Some See Conflicts at Energy Partnerships

A rare growth engine in the downtrodden merchant energy business is running on empty, some investors say.

In an ugly year for the market, one group of energy stocks -- known as master limited partnerships, or MLPs -- has held its own. Some MLPs, carrying names such as Williams Energy Group (WEG) and El Paso Energy Partners (EPN), are the offspring of embattled energy merchants hammered by business setbacks and accounting scandals. Despite such ties, energy MLPs have managed to avoid the share-price erosion crippling their parents, and even have outperformed the market overall.

In a nutshell, energy MLPs acquire pipelines and other dependable cash-generating assets -- often from their own parents -- and, thanks to a generous tax break, pass on much of the resulting income to investors in the form of hefty distributions. ...