Pipeline MLPs (Master Limited Partnerships) and related ETFs slumped on Thursday following news from the Federal Energy Regulatory Commission that these companies will no longer be able to recover an income-tax allowance.
“The Federal Energy Regulatory Commission (FERC) today responded to a federal court remand by stating it no longer will allow master limited partnership (MLP) interstate natural gas and oil pipelines to recover an income tax allowance in cost of service rates,” according to a FERC statement.
The Alerian MLP ETF (AMLP), the largest MLP related ETF, was the most traded ETF on Thursday. AMLP rebounded Friday to trading at $9.92 as of 1:30 pm Eastern Time.
Alerian released a statement Thursday, saying “we don’t believe the impact of today’s policy revision from the Federal Energy Regulatory Commission (FERC) regarding cost-of-service rates charged by pipelines is as extreme as the initial market reaction indicated.”