1016-00005 · Dunmore Energy Holdings · Regulatory Strategy & Legal Analysis

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

From: George Trujillo, Responsible Partner, Energy & Infrastructure, Calderwood & Harkness LLP

To: Patricia Dunmore, Chairperson, Dunmore Energy Holdings Ltd. James K. Winfield, CEO & President, Ridgeline Midstream Services LLC

CC: Brett Callahan, Lead Associate, Calderwood & Harkness LLP David Stanton, Working Associate, Calderwood & Harkness LLP

Date: May 12, 2022

Re: FERC Regulatory Strategy — Overview and Timeline FERC Docket Nos. RP22-847-000 (Rate Case) and RP22-847-001 (Interconnection) C&H Matter No. 1016-00005

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I. Executive Summary

The purpose of this memorandum is to set forth a comprehensive regulatory strategy for the proceeding initiated today, May 12, 2022, before the Federal Energy Regulatory Commission ("FERC" or the "Commission") on behalf of Ridgeline Midstream Services LLC ("Ridgeline" or the "Applicant"). In the application filed today, Ridgeline seeks (a) approval of an initial tariff rate for interstate natural gas transportation service on the Ridgeline Pipeline System (the "System"), and (b) authorization for physical interconnection with Appalachian Trunk Pipeline Company, LLC ("ATPC") at the proposed Wetzel County Interconnect in Wetzel County, West Virginia.

The application was filed under Sections 4 and 7 of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717c and 717f, and in accordance with the Commission's implementing regulations at 18 C.F.R. Parts 154, 157, and 284. The Commission has assigned Docket No. RP22-847-000 to the rate case component and Docket No. RP22-847-001 to the interconnection authorization component. The two dockets have been filed in a consolidated structure to facilitate coordinated review by the Commission and its administrative law judges.

The Applicant, Ridgeline Midstream Services LLC, is a Delaware limited liability company and wholly-owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Company Registration No. CR-381204). DEH serves as the sole member of Ridgeline and, through Ridgeline, owns and operates the Ridgeline Pipeline System — a 187-mile, 24-inch-diameter high-pressure natural gas pipeline running from Wetzel County, West Virginia, to Greene County, Pennsylvania.

The key strategic objectives of this proceeding are fourfold:

1. Obtain FERC approval of an initial recourse rate of $0.2265/Dth for open-access firm and interruptible transportation service on the Ridgeline Pipeline System;

2. Secure interconnection authorization at the Wetzel County Interconnect with ATPC, including approval of the interconnection facilities and associated cost allocation;

3. Protect Ridgeline's rate base of $612.40 million, which reflects the original construction cost of the System, adjusted for accumulated depreciation, working capital, accumulated deferred income taxes, and other standard rate base items; and

4. Achieve a favorable cost allocation for the $22.3 million in interconnection facilities between Ridgeline and ATPC, with Ridgeline's proposed allocation placing 34.1% of costs on Ridgeline ($7.6 million) and 65.9% on ATPC ($14.7 million).

At the outset of this memorandum, we note the dual role of Patricia Dunmore in this engagement. Ms. Dunmore serves as Chairperson and 72% controlling shareholder of DEH, the parent company of the Applicant, and is also a billing partner at Calderwood & Harkness LLP. A conflict of interest waiver has been obtained and documented separately in the engagement files in accordance with the firm's conflict management policies and applicable rules of professional conduct. All billing arrangements, supervisory structures, and engagement governance for this matter are detailed in the separate Conflict Waiver Memorandum dated April 28, 2022.

This memorandum covers the following topics in detail: the regulatory framework and legal authority governing the proceeding; the filing strategy for both the rate case and interconnection components; the anticipated parties and their expected positions; the procedural timeline through Commission order; key risk factors that may affect the outcome or timing of the proceeding; the interconnection negotiation strategy with ATPC; lender covenant considerations arising from Ridgeline's existing credit facilities; the Calderwood & Harkness engagement team and staffing plan; recommended immediate next steps; and preliminary budget considerations.

II. Client and System Overview

A. Dunmore Energy Holdings Ltd.

Dunmore Energy Holdings Ltd. ("DEH") is a Cayman Islands exempted limited company, registered and existing under the laws of the Cayman Islands. DEH's registered address is 4th Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1002, Cayman Islands. The company was founded by Patricia Dunmore and serves as a strategic private energy holding company with significant midstream natural gas and renewable energy assets across the Appalachian Basin and adjacent regions.

DEH's portfolio includes approximately 1,200 miles of midstream gathering and transportation pipelines, two cryogenic gas processing plants with aggregate capacity of approximately 600 MMcf/d, and a 250 MW onshore wind generation portfolio currently under various stages of development and construction in West Virginia and Pennsylvania. The estimated enterprise value of DEH is approximately $2.8 billion, based on an internal valuation dated December 31, 2023. We note that this valuation will need to be updated as the FERC proceeding progresses, particularly if intervenors or FERC Trial Staff request current financial data regarding DEH's consolidated financial position. Annual consolidated revenue for DEH was approximately $485 million for the fiscal year ended December 31, 2023.

Patricia Dunmore is the founder and Chairperson of DEH and holds approximately 72% of the company's equity interests. The remaining 28% is held by a small group of private investors and members of the company's senior management team. Ms. Dunmore exercises day-to-day strategic oversight of DEH's portfolio companies and has been intimately involved in the development, financing, and construction of the Ridgeline Pipeline System since its inception. As noted above, Ms. Dunmore's dual role as DEH Chairperson and Calderwood & Harkness billing partner has been addressed through a separate conflict waiver.

B. Ridgeline Midstream Services LLC — The Applicant

Ridgeline Midstream Services LLC ("Ridgeline" or the "Applicant") is a limited liability company organized under the laws of the State of Delaware. Ridgeline's sole member is DEH, which holds 100% of the membership interests. The company's Employer Identification Number is 87-4231956, and its FERC Code is 960442.

Ridgeline's registered agent for service of process in the State of Delaware is Capitol Filings Inc., located at 1209 Orange Street, Wilmington, Delaware 19801. Ridgeline's principal office and operational headquarters are located at 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301.

The company's key management team consists of the following officers:

• James K. Winfield, CEO & President — Mr. Winfield has overall executive responsibility for Ridgeline's operations and strategic direction and will serve as the policy witness in the FERC proceeding.

• Angela Moretti, VP Finance & Treasurer — Ms. Moretti oversees Ridgeline's financial reporting, treasury functions, and investor relations. She will serve as the cost-of-service and capital structure witness in the proceeding.

• Thomas Greaves, VP Engineering & Operations — Mr. Greaves is responsible for the engineering, construction, and day-to-day operations of the Ridgeline Pipeline System, including the three compressor stations. He will serve as the engineering and facilities witness.

• Dr. Natasha Orlov, Director of Rates & Regulatory — Dr. Orlov manages Ridgeline's rate design work, tariff administration, and regulatory compliance. She holds a Ph.D. in energy economics and will serve as the rate design and tariff witness.

C. The Ridgeline Pipeline System

The Ridgeline Pipeline System is a 187-mile, 24-inch-diameter high-pressure natural gas transmission pipeline extending from Wetzel County, West Virginia, to Greene County, Pennsylvania. The pipeline was designed and constructed as a single continuous pipeline segment with three compressor stations along its route, providing aggregate installed compression of 45,000 horsepower.

The System's key physical attributes and operational parameters are as follows:

Receipt Point. The System's primary receipt point is the proposed Wetzel County Interconnect, located in Wetzel County, West Virginia, at approximately 39.6120° N latitude, 80.7540° W longitude. This receipt point is the location of the proposed interconnection with ATPC's existing 30-inch mainline, which is the subject of the interconnection authorization application filed in Docket No. RP22-847-001.

Delivery Point. The System's primary delivery point is the Waynesburg Compressor Station, located in Greene County, Pennsylvania, at approximately 39.8965° N latitude, 80.1810° W longitude. The Waynesburg Compressor Station serves as both a compression facility and a delivery point, providing access to downstream pipeline interconnections and local distribution systems in southwestern Pennsylvania.

Compressor Stations. The System includes three compressor stations, each equipped with natural gas-fired centrifugal compressor units:

(1) Wetzel Station — Located at approximately Milepost 0.5, near the Wetzel County Interconnect. This station provides initial boost compression for gas entering the System from the interconnection with ATPC.

(2) Mannington Station — Located at approximately Milepost 93.0, near Mannington, Marion County, West Virginia. This mid-point station provides intermediate compression to maintain design pressures through the central portion of the pipeline.

(3) Waynesburg Station — Located at approximately Milepost 187.0, at the System's terminus in Greene County, Pennsylvania. This station provides final-stage compression and serves as the delivery point compressor station.

The aggregate installed compression across all three stations is 45,000 horsepower.

Design Capacity. The System's maximum design capacity is 1.2 Bcf/d (1,200,000 Dth/d, at an assumed BTU content of 1,000 BTU per standard cubic foot). This design capacity reflects the full utilization of all three compressor stations at their maximum rated horsepower.

Current Throughput. As of the test year ended March 31, 2022, the System's average daily throughput is approximately 680 MMcf/d. This represents a utilization rate of approximately 56.67% (680,000 Dth/d ÷ 1,200,000 Dth/d). The relatively low utilization rate at this stage of the System's operational life is attributable to the System's recent in-service date and the ongoing development of shipper commitments. As discussed in Section VII.B below, the current utilization rate creates a potential vulnerability in the rate design insofar as intervenors may challenge the 100% load factor billing determinant assumption.

In-Service Date. The Ridgeline Pipeline System was placed in service on October 1, 2021, approximately seven months prior to the filing of today's application. The System was constructed over a period of approximately 24 months, beginning with initial site preparation in late 2019 and concluding with commissioning and startup in the third quarter of 2021.

Original Construction Cost. The total original construction cost of the Ridgeline Pipeline System, including pipeline, compressor stations, metering, SCADA, rights-of-way, and related capitalized development costs, was $587.2 million. This figure forms the basis for the net plant in service component of the rate base, as discussed in Section IV.A.1 below.

III. Regulatory Framework and Legal Authority

A. Natural Gas Act Provisions

The proceeding initiated today implicates three core provisions of the Natural Gas Act, each of which plays a distinct but interrelated role in the regulatory framework governing Ridgeline's application.

Section 4 — Rate Authority (15 U.S.C. § 717c). Section 4 of the NGA provides the statutory authority for Ridgeline's initial rate filing. Under Section 4, a natural gas company may file with the Commission "schedules showing all rates and charges for any transportation or sale subject to the jurisdiction of the Commission." Section 4(e) of the NGA establishes the foundational standard that "all rates and charges . . . and all rules and regulations affecting or pertaining to such rates or charges shall be just and reasonable." Critically, under a Section 4 filing, the pipeline bears the burden of proof that its proposed rate satisfies the just and reasonable standard. This burden allocation is of central strategic importance to the proceeding. As the applicant for initial rates, Ridgeline must affirmatively demonstrate through its cost-of-service presentation and supporting testimony that each element of its proposed rate — including rate base, return on equity, capital structure, depreciation, operating expenses, and revenue credits — is just and reasonable. The Commission's historical practice has been to afford a presumption of reasonableness to first-filed rates under Section 4, provided the filing is supported by a properly documented cost-of-service analysis. We intend to leverage this presumption as a strategic advantage, though we must be prepared for the reality that intervenors and FERC Trial Staff will subject each cost-of-service element to rigorous scrutiny.

Section 5 — Commission Investigation Authority (15 U.S.C. § 717d). Section 5 of the NGA provides the Commission with independent authority to investigate rates and, upon a finding that existing rates are unjust, unreasonable, or unduly discriminatory, to determine and fix just and reasonable rates. Although Ridgeline's filing is made under Section 4, Section 5 remains relevant for two reasons. First, if the Commission suspends Ridgeline's proposed rate and the matter proceeds to hearing, the procedural posture may shift in ways that affect the evidentiary burden. Specifically, once the Commission suspends a filed rate and sets it for hearing, the pipeline continues to bear the burden of proof under Section 4 that its proposed rate is just and reasonable; however, the suspension itself signals the Commission's preliminary concern and may affect the dynamics of settlement negotiations. Second, after a rate is approved and placed into effect, it remains subject to potential future Section 5 investigation, including complaints by shippers or other interested parties. We should keep this in mind as we design the tariff and rate structure, ensuring that the rate as approved will be defensible against potential future Section 5 challenges.

