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Appendix J
PSNC FERC Response

UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Mountain Valley Pipeline, LLC ) Docket No. CP 19-14-000
MOTION FOR LEAVE TO ANSWER, ANSWER, AND MOTION TO LODGE OF
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
Public Service Company of North Carolina, Incorporated ("PSNC") hereby submits
this answer ("Answer"),' along with a motion for leave to answer and motion to
lodge (collectively, the "Motions"),2 in response to certain protests,3 comments 4 and a
' PSNC moves for leave to submit this Answer pursuant to Rules 212 and 213 of the Rules of Practice and
Procedure of the Federal Energy Regulatory Commission ("Commission"), 18 C.F.R. §§ 385.212 &
385.213(a) (2018). Under Rule 213(a)(2) of the Commission's Rules of Practice and Procedure, 18 C.F.R.
§ 385.213(a)(2), the Commission may accept an answer to a protest for good cause. The Commission will
accept an answer to a protest where the answer clarifies the record and assists the Commission in its decision-
making. See, e.g., Entergy Nuclear FitzPatrick, LLC, 157 FERC ¶ 61,183, at P 15 (2016) (accepting answer
that aided in decision-making); Texas Gas Transmission, LLC, 138 FERC ¶ 61,228, at P 4 (2012) (accepting
an answer to a protest that provided information that assisted the Commission's decision-making process);
Equitrans, L.P., 138 FERC ¶ 61,229, at P 8 (2012) (accepting an answer to a protest "because it provides a
more complete record in this proceeding"); ANR Pipeline Co., 107 FERC ¶ 61,094, at P 15 (2004) (accepting
answer to protests that provided relevant information and led to a more complete and accurate record); Cal.
Indep. Sys. Operator Corp., 104 FERC ¶ 61,129, at P 5 (2003) (accepting answer that clarified issues and
aided in decision-making). PSNC respectfully submits that the Commission should accept this Answer
because it provides information that will assist in the Commission's decision-making process, it clarifies the
issues under consideration, and it will lead to creation of a more complete record.
z As noted in footnote 1 above, PSNC makes the motion for leave to answer pursuant to Rules 212 and 213
of the Commission's Rules of Practice and Procedure, 18 C.F.R. §§ 385.212 & 385.213. PSNC submits the
motion to lodge, discussed below, pursuant to Rule 212 of the Commission's Rules of Practice and Procedure,
18 C.F.R. § 385.212.
3 Notice of Intervention and Protest of Proposed Recourse Rates of the North Carolina Utilities Commission,
Docket Nos. CP19-14-000 and PF18-4-000 (Dec. 10, 2018) ("NCUC Protest"); Motion to Intervene and
Protest of Appalachian Mountain Advocates, Appalachian Voices, Center for Biological Diversity,
Chesapeake Climate Action Network, Haw River Assembly, and the Sierra Club, Docket No. CP 19-14-000
(Dec. 10, 2018) ("Appalachian Protest").
4 Comments of Janine Tokarczyk, Docket No. CP 19-14-000 (Nov. 29, 2018); Comments of John Tokarczyk,
Docket No. CP19-14-000 (Dec. 1, 2018) (collectively with the Comments of Janine Tokarczyk, the
"Tokarczyk Comments").

notices filed in the above -captioned proceeding. PSNC supports the November 6, 2018
application filed by Mountain Valley Pipeline, LLC ("MVP"), which requests
authorizations for MVP to construct and operate a new natural gas pipeline commencing
near Chatham, Virginia and terminating near Graham, North Carolina, along with related
compression and appurtenant facilities (the "Southgate Project"). PSNC submits this
Answer to clarify and supplement the record as relevant to the assertions raised by the
protestors and commenters listed herein.
I.
ANSWER AND MOTION TO LODGE
The Commission should grant the Application. PSNC would show as follows:
A. The Southgate Project is Necessary to Meet Growing Demand in North
Carolina.
The Southgate Project is necessary for PSNC to provide reliable service to its
customers, as explained in PSNC's December 10, 2018 comments in this proceeding.' The
NCDEQ Notice, Appalachian Protest, and Tokarczyk Comments question whether the
Southgate Project is needed and (in the case of the NCDEQ Notice and Appalachian
Protest) claim that an indirect affiliate relationship between MVP and PSNC undermines
the ability of the precedent agreement committing PSNC to take service on the Southgate
Project ("Precedent Agreement") to demonstrate market demand. Regardless of the merit
of the contention that a legally -binding precedent agreement between two affiliates should
5 Notice of Intervention/Motion to Intervene and Obtain Parry Status to Proceedings for the Mountain Valley
Pipeline, LLC, Southgate Project, Docket Nos. CP19-14-000 and PF18-4-000 (Dec. 10, 2018) ("NCDEQ
Notice").
6 Application of Mountain Valley Pipeline, LLC for Authorization to Construct and Operate Pipeline
Facilities under the Natural Gas Act, Docket No. CP19-14 (Nov. 6, 2018) ("Application").
' Motion for Leave to Intervene and Comments in Support of Public Service Company of North Carolina,
Incorporated at 3-4, Docket No. CP19-14-000(Dec. 10, 2018) ("PSNC Comments").
2

somehow be given less weight in making a market need determination, PSNC clarifies for
the record that it is not now affiliated in any way with MVP. PSNC no longer holds an
equity interest in MVP. 8
The PSNC Comments also refer to two North Carolina Utilities Commission
("NCUC") proceedings that shed light on the need for the Southgate Project and the
propriety of its underlying ownership arrangements.9 The record in this proceeding will
benefit from additional detail concerning the material PSNC submitted to the NCUC in
connection with the Southgate Project, as well as the complete text of the orders in those
proceedings (collectively, the "NCUC Materials"). Accordingly, PSNC moves to lodge
into the record in this proceeding Exhibits A through D, attached hereto and described
further below.
PSNC submitted testimony concerning the need for the Southgate Project in NCUC
Docket No. G-5, SUB 591, where the NCUC performed its annual prudence review of
PSNC's gas costs, and the public version of that testimony is included as Exhibit A
hereto. 10 The Jackson Testimony states that "PSNC projects that by the winter of 2019-20
it will need additional interstate capacity to serve expected peak -day requirements," and
attaches a table showing the forecasted peak -day demand requirements for winter seasons
'See Change in Ownership, Docket No. CP19-14-000 (Dec. 20, 2018) (stating that "PSNC no longer has any
equity interest in the Southgate Project").
9 PSNC Comments at 4, nn. 9-10 (citing NCUC Docket Nos. G-5, SUB 593 and G-5, SUB 591).
10 Exhibit A (Direct Testimony and Exhibits of Rose M. Jackson, Docket No. G-5, SUB 591 (N.C. Util.
Comm'n June 1, 2018, as corrected and admitted, respectively, during Aug. 14, 2018 NCUC hearing), Public
Version ("Jackson Testimony")).
3

from 2017-18 through 2022-23.11 The table shows a shortage of 7,710 dekatherms per day
("Dth/d") beginning in 2019-20, rising to 62,111 Dth/d by 2022-23.12
In addition, a significant amount of the subscribed capacity shown in the table is
for secondary firm service as backhaul and thus has a lower scheduling priority than will
the capacity provided by the Southgate Project. This issue takes on greater significance as
flows become increasingly bidirectional on the pipelines that PSNC uses. The NCUC has
expressed "serious concern" about the secondary nature of such capacity. 13
The Jackson Testimony provides a lengthy, and largely confidential, explanation of
the steps PSNC has taken "in connection with its acquisition of additional interstate
pipeline capacity." 14 It explains that the steps PSNC has taken "to meet forecasted
incremental demand on the PSNC system"" include entry into the Precedent Agreement,
which will provide 300,000 Dth/d of capacity, 50,000 of which "will be used by PSNC to
receive primary firm, forward -haul deliveries directly from East Tennessee through a new
interconnection with MVP." 16 It also sets forth confidential commercial details concerning
the acquisition of the Southgate Project capacity and other commercial arrangements that
PSNC has made in conjunction with its gas supply needs. 17
" Id. at 8, 20 (Jackson Testimony at 7:5-7 and Jackson Revised Exhibit 1).
12 Id. at 20 (Jackson Revised Exhibit 1).
" Exhibit B (In the Matter of Application of Public Service Company of North Carolina, Inc. for Annual
Review of Gas Costs Pursuant to N.C.G.S. § 62-133.4(c) and Commission Rule RI -17(k)(6) at 13, Docket
No. G-5, Sub 591 (N.C. Util. Comm'n Dec. 6, 2018)) (discussing increasing use of secondary capacity and
stating that "[t]he delays being experienced by [the Atlantic Coast Pipeline] and MVP are a matter of serious
concern").
14 Exhibit A at 12 (Jackson Testimony at 11:2-3); see id. at 12-15 (Jackson Testimony at 11:1-14:18).
15 Id. at 14 (Jackson Testimony at 13:21-22).
16 Id. at 15 (Jackson Testimony at 14:2-9).
" See id. at 12-15 (Jackson Testimony at 11:11-14:18 (redacted portions)).
E

PSNC also explained the need for the Southgate Project in NCUC Docket No. G-
5, SUB 593, where it requested that the NCUC approve payment of compensation by PSNC
to MVP under a service agreement for the Southgate Project ("Southgate Service
Agreement"). PSNC's application in that proceeding is attached hereto as Exhibit C.18
The Payment Authorization Application explains that payment of compensation under the
Southgate Service Agreement is "just and reasonable and in the public interest" because
the Southgate Project will: (i) "provide PSNC access to the MVP capacity, which
constitutes the best -cost alternative available to satisfy the Company's long-term interstate
capacity needs;" (ii) increase reliability, resiliency, and direct access to low-cost natural
gas produced in the Marcellus and Utica shale regions; (iii) contribute to optionality of
natural gas supply sources; (iv) allow PSNC to replace secondary -firm backhaul deliveries
with primary -firm forward -haul deliveries; and (v) operate using a minimum delivery
pressure guarantee, increasing PSNC's confidence in its system modeling and leading to
operational enhancements. 19 The Payment Authorization Application also attached the
Precedent Agreement and a credit agreement for the Southgate Project as confidential
exhibits for the NCUC's review. 20
The PSNC Comments explained that the concerns referenced in the NCDEQ Notice
are based on incomplete information. 21 After examining the detailed public and non-public
18 Exhibit C (Application of Public Service Company of North Carolina, Inc., In the Matter of Application
of Public Service Company of North Carolina, Inc., for Approval of Payment of Compensation under a
Service Agreement with Mountain Valley Pipeline, LLC, Docket No. G-5, SUB 593 (N.C. Util. Comm'nAug.
16, 2018) ("Payment Authorization Application")). North Carolina law required PSNC to obtain
authorization for the payment of compensation under the Southgate Service Agreement because PSNC and
MVP were indirect affiliates at the time. See id. at 5.
19 Id. at 7-8 (Payment Authorization Application at 6-7).
20 Id. at 5 (Payment Authorization Application at 4, n.3 and Exhibit B to Payment Authorization Application).
21 PSNC Comments at 3-4.
5

information submitted in the Jackson Testimony and the Payment Authorization
Application, the NCUC approved the Southgate Project as beneficial to North Carolina
consumers 22 and granted the Payment Authorization Application. 23 To ensure that the
NCUC's complete reasoning is reflected in the record in this proceeding, PSNC attaches
the NCUC's orders as Exhibits B and D hereto.
B. The NCUC Protest Reflects Flawed Assumptions Concerning Negotiation of
the Precedent Agreement.
The NCUC Protest operates on the incorrect assumption that PSNC was aware of
MVP's proposed recourse rate, as well as the return on equity and depreciation rate
underlying it, at the time PSNC negotiated the Precedent Agreement. This reflects a
misunderstanding of how the Precedent Agreement was negotiated. Consistent with
industry practice, PSNC negotiated with MVP to determine the rate at which PSNC will
take service. This negotiation was based on numerous factors, including (i) an estimated
recourse rate provided by MVP that was subject to change given numerous variables,
including total volume subscribed for the Southgate Project and total actual cost, and (ii)
PSNC's knowledge of rates being offered for competing projects. Pipelines usually do not
break down such estimates and reveal assumptions regarding return, depreciation, or other
items affecting the rate, and MVP accordingly did not provide such information to PSNC
in the negotiation process.
The negotiated rate that resulted from the discussions leading to the Precedent
Agreement was the best rate being offered for similar capacity in the marketplace at the
22 Exhibit B at 12-13.
23 Exhibit D (Order Accepting Affiliated Agreements for Filing and Permitting Operation Thereunder
Pursuant to N.C. Gen. Stat. §62-153, Docket No. G-5, SUB 593 (N.C. Util. Comm'n Oct. 9, 2018)); also
included in the Application as Exhibit Z-1.
I

time it was negotiated. PSNC also understood at that time that its negotiated rate would be
lower than the Southgate Project recourse rate. As the anchor shipper on the Southgate
Project, PSNC would continue to expect that the recourse rate would be higher than its
negotiated rate.
II.
CONCLUSION
For the reasons stated herein, PSNC respectfully asks the Commission to (i) grant
the Motions, thereby accepting the Answer and lodging Exhibits A through D into the
record, and (ii) grant the Application.
December 28, 2018
7
Respectfully submitted,
/s/.Tames E. Olson
James E. Olson
Erica E. Youngstrom
JONES DAY
717 Texas, Suite 3300
Houston, TX 77002
Telephone: [phone]
[e-mail]
[e-mail]
B. Craig Collins
SCANA Services, Inc.
Mail Code C222
220 Operation Way
Cayce, South Carolina 29033-2701
Telephone: [phone]
[e-mail]
Attorneys for Public Service Company of
North Carolina, Incorporated

EXHIBIT A

Exhibit A
Pagel of 30
LL
LL
BEFORE THE
NORTH CAROLINA UTILITIES COMMISSION
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
DOCKET NO. G-5, SUB 591
DIRECT TESTIMONY
OF
ROSE M. JACKSON
JUNE 1, 2018

Exhibit A
Page 2 of 30
1 Q. PLEASE STATE YOUR NAME, BUSINESS ADDRESS, BY WHOM YOU
2 ARE EMPLOYED, AND IN WHAT CAPACITY.
3 A. My name is Rose M. Jackson and my business address is 1300 12th Street, Suite
4 F, Cayce, South Carolina. I am employed by SCANA Services, Inc. ("SCANA
5 Services") as General Manager — Supply & Asset Management.
6 Q. WHAT ARE YOUR RESPONSIBILITIES?
7 A. I am responsible for managing the Gas Supply Group ("Gas Supply"), which
8 supports the gas supply and capacity management functions for Public Service
9 Company of North Carolina, Incorporated, d/b/a PSNC Energy ("PSNC" or the
10 "Company"), and South Carolina Electric & Gas Company, the two regulated
11 utility subsidiaries of SCANA Corporation ("SCANA"). Gas Supply's specific
12 responsibilities include planning and procurement of gas supply and pipeline
13 capacity, nominations and scheduling related to natural gas transportation and
14 storage services on interstate pipelines and PSNC's system, gas cost
15 accounting, state and federal regulatory issues concerning supply and capacity,
16 asset and risk management, and gas transportation administration.
17 Q. PLEASE SUMMARIZE YOUR EDUCATIONAL AND PROFESSIONAL
18 BACKGROUND.
19 A. I graduated from the University of South Carolina in 1988 with a Bachelor of
20 Science degree in Accounting. Following graduation, I worked as an
21 accountant for a national security services firm. In 1992, I began my
22 employment with SCANA as an accountant. Over the years, I have held various
23 positions of increasing responsibility related to gas procurement, interstate
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 1 of 18

