MLPA Requests Clarification of FERC’s “Revised Policy Statement on Treatment of Income Taxes”

News Article | April 16, 2018
  • On April 13, 2018, MLPA filed comments with the Federal Energy Regulatory Commission (FERC) requesting that FERC clarify its “Revised Policy Statement on Treatment of Income Taxes” issued March 15, 2018 by finding that whether an MLP or any partnership form may recover an income tax allowance will be determined on a case-by-case basis.

    The comments argue that the revised policy statement’s exclusion of all MLPs from the income tax allowance based on the history of a single MLP, despite the wide variety in MLP structures, was arbitrary and capricious and did not constitute the reasoned decision making required by federal court decisions.   The comments also dispute FERC’s assertion that the new policy would not deter investment in MLPs, pointing to the “immediate, negative and the substantial decline in the market value of many MLP equities” following the March 15 announcement of the revised policy.

    The Revised Policy Statement modified the policy in effect since 2005, which had allowed all entities to incorporate an income tax allowance in cost-of-service ratemaking as long as they could show show that an entity or individual had an actual or potential income tax liability for the income generated by the regulated assets.

    To download a copy of MLPA’s comments, click here.

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