Section 7 — Certificate Authorization (15 U.S.C. § 717f). Section 7 of the NGA governs the issuance of certificates of public convenience and necessity for the construction, extension, acquisition, or operation of natural gas facilities. Section 7 is directly relevant to the interconnection component of this proceeding (Docket No. RP22-847-001), as the proposed Wetzel County Interconnect constitutes new natural gas facilities — specifically, a new meter station and pig launcher/receiver — that require certificate authorization from the Commission. Under Section 7(e), the Commission must find that the proposed construction and operation of the interconnection facilities "is or will be required by the present or future public convenience and necessity" before issuing a certificate. The "public convenience and necessity" standard requires a showing that the proposed facilities will serve the public interest, typically demonstrated through evidence of market demand, system benefits, and the absence of overriding adverse impacts.

Interplay Between Section 4 and Section 7. An important strategic consideration in this proceeding is the interplay between the Section 4 rate filing and the Section 7 certificate application. The rate case and interconnection proceedings have been filed in consolidated docket numbers to enable coordinated review, but they are governed by distinct statutory provisions with distinct standards and procedural requirements. The Section 4 rate case requires a demonstration that the proposed rate is just and reasonable, supported by a properly documented cost of service. The Section 7 interconnection application requires a demonstration that the proposed facilities serve the public convenience and necessity. However, the two proceedings are substantively interconnected: the cost of the interconnection facilities flows into Ridgeline's rate base, and the availability of interconnection capacity affects the throughput projections that underlie the rate design. We have structured the filing to present these components as a cohesive case, emphasizing the synergies between the rate filing and the interconnection authorization. However, we must be prepared for the possibility that the Commission or an ALJ may choose to sever the two proceedings or adjudicate them on different schedules if complications arise in either docket.

B. Implementing Regulations

The following FERC regulations govern the procedural and substantive requirements for Ridgeline's filing:

18 C.F.R. Part 154 — Rate Case Filing Requirements. Part 154 establishes the comprehensive requirements for the filing of rate cases by natural gas companies. Part 154 specifies the required format for tariff filings, the exhibits and supporting data that must accompany a rate case filing, and the cost-of-service methodology that the Commission applies in evaluating proposed rates. Of particular importance are the following provisions:

• Section 154.7 requires a "statement of the nature, reasons, and basis for the filing," which serves as the transmittal letter and summary of the applicant's case.

• Section 154.312 requires the submission of detailed cost-of-service schedules, including rate base calculations, return calculations, operating expense summaries, revenue requirement computations, and billing determinant analyses.

• Section 154.313 requires the submission of detailed rate design workpapers, demonstrating the derivation of the proposed rates from the underlying cost-of-service components.

Ridgeline's filing today includes all required statements, schedules, and workpapers under Part 154. However, as discussed in Section VII.D below, the comprehensiveness and accuracy of these submissions is a critical risk factor, as FERC's Office of Energy Market Regulation may issue a deficiency letter if any required element is missing or inadequately supported.

18 C.F.R. Part 157 — Certificate Procedures. Part 157 governs the procedures for applications for certificates of public convenience and necessity under NGA Section 7, including applications for the construction of new facilities and interconnections. The interconnection application in Docket No. RP22-847-001 has been prepared and filed in accordance with Part 157's requirements, including environmental reports, engineering specifications, and a demonstration of public convenience and necessity.

18 C.F.R. Part 284, Subpart G — Open-Access Transportation. Part 284, Subpart G, establishes the requirements for blanket certificates authorizing open-access transportation service by interstate natural gas pipelines. Ridgeline's proposed tariff — FERC Gas Tariff, Original Volume No. 1 — is structured as an open-access transportation tariff under Subpart G, providing for firm and interruptible transportation service on a non-discriminatory basis. The tariff includes all required provisions for capacity release, electronic bulletin board posting, and shipper protections mandated by the Commission's open-access policies.

C. FERC Policy Considerations

Several current and emerging FERC policy considerations are relevant to the strategic positioning of Ridgeline's case.

Initial Rates for New Pipelines. FERC policy distinguishes between initial rate filings for new pipelines (such as Ridgeline's filing) and rate change filings for existing pipelines. For initial rate filings, the Commission has historically afforded a degree of deference to the pipeline's proposed cost of service, recognizing that new pipeline systems face unique economic risks, including construction cost uncertainty, ramp-up of throughput volumes, and initial shipper commitments. This policy framework provides Ridgeline with a strategic advantage, as it supports the argument that Ridgeline's proposed rate reflects the actual costs of a newly constructed pipeline system and should not be evaluated under the same exacting scrutiny applied to rate increase filings by mature systems with established revenue streams. However, this presumption of reasonableness is not absolute and can be overcome by evidence that the proposed rate is inflated, unsupported, or based on unreasonable assumptions.

Return on Equity Methodology. The Commission's current methodology for evaluating proposed returns on equity in pipeline rate cases is the discounted cash flow ("DCF") proxy group analysis, as established in a line of precedent beginning with Williston Basin Interstate Pipeline Co., Opinion No. 495 (2006), and refined in subsequent orders. Under this methodology, the Commission identifies a proxy group of publicly traded companies with comparable risk profiles and uses DCF analysis to estimate a range of reasonable returns. Ridgeline's proposed ROE of 14.00% is at the upper end of the range that the Commission has approved in recent proceedings, and we anticipate that this will be a central area of contention. Our filing includes a robust DCF proxy group analysis prepared by Dr. Raymond Braswell that presents multiple valuation scenarios and identifies project-specific risk factors (including the System's recent in-service date, current utilization rate, and geographic concentration in the Appalachian Basin) that justify a premium return.

Open-Access Principles. The Commission's open-access policies, codified principally in FERC Order No. 636 and its progeny, require that interstate natural gas pipelines provide transportation service on a non-discriminatory basis, with appropriate shipper protections, capacity release rights, and electronic information posting. Ridgeline's proposed tariff has been designed to comply fully with these requirements. However, we should be mindful that intervenors may raise open-access concerns, particularly with respect to the capacity release provisions, the electronic bulletin board ("EBB") requirements, and the shipper-must-have-title provisions.

Emerging Policy Issues. Two emerging policy areas warrant monitoring as the proceeding progresses. First, the Commission has not yet established a comprehensive framework for the recovery of greenhouse gas ("GHG") emission costs in pipeline rates. While GHG cost recovery is not a central element of Ridgeline's filing at this time, intervenors or Commission Staff may raise questions about whether and how GHG-related costs should be addressed in the tariff, particularly in light of evolving state and federal environmental policies. Second, FERC Order No. 2222, which addresses the participation of distributed energy resource ("DER") aggregations in wholesale markets, may have indirect implications for pipelines that interconnect with systems serving DER-intensive markets. While Order No. 2222 is primarily directed at regional transmission organizations and independent system operators, its broader policy implications for energy infrastructure coordination should be considered as we develop Ridgeline's long-term regulatory strategy.

IV. Filing Strategy

A. Rate Case (Docket No. RP22-847-000)

1. Cost-of-Service Methodology

Ridgeline's rate filing follows the traditional cost-of-service methodology prescribed by FERC under 18 C.F.R. Part 154. Under this methodology, the pipeline's total cost of service — comprising return on rate base, depreciation, operating expenses, taxes, and revenue credits — is divided by the applicable billing determinants to derive the proposed unit rate. The cost of service is based on a test year ended March 31, 2022, which is the most recent twelve-month period for which complete financial data are available.

The rate base — the foundation of the cost-of-service calculation — represents the total capital invested in the pipeline system that is recoverable through rates. The following table summarizes the components of Ridgeline's proposed rate base:

Net plant in service of $563.71 million reflects the original construction cost of the System ($587.2 million) minus accumulated depreciation of $23.49 million, calculated at a 2.5% annual straight-line depreciation rate over the period from the System's in-service date (October 1, 2021) through the end of the test year (March 31, 2022). The working capital allowance of $18.64 million is calculated using the Commission's standard formula — one-eighth of the sum of operation and maintenance ("O&M") expenses and administrative and general ("A&G") expenses. Accumulated deferred income taxes of $12.45 million reduce rate base in accordance with the Commission's normalization requirements, reflecting the temporary differences between book and tax depreciation. Other rate base items totaling $42.50 million include gas stored for system operations, prepaid expenses, and materials and supplies inventory maintained at the three compressor stations.

Protection of the $612.40 million rate base is a paramount strategic objective of this proceeding. Any reduction in rate base — whether through challenges to the original construction cost, adjustments to depreciation methodology, or reclassification of rate base items — would directly reduce the revenue requirement and the approved rate, potentially impacting Ridgeline's ability to service its debt obligations and provide an adequate return to its equity investor.

2. Capital Structure and Return

Ridgeline's proposed capital structure and rate of return are summarized as follows:

The proposed capital structure of 55% equity and 45% debt reflects the actual capital structure of Ridgeline, based on DEH's equity contribution and the outstanding debt under Ridgeline's Senior Secured Credit Facility and Second Lien Notes. The cost of debt of 5.25% represents the weighted average cost of Ridgeline's two debt instruments: a $400 million term loan bearing interest at SOFR plus 325 basis points (with SOFR currently at approximately 1.79%, yielding a current all-in rate of approximately 5.04%) and $150 million in 7.875% Second Lien Senior Secured Notes. The weighted average cost of debt across these two instruments, accounting for the relative principal amounts outstanding, is approximately 5.25%.

The proposed return on equity ("ROE") of 14.00% is based on a discounted cash flow proxy group analysis prepared by Dr. Raymond Braswell of Braswell Energy Consulting Group LLC. Dr. Braswell's analysis identifies a proxy group of publicly traded midstream companies with risk profiles comparable to Ridgeline's and applies DCF methodology to derive a range of reasonable returns. Dr. Braswell's analysis supports an ROE at the upper end of the range, reflecting project-specific risk factors including:

• The System's recent in-service date and early-stage operational profile;

• The current throughput utilization rate of approximately 56.67%, which is below the industry average for mature pipeline systems;

• Geographic concentration risk in the Appalachian Basin;

• Construction cost and environmental compliance risk associated with a newly built pipeline;

• Interest rate risk and refinancing risk associated with the System's leveraged capital structure; and

• Regulatory risk inherent in a first-time rate filing before the Commission.

Applying the WACC of 10.0625% to the total rate base of $612.40 million yields a return on rate base of $61.62 million.

We recognize that the proposed ROE of 14.00% is aggressive and likely to be the single most heavily contested element of the filing. Based on our review of recent FERC precedent, approved ROEs for interstate natural gas pipeline rate cases have generally fallen in the range of 10.50% to 13.00%, with most recent approvals clustering in the 10.50% to 11.50% range. We anticipate that intervenors and FERC Trial Staff will file answering testimony proposing ROEs in the 10.50% to 11.50% range, supported by their own DCF analyses using different proxy groups, growth rates, and risk premium adjustments.

Our strategy is to file a robust and comprehensive initial ROE presentation that establishes the upper end of the range as defensible, thereby creating negotiating room for settlement discussions. In the event of settlement, we anticipate that a compromise ROE in the range of 12.50% to 13.00% may be achievable. In the event of full litigation, we must be prepared for the possibility that the ALJ or Commission may approve an ROE at or below 12.00%. If the ROE is reduced to, for example, 11.00%, the return on rate base would drop from $61.62 million to approximately $48.77 million (calculated as $612.40 million × [(0.55 × 11.00%) + (0.45 × 5.25%)] = $612.40 million × 8.4125% = approximately $51.53 million — or alternatively, applying a simple reduction of 300 basis points on the equity component: 0.55 × 3.00% × $612.40 million = $10.10 million reduction, yielding approximately $51.52 million). This reduction in return would significantly impact the total cost of service and the resulting unit rate.

