REPLY BRIEF OF THE COMMISSION TRIAL STAFF under OR14-6.

UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION BP Pipelines (Alaska) Inc., ConocoPhillips ) Transportation Alaska, Inc., and ExxonMobil Pipeline ) Docket No. OR14-6-000 Company ) REPLY BRIEF OF THE COMMISSION TRIAL STAFF Kenneth M. Ende, Special Counsel John P. Perkins, III Commission Trial Staff Counsel Washington, DC March 28, 2014 Docket No. OR14-6-000 i TABLE OF CONTENTS INTRODUCTION ............................................................................................................... 1 I. Issue 1 - What Findings Must Be Made by the Commission To Warrant a Change to the Existing Quality Bank Methodology? ................................................................... 2 II. Issue 2 - Whether, Based on the Applicable Legal Standards, the Quality Bank Methodology Has Become Unjust and Unreasonable for the Valuation of Resid? ........ 5 A. FHR and PS Failed To Establish that Removal of the Capital Cost Deduction Is Justified ........................................................................................................................ 6 B. FHR Failed To Meet its Burden To Justify a Change to the QB Coker Yields .... ........................................................................................................................... 13 1. FHR Failed To Present Any Evidence of Changed Circumstances To Justify Modifying the QB Coker Yields ........................................................................... 14 2. The QB Coker Is a Typical Coker and Should Not Be Changed to One Designed To Optimize Liquid Yields.................................................................... 16 a. The Evidence in the Record of Actual Yields and Actual Operating Conditions Supports the Existing QB Coker Yields, Not FHRs Proposed Yields ................................................................................................................. 17 b. The QB Coker Should Not be Changed to a Coker that Optimizes Liquid Yields as Proposed by FHR ............................................................................... 18 3. FHRs Proposed Yields Are Inaccurate and Cannot Be Relied Upon as Just and Reasonable ...................................................................................................... 24 III. Issue 3 - If it Is Determined that the Existing Quality Bank Methodology Has Become Unjust and Unreasonable for Valuing Resid, What Changes Need To Be Made to the Existing Methodology? ............................................................................. 25 IV. Issue 4 - If the Existing Quality Bank Methodology is To Be Modified, Whether the Modified Methodology Is Capable of Being Administered by the TAPS Carriers? ......................................................................................................................... 25 CONCLUSION ................................................................................................................. 25 Docket No. OR14-6-000 ii TABLE O