 15, 2024 through December 13, 2024.

January 2025: Final review and quality assurance of the redesigned Tariff, supplemental testimony, and all supporting exhibits and workpapers. This phase will include verification of all numerical calculations, cross-referencing of tariff provisions with Commission regulations and orders, and preparation of a comprehensive index of exhibits.

February 2025: Final tariff and testimony preparation, including formatting of tariff sheets in compliance with FERC filing requirements, assembly of all filing components, and preparation of the transmittal letter to the Secretary of the Commission.

February 21, 2025: Filing of the redesigned FERC Gas Tariff, Original Volume No. 1, supplemental pre-filed testimony, and all supporting exhibits in Docket Nos. RP22-847-000 and RP22-847-001.

Ridgeline confirms that it is on track to meet the February 21, 2025 filing deadline established in ALJ Whitfield's March 4, 2024 Extension Order. Based on the progress achieved to date and the work plan outlined above, Ridgeline does not anticipate requesting any additional extensions of time.

IX. CONCLUSION AND REQUEST

Ridgeline Midstream Services LLC respectfully submits this Second Quarterly Status Report and represents to the Commission and the Administrative Law Judge that it is making diligent progress toward the completion of the redesigned Tariff filing. As described herein, eleven of the fourteen deficiency items have been fully addressed, the revised cost-of-service model and rate design have been substantially completed, and the remaining three deficiency items are on track for resolution in the fourth draft of the revised Tariff anticipated in November 2024.

Ridgeline confirms its intention to file the complete redesigned FERC Gas Tariff, Original Volume No. 1, supplemental pre-filed testimony of Dr. Natasha Orlov and Angela Moretti, and all supporting exhibits and workpapers by the February 21, 2025 deadline established in ALJ Whitfield's March 4, 2024 order.

Ridgeline respectfully requests that the Commission and the Administrative Law Judge take no further action on the procedural schedule at this time pending the February 21, 2025 filing, and that this Second Quarterly Status Report be accepted as satisfying the quarterly reporting requirement imposed by the Extension Order for the period ending September 14, 2024.

Ridgeline's next quarterly status report, the Third Quarterly Status Report, will be filed by December 13, 2024, covering the period from September 15, 2024 through December 13, 2024.

X. SIGNATURE

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

George Trujillo Responsible Partner

Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-4200 Facsimile: (202) 555-4201

Email: gtrujillo@calderwoodharkness.com

Counsel for Ridgeline Midstream Services LLC

Date: September 14, 2024

CERTIFICATE OF SERVICE

I hereby certify that on this 14th day of September, 2024, a true and correct copy of the foregoing Second Quarterly Status Report of Ridgeline Midstream Services LLC was served upon all parties on the official service list maintained by the Secretary of the Commission in Docket Nos. RP22-847-000 and RP22-847-001, by electronic mail and by first-class United States mail, postage prepaid, to the following:

Secretary of the Commission Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426

FERC Trial Staff: Jonathan Briggs, Lead Trial Attorney Office of General Counsel Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426

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

Administrative Law Judge: The Honorable Clara Whitfield Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426

Settlement Judge: The Honorable Howard Margolis Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426

Appalachian Trunk Pipeline Company, LLC: William Pratt, Senior Partner Kellner, Royce & Dillard LLP One PPG Place, Suite 2800 Pittsburgh, PA 15222

Mountainside Gas Producers Coalition: Rebekah Montague, Partner Whitmore & Sable LLP 1200 New Hampshire Avenue NW, Suite 600 Washington, DC 20036

Clearwater Municipal Gas Authority: Stephen Greer, Principal Fordham Municipal Law Group PC 312 Adams Avenue, Suite 100 Scranton, PA 18503

________________________________________

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

Date: September 14, 2024

Ridgeline Midstream Services LLC

(Rate Case)

Ridgeline Midstream Services LLC

(Interconnection)

Counsel of Record:

George Trujillo, Responsible Partner

Brett Callahan, Lead Associate

David Stanton, Working Associate

Calderwood & Harkness LLP

1601 K Street NW, Suite 900

Washington, DC 20006

Billing Partner: Patricia Dunmore

(also Founder & Chairperson, Dunmore Energy Holdings Ltd.; dual-role disclosure and waiver on file)

C&H Matter No.: 1016-00005

Rate Base Component	Amount ($ millions)
Net plant in service	$563.71

(Original construction cost of $587.20M less accumulated depreciation of $23.49M)

Working capital allowance

(1/8 of O&M + A&G per FERC formula)