3. Cost-of-Service Components

The total cost of service, which represents the revenue requirement that Ridgeline must recover through its tariff rates, is composed of the following elements:

Depreciation expense of $14.68 million reflects annual straight-line depreciation at a rate of 2.5% applied to gross plant in service. The 2.5% depreciation rate implies a 40-year useful life for the pipeline system, which is consistent with FERC precedent for interstate natural gas pipelines of this type and size. We do not anticipate significant challenges to the depreciation rate, although intervenors may argue for a shorter useful life (and correspondingly higher depreciation rate) if they contend that market or policy developments — such as the energy transition or declining natural gas demand — will shorten the economic life of the System.

Operation and maintenance expense of $12.44 million and administrative and general expense of $4.82 million are based on actual costs incurred during the test year as reported in Ridgeline's filed FERC Form 2. These amounts include labor costs, outside services, materials, insurance, compressor station fuel and power, pipeline inspection and maintenance, SCADA operations, and other routine operating costs. We anticipate that intervenors may scrutinize certain O&M and A&G line items for reasonableness, particularly any allocations from DEH or affiliate transactions that may be subject to heightened FERC review under the Commission's affiliate cost allocation policies.

Taxes other than income of $3.80 million include West Virginia and Pennsylvania ad valorem property taxes and franchise taxes applicable to the pipeline system and compressor stations. These amounts are based on actual tax assessments and payments during the test year.

Income tax allowance of $16.10 million reflects the grossed-up income tax liability on the equity component of the return, calculated at an effective income tax rate of approximately 26.13%. The effective rate is derived from the combined federal corporate income tax rate of 21.0% and the West Virginia corporate net income tax rate of 6.5%, adjusted for the deductibility of state income taxes on the federal return. The income tax allowance is calculated on the equity return only, in accordance with the Commission's policy under Consolidated Edison Co. of New York, Inc. v. FERC, 510 F.3d 333 (D.C. Cir. 2007) (commonly known as the SFPP line of cases). The availability of an income tax allowance for Ridgeline, as a single-member LLC owned by a Cayman Islands exempted limited company, may be questioned by intervenors. We have analyzed this issue and believe that Ridgeline is entitled to the income tax allowance based on its status as a taxable entity for U.S. federal income tax purposes (Ridgeline has elected to be treated as a corporation for U.S. tax purposes under Treasury Regulations § 301.7701-3).

Revenue credits of negative $16.10 million represent credits to the cost of service from non-jurisdictional revenues, including revenues from interruptible transportation, penalties, and other miscellaneous revenue sources. The net effect of the revenue credits is to reduce the cost of service that must be recovered from firm transportation rates.

4. Rate Design

Ridgeline's proposed tariff is structured as a Part 284, Subpart G, open-access transportation tariff, designated as FERC Gas Tariff, Original Volume No. 1. The tariff provides for two principal rate schedules:

• Rate Schedule FT-1 (Firm Transportation): Provides for firm transportation service under long-term and short-term contracts. Firm transportation service is subject to a two-part rate consisting of a monthly reservation charge and a commodity (usage) charge.

• Rate Schedule IT-1 (Interruptible Transportation): Provides for interruptible transportation service on an as-available basis, subject to a single commodity charge derived from the firm transportation rate.

The proposed billing determinants are based on a 100% load factor assumption. Under this assumption, the annual billing determinants equal the design capacity of 1,200,000 Dth/d multiplied by 365 days, yielding a total of 438,000,000 Dth per year.

Dividing the total cost of service of $97.36 million by the annual billing determinants of 438,000,000 Dth yields a proposed total recourse rate of $0.2223/Dth. This total rate is allocated between a reservation charge of $0.2223/Dth (reflecting the fixed costs of the system that are recoverable through the demand component of the rate) and a usage charge of $0.0042/Dth (reflecting variable costs, primarily compressor fuel and lost-and-unaccounted-for gas, that are recoverable through the commodity component). The total combined recourse rate is $0.2265/Dth ($0.2223 + $0.0042).

The proposed recourse rate is levelized over a 25-year period, reflecting the anticipated economic life of firm transportation service contracts and the pipeline's amortization and depreciation profiles. Levelization smooths the rate over the life of the system, avoiding the front-loading of costs that would occur under a non-levelized rate design and providing rate stability for shippers over the term of their transportation contracts.

The 100% load factor billing determinant assumption is standard for initial rate filings by new pipelines and is consistent with Commission precedent. However, as discussed in Section VII.B below, this assumption is vulnerable to challenge given Ridgeline's current throughput utilization of only 56.67%. If the Commission or intervenors successfully argue for a lower load factor assumption — for example, 75% or 85% — the billing determinants would decrease, and the per-unit rate would increase correspondingly, even though the total cost of service would remain the same or decrease only slightly. This dynamic is an important strategic consideration for both the rate case and for Ridgeline's commercial negotiations with prospective shippers.

5. Testimony Plan

Ridgeline plans to present direct testimony from seven witnesses in support of its rate filing. The filing of direct testimony is targeted for approximately November–December 2022, consistent with the anticipated procedural schedule. The planned testimony assignments are as follows:

1. James K. Winfield, CEO & President — Mr. Winfield will provide policy testimony addressing the need for service on the Ridgeline Pipeline System, the public interest benefits of the System, Ridgeline's corporate structure and management, and the overall reasonableness of the proposed rate and tariff.

2. Angela Moretti, VP Finance & Treasurer — Ms. Moretti will present the detailed cost-of-service analysis, including rate base calculations, capital structure, cost of debt, depreciation, O&M and A&G expenses, taxes, and revenue credits. Ms. Moretti will also address the financial condition of Ridgeline and its ability to provide reliable service.

3. Thomas Greaves, VP Engineering & Operations — Mr. Greaves will provide engineering testimony addressing the design, construction, and operational characteristics of the Ridgeline Pipeline System, including the pipeline itself, the three compressor stations, the metering and SCADA systems, and the proposed interconnection facilities at the Wetzel County Interconnect.

4. Dr. Natasha Orlov, Director of Rates & Regulatory — Dr. Orlov will present the rate design testimony, addressing the derivation of the proposed recourse rate from the cost of service, the structure of the two-part rate, the load factor assumptions, the tariff provisions (including the General Terms and Conditions), and the compliance of the tariff with Commission regulations and open-access requirements.

5. Dr. Raymond Braswell (outside expert, Braswell Energy Consulting Group LLC) — Dr. Braswell will present expert testimony on the proposed return on equity and capital structure. His testimony will include a detailed DCF proxy group analysis, a discussion of alternative ROE methodologies (including capital asset pricing model and risk premium approaches), and an assessment of project-specific risk factors that justify a premium return for Ridgeline.

6. Two additional Ridgeline witnesses (to be confirmed) — These witnesses will address operational and market topics, including throughput projections, shipper demand, market conditions in the Appalachian Basin, and competitive alternatives. The identity and specific testimony assignments for these witnesses will be confirmed as the pre-hearing phase progresses.

All testimony will be prepared in accordance with FERC's rules of practice and procedure and will be supported by exhibits, workpapers, and attachments as required. Calderwood & Harkness will coordinate the preparation of all testimony, working closely with Ridgeline's management team and outside experts.

B. Interconnection Authorization (Docket No. RP22-847-001)

1. Proposed Interconnection

The interconnection application seeks authorization for the construction and operation of new interconnection facilities at the Wetzel County Interconnect, where Ridgeline's System will physically tie into ATPC's existing 30-inch mainline. The proposed interconnection is located at Milepost 0.0 of the Ridgeline Pipeline System (equivalent to ATPC Milepost 412.6 on ATPC's mainline), in Wetzel County, West Virginia.

The proposed interconnection facilities include a new meter station and pig launcher/receiver to be constructed at the Wetzel County Interconnect site. The interconnection is designed to accommodate an initial bidirectional flow capacity of 800 MMcf/d, with the physical infrastructure engineered to be expandable to 1.2 Bcf/d (the full design capacity of the Ridgeline System) without the need for major additional construction. Bidirectional flow capability is a critical design feature, as it provides operational flexibility to accommodate varying flow conditions on both the Ridgeline and ATPC systems, including reverse-flow scenarios during periods of high downstream demand or system imbalances.

The target in-service date for the interconnection facilities is the fourth quarter of 2023. This target date assumes timely authorization by the Commission and an approximately 12-month construction timeline from the date of authorization. As discussed in Section VII.G below, any prolonged litigation or procedural delays in the proceeding could push the in-service date beyond Q4 2023, with consequent impacts on throughput projections, shipper commitments, and lender covenant compliance.

2. Interconnection Facilities

The total estimated cost of the interconnection facilities is $22.3 million. This cost encompasses the meter station, pig launcher/receiver, associated piping and valves, metering equipment, SCADA integration, site preparation, civil works, and engineering and project management costs.

The proposed cost allocation between Ridgeline and ATPC is as follows:

Ridgeline's proposed cost allocation is based on a detailed cost-causation analysis that considers the relative benefits and usage of the interconnection facilities by each pipeline system. The analysis reflects several factors supporting a disproportionate allocation to ATPC:

• System size and capacity differential: ATPC's system is substantially larger than Ridgeline's, with 640 miles of pipeline and 3.8 Bcf/d of capacity, compared to Ridgeline's 187 miles and 1.2 Bcf/d. The interconnection provides ATPC with access to additional supply sources that will flow onto ATPC's larger system and serve ATPC's broader customer base.

• Existing customer base: ATPC's existing shipper base includes major industrial and utility customers across Pennsylvania, Ohio, and New York. These customers will benefit directly from the additional supply diversity and reliability provided by the interconnection with Ridgeline.

• Incremental throughput benefit: ATPC stands to gain a greater absolute volume of throughput from the interconnection than Ridgeline, given ATPC's larger capacity and broader market reach.

• Precedent: The Commission's policy on interconnection cost allocation, as articulated in Order No. 2004 and related proceedings, supports cost-causation-based allocation that reflects the relative benefit to each interconnecting system.

The metering equipment at the interconnection station will include ultrasonic flow meters (three runs, 12-inch diameter), gas chromatographs for real-time gas quality analysis, and full SCADA integration for remote monitoring and control. These specifications are designed to meet or exceed the Commission's metering accuracy standards and industry best practices for custody transfer measurement at major interstate pipeline interconnections.

We anticipate that cost allocation will be a major point of contention with ATPC. Based on our assessment of ATPC's likely position (discussed in detail in Section V.A below), ATPC will likely propose a 50/50 cost allocation ($11.15 million each), or may even argue that Ridgeline should bear a larger share as the party requesting the interconnection. Our cost-causation analysis provides a strong evidentiary basis for the proposed 34.1/65.9 split, but the outcome will depend on the weight the Commission gives to the various cost allocation factors and on the negotiation dynamics between the parties.

3. Interconnection Agreement

A draft Interconnection Agreement will be prepared by Calderwood & Harkness and filed as an exhibit to the interconnection application. The Interconnection Agreement is intended to serve as the governing document for the operational and commercial relationship between Ridgeline and ATPC at the Wetzel County Interconnect. The draft agreement will address the following key topics:

• Metering specifications: Detailed technical requirements for the custody transfer metering equipment, including accuracy standards, calibration procedures, and dispute resolution for measurement discrepancies.

• Operational flow protocols: Procedures for scheduling and confirming gas flows across the interconnection, including nomination deadlines, confirmation cycles, and operational balancing.

• Maintenance responsibilities: Allocation of responsibility for the maintenance, repair, and replacement of interconnection facilities between Ridgeline and ATPC.

• Capacity allocation: Methodology for allocating interconnection capacity between firm and interruptible service, and between the two interconnecting pipelines.

• Gas quality standards: Specifications for the quality of natural gas delivered at the interconnection, including BTU content, moisture content, hydrogen sulfide, carbon dioxide, and other impurities.

• Force majeure: Provisions addressing the parties' rights and obligations in the event of force majeure events that affect the operation of the interconnection.

• Term and renewal: The initial term of the agreement and provisions for renewal or termination.

• Indemnification and liability: Allocation of liability for losses, damages, and claims arising from the operation of the interconnection facilities.

We anticipate that the Commission may require the filing of the Interconnection Agreement as a separate rate schedule within Ridgeline's FERC Gas Tariff. This requirement, if imposed, would subject the Interconnection Agreement to the same regulatory review and modification authority as the tariff rate schedules themselves. We will monitor this issue and prepare for the possibility of a rate schedule filing.

