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Thursday's Energy Stocks: MLP equities fall on FERC tax policy change

Broader markets posted mixed results Thursday, March 15, but the midstream sector took a hit as investors reacted to a tax policy change for master limited partnerships by the Federal Energy Regulatory Commission.

FERC announced at its March 15 meeting that it will no longer allow interstate natural gas and oil and pipelines operating as MLPs to recover an income tax allowance in their cost-of-service rates, removing from many pipelines a mechanism deployed to boost the amount of pretax income passed through to unit holders.

The Alerian MLP ETF lost 5.07% in heavy trading to close at $9.74.

TC PipeLines LP and Enbridge Energy Partners LP were among the midstream stocks that suffered the biggest declines. TC Pipelines units plunged 17.93% to close the session at $40.09 on more than eight times average volume, and Enbridge Energy Partners stock sunk 17.33% to end the session at $10.83 on nearly 10 times average trading volume.

Spectra Energy Partners LP units dove 10.83% to $35.49, Energy Transfer Partners LP stock dropped 6.26% to close the day at $16.61, and Williams Cos. Inc. shares shed 5.15% to end the session at $26.69, all in heavy trading volume.

EQT Corp. shares declined 5.19%, closing a brisk session at $49.73. Another complicating factor in EQT's stock performance was the sudden retirement announcement of its president and CEO, Steven Schlotterbeck, who was leading the complex merger between EQT and Rice Energy Inc. Former EQT Chairman and CEO David Porges is coming out of retirement to lead the company.

Tellurian Inc. shares slipped 7.53%, closing an active session at $7.49. The company announced that the new 25% tariff on imported steel will "significantly" increase construction costs for the roughly $15 billion Driftwood LNG project proposed for southwestern Louisiana.

Beyond the midstream sector, the Dow Jones Industrial Average increased 0.47% to close the day at 24,873.66, and the S&P 500 declined 0.08% to finish the day at 2,747.33.

In power, Dynegy Inc. shares gained 1.90% to end a slow session at $13.40 and NRG Energy Inc. stock grew 1.89% in slightly above-average trading to close the day at $30.77.

TerraForm Power Inc lost 2.78% in heavy trading to end at $11.21, and Covanta Holding Corp. shares retreated 2.28% to finish at $15.00 on below-average volume.

In coal, Arch Coal Inc. units increased 1.94% in light trading to $95.73 and Peabody Energy Corp. added 1.24% to wrap an average session at $39.85.

CNX Resources Corporation shares slid 1.74% to finish at $15.27 on high volume.

Overnight gains gave way to losses for April natural gas as the latest storage data outlined a withdrawal from stocks that was below consensus and the five-year-average pull. The contract tumbled to a $2.664/MMBtu low and settled 5.0 cents lower at $2.681/MMBtu.

Market prices and index values are current as of the time of publication and are subject to change.