Accumulated deferred income taxes (ADIT)	($12.45)
Other rate base items (gas stored, prepayments, materials & supplies)	$42.50
Total Rate Base	$612.40
Cost-of-Service Component	Amount ($ millions)
Return on rate base	$56.57
Depreciation expense	$14.68
O&M expense	$13.92
A&G expense	$5.14
Taxes other than income	$3.80
Income tax allowance	$15.04
Revenue credits	($6.00)
Total Cost of Service	$103.15
Item No.	Deficiency Item Description	Status	Notes
1	ROE support and DCF proxy group analysis	COMPLETE (pending incorporation in fourth draft)	Addressed in partial response (March 15, 2023) and further updated with Q3 2024 DCF proxy group analysis performed by Braswell; revised ROE of 12.50%
2	FL&U tracker mechanism	COMPLETE	Addressed in partial response; detailed FL&U tracker mechanism design completed July 2023; incorporated in tariff third draft
3	IT rate derivation	COMPLETE	Addressed in partial response; IT rate schedule (IT-1) drafted September 2023; incorporated in tariff second and third drafts
4	Load factor billing determinant support	COMPLETE	Addressed in partial response; revised from 100% to 75% load factor per Braswell analysis; supported by throughput data showing current ~680 MMcf/d (56.67% utilization of 1.2 Bcf/d design capacity)
5	Capacity release provisions	COMPLETE	Incorporated in tariff third draft (June 2024); includes prearranged deal, bidding, recall, and permanent/temporary release provisions
6	NAESB standards compliance	COMPLETE	Gap analysis completed; WGQ Version 3.2 compliance provisions incorporated in tariff third draft (June 2024)
7	EBB posting requirements	COMPLETE	Addressed in partial response; detailed EBB provisions incorporated in tariff third draft
8	Shipper-must-have-title provisions	COMPLETE	Addressed in partial response (March 15, 2023)
9	Interconnection agreement as rate schedule	COMPLETE (subject to ongoing negotiation with ATPC)	Addressed in partial response; Interconnection Agreement Version 3.0 (April 2023) drafted as a FERC rate schedule
10	Penalty revenue crediting mechanism	COMPLETE	Addressed in partial response (March 15, 2023)
11	Creditworthiness provisions	IN PROGRESS	Draft provisions completed; incorporating FERC policy on collateral requirements, unsecured credit limits, and credit rating thresholds; to be finalized in fourth draft
12	Segmentation and flexible receipt/delivery point provisions	COMPLETE	Incorporated in tariff third draft (June 2024)

13	Greenhouse gas emission cost recovery	IN PROGRESS	Analysis memorandum completed March 2024; tariff language for GHG cost tracker and passthrough mechanism under development; to be incorporated in fourth draft
14	Order No. 2222 DER aggregation implications	IN PROGRESS	Analysis memorandum completed May 2024; tariff provisions under development addressing renewable energy interconnection, relevant to DEH's 250 MW wind portfolio; to be incorporated in fourth draft

UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
FERC Code: 960442
SECOND QUARTERLY STATUS REPORT OF RIDGELINE MIDSTREAM SERVICES LLC
Filed: September 14, 2024
Filed Pursuant to the Order of Administrative Law Judge Hon. Clara Whitfield, Dated March 4, 2024, Granting Ridgeline's Third Extension of Time and Requiring Quarterly Status Reports
Filing Deadline for Redesigned Tariff and Supplemental Testimony: February 21, 2025
I. INTRODUCTION AND PURPOSE
Ridgeline Midstream Services LLC ("Ridgeline" or "Applicant"), a Delaware limited liability company and the wholly-owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Cayman Registry No. CR-381204), hereby submits its Second Quarterly Status Report ("Second Report") in the above-captioned proceedings before the Federal Energy Regulatory Commission ("FERC" or the "Commission").
This Second Report is filed pursuant to the conditions imposed by Administrative Law Judge the Honorable Clara Whitfield in her Order dated March 4, 2024 (the "Extension Order"), which granted Ridgeline's third motion for extension of time to file its redesigned FERC Gas Tariff, Original Volume No. 1 ("Tariff"), and supplemental pre-filed testimony. The Extension Order extended the filing deadline to February 21, 2025, and required Ridgeline to file quarterly status reports with the Commission to keep the Commission, the Administrative Law Judge, the Settlement Judge, FERC Trial Staff, and all parties of record informed of the progress being made toward the redesigned Tariff filing.
Ridgeline filed its First Quarterly Status Report in this proceeding on June 15, 2024, covering the period from the issuance of the Extension Order through June 15, 2024. This Second Report covers the subsequent reporting period from June 16, 2024 through September 14, 2024, and provides updated information regarding the status of the Tariff redesign, the resolution of deficiency items identified by the Commission's Office of Energy Market Regulation, the status of interconnection negotiations with Appalachian Trunk Pipeline Company, LLC ("ATPC"), the status of settlement discussions, and the anticipated timeline for filing the completed redesigned Tariff and supplemental testimony by the February 21, 2025 deadline.
Ridgeline's principal office is located at 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301. Ridgeline's federal employer identification number is 87-4231956.
The interconnecting pipeline in this proceeding is Appalachian Trunk Pipeline Company, LLC ("ATPC"), FERC Code 840117, with its principal office at 2200 Penn Center West, Suite 300, Pittsburgh, Pennsylvania 15276. ATPC is represented by Kellner, Royce & Dillard LLP, through William Pratt, Senior Partner, One PPG Place, Suite 2800, Pittsburgh, Pennsylvania 15222.
The intervenors in this proceeding are: (i) the Mountainside Gas Producers Coalition ("MGPC"), represented by Whitmore & Sable LLP, through Rebekah Montague, Partner; and (ii) the Clearwater Municipal Gas Authority ("CMGA"), represented by Fordham Municipal Law Group PC, through Stephen Greer, Principal.
II. BACKGROUND AND PROCEDURAL HISTORY
In order to provide appropriate context for the progress described in this Second Report, Ridgeline respectfully summarizes the relevant background and procedural history of these consolidated proceedings.
A. The Application
On May 12, 2022, Ridgeline filed an application with the Commission for initial tariff rate authorization and interconnection authorization under Sections 4 and 7 of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717c and 717f, and the Commission's regulations at 18 C.F.R. Parts 154, 157, and 284 (the "Application"). The Application sought Commission authorization for Ridgeline to provide open-access transportation service on the Ridgeline Pipeline System and to establish a tariff rate for such service, as well as authorization to construct and operate interconnection facilities with the ATPC pipeline system.
B. The Ridgeline Pipeline System
The Ridgeline Pipeline System (the "System") consists of approximately 187 miles of 24-inch-diameter high-pressure natural gas transmission pipeline extending from the Wetzel County Interconnect in Wetzel County, West Virginia, to the Waynesburg Compressor Station in Greene County, Pennsylvania. The System has a design capacity of 1.2 billion cubic feet per day ("Bcf/d"), equivalent to 1,200,000 dekatherms per day ("Dth/d"). Current throughput on the System is approximately 680 million cubic feet per day ("MMcf/d"), representing approximately 56.67% utilization of design capacity.
The System includes three compressor stations with aggregate installed compression of 45,000 horsepower ("HP"): (i) Wetzel Station, located in Wetzel County, West Virginia; (ii) Mannington Station, located in Marion County, West Virginia; and (iii) Waynesburg Station, located in Greene County, Pennsylvania. The System's in-service date was October 1, 2021, and the original construction cost was $587.2 million.
C. Interventions and Early Proceedings
The Commission issued its Notice of Filing on June 14, 2022, establishing an intervention deadline of August 15, 2022. Three parties timely intervened in the proceeding. MGPC filed its motion to intervene on July 28, 2022. CMGA filed its motion to intervene on August 1, 2022. ATPC filed a combined protest and motion to intervene on August 15, 2022, challenging various aspects of Ridgeline's proposed tariff rates and the proposed cost allocation for the interconnection facilities.
On September 22, 2022, the Commission issued an order granting all three interventions and establishing a Track II procedural schedule for the proceeding. In that same order, the Commission appointed the Honorable Howard Margolis as Settlement Judge to facilitate settlement discussions among the parties.
D. Hearing Proceedings
On November 14, 2022, the Commission appointed the Honorable Clara Whitfield as Administrative Law Judge to preside over the hearing proceedings. A prehearing conference was held on November 14, 2022, at which the procedural schedule was refined and discovery deadlines were established.
Ridgeline filed the direct testimony of seven witnesses on December 5, 2022, covering all aspects of its proposed tariff rates, cost of service, rate design, and interconnection facilities. On January 9, 2023, answering testimony was filed by ATPC, MGPC, and CMGA, challenging various elements of Ridgeline's filing.
E. The Deficiency Letter
On January 19, 2023, the Commission's Office of Energy Market Regulation ("OEMR"), through Lead Economic Analyst Dr. Miriam Okafor, issued a Deficiency Letter identifying fourteen (14) specific deficiency items in Ridgeline's tariff filing (the "Deficiency Letter"). The Deficiency Letter identified substantive deficiencies across a range of tariff provisions, including cost-of-service methodology, rate design, tariff structure, compliance with Commission policies and orders, and interconnection-related matters.