Exhibit A
Page 3 of 30
1 pipeline and local distribution company scheduling, and preparation of gas
2 accounting information. In May 2002, I became Manager of Operations and
3 Gas Accounting with SCANA Services where I was responsible for gas
4 scheduling on interstate pipelines and gas accounting for all SCANA
5 subsidiaries. In November 2003, I became Fuels Planning Manager where I
6 assisted all SCANA subsidiaries with strategic planning and special projects
7 associated with natural gas. I held this position until promoted to my current
8 position in December 2005.
9 Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE THIS COMMISSION?
10 A. Yes. I have presented testimony on behalf of PSNC many times, including its
11 last five annual gas cost reviews.
12 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS
13 PROCEEDING?
14 A. North Carolina General Statute Section 62-133.4 allows PSNC to track and
15 recover from its customers the cost of natural gas supply and transportation and
16 to adjust customer charges to reflect changes in those costs. Under subsection
17 (c) of the statute, the Commission must conduct an annual review of PSNC's
18 gas costs, comparing the Company's prudently incurred costs with the costs
19 recovered from customers during a 12 -month test period. To facilitate this
20 review, Commission Rule R1 -17(k)(6) requires PSNC to submit to the
21 Commission, on or before June 1 of each year, certain information for the 12-
22 month test period ended March 31.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 2 of 18

Exhibit A
Page 4 of 30
1 The purpose of my testimony is to demonstrate that all PSNC gas costs
2 were prudently incurred during the review period ended March 31, 2018, and
3 therefore meet the requirement for recovery. My testimony also provides the
4 Commission with information pursuant to the Order Requiring Reporting
5 issued in Docket No. G-100, Sub 91, and describes the Federal Energy
6 Regulatory Commission ("FERC") proceedings in which PSNC participated,
7 as required by the Commission's Order on Annual Review of Gas Costs issued
8 in Docket No. G-5, Sub 533. In addition to my testimony, PSNC is submitting
9 the direct testimony and schedules of Candace A. Paton for the purpose of
10 providing the Commission with data necessary to true -up PSNC's gas costs
11 during the review period.
12 Q. PLEASE BRIEFLY DESCRIBE PSNC AND THE COMPOSITION OF ITS
13 MARKET.
14 A. PSNC is a local distribution company primarily engaged in the purchase,
15 transportation, distribution, and sale of natural gas to more than 563,000
16 customers in North Carolina. Approximately half of PSNC's throughput during
17 the review period was comprised of deliveries to industrial or large commercial
18 customers that either purchased gas from PSNC or transported gas on PSNC's
19 system. Many of these customers were served under interruptible rate
20 schedules. The remainder of PSNC's throughput consisted of firm sales service
21 to residential and small and medium commercial customers.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 3 of 18

Exhibit A
Page 5 of 30
1 Q. PLEASE DESCRIBE PSNC'S GAS SUPPLY PROCUREMENT POLICY.
2 A. PSNC's system and its gas supply procurement policy are designed to serve LLLL
0
3 firm customers reliably on a peak day. In providing sales services, the
4 Company must acquire supplies of natural gas and arrange for their delivery to
5 PSNC's system. The most appropriate description of PSNC's gas supply
6 procurement policy would be a best -cost supply strategy, which is based on
7 three primary criteria: supply security, operational flexibility, and cost of gas
8 The first and foremost criterion is security of gas supply, which refers
9 to the assurance that the supply of gas will be available when needed for
10 PSNC's firm sales customers. Supply security is obtained through PSNC's
11 diverse portfolio of suppliers, receipt points, purchase quantity commitments,
12 and terms. Potential suppliers are evaluated on a variety of factors, including
13 past performance, creditworthiness, available terms, gas deliverability options,
14 and supply location.
15 The second criterion is maintaining the necessary operational flexibility
16 that will enable PSNC to react to the effects of unpredictable weather on firm
17 sales customer usage. PSNC's gas supply portfolio must be capable of handling
18 the monthly, daily, and hourly changes in these customers' demand needs.
19 Operational flexibility largely results from PSNC's gas supply agreements
20 having different purchase commitments and swing capabilities (for example,
21 the ability to adjust purchased gas within the contract volume on either a
22 monthly or daily basis) and from PSNC's injections into and withdrawals out
23 of storage.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 4 of 18

Exhibit A
Page 6 of 30
1 The third criterion is the cost of gas. In evaluating costs, it is important
2 to consider not only the actual commodity cost, but also any transportationLL
LL-
0
3 related charges such as reservation, usage, and fuel charges. PSNC routinely
4 requests gas supply bids from suppliers to help ensure cost-effective proposals.
co
5 In requests for proposal, suppliers are asked to submit alternative pricing C)
6 options they believe may be of interest or value to PSNC and its customers. CD
CD
7 Typically, the greater the flexibility that PSNC has with a supply contract, the
8 higher the premium assessed. In securing natural gas supply for its customers,
9 PSNC remains committed to acquiring the most cost-effective supplies of gas
10 available while maintaining the necessary supply security and operational
11 flexibility.
12 Q. WHAT TYPES OF SUPPLY CONTRACTS DOES PSNC HAVE IN ITS
13 PORTFOLIO?
14 A. PSNC has developed a gas supply portfolio made up of long-term agreements
15 and supplemental short-term agreements with a variety of suppliers, including
16 both producers and independent marketers. The portfolio includes:
17 • Baseload contracts, which provide fixed volumes of gas each
18 day of the contract term.
19 • Physical option contracts, which provide flexibility to modify
20 the volumes delivered on a monthly or daily basis in order to
21 address changing demands and weather patterns.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 5 of 18

Exhibit A
Page 7 of 30
1 • No -notice contracts, which provide flexibility to increase or
2 decrease delivered volumes on a daily basis to respond to
3 changing operational demands and weather.
4 • Spot (daily) market contracts, which are primarily used for price
5 mitigation, system balancing, and peak shaving.
6 PSNC's gas supply portfolio had approximately 223,000 dekatherms
7 per day under term contracts with eight different suppliers as of November 1,
8 2017, the beginning of the winter heating season for the period under review.
9 All of these contracts included provisions to ensure the prices paid were market
10 based. PSNC's remaining contracts were for purchases in the spot market. Spot
11 purchase contracts do not include reservation fees but reflect only commodity
12 cost, generally by reference to standard indices or negotiated prices.
13 Q. HOW DOES THE COMPANY CALCULATE ITS FIRM CUSTOMERS'
14 DEMAND REQUIREMENTS?
15 A. Projected design -day demand of PSNC's firm customers is calculated using a
16 statistical modeling program prepared by SCANA Services Resource Planning
17 personnel. The model assumes a 50 heating degree-day on a 60 degree
18 Fahrenheit base and uses historical weather to estimate peak -day demand.
19 Q. WHAT DESIGN -DAY REQUIREMENTS WERE USED BY PSNC DURING
20 THE REVIEW PERIOD AND HOW DID THE COMPANY PLAN TO MEET
21 THOSE REQUIREMENTS?
22 A. Jackson Exhibit 1 is a table showing the forecasted firm peak -day demand
23 requirements for the review period and for the next five winter seasons. It also
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 6 of 18

Exhibit A
Page 8 of 30
1 lists the assets available to meet those firm peak -day requirements. These assets
2 include year-round, seasonal, and peaking capabilities and consist of firm
3 transportation and storage capacity on interstate pipelines as well as the peaking
4 capability of PSNC's on -system liquefied natural gas facility.
5 As shown on Jackson Exhibit 1, PSNC projects that by the winter of
6 2019-20 it will need additional interstate capacity to serve expected peak -day
7 requirements. Later in my testimony I will discuss what steps the Company has
8 taken to acquire the necessary capacity.
9 Q. WHAT PROCESS DOES PSNC UNDERTAKE TO ACQUIRE CAPACITY
10 TO MEET ITS CUSTOMER DEMAND?
11 A. PSNC's design -day demand forecast projects firm customer load growth and is
12 used to determine total asset needs. This forecast is updated annually and
13 capacity alternatives are evaluated on an on-going basis. If needed, PSNC
14 secures incremental storage or transportation capacity to meet the growth
15 requirements of its firm sales customers consistent with its best -cost strategy.
16 To acquire long-term expansion capacity precisely in balance with customer
17 needs is impossible due to many external factors beyond the Company's
18 control. In assessing the type of resources needed to meet its design -day
19 demand, PSNC attempts to minimize the per unit delivered gas cost. This
20 analysis incorporates any transportation charges, storage costs, and supplier
21 reservation fees required to deliver gas to PSNC's city gate, as well as the
22 reliability and timing of new services.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 7 of 18

Exhibit A
Page 9 of 30
1 Q. PLEASE DESCRIBE PSNC'S INTERSTATE CAPACITY.
2 A. The Company subscribes to interstate capacity so that gas can be delivered from
3 supply areas or gas storage facilities to PSNC's local distribution system. The
4 interstate transportation and storage providers with whom PSNC has
5 transportation or storage service contracts include Transcontinental Gas
6 Pipeline Company, LLC ("Transco"); Columbia Gas Transmission, LLC
7 ("Columbia Gas"); Dominion Energy Cove Point LNG, LP ("Cove Point");
8 Dominion Energy Transmission, Inc. ("DETI"); East Tennessee Natural Gas,
9 LLC ("East Tennessee"); Pine Needle LNG Company, LLC ("Pine Needle");
10 Saltville Gas Storage Company, LLC. ("Saltville"); and Texas Gas
11 Transmission, LLC ("Texas Gas"). The vast majority of PSNC's firm
12 transportation and storage capacity is obtained from Transco, the only interstate
13 pipeline to which PSNC's system currently is directly connected. The
14 Company has been able to use segmentation of the Transco firm transportation
15 capacity and schedule backhaul deliveries of gas from Columbia Gas, Cove
16 Point, DETI, East Tennessee/Saltville, Pine Needle, and Texas Gas — natural
17 gas storage facilities and connecting pipelines located downstream of the PSNC
18 system.
19 Q. PLEASE EXPLAIN WHAT YOU MEAN BY "BACKHAUL DELIVERIES
20 FROM DOWNSTREAM OF THE PSNC SYSTEM."
21 A. Forward haul involves the transportation of gas in the same direction as the
22 physical flow of gas in the pipeline and is typically achieved when the pipeline
23 transports gas to a delivery point downstream from the point where the gas was
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 8 of 18

Exhibit A
Page 10 of 30
1 received by the pipeline. Backhaul involves the contractual delivery of natural
2 gas in a direction opposite of the physical flow of gas in the pipeline; the receipt
3 point is downstream from the point of delivery.
4 Historically, gas flowed on the Transco system from the Gulf of Mexico
5 production area in a northerly direction. PSNC's system was downstream of
6 the Gulf supply points and the Columbia Gas, Cove Point, DETI, East
7 Tennessee/Saltville, Pine Needle, and Texas Gas points were downstream of
8 PSNC's system.
9 Q. HOW CAN THE COMPANY UTILIZE SEGMENTATION?
10 A. The Company can use different segments of the transportation contract to
11 schedule backhaul deliveries of gas to the PSNC system from the downstream
12 storage facilities and pipelines and, at the same time, schedule gas for delivery
13 on a forward -haul basis from the Gulf production area. This allows PSNC to
14 obtain geographic supply diversity and reduces the amount of annual firm
15 transportation needed on Transco. In addition, the Company can release
16 segments of capacity when not needed to serve PSNC's customers, which
17 generates revenue that mitigates capacity costs incurred by PSNC and passed
18 on to customers.
19 Q. PLEASE DESCRIBE ANY LIMITATIONS ON THE USE OF
20 SEGMENTATION.
21 A. PSNC's use of segmentation for backhaul deliveries on Transco can be limited
22 because it is considered secondary firm in scheduling priority. This did not
23 present any problems in the past, but now that gas flow on the Transco system
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 9 of 18

Exhibit A
Page 11 of 30
1 is bidirectional in nature due to the new connected shale gas supply areas of the
2 Northeast, PSNC has on occasion been unable to use segmentation to schedule LLLL
0
3 backhaul deliveries to its city gate. The Company is concerned that this could
4 impair its ability to meet storage turnover requirements for storage fields
co
5 downstream of the PSNC system on certain days. C)
6 Q. WHAT STEPS HAS THE COMPANY TAKEN TO ADDRESS ITS CD
CD
7 CONCERNS ABOUT LIMITATIONS ON THE USE OF TRANSCO
8 SEGMENTATION?
9 A. Last summer, PSNC submitted a binding request for [BEGIN
10 CONFIDENTIAL] = [END CONFIDENTIAL] dekatherms per day of
11 capacity on Transco's Southeastern Trail Expansion project, which will provide
12 additional firm transportation service with a receipt point at the existing
13 Pleasant Valley Transco -Cove Point interconnection in Fairfax County,
14 Virginia, and a delivery point at the existing Transco Station 65 pooling point
15 in St. Helena Parish, Louisiana. In November 2017, PSNC and Transco
16 executed a precedent agreement for this transportation service [BEGIN
17 CONFIDENTIAL]
18 [END CONFIDENTIAL] The proj ect has a target in-service date of late 2020.
19 When the project is placed into service, this capacity will allow the Company
20 to schedule deliveries from downstream storage facilities and pipelines on a
21 primary firm, forward -haul basis and will replace the secondary backhaul
22 transportation that PSNC has used in the past.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 10 of 18

Exhibit A
Page 12 of 30
1
Q.
WHAT OTHER STEPS DID PSNC TAKE DURING THE REVIEW PERIOD
2
IN CONNECTION WITH ITS ACQUISITION OF ADDITIONAL
3
INTERSTATE PIPELINE CAPACITY?
4
A.
In previous gas cost reviews, I testified that PSNC entered into a precedent
5
agreement with Atlantic Coast Pipeline, LLC ("ACP") to acquire capacity on
6
ACP's 550 -mile pipeline project that will run from Harrison County, West
7
Virginia, to Robeson County, North Carolina. PSNC will take deliveries off
8
the pipeline at points on the eastern side of the Company's system. The target
9
in-service date for the project currently is late 2019. PSNC contracted for
10
100,000 dekatherms per day of firm transportation for a 20 -year term. [BEGIN
11
CONFIDENTIAL]
12
13
14
15
16
[END CONFIDENTIAL]
17
Q.
PLEASE ELABORATE.
18
A.
[BEGIN CONFIDENTIAL]
19
20
21
22
23
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 11 of 18

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Exhibit A
Page 13 of 30
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Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 12 of 18

Exhibit A
Page 14 of 30
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17 Q.
18
19 A. [END CONFIDENTIAL]
20 PSNC solicited interest from other interstate pipeline providers for natural gas
21 transportation capacity to meet forecasted incremental demand on the PSNC
22 system. Subsequently, the Company entered into precedent agreements with
23 Mountain Valley Pipeline, LLC ("MVP") to obtain capacity on its mainline
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 13 of 18

