Magellan Midstream Does Not Expect Material Impact from Recent FERC Ruling on Income Tax Allowance

TULSA, Okla., March 15, 2018 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it does not expect a material impact from today's revised policy statement by the Federal Energy Regulatory Commission (FERC) to disallow income tax allowance cost recovery in rates charged by pipeline companies organized as master limited partnerships (MLPs).

Although Magellan is organized as an MLP, it does not have cost-of-service rates that would be directly impacted by this policy change. Rather, the rates on approximately 40% of the shipments on Magellan's refined products pipeline system are regulated by the FERC primarily through an index methodology. As an alternative to cost-of-service or index-based rates, interstate pipeline companies may establish rates by obtaining authority to charge market-based rates in competitive markets or by negotiation with unaffiliated shippers. Approximately 60% of Magellan's refined products pipeline system's markets are either subject to regulations by the related state or approved for market-based rates by the FERC. In addition, most of the tariffs on Magellan's crude oil pipelines are established by negotiated rates that generally provide for annual adjustments in line with changes in the FERC index, subject to certain modifications.

Page 700 of the FERC Form 6 filed by interstate pipeline companies on an annual basis is a screening tool for analyzing whether a pipeline may be over- or under-earning on a cost-of-service basis. For the year 2016, which is the latest information available, Magellan's Page 700 indicates that it is under-earning on a cost-of-service basis even with the income tax allowance line item removed. 

Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.

Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) price fluctuations and overall demand for refined petroleum products; (2) changes in the partnership's tariff rates or other terms imposed by state or federal regulatory agencies; (3) the occurrence of an operational hazard or unforeseen interruption; (4) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (5) willingness to incur or failure of customers or vendors to meet or continue contractual obligations related to this potential expansion. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2017 and subsequent reports on Forms 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.

SOURCE Magellan Midstream Partners, L.P.