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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-K
___________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 15, 1996
LAKEHEAD PIPE LINE PARTNERS, L.P.
(Exact Name of Registrant as specified in its charter)
Delaware
(State of other jurisdiction of incorporation)
1-10934 39-1715850
(Commission File Number) (IRS Employer
Identification Number)
Lake Superior Place, 21 W. Superior Street, Duluth, MN 55802
(Address of principal executive offices)
Registrant's telephone number, including area code: (218) 725-0100
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Item 5. Other Events
See attached Press Release dated May 15, 1996 attached hereto as
Exhibit No. 1.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LAKEHEAD PIPE LINE PARTNERS, L.P.
(Registrant)
By:
Lakehead Pipe Line Company, Inc.
as General Partner
/s/R. L. Nichols
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R. L. Nichols
(Vice President and Controller)
DATED: May 21, 1996
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LAKEHEAD PIPE LINE PARTNERS, L.P.
Form 8-K Report dated
May 21, 1996
PAGE NO. IN
SEQUENTIAL
NUMBERING
EXHIBIT INDEX SYSTEM
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Exhibit 1 1
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EXHIBIT 1
For immediate release
May 15, 1996
(DULUTH, MINNESOTA - MAY 15, 1996) Lakehead Pipe Line Partners, L.P. today
announced the receipt of a draft order on rehearing by the Federal Energy
Regulatory Commission (FERC). The FERC draft order (Opinion No. 397-A) denied
rehearing and modified FERC Opinion No. 397 which was issued on June 15, 1995
in Phase I of Lakehead's FERC rate proceedings. The modification of Opinion
No. 397, if upheld, will reduce Lakehead's earnings both currently and in the
future, will have a negative effect on its ability to increase cash
distribution levels and may, in combination with the Lakehead's capital
expenditure plans, impact the current cash distribution level.
In today's ruling, the FERC has upheld previous findings that were favorable to
Lakehead, including the applicability of FERC's Opinion No. 154-B regulatory
methodology. In Opinion No. 397, FERC permitted Lakehead to collect a tax
allowance commensurate with the General Partner's, and other corporate
interests, share of partnership taxable income. In today's order, despite
concerns expressed by members of Congress and public unitholders, the FERC has
further limited the income tax allowance. The Order denies Lakehead's
entitlement to any income tax allowance in connection with "curative
allocations" which cause the General Partner's proportion of taxable income to
be greater than its proportion of ownership in Lakehead.
At March 31, 1996, Lakehead has provided a total rate refund reserve of $83.9
million. The Opinion, if upheld, will require additional refunds, and
additionally reduce Lakehead's future income. Lakehead believes it has
sufficient liquidity to pay the additional refunds. However, Lakehead has
committed to significant capital expenditures to expand its pipeline system and
is considering a further program of expansion in 1997. In view of the
reduction in liquidity available to Lakehead from the Opinion, Lakehead will be
considering alternatives for funding the capacity expansions including
implications to the level of cash distributions.
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Lakehead still believes the decision contradicts legislation passed by the U.S.
Congress, which sanctioned the use of natural resource based publicly traded
partnerships. For this reason, Lakehead intends to challenge Opinion No. 397
and 397-A at the U.S. Court of Appeals.
The Preference Units of Lakehead Pipe Line Partners, L.P. are traded on the New
York Stock Exchange under the symbol LHP.
For further information contact:
Ron Karlen
Manager, Investor Relations
Telephone: (218) 725-0570 or (800) 525-3999
Facsimile: (218) 725-0169
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