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1
Exhibit A
Page 15 of 30
Q dp 8
1 pipeline project running from northwestern West Virginia to Pittsylvania
2 County, Virginia, as well as on an approximately 70 -mile lateral running from
3 the termination of the mainline to delivery points at PSNC's Dan River and
4 Haw River interconnects in Rockingham and Alamance Counties, North
5 Carolina, respectively. Specifically, PSNC contracted for 250,000 dekatherms
6 per day of mainline capacity and 300,000 dekatherms per day of lateral
7 capacity. The additional 50,000 dekatherms per day of lateral capacity will be
8 used by PSNC to receive primary firm, forward -haul deliveries directly from
9 East Tennessee through a new interconnection with MVP.
10 Q. WHEN ARE THE MVP FACILITIES EXPECTED TO BE PLACED INTO
11 SERVICE?
12 A. The projected in-service date for the mainline facilities is first quarter 2019 and
13 for the Iateral facilities late 2020. [BEGIN CONFIDENTIAL]
14
15
16
17
18
[END CONFIDENTIAL]
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 14 of 17
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Exhibit A
Page 16 of 30
1 Q. HAVE YOU PROVIDED THE INFORMATION CONCERNING
2 CAPACITY ACQUISITION AS REQUIRED BY THE COMMISSION'S
3 ORDER IN DOCKET NO. G-100, SUB 91?
4 A. Yes. PSNC's responses to the ten questions set forth in that order are attached
5 as Jackson Exhibit 2.
6 Q. WHAT ADDITIONAL ACTIONS HAS PSNC TAKEN TO ACCOMPLISH
7 ITS BEST -COST POLICY?
8 A. PSNC continues to take the following steps to keep its gas costs as low as
9 possible while accomplishing its stated policy goals of maintaining security of
10 supply and delivery flexibility:
11 • Optimize the flexibility available within its supply and capacity
12 contracts to realize their value.
13 • Monitor and intervene in matters before the FERC whose actions
14 could impact the rates that PSNC pays and the services it receives
15 from interstate pipelines and storage facilities.
16 • Work with industrial customers to facilitate transportation of
17 customer -acquired natural gas.
18 • Communicate directly with customers, suppliers, and other
19 industry participants and actively monitor developments in the
20 industry.
21 • Conduct frequent internal discussions concerning gas supply
22 policy and major purchasing decisions.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 15 of 18

Exhibit A
Page 17 of 30
1 • Utilize deferred gas cost accounting to calculate the Company's
LL
2 benchmark cost of gas to provide a smoothing effect on gas price LL
0
3 volatility.
4 • Conduct a hedging program to mitigate price volatility.
5 Q. PLEASE DESCRIBE THE FERC PROCEEDINGS THAT PSNC
6 PARTICIPATED IN DURING THE REVIEW PERIOD.
7 A. Jackson Exhibit 3 is a complete listing of the new FERC matters that PSNC
8 intervened in during the review period. The Company may not have stated a
9 position in a particular proceeding but filed an intervention without protest or
10 comment. Such interventions are made in proceedings where the Company has
11 an interest and the issues or dollar impact appears to be relatively minor but
12 might escalate and become significant at a later date or where the Company
13 would like to receive more information from the participants on an issue in
14 order to monitor future developments. Unless specifically indicated in the last
15 column of Jackson Exhibit 3, the Company did not express a position during its
16 participation in a matter listed.
17 Q. WHAT IS THE PURPOSE OF PSNC'S HEDGING PROGRAM?
18 A. The primary objective of PSNC's hedging program has always been to help
19 mitigate the price volatility of natural gas for PSNC's firm sales customers at a
20 reasonable cost. The hedging program meets this objective by having financial
21 instruments such as call options or futures in place to mitigate in a cost-effective
22 manner the impact of unexpected or adverse price fluctuations to customers.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 16 of 18

Exhibit A
Page 18 of 30
1 Q. PLEASE DESCRIBE PSNC'S HEDGING PROGRAM.
2 A. PSNC's hedging program provides protection from higher prices through the
3 purchase of call options for up to 25% of estimated firm sales volume. In order
4 to help control costs, the call options are purchased at a price no higher than
5 10% of the underlying commodity price. Hedges also are limited to a 12 -month
6 future time period, which allows PSNC to obtain favorable option pricing terms
7 and better react to changing market conditions. The hedging program continues
8 to utilize two proprietary models developed by Kase and Company that assist
9 in determining the appropriate timing and volume of hedging transactions. The
10 total amount available to hedge is divided equally between the two models.
11 Q. HAS THE COMPANY MADE ANY CHANGES TO ITS HEDGING PLAN?
12 A. No changes were made to PSNC's hedging program during the review period.
13 However, the Company continues to analyze and evaluate the program and will
14 implement changes as warranted.
15 Q WHAT WAS THE NET ECONOMIC RESULT OF THE HEDGING
16 PROGRAM DURING THE REVIEW PERIOD?
17 A. During this period, New York Mercantile Exchange prices at the Henry Hub in
18 Louisiana ranged from a low of $2.530 per dekatherm for the March 2018
19 contract set on February 15, 2018, to a high of $3.661 per dekatherm for the
20 February 2018 contract set on January 29, 2018. Overall, the hedging program
21 increased gas costs by $2,376,550 during the review period.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 17 of 18

Exhibit A
Page 19 of 30
1 Q. IN YOUR OPINION, WERE ALL OF THE REVIEW PERIOD GAS COSTS
2 PRUDENTLY INCURRED?
3 A. Yes. All of these gas costs were incurred under PSNC's best -cost supply
4 strategy, which this Commission has consistently upheld. In my opinion, they
5 are the result of reasonable business judgments in light of the conditions under
6 which the gas purchasing decisions were made.
7 Q. DOES THIS CONCLUDE YOUR TESTIMONY?
8 A. Yes.
Direct Testimony of Rose M. Jackson
Docket No. G-5, Sub 591
Page 18 of 18

Contracted Capacity*
Transco
DTI
Subtotal
Seasonal Capacity
Transco
DTI
Columbia
ETNG/Saltville
Subtotal
Peaking Capacity
Transco
Pine Needle
PSNC
DTI Cove Point
Subtotal
Total
Design -Day Requirements
Surplus (Shortage)
Reserve Margin
Exhibit A
Page 20 of 30
Revised Jackson Exhibit 1
DESIGN -DAY DEMAND REQUIREMENTS AND AVAILABLE ASSETS
FOR WINTER SEASONS FROM 2017-18 THROUGH 2022-23
LGA 5,175
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
103,500
103,500
103,500
103,500
103,500
LNG 100,000
FT
390,743
390,743
390,743
390,743
390,743
390,743
FT
7,331
7,331
7,331
7,331
7,331
7,331
233,675
398,074
398,074
398,074
398,074
398,074
398,074
Storage
33,218
33,218
33,218
33,218
33,218
33,218
Storage
60,883
60,883
60,883
60,883
60,883
60,883
Storage
35,335
35,335
35,335
35,335
35,335
35,335
Storage
48,877
48,877
48,877
48,877
48,877
48,877
178,313
178,313
178,313
178,313
178,313
178,313
LGA 5,175
5,175
5,175
5,175
5,175
5,175
LNG 103,500
103,500
103,500
103,500
103,500
103,500
LNG 100,000
100,000
100,000
100,000
100,000
100,000
LNG 25,000
25,000
25,000
25,000
25,000
25,000
233,675
233,675
233,675
233,675
233,675
233,675
810,062 810,062 810,062 810,062 810,062 810,062
782.485 800.404 817.772 835.518 853.649 872.173
27,577 9,658 (7,710) (25,456) (43,587) (62,111)
3.52% 1.21% -0.94% -3.05% -5.11% -7.12%
* Does not include Atlantic Coast Pipeline capacity scheduled to be in service by late 2019 or Mountain Valley Pipeline capacity
scheduled to be in service by late 2020.
Docket No. G-5, Sub 591 Page 1 of 1

Exhibit A
Page 21 of 30
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Jackson Exhibit 2
INFORMATION PURSUANT TO ORDER REQUIRING REPORTING
ISSUED IN DOCKET No. G100, SUB 91
1. Please describe any changes in the Company's customer mix or customer
market profiles that it forecasts for the next ten (10) years and explain how the
changes will impact the Company's gas supply, transportation, and storage
requirements.
No significant changes are expected.
2. Please identify the rate schedules and special contracts that the Company uses
to determine its peak day demand requirements for planning purposes. Please
explain the rationale and basis for each rate schedule or special contract
included in the determination of peak day demand requirements.
The Company's demand forecast methodology utilizes actual daily measured
volumes to determine its peak -day demand requirements for planning purposes.
PSNC initially considers total daily throughput, which includes all rate schedules,
and then deducts daily transportation volumes (Rate Schedules 175 and 180).
Because volumes for interruptible sales (Rate Schedule 150) customers are within
the statistical margin of error, this rate schedule is not deducted.
3. Please provide the base load requirements estimated for the review period and
forecasted for each of the next five (5) years.
For the review period, PSNC's. estimated winter base load requirements were
approximately 90,000 dekatherms per day. PSNC anticipates that this base load
requirement will remain approximately the same over the next five years.
4. Please provide the one -day design peak demand requirements used by the
Company for planning purposes for the review period and forecasted for each
of the next five (5) winter seasons. The peak demand requirement amounts
should set forth the estimated demand for each rate schedule or priority with
peak day demand. All assumptions, such as heating degree-days, dekatherms
per heating degree-day, customer growth rates, and supporting calculations
used to determine the peak day requirement amounts should be provided.
Design day requirements are set forth on Jackson Exhibit 1. The Company's
demand forecast methodology utilizes actual daily measured volumes for the entire
system and then deducts daily transportation volumes based on actual daily
measurement data. Therefore, the demand for each rate schedule is not used to
determine design -day demand requirements. The Company performs a regression
analysis using 50 heating degree-days (HDDs) on a 60 degree Fahrenheit base to
project design -day usage.
Docket No. G-5, Sub 591 Page] of 3
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Exhibit A
Page 22 of 30
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Jackson Exhibit 2
5. Please explain how the Company determines which type of resource should be
acquired or developed for meeting the Company's deliverability needs, and
describe the factors evaluated in deciding whether- the Company should
acquire pipeline transportation capacity, acquire a storage service, or develop
additional on -system storage deliverability.
Resource acquisition depends on several factors. Thcse primarily include: (1)
whether the need is year-round, seasonal, or peaking in nature; (2) availability of
the resource; (3) operational flexibility requirements; and (4) the relative costs of
service.
6. Please describe how the Company determines the amount of pipeline capacity
f that should be acquired for (a) the whole year, (b) the full winter season, and
(c) less than the full winter season. Also, please describe the factors evaluated
in determining the appropriate amount and mix of service period options.
PSNC maintains a level and mix that ensures its firm system requirements and
operational flexibility requirements are satisfied. PSNC plans for sufficient
capacity to be available on a design day, while seeking to avoid underutilization of
capacity. PSNC continually monitors historical usage and expected requirements.
Before acquiring additional capacity, PSNC evaluates whether a year-round or
seasonal service period is appropriate, and will seek either to increase demand on
an existing contract or to secure a new contract. The type of service acquired
depends on availability, economics, and satisfaction of operational flexibility
requirements.
7. Please describe each new capacity and storage opportunity that the Company
is contemplating entering into during the next five (5) year period.
The Direct Testimony of Rose M. Jackson at pages 10 through 14 describes the
capacity opportunities that PSNC contemplated and entered into during the review
period.
The Company currently is not contemplating entering into any other opportunity
during the next five years.
S. Please provide a computation of the reserve or excess capacity estimated for
the review period and forecasted for each of the next five (5) years.
The requested information is set forth on Jackson Exhibit 1.
9. Please describe any significant storage, transmission, and distribution
upgrades required for the Company to fulfill its peak day requirements during
the next five (5) years.
Docket No. b-5, Sub 591 Page 2 of 3
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Exhibit A
Page 23 of 30
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See Jackson Exhibit 2 Attachment which is confidential and therefore being filed �?
under seal. L-
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10. 1n determining which type of resource should be required, what steps, if any,
did the Company take during the review period to seek out service agreements
from competitive suppliers pursuant to the provisions of G.S. 62-36B?
See the response to Question. 7 above.
Docket No. G-5, Sub 591 Page 3 of 3
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Exhibit,A
Page 24 of 30
Public Service Company of North Carolina, Inc.
Docket No. G-5, Sub 591
Jackson Exhibit No. 2
Attachment
System Upgrades for 2019 — 2023
CONFIDENTIAL
Attachment is confidential and filed under seal
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Exhibit A
ge
25 of 30
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Jackson Exhibit 3
PROCEEDINGS BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
IN WHICH PSNC. PARTICIPATED AS A PARTY FROM APRIL 2017 THROUGH MARCH 2018
Date
Pipeline
Docket No.
Docket Description
PSNC Position
4/6117
Dominion Transmission,
RP17-568-000
On March 29, 2017, Dominion
Motion to intervene.
Inc.
Transmission filed to make
administrative changes to its FERC Gas
Tariff regarding methods of notification.
4/6/17
Pine Needle LNG
RP 17-576-000
On March 30, 2017, Pine Needle made its
Motion to intervene.
Company,.LLC
annual fuel retention percentage and
electric power rate filing.
4/6117
East Tennessee Natural
RP 17-587-000
On March 30, 2017, East Tennessee filed
Motion to intervene.
Gas, LLC
its annual cash -out report.
4/6/17
Columbia Gas
RP17-588-000
On March 31, 2017, Columbia Gas made
Motion to intervene.
Transmission, LLC
its semiannual filing to adjust the
operational transaction rate adjustment
surcharge for the upcoming summer
season.
5/2/17
Texas Gas Transmission,
CP 17-256-000
On April 26, 2017, Texas Gas filed an
Motion to intervene.
LLC
application for authority to abandon
certain compressor station facilities
located in St. Mary Parish and Lafayette
Parish, Louisiana.
9/12/17
Dominion Energy Cove
RP17-1014-000
On September 1, 2017, Cove Point filed
Motion to intervene.
Point LNG, LP
its annual. revenue crediting report.
9/21/17
Transcontinental Gas Pipe
RP17-1049-000
On September 14, 2017, Transco filed its
Motion to intervene.
Line Company, LLC
amival cash -out report.
Docket No. G-5, Sub 591 Pagel of 5
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Exhibit A
Page 26 of 30
Jackson Exhibit 3
Date
Pipeline
Docket No.
Docket Description
PSNC Position
10/5/17
Transcontinental Gas Pipe
RP 17-1105-000
On September 28, 2017, Transco filed to
Motion to intervene.
Line Company, LLC
re -determine the fuel retention percentage
applicable to Rate Schedules LG -A,
LNG, and LG -S.
1015/17
Texas Gas Transmission,
RP 17-1124-000
On September 29, 2017, Texas Gas made
Motion to intervene.
LLC
its annual fuel retention percentage filing.
10/5/17
Dominion Energy
RP17-1130-000
On September 29, 2017, Dominion
Motion to intervene.
Transmission, Inc.
Transmission made its annual electric
power cost adjustment filing.
10/5/17
Dominion Energy
RP17-1 I32-000
On September 29, 2017, Dominion
Motion to intervene.
Transmission, Inc.
Transmission filed to update its effective
transportation cost rate adjustment.
10/17/17
Transcontinental Gas Pipe
RP 18-29-000
On October 12, 2017, Transco filed its
Motion to intervene.
Line Company, LLC
penalty sharing report.
I0/25/17
Transcontinental Gas Pipe
CP 18-8-000
On October 16, 2017, Transco filed for
Motion to intervene.
Line Company, LLC
authorization to retroactively abandon
certain receipt point natural gas facilities
that Transco had elroneously determined
were eligible for automatic abandonment
because they were no longer active but for
which Transco had not formally amended
its firm contracts to remove these receipt
points prior to abandonment.
Docket No. G-5, Sub 591 Page 2 of 5

