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On Friday, June 15, Senator Chris Coons (D-DE) introduced
S.3275, the bipartisan "MLP Parity Act," a
bipartisan bill that would amend Section 7704 of the tax code by
enabling Master Limited Partnerships (MLPs) to own and finance
renewable energy and biofuel projects. Cosponsors of S.3275 include
Senators Jerry Moran (R-KS), Jeanne Shaheen (D-NH), Sheldon
Whitehouse (D-RI), Jon Tester (D-MT), Amy Klobuchar (D-MN), and Al
Franken (D-MN).
As background, MLPs carry the fund-raising advantages of a
corporation: ownership interests are publicly traded and offer
investors the liquidity, limited liability, and dividends of
classic corporations. MLP market capitalization exceeds $350
billion. With average dividends of just 6 percent, proponents argue
MLPs could substantially reduce the cost of financing renewables,
which currently rely on the participation of the tax equity market,
which primarily consists of a small set of large investment
banks.
Over the last several decades, MLPs have proven to be highly
effective at attracting private investment in energy projects
through the public markets. However, under current law, MLPs have
only been able to invest in oil, natural gas, coal extraction, and
pipeline projects. Approximately $290 billion (83 percent) of MLP
investments have gone into qualifying energy and natural resources.
Of that, just over 80 percent has gone into midstream oil and gas
pipeline projects.
The MLP Parity Act expands the definition of
"qualified" sources to include clean energy resources and
infrastructure projects. Specifically included are those energy
technologies that qualify under Sections 45 and 48 of the tax code,
including wind, closed and open loop biomass, geothermal, solar,
municipal solid waste, hydropower, marine and hydrokinetic, fuel
cells, and combined heat and power. The legislation also allows for
a range of transportation fuels to qualify, including cellulosic,
biodiesel, and algae-based fuels. The MLP Parity Act does not
affect any current MLP entity. All projects currently eligible to
structure as MLPs would continue to qualify exactly as they would
under existing law.
The MLP Parity Act has already gained significant, public
support from various sectors of the renewable energy industry. A
House companion bill is slated to be introduced shortly by Rep.
Mike Thompson (D-CA).
For more information on The MLP Parity Act, see the whitepaper
and website Sen. Chris Coons (D-DE) has created, located here.
A helpful analysis on the benefits of expanding MLPs to
renewables and biofuels was also recently published in a New
York Times article authored by Stanford University's
Steyer-Taylor Center for Clean Energy Policy & Finance and
entitled "How to Make Renewable Energy
Competitive."
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In a recent and much anticipated decision by both natural gas producers and landowners, the Pennsylvania Supreme Court finally cleared up confusion about who owns the mineral rights to shale gas in Butler v. Powers Estate.
Natural gas producers and landowners alike breathed a sigh of relief on April 24, 2013 as the Pennsylvania Supreme Court (the "Supreme Court" or "Court") overturned a lower court decision that questioned whether subsurface ownership rights of natural gas in shale formations should be treated differently than ownership rights of natural gas in conventional formations.
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