Kinder Morgan is aware of the FERC announcement today of a notice of proposed rule-making (NOPR) on the impact of the Tax Cuts and Jobs Act on FERC-regulated rates for natural gas and oil pipelines. As a proposed rule, it is neither final nor immediate and will be subject to a public comment process. We intend to provide comments during that process, both as an individual company and through our trade associations.
Based on the information provided today, KMI is pleased by FERC’s inclusion of an option for companies to file a statement with the FERC explaining why an adjustment to rates to reflect the Tax Act impact is not necessary. The competitive environment in which interstate natural gas transmission companies operate is vastly different from the historic “franchised utility service territory” that is still prevalent for traditional utilities. As a result, many of our rates are set pursuant to negotiated rate arrangements that we believe should not be subject to adjustment due to changes in tax law. Also, many of our current transactions are provided at discounted rates that are below maximum tariff rates, many of which would not be impacted by a change in the maximum tariff rate. Further, on many of our pipelines we are operating under rate settlements that limit changes to their terms during the life of the settlement.
We believe any action by FERC should not affect negotiated rate contracts and will not significantly impact assets that are current cash taxpayers. For those reasons, the ultimate timing and impact of any future rate adjustments, should they occur, are not expected to be material to KMI’s distributable cash flow.
Finally, with respect to FERC’s separate action eliminating the master limited partnership tax allowance, we note that KMI has been organized as a C-corporation since 2014.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America. It owns an interest in or operates approximately 85,000 miles of pipelines and 152 terminals. KMI’s pipelines transport natural gas, refined petroleum products, crude oil, condensate, CO2 and other products, and its terminals transload and store petroleum products, ethanol and chemicals, and handle products such as steel, coal and petroleum coke. It is also a leading producer of CO2 that we and others use for enhanced oil recovery projects primarily in the Permian basin. For more information please visit www.kindermorgan.com.