The target date for completion of the draft Interconnection Agreement and submission to ATPC for review is July 2022.

C. Coordination Between Rate Case and Interconnection Proceedings

Both proceedings have been filed in a consolidated docket structure — RP22-847-000 for the rate case and RP22-847-001 for the interconnection — to enable coordinated review by the Commission. This consolidated structure reflects our strategic determination that the rate case and interconnection proceedings are substantively interdependent and should be evaluated as components of a single integrated filing.

The strategic rationale for consolidated filing is twofold. First, the interconnection proceeding provides an opportunity to demonstrate the system benefits and public interest justification that support the rate filing. The Wetzel County Interconnect will enhance the Ridgeline System's operational flexibility, increase access to supply sources, and improve reliability of service — all factors that the Commission considers in evaluating the reasonableness of a proposed rate. Second, the rate filing's revenue requirements are partly dependent on assumptions about interconnection capacity utilization. Specifically, the throughput projections that underlie the 100% load factor billing determinant assumption are premised, in part, on the availability of the interconnection with ATPC as a primary receipt point for gas entering the Ridgeline System.

This interdependence, however, creates a corresponding risk. If the interconnection authorization is delayed or denied, the throughput projections supporting the rate filing may need to be revised downward. A denial of the interconnection would eliminate the Wetzel County Interconnect as a receipt point, potentially reducing the System's accessible supply base and throughput volumes. A delay in interconnection authorization would push back the in-service date for the interconnection facilities, extending the period during which the System operates without the benefit of the ATPC connection. Either outcome could undermine the rate case by calling into question the reasonableness of the billing determinants and the underlying market demand assumptions. We will monitor this risk closely and be prepared to adjust the rate case presentation if developments in the interconnection proceeding require it.

V. Anticipated Parties and Their Positions

A. Appalachian Trunk Pipeline Company, LLC (ATPC)

Appalachian Trunk Pipeline Company, LLC ("ATPC") is a limited liability company organized under the laws of the Commonwealth of Pennsylvania. ATPC's Employer Identification Number is 25-1987643 and its FERC Code is 840117. ATPC's principal office is located at 2200 Penn Center West, Suite 300, Pittsburgh, Pennsylvania 15276.

ATPC is a wholly-owned subsidiary of Tidewater Infrastructure Partners LP, a Delaware limited partnership whose general partner is Tidewater GP Inc. Tidewater Infrastructure Partners is controlled by the Alderman family, a prominent Pittsburgh-based family with longstanding investments in energy infrastructure. The estimated enterprise value of Tidewater Infrastructure Partners is approximately $6.1 billion, making it one of the largest privately held midstream energy platforms in the Appalachian Basin.

ATPC's key personnel include Marcus R. Alderman, President and CEO, and Sandra K. Fenton, VP Regulatory Affairs. ATPC's outside counsel for this proceeding is Kellner, Royce & Dillard LLP, represented by William Pratt, Senior Partner, with offices at One PPG Place, Suite 2800, Pittsburgh, Pennsylvania 15222. Kellner, Royce & Dillard is a well-regarded regional energy law firm with extensive experience before FERC.

ATPC operates a 640-mile interstate natural gas pipeline system with a total capacity of 3.8 Bcf/d, serving markets in Pennsylvania, Ohio, and New York. ATPC's system is one of the principal natural gas transmission pipelines in the northeastern United States and has been in operation for over three decades. ATPC's established market position, large customer base, and experienced regulatory team make it a formidable participant in this proceeding.

Expected Position. We anticipate that ATPC will intervene in both dockets and file a protest raising the following principal objections:

Interconnection cost allocation: ATPC will oppose Ridgeline's proposed 34.1/65.9 cost allocation for the $22.3 million interconnection facilities. ATPC is expected to argue that a 50/50 cost allocation ($11.15 million each) is more appropriate, or that Ridgeline should bear an even larger share as the party initiating the interconnection request. ATPC's position will likely be framed as a fairness argument — that ATPC should not be required to bear a disproportionate share of costs for facilities that primarily benefit Ridgeline's system.

Metering station design: ATPC may challenge the adequacy of Ridgeline's proposed metering station design, arguing that additional or upgraded metering equipment is required to ensure accurate custody transfer measurement at the interconnection point. Any challenge to the metering design could increase the total interconnection cost or require design modifications that delay the construction schedule.

Return on equity: ATPC is expected to challenge Ridgeline's proposed 14.00% ROE as excessive and unsupported by market conditions. ATPC may retain its own rate expert to present an alternative DCF analysis supporting a lower ROE. While ATPC is primarily a pipeline operator rather than a shipper, ATPC has a strategic interest in the outcome of the ROE determination because a high approved ROE for Ridgeline could establish a precedent that shippers and other parties invoke in future ATPC rate proceedings.

The intervention/protest deadline is August 15, 2022. We anticipate that ATPC will file a timely protest raising all of the above issues.

B. Mountainside Gas Producers Coalition (MGPC)

The Mountainside Gas Producers Coalition ("MGPC") is an unincorporated association of 14 independent natural gas producers operating in the Marcellus and Utica shale formations in West Virginia, Ohio, and Pennsylvania. MGPC's principal contact is Calvin Dreyer, Executive Director, with offices at 1100 Main Street, Suite 210, Morgantown, West Virginia 26505.

MGPC's outside counsel for this proceeding is Whitmore & Sable LLP, represented by Rebekah Montague, Partner, with offices at 1200 New Hampshire Avenue NW, Suite 600, Washington, DC 20036. Whitmore & Sable has an active FERC practice and has represented producer groups in several recent interstate pipeline rate cases.

Expected Position. MGPC's position is expected to be mixed — generally supportive of the interconnection but opposed to the proposed recourse rate:

Support for interconnection: MGPC's member producers are likely to support the proposed Wetzel County Interconnect because it provides additional takeaway capacity for Marcellus and Utica shale production. Additional pipeline interconnection capacity in the Appalachian Basin is a priority for MGPC's members, who have experienced capacity constraints that depress realized wellhead prices.

Opposition to proposed rate: MGPC is expected to oppose Ridgeline's proposed recourse rate of $0.2265/Dth as excessive. MGPC will likely argue that the rate imposes an unreasonable burden on producers who ship gas on the Ridgeline System or who are indirectly affected by the rate through downstream transportation cost allocations. MGPC may retain an independent rate expert — likely a credentialed energy economist with FERC experience — to file testimony presenting an alternative cost-of-service analysis with a lower ROE, different load factor assumptions, and/or challenged O&M and A&G expense levels.

MGPC's participation adds an important dimension to the proceeding. As a producer group, MGPC represents the upstream supply interests that generate throughput on the Ridgeline System. Their support for the interconnection strengthens the public convenience and necessity case, while their opposition to the rate level ensures that the cost-of-service analysis will be tested from a shipper perspective.

C. Clearwater Municipal Gas Authority (CMGA)

The Clearwater Municipal Gas Authority ("CMGA") is a municipal authority organized under the Pennsylvania Municipality Authorities Act, 53 Pa. C.S. §§ 5601 et seq. CMGA's principal office is located at 455 Market Street, Clearwater, Pennsylvania 15330, and its General Manager is Dennis Ott.

CMGA's outside counsel is Fordham Municipal Law Group PC, represented by Stephen Greer, Principal, with offices at 312 Adams Avenue, Suite 100, Scranton, Pennsylvania 18503.

Expected Position. CMGA's primary concern is the potential for increased rates on ATPC's system resulting from pass-through of interconnection costs that ATPC is required to bear. CMGA is a customer on ATPC's system and would be directly affected if ATPC's rates increase as a result of the interconnection cost allocation. Accordingly, CMGA is expected to support ATPC's position on cost allocation and to oppose any allocation that imposes a disproportionate cost burden on ATPC.

CMGA may also oppose the rate level in Ridgeline's filing if it believes that a high approved rate for Ridgeline could set an unfavorable precedent for future rate proceedings by other pipelines serving the same market area. As a municipal authority serving residential and small commercial customers, CMGA is sensitive to any developments that could increase the cost of natural gas transportation to its service territory.

D. FERC Trial Staff

FERC Trial Staff — comprising attorneys from the Office of the General Counsel and analysts from the Office of Energy Market Regulation — will be an active participant in both dockets. The lead trial attorney will be assigned after the Notice of Filing is issued. FERC Trial Staff's position in the proceeding is independent of the Commission itself: Staff may support, oppose, or seek modification of any element of Ridgeline's proposals, based on its own analysis of the cost of service, rate design, and interconnection issues.

FERC Trial Staff will file its own testimony in the rate case, typically presenting an independent cost-of-service analysis that may confirm, adjust, or challenge Ridgeline's proposed cost-of-service components. Staff testimony frequently addresses ROE (often presenting a separate DCF proxy group analysis), depreciation rates, O&M and A&G expense levels, working capital methodology, and tax calculations.

A key risk associated with FERC Trial Staff's participation is the potential for a deficiency information request. If Staff's initial review of the filing identifies incomplete or inadequately supported elements, Staff may issue a formal deficiency letter requiring supplemental filings before the proceeding can advance. A deficiency letter can delay the proceeding by several months, as the response time typically ranges from 30 to 90 days, and the Commission's review of the supplemental filing can take additional time.

E. Other Potential Intervenors

In addition to the parties discussed above, we anticipate that the following types of entities may seek to intervene in the proceeding:

• State public utility commissions: The West Virginia Public Service Commission and the Pennsylvania Public Utility Commission may file comments or limited interventions to protect their respective states' interests in the proceeding. While state commissions do not have jurisdiction over FERC-regulated rates, they frequently participate in FERC proceedings to provide input on issues affecting their states' energy markets and consumers.

• Other shippers or prospective shippers: Other shippers or prospective shippers on the Ridgeline System may seek to intervene to protect their interests in the rate determination. Any shipper that has entered into or is negotiating a transportation agreement with Ridgeline would have a direct interest in the approved rate level and tariff terms.

• Environmental groups: If greenhouse gas emissions, environmental impacts, or climate-related issues are raised in the proceeding — either by parties or by the Commission on its own motion — environmental advocacy organizations may seek to intervene. While environmental issues are not a central focus of the current filing, the Commission's evolving approach to environmental review and GHG analysis creates a possibility that environmental intervenors may seek a forum in this proceeding.

• Adjacent pipeline operators: Other pipeline operators with systems adjacent to or interconnected with the Ridgeline System or ATPC's system may intervene to protect their competitive and operational interests. Any adjacent pipeline that could be affected by the interconnection or by changes in the flow dynamics of the regional pipeline network may have a legitimate interest in the proceeding.

VI. Anticipated Procedural Timeline

The following timeline reflects our best assessment of the anticipated procedural milestones in this proceeding, based on current FERC practice and the complexity of the issues presented. We caution that procedural schedules in FERC rate cases are subject to extension, modification, and delay, and the actual schedule may differ materially from these estimates. We will update this timeline as the proceeding progresses and as the Commission establishes formal procedural deadlines.

A. Near-Term (May–September 2022)

May 12, 2022 — Application Filed. Ridgeline's application was filed with the Commission today. The filing includes the application, transmittal letter, proposed FERC Gas Tariff (Original Volume No. 1), all supporting exhibits required under 18 C.F.R. Parts 154 and 157, verification by James K. Winfield, and notice of appearance designating George Trujillo as lead counsel.

Approximately June 2022 — FERC Issues Notice of Filing. Following receipt and initial review of the application, the Commission's Office of the Secretary is expected to issue a Notice of Filing. The Notice will be published in the Federal Register and posted on the Commission's eLibrary system. The Notice will establish the deadline for motions to intervene and protests, which is typically 60 days after the date of the Notice. Based on a projected Notice date in June 2022, we estimate an intervention/protest deadline of approximately August 2022.

