[GRAPHIC OMITTED] [GRAPHIC OMITTED]
FEDERAL ENERGY REGULATORY COMMISSION ISSUES DRAFT ORDER ON COMPLAINTS AGAINST
RATES AND PRACTICES OF KINDER MORGAN ENERGY PARTNERS, L. P. SUBSIDIARY SFPP,
L.P.
FOR IMMEDIATE RELEASE: Thursday, January 14, 1999
--------------------------
HOUSTON - Kinder Morgan Energy Partners, L. P. (NYSE: "ENP") today
announced that the Federal Energy Regulatory Commission ("FERC" or "Commission")
published a draft order which, when formally issued will affirm in major
respects the September, 1997 Initial Decision of one of its Administrative Law
Judges, regarding certain rates and practices of its subsidiary SFPP, L. P.
Richard D. Kinder, Chairman and CEO of Kinder Morgan, stated, "We applaud
the Commission for issuing its decision in such a timely manner. Based on our
preliminary review of this far reaching decision, we believe that it fairly
resolves many of the contentious issues that have existed on our Pacific system
for a number of years. We are particularly pleased with the Commission's
findings that our West Line rates remain grandfathered under the Energy Policy
Act of 1992 ("EPAct"). Additionally, although we are continuing to review this
lengthy and complex decision, we believe some of the other modifications and
changes made by the Commission support the positions we have taken and
substantially lessen the negative aspects of the Administrative Law Judge's
decision. Accordingly, we believe our historical reserves relative to the rate
case litigation should be more than sufficient to cover our ultimate financial
exposure."
The FERC's draft order, which was voted on and approved on January 13,
1999, affirms, in large part, the September 1997 decision of Administrative Law
Judge Ernst Liebman. Specifically, the Commission dismissed the complaints filed
by certain customers of SFPP arguing that its "West Line" rates were not
"grandfathered" within the meaning of EPAct. Under the EPAct, "grandfathered"
rates are deemed just and reasonable and are subject to challenge only under
limited circumstances.
Additionally, on review, the Commission modified and clarified certain
aspects of the Judge's decision relative to SFPP's East Line which provides
service from El Paso, Texas to Phoenix and Tucson, Arizona. These rulings relate
to, among other things, the appropriate capital structure and starting rate base
to be used in setting SFPP's rates, certain aspects of the income tax allowance
allowed SFPP, and the period for which reparations may potentially be owed to
complaining customers.
Mr. Kinder concluded, "In short, we believe that this decision, when
formally issued by the Commission, affirms our position on many of the issues
that have festered on this system for some time. Hopefully, this will provide a
basis to move forward with our customers to focus on continuing to grow our
business in a cooperative fashion." Kinder Morgan Energy Partners, L. P., which
has an enterprise value in excess of $2 billion, is the nation's largest
pipeline master limited partnership. It owns and operates one of the largest
product pipeline systems in the United States, serving customers in sixteen
states with more than 5,000 miles of pipeline and over twenty associated
terminals. Kinder Morgan also operates 24 bulk terminal facilities which
transload approximately 50 million tons of coal, petroleum coke and other
products annually. In addition, Kinder Morgan owns 24% of Plantation Pipe Line
Company, 20% of Shell CO2 Company, Ltd. and a 25% interest in an NGL
fractionator.
This press release includes forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although Kinder Morgan believes that its expectations are
based on reasonable assumptions it can give no assurance that such assumptions
will materialize.
- ### -
For further information, contact: Irene Twardowski; Carol Haskins; or Christina
West @ 713-844-9500
www.kindermorgan.com