"I, -
Exhibit A
Page 27 of 30
Jackson Exhibit 3
Date
Pipeline
Docket No.
Docket Description
PSNC Position
1118117
Transcontinental Gas.Pipe
RP 18-91-000
On October 31, 2017, Transco filed to
Motion to intervene.
Line Company, LLC
revise its FERC Gas Tariff to track rate
changes attributable to storage services
purchased from Dominion Transmission.
11/8/17
Columbia Gas
RP 18-124-000
On November 1, 2017, Columbia Gas
Motion to intervene.
Transmission, LLC
made its semiannual filing to adjust the
operational transaction rate adjustment
surcharge for the upcoming winter
season.
1/16118
Transcontinental Gas Pipe
RP18-314-000
On January 2, 2018, Transco filed
Motion to intervene and
Line Company, LLC
revisions to its FERC Gas Tariff
protest on grounds that
regarding no -notice and priority of
Transco did not show the
service rights.
revisions to be necessary and
that the revisions had the
potential to increase the cost
of resolving imbalances and
the cost of cash -outs of
imbalances for no -notice
customers.
2/20/18
Dominion Energy Cove
RP 18-419-000
On February 2, 2018, Cove Point filed to
Motion to intervene.
Point LNG, LP
implement the incremental rates, charges,
and tariff changes associated with its
liquefaction export project.
Docket No. G-5, Sub 591 Page 3 of 5
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Exhibit A
Page 28 of 30
Jackson Exhibit 3
Date
Pipeline
Docket No.
Docket Description
PSNC Position
2120/18
Columbia Gas
RP 18-426-000
On February 5, 2018, Columbia Gas filed
Motion to intervene.
Transmission, LLC
revised tariff records to flow through the
benefits of the decreased federal income
tax rate to its customers.
317118
Dominion Energy Cove
RP 18-498-000
On February 28, 2018, Cove Point made
Motion to intervene.
Point LNG, LP
its annual electric power cost adjustment
filing.
3/7/18
Dominion Energy Cove
RP 18-499-000
On February 28, 2018, Cove Point made
Motion to intervene.
Point LNG, LP
its annual fuel retainage filing.
3/7/18
Columbia Gas
RP18-507-000
On March 1, 2018, Columbia Gas made
Motion to intervene.
Transmission, LLC
its annual electric power cost adjustment
filing.
317/18
Columbia Gas
RP 18-508-000
On March 1, 2018, Columbia Gas made
Motion to intervene.
Transmission, LLC
its annual transportation cost rate
adjustment filing.
317118
Columbia Gas
RP 18-509-000
On March 1, 2018, Columbia Gas made
Motion to intervene.
Transmission, LLC
its annual fuel retainage percentage filing.
317118
Transcontinental Gas Pipe
RP 18-540-000
On March 1, 2018, Transco made its
Motion to intervene.
Line Company, LLC
annual fuel tracker filing to update fuel
retention percentages.
3/7118
Transcontinental Gas Pipe
RP18-541-000
On March 1, 2018, Transco filed to
Motion to intervene.
Line Company, LLC
update transmission electric power rates.
Docket No. G-5, Sub 591 Page 4 of 5
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Exhibit A
Page 29 of 30
Jackson Exhibit 3
Date
Pipeline
Docket No.
Docket Description
PSNC Position
3/7/18
Columbia Gas
CP 18-100-000
On March 1, 2018, Columbia Gas filed a
Motion to intervene.
Transmission, LLC
prior notice request to perform
installations and activities to enable the
in-line inspection of a 24 -inch diameter
Iine having multiple high consequence
areas in West Virginia.
3/7/18
Transcontinental Gas Pipe
CP18-101-000
On March 1, 2018, Transco filed an
Motion to intervene.
Line Company, LLC
advance notification to replace certain
facilities at its Station 240 liquefied
natural gas peak -shaving plant.
3/12/18
Dominion Energy Cove
RP 18-553-000
On March G, 2018, Cove Point filed
Motion to intervene.
Point LNG, LP
revised tariff records to update the fuel
retainage and electric power cost
adjustment rates reflected in its export
liquefaction project implementation tariff
filing in Docket No. RP 18-419.
Docket No. G-5, Sub 591 Page 5 of 5
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Exhibit A
Page 30 of 30
Public Service Company of North Carolina, Inc.
Docket No. G-5, Sub 591
Details of Seasonal and Peaking Capacity per Revised Jackson Exhibit 1
(b)
(c)
(e) (e)
(e)(i)
Storage injection Days @ Max
Receipt Delivery
Capacity Capacity W/D
Location
Expiration
Seasonal Capacity
Zone 5/PSNC Citygate Zone S/PSNC Citygate
1,835,944
8,579
55
Leidy, PA
Transco Mar -2023
Transco
DTi
DTI Storage Zone S/Nokesville
3,856,000
21,423
62
Leidy, PA
Transco Mar -2021 /Mar2024
Columbia
TCO Storage Zone 5/Boswells Tavern
3,180,150
17,667
90
PA, WV and OH
Transco Mar -2023
ETNG/Saltville
Saltville Storage Zone 5/Cascade Creek
900,000
23,871
16
Abingdon, VA
Transco Jul-2019/Mar-2023
Peaking Capacity
Transco
Zone 5/PSNC Citygate Zone 5/PSNC Citygate
25,875
121
5
Carlsbad, NJ
Transco Oct -2019
Pine Needle
Zone 5 Pine Needle Zone 5/Transco Mainline
1,035,000
5,175
10
Stokesdale, NC
Transco Apr -2020
PSNC
On System - Cary, NC On System - Cary, NC
1,000,000
3,500
10
Cary, NC
n1a n/a
IDTI Cove Point
Cove Point Storage Zone 5/Pleasant Valley
250,000
1 750
1 10
Lusby, MD
I Transco L Apr -2021

EXHIBIT B

Exhibit B
Page 1 of 17
STATE OF NORTH CAROLINA
UTILITIES COMMISSION
RALEIGH
DOCKET NO. G-5, SUB 591
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Application of Public Service Company of )
North Carolina, Inc. for Annual Review of Gas ) ORDER ON ANNUAL
Costs Pursuant to N.C.G.S. § 62-133.4(c) and ) REVIEW OF GAS COSTS
Commission Rule R1 -17(k)(6) )
HEARD: Tuesday, August 14, 2018, at 10:00 a.m., in Commission Hearing Room
2115, Dobbs Building, 430 North Salisbury Street, Raleigh, North Carolina
BEFORE: Commissioner ToNola D. Brown -Bland, Presiding, Commissioner Jerry C.
Dockham, and Commissioner Charlotte A. Mitchell
APPEARANCES:
For Public Service Company of North Carolina, Inc.:
Andrea R. Kells, McGuireWoods LLP, 434 Fayetteville Street, Suite 2600,
Raleigh, North Carolina 27601
For the Using and Consuming Public:
Gina C. Holt, Staff Attorney, Public Staff North Carolina Utilities
Commission, 4326 Mail Service Center, Raleigh, North Carolina 27699
BY THE COMMISSION: On June 1, 2018, pursuant to N.C. Gen. Stat. §
62-133.4(c) and Commission Rule R1 -17(k)(6), Public Service Company of North
Carolina, Inc. (PSNC or Company), filed the direct testimony and exhibits of Candace A.
Paton, Rates & Regulatory Manager for PSNC, and Rose M. Jackson, General Manager
Supply & Asset Management for SCANA Services, Inc., in connection with the annual
review of PSNC's gas costs for the 12 -month period ended March 31, 2018.
On June 7, 2018, the Commission issued its Order Scheduling Hearing, Requiring
Filing of Testimony, Establishing Discovery Guidelines, and Requiring Public Notice. This
Order established a hearing date of Tuesday, August 14, 2018, set prefiled testimony
dates, and required the Company to give notice to its customers of the hearing on this
matter.
On July 19, 2018, the Company filed Revised Jackson Exhibit 1.

Exhibit B
Page 2 of 17
On July 30, 2018, the Public Staff filed the joint testimony of Geoffrey M. Gilbert,
Utilities Engineer, Natural Gas Division; Julie G. Perry, Manager of the Natural Gas
Section, Accounting Division; and Sonja M. Johnson, Staff Accountant, Accounting
Division.
On August 3, 2018, the Company filed its Affidavits of Publication.
On August 8, 2018, the Commission issued an Order Providing Notice of
Commission Questions.
On August 14, 2018, the matter came on for hearing as scheduled, and all prefiled
testimony and exhibits were admitted into evidence. No public witnesses appeared at the
hearing.
On September 6, 2018, the Company filed Paton Late -filed Exhibits 2 and 3 in
response to the Commission's request at the hearing.
On September 24, 2018, the Joint Proposed Order of PSNC and the Public Staff
was filed.
Based on the testimony and exhibits received into evidence and the entire record
in this proceeding, the Commission makes the following:
FINDINGS OF FACT
1. PSNC is a corporation duly organized and existing under the laws of the
State of South Carolina, having its principal office and place of business in Gastonia,
North Carolina. PSNC operates a natural gas pipeline system for the transportation,
distribution, and sale of natural gas to approximately 563,000 customers in the State of
North Carolina.
2. PSNC is engaged in providing natural gas service to the public, is a public
utility as defined in N.C. Gen. Stat. § 62-3(23), and is subject to the jurisdiction of this
Commission.
3. PSNC has filed with the Commission and submitted to the Public Staff all of
the information required by N.C.G.S. § 62-133.4(c) and Commission Rule R1 -17(k) and
has complied with the procedural requirements of such statute and rule.
4. The review period in this proceeding is the 12 months ended March 31, 2018.
5. During the review period, PSNC incurred total gas costs of $235,756,953,
comprised of demand and storage charges of $91,043,579, commodity gas costs of
$145,801,389, and other gas costs of ($1,088,016).
2

Exhibit B
Page 3 of 17
6. In compliance with the Commission's order in Docket No. G-100, Sub 67,
the Company credited 75% of the net compensation from secondary market transactions,
which amounted to $34,269,198, to its All Customers Deferred Account.
7. As of March 31, 2018, the Company had a debit balance (owed from the
customers to the Company) of $1,443,014 in its Sales Customers Only Deferred Account
and a credit balance of $13,770,526 (owed from the Company to the customers) in its All
Customers Deferred Account.
8. The Company properly accounted for its gas costs incurred during the
review period.
9. PSNC's hedging activities during the review period were reasonable and
prudent.
10. As of March 31, 2018, the Company had a debit balance of $2,376,550 in its
Hedging Deferred Account.
11. It is appropriate for the Company to transfer the $2,376,550 debit balance
in the Hedging Deferred Account to its Sales Customers Only Deferred Account. The
combined balance for the Hedging and Sales Customers Only Deferred Accounts is a
debit balance of $3,819,564, owed by customers to the Company.
12. PSNC has adopted a gas supply policy that it refers to as a "best cost"
supply strategy. This gas supply acquisition policy is based upon three primary criteria:
supply security, operational flexibility, and the cost of gas.
13. PSNC has firm transportation and storage contracts with interstate
pipelines, which provide for the transportation of gas to the Company's system, and both
long-term and supplemental short-term supply contracts with producers, marketers, and
other suppliers.
14. The gas costs incurred by PSNC during the review period were prudently
incurred, and the Company should be permitted to recover 100% of such prudently
incurred gas costs.
15. As proposed by PSNC witness Paton and agreed to by the Public Staff, the
Company should not implement any new temporary rate changes in the instant docket at
this time.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 1-2
These findings are essentially informational, procedural, or jurisdictional in nature
and were not contested by any party. They are supported by information in the
Commission's public files and records and the testimony and exhibits filed by the
witnesses for PSNC and the Public Staff.
3

Exhibit B
Page 4 of 17
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 3-4
The evidence supporting these findings of fact is contained in the testimony of
PSNC witnesses Jackson and Paton, and the testimony of Public Staff witnesses Gilbert
and Johnson. These findings are based on N.C.G.S. § 62-133.4(c) and Commission Rule
R1 -17(k)(6).
Pursuant to N.C. Gen. Stat. 62-133.4, PSNC is required to submit to the
Commission information and data for an historical 12 -month review period, including
PSNC's actual cost of gas, volumes of purchased gas, sales volumes, negotiated sales
volumes, and transportation volumes. Commission Rule R1-17(k)(6)(c) requires that
PSNC file weather normalization data, sales volume data, work papers, and direct
testimony and exhibits supporting the information.
Witness Paton testified that Rule R1 -17(k)(6) requires PSNC to submit to the
Commission on or before June 1 of each year certain information with supporting work
papers based on the 12 -month period ending March 31. Witness Paton indicated that the
Company had filed the required information. Witness Paton also stated that the Company
had provided to the Commission and the Public Staff on a monthly basis the gas cost and
deferred gas cost account information required by Commission Rule R1-17(k)(5)(c).
Witnesses Gilbert and Johnson presented the results of their review of the gas cost
information filed by PSNC in accordance with N.C.G.S. § 62-133.4(c) and Commission
Rule R1 -17(k)(6).
Based on the foregoing, the Commission concludes that PSNC has complied with
the procedural requirements of N.C.G.S. § 62-133.4(c) and Commission Rule R1 -17(k)
for the 12 -month review period ended March 31, 2018.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 5-8
The evidence supporting these findings of fact is found in the testimony and
exhibits of PSNC witness Paton and the testimony of Public Staff witnesses Gilbert and
Johnson.
PSNC witness Paton's exhibits show that the Company incurred total gas costs of
$235,756,953 during the review period, which was comprised of demand and storage
costs of $91,043,579, commodity gas costs of $145,801,389, and other gas costs of
($1,088,016). Public Staff witness Johnson confirmed that total gas costs for the review
period ended March 31, 2018, were $235,756,953.
The Public Staff's testimony included a thorough analysis of PSNC's gas costs.
That testimony showed that the level of demand and storage charges were down 2.4%
from the level in last year's annual review in Docket No. G-5, Sub 578. The bulk of the
reduction was attributed to changes in the cost of three sources of capacity. The most
significant reduction was a $1,294,395 reduction in the rates paid to Cardinal Pipeline
Company LLC as a result of a general rate case in Docket No. G-39, Sub 38. The costs
0

Exhibit B
Page 5 of 17
of PSNC's capacity from Pine Needle LNG, which is regulated by the Federal Energy
Regulatory Commission (FERC), decreased $780,633 as a result of a change in Pine
Needle LNG's Electric Power and Fuel Tracker in FERC Docket No. RP17-576. PSNC
leases 17,250 dekatherms per day (dts/day) of intrastate capacity from the City of
Monroe. The contract between PSNC and Monroe called for payments to be made for a
set term. The end of payments resulted in a $546,188 reduction in costs compared to the
previous review period.
The Commission notes that the demand and storage costs paid by PSNC have
increased in recent years as additional capacity was added to accommodate growth. In
PSNC's Docket No. G-5 Sub 568, which covered a 12 -month review period ending
March 31, 2016, demand and storage costs rose sharply to approximately $89.3 million
from $75.2 million during the previous review period. This increase was mostly attributed
to the cost of adding 100,000 dts/day on Transcontinental Gas Pipe Line Company, LLC's
(Transco's) Leidy Southeast project.
Public Staff witness Johnson stated that the Company recorded $45,692,268 of
margin on secondary market transactions (SMT), including capacity release transactions
and storage management arrangements, during the review period. Of this amount,
$34,269,198 was credited to the All Customers Deferred Account for the benefit of
ratepayers. She further testified that the bulk of the SMT margins, totaling $39,551,582,
were produced by Asset Management Agreements.
PSNC witness Paton's prefiled testimony and exhibits reflected a Sales Customers
Only Deferred Account debit balance of $1,443,014 (owed to the Company by customers)
and a credit balance of $13,770,526 (owed to customers by the Company) in its All
Customers Deferred Account as of March 31, 2018. Public Staff witness Johnson agreed
with these balances and testified that PSNC properly accounted for its gas costs during
the review period.
Based upon the foregoing, the Commission concludes that the Company properly
accounted for its gas costs incurred during the review period. The Commission also
concludes that the appropriate level of total gas costs incurred by PSNC for this
proceeding is $235,756,953. The Commission further concludes that the appropriate
balances as of March 31, 2018, are a debit balance of $1,443,014, owed to the Company,
in its Sales Customers Only Deferred Account and a credit balance of $13,770,526, owed
to customers, in its All Customers Deferred Account.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 9-11
The evidence for these findings of fact is contained in the testimony of PSNC
witnesses Paton and Jackson and the testimony of Public Staff witnesses Perry and
Johnson.
PSNC witness Paton testified that the Company's Hedging Deferred Account
balance for the 12 -month review period ended March 31, 2018, was $2,376,550, a net
5

