Leadership at Oklahoma City-based Enable Midstream Partners, LP is still reviewing the potential impact of a March 15, 2018 FERC announcement.
The Federal Energy Regulatory Commission said it would reverse a long-standing policy allowing master limited partnership interstate natural gas and oil pipelines to recover an income tax allowance in cost of service rates.
Enable is also monitoring the notice of proposed rulemaking issued concurrently with the announcement that will address the effects of the revised policy on the rates of the MLP interstate natural gas pipelines.
The company issued a statement:
A significant portion of Enable’s revenue and gross margin is derived from our gathering and processing segment, where the only potential impact could be on our crude oil gathering lines in the Bakken Shale, which we believe would not be material. For the year ended Dec. 31, 2017, as reported in our Form 10-K filed in Feb. 2018, 77% of our revenue and 62% of our gross margin was derived from our gathering and processing segment.
Further, a significant portion of the rates in our transportation and storage segment, which is comprised of interstate and intrastate assets, are unlikely to be impacted by the policy change. For our interstate natural gas pipelines, as disclosed in our Form 10-K filed in Feb. 2018, approximately 44% of our aggregate contracted firm transportation capacity on Enable Gas Transmission (“EGT”) and Enable Mississippi River Transmission (“MRT”) and approximately 44% of our aggregated contracted firm storage capacity on EGT and MRT was subscribed under “negotiated rate” contracts as of Dec. 31, 2017. We believe that these “negotiated rate” contracts are less likely to be impacted by the policy change. As disclosed in the Form 2 filed for each of EGT and MRT in Apr. 2017, approximately 35% and 52% of our transportation volumes were shipped under “discounted rate” contracts during the year ended Dec. 31, 2016, respectively. Likewise, we believe that these “discounted rate” contracts are less likely to be impacted by the policy change. In addition, a significant portion of the service provided on Enable Oklahoma Intrastate Transmission, our intrastate transportation and storage system, is subject to state regulation, which is not impacted by the policy change. The rule implementing policy change, if finalized, would be reflected in MRT’s upcoming rate case which in any event will provide us with the opportunity to adjust rates based on historical investments and updated contracted capacity levels.