Tax Cuts & MLPs: FERC Announces Changes Designed to Reduce Cost-Based Rates Charged by Regulated Pipelines

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FERC eliminates tax allowance in MLP pipelines’ cost-based rates and establishes procedures to address income tax changes.

Key Points:

..FERC will no longer permit MLPs to recover an income tax allowance in cost-based rates.

..Gas pipelines will be required to submit information reports showing the impact of lower corporate tax rates and the disallowance of taxes for MLPs, and then are encouraged to voluntarily reduce rates; oil pipelines rates will be reduced in 2020 on a generic basis through indexing.

..Generally, only cost-based maximum rates will be affected: market-based rates, negotiated rates, discounted rates that remain below any reduced maximum rate, committed rates, and some settlement rates will not be altered.

Please see full publication below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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