Exhibit B
Page 6 of 17
debit balance, due from customers. Public Staff witness Perry testified that this balance
was composed of: Economic Gains Closed Positions of ($271,330); Premiums Paid of
$2,591,190; Brokerage Fees and Commissions of $14,375; and Interest on the Hedging
Deferred Account of $42,316. Public Staff witness Perry further stated that the hedging
charges resulted in an annual charge of $3.15 for the average residential customer which
equates to approximately $0.26 per month. Witness Perry also testified that PSNC's
weighted average hedged cost of gas for the review period was $3.81 per dekatherm.
PSNC witness Jackson testified that the primary objective of PSNC's hedging
program has always been to help mitigate the price volatility of natural gas for PSNC's
firm sales customers at a reasonable cost. She further testified that PSNC's hedging
program meets this objective by having financial instruments such as call options or
futures in place to mitigate, in a cost effective manner, the impact of unexpected or
adverse price fluctuations to its customers.
Witness Jackson testified that the hedging program provides protection from
higher prices through the purchase of call options for up to 25% of PSNC's estimated
sales volume. Witness Jackson further stated that in order to help control costs, the call
options are purchased at a price no higher than 10% of the underlying commodity price.
She also stated that PSNC limits its hedging to a 12 -month future time period, which
allows PSNC to obtain more favorable option pricing terms and better react to changing
market conditions.
Witness Jackson explained that PSNC's hedging program continues to utilize two
proprietary models developed by Kase and Company that assist in determining the
appropriate timing and volume of hedging transactions. She stated that the total amount
available to hedge is divided equally between the two models.
Witness Jackson further testified that no changes were made to PSNC's hedging
program during this review period. Witness Jackson stated that PSNC will continue to
analyze and evaluate its hedging program and implement changes as warranted.
Public Staff witness Perry stated that her review of the Company's hedging
activities involves an ongoing analysis and evaluation of the Company's monthly hedging
deferred account reports, detailed source documentation, work papers supporting the
derivation of the maximum targeted hedge volumes for each month, periodic reports on
the status of hedge coverage for each month, and periodic reports on the market values
of the various financial instruments used by the Company to hedge. In addition, the Public
Staff reviews monthly Hedging Program Status Reports, monthly reports reconciling the
Hedging Program Status Report and the hedging deferred account report, minutes from
the meetings of SCANA's Risk Management Committee (RMC), and minutes from the
meetings of the Board of Directors and its committees that pertain to hedging activities.
Further, the review includes reports and correspondence from the Company's internal
and external auditors, hedging plan documents, communications with Company
personnel regarding key hedging events and plan modifications under consideration by
SCANA's RMC, and the testimony and exhibits of the Company's witnesses in the annual
A

Exhibit B
Page 7 of 17
review proceeding. Witness Perry testified that based on her analysis of what was
reasonably known or should have been known at the time the Company made its hedging
decisions affecting the review period, as opposed to the outcome of those decisions, she
concluded that the Company's hedging decisions were prudent.
Witness Perry further testified that the $2,376,550 debit balance in the Hedging
Deferred Account as of the end of the review period should be transferred to the Sales
Customers Only Deferred Account. Based on this recommendation, Public Staff witness
Johnson stated that the appropriate balance in the Sales Customers Only Deferred
Account as of March 31, 2018, after the hedging balance transfer, should be a net debit
balance of $3,819,564, owed by the customers to the Company.
Based on the testimony and exhibits provided by PSNC and the Public Staff, the
Commission finds that PSNC's hedging program has met the objective of contributing to
the mitigation of gas price volatility and avoiding rate shock to customers. The
Commission concludes that PSNC's hedging activities during the review period were
reasonable and prudent and that the $2,376,550 debit balance in the Hedging Deferred
Account as of the end of the review period should be transferred to the Company's Sales
Customers Only Deferred Account. The Commission finds that the appropriate combined
balance for the Hedging and Sales Customers Only Deferred Accounts is a debit balance
of $3,819,564.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT NOS. 12-14
The evidence for these findings of fact is found in the testimony of PSNC witness
Jackson and the testimony of Public Staff witness Gilbert.
Gas Supply
PSNC witness Jackson testified that the most appropriate description of PSNC's
gas supply procurement policy would be a "best cost" supply strategy, which is based on
three primary criteria: supply security, operational flexibility, and cost of gas. PSNC
witness Jackson stated that security of supply is the first and foremost criterion, which
refers to the assurance that the supply of gas will be available when needed. Witness
Jackson went on to state that supply security is obtained through PSNC's diverse portfolio
of suppliers, receipt points, purchase quantity commitments, and terms. She also testified
that potential suppliers are evaluated on a variety of factors, including past performance,
creditworthiness, available terms, gas deliverability options, and supply location.
Witness Jackson testified that the second criterion is maintaining the necessary
operational flexibility in the gas supply portfolio that will enable PSNC to react to
unpredictable weather on firm sales gas usage. She noted that PSNC's gas supply
portfolio must be capable of handling the monthly, daily, and hourly changes in customer
demand needs. Witness Jackson also testified that operational flexibility largely results
from PSNC's gas supply agreements having different purchase commitments and swing
capabilities (for example, the ability to adjust purchased gas within the contract volume
7

Exhibit B
Page 8 of 17
on either a monthly or daily basis) and from PSNC's injections into and withdrawals out
of storage.
In regard to the third criterion, cost of gas, PSNC witness Jackson stated that in
evaluating costs it is important to consider not only the actual commodity cost, but also
any transportation -related charges such as reservation, usage, and fuel charges. She
further stated that PSNC routinely requests gas supply bids from suppliers to help ensure
the most cost-effective proposals. Witness Jackson further testified that in securing
natural gas supply for its customers, PSNC is committed to acquiring the most cost-
effective supplies while maintaining the necessary security and operational flexibility. She
testified that PSNC has developed a gas supply portfolio made up of long-term
agreements and supplemental short-term agreements with a variety of suppliers,
including both producers and independent marketers.
Witness Jackson also testified that the majority of PSNC's interstate pipeline
capacity is obtained from Transco, the only interstate pipeline with which PSNC has a
direct connection. The Company also has a backhaul transportation arrangement with
Transco to schedule deliveries of gas from pipelines and storage facilities downstream of
PSNC's system, as well as transportation and/or storage service agreements with
Dominion Energy Transmission, Inc.; Columbia Gas Transmission, LLC; Texas Gas
Transmission, LLC; East Tennessee Natural Gas LLC; Dominion Energy Cove Point
LNG, LP; Saltville Gas Storage Company, LLC; and Pine Needle LNG Company, LLC.
Witness Jackson further testified that PSNC engages in the following activities to
lower gas costs while maintaining security of supply and delivery flexibility -
1 .
lexibility:
1. PSNC continues to optimize the flexibility available within its supply and
capacity contracts to realize their value;
2. PSNC monitors and intervenes in matters before the FERC whose actions
could impact PSNC's rates and services to its customers;
3. PSNC continues to work with its industrial customers to transport customer -
acquired gas;
4. PSNC routinely communicates directly with customers, suppliers, and other
industry participants, and actively monitors developments in the industry;
5. PSNC frequently has internal discussions concerning gas supply policy and
major purchasing decisions;
6. PSNC utilizes deferred gas cost accounting to calculate the Company's
benchmark cost of gas to provide a smoothing effect on gas price volatility; and,
7. PSNC conducts a hedging program to help mitigate price volatility.

Exhibit B
Page 9 of 17
Pipeline Capacity and Storage
PSNC Witness Jackson testified that in the summer of 2017 PSNC submitted a
binding request for capacity on Transco's Southeastern Trail expansion project, which will
provide additional firm transportation service with a receipt point at the existing Pleasant
Valley Transco -Cove Point interconnection in Fairfax County, Virginia, and a delivery
point at the existing Transco Station 65 pooling point in St. Helena Parish, Louisiana. In
November 2017, PSNC and Transco executed a precedent agreement for this
transportation service. Witness Jackson testified that the project has a target in-service
date of late 2020.
Witness Jackson further noted that in previous gas cost reviews she had testified
that PSNC entered into a precedent agreement with Atlantic Coast Pipeline, LLC (ACP)
to acquire capacity on ACP's 550 -mile pipeline project that will run from Harrison County,
West Virginia, to Robeson County, North Carolina. She provided the Commission with an
update on developments concerning the status of the project and PSNC's contracting for
service with ACP.
Witness Jackson also presented testimony regarding PSNC's precedent
agreements with Mountain Valley Pipeline, LLC (MVP) to obtain capacity on its mainline
pipeline project running from northwestern West Virginia to Pittsylvania County, Virginia,
as well as on an approximately 70 -mile lateral running from the termination of the mainline
to delivery points at PSNC's Dan River and Haw River interconnects in Rockingham and
Alamance Counties, North Carolina, respectively. The lateral project is the Mountain
Valley Southgate project (MVP Southgate). Specifically, PSNC contracted for
250,000 dts/day of capacity on MVP and 300,000 dts/day on MVP Southgate. The
additional 50,000 dts/day of capacity on the lateral will be used by PSNC to receive
primary firm, forward -haul deliveries directly from East Tennessee through a new
interconnection with MVP. Witness Jackson testified that MVP was expected be placed
into service in the first quarter of 2019 and MVP Southgate would come on line in late
2020.
Witness Jackson provided testimony on the profound change that has taken place
in the interstate pipeline and storage market as a result of shale gas production in the
Northeast. She indicated this change has impacted the Company's gas supply security
planning, requiring that additional capacity be secured to meet customer needs,
particularly during periods of cold weather. She testified that:
The Company has been able to use segmentation of the Transco firm
transportation capacity and schedule backhaul deliveries of gas from
Columbia Gas, Cove Point, DETI, East Tennessee/Saltville, Pine Needle,
and Texas Gas - natural gas storage facilities and connecting pipelines
located downstream of the PSNC system.
9

Exhibit B
Page 10 of 17
She distinguished "forward haul" and "backhaul":
Forward haul involves the transportation of gas in the same direction as the
physical flow of gas in the pipeline and is typically achieved when the
pipeline transports gas to a delivery point downstream from the point where
the gas was received by the pipeline. Backhaul involves the contractual
delivery of natural gas in a direction opposite of the physical flow of gas in
the pipeline; the receipt point is downstream from the point of delivery.
Witness Jackson testified that:
PSNC's use of segmentation for backhaul deliveries on Transco can be
limited because it is considered secondary firm in scheduling priority. This
did not present any problems in the past, but now that gas flow on the
Transco system is bidirectional in nature due to the new connected shale
gas supply areas of the Northeast, PSNC has on occasion been unable to
use segmentation to schedule backhaul deliveries to its city gate.
Jackson Direct Testimony, pp. 8-9.
In response to a Commission question on the reliability of backhaul to meet gas
supply, witness Jackson testified that while backhaul had once been considered highly
reliable and was available without any additional reservation or demand charge, PSNC
has experienced supply cuts from its downstream storage facilities since Transco's Leidy
Southeast and Atlantic Sunrise projects came on line with a reversal of the flow of gas on
Transco's system on a primary firm basis from north to south. Witness Jackson noted
these supply cuts are concerning, stating, " we re concerned long term what type of
restrictions we may see and, therefore, we have contracted for a portion of our storage
withdrawal capability on the Southeastern Trail Project on Transco's system." Transcript
p. 50. When asked about other efforts to mitigate the loss of backhaul as a reliable option
for transporting downstream capacity, witness Jackson referenced PSNC's efforts to
contract for capacity on both ACP and MVP.
In response to additional questions from the Commission, witness Jackson
testified that the time horizon for getting pipeline projects on line is getting longer. She
stated that if there are further delays to the pipelines' in-service dates, the Company will
go to the market for "short-term capacity options." She explained that PSNC would stay
in constant communication with suppliers about available capacity, either on a forward -
haul or backhaul basis, and issue requests for proposal on an annual and seasonal basis.
She further testified that PSNC would seek opportunities to secure bundled services for
supply and transportation services delivered to PSNC's system. Additionally, witness
Jackson testified that the Company looks at interstate pipelines' electronic bulletin boards
and would take advantage of any opportunities to acquire existing capacity on Transco's
system that might become available at a lower cost.
Part of adhering to its best cost supply strategy means PSNC must plan to have
sufficient supply to serve customers' future capacity requirements on PSNC's design day,
10

Exhibit B
Page 11 of 17
i.e., the day the Company uses for planning purposes to determine the highest volume of
gas it will need to meet firm customers' demand on the accepted peak coldest day that
would be anticipated to be experienced in PSNC's territory. Because the Company
reasonably anticipates that new customers will be added to the PSNC system going
forward,' its design -day forecast projects customer load growth which must be accounted
for in supply planning. This means adding firm pipeline and storage capacity to serve the
growth in design -day needs of PSNC firm customers and to avoid a shortfall in gas supply.
Witness Jackson testified that the projected future design -day demand of PSNC's
firm customers is calculated using a statistical modeling program prepared by SCANA
Services Resource Planning personnel. She explained that the model assumes a 50
heating degree-day (HDD) on a 60 degree Fahrenheit base and uses historical weather
to estimate peak -day demand. Witness Jackson also testified that PSNC presented its
forecasted firm peak -day demand requirements for the review period and for the next five
winter seasons. She further explained that the assets available to meet PSNC's firm peak -
day requirements include year-round, seasonal, and peaking capabilities and consist of
firm transportation and storage capacity on interstate pipelines as well as the peaking
capability of PSNC's on -system liquefied natural gas facility.
Witness Gilbert testified that the Public Staff conducted " an independent
analysis using similar calculations to determine peak day demand levels and compare[d]
that to the assets the Company ha[d] available (or [was] planning to have available when
needed in the future) to meet that demand." Public Staff Direct Testimony at p. 18. The
Public Staff used the review period data of customer usage and HDDs, which were
calculated by taking the average of the minimum and maximum daily temperature and
subtracting that quotient from 65 degrees. (For example, a low of 10 degrees and a high
of 30 degrees would yield 45 HDDs) Base load (usage that does not fluctuate with
weather) plus a usage per HDD factor was developed, and the projected peak day
demand was calculated. The assumption in developing a peak design -day demand was
55 HDDs (as compared to the 50 HDD on a 60 degree base used by the Company), which
is the accepted peak coldest day that would be anticipated to be experienced in PSNC's
territory.
Witness Gilbert testified that the results of the Public Staff's analysis were similar
to the levels presented by PSNC in Revised Jackson Exhibit 1. Both witness Jackson
and witness Gilbert acknowledged that their use of different HDD assumptions had not
yielded a significantly different outcome for planning purposes. Witness Gilbert observed
that PSNC's design -day demand models showed a shortfall of capacity beginning in the
2019 2020 winter season. He cited witness Jackson's testimony that in order to
overcome this anticipated shortfall, PSNC has contracted for necessary capacity on ACP,
which is expected to come into service by late 2019, and MVP, which is expected to have
lateral facilities capable of delivering capacity to PSNC completed by late 2020.
1 PSNC is in growth mode. The Company reports an estimate of its number of customers in its annual
reviews. Over the past decade, growth has averaged 10,200 customers per year. In this docket, the
Company reported approximately 563,000 customers, up 13,000 from the 550,000 reported in last year's
annual review.
11

