Williams and Williams Partners Statement on FERC Income Tax Policy Revision
16 March 2018 - 11:30PM
Business Wire
Yesterday, the Federal Energy Regulatory Commission (“FERC”)
issued a revised policy statement that reversed its 2005 income tax
policy that permitted master limited partnership (MLP) interstate
oil and natural gas pipelines to recover an income tax allowance in
cost of service rates. Williams Partners’ (NYSE:WPZ) primary
regulated interstate pipelines are Transcontinental Gas Pipe Line
Company (“Transco”), Northwest Pipeline, and a 50 percent interest
in Gulfstream Natural Gas System. Williams Companies, Inc.
(NYSE:WMB) (“Williams”) owns approximately 74 percent of Williams
Partners, and is an income tax paying entity. In 2017, about a
third of Williams Partners’ gross margin was derived from these
regulated pipelines.
The FERC’s revised policy will only impact cost of service rate
calculations on a prospective basis. Transco will make its
initial filing for its next rate case later this year. However,
negotiated rates will make up approximately 50 percent of Transco’s
revenue by year-end and would not be impacted by this ruling.
Northwest Pipeline settled its rate case with shippers in 2017,
with new rates becoming effective in 2018. Finally, Gulfstream
Natural Gas System’s rates with its customers, which are all
negotiated rates, would not be impacted by this ruling.
Alan Armstrong, Williams’ president and chief executive officer,
made the following statement: “Given the relatively small
percentage of our revenues that are affected by this ruling, we
don’t expect this ruling to impact our previous guidance for WMB
and WPZ cash dividends and distributions and related growth rates.
Additionally, as we’ve often discussed, we are well-positioned to
execute on corporate structure changes, which would restore the
income tax allowance to the pipeline’s cost of service rates.”
About Williams & Williams Partners
Williams (NYSE:WMB) is a premier provider of large-scale
infrastructure connecting U.S. natural gas and natural gas products
to growing demand for cleaner fuel and feedstocks. Headquartered in
Tulsa, Okla., Williams owns approximately 74 percent of Williams
Partners L.P. (NYSE:WPZ). Williams Partners is an industry-leading,
large-cap master limited partnership with operations across the
natural gas value chain including gathering, processing and
interstate transportation of natural gas and natural gas liquids.
With major positions in top U.S. supply basins, Williams Partners
owns and operates more than 33,000 miles of pipelines system wide –
including the nation’s largest volume and fastest growing pipeline
– providing natural gas for clean-power generation, heating and
industrial use. Williams Partners’ operations touch approximately
30 percent of U.S. natural gas. www.williams.com
Portions of this document may constitute “forward-looking
statements” as defined by federal law. Although the company
believes any such statements are based on reasonable assumptions,
there is no assurance that actual outcomes will not be materially
different. Any such statements are made in reliance on the “safe
harbor” protections provided under the Private Securities Reform
Act of 1995. Additional information about issues that could lead to
material changes in performance is contained in the company’s
annual and quarterly reports filed with the Securities and Exchange
Commission.
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version on businesswire.com: http://www.businesswire.com/news/home/20180316005198/en/
Williams Companies, Inc.Media Relations:Keith Isbell,
918-573-7308orInvestor Relations:Brett Krieg, 918-573-4614
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