In light of the Deficiency Letter, ALJ Whitfield issued an order on February 6, 2023, staying the procedural schedule pending Ridgeline's response to the deficiency items.
F. Ridgeline's Partial Response and Engagement of Braswell
On March 15, 2023, Ridgeline filed a partial response to the Deficiency Letter addressing eight (8) of the fourteen (14) identified deficiency items. Recognizing the complexity and scope of the remaining deficiency items and the need for comprehensive tariff redesign, Ridgeline engaged Braswell Energy Consulting Group LLC ("Braswell"), led by Dr. Raymond Braswell, a former Commission economist, on April 15, 2023 (Engagement No. BEC-2023-0041) to assist with the comprehensive redesign of the Tariff to address all fourteen deficiency items.
G. Extensions of Time
The complexity of the tariff redesign effort and the scope of the revisions necessitated by the Deficiency Letter required Ridgeline to seek extensions of time to complete the redesigned Tariff filing. The procedural history of those extensions is as follows:
First Extension. On April 28, 2023, Ridgeline filed its first motion for a 120-day extension of time. The motion was granted by ALJ Whitfield on May 10, 2023, establishing a filing deadline of August 28, 2023.
Second Extension. On August 25, 2023, Ridgeline filed its second motion for a 180-day extension of time. The motion was granted by ALJ Whitfield on September 8, 2023, establishing a revised filing deadline of February 23, 2024. In connection with the grant of the second extension, the proceeding status was changed to "dormant" on the Commission's docket.
Third Extension. On February 20, 2024, Ridgeline filed its third motion for a twelve-month extension of time. By order dated March 4, 2024, ALJ Whitfield granted the third extension with conditions, establishing the current filing deadline of February 21, 2025, and imposing the requirement that Ridgeline file quarterly status reports to keep the Commission and parties informed of progress. This Second Report is filed in compliance with that requirement.
III. PROGRESS ON TARIFF REDESIGN
A. Overview of Redesign Scope
As described in the First Quarterly Status Report and further elaborated herein, Ridgeline is undertaking a comprehensive revision of its FERC Gas Tariff, Original Volume No. 1, to address all fourteen (14) deficiency items identified in the January 19, 2023 Deficiency Letter issued by OEMR through Dr. Miriam Okafor. The redesign is being performed in coordination with Braswell Energy Consulting Group LLC, located at 8300 Greensboro Drive, Suite 450, McLean, Virginia 22102, under the direction of Dr. Raymond Braswell.
The scope of the tariff redesign encompasses the following key structural changes to the Tariff as originally filed:
(a) Adoption of a modified fixed-variable rate methodology, replacing the straight fixed-variable methodology as originally proposed;
(b) Revision of the billing determinant calculation from a 100% load factor assumption to a 75% load factor assumption, consistent with the System's current and projected utilization characteristics;
(c) Updated discounted cash flow ("DCF") proxy group analysis to support the proposed return on equity ("ROE");
(d) New tariff provisions for a fuel, losses, and unaccounted-for gas ("FL&U") tracker mechanism;
(e) Revised and expanded capacity release provisions consistent with current Commission policy;
(f) Updated tariff language to achieve compliance with North American Energy Standards Board ("NAESB") Wholesale Gas Quadrant ("WGQ") Version 3.2 standards;
(g) Revised electronic bulletin board ("EBB") posting requirements consistent with Commission regulations;
(h) New creditworthiness provisions reflecting current Commission policy on collateral requirements, unsecured credit limits, and credit rating thresholds;
(i) New greenhouse gas ("GHG") emission cost recovery provisions, including a GHG cost tracker and passthrough mechanism; and
(j) Tariff provisions addressing the implications of Commission Order No. 2222 regarding distributed energy resource ("DER") aggregation, particularly as relevant to DEH's 250-megawatt wind portfolio currently under development.
B. Revised Cost-of-Service Model
During this reporting period, Ridgeline and Braswell have continued to refine the revised cost-of-service model that will underpin the redesigned Tariff. The principal elements of the revised cost-of-service model, reflecting updates through the current reporting period, are set forth below.
Rate Base. The rate base remains at $612.40 million as originally filed, calculated as follows:
No party has challenged the overall rate base amount, and Ridgeline does not propose any revisions to rate base in the redesigned Tariff.
Return on Equity. Ridgeline has revised its proposed ROE to 12.50%, reduced from the 14.00% originally proposed in the Application. This revision is based on an updated DCF proxy group analysis as of the third quarter of 2024, performed by Braswell. The updated proxy group analysis reflects current market conditions, including prevailing interest rate levels, equity risk premiums, and the financial profiles of comparable natural gas pipeline companies. For context, ATPC has proposed an ROE of 10.75%, and MGPC's expert, Dr. Eleanor Vasquez, has advocated an ROE of 11.25%. The parties' respective ROE positions remain a significant area of disagreement, as discussed further in Section VI below.
Capital Structure. The capital structure remains unchanged from the original filing at 55% equity and 45% debt. This capital structure reflects Ridgeline's actual capitalization and is consistent with Commission-approved capital structures for comparable natural gas pipeline companies.
Cost of Debt. The weighted average cost of debt is 5.25%, reflecting the blended interest cost of Ridgeline's two tranches of outstanding indebtedness:
(i) A $400 million senior secured term loan facility led by Pinnacle National Bank, bearing interest at SOFR plus 325 basis points; and
(ii) $150 million aggregate principal amount of 7.875% Second Lien Senior Secured Notes due 2030, privately placed with Harborview Capital Management LLC and Sentinel Ridge Fund LP.
Weighted Average Cost of Capital. The revised weighted average cost of capital ("WACC") is calculated as follows:
WACC = (0.55 × 12.50%) + (0.45 × 5.25%) WACC = 6.875% + 2.3625% WACC = 9.2375%
Return on Rate Base. The revised return on rate base is $56.57 million, calculated as the product of the $612.40 million rate base and the 9.2375% WACC. This compares to a return on rate base of $61.62 million in the original filing, reflecting the reduction in proposed ROE from 14.00% to 12.50%.