Exhibit B
Page 12 of 17
At the hearing, with an eye toward assuring that design -day demand is not over-
estimated, the Commission probed whether a reduction in demand resulting from
increased efficiency should also result in a reduction in the amount of pipeline and storage
capacity required on a design day. At the time the Commission approved PSNC's
Customer Usage Tracker (CUT) in general rate case Docket No. G-5, Sub 495, various
PSNC witnesses had testified that the CUT would more effectively support the Company's
efforts to support conservation and efficiency. Among other efforts, PSNC's proposed
residential and commercial high -efficiency rates were mentioned as offering a discount to
customers whose dwellings and buildings comply with certain efficiency standards.
In this docket, in response to the Commission's inquiry as to whether the
implementation of the CUT had impacted PSNC's design -day requirement or demand
calculations, witness Jackson responded that the CUT Mechanism is not factored at all
into PSNC's design -day forecast because PSNC is looking at actual throughput on the
system. She reiterated that PSNC's projected design -day demand of PSNC's firm
customers is calculated using a statistical modeling program prepared by SCANA
Services Resource Planning personnel. Presumably, the statistical modeling program
picks up efficiency improvements so that their impacts facilitated by the CUT are
accounted for in PSNC's calculation of design -day demand, but are not explicitly or
separately calculated.
Finally, Witness Gilbert testified regarding the prudence of PSNC's total gas costs.
He testified that he had reviewed the testimony and exhibits of the Company's witnesses;
monthly operating reports; gas supply and pipeline transportation and storage contracts;
and the Company's responses to the Public Staff's data requests. He concluded that, in
his opinion, PSNC's gas costs were prudently incurred for the 12 -month review period
ending March 31, 2018.
DISCUSSION AND CONCLUSIONS
Pursuant to N.C. Gen. Stat. § 62-133.4(e), the Commission is authorized to include
all costs related to the purchase and transportation of natural gas to the natural gas local
distribution company's system. Pursuant to that statute, in Docket No. G-100, Sub 58,
the Commission adopted Rule R1 -17(k), which includes "charges in connection with the
purchase, storage or transportation of gas for the LDC's system supply" in the definition
of gas costs.
Further, N.C. Gen. Stat. § 62-36.01 addresses the need to have natural gas local
distribution companies enter into service agreements with interstate or intrastate pipelines
to provide increased competition in North Carolina's natural gas industry. It authorizes the
Commission, under certain circumstances, to order natural gas local distribution
companies to enter into such agreements. In Docket No. G-100, Sub 91, the Commission
issued Order Requiring Reporting, which required local distribution companies to include
information in their annual reviews concerning their future capacity needs in order to
assist the Commission in carrying out its responsibilities under that statute. Although the
Commission is not exercising its authority under N.C.G.S. § 62-36.01 in this docket, it
recognizes that PSNC's efforts to enter into service agreements with ACP and MVP have
12

Exhibit B
Page 13 of 17
the desired effect of increasing competition while reducing the risk of service interruptions.
As witness Jackson testified, "instead of relying on one pipeline provider, Transco, we
will in the very near future, have three pipeline providers."
PSNC witness Jackson testified that, because of the reversal of flow on Transco's
system, traditional backhaul arrangements that were relied upon to get downstream
pipeline and storage capacity to PSNC's system are now classified as "secondary firm"
and can no longer be considered reliable. Revised Jackson Exhibit 1 shows both the
forecasted firm peak -day demand requirements for the review period as well as for the
next five winter seasons, and the assets available to meet those firm peak -day
requirements. The Commission notes that a significant amount of capacity shown on
Revised Jackson Exhibit 1 as being available to meet design -day needs, particularly
seasonal and peaking storage capacity, is downstream of PSNC's system and has
traditionally depended on backhaul. When PSNC first announced that it would acquire
capacity on ACP, that project was scheduled to come on line in November 2018 and
would have been available to firm up the delivery of that downstream capacity. Witness
Jackson spoke to the actions that PSNC would now take to ensure that such downstream
capacity would be available to its system on a firm basis in the near term. She also pointed
to PSNC's efforts to secure more permanent, long-term capacity on Transco's
Southeastern Trail, ACP and MVP/MVP Southgate.
The delays being experienced by ACP and MVP are a matter of serious concern.
As mentioned above, ACP was scheduled to come on line in November 2018. In this
docket, testimony was submitted that it is not going to be available until late 2019. MVP
Southgate, which will both deliver gas from MVP to PSNC's system, and provide a firm
path for gas from East Tennessee/Saltville, is not expected to come on line until late 2020,
which is also the in-service date for Transco's Southeastern Trail project. As discussed
above, witness Jackson testified as to the steps that PSNC would take to get gas to its
system on a firm basis when its customers need it. However, Revised Jackson Exhibit 1
makes clear that, if the new interstate projects are delayed, PSNC may have to go to the
short-term market for considerable volumes for the next several winters. A reliance on
short-term solutions raises serious questions about both their cost and their availability.
The need to firm up interstate pipeline capacity to deliver market -area storage will
add significantly to demand and storage costs. As shown on Revised Jackson Exhibit 1,
PSNC has contracted for 178,313 dekatherms per day of seasonal capacity. In response
to a Commission question, witness Jackson stated that all of those seasonal facilities
except for Saltville were depleted oil and gas reservoirs. She added that there are no
depleted oil and gas reservoirs available as capacity options in North Carolina. The
Commission recognizes that, to access volumes of gas on a seasonal basis, it might be
necessary both to maintain existing contracts to what had been market -area seasonal
storage and to secure year-round pipeline capacity to move the stored gas to PSNC's city
gate. However, the Commission expects PSNC to consider all possibilities as part of its
best cost approach to gas supply.
In witness Jackson's description of the Company's actions taken to accommodate
its best -cost policy, she listed "Monitor and intervene in matters before the FERC whose
13

Exhibit B
Page 14 of 17
actions could impact the rates that PSNC pays and the services it receives from interstate
pipelines and storage facilities." Jackson Direct Testimony at p. 15. As required in the
Docket No. G-100, Sub 91 Order Requiring Reporting, PSNC listed the FERC
proceedings in which the Company participated. In sixteen of the seventeen proceedings
listed in Jackson Exhibit 3, PSNC had done nothing more than file a petition to intervene.
No position was taken. The Commission notes that during the time period over which
PSNC took the reported actions at the FERC, the Commission itself took active positions
in a number of FERC dockets.
For example, at the hearing in this docket, the Commission asked both the Public
Staff and Company witnesses about Transco's Eminence Storage Field (Eminence).
PSNC has not taken any position at the FERC regarding demand credits to customers
where significant portions of the Eminence Storage Field are out of service. The
Commission, on the other hand, has been active before the FERC on matters pertaining
to Eminence.
To further explain, PSNC has contracted for capacity from Eminence under two
contracts. Paton Exhibit 1, Schedule 2 shows that, during the review period, PSNC paid
$938,594 for ESS Demand and Capacity and $954,471 for Eminence Demand and
Capacity. Witness Jackson testified that a few years ago, PSNC contracted with Transco
for additional withdrawal and injection capacity, which explains the two different contracts.
She further testified that PSNC had " not encountered any interruptions in our service
so that's why we continue to contract for that storage service." Transcript, p. 76.
In Docket No. CP11-551, Transco requested that it be allowed to abandon four of
seven salt dome caverns at Eminence. After granting Transco's request to abandon the
caverns at Eminence, the FERC established new operating parameters for each of the
remaining three caverns. However, filings at the FERC show that Transco has been
taking the remaining storage caverns out of service for extended periods for testing and
maintenance, thereby raising questions as to whether it can meet the certificate
parameters. Despite taking significant portions of the Eminence Storage Field out of
service, Transco has not been providing demand credits to customers like PSNC. PSNC
has not pursued demand credits, which ultimately would benefit its own North Carolina
customers.
In contrast, the Commission actively pursued the question of demand credits with
the FERC and, as a result, Docket No. CP18-42 was opened. Transco asserted that it
operates its system on an integrated basis and, as long as it meets its contractual
obligations for capacity and deliverability, it does not matter what assets it actually uses
to provide those services. PSNC filed an intervention in CP18-42, but took no position.
Following the Commission's pursuit of demand credits and the opening of the
related FERC docket, Transco filed a request to reduce the certificated capacity of
Eminence in Docket No. CP18-145, essentially, in the Commission's opinion, conceding
that Eminence could not meet the operating parameters required by FERC in
CP11-551. In effect, while Transco may have met its contractual obligations to PSNC
14

Exhibit B
Page 15 of 17
using undefined system assets, the Commission does not believe it was, in fact, capable
of meeting full contract demand for all customers at any single point in time from
Eminence. PSNC paid for and should be assured of firm service from Transco at
Eminence. The Commission has no way of knowing if Transco's undefined system assets
would actually have been available on a firm basis if the system had experienced a
design -day event. Accordingly, the Commission filed a protest intervention in CP18-145
based on the lack of support Transco provided for its requested certificate
revisions. PSNC filed an intervention in CP18-145, but again, took no position.
The Public Staff has recommended that the Commission find that PSNC's gas
costs were prudently incurred. The Commission agrees with and will accept that
recommendation. However, the Commission remains interested in PSNC's decisions
with regard to participation in matters before the FERC. In future annual reviews, the
Commission will continue to monitor and closely scrutinize the positions and actions taken
by PSNC on FERC matters, including Eminence.
Based upon the foregoing, the Commission concludes that the Company's gas
costs incurred during the review period ended March 31, 2018, were reasonable and
prudently incurred and that the Company should be permitted to recover 100% of its
prudently incurred gas costs.
EVIDENCE AND CONCLUSIONS FOR FINDING OF FACT NO. 15
The evidence for this finding of fact is found in the testimony of PSNC witness
Paton and the testimony of Public Staff witness Gilbert.
Witness Paton testified that the Company was not proposing new temporary rate
increments or decrements at this time. Specifically, PSNC witness Paton testified that the
Company proposes to leave the current temporary decrements applicable to the All
Customers Deferred Account in place and monitor the balance in the account to
determine when or if changes are required. She stated that the Company proposes to
continue its practice of taking into consideration the balance in the Sales Customers Only
Deferred Account when evaluating whether to file for a change in the benchmark cost of
gas. She concluded that the Company believes that making periodic and smaller
adjustments in the benchmark cost of gas is preferable to making one adjustment
annually based on the over- or under -collection in commodity cost of gas that may exist
as of the end of the review period.
Witness Gilbert testified that the All Customers Deferred Account reflects a credit
balance of $13,770,526 owed by the Company to customers. He noted that PSNC has
proposed not to place a decrement in rates for the adjustment of this credit balance. At
the end of May, the over -collection had decreased to $9,145,536, and the Company
estimates the balance will "flip" to an under -collection of approximately $8.4 million by the
end of October 2018. The Sales Customers Only Deferred Account reflects an under -
collection of $1,443,014, owed by customers to the Company. The current tariff rates,
which were approved in the Company's Purchased Gas Adjustment (PGA) filing in
15

Exhibit B
Page 16 of 17
Docket No. G-5, Sub 583 and became effective January 1, 2018, are based on an over-
collection of approximately $15.0 million in the All Customers Deferred Account. Witness
Gilbert concluded that removing the decrements that are currently in place and
implementing a new rate based on the $13,770,526 credit balance in the All Customers
Deferred Account would not be beneficial to the rate payers. He noted that it is not unusual
to have a change in the balances, since fixed gas costs are typically over -collected during
the winter period when throughput is higher due to heating load, and under -collected
during the summer when throughput is lower. He agreed with the Company's proposal to
leave the current temporary decrements applicable to the All Customers Deferred
Account in place and monitor the balance in the account to determine when or if changes
are required. He recommended that PSNC continue to monitor the balances in both the
All Customers and the Sales Customers Only Deferred Accounts and file for a request to
implement new temporary increments or decrements, as applicable, through the PGA
mechanism to avoid significant over -collections of its fixed gas costs. He agreed with
PSNC's proposal of not taking any action on the All Customers and the Sales Customers
Only Deferred Accounts at this time.
In addition to not changing the temporary decrements that PSNC currently has in
place, witness Gilbert also agreed with PSNC's proposal not to place a decrement in rates
for the recovery of this credit balance, but to manage it by using the PGA mechanism,
pursuant to N.C.G S. § 62-133.4, which PSNC has previously used for this purpose. He
concluded that requiring PSNC to implement temporary rate changes in the instant docket
at this time would not be productive, and, therefore, he agreed with the Company's
proposals. The Commission notes that PSNC's Summary of Deferred Gas Cost Accounts
for the month of August that was filed on October 15, 2018 in Docket No. G-5, Sub 586
reported a debit balance of $2,020,888 in the All Customers Deferred Account.
Based on the testimony discussed above, the Commission notes that it is
commonplace for the Company to over -collect its fixed gas costs during the winter months
and under -collect during summer months and recognizes that this is what occurred during
the prior review period ended March 31, 2017, in Docket No. G-5, Sub 578. Had the
Commission ordered a rate decrement in that proceeding, the effect would have been
counterproductive, due to the fact that by the time temporary decrements would have
gone into effect in November 2017, the Company's All Customer Deferred Account was
under -collected, and it would have had to file a petition to remove the decrement and
perhaps implement an increment.
The Commission concludes that the same would be true in this docket. If the
Commission were to require decrements, by the time rates go into effect in November the
Company would likely be under -collected and the decrements would exacerbate that
position. Based on the facts in the present docket, and the record as a whole, the
Commission finds and concludes that it is appropriate not to require PSNC to implement
new temporary rate decrements in the instant docket at this time. However, the
Commission expects PSNC to continue to monitor market conditions and the Sales Only
16

Exhibit B
Page 17 of 17
Customer Deferred Account balances and, if necessary, to file a PGA to make an
appropriate adjustment to rates.
IT IS, THEREFORE, ORDERED as follows -
1 .
ollows:
1. That PSNC's accounting for gas costs for the 12 -month period ended
March 31, 2018, is approved;
2. That the gas costs incurred by PSNC during the 12 -month period ended
March 31, 2018, including the Company's hedging costs, were reasonably and prudently
incurred, and PSNC is hereby authorized to recover 100% of these gas costs as provided
herein; and
3. That as proposed by PSNC and agreed to by the Public Staff in the instant
docket, PSNC shall not implement any temporary rate changes effective for service
rendered on and after December 1, 2018.
ISSUED BY ORDER OF THE COMMISSION
This the 6th day of December, 2018
NORTH CAROLINA UTILITIES COMMISSION
Janice H. Fulmore, Deputy Clerk
17

EXHIBIT C

McGuireWoods LLP
434 Fayetteville Street
Suite 2600
PO Box 27507 (27611)
Raleigh, NC 27601
Phone: [phone]
Fax: [phone]
www.mcguirewoods.com
Mary Lynne Grigg
Direct: 919.755.6573
August 16, 2018
VIA ELECTRONIC FILING
Ms. M. Lynn Jarvis, Chief Clerk
North Carolina Utilities Commission
Dobbs Building
430 North Salisbury Street
Raleigh, North Carolina 27603
Re: Docket No. G-5, Sub 593
Dear Ms. Jarvis:
Exhibit C
Page 1 of 13
IL
[e-mail]
U.
Pursuant to Section 62-153 of the General Statutes of North Carolina, enclosed
for filing on behalf of Public Service Company of North Carolina, Inc., is an Application
or Approval of Payment of Compensation under a Service Agreement with Mountain
Vallev Pipeline, LLC.
If you have any questions regarding this filing, please do not hesitate to call me.
Thank you for your assistance with this matter.
Very truly yours,
Is/Mary Lvnne Grigg
MLG:mth
Enclosures
Atlanta I Austin I Baltimore I Brussels I Charlotte I Charlottesville I Chicago I Dallas Houston I Jacksonville London I Los Angeles - Century City
Los Angeles - Downtown I New York I Norfolk I Pittsburgh I Raleigh I Richmond San Francisco I Tysons Washington, D.C. I Wilmington

BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of: )00
Application of Public Service Company )
of North Carolina, Inc., for Approval of ) APPLICATION OF PUBLIC
Payment of Compensation under a ) SERVICE COMPANY OF
Service Agreement with Mountain ) NORTH CAROLINA, INC.
Valley Pipeline, LLC )
Public Service Company of North Carolina, Inc. ("PSNC" or the "Company"),
through counsel and pursuant to Section 62-153 of the North Carolina General Statutes and
Rules R1-3 and R1-5 of the Rules and Regulations of the North Carolina Utilities
Commission ("Commission"), respectfully requests that the Commission approve the
payment of compensation under a service agreement ("Southgate Service Agreement")
which is to be entered into in connection with an interstate lateral pipeline project known
as the MVP Southgate Project to be constructed and operated by Mountain Valley Pipeline,
LLC ("MVP") and with respect to which PSNC has acquired an ownership interest. In
support of this application, PSNC shows the following:
Description of Applicant
1. PSNC is a corporation organized and existing under the laws of the State of
South Carolina, with its principal office and place of business located at 800 Gaston Road,
Gastonia, North Carolina 28056. PSNC is a public utility engaged in the transportation,
distribution, and sale of natural gas within its franchised service area in North Carolina. Its
public utility operations are subject to the jurisdiction of this Commission.
Exhibit C
Page 2 of 13
IL
STATE OF NORTH CAROLINA
UTILITIES COMMISSION
RALEIGH
U.
DOCKET NO. G-5, SUB 593
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of: )00
Application of Public Service Company )
of North Carolina, Inc., for Approval of ) APPLICATION OF PUBLIC
Payment of Compensation under a ) SERVICE COMPANY OF
Service Agreement with Mountain ) NORTH CAROLINA, INC.
Valley Pipeline, LLC )
Public Service Company of North Carolina, Inc. ("PSNC" or the "Company"),
through counsel and pursuant to Section 62-153 of the North Carolina General Statutes and
Rules R1-3 and R1-5 of the Rules and Regulations of the North Carolina Utilities
Commission ("Commission"), respectfully requests that the Commission approve the
payment of compensation under a service agreement ("Southgate Service Agreement")
which is to be entered into in connection with an interstate lateral pipeline project known
as the MVP Southgate Project to be constructed and operated by Mountain Valley Pipeline,
LLC ("MVP") and with respect to which PSNC has acquired an ownership interest. In
support of this application, PSNC shows the following:
Description of Applicant
1. PSNC is a corporation organized and existing under the laws of the State of
South Carolina, with its principal office and place of business located at 800 Gaston Road,
Gastonia, North Carolina 28056. PSNC is a public utility engaged in the transportation,
distribution, and sale of natural gas within its franchised service area in North Carolina. Its
public utility operations are subject to the jurisdiction of this Commission.

Exhibit C
Page 3 of 13
CL
Notices and Communications
2. The attorneys for PSNC to whom all notices or other communications
LL
should be sent are:
Mary Lynne Grigg
Andrea R. Kells
McGuireWoods LLP
PO Box 27507
Raleigh, North Carolina 27611
MLG phone: [phone]
ARK phone: [phone]
[e-mail]
[e-mail]
B. Craig Collins
SCANA Services, Inc.
Mail Code C222
220 Operation Way
Cayce, South Carolina 29033
[phone]
[e-mail]
Background
3. MVP is a limited liability company organized and existing under the laws
of the State of Delaware formed for the purpose of constructing, owning, and operating an
interstate pipeline subject to the jurisdiction of the Federal Energy Regulatory Commission
("FERC"). On October 23, 2015, MVP filed an application with FERC to obtain a
certificate of public convenience and necessity for a project comprising approximately 300
miles of transmission pipeline and compression facilities, with approximately 2,000,000
dekatherms per day of firm natural gas transportation capacity, running from West Virginia
to Pittsylvania County, Virginia ("Mainline Project"). On October 13, 2017, FERC issued
its order approving the certificate of public convenience and necessity for the project.
Mountain Valley Pipeline, LLC, 161 FERC ¶ 61,043 (October 13, 2017). MVP has
2

Exhibit C
Page 4 of 13
IL
indicated that the expected in-service date of the Mainline Project is the fourth quarter of
2019.
U.
4. During the spring of 2017, PSNC solicited interest from existing and
proposed interstate pipeline providers for natural gas transportation capacity to meet
forecasted incremental demand on PSNC's local distribution system. After discussions
and negotiations with interested pipeline providers, on December 20, 2017, PSNC and
MVP entered into a Precedent Agreement for 250,000 dekatherms per day of firm
transportation capacity on the Mainline Project for a term of twenty years at a negotiated
rate ("Mainline PA"). Contemporaneously, PSNC and MVP also executed a Credit
Agreement for the Mainline Project ("Mainline Credit Agreement") pursuant to Section 7
of the Mainline PA. On January 5, 2018, pursuant to Section 3 of the Mainline PA, PSNC
and MVP executed a Transportation Service Agreement applicable to Firm Transportation
Service under Rate Schedule FTS for the Mainline Project ("Mainline Service
Agreement"). The Mainline Service Agreement is the form agreement set forth in MVP's
approved FERC Gas Tariff, with modifications only as necessary to reflect the rates, terms,
and conditions of service set forth in the Mainline PA.'
5. To connect PSNC's system with the Mainline Project facilities, MVP
agreed to develop and construct a lateral consisting of approximately 70 miles of
transmission pipeline and compression facilities from an interconnection in Pittsylvania
County, Virginia, to new delivery points to be established at PSNC's Dan River and Haw
' Copies of the Mainline PA, Mainline Credit Agreement, and Mainline Service Agreement are
attached as Exhibit A for the Commission's information. Because the material terms of these agreements are
the confidential and proprietary trade secrets of PSNC and MVP and all other requirements of G.S. 132-1.2
are met, the agreements are hereby designated to be exempt from disclosure pursuant to G.S. 132-1.2.
3

Exhibit C
Page 5 of 13
River interconnects in Rockingham and Alamance Counties, North Carolina, respectively
("Southgate Project"). On May 3, 2018, MVP filed a request with FERC to initiate its pre-
filing review of the Southgate Project and FERC opened Docket No. PF 18-4 for that
purpose. The expected in-service date of the Southgate Project is the fourth quarter of
2020.
6. Contemporaneously with the Mainline PA, on December 20, 2017, PSNC
and MVP entered into a Precedent Agreement for 300,000 dekatherms per day of firm
transportation capacity on the Southgate Project for a term of twenty years at a negotiated
rate ("Southgate PA"). Pursuant to Section 6 of the Southgate PA, on December 20, 2017,
PSNC and MVP also executed a Credit Agreement for the Southgate Project ("Southgate
Credit Agreement" ).3 Given that the Southgate Project is near the beginning of the FERC
regulatory process, PSNC and MVP have not yet executed the Southgate Service
Agreement pursuant to Section 2 of the Southgate PA. The Southgate Service Agreement
will be the form of service agreement applicable to firm service on the Southgate Project
facilities, with the rates, terms, and conditions of service as set forth in the Southgate PA.
The Southgate Service Agreement will be executed later in the FERC regulatory process,
2 This is 50,000 dekathenns per day more than the 250,000 dekathenns per day of fine transportation
capacity that PSNC is contracting for on the Mainline Project. The additional capacity will allow the
Company to receive primary fine forward -haul deliveries directly from East Tennessee Natural Gas, LLC
("East Tennessee") through a new interconnection with MVP. PSNC holds 50,000 dekathenns per day of
capacity on East Tennessee to access storage services the Company has contracted for with Saltville Gas
Storage Company, L.L.C. ("Saltville"). Currently, PSNC uses secondary fine backhaul transportation on
Transcontinental Gas Pipeline Company, LLC ("Transco") to transport quantities of natural gas to and from
the East Tennessee pipeline.
3 Copies of the Southgate PA and Southgate Credit Agreement are attached as Exhibit B for the
Commission's information. Because the material terms of these agreements are the confidential and
proprietary trade secrets of PSNC and MVP and all other requirements of G.S. 132-1.2 are met, the
agreements are hereby designated to be exempt from disclosure pursuant to G.S. 132-1.2.
11

Exhibit C
Page 6 of 13
CL
typically after FERC issues a certificate of public convenience and necessity for the
Southgate Project.
U.
7. On August 1, 2018, PSNC acquired a 30% ownership interest in a
membership series of MVP, which is related solely to the Southgate Project and which is
separate from the membership series that will construct, own, and operate the Mainline
Project. This ownership interest is held by PSNC through a wholly-owned subsidiary,
PSNC Southgate, LLC ("PSNC Southgate").
Request for Approval of Payment of Compensation
8. Subsection (a) of G.S. 62-153 requires all public utilities to file with the
Commission copies of contracts with affiliates and subsection (b) prohibits them from
paying "any fees, commissions, or compensation" to an affiliate "without first filing copies
of all proposed agreements and contracts with the Commission and obtaining its approval."
Because of PSNC's ownership interest in MVP associated with the Southgate Project, this
statute requires PSNC to file a copy of the contemplated Southgate Service Agreement
with the Commission and, before compensation may be paid to MVP, obtain Commission
approval.4 As noted in paragraph 6 above, PSNC and MVP have not yet executed the
Southgate Service Agreement. Accordingly, PSNC requests that the Commission approve
the payment of compensation under the contemplated Southgate Service Agreement with
the rates, terms, and conditions of service set forth in the Southgate PA included in
4 Because the Southgate PA and Southgate Credit Agreement were entered into prior to the
establishment of an affiliate relationship, G.S. 62-153 appears to have no application with respect to those
agreements. In addition, PSNC is not an affiliate of MVP under G.S. 62-153 with respect to the Mainline
Project agreements because it has no ownership interest associated with the Mainline Project. However, as
noted in footnotes 1 and 3 above, PSNC is filing all of these agreements under seal for informational purposes.
5

Exhibit C
Page 7 of 13
Exhibit B to this application. After the Southgate Service Agreement is executed, PSNC
will file a copy with the Commission.
9. PSNC submits that payment of compensation under the contemplated
Southgate Service Agreement is just and reasonable and in the public interest for the
following reasons:
• The Southgate Service Agreement will provide PSNC access to the MVP
capacity, which constitutes the best -cost alternative available to satisfy the
Company's long-term interstate capacity needs. Although there is no guarantee
that other capacity alternatives will arise in the future, it is reasonable to
conclude that capacity options that might become available later will be more
expensive than the MVP capacity.
• The MVP projects will provide PSNC with a third direct interstate pipeline
connection, in addition to the existing Transco pipeline and the new Atlantic
Coast Pipeline project, which will improve reliability and add resiliency to the
interstate pipeline services the Company receives. The addition of a third
interstate pipeline provides risk diversification by giving PSNC multiple
options on geographically diverse interstate pipelines. In the event of planned
or unplanned outages or constraints on one of the pipelines, PSNC would have
access to the other pipelines to continue serving its customers without
interruption.
• The MVP projects will provide PSNC additional direct access to low-cost
natural gas produced in the Marcellus and Utica shale regions, the largest shale
gas deposits in the United States. When completed, the Mainline Project will
I

Exhibit C
Page 8 of 13
interconnect in West Virginia with an existing interstate transmission pipeline
system operated by EQT Midstream Partners, LP ("EQT"), which also is
expected to be the operator of the MVP projects. At the end of 2016, that system
had total throughput of 4.3 billion cubic feet per day and was connected to
eighteen natural gas storage reservoirs with approximately 43 billion cubic feet
of working gas capacity and 645 million cubic feet of peak withdrawal capacity.
• Through its interconnection with the other EQT-operated pipelines in West
Virginia, the MVP projects will give PSNC more competitive and diverse
options for natural gas supply. Thus, PSNC will gain optionality in selecting
best -cost supply sources and will be able to take advantage of price differentials
across more gas supply regions. These price differentials tend to change as
suppliers alter their purchasing strategies in response to supply and demand
dynamics within different areas.
• As indicated in footnote 2 above, the MVP projects will provide a direct
connection of PSNC's system to the East Tennessee pipeline through which the
Company sources its Saltville storage. This will allow PSNC to replace less
reliable secondary -firm backhaul deliveries on Transco with primary -firm
forward -haul deliveries on MVP.
• The Southgate Service Agreement will provide for a minimum delivery
pressure guarantee. The minimum delivery pressure from MVP will allow
PSNC to be more confident in its pressure inputs when conducting system
modeling. This should improve PSNC's ability to conduct system planning and
enhance the operation of its system.
7

Exhibit C
Page 9 of 13
10. PSNC also submits that its ownership in MVP through PSNC Southgate is
in the public interest for the following reasons:
• As a customer of MVP, PSNC will have a vested interest in MVP's operations
and will have an opportunity to provide input into how those operations are
performed.
• PSNC has valuable experience with operating pipeline facilities within the State
of North Carolina that other members do not offer.
• PSNC's experience as a joint -owner of other interstate and intrastate pipeline
projects will allow it to provide a unique perspective in its role as an owner and
will enhance MVP's provision of interstate natural gas transportation service in
North Carolina.
11. PSNC needs the necessary approval to enter into the Southgate Service
Agreement by September 30, 2018. Accordingly, PSNC requests that the Commission
consider this application on an expedited basis and issue its order approving the payment
of compensation under the agreement prior to that date.
Conclusion
WHEREFORE, based on the foregoing, PSNC respectfully requests that the
Commission issue an order approving PSNC's payment of compensation under the
contemplated Southgate Service Agreement, with the rates, terms, and conditions of
service set forth in the Southgate PA.

434 Fayetteville Street, Suite 2600
PO Box 27507 (27611)
Raleigh, North Carolina 27601
MLG phone: [phone]
ARK phone: [phone]
[e-mail]
[e-mail]
B. Craig Collins
SCANA Services, Inc.
Mail Code C222
220 Operation Way
Cayce, South Carolina 29033
[phone]
[e-mail]
Attorneys for Public Service Company of
North Carolina, Inc.
7
Exhibit C
Page 10 of 13
IL
Respectfully submitted, this 16I' day of August, 2018.
/s/Mary Lvnne Grimm
U.
Mary Lynne Grigg
Andrea R. Kells
McGuireWoods LLP
434 Fayetteville Street, Suite 2600
PO Box 27507 (27611)
Raleigh, North Carolina 27601
MLG phone: [phone]
ARK phone: [phone]
[e-mail]
[e-mail]
B. Craig Collins
SCANA Services, Inc.
Mail Code C222
220 Operation Way
Cayce, South Carolina 29033
[phone]
[e-mail]
Attorneys for Public Service Company of
North Carolina, Inc.
7

Exhibit C
Page 11 of 13
IL
Exhibit A U.
Mainline PA, Mainline Credit Agreement, and Mainline Service Agreement
[Filed under seal pursuant to G.S. 132-1.2.]

Exhibit C
Page 12 of 13
IL
U.
Exhibit B
Southgate PA and Southgate Credit Agreement
[Filed under seal pursuant to G.S. 132-1.2.]

