Enbridge Energy Partners, L.P. Announces Preliminary Impacts of Revised FERC Policy Statement on Treatment of Income Taxes

HOUSTON, March 16, 2018 /PRNewswire/ - Enbridge Energy Partners, L.P. (NYSE:EEP) (EEP or the Partnership) today provided its preliminary assessment of the potential impacts of the Federal Energy Regulatory Commission's (FERC) recent policy change with respect to the recovery of income tax amounts included in the cost of service rates of pipelines within a master limited partnership (MLP).

On March 15, 2018, FERC changed its long-standing policy on the treatment of income tax amounts included in the rates of pipelines and other entities subject to cost of service rate regulation within an MLP. In its order PL17-1-000, FERC revised a policy in-place since 2005 to no longer permit entities organized as master limited partnerships (MLP's) to recover an income tax allowance in their cost of service rates.  

EEP is organized as an MLP and certain of the rates applicable to its expansion projects are tolled annually on a cost of service basis, via the Lakehead Facility Surcharge Mechanism (FSM). EEP intends to ask for rehearing of this policy change at the FERC. FERC's new policy will take effect when the policy is published in the Federal Register which, for purposes of estimating the 2018 impact, is assumed to be March 31, 2018. Should FERC's new policy be approved as announced, the 2018 financial impact to EEP is expected to be an approximate $100 Million reduction in revenues and a $60MM reduction to distributable cash flow (DCF), net of non-controlling interests.

Based on the foregoing preliminary analysis and estimates, EEP is adjusting its 2018 DCF guidance range to $650 million - $700 million from $720 million - $770 million and 2018 total distribution coverage to approximately 1.0x from approximately 1.15x.

Important details of implementing the new policy statement require clarification and EEP will continue to assess the financial impacts as more information becomes available. 

Forward-Looking Statements

This news release includes forward-looking statements, which are statements that frequently use words such as "anticipate," "believe," "consider," "continue," "could," "estimate," "evaluate," "expect," "explore," "forecast," "intend," "may," "opportunity," "plan," "position," "projection," "should," "strategy," "target," "will" and similar words. Although the Partnership believes that such forward-looking statements are reasonable based on currently available information, such statements involve risks, uncertainties and assumptions and are not guarantees of performance. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Any forward-looking statement made by the Partnership in this release speaks only as of the date on which it is made, and the Partnership undertakes no obligation to publicly update any forward-looking statement. Many of the factors that will determine these results are beyond the Partnership's ability to control or predict. Specific factors that could cause actual results to differ from those in the forward-looking statements include: (1) the effectiveness of the various actions the Partnership has announced resulting from its strategic review process; (2) changes in the demand for the supply of, forecast data for, and price trends related to crude oil, liquid petroleum, including the rate of development of the Alberta Oil Sands; (3) the Partnership's ability to successfully complete and finance expansion projects; (4) the effects of competition, in particular, by other pipeline systems; (5) shut-downs or cutbacks at the Partnership's facilities or refineries, petrochemical plants, utilities or other businesses for which the Partnership transports products or to whom it sell products; (6) hazards and operating risks that may not be covered fully by insurance, including those related to Line 6B, (7) any fines, penalties and injunctive relief assessed in connection with any crude oil release; (8) changes in or challenges to the Partnership's tariff rates; (9) changes in laws or regulations to which the Partnership is subject, including compliance with environmental and operational safety regulations that may increase costs of system integrity testing and maintenance; and (10) permitting at federal, state and local level or renewals of rights of way. Any statements regarding sponsor expectations or intentions are based on information communicated to the Partnership by Enbridge Inc., but there can be no assurance that these expectations or intentions will not change in the future.

Except to the extent required by law, we assume no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Reference should also be made to the Partnership's filings with the U.S. Securities and Exchange Commission (the "SEC"), including its most recently filed 2017 Annual Report on Form 10-K dated February 15, 2018 and any subsequently filed Quarterly Reports on Form 10-Q or current reports on Form 8-K for additional factors that may affect results. These filings are available to the public over the Internet at the SEC's website (www.sec.gov) and at the Partnership's website.

About Enbridge Energy Partners, L.P.

Enbridge Energy Partners, L.P. owns and operates a diversified portfolio of crude oil transportation systems in the United States. Its principal crude oil system is the largest pipeline transporter of growing oil production from western Canada and the North Dakota Bakken formation. The system's deliveries to refining centers and connected carriers in the United States account for approximately 23 percent of total U.S. oil imports. Enbridge Energy Partners, L.P. is traded on the New York stock exchange under the symbol EEP; information about the company is available on its website at www.enbridgepartners.com.

About Enbridge Energy Management, L.L.C.

Enbridge Energy Management, L.L.C. manages the business and affairs of the Partnership, and its sole asset is an approximate 19.9 percent limited partner interest in the Partnership. Enbridge Energy Company, Inc., an indirect wholly owned subsidiary of Enbridge Inc. of Calgary, Alberta, Canada (NYSE: ENB) (TSX: ENB) is the General Partner of the Partnership and holds an approximate 35 percent interest in the Partnership. Enbridge Management is the delegate of the General Partner of the Partnership.

FOR FURTHER INFORMATION PLEASE CONTACT:

Enbridge Energy Partners, L.P.

SOURCE Enbridge Energy Partners, L.P.