Depreciation Expense. Depreciation expense remains unchanged at $14.68 million, based on a 2.5% annual straight-line depreciation rate applied to original plant in service.
Operations and Maintenance Expense. Revised O&M expense is $13.92 million, updated from the originally filed amount of $12.44 million to reflect current operating costs, including increased compressor station maintenance costs, right-of-way maintenance, and pipeline integrity management program expenditures.
Administrative and General Expense. Revised A&G expense is $5.14 million, updated from the originally filed amount of $4.82 million to reflect current administrative costs, including regulatory compliance, insurance premiums, and corporate allocations from DEH.
Taxes Other Than Income. Taxes other than income remain unchanged at $3.80 million, reflecting property taxes, state franchise taxes, and other applicable non-income taxes.
Income Tax Allowance. The revised income tax allowance is $15.04 million, adjusted to reflect the lower proposed ROE and grossed-up at the effective combined federal and state income tax rate of approximately 26.13%, comprising the federal corporate income tax rate of 21% and the West Virginia corporate income tax rate of 6.5%.
Revenue Credits. Revised revenue credits total ($6.00 million), reduced from the originally filed amount of ($16.10 million). The reduction in revenue credits reflects a decline in interruptible transportation revenues and other miscellaneous revenues since the original filing.
Total Revised Cost of Service. The revised total cost of service is summarized as follows:
The revised total cost of service of $103.15 million compares to the originally filed total cost of service of $97.36 million. The increase is primarily attributable to (i) higher O&M and A&G expenses reflecting current operating costs, and (ii) the significant reduction in revenue credits, partially offset by (iii) the lower return on rate base resulting from the reduction in proposed ROE.
C. Revised Rate Design and Proposed Recourse Rate
The revised rate design reflects the adoption of a 75% load factor for the calculation of billing determinants, replacing the 100% load factor originally proposed. The revised billing determinants are calculated as follows:
Billing Determinants = 1,200,000 Dth/d × 365 days × 75% = 328,500,000 Dth/yr
This represents a reduction from the originally filed billing determinants of 438,000,000 Dth/yr (calculated using a 100% load factor). The revision to a 75% load factor is supported by Braswell's analysis of Ridgeline's actual and projected throughput data, which demonstrates that the System is currently operating at approximately 56.67% utilization of design capacity (680 MMcf/d actual throughput against 1,200 MMcf/d design capacity) and is projected to achieve approximately 75% utilization within the initial five-year rate period.
The revised proposed total recourse rate is calculated as follows:
Total Recourse Rate = $103.15M ÷ 328,500,000 Dth/yr = $0.3140/Dth
•  Reservation component: $0.3102/Dth
•  Usage component: $0.0038/Dth
This compares to the original proposed recourse rate of $0.2265/Dth, comprising a reservation component of $0.2223/Dth and a usage component of $0.0042/Dth. The higher per-unit rate in the redesigned Tariff reflects the substantially lower billing determinants under the 75% load factor assumption, which reduces the denominator over which the cost of service is spread, partially offset by the reduction in ROE from 14.00% to 12.50%, which lowers the total cost of service relative to what it would have been under a 75% load factor at the originally proposed ROE.
The redesigned Tariff adopts the modified fixed-variable rate methodology as recommended by Braswell, and maintains a Part 284, Subpart G, open-access transportation tariff structure.
D. Tariff Drafting Progress
Substantial progress has been made on the drafting of the redesigned Tariff during this reporting period. The third draft of the revised FERC Gas Tariff, Original Volume No. 1, was completed in June 2024 and was prepared in redline form against the second draft dated January 2024. The third draft specifically addressed the following deficiency items from the Deficiency Letter:
(a) NAESB WGQ Version 3.2 compliance (Deficiency Item 6), including detailed provisions for standardized nomination and scheduling procedures, capacity release posting timelines, and gas quality specifications consistent with WGQ standards;
(b) Electronic bulletin board posting requirements (Deficiency Item 7), including specifications for posting intervals, data fields, and availability of historical data;
(c) Capacity release provisions (Deficiency Item 5), including prearranged deal posting requirements, bidding procedures, recall rights, and permanent and temporary release mechanisms; and
(d) Segmentation and flexible receipt-delivery point provisions (Deficiency Item 12), including operational procedures for segmented capacity and alternative receipt and delivery point elections.
The fourth draft of the revised Tariff, which will constitute the near-final working version, is currently in preparation. Ridgeline and Braswell anticipate completion of the fourth draft by November 2024. The fourth draft will integrate all remaining tariff revisions, including:
(a) Greenhouse gas emission cost recovery provisions (Deficiency Item 13), incorporating a GHG cost tracker and passthrough mechanism to allow Ridgeline to recover direct and allocated costs of compliance with federal and state greenhouse gas regulations, including potential costs associated with methane emission monitoring and reporting requirements; and
(b) Order No. 2222 distributed energy resource aggregation implications (Deficiency Item 14), addressing renewable energy interconnection provisions relevant to DEH's 250-megawatt wind portfolio currently under development, including the coordination of gas-fired generation scheduling with variable renewable energy output.
Upon completion of the fourth draft, Ridgeline will proceed with internal management review, finalization of supplemental pre-filed testimony, preparation of supporting exhibits and workpapers, and final quality assurance, all as described in Section VIII below.
IV. STATUS OF DEFICIENCY ITEM RESOLUTION
The following table summarizes the current status of all fourteen (14) deficiency items identified in the January 19, 2023 Deficiency Letter, as of the end of this reporting period on September 14, 2024.
