Pipeline Merger Stalled by Philosophy

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  1. Kevin Beck says:

    Under the LP model, a company can only grow by issuing debt and/or equity; it cannot grow with retained earnings, which must be paid out to unit-holders at least annually. Another trade-off for the unit-holders is whether they want the complications at tax time of having to work through the extra paperwork for their partnership interests. If a partnership is involved in operating the pipeline, I would prefer to own an interest in the general partner instead. Especially in ETE’s case: They earn a higher IDR when the partnership they control makes more money.


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