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FERC Confirms Buckeye's Current Tariff Rates And Authorizes Future Changes Under FERC Standard Ratemaking Methods, Sending NYC Airport Rates To Settlement Process

Stocks in this article: BPL

HOUSTON, Feb. 25, 2013 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. (NYSE:BPL) ("Buckeye") announced that, on February 22, 2013, the Federal Energy Regulatory Commission ("FERC") issued two orders related to previously announced proceedings pending before FERC involving one of Buckeye's operating subsidiaries, Buckeye Pipe Line Company, L.P. ("Buckeye Pipe Line"). The first order (the "Ratemaking Methodology Order") permits Buckeye Pipe Line to continue charging its current tariff rates and gives Buckeye Pipe Line full market-based-rate authority in markets FERC previously found to be competitive. This change allows Buckeye Pipe Line to set future rates in these markets based solely on competitive forces, without the limits that had been imposed under its previous unique ratemaking program. The order, which discontinues that earlier program, also authorizes Buckeye Pipe Line to file future rates in its remaining markets pursuant to any of the methodologies permitted by FERC regulations, including in accordance with the generic FERC index. The second order (the "Airline Complaint Order") relates to the complaint filed by several airlines challenging Buckeye Pipe Line's rates for transportation of jet fuel to three New York City area airports. This order sets the matter for hearing, but orders that such hearing be held in abeyance pending the outcome of FERC-ordered settlement discussions between the parties, which are to be facilitated by a FERC-appointed settlement judge.

The Ratemaking Methodology Order

In 1991, Buckeye Pipe Line sought and received FERC permission to determine rate changes on its system using a unique methodology that constrained rates in markets that FERC had not found to be competitive based on rate changes in markets that FERC had found to be competitive, as well as through certain other limits on rate increases. FERC ordered the continuation of this methodology in 1994, subject to FERC's authority to cause Buckeye Pipe Line to terminate the program in the future. On March 1, 2012, Buckeye Pipe Line filed to increase its rates under the program. The rate increases for deliveries of jet fuel to three New York City area airports were protested. On March 30, 2012, FERC issued an order rejecting all of the rate increases, stating that FERC would review the continued efficacy of Buckeye Pipe Line's unique program, and directing Buckeye Pipe Line to show cause why it should not be required to discontinue its unique program and avail itself of the generic ratemaking methodologies that FERC had promulgated after approval of the Buckeye program and that are now used by all other oil pipelines.

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