The MLP Parity Act is a No-Brainer for Renewable Energy (Energy Trends Insider)
A Master Limited Partnership (MLP) is a publicly traded partnership with a tax structure that enables it to attract low-cost capital. The main attraction of an MLP from an investor’s point of view is that MLPs don’t pay corporate income tax. Profits are passed directly to unitholders via regular distributions. Profits from conventional corporations are taxed at the corporate level, then a second time via the personal income tax on distributed dividends. In contrast, MLP distributions are taxed just once, at the individual level.
A little over a year ago, legislation was introduced to expand the universe of MLPs to include a number of renewable energy technologies. The Master Limited Partnerships Parity Act (MLPPA) was sponsored in the Senate by Sen. Chris Coons (D-DE) and in the House by US Rep. Ted Poe (R-TX).
Projects with attractive, long-term power purchase agreements (PPA) could work well as MLPs, similar to a midstream pipeline operator with long-term fee-based contracts. Solar, wind, geothermal, biomass combustion — all of the current commercially available renewable power production options — could benefit greatly from MLP status.
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