July–August 2022 — Intervention and Protest Filings. We anticipate that ATPC, MGPC, CMGA, and potentially other parties identified in Section V above will file timely motions to intervene and, in the case of ATPC and MGPC, protests or comments raising subs

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
From: George Trujillo, Responsible Partner, Energy & Infrastructure, Calderwood & Harkness LLP
To: Patricia Dunmore, Chairperson, Dunmore Energy Holdings Ltd. James K. Winfield, CEO & President, Ridgeline Midstream Services LLC
CC: Brett Callahan, Lead Associate, Calderwood & Harkness LLP David Stanton, Working Associate, Calderwood & Harkness LLP
Date: May 12, 2022
Re: FERC Regulatory Strategy — Overview and Timeline FERC Docket Nos. RP22-847-000 (Rate Case) and RP22-847-001 (Interconnection) C&H Matter No. 1016-00005
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I. Executive Summary
The purpose of this memorandum is to set forth a comprehensive regulatory strategy for the proceeding initiated today, May 12, 2022, before the Federal Energy Regulatory Commission ("FERC" or the "Commission") on behalf of Ridgeline Midstream Services LLC ("Ridgeline" or the "Applicant"). In the application filed today, Ridgeline seeks (a) approval of an initial tariff rate for interstate natural gas transportation service on the Ridgeline Pipeline System (the "System"), and (b) authorization for physical interconnection with Appalachian Trunk Pipeline Company, LLC ("ATPC") at the proposed Wetzel County Interconnect in Wetzel County, West Virginia.
The application was filed under Sections 4 and 7 of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717c and 717f, and in accordance with the Commission's implementing regulations at 18 C.F.R. Parts 154, 157, and 284. The Commission has assigned Docket No. RP22-847-000 to the rate case component and Docket No. RP22-847-001 to the interconnection authorization component. The two dockets have been filed in a consolidated structure to facilitate coordinated review by the Commission and its administrative law judges.
The Applicant, Ridgeline Midstream Services LLC, is a Delaware limited liability company and wholly-owned subsidiary of Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted limited company (Company Registration No. CR-381204). DEH serves as the sole member of Ridgeline and, through Ridgeline, owns and operates the Ridgeline Pipeline System — a 187-mile, 24-inch-diameter high-pressure natural gas pipeline running from Wetzel County, West Virginia, to Greene County, Pennsylvania.
The key strategic objectives of this proceeding are fourfold:
1.  Obtain FERC approval of an initial recourse rate of $0.2265/Dth for open-access firm and interruptible transportation service on the Ridgeline Pipeline System;
2.  Secure interconnection authorization at the Wetzel County Interconnect with ATPC, including approval of the interconnection facilities and associated cost allocation;
3.  Protect Ridgeline's rate base of $612.40 million, which reflects the original construction cost of the System, adjusted for accumulated depreciation, working capital, accumulated deferred income taxes, and other standard rate base items; and
4.  Achieve a favorable cost allocation for the $22.3 million in interconnection facilities between Ridgeline and ATPC, with Ridgeline's proposed allocation placing 34.1% of costs on Ridgeline ($7.6 million) and 65.9% on ATPC ($14.7 million).
At the outset of this memorandum, we note the dual role of Patricia Dunmore in this engagement. Ms. Dunmore serves as Chairperson and 72% controlling shareholder of DEH, the parent company of the Applicant, and is also a billing partner at Calderwood & Harkness LLP. A conflict of interest waiver has been obtained and documented separately in the engagement files in accordance with the firm's conflict management policies and applicable rules of professional conduct. All billing arrangements, supervisory structures, and engagement governance for this matter are detailed in the separate Conflict Waiver Memorandum dated April 28, 2022.
This memorandum covers the following topics in detail: the regulatory framework and legal authority governing the proceeding; the filing strategy for both the rate case and interconnection components; the anticipated parties and their expected positions; the procedural timeline through Commission order; key risk factors that may affect the outcome or timing of the proceeding; the interconnection negotiation strategy with ATPC; lender covenant considerations arising from Ridgeline's existing credit facilities; the Calderwood & Harkness engagement team and staffing plan; recommended immediate next steps; and preliminary budget considerations.
II. Client and System Overview
A. Dunmore Energy Holdings Ltd.
Dunmore Energy Holdings Ltd. ("DEH") is a Cayman Islands exempted limited company, registered and existing under the laws of the Cayman Islands. DEH's registered address is 4th Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1002, Cayman Islands. The company was founded by Patricia Dunmore and serves as a strategic private energy holding company with significant midstream natural gas and renewable energy assets across the Appalachian Basin and adjacent regions.
DEH's portfolio includes approximately 1,200 miles of midstream gathering and transportation pipelines, two cryogenic gas processing plants with aggregate capacity of approximately 600 MMcf/d, and a 250 MW onshore wind generation portfolio currently under various stages of development and construction in West Virginia and Pennsylvania. The estimated enterprise value of DEH is approximately $2.8 billion, based on an internal valuation dated December 31, 2023. We note that this valuation will need to be updated as the FERC proceeding progresses, particularly if intervenors or FERC Trial Staff request current financial data regarding DEH's consolidated financial position. Annual consolidated revenue for DEH was approximately $485 million for the fiscal year ended December 31, 2023.
Patricia Dunmore is the founder and Chairperson of DEH and holds approximately 72% of the company's equity interests. The remaining 28% is held by a small group of private investors and members of the company's senior management team. Ms. Dunmore exercises day-to-day strategic oversight of DEH's portfolio companies and has been intimately involved in the development, financing, and construction of the Ridgeline Pipeline System since its inception. As noted above, Ms. Dunmore's dual role as DEH Chairperson and Calderwood & Harkness billing partner has been addressed through a separate conflict waiver.
B. Ridgeline Midstream Services LLC — The Applicant
Ridgeline Midstream Services LLC ("Ridgeline" or the "Applicant") is a limited liability company organized under the laws of the State of Delaware. Ridgeline's sole member is DEH, which holds 100% of the membership interests. The company's Employer Identification Number is 87-4231956, and its FERC Code is 960442.
Ridgeline's registered agent for service of process in the State of Delaware is Capitol Filings Inc., located at 1209 Orange Street, Wilmington, Delaware 19801. Ridgeline's principal office and operational headquarters are located at 700 Kanawha Boulevard East, Suite 1400, Charleston, West Virginia 25301.
The company's key management team consists of the following officers:
•  James K. Winfield, CEO & President — Mr. Winfield has overall executive responsibility for Ridgeline's operations and strategic direction and will serve as the policy witness in the FERC proceeding.
•  Angela Moretti, VP Finance & Treasurer — Ms. Moretti oversees Ridgeline's financial reporting, treasury functions, and investor relations. She will serve as the cost-of-service and capital structure witness in the proceeding.
•  Thomas Greaves, VP Engineering & Operations — Mr. Greaves is responsible for the engineering, construction, and day-to-day operations of the Ridgeline Pipeline System, including the three compressor stations. He will serve as the engineering and facilities witness.
•  Dr. Natasha Orlov, Director of Rates & Regulatory — Dr. Orlov manages Ridgeline's rate design work, tariff administration, and regulatory compliance. She holds a Ph.D. in energy economics and will serve as the rate design and tariff witness.
C. The Ridgeline Pipeline System
The Ridgeline Pipeline System is a 187-mile, 24-inch-diameter high-pressure natural gas transmission pipeline extending from Wetzel County, West Virginia, to Greene County, Pennsylvania. The pipeline was designed and constructed as a single continuous pipeline segment with three compressor stations along its route, providing aggregate installed compression of 45,000 horsepower.
The System's key physical attributes and operational parameters are as follows:
Receipt Point. The System's primary receipt point is the proposed Wetzel County Interconnect, located in Wetzel County, West Virginia, at approximately 39.6120° N latitude, 80.7540° W longitude. This receipt point is the location of the proposed interconnection with ATPC's existing 30-inch mainline, which is the subject of the interconnection authorization application filed in Docket No. RP22-847-001.
Delivery Point. The System's primary delivery point is the Waynesburg Compressor Station, located in Greene County, Pennsylvania, at approximately 39.8965° N latitude, 80.1810° W longitude. The Waynesburg Compressor Station serves as both a compression facility and a delivery point, providing access to downstream pipeline interconnections and local distribution systems in southwestern Pennsylvania.
Compressor Stations. The System includes three compressor stations, each equipped with natural gas-fired centrifugal compressor units:
(1) Wetzel Station — Located at approximately Milepost 0.5, near the Wetzel County Interconnect. This station provides initial boost compression for gas entering the System from the interconnection with ATPC.
(2) Mannington Station — Located at approximately Milepost 93.0, near Mannington, Marion County, West Virginia. This mid-point station provides intermediate compression to maintain design pressures through the central portion of the pipeline.
(3) Waynesburg Station — Located at approximately Milepost 187.0, at the System's terminus in Greene County, Pennsylvania. This station provides final-stage compression and serves as the delivery point compressor station.
The aggregate installed compression across all three stations is 45,000 horsepower.
Design Capacity. The System's maximum design capacity is 1.2 Bcf/d (1,200,000 Dth/d, at an assumed BTU content of 1,000 BTU per standard cubic foot). This design capacity reflects the full utilization of all three compressor stations at their maximum rated horsepower.
Current Throughput. As of the test year ended March 31, 2022, the System's average daily throughput is approximately 680 MMcf/d. This represents a utilization rate of approximately 56.67% (680,000 Dth/d ÷ 1,200,000 Dth/d). The relatively low utilization rate at this stage of the System's operational life is attributable to the System's recent in-service date and the ongoing development of shipper commitments. As discussed in Section VII.B below, the current utilization rate creates a potential vulnerability in the rate design insofar as intervenors may challenge the 100% load factor billing determinant assumption.
In-Service Date. The Ridgeline Pipeline System was placed in service on October 1, 2021, approximately seven months prior to the filing of today's application. The System was constructed over a period of approximately 24 months, beginning with initial site preparation in late 2019 and concluding with commissioning and startup in the third quarter of 2021.
Original Construction Cost. The total original construction cost of the Ridgeline Pipeline System, including pipeline, compressor stations, metering, SCADA, rights-of-way, and related capitalized development costs, was $587.2 million. This figure forms the basis for the net plant in service component of the rate base, as discussed in Section IV.A.1 below.
III. Regulatory Framework and Legal Authority
A. Natural Gas Act Provisions
The proceeding initiated today implicates three core provisions of the Natural Gas Act, each of which plays a distinct but interrelated role in the regulatory framework governing Ridgeline's application.
Section 4 — Rate Authority (15 U.S.C. § 717c). Section 4 of the NGA provides the statutory authority for Ridgeline's initial rate filing. Under Section 4, a natural gas company may file with the Commission "schedules showing all rates and charges for any transportation or sale subject to the jurisdiction of the Commission." Section 4(e) of the NGA establishes the foundational standard that "all rates and charges . . . and all rules and regulations affecting or pertaining to such rates or charges shall be just and reasonable." Critically, under a Section 4 filing, the pipeline bears the burden of proof that its proposed rate satisfies the just and reasonable standard. This burden allocation is of central strategic importance to the proceeding. As the applicant for initial rates, Ridgeline must affirmatively demonstrate through its cost-of-service presentation and supporting testimony that each element of its proposed rate — including rate base, return on equity, capital structure, depreciation, operating expenses, and revenue credits — is just and reasonable. The Commission's historical practice has been to afford a presumption of reasonableness to first-filed rates under Section 4, provided the filing is supported by a properly documented cost-of-service analysis. We intend to leverage this presumption as a strategic advantage, though we must be prepared for the reality that intervenors and FERC Trial Staff will subject each cost-of-service element to rigorous scrutiny.
Section 5 — Commission Investigation Authority (15 U.S.C. § 717d). Section 5 of the NGA provides the Commission with independent authority to investigate rates and, upon a finding that existing rates are unjust, unreasonable, or unduly discriminatory, to determine and fix just and reasonable rates. Although Ridgeline's filing is made under Section 4, Section 5 remains relevant for two reasons. First, if the Commission suspends Ridgeline's proposed rate and the matter proceeds to hearing, the procedural posture may shift in ways that affect the evidentiary burden. Specifically, once the Commission suspends a filed rate and sets it for hearing, the pipeline continues to bear the burden of proof under Section 4 that its proposed rate is just and reasonable; however, the suspension itself signals the Commission's preliminary concern and may affect the dynamics of settlement negotiations. Second, after a rate is approved and placed into effect, it remains subject to potential future Section 5 investigation, including complaints by shippers or other interested parties. We should keep this in mind as we design the tariff and rate structure, ensuring that the rate as approved will be defensible against potential future Section 5 challenges.