In summary, of the fourteen (14) deficiency items identified in the Deficiency Letter, eleven (11) are complete or substantially complete, and three (3) remain in progress (Items 11, 13, and 14). All three items that remain in progress are on track for inclusion in the fourth draft of the revised Tariff, which is anticipated to be completed in November 2024. Ridgeline is confident that all fourteen deficiency items will be fully addressed in the redesigned Tariff to be filed on February 21, 2025.
V. INTERCONNECTION MATTERS (DOCKET NO. RP22-847-001)
A. Proposed Interconnection Facilities
The interconnection at issue in Docket No. RP22-847-001 involves the proposed construction and operation of facilities at the Wetzel County Interconnect, located at milepost 0.0 of the Ridgeline Pipeline System. The proposed interconnection facilities consist of a new meter station and pig launcher/receiver, designed to tie into ATPC's existing 30-inch mainline at ATPC Milepost 412.6 in Wetzel County, West Virginia.
The proposed design capacity at the interconnect is 800 MMcf/d bidirectional, expandable to 1.2 Bcf/d with the addition of supplemental metering runs and associated equipment. Metering equipment includes ultrasonic flow meters configured in three runs of 12-inch diameter, along with gas chromatographs for gas quality and heating value determination, and full SCADA integration for remote monitoring and operational control.
B. Interconnection Facilities Cost Allocation
The total estimated cost of the interconnection facilities is $22.3 million. The proposed cost allocation between the parties remains a significant area of disagreement.
Ridgeline has proposed a cost allocation based on a benefits analysis that assigns each party's share in proportion to the relative benefits each party derives from the interconnection facilities. Under Ridgeline's proposal, the cost allocation is as follows:
•  Ridgeline's proposed share: $7.6 million (34.08%)
•  ATPC's proposed share: $14.7 million (65.92%)
ATPC continues to oppose the proposed cost allocation and insists on a 50/50 split of the interconnection facilities cost, which would result in each party bearing $11.15 million. ATPC has articulated its position that the interconnection provides approximately equal benefits to both pipeline systems and that a 50/50 split is consistent with Commission precedent for comparable interconnection facilities. ATPC also challenges the adequacy of the proposed receipt-point metering station design, contending that additional metering redundancy and gas quality monitoring equipment should be incorporated into the design, which would increase the overall facility cost.
C. Interconnection Agreement Status
The current working draft of the Interconnection Agreement is Version 3.0, dated April 2023. This agreement was drafted as a FERC rate schedule to address Deficiency Item 9 from the Deficiency Letter. The Interconnection Agreement Version 3.0 addresses operational procedures, measurement standards, gas quality specifications, maintenance responsibilities, scheduling protocols, and force majeure provisions.
Negotiations with ATPC's counsel, William Pratt of Kellner, Royce & Dillard LLP, are ongoing but no agreement has been reached on either the cost allocation for the interconnection facilities or the metering station design specifications. The original target in-service date for the interconnection facilities was the fourth quarter of 2023; this timeline has been delayed pending resolution of the proceeding before the Commission.
D. Ridgeline's Position Going Forward
Ridgeline remains willing to engage in further technical discussions with ATPC regarding metering specifications and cost allocation methodology. Ridgeline believes that productive discussions on interconnection matters may be facilitated following the filing of the redesigned Tariff on February 21, 2025, which will provide a comprehensive and updated framework for evaluating the interconnection terms and cost allocation as part of the overall rate case proceeding.
VI. SETTLEMENT DISCUSSIONS
A. Settlement Conference History
Settlement Judge the Honorable Howard Margolis was appointed on September 22, 2022, to facilitate settlement discussions among the parties. Four settlement conferences have been held to date:
1.  November 30, 2022 — Initial settlement conference; parties exchanged preliminary positions on key disputed issues.
2.  March 8, 2023 — Second settlement conference; held after issuance of the Deficiency Letter; discussion focused on the scope and timeline for Ridgeline's tariff redesign.
3.  July 12, 2023 — Third settlement conference; parties discussed potential resolution of cost-of-service and rate design issues in light of Braswell's preliminary analyses.
4.  January 18, 2024 — Fourth settlement conference; parties reviewed updated positions but were unable to narrow the gap on key disputed issues.
B. Status of Settlement Discussions
No settlement has been reached among the parties. The key sticking points that continue to impede settlement are as follows:
Return on Equity. The parties remain significantly apart on the appropriate ROE for Ridgeline. ATPC proposes an ROE of 10.75%, contending that Ridgeline's business risk profile and the prevailing interest rate environment support a lower return. MGPC, through its expert Dr. Eleanor Vasquez, proposes an ROE of 11.25%, asserting that while Ridgeline is entitled to a reasonable return, the originally proposed 14.00% ROE and even the revised 12.50% ROE exceed the range of returns approved by the Commission for comparable pipelines. Ridgeline's revised position, as reflected in the updated DCF proxy group analysis performed by Braswell, is an ROE of 12.50%.
Interconnection Cost Allocation. ATPC insists on a 50/50 split of the $22.3 million interconnection facilities cost, which would require each party to bear $11.15 million. Ridgeline maintains its proposed allocation of 34.08% ($7.6 million) to Ridgeline and 65.92% ($14.7 million) to ATPC, based on the relative benefits each party derives from the interconnection.
Load Factor. All three intervenors — ATPC, MGPC, and CMGA — advocate for a load factor assumption of 85% or higher for the calculation of billing determinants, which would result in a lower per-unit recourse rate. Ridgeline's revised position, supported by Braswell's analysis of actual and projected throughput data, is a 75% load factor assumption.
C. Rate Gap Analysis
Taking into account the foregoing disputes, the parties remain approximately $0.058/Dth apart on the overall recourse rate. ATPC and MGPC advocate a rate ceiling of approximately $0.2560/Dth, reflecting their preferred positions on ROE, load factor, and other cost-of-service inputs. Ridgeline's current position reflects a rate floor of $0.3140/Dth, as described in Section III.C above.
D. CMGA's Position
