Prepared Rebuttal Testimony of Delta Air Lines, Inc., JetBlue Airways Corporation, United Airlines, Inc., and US Airways, Inc. (Airlines) under OR12-28.

PUBLIC VERSION - CONFIDENTIAL PROTECTED MATERIALS REMOVED Exhibit No. AIR-93 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Delta Air Lines, Inc., ) Continental Airlines, Inc., ) JetBlue Airways Corporation, ) United Air Lines, Inc., and ) US Airways, Inc. ) Docket No. OR12-28-001 ) v. ) Buckeye Pipe Line Company, L.P. ) PREPARED REBUTTAL TESTIMONY OF DANIEL S. ARTHUR January 27, 2015 Exhibit No. AIR-93 SUMMARY OF PREPARED REBUTTAL TESTIMONY OF DANIEL S. ARTHUR Dr. Arthur is a Principal of The Brattle Group, an economic and management consulting firm. The purpose of Dr. Arthurs rebuttal testimony is to assess and respond to Buckeye and FERC Staff witnesses conclusions regarding (1) whether it is reasonable to calculate a cost of service for a system that includes the rates to the New York City destinations at issue in the proceeding based on a Long Island System as defined by Buckeye, or on the basis of an Eastern Products System (including the Long Island System) as Buckeye recommended in its prior rate proceeding before the Commission, (2) a reasonable allocation of common origin costs between the Long Island System and the Eastern Products System (excluding the Long Island System) if the Long Island System is to be broken out from the remaining Eastern Products System, (3) a reasonable allocation of parent entity common costs to Buckeye, and a reasonable allocation of Buckeyes common costs to Buckeyes individual systems, (4) whether a test period adjustment for fuel and power expenses related to the expiration of a natural gas credit program is reasonable, (5) which legal expenses are reasonable to include in a surcharge created pursuant to this proceeding, (6) a reasonable incorporation of oil losses and shortages expenses and revenues into Buckeyes cost of service, (7) the calculation of costs of service for Buckeyes individual systems for a 2011 Complaint Period and a 2011 Test Period, and (8) the method for evaluating, and the degree of change in, Buckeyes realized return on equity for purposes of evaluating whether there has been a substantial change in the economic circumstances regarding any grandfathered rates. As a result of Dr. Arthurs analysis, he concludes that Buckeyes proposal to use calendar- year 2012 data to set going forward rates is not consistent with Commission precedent. Rather, Dr. Arthur concludes that calendar-year 2011 data is reasonable to use for a 2011 Complaint period. Calendar year 2011 data, with relevant test period adjustments for known and measurable changes, should also be the test period for establishing going-forward rates ...