American Gas - February 2013 - (Page 36)

Long-term planning as well as involvement by AGA member company executives helped keep dividends from falling off the fiscal cliff BY PETER HAAPANIEMI h e a dway Dividends Saved from the Fiscal Cliff I n late December, the nation’s attention was fixed on the drama of last-minute budget negotiations and the looming “fiscal cliff” in Washington. But at AGA, the issue had already been on the front burner for much of the preceding year. AGA members were particularly concerned with one aspect of the debate—attempts to allow the tax rate on dividends to move from 15 percent up to 43.4 percent. “It was clear that this could have a significant impact on the industry,” says George Lowe, vice president of Federal Affairs at AGA. “Estimates said that an increase could lead to at least a 10 to 15 percent drop in market value for utilities, which would mean less capital to invest in safety, reliability, and infrastructure expansion.” To address the issue, AGA worked with the Edison Electric Institute (EEI) to coordinate two “fly-in” events in which utility CFOs and CEOs came to Washington to meet with members of Congress and their staffs. AGA also worked with the Alliance for Savings & Investment (ASI) to support a media campaign that saw industry executives interviewed on various news and business television shows. And in June, AGA, EEI, and ASI launched an updated Defend My Dividend campaign to highlight the issue. “The site reached out to member company employees, shareholders, retirees, and others who have an interest in this, and resulted in hundreds of thousands of letters and emails to Congress,” says Lowe. These efforts were designed to help the public and Congress understand the importance of keeping dividend tax rates low—and keeping them in line with capital gains rates in order to maintain a level playing field for investment. AGA and its partners advanced two basic arguments: The first emphasized the impact of an increase on the industry in terms of reduced access to capital—at a time when infrastructure improvement is key to ensuring the nation’s energy supply. The second argument focused on developing an accurate understanding of who actually relies on dividends—that they are not just for the “hyper-rich.” In reality, says Lowe, “67 percent of people who invest in dividends make less than $100,000 a year. And dividends are important to pension funds and individual retirement accounts. So we explained how raising the rate could be devastating to a lot of people.” 36 American Gas february 2013 In the end, January’s American Taxpayer Relief Act preserved the 15 percent rate for 98 percent of Americans and made it a permanent law. “I think we helped change some minds with this effort,” says Lowe. A key success factor, he says, was the involvement of AGA member company executives. “We had a Financial Executive Steering Committee, led by David Anderson, CFO at NW Natural, working with us on this critical issue, and the involvement of these folks and their efforts in Washington drove the importance of the message home to Congress,” he says. Also key, he says, was the fact that the effort was started months in advance, giving Congress time to absorb the facts prior to the intense distractions of the December negotiations. Of course, nothing is certain except death and taxes—and presumably that includes ongoing tax debates. “Congress has the power to change the law in the future, and the recent legislation left a lot of fiscal work undone,” Lowe says. “We will continue our efforts in 2013 to help find bipartisan solutions to the important fiscal challenges that still face the nation.” u

Table of Contents for the Digital Edition of American Gas - February 2013

American Gas - February 2013
Table of Contents
President’s Message
Subject Index
Supplanting Coal, Creating Jobs
Digest
Issues
Updates
Need to Know
By the Numbers
People and Places
Fill ‘er Up—in the Driveway
Europe
State House
City Hall
Wall Street
Elm Street
On the Docket
Profile: Philip B. Jones
Law
Jobs
Buyer’s Guide: Meters
Marketplace
Headway

American Gas - February 2013