Exhibit C
Page 13 of 13
IL
VERIFICATION
SOUTH CAROLINA,
LEXINGTON COUNTY.
M. Shaun Randall, being first duly sworn, says that (i) he is Vice President of
Gas Services and, as such, he is authorized, and has been designated by Public Service
Company of North Carolina, Inc., to make this proof on its behalf; (ii) he has read the
foregoing application and the matters and things stated therein are true of his own
knowledge, except as to those matters and things stated therein on information and belief,
and as to those, he believes them to be true.
Affiant (M. Shaun Randall)
Subscribed and sworn to before me, this 15" day of August 2018.
Melissa Addy, Notary Public
My Commission Expires: May 23, 2027
[OFFICIAL SEAL]
MELISSA ADDY
Nwar., Pijbl',c-Stare o, So'J=h Carr)ti
{cif' Corn rT .s S i 0 i.=Xpi res
May2'3,2Ci27

EXHIBIT D

STATE OF NORTH CAROLINA
UTILITIES COMMISSION
RALEIGH
DOCKET NO. G-5, SUB 593
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Application of Public Service Company of
North Carolina, Inc. for Approval of Payment
of Compensation Under a Service Agreement
with Mountain Valley Pipeline, LLC
Exhibit D
Page 1 of 6
ORDER ACCEPTING AFFILIATED
AGREEMENTS FOR FILING AND
PERMITTING OPERATION
THEREUNDER PURSUANT TO
N.C. GEN. STAT. § 62-153
BY THE COMMISSION: On August 16, 2018, pursuant to N.C. Gen. Stat. § 62-
153 and Rules R1-3 and R1-5 of the Rules and Regulations of the North Carolina Utilities
Commission (Commission), Public Service Company of North Carolina, Inc. (PSNC or
Company), filed an application with the Commission requesting approval of payment of
compensation under a service agreement (Southgate Service Agreement), which is to be
entered into in connection with an interstate lateral pipeline project known as the MVP
Southgate Project, to be constructed and operated by Mountain Valley Pipeline, LLC
(MVP), and with respect to which PSNC has acquired an ownership interest.
In summary, PSNC stated that MVP is a limited liability company formed for the
purpose of constructing, owning, and operating an interstate pipeline, and is subject to
the jurisdiction of the Federal Energy Regulatory Commission (FERC). Further,
PSNC stated that MVP filed an application with FERC to obtain a certificate
of public convenience and necessity for a project comprising approximately 300 miles
of transmission pipeline and compression facilities, with approximately
2,000,000 dekatherms per day (dts/day) of firm natural gas transportation capacity,
running from West Virginia to Pittsylvania County, Virginia (Mainline Project).
In the filing, PSNC stated that in the spring of 2017, it solicited interest from existing
and proposed interstate pipeline providers for natural gas transportation capacity to meet
forecasted incremental demand on PSNC's local distribution system. After discussions
and negotiations with interested pipeline providers, PSNC and MVP entered into a
Precedent Agreement on December 20, 2017 (Mainline PA), for 250,000 dts/day of firm
transportation capacity on the Mainline Project for a term of twenty years at a negotiated
rate, which is provided in the Mainline PA. PSNC and MVP also executed a Credit
Agreement for the Mainline Project (Mainline Credit Agreement) pursuant to Section 7 of
the Mainline PA. Moreover, PSNC stated that on January 5, 2018, pursuant to Section 3
of the Mainline PA, PSNC and MVP executed a Transportation Service Agreement
applicable to Firm Transportation Service under Rate Schedule FTS for the Mainline
Project (Mainline Transportation Service Agreement). According to PSNC, the Mainline
Transportation Service Agreement is the form agreement set forth in MVP's approved

Exhibit D
Page 2 of 6
FERC Gas Tariff, with modifications only as necessary to reflect the rates, terms, and
conditions of service set forth in the Mainline PA. PSNC submitted these agreements for
informational purposes in its filing in this proceeding, under seal on the grounds that they
are confidential pursuant to N.C. Gen. Stat. § 132-1.2.
Further, PSNC stated that to connect PSNC's system with the Mainline Project
facilities, MVP agreed to develop and construct a lateral consisting of approximately
70 miles of transmission pipeline and compression facilities from an interconnection in
Pittsylvania County, Virginia, to new delivery points to be established at PSNC's Dan
River and Haw River interconnects in Rockingham and Alamance Counties, North
Carolina, respectively (Southgate Project). On May 3, 2018, MVP filed a request with
FERC to initiate its prefiling review of the Southgate Project and FERC opened Docket
No. PF 18-4 for that purpose. The expected in-service date of the Southgate Project is
the fourth quarter of 2020.
Contemporaneously with entering into the Mainline PA, on December 20, 2017,
PSNC and MVP entered into a Precedent Agreement (Southgate PA) for 300,000 dts/day
of firm transportation capacity on the Southgate Project for a term of twenty years at a
negotiated rate. Pursuant to Section 6 of the Southgate PA, on December 20, 2017,
PSNC and MVP also executed a Credit Agreement for the Southgate Project (Southgate
Credit Agreement). However, given that the Southgate Project is near the beginning of
the FERC regulatory process, PSNC and MVP have not yet executed the Southgate
Service Agreement pursuant to Section 2 of the Southgate PA. PSNC submitted the
Southgate PA and the Southgate Credit Agreement as Exhibit B to its application for
informational purposes in its filing in this proceeding, under seal on the grounds that they
are confidential pursuant to N.C. Gen. Stat. § 132-1.2.
On August 1, 2018, PSNC acquired a 30% ownership interest in a membership
series of MVP, related solely to the Southgate Project and separate from the membership
series that will construct, own, and operate the Mainline Project. This ownership interest
is held by PSNC through a wholly-owned subsidiary, PSNC Southgate, LLC (PSNC
Southgate). PSNC contended in the filing that the Southgate Service Agreement will be
in the form of service agreements applicable to firm service on the Southgate Project
facilities, with the rates, terms, and conditions of service as set forth in the Southgate PA.
PSNC also stated that the Southgate Service Agreement will be executed later in the
FERC regulatory process, typically after FERC issues a certificate of public convenience
and necessity for the Southgate Project.
Subsection (a) of N.C. Gen. Stat. § 62-153 requires all public utilities to file with
the Commission copies of contracts with affiliates, and subsection (b) prohibits utilities
from paying "any fees, commissions, or compensation" to an affiliate "without first filing
copies of all proposed agreements and contracts with the Commission and obtaining its
approval." PSNC stated in its filing that because the Southgate PA and the Southgate
Credit Agreement were entered into prior to the establishment of an affiliate relationship,
N.C. Gen. Stat. § 62-153 appears to have no application with respect to those
agreements. PSNC also stated that, because of PSNC's ownership interest in MVP
2

Exhibit D
Page 3 of 6
associated with the Southgate Project, N.C. Gen. Stat. § 62-153 requires PSNC to file a
copy of the contemplated Southgate Service Agreement with the Commission, and,
before compensation may be paid to MVP, obtain Commission approval.
PSNC stated that it needs the necessary approval to enter into the Southgate
Service Agreement on an expedited basis, and further requested that the Commission
approve the payment of compensation under the contemplated Southgate Service
Agreement with the rates, terms, and conditions of service set forth in the Southgate PA.
After the Southgate Service Agreement is executed, PSNC stated that it will file a copy
with the Commission.
PSNC stated that payment of compensation under the contemplated Southgate
Service Agreement is just and reasonable and in the public interest for many reasons,
including: (1) the Southgate Service Agreement will provide PSNC access to capacity on
the Mainline Project, which constitutes the best -cost alternative available to satisfy the
Company's long-term interstate capacity needs; (2) the MVP projects (the Mainline
Project and the MVP Southgate Project) will provide PSNC with a third direct interstate
pipeline connection, which will improve reliability and add resiliency to the interstate
pipeline services the Company receives; (3) the MVP projects will diversify risk and
provide access to the other pipelines to continue serving PSNC's customers without
interruption in the event of an unplanned outage or interruption; (4) the MVP projects will
provide PSNC additional direct access to low-cost natural gas produced in the Marcellus
and Utica shale regions, the largest shale gas deposits in the United States; (5) the MVP
projects will provide interconnection in West Virginia with an existing interstate
transmission pipeline system operated by EQT Midstream Partners, LP (EQT), which also
is expected to be the operator of the MVP projects, and provide PSNC, through its
interconnection with the other EQT-operated pipelines in West Virginia, with more
competitive and diverse options for natural gas supply; and (6) the MVP projects will
provide a direct connection of PSNC's system to the East Tennessee pipeline through
which the Company sources its Saltville storage, which will allow PSNC to replace less
reliable secondary -firm backhaul deliveries on Transco with primary -firm forward -haul
deliveries on MVP under the Southgate Service Agreement, for a minimum delivery
pressure guarantee.
PSNC also stated that its ownership in MVP through PSNC Southgate is in the
public interest for the following reasons: (1) as a customer of MVP, PSNC will have a
vested interest in MVP's operations and will have an opportunity to provide input into how
those operations are performed; (2) PSNC has valuable experience with operating
pipeline facilities within the State of North Carolina that other members do not offer; and
(3) PSNC's experience as a joint -owner of other interstate and intrastate pipeline projects
will allow it to provide a unique perspective in its role as an owner and will enhance MVP's
provision of interstate natural gas transportation service in North Carolina.
The Public Staff presented this matter to the Commission at its Regular Staff
Conference on October 8, 2018. The Public Staff stated that based on its review of
PSNC's anticipated future capacity needs to meet its customer demands, the Public Staff
3

Exhibit D
Page 4 of 6
believed that, when completed, the pipeline will substantially increase the amount of firm
pipeline capacity that PSNC has under long-term contract.
The Public Staff stated that it had reviewed the Southgate PA, the other filed
agreements, and information provided by PSNC in response to Public Staff data requests.
Based on its investigation, the Public Staff determined that authorizing PSNC to go
forward with its participation in the Southgate project should be approved as
discussed below.
PSNC stated that the Southgate PA, which makes reference to the Southgate
Services Agreement, as well as the Southgate Credit Agreement, did not require
Commission approval because they were executed prior to the time that an affiliate
relationship existed between PSNC and MVP. PSNC also stated that neitherthe Mainline
PA, the Mainline Credit Agreement, nor the Mainline Transportation Services Agreement
require approval, due to PSNC not having an ownership interest in the Mainline Project.
The Public Staff stated that in its opinion an affiliate relationship now exists with
regard to the Southgate Project, the Southgate PA, and the Southgate Credit Agreement,
which all involve compensation being paid by PSNC, and therefore they should now be
subject to Commission review and approval. Furthermore, the Public Staff stated that
PSNC may be considered to be at least an indirect affiliate with respect to the Mainline
Project, due to their common interest in the Southgate Project. The Public Staff stated
that PSNC does not agree with these latter assertions; but, notwithstanding this
disagreement, PSNC supports the Public Staff's recommendation.
The Public Staff stated that the Company's filing is unique in that it seeks approval
for a prospective contract, the Southgate Service Agreement, which cannot be provided
until later. According to the Public Staff, N.C. Gen. Stat. § 62-153 (a) specifically requires
a filing of copies of contracts and agreements with affiliates, and the Commission has the
authority to disapprove, after hearing, any such contract if it is found to be unjust or
unreasonable. The Public Staff further noted that N.C.G.S. § 62-153(b) specifically
requires that a utility must first file copies of all proposed agreements with the Commission
and receive Commission approval prior to paying compensation to an affiliated company.
The Public Staff stated that although the Southgate Service Agreement for which
PSNC is seeking approval has not yet been executed, it is the Public Staff's
understanding after discussions with the Company that it will be similar in form to the
Mainline Service Agreement, and its essential terms will be taken from the Southgate PA.
Based on the facts of this particular case, the Public Staff opined that the Southgate
Service Agreement is simply an implementation of the Southgate PA, and it need not be
received in advance if the primary agreement (which in this case is the Southgate PA) is
approved under N.C.G.S. § 62-153. Accordingly, the Public Staff stated that it is
appropriate for the Commission at this time to approve PSNC's payment of compensation
under the Southgate Service Agreement, subject to PSNC promptly filing a copy of the
agreement once it is executed, and provided that the terms of the agreement are not
materially different from those reflected in the Southgate PA.
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Exhibit D
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The Public Staff recommended that the Commission accept the Southgate PA, the
Southgate Credit Agreement, the Mainline PA, the Mainline Credit Agreement, and the
Mainline Transportation Services Agreement for filing, and authorize PSNC to make
payment of compensation pursuant thereto. Additionally, the Public Staff recommended
that PSNC be required to file the Southgate Service Agreement when executed and
authorized to make payment of compensation under the agreement, provided its terms
are not materially different from the terms of the Southgate PA.
The Public Staff further recommended that the Commission's order state that for
ratemaking purposes these actions do not constitute approval of the amount of
compensation paid pursuant to any of the agreements, and that the authority granted by
the order is without prejudice to the right of any party to take issue with any provision in
the agreements in a future proceeding.
Finally, the Public Staff opined that notwithstanding the authority granted by its
order authorizing payment, the Commission may subsequently disapprove, after hearing,
the agreements approved in this proceeding, or any fees, commissions or compensation
whatsoever paid to any affiliated or subsidiary holding, managing, operating, constructing,
engineering, financing or purchasing company or agency for services rendered, if found
to be unjust or unreasonable, or made for the purpose or with the effect of concealing,
transferring, or dissipating the earnings of a public utility.
On October 8, 2018, in response to questions by the Commission, PSNC filed
additional information concerning the above-described agreements.
Based upon careful consideration of the filings in this docket and the
recommendations of the Public Staff, the Commission concludes that the Public Staff's
recommendations should be adopted.
IT IS, THEREFORE, ORDERED as follows -
1 .
ollows:
1. That the Southgate Precedent Agreement, the Southgate Credit
Agreement, the Mainline Precedent Agreement, the Mainline Credit Agreement, and the
Mainline Transportation Services Agreement are accepted for filing pursuant to
N.C. Gen. Stat. § 62-153(b), and PSNC is authorized to make payment of compensation
pursuant thereto.
2. That PSNC shall file the Southgate Service Agreement when executed and
shall be authorized to make payment of compensation under the agreement provided its
terms are not materially different from the terms of the Southgate Precedent Agreement.
3. That within 30 days after PSNC files the Southgate Service Agreement, the
Public Staff shall review the Agreement to determine whether the terms are consistent
with the representations made by PSNC in its filings in this docket, and the Public Staff
shall file a letter informing the Commission of its findings.
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Exhibit D
Page 6 of 6
4. That for ratemaking purposes, the authority granted herein neither
constitutes approval of any amount of compensation paid pursuant to any of the
agreements, and the authority granted by this order is without prejudice to the right of
any party to take issue with any provision in the agreements in a future proceeding.
5. That consistent with the provisions of N.C. Gen. Stat. § 62-153, and
notwithstanding the authority granted by this order authorizing payment, the Commission
may subsequently disapprove, after hearing, the agreements approved in this
proceeding, or any fees, commissions or compensation whatsoever paid to any affiliated
or subsidiary holding, managing, operating, constructing, engineering, financing or
purchasing company or agency for services rendered, if found to be unjust or
unreasonable, or made for the purpose or with the effect of concealing, transferring, or
dissipating the earnings of a public utility.
ISSUED BY ORDER OF THE COMMISSION.
This the 9th day of October 2018.
NORTH CAROLINA UTILITIES COMMISSION
Janice H. Fulmore, Deputy Clerk
9

CERTIFICATE OF SERVICE
I hereby certify that I have this day served a copy of the foregoing document on each person
designated on the official service list compiled by the Secretary in this proceeding.
Dated at Billings, Montana, this 28th day of December, 2018.
/s/Erica E. YouWstrom
Attorney for Public Service Company of North
Carolina, Incorporated