Tallgrass Energy Eliminating MLP – First “Casualty” of Tax Cut?

Last week MDN brought you the news that the Federal Energy Regulatory Commission (FERC) had taken “significant action” to address the Trump tax cut legislation enacted last December (see FERC Takes Aim at Adjusting Pipe Rates in Light of Trump Tax Cut). FERC wants to be sure the tax cuts coming to electric companies and pipeline companies are passed on to consumers and pipeline shippers. The agency proposed new solutions to eliminate “tax loopholes” for natural gas pipelines. Closing these so-called loopholes will eliminate certain tax benefits for MLPs–master limited partnerships. Many pipeline companies (most) are organized as MLPs, which allows tax advantages to flow to investors. With certain tax benefits for MLP unitholders on the chopping block, all of a sudden some MLPs don’t look like such a hot investment anymore, at least on paper. Some analysts have speculated this may be the beginning of the end for MLPs. A few years ago Kinder Morgan got rid of all it’s MLP subsidiaries, combining them all into a single “C” corporation. Now, Tallgrass Energy, builder/operator of the mighty Rockies Express (REX) pipeline which flows Marcellus/Utica gas, is doing the same as Kinder did. Which causes us to ask the question, is Tallgrass’ MLP the first “casualty” of the Trump tax cut among pipeline companies?…

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