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FERC Affirms And Clarifies Magellan Marketing Affiliate Order – Oil, Gas & Electricity


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Highlights

  • After a five-year wait, the Federal Energy Regulatory
    Commission (FERC) has denied rehearing of its 2017 order
    in Magellan Midstream Partners,
    L.P. (Magellan) that declared Magellan Midstream
    Partners’ marketing affiliate proposal would violate the
    Interstate Commerce Act’s (ICA) prohibitions against
    rebates.

  • At the same time, however, FERC’s rehearing order provides
    several important clarifications concerning 1) how it will assess
    whether future marketing affiliate transactions create unlawful
    rebates and 2) the scope of
    its Magellan holdings.

  • FERC’s order turns on its analysis of
    “integrated-company economics” among the pipeline, its
    marketing affiliate and their common parent company, and in
    FERC’s view, these economics can create the potential for an
    implicit subsidy/unlawful rebate from the parent company to the
    pipeline’s affiliated shipper to enable otherwise uneconomic
    transactions.

After a five-year wait, the Federal Energy Regulatory Commission
(FERC) has denied rehearing of its 2017 order in Magellan
Midstream Partners, L.P., 161 FERC ¶ 61,219 (2017)
(Magellan) that declared Magellan Midstream Partners’
marketing affiliate proposal would violate the Interstate Commerce
Act’s (ICA) prohibitions against rebates. At the same time,
however, FERC’s rehearing order provides several important
clarifications concerning 1) how it will assess whether future
marketing affiliate transactions create unlawful rebates and 2) the
scope of its Magellan holdings.

FERC’s order turns on its analysis of
“integrated-company economics” among the pipeline, its
marketing affiliate and their common parent company. In FERC’s
view, these economics can…

..

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