Section 7 — Certificate Authorization (15 U.S.C. § 717f). Section 7 of the NGA governs the issuance of certificates of public convenience and necessity for the construction, extension, acquisition, or operation of natural gas facilities. Section 7 is directly relevant to the interconnection component of this proceeding (Docket No. RP22-847-001), as the proposed Wetzel County Interconnect constitutes new natural gas facilities — specifically, a new meter station and pig launcher/receiver — that require certificate authorization from the Commission. Under Section 7(e), the Commission must find that the proposed construction and operation of the interconnection facilities "is or will be required by the present or future public convenience and necessity" before issuing a certificate. The "public convenience and necessity" standard requires a showing that the proposed facilities will serve the public interest, typically demonstrated through evidence of market demand, system benefits, and the absence of overriding adverse impacts.
Interplay Between Section 4 and Section 7. An important strategic consideration in this proceeding is the interplay between the Section 4 rate filing and the Section 7 certificate application. The rate case and interconnection proceedings have been filed in consolidated docket numbers to enable coordinated review, but they are governed by distinct statutory provisions with distinct standards and procedural requirements. The Section 4 rate case requires a demonstration that the proposed rate is just and reasonable, supported by a properly documented cost of service. The Section 7 interconnection application requires a demonstration that the proposed facilities serve the public convenience and necessity. However, the two proceedings are substantively interconnected: the cost of the interconnection facilities flows into Ridgeline's rate base, and the availability of interconnection capacity affects the throughput projections that underlie the rate design. We have structured the filing to present these components as a cohesive case, emphasizing the synergies between the rate filing and the interconnection authorization. However, we must be prepared for the possibility that the Commission or an ALJ may choose to sever the two proceedings or adjudicate them on different schedules if complications arise in either docket.
B. Implementing Regulations
The following FERC regulations govern the procedural and substantive requirements for Ridgeline's filing:
18 C.F.R. Part 154 — Rate Case Filing Requirements. Part 154 establishes the comprehensive requirements for the filing of rate cases by natural gas companies. Part 154 specifies the required format for tariff filings, the exhibits and supporting data that must accompany a rate case filing, and the cost-of-service methodology that the Commission applies in evaluating proposed rates. Of particular importance are the following provisions:
•  Section 154.7 requires a "statement of the nature, reasons, and basis for the filing," which serves as the transmittal letter and summary of the applicant's case.
•  Section 154.312 requires the submission of detailed cost-of-service schedules, including rate base calculations, return calculations, operating expense summaries, revenue requirement computations, and billing determinant analyses.
•  Section 154.313 requires the submission of detailed rate design workpapers, demonstrating the derivation of the proposed rates from the underlying cost-of-service components.
Ridgeline's filing today includes all required statements, schedules, and workpapers under Part 154. However, as discussed in Section VII.D below, the comprehensiveness and accuracy of these submissions is a critical risk factor, as FERC's Office of Energy Market Regulation may issue a deficiency letter if any required element is missing or inadequately supported.
18 C.F.R. Part 157 — Certificate Procedures. Part 157 governs the procedures for applications for certificates of public convenience and necessity under NGA Section 7, including applications for the construction of new facilities and interconnections. The interconnection application in Docket No. RP22-847-001 has been prepared and filed in accordance with Part 157's requirements, including environmental reports, engineering specifications, and a demonstration of public convenience and necessity.
18 C.F.R. Part 284, Subpart G — Open-Access Transportation. Part 284, Subpart G, establishes the requirements for blanket certificates authorizing open-access transportation service by interstate natural gas pipelines. Ridgeline's proposed tariff — FERC Gas Tariff, Original Volume No. 1 — is structured as an open-access transportation tariff under Subpart G, providing for firm and interruptible transportation service on a non-discriminatory basis. The tariff includes all required provisions for capacity release, electronic bulletin board posting, and shipper protections mandated by the Commission's open-access policies.
C. FERC Policy Considerations
Several current and emerging FERC policy considerations are relevant to the strategic positioning of Ridgeline's case.
Initial Rates for New Pipelines. FERC policy distinguishes between initial rate filings for new pipelines (such as Ridgeline's filing) and rate change filings for existing pipelines. For initial rate filings, the Commission has historically afforded a degree of deference to the pipeline's proposed cost of service, recognizing that new pipeline systems face unique economic risks, including construction cost uncertainty, ramp-up of throughput volumes, and initial shipper commitments. This policy framework provides Ridgeline with a strategic advantage, as it supports the argument that Ridgeline's proposed rate reflects the actual costs of a newly constructed pipeline system and should not be evaluated under the same exacting scrutiny applied to rate increase filings by mature systems with established revenue streams. However, this presumption of reasonableness is not absolute and can be overcome by evidence that the proposed rate is inflated, unsupported, or based on unreasonable assumptions.
Return on Equity Methodology. The Commission's current methodology for evaluating proposed returns on equity in pipeline rate cases is the discounted cash flow ("DCF") proxy group analysis, as established in a line of precedent beginning with Williston Basin Interstate Pipeline Co., Opinion No. 495 (2006), and refined in subsequent orders. Under this methodology, the Commission identifies a proxy group of publicly traded companies with comparable risk profiles and uses DCF analysis to estimate a range of reasonable returns. Ridgeline's proposed ROE of 14.00% is at the upper end of the range that the Commission has approved in recent proceedings, and we anticipate that this will be a central area of contention. Our filing includes a robust DCF proxy group analysis prepared by Dr. Raymond Braswell that presents multiple valuation scenarios and identifies project-specific risk factors (including the System's recent in-service date, current utilization rate, and geographic concentration in the Appalachian Basin) that justify a premium return.
Open-Access Principles. The Commission's open-access policies, codified principally in FERC Order No. 636 and its progeny, require that interstate natural gas pipelines provide transportation service on a non-discriminatory basis, with appropriate shipper protections, capacity release rights, and electronic information posting. Ridgeline's proposed tariff has been designed to comply fully with these requirements. However, we should be mindful that intervenors may raise open-access concerns, particularly with respect to the capacity release provisions, the electronic bulletin board ("EBB") requirements, and the shipper-must-have-title provisions.
Emerging Policy Issues. Two emerging policy areas warrant monitoring as the proceeding progresses. First, the Commission has not yet established a comprehensive framework for the recovery of greenhouse gas ("GHG") emission costs in pipeline rates. While GHG cost recovery is not a central element of Ridgeline's filing at this time, intervenors or Commission Staff may raise questions about whether and how GHG-related costs should be addressed in the tariff, particularly in light of evolving state and federal environmental policies. Second, FERC Order No. 2222, which addresses the participation of distributed energy resource ("DER") aggregations in wholesale markets, may have indirect implications for pipelines that interconnect with systems serving DER-intensive markets. While Order No. 2222 is primarily directed at regional transmission organizations and independent system operators, its broader policy implications for energy infrastructure coordination should be considered as we develop Ridgeline's long-term regulatory strategy.
IV. Filing Strategy
A. Rate Case (Docket No. RP22-847-000)
1. Cost-of-Service Methodology
Ridgeline's rate filing follows the traditional cost-of-service methodology prescribed by FERC under 18 C.F.R. Part 154. Under this methodology, the pipeline's total cost of service — comprising return on rate base, depreciation, operating expenses, taxes, and revenue credits — is divided by the applicable billing determinants to derive the proposed unit rate. The cost of service is based on a test year ended March 31, 2022, which is the most recent twelve-month period for which complete financial data are available.
The rate base — the foundation of the cost-of-service calculation — represents the total capital invested in the pipeline system that is recoverable through rates. The following table summarizes the components of Ridgeline's proposed rate base:
Net plant in service of $563.71 million reflects the original construction cost of the System ($587.2 million) minus accumulated depreciation of $23.49 million, calculated at a 2.5% annual straight-line depreciation rate over the period from the System's in-service date (October 1, 2021) through the end of the test year (March 31, 2022). The working capital allowance of $18.64 million is calculated using the Commission's standard formula — one-eighth of the sum of operation and maintenance ("O&M") expenses and administrative and general ("A&G") expenses. Accumulated deferred income taxes of $12.45 million reduce rate base in accordance with the Commission's normalization requirements, reflecting the temporary differences between book and tax depreciation. Other rate base items totaling $42.50 million include gas stored for system operations, prepaid expenses, and materials and supplies inventory maintained at the three compressor stations.
Protection of the $612.40 million rate base is a paramount strategic objective of this proceeding. Any reduction in rate base — whether through challenges to the original construction cost, adjustments to depreciation methodology, or reclassification of rate base items — would directly reduce the revenue requirement and the approved rate, potentially impacting Ridgeline's ability to service its debt obligations and provide an adequate return to its equity investor.
2. Capital Structure and Return
Ridgeline's proposed capital structure and rate of return are summarized as follows:
The proposed capital structure of 55% equity and 45% debt reflects the actual capital structure of Ridgeline, based on DEH's equity contribution and the outstanding debt under Ridgeline's Senior Secured Credit Facility and Second Lien Notes. The cost of debt of 5.25% represents the weighted average cost of Ridgeline's two debt instruments: a $400 million term loan bearing interest at SOFR plus 325 basis points (with SOFR currently at approximately 1.79%, yielding a current all-in rate of approximately 5.04%) and $150 million in 7.875% Second Lien Senior Secured Notes. The weighted average cost of debt across these two instruments, accounting for the relative principal amounts outstanding, is approximately 5.25%.
The proposed return on equity ("ROE") of 14.00% is based on a discounted cash flow proxy group analysis prepared by Dr. Raymond Braswell of Braswell Energy Consulting Group LLC. Dr. Braswell's analysis identifies a proxy group of publicly traded midstream companies with risk profiles comparable to Ridgeline's and applies DCF methodology to derive a range of reasonable returns. Dr. Braswell's analysis supports an ROE at the upper end of the range, reflecting project-specific risk factors including:
•  The System's recent in-service date and early-stage operational profile;
•  The current throughput utilization rate of approximately 56.67%, which is below the industry average for mature pipeline systems;
•  Geographic concentration risk in the Appalachian Basin;
•  Construction cost and environmental compliance risk associated with a newly built pipeline;
•  Interest rate risk and refinancing risk associated with the System's leveraged capital structure; and
•  Regulatory risk inherent in a first-time rate filing before the Commission.
Applying the WACC of 10.0625% to the total rate base of $612.40 million yields a return on rate base of $61.62 million.
We recognize that the proposed ROE of 14.00% is aggressive and likely to be the single most heavily contested element of the filing. Based on our review of recent FERC precedent, approved ROEs for interstate natural gas pipeline rate cases have generally fallen in the range of 10.50% to 13.00%, with most recent approvals clustering in the 10.50% to 11.50% range. We anticipate that intervenors and FERC Trial Staff will file answering testimony proposing ROEs in the 10.50% to 11.50% range, supported by their own DCF analyses using different proxy groups, growth rates, and risk premium adjustments.
Our strategy is to file a robust and comprehensive initial ROE presentation that establishes the upper end of the range as defensible, thereby creating negotiating room for settlement discussions. In the event of settlement, we anticipate that a compromise ROE in the range of 12.50% to 13.00% may be achievable. In the event of full litigation, we must be prepared for the possibility that the ALJ or Commission may approve an ROE at or below 12.00%. If the ROE is reduced to, for example, 11.00%, the return on rate base would drop from $61.62 million to approximately $48.77 million (calculated as $612.40 million × [(0.55 × 11.00%) + (0.45 × 5.25%)] = $612.40 million × 8.4125% = approximately $51.53 million — or alternatively, applying a simple reduction of 300 basis points on the equity component: 0.55 × 3.00% × $612.40 million = $10.10 million reduction, yielding approximately $51.52 million). This reduction in return would significantly impact the total cost of service and the resulting unit rate.
3. Cost-of-Service Components
