Edison Electric Institute President Tom Kuhn today commended Congress for enacting legislation that will retain the current low federal tax rate on dividends, saying it will benefit customers by enabling electric companies to more efficiently raise large amounts of capital to help modernize infrastructure across the board in the years ahead.

Today’s legislation caps the federal levy on dividend income at 15 percent for all taxpayers until December 31, 2012, extending a federal tax policy that was first created in 2003 and then extended again in 2006. Had current policy expired at year’s end, dividends would have again been taxed as ordinary income, causing the rate for some taxpayers to soar to nearly 40 percent.

“This legislation ends months of uncertainty and sends a strong signal that will help keep our industry’s balance sheets strong and much-needed investment capital flowing,” Kuhn said. “This will help utility companies lower their borrowing costs which, in turn, can help manage the expensive task of upgrading the nation’s electric power facilities that generate and deliver electricity to customers.”

An estimated $1.5 to $2 trillion will be spent in the coming two decades as the industry accelerates the transition to a low-carbon future, investing heavily in cleaner generation technologies, new transmission lines, the smart grid and electric vehicle charging infrastructure, said Kuhn, naming just a few. Moreover, that transition is likely to create many much-needed clean energy jobs, he added.

“Being able to undertake this major transformation with a lower cost of capital, and with more equity than debt on our balance sheets follows sound business practice that also will help contain customer bills over time,” said Kuhn, adding that the electric utility industry has one of the nation’s highest dividend payouts.

Noting that millions of retired and middle-income taxpayers rely on a steady stream of dividend income from their investments in electric utilities, Kuhn said Congress’ action today also will be a lifeline for countless Americans during a still-fragile economic recovery.

“We applaud Congress for ultimately recognizing the vital importance of a low and fair tax on dividend income, and that this was not the time for a dividend tax increase,” Kuhn said. “This outcome will help sustain the economic recovery by stimulating investment, creating jobs and, ultimately, benefitting electricity customers.”