Prepared Answering Testimony of John Van Heyst and Daniel S. Arthur on behalf of Suncor Energy Marketing Inc. under OR15-6.

PUBLIC VERSIONHIGHLY CONFIDENTIAL INFORMATION REMOVED Exhibit No. SUN-14 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION ) ) Seaway Crude Pipeline Company LLC ) Docket No. OR15-6-000 ) ) PREPARED ANSWERING TESTIMONY OF DANIEL S. ARTHUR February 11, 2016 PUBLIC VERSIONHIGHLY CONFIDENTIAL INFORMATION REMOVED Exhibit No. SUN-14 TABLE OF CONTENTS I. Introduction and Summary of Conclusions ......................................................................1 II. Definition and Test for Market Power ..............................................................................7 A. Meaning of A Competitive Price Level ...............................................................9 B. Meaning of A Small But Significant Price Increase ..........................................19 C. Meaning of A Significant Period of Time..........................................................20 III. Relevant Product and Geographic Markets ....................................................................23 A. Relevant Product Market .......................................................................................31 B. Relevant Origin Geographic Market Western Canadian Production Area.........35 C. Identification of Good Competitive Alternatives to Seaway in the Relevant WCSB Origin Market ............................................................................................42 D. HHI Statistics for the WCSB Origin Market .........................................................50 E. Seaways Unreasonable Methodology of Treating Distant Refineries as Alternatives to Seaway ..........................................................................................58 IV. An Estimate of a Competitive Rate for Seaways Transportation Service and Direct Evidence of Seaway Possessing Market Power ..............................................................68 A. Estimate of a Reasonable Proxy for a Competitive Rate for Seaways Transportation Service Using Long-Run Marginal Cost .......................................74 1. Average Incremental Cost for Seaways recent Cushing to Gulf Coast expansions ....................................................................................................... 78 2. Average Incremental Cost for Marketlinks Cushing to Gulf Coast service .. 88 B. Seaways Act of Sustaining Rates Above a Competitive Level is Direct Evidence of Exercising Market Power ..................................................................92 V. Other Factors...................................................................................................................96 A. Seaways Status as a New Entrant .........................................................................97 B. Seaways Claim of Significant Unutilized Capacity Held By Others ...................98 C. Relevance of Exchanges ......................................................................................101 VI. Conclusions....................................................