CMGA, through its General Manager Dennis Ott and its counsel Stephen Greer of Fordham Municipal Law Group PC, continues to align with ATPC's position on cost allocation for the interconnection facilities. CMGA's primary concern is the potential for rate increases on ATPC's system resulting from the interconnection, which could affect CMGA's gas procurement costs as a municipal distribution utility receiving service from ATPC.
E. Outlook for Further Settlement Discussions
Ridgeline remains committed to good-faith settlement discussions and is willing to participate in additional settlement conferences at the direction of Settlement Judge Margolis. No settlement conference is currently scheduled during this reporting period. Ridgeline anticipates that additional settlement conferences may be productive after the redesigned Tariff and supplemental testimony are filed on February 21, 2025, at which point all parties will have the benefit of Ridgeline's updated rate design parameters, comprehensive tariff provisions, and supporting testimony for evaluation. The filing of the complete redesigned Tariff package should provide a more informed basis for settlement discussions and may facilitate narrowing the gap on the key disputed issues.
VII. CONSULTING AND ADVISORY ENGAGEMENT UPDATES
Ridgeline reports the following with respect to the status of its consulting and advisory engagements in connection with this proceeding.
Braswell Energy Consulting Group LLC. Braswell, under the direction of Dr. Raymond Braswell, Lead Consultant (Engagement No. BEC-2023-0041), continues to perform tariff redesign work in coordination with Ridgeline and Calderwood & Harkness LLP. Key deliverables received from Braswell during this reporting period include: (i) an updated DCF proxy group analysis reflecting third quarter 2024 market data; (ii) revised cost-of-service workpapers reflecting current operating expense levels and the revised ROE; and (iii) a refined modified fixed-variable rate design model incorporating the 75% load factor billing determinants. Braswell continues to be actively engaged in the preparation of the fourth draft of the revised Tariff and is expected to provide additional deliverables through the filing date.
Ridgepoint Appraisal & Valuation Inc. Ridgepoint Appraisal & Valuation Inc., based in Houston, Texas, previously completed a comprehensive pipeline valuation of the Ridgeline Pipeline System in connection with the original Application. No additional valuation work was required or performed during this reporting period.
Ashford & McBride LLP. Ashford & McBride LLP, located at 30 Rockefeller Plaza, Suite 4100, New York, New York 10112, serves as auditors and accountants for DEH and continues to provide support to Ridgeline regarding cost-of-service data, financial statement reconciliation, and verification of the financial information underlying the revised cost-of-service model. Ashford & McBride's ongoing involvement ensures that the financial data supporting the redesigned Tariff is consistent with DEH's and Ridgeline's audited financial statements and complies with applicable accounting standards.
Calderwood & Harkness LLP. Calderwood & Harkness LLP continues to serve as counsel of record for Ridgeline in this proceeding. The engagement team, consisting of George Trujillo (Responsible Partner), Brett Callahan (Lead Associate), and David Stanton (Working Associate), is actively preparing the fourth draft of the revised Tariff and is working with Ridgeline's regulatory and finance personnel to develop draft supplemental pre-filed testimony. The anticipated supplemental testimony witnesses include Dr. Natasha Orlov, Director of Rates & Regulatory at Ridgeline, who will testify regarding the redesigned tariff provisions, and Angela Moretti, Vice President of Finance & Treasurer at Ridgeline, who will testify regarding the revised cost of service.
VIII. ANTICIPATED TIMELINE TO FEBRUARY 21, 2025 DEADLINE
Ridgeline provides the following anticipated timeline for the completion of the remaining work and the filing of the redesigned Tariff and supplemental testimony by the February 21, 2025 deadline:
November 2024: Completion of the fourth (near-final) draft of the revised FERC Gas Tariff, Original Volume No. 1, incorporating all revisions necessary to address all fourteen (14) deficiency items from the Deficiency Letter, including the three items currently in progress (Items 11, 13, and 14).
November – December 2024: Internal review of the fourth draft by Ridgeline's senior management team, including James K. Winfield, Chief Executive Officer; Angela Moretti, Vice President of Finance & Treasurer; Thomas Greaves, Vice President of Engineering; and Dr. Natasha Orlov, Director of Rates & Regulatory. This review will ensure that the redesigned Tariff is consistent with Ridgeline's operational capabilities, financial projections, and strategic objectives.
December 2024: Finalization of draft supplemental pre-filed testimony of Dr. Natasha Orlov, who will testify regarding the redesigned tariff provisions, rate design methodology, and the basis for each revision, and Angela Moretti, who will testify regarding the revised cost of service, rate base, operating expenses, and capital cost inputs.
December 13, 2024: Filing of the Third Quarterly Status Report, covering the period from September 15, 2024 through December 13, 2024.
January 2025: Final review and quality assurance of the redesigned Tariff, supplemental testimony, and all supporting exhibits and workpapers. This phase will include verification of all numerical calculations, cross-referencing of tariff provisions with Commission regulations and orders, and preparation of a comprehensive index of exhibits.
February 2025: Final tariff and testimony preparation, including formatting of tariff sheets in compliance with FERC filing requirements, assembly of all filing components, and preparation of the transmittal letter to the Secretary of the Commission.
February 21, 2025: Filing of the redesigned FERC Gas Tariff, Original Volume No. 1, supplemental pre-filed testimony, and all supporting exhibits in Docket Nos. RP22-847-000 and RP22-847-001.
Ridgeline confirms that it is on track to meet the February 21, 2025 filing deadline established in ALJ Whitfield's March 4, 2024 Extension Order. Based on the progress achieved to date and the work plan outlined above, Ridgeline does not anticipate requesting any additional extensions of time.
IX. CONCLUSION AND REQUEST