The total cost of service, which represents the revenue requirement that Ridgeline must recover through its tariff rates, is composed of the following elements:
Depreciation expense of $14.68 million reflects annual straight-line depreciation at a rate of 2.5% applied to gross plant in service. The 2.5% depreciation rate implies a 40-year useful life for the pipeline system, which is consistent with FERC precedent for interstate natural gas pipelines of this type and size. We do not anticipate significant challenges to the depreciation rate, although intervenors may argue for a shorter useful life (and correspondingly higher depreciation rate) if they contend that market or policy developments — such as the energy transition or declining natural gas demand — will shorten the economic life of the System.
Operation and maintenance expense of $12.44 million and administrative and general expense of $4.82 million are based on actual costs incurred during the test year as reported in Ridgeline's filed FERC Form 2. These amounts include labor costs, outside services, materials, insurance, compressor station fuel and power, pipeline inspection and maintenance, SCADA operations, and other routine operating costs. We anticipate that intervenors may scrutinize certain O&M and A&G line items for reasonableness, particularly any allocations from DEH or affiliate transactions that may be subject to heightened FERC review under the Commission's affiliate cost allocation policies.
Taxes other than income of $3.80 million include West Virginia and Pennsylvania ad valorem property taxes and franchise taxes applicable to the pipeline system and compressor stations. These amounts are based on actual tax assessments and payments during the test year.
Income tax allowance of $16.10 million reflects the grossed-up income tax liability on the equity component of the return, calculated at an effective income tax rate of approximately 26.13%. The effective rate is derived from the combined federal corporate income tax rate of 21.0% and the West Virginia corporate net income tax rate of 6.5%, adjusted for the deductibility of state income taxes on the federal return. The income tax allowance is calculated on the equity return only, in accordance with the Commission's policy under Consolidated Edison Co. of New York, Inc. v. FERC, 510 F.3d 333 (D.C. Cir. 2007) (commonly known as the SFPP line of cases). The availability of an income tax allowance for Ridgeline, as a single-member LLC owned by a Cayman Islands exempted limited company, may be questioned by intervenors. We have analyzed this issue and believe that Ridgeline is entitled to the income tax allowance based on its status as a taxable entity for U.S. federal income tax purposes (Ridgeline has elected to be treated as a corporation for U.S. tax purposes under Treasury Regulations § 301.7701-3).
Revenue credits of negative $16.10 million represent credits to the cost of service from non-jurisdictional revenues, including revenues from interruptible transportation, penalties, and other miscellaneous revenue sources. The net effect of the revenue credits is to reduce the cost of service that must be recovered from firm transportation rates.
4. Rate Design
Ridgeline's proposed tariff is structured as a Part 284, Subpart G, open-access transportation tariff, designated as FERC Gas Tariff, Original Volume No. 1. The tariff provides for two principal rate schedules:
•  Rate Schedule FT-1 (Firm Transportation): Provides for firm transportation service under long-term and short-term contracts. Firm transportation service is subject to a two-part rate consisting of a monthly reservation charge and a commodity (usage) charge.
•  Rate Schedule IT-1 (Interruptible Transportation): Provides for interruptible transportation service on an as-available basis, subject to a single commodity charge derived from the firm transportation rate.
The proposed billing determinants are based on a 100% load factor assumption. Under this assumption, the annual billing determinants equal the design capacity of 1,200,000 Dth/d multiplied by 365 days, yielding a total of 438,000,000 Dth per year.
Dividing the total cost of service of $97.36 million by the annual billing determinants of 438,000,000 Dth yields a proposed total recourse rate of $0.2223/Dth. This total rate is allocated between a reservation charge of $0.2223/Dth (reflecting the fixed costs of the system that are recoverable through the demand component of the rate) and a usage charge of $0.0042/Dth (reflecting variable costs, primarily compressor fuel and lost-and-unaccounted-for gas, that are recoverable through the commodity component). The total combined recourse rate is $0.2265/Dth ($0.2223 + $0.0042).
The proposed recourse rate is levelized over a 25-year period, reflecting the anticipated economic life of firm transportation service contracts and the pipeline's amortization and depreciation profiles. Levelization smooths the rate over the life of the system, avoiding the front-loading of costs that would occur under a non-levelized rate design and providing rate stability for shippers over the term of their transportation contracts.
The 100% load factor billing determinant assumption is standard for initial rate filings by new pipelines and is consistent with Commission precedent. However, as discussed in Section VII.B below, this assumption is vulnerable to challenge given Ridgeline's current throughput utilization of only 56.67%. If the Commission or intervenors successfully argue for a lower load factor assumption — for example, 75% or 85% — the billing determinants would decrease, and the per-unit rate would increase correspondingly, even though the total cost of service would remain the same or decrease only slightly. This dynamic is an important strategic consideration for both the rate case and for Ridgeline's commercial negotiations with prospective shippers.
5. Testimony Plan
Ridgeline plans to present direct testimony from seven witnesses in support of its rate filing. The filing of direct testimony is targeted for approximately November–December 2022, consistent with the anticipated procedural schedule. The planned testimony assignments are as follows:
1.  James K. Winfield, CEO & President — Mr. Winfield will provide policy testimony addressing the need for service on the Ridgeline Pipeline System, the public interest benefits of the System, Ridgeline's corporate structure and management, and the overall reasonableness of the proposed rate and tariff.
2.  Angela Moretti, VP Finance & Treasurer — Ms. Moretti will present the detailed cost-of-service analysis, including rate base calculations, capital structure, cost of debt, depreciation, O&M and A&G expenses, taxes, and revenue credits. Ms. Moretti will also address the financial condition of Ridgeline and its ability to provide reliable service.
3.  Thomas Greaves, VP Engineering & Operations — Mr. Greaves will provide engineering testimony addressing the design, construction, and operational characteristics of the Ridgeline Pipeline System, including the pipeline itself, the three compressor stations, the metering and SCADA systems, and the proposed interconnection facilities at the Wetzel County Interconnect.
4.  Dr. Natasha Orlov, Director of Rates & Regulatory — Dr. Orlov will present the rate design testimony, addressing the derivation of the proposed recourse rate from the cost of service, the structure of the two-part rate, the load factor assumptions, the tariff provisions (including the General Terms and Conditions), and the compliance of the tariff with Commission regulations and open-access requirements.
5.  Dr. Raymond Braswell (outside expert, Braswell Energy Consulting Group LLC) — Dr. Braswell will present expert testimony on the proposed return on equity and capital structure. His testimony will include a detailed DCF proxy group analysis, a discussion of alternative ROE methodologies (including capital asset pricing model and risk premium approaches), and an assessment of project-specific risk factors that justify a premium return for Ridgeline.
6.  Two additional Ridgeline witnesses (to be confirmed) — These witnesses will address operational and market topics, including throughput projections, shipper demand, market conditions in the Appalachian Basin, and competitive alternatives. The identity and specific testimony assignments for these witnesses will be confirmed as the pre-hearing phase progresses.
All testimony will be prepared in accordance with FERC's rules of practice and procedure and will be supported by exhibits, workpapers, and attachments as required. Calderwood & Harkness will coordinate the preparation of all testimony, working closely with Ridgeline's management team and outside experts.
B. Interconnection Authorization (Docket No. RP22-847-001)
1. Proposed Interconnection
The interconnection application seeks authorization for the construction and operation of new interconnection facilities at the Wetzel County Interconnect, where Ridgeline's System will physically tie into ATPC's existing 30-inch mainline. The proposed interconnection is located at Milepost 0.0 of the Ridgeline Pipeline System (equivalent to ATPC Milepost 412.6 on ATPC's mainline), in Wetzel County, West Virginia.
The proposed interconnection facilities include a new meter station and pig launcher/receiver to be constructed at the Wetzel County Interconnect site. The interconnection is designed to accommodate an initial bidirectional flow capacity of 800 MMcf/d, with the physical infrastructure engineered to be expandable to 1.2 Bcf/d (the full design capacity of the Ridgeline System) without the need for major additional construction. Bidirectional flow capability is a critical design feature, as it provides operational flexibility to accommodate varying flow conditions on both the Ridgeline and ATPC systems, including reverse-flow scenarios during periods of high downstream demand or system imbalances.
The target in-service date for the interconnection facilities is the fourth quarter of 2023. This target date assumes timely authorization by the Commission and an approximately 12-month construction timeline from the date of authorization. As discussed in Section VII.G below, any prolonged litigation or procedural delays in the proceeding could push the in-service date beyond Q4 2023, with consequent impacts on throughput projections, shipper commitments, and lender covenant compliance.
2. Interconnection Facilities
The total estimated cost of the interconnection facilities is $22.3 million. This cost encompasses the meter station, pig launcher/receiver, associated piping and valves, metering equipment, SCADA integration, site preparation, civil works, and engineering and project management costs.
The proposed cost allocation between Ridgeline and ATPC is as follows:
Ridgeline's proposed cost allocation is based on a detailed cost-causation analysis that considers the relative benefits and usage of the interconnection facilities by each pipeline system. The analysis reflects several factors supporting a disproportionate allocation to ATPC:
•  System size and capacity differential: ATPC's system is substantially larger than Ridgeline's, with 640 miles of pipeline and 3.8 Bcf/d of capacity, compared to Ridgeline's 187 miles and 1.2 Bcf/d. The interconnection provides ATPC with access to additional supply sources that will flow onto ATPC's larger system and serve ATPC's broader customer base.
•  Existing customer base: ATPC's existing shipper base includes major industrial and utility customers across Pennsylvania, Ohio, and New York. These customers will benefit directly from the additional supply diversity and reliability provided by the interconnection with Ridgeline.
•  Incremental throughput benefit: ATPC stands to gain a greater absolute volume of throughput from the interconnection than Ridgeline, given ATPC's larger capacity and broader market reach.
•  Precedent: The Commission's policy on interconnection cost allocation, as articulated in Order No. 2004 and related proceedings, supports cost-causation-based allocation that reflects the relative benefit to each interconnecting system.
The metering equipment at the interconnection station will include ultrasonic flow meters (three runs, 12-inch diameter), gas chromatographs for real-time gas quality analysis, and full SCADA integration for remote monitoring and control. These specifications are designed to meet or exceed the Commission's metering accuracy standards and industry best practices for custody transfer measurement at major interstate pipeline interconnections.
We anticipate that cost allocation will be a major point of contention with ATPC. Based on our assessment of ATPC's likely position (discussed in detail in Section V.A below), ATPC will likely propose a 50/50 cost allocation ($11.15 million each), or may even argue that Ridgeline should bear a larger share as the party requesting the interconnection. Our cost-causation analysis provides a strong evidentiary basis for the proposed 34.1/65.9 split, but the outcome will depend on the weight the Commission gives to the various cost allocation factors and on the negotiation dynamics between the parties.
3. Interconnection Agreement
A draft Interconnection Agreement will be prepared by Calderwood & Harkness and filed as an exhibit to the interconnection application. The Interconnection Agreement is intended to serve as the governing document for the operational and commercial relationship between Ridgeline and ATPC at the Wetzel County Interconnect. The draft agreement will address the following key topics:
•  Metering specifications: Detailed technical requirements for the custody transfer metering equipment, including accuracy standards, calibration procedures, and dispute resolution for measurement discrepancies.
•  Operational flow protocols: Procedures for scheduling and confirming gas flows across the interconnection, including nomination deadlines, confirmation cycles, and operational balancing.
•  Maintenance responsibilities: Allocation of responsibility for the maintenance, repair, and replacement of interconnection facilities between Ridgeline and ATPC.
•  Capacity allocation: Methodology for allocating interconnection capacity between firm and interruptible service, and between the two interconnecting pipelines.
•  Gas quality standards: Specifications for the quality of natural gas delivered at the interconnection, including BTU content, moisture content, hydrogen sulfide, carbon dioxide, and other impurities.
•  Force majeure: Provisions addressing the parties' rights and obligations in the event of force majeure events that affect the operation of the interconnection.
•  Term and renewal: The initial term of the agreement and provisions for renewal or termination.
•  Indemnification and liability: Allocation of liability for losses, damages, and claims arising from the operation of the interconnection facilities.
