The Fuelfix blog on the Houston Chronicle website (chron.com) is always an interesting read on relevant topics in the energy industry. Today, that blog has two stories of note related to MLPs. The first is posted by Bloomberg and discusses the lobbying effort of private equity firms to extend what qualifies to go into an MLP to include renewable energy assets, such as wind farms and solar projects specifically. Apparently tax credits will expire soon (2012 for wind, 2016 for solar), so PE firms are looking for some other tax break, and have their eyes on MLPs.
Developers of wind farms and solar power plants have begun lobbying for legislation that would let them form master limited partnerships, a financial structure used by pipeline operators, drillers and mine operators, as well as private- equity companies such as KKR and Blackstone. The publicly traded equities, valued at more than $230 billion at the end of last year, pay no corporate taxes, passing tax liability directly to investors.
Eliminating the corporate tax burden increases the potential profit of master limited partnerships and makes them appealing to wealthy investors. The tax vehicles were responsible for building much of the U.S. oil and gas pipeline networks, and investors such as John McKenna say they may deliver the same boost to alternative energy projects.
Towards the end of the article, some familiar MLP names weighed in, highlighting the unstable nature of wind assets and how they might not be appropriate for the structure. Click here to read the entire article at the Fuelfix blog.
Southern Union Article
The second article of note is from Loren Steffy, the Houston Chronicle’s business columnist. He’s been keeping readers informed of the $SUG bidding war between $ETE and $WMB. In this latest post, he asks: Is the Southern Union Bidding War Over? I’m quoted in the article, and I reference that I believe $ETE might have done it with this bid. $WMB probably can come back over the top, but I think the war is pretty close to over for $ETE, which seems to have put its best offer on the table at this point. What do you guys think?