Ridgeline Midstream Services LLC respectfully submits this Second Quarterly Status Report and represents to the Commission and the Administrative Law Judge that it is making diligent progress toward the completion of the redesigned Tariff filing. As described herein, eleven of the fourteen deficiency items have been fully addressed, the revised cost-of-service model and rate design have been substantially completed, and the remaining three deficiency items are on track for resolution in the fourth draft of the revised Tariff anticipated in November 2024.
Ridgeline confirms its intention to file the complete redesigned FERC Gas Tariff, Original Volume No. 1, supplemental pre-filed testimony of Dr. Natasha Orlov and Angela Moretti, and all supporting exhibits and workpapers by the February 21, 2025 deadline established in ALJ Whitfield's March 4, 2024 order.
Ridgeline respectfully requests that the Commission and the Administrative Law Judge take no further action on the procedural schedule at this time pending the February 21, 2025 filing, and that this Second Quarterly Status Report be accepted as satisfying the quarterly reporting requirement imposed by the Extension Order for the period ending September 14, 2024.
Ridgeline's next quarterly status report, the Third Quarterly Status Report, will be filed by December 13, 2024, covering the period from September 15, 2024 through December 13, 2024.
X. SIGNATURE
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
George Trujillo Responsible Partner
Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-4200 Facsimile: (202) 555-4201
Email: gtrujillo@calderwoodharkness.com
Counsel for Ridgeline Midstream Services LLC
Date: September 14, 2024
CERTIFICATE OF SERVICE
I hereby certify that on this 14th day of September, 2024, a true and correct copy of the foregoing Second Quarterly Status Report of Ridgeline Midstream Services LLC was served upon all parties on the official service list maintained by the Secretary of the Commission in Docket Nos. RP22-847-000 and RP22-847-001, by electronic mail and by first-class United States mail, postage prepaid, to the following:
Secretary of the Commission Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426
FERC Trial Staff: Jonathan Briggs, Lead Trial Attorney Office of General Counsel Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426
Dr. Miriam Okafor, Lead Economic Analyst Office of Energy Market Regulation Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426
Administrative Law Judge: The Honorable Clara Whitfield Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426
Settlement Judge: The Honorable Howard Margolis Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426
Appalachian Trunk Pipeline Company, LLC: William Pratt, Senior Partner Kellner, Royce & Dillard LLP One PPG Place, Suite 2800 Pittsburgh, PA 15222
Mountainside Gas Producers Coalition: Rebekah Montague, Partner Whitmore & Sable LLP 1200 New Hampshire Avenue NW, Suite 600 Washington, DC 20036
Clearwater Municipal Gas Authority: Stephen Greer, Principal Fordham Municipal Law Group PC 312 Adams Avenue, Suite 100 Scranton, PA 18503
________________________________________
David Stanton Working Associate Calderwood & Harkness LLP 1601 K Street NW, Suite 900 Washington, DC 20006
Date: September 14, 2024
Ridgeline Midstream Services LLC | Docket No. RP22-847-000
(Rate Case)
Ridgeline Midstream Services LLC | Docket No. RP22-847-001
(Interconnection)
Counsel of Record:
George Trujillo, Responsible Partner
Brett Callahan, Lead Associate
David Stanton, Working Associate
Calderwood & Harkness LLP
1601 K Street NW, Suite 900
Washington, DC 20006
Billing Partner: Patricia Dunmore
(also Founder & Chairperson, Dunmore Energy Holdings Ltd.; dual-role disclosure and waiver on file)
C&H Matter No.: 1016-00005
Rate Base Component | Amount ($ millions)
Net plant in service | $563.71
(Original construction cost of $587.20M less accumulated depreciation of $23.49M)
Working capital allowance | $18.64
(1/8 of O&M + A&G per FERC formula)
Accumulated deferred income taxes (ADIT) | ($12.45)
Other rate base items (gas stored, prepayments, materials & supplies) | $42.50
Total Rate Base | $612.40
Cost-of-Service Component | Amount ($ millions)
Return on rate base | $56.57
Depreciation expense | $14.68
O&M expense | $13.92
A&G expense | $5.14
Taxes other than income | $3.80
Income tax allowance | $15.04
Revenue credits | ($6.00)
Total Cost of Service | $103.15
Item No. | Deficiency Item Description | Status | Notes
1 | ROE support and DCF proxy group analysis | COMPLETE (pending incorporation in fourth draft) | Addressed in partial response (March 15, 2023) and further updated with Q3 2024 DCF proxy group analysis performed by Braswell; revised ROE of 12.50%
2 | FL&U tracker mechanism | COMPLETE | Addressed in partial response; detailed FL&U tracker mechanism design completed July 2023; incorporated in tariff third draft
3 | IT rate derivation | COMPLETE | Addressed in partial response; IT rate schedule (IT-1) drafted September 2023; incorporated in tariff second and third drafts
4 | Load factor billing determinant support | COMPLETE | Addressed in partial response; revised from 100% to 75% load factor per Braswell analysis; supported by throughput data showing current ~680 MMcf/d (56.67% utilization of 1.2 Bcf/d design capacity)
5 | Capacity release provisions | COMPLETE | Incorporated in tariff third draft (June 2024); includes prearranged deal, bidding, recall, and permanent/temporary release provisions
6 | NAESB standards compliance | COMPLETE | Gap analysis completed; WGQ Version 3.2 compliance provisions incorporated in tariff third draft (June 2024)
7 | EBB posting requirements | COMPLETE | Addressed in partial response; detailed EBB provisions incorporated in tariff third draft
8 | Shipper-must-have-title provisions | COMPLETE | Addressed in partial response (March 15, 2023)
9 | Interconnection agreement as rate schedule | COMPLETE (subject to ongoing negotiation with ATPC) | Addressed in partial response; Interconnection Agreement Version 3.0 (April 2023) drafted as a FERC rate schedule
10 | Penalty revenue crediting mechanism | COMPLETE | Addressed in partial response (March 15, 2023)
11 | Creditworthiness provisions | IN PROGRESS | Draft provisions completed; incorporating FERC policy on collateral requirements, unsecured credit limits, and credit rating thresholds; to be finalized in fourth draft
12 | Segmentation and flexible receipt/delivery point provisions | COMPLETE | Incorporated in tariff third draft (June 2024)
13 | Greenhouse gas emission cost recovery | IN PROGRESS | Analysis memorandum completed March 2024; tariff language for GHG cost tracker and passthrough mechanism under development; to be incorporated in fourth draft
14 | Order No. 2222 DER aggregation implications | IN PROGRESS | Analysis memorandum completed May 2024; tariff provisions under development addressing renewable energy interconnection, relevant to DEH's 250 MW wind portfolio; to be incorporated in fourth draft