We anticipate that the Commission may require the filing of the Interconnection Agreement as a separate rate schedule within Ridgeline's FERC Gas Tariff. This requirement, if imposed, would subject the Interconnection Agreement to the same regulatory review and modification authority as the tariff rate schedules themselves. We will monitor this issue and prepare for the possibility of a rate schedule filing.
The target date for completion of the draft Interconnection Agreement and submission to ATPC for review is July 2022.
C. Coordination Between Rate Case and Interconnection Proceedings
Both proceedings have been filed in a consolidated docket structure — RP22-847-000 for the rate case and RP22-847-001 for the interconnection — to enable coordinated review by the Commission. This consolidated structure reflects our strategic determination that the rate case and interconnection proceedings are substantively interdependent and should be evaluated as components of a single integrated filing.
The strategic rationale for consolidated filing is twofold. First, the interconnection proceeding provides an opportunity to demonstrate the system benefits and public interest justification that support the rate filing. The Wetzel County Interconnect will enhance the Ridgeline System's operational flexibility, increase access to supply sources, and improve reliability of service — all factors that the Commission considers in evaluating the reasonableness of a proposed rate. Second, the rate filing's revenue requirements are partly dependent on assumptions about interconnection capacity utilization. Specifically, the throughput projections that underlie the 100% load factor billing determinant assumption are premised, in part, on the availability of the interconnection with ATPC as a primary receipt point for gas entering the Ridgeline System.
This interdependence, however, creates a corresponding risk. If the interconnection authorization is delayed or denied, the throughput projections supporting the rate filing may need to be revised downward. A denial of the interconnection would eliminate the Wetzel County Interconnect as a receipt point, potentially reducing the System's accessible supply base and throughput volumes. A delay in interconnection authorization would push back the in-service date for the interconnection facilities, extending the period during which the System operates without the benefit of the ATPC connection. Either outcome could undermine the rate case by calling into question the reasonableness of the billing determinants and the underlying market demand assumptions. We will monitor this risk closely and be prepared to adjust the rate case presentation if developments in the interconnection proceeding require it.
V. Anticipated Parties and Their Positions
A. Appalachian Trunk Pipeline Company, LLC (ATPC)
Appalachian Trunk Pipeline Company, LLC ("ATPC") is a limited liability company organized under the laws of the Commonwealth of Pennsylvania. ATPC's Employer Identification Number is 25-1987643 and its FERC Code is 840117. ATPC's principal office is located at 2200 Penn Center West, Suite 300, Pittsburgh, Pennsylvania 15276.
ATPC is a wholly-owned subsidiary of Tidewater Infrastructure Partners LP, a Delaware limited partnership whose general partner is Tidewater GP Inc. Tidewater Infrastructure Partners is controlled by the Alderman family, a prominent Pittsburgh-based family with longstanding investments in energy infrastructure. The estimated enterprise value of Tidewater Infrastructure Partners is approximately $6.1 billion, making it one of the largest privately held midstream energy platforms in the Appalachian Basin.
ATPC's key personnel include Marcus R. Alderman, President and CEO, and Sandra K. Fenton, VP Regulatory Affairs. ATPC's outside counsel for this proceeding is Kellner, Royce & Dillard LLP, represented by William Pratt, Senior Partner, with offices at One PPG Place, Suite 2800, Pittsburgh, Pennsylvania 15222. Kellner, Royce & Dillard is a well-regarded regional energy law firm with extensive experience before FERC.
ATPC operates a 640-mile interstate natural gas pipeline system with a total capacity of 3.8 Bcf/d, serving markets in Pennsylvania, Ohio, and New York. ATPC's system is one of the principal natural gas transmission pipelines in the northeastern United States and has been in operation for over three decades. ATPC's established market position, large customer base, and experienced regulatory team make it a formidable participant in this proceeding.
Expected Position. We anticipate that ATPC will intervene in both dockets and file a protest raising the following principal objections:
Interconnection cost allocation: ATPC will oppose Ridgeline's proposed 34.1/65.9 cost allocation for the $22.3 million interconnection facilities. ATPC is expected to argue that a 50/50 cost allocation ($11.15 million each) is more appropriate, or that Ridgeline should bear an even larger share as the party initiating the interconnection request. ATPC's position will likely be framed as a fairness argument — that ATPC should not be required to bear a disproportionate share of costs for facilities that primarily benefit Ridgeline's system.
Metering station design: ATPC may challenge the adequacy of Ridgeline's proposed metering station design, arguing that additional or upgraded metering equipment is required to ensure accurate custody transfer measurement at the interconnection point. Any challenge to the metering design could increase the total interconnection cost or require design modifications that delay the construction schedule.
Return on equity: ATPC is expected to challenge Ridgeline's proposed 14.00% ROE as excessive and unsupported by market conditions. ATPC may retain its own rate expert to present an alternative DCF analysis supporting a lower ROE. While ATPC is primarily a pipeline operator rather than a shipper, ATPC has a strategic interest in the outcome of the ROE determination because a high approved ROE for Ridgeline could establish a precedent that shippers and other parties invoke in future ATPC rate proceedings.
The intervention/protest deadline is August 15, 2022. We anticipate that ATPC will file a timely protest raising all of the above issues.
B. Mountainside Gas Producers Coalition (MGPC)
The Mountainside Gas Producers Coalition ("MGPC") is an unincorporated association of 14 independent natural gas producers operating in the Marcellus and Utica shale formations in West Virginia, Ohio, and Pennsylvania. MGPC's principal contact is Calvin Dreyer, Executive Director, with offices at 1100 Main Street, Suite 210, Morgantown, West Virginia 26505.
MGPC's outside counsel for this proceeding is Whitmore & Sable LLP, represented by Rebekah Montague, Partner, with offices at 1200 New Hampshire Avenue NW, Suite 600, Washington, DC 20036. Whitmore & Sable has an active FERC practice and has represented producer groups in several recent interstate pipeline rate cases.
Expected Position. MGPC's position is expected to be mixed — generally supportive of the interconnection but opposed to the proposed recourse rate:
Support for interconnection: MGPC's member producers are likely to support the proposed Wetzel County Interconnect because it provides additional takeaway capacity for Marcellus and Utica shale production. Additional pipeline interconnection capacity in the Appalachian Basin is a priority for MGPC's members, who have experienced capacity constraints that depress realized wellhead prices.
Opposition to proposed rate: MGPC is expected to oppose Ridgeline's proposed recourse rate of $0.2265/Dth as excessive. MGPC will likely argue that the rate imposes an unreasonable burden on producers who ship gas on the Ridgeline System or who are indirectly affected by the rate through downstream transportation cost allocations. MGPC may retain an independent rate expert — likely a credentialed energy economist with FERC experience — to file testimony presenting an alternative cost-of-service analysis with a lower ROE, different load factor assumptions, and/or challenged O&M and A&G expense levels.
MGPC's participation adds an important dimension to the proceeding. As a producer group, MGPC represents the upstream supply interests that generate throughput on the Ridgeline System. Their support for the interconnection strengthens the public convenience and necessity case, while their opposition to the rate level ensures that the cost-of-service analysis will be tested from a shipper perspective.
C. Clearwater Municipal Gas Authority (CMGA)
The Clearwater Municipal Gas Authority ("CMGA") is a municipal authority organized under the Pennsylvania Municipality Authorities Act, 53 Pa. C.S. §§ 5601 et seq. CMGA's principal office is located at 455 Market Street, Clearwater, Pennsylvania 15330, and its General Manager is Dennis Ott.
CMGA's outside counsel is Fordham Municipal Law Group PC, represented by Stephen Greer, Principal, with offices at 312 Adams Avenue, Suite 100, Scranton, Pennsylvania 18503.
Expected Position. CMGA's primary concern is the potential for increased rates on ATPC's system resulting from pass-through of interconnection costs that ATPC is required to bear. CMGA is a customer on ATPC's system and would be directly affected if ATPC's rates increase as a result of the interconnection cost allocation. Accordingly, CMGA is expected to support ATPC's position on cost allocation and to oppose any allocation that imposes a disproportionate cost burden on ATPC.
CMGA may also oppose the rate level in Ridgeline's filing if it believes that a high approved rate for Ridgeline could set an unfavorable precedent for future rate proceedings by other pipelines serving the same market area. As a municipal authority serving residential and small commercial customers, CMGA is sensitive to any developments that could increase the cost of natural gas transportation to its service territory.
D. FERC Trial Staff
FERC Trial Staff — comprising attorneys from the Office of the General Counsel and analysts from the Office of Energy Market Regulation — will be an active participant in both dockets. The lead trial attorney will be assigned after the Notice of Filing is issued. FERC Trial Staff's position in the proceeding is independent of the Commission itself: Staff may support, oppose, or seek modification of any element of Ridgeline's proposals, based on its own analysis of the cost of service, rate design, and interconnection issues.
FERC Trial Staff will file its own testimony in the rate case, typically presenting an independent cost-of-service analysis that may confirm, adjust, or challenge Ridgeline's proposed cost-of-service components. Staff testimony frequently addresses ROE (often presenting a separate DCF proxy group analysis), depreciation rates, O&M and A&G expense levels, working capital methodology, and tax calculations.
A key risk associated with FERC Trial Staff's participation is the potential for a deficiency information request. If Staff's initial review of the filing identifies incomplete or inadequately supported elements, Staff may issue a formal deficiency letter requiring supplemental filings before the proceeding can advance. A deficiency letter can delay the proceeding by several months, as the response time typically ranges from 30 to 90 days, and the Commission's review of the supplemental filing can take additional time.
E. Other Potential Intervenors
In addition to the parties discussed above, we anticipate that the following types of entities may seek to intervene in the proceeding:
•  State public utility commissions: The West Virginia Public Service Commission and the Pennsylvania Public Utility Commission may file comments or limited interventions to protect their respective states' interests in the proceeding. While state commissions do not have jurisdiction over FERC-regulated rates, they frequently participate in FERC proceedings to provide input on issues affecting their states' energy markets and consumers.
•  Other shippers or prospective shippers: Other shippers or prospective shippers on the Ridgeline System may seek to intervene to protect their interests in the rate determination. Any shipper that has entered into or is negotiating a transportation agreement with Ridgeline would have a direct interest in the approved rate level and tariff terms.
•  Environmental groups: If greenhouse gas emissions, environmental impacts, or climate-related issues are raised in the proceeding — either by parties or by the Commission on its own motion — environmental advocacy organizations may seek to intervene. While environmental issues are not a central focus of the current filing, the Commission's evolving approach to environmental review and GHG analysis creates a possibility that environmental intervenors may seek a forum in this proceeding.
•  Adjacent pipeline operators: Other pipeline operators with systems adjacent to or interconnected with the Ridgeline System or ATPC's system may intervene to protect their competitive and operational interests. Any adjacent pipeline that could be affected by the interconnection or by changes in the flow dynamics of the regional pipeline network may have a legitimate interest in the proceeding.
VI. Anticipated Procedural Timeline
The following timeline reflects our best assessment of the anticipated procedural milestones in this proceeding, based on current FERC practice and the complexity of the issues presented. We caution that procedural schedules in FERC rate cases are subject to extension, modification, and delay, and the actual schedule may differ materially from these estimates. We will update this timeline as the proceeding progresses and as the Commission establishes formal procedural deadlines.
A. Near-Term (May–September 2022)
May 12, 2022 — Application Filed. Ridgeline's application was filed with the Commission today. The filing includes the application, transmittal letter, proposed FERC Gas Tariff (Original Volume No. 1), all supporting exhibits required under 18 C.F.R. Parts 154 and 157, verification by James K. Winfield, and notice of appearance designating George Trujillo as lead counsel.
Approximately June 2022 — FERC Issues Notice of Filing. Following receipt and initial review of the application, the Commission's Office of the Secretary is expected to issue a Notice of Filing. The Notice will be published in the Federal Register and posted on the Commission's eLibrary system. The Notice will establish the deadline for motions to intervene and protests, which is typically 60 days after the date of the Notice. Based on a projected Notice date in June 2022, we estimate an intervention/protest deadline of approximately August 2022.
July–August 2022 — Intervention and Protest Filings. We anticipate that ATPC, MGPC, CMGA, and potentially other parties identified in Section V above will file timely motions to intervene and, in the case of ATPC and MGPC, protests or comments raising subs

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