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EEI represents investor-owned electric companies on industry finance and accounting issues, promoting sound business practices and regulatory policies and is leading efforts to ensure the financial well-being of the U.S. investor-owned electric companies and their investors while also representing the best interests of electric company customers
EEI member companies invest more than $120 billion each year to make the energy grid smarter, stronger, cleaner, more dynamic, and more secure
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AVERAGE CREDIT RATING
The industry has maintained a BBB+ average since increasing from a BBB average in 2014.
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82% of Companies
INCREASED DIVIDEND RATE
In 2021, 82% of EEI member companies increased their dividend rate.
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To better serve customers and investors, the Edison Electric Institute (EEI) and the American Gas Association (AGA) developed an environmental, social, governance, and sustainability (ESG/sustainability) reporting template, with the goal of helping electric and gas companies provide the financial sector with more uniform and consistent ESG/sustainability data and information.
Millions of Americans from all income levels and age groups own stocks that pay dividends. And dividends are an important component of shareholder value for the investor-owned electric utility industry. Today’s low dividend tax rates make dividend-paying companies, like electric companies, more attractive to investors. This helps to increase the value of utility stocks and lowers the cost of capital, which is critical for electric companies during this time of elevated capital expenditures.
On January 1, 2013, Congress passed the American Taxpayer Relief Act of 2012, which prevented the nation from going over the “fiscal cliff.” As part of this legislation, dividend tax rates, which would have reverted to ordinary income tax levels in 2013, were kept low and were permanently linked to the tax rates for capital gains.
The top tax rate for both dividends and capital gains is now 20 percent for couples earning more than $501,600 ($445,850 for singles). For taxpayers below these income thresholds, dividends and capital gains will continue to be taxed at the current rates of either 15 percent or 0 percent, depending on a filer’s income level. [Starting in 2013, a 3.8-percent Medicare tax that was included in the 2010 health care legislation will be applied to all investment income for couples earning more than $250,000 ($200,000 singles).]
The continued low dividend tax rates remain important to the industry’s ability to attract capital for investment in emissions reduction, new transmission lines, distribution upgrades, and new generation in many power markets in the years ahead.
On December 20, 2017, Congress passed the Tax Cuts and Jobs Act, completing the most comprehensive overhaul of the U.S. tax code in more than 30 years. The final legislation included the electric power industry’s top priorities and several other provisions that will benefit electricity customers and encourage much-needed investments in smarter energy infrastructure.
Electric Customers Will Benefit From Tax Reform
America’s electric companies know that their customers rely on them to provide safe, reliable, affordable, and increasingly clean energy to power their homes and their businesses. That is why they supported tax reform legislation that promotes investments in America’s critical energy infrastructure and that keeps energy bills as affordable and predictable as possible for all Americans.
One of the cornerstone pieces of the tax reform legislation is the reduction in the corporate tax rate from 35% to 21%. This reduction is a huge win for electricity customers, as the drop in the corporate rate generally is reflected in customer rates.
Electric companies across the country are having discussions with their public utility commissions on how tax reform benefits will be provided to customers. These benefits will take many different forms. For example, customers may see a reduction in their bills or bill credits; potential rate increases may be avoided; or the benefit may be applied toward needed energy infrastructure improvements.
Tax Reform Will Result in Continued Investment in America’s Smarter Energy Infrastructure
To meet the evolving needs of their customers across the country, EEI’s member companies currently invest more than $120 billion annually to build a smarter energy infrastructure and to transition to even cleaner generation sources.
These investments help to:
Improve reliability by making the energy grid smarter, stronger, more resilient, and more secure;
Protect the energy grid from the increasing threat of physical and cyber attacks;
Provide customers with more control over their energy bills; and
Increase the use of cleaner generation sources.
The final tax legislation included several provisions, such as maintaining the deductibility of interest expense, maintaining tax normalization, and keeping dividend tax rates low and on par with capital gains, that will continue to allow electric companies to raise the capital they need at affordable rates to fund these investments.
Excess Deferred Taxes – What Does the Future Hold?
Due to the unique regulated nature of electric companies, the drop in the corporate tax rate creates a certain amount of excess deferred taxes.
Simply, the change in the law will require electric companies to recalculate their tax expense. However, unlike other industries that would treat excess deferred taxes collected as income, regulated electric companies are required to refund these excess deferred taxes over time to their customers.
These excess deferred taxes are a regulatory liability and are not cash on hand. Excess deferred taxes ultimately will be returned to customers over time.
The amount of excess deferred taxes will vary by company, and decisions about how and when this amount will be flowed back to customers will vary by state.
The benefits and use of excess deferred taxes could take many different forms, similar to the benefits resulting from the corporate tax rate reduction.
The EEI Financial Review is an annual report on the financial performance and strategic direction of the electric power industry. The report includes discussions of: industry-level financial results, stock performance, dividends, credit ratings, rate reviews, construction activity, fuel sources, business segmentation, as well as mergers and acquisitions.
Electric Company Industry Financial Data and Analysis
EEI's Financial Analysis group tracks and analyzes a wide range of industry financial metrics covering the U.S. investor-owned electric companies. These companies include electric holding companies whose stocks are traded on major U.S. stock exchanges and other U.S. electric subsidiaries of non-utility or foreign companies.
The EEI Index measures total shareholder return for the 39 publicly traded U.S. investor-owned electric companies. The EEI Index is market cap-weighted and calculated on the final day of each quarter, covering both the year-to-date and trailing 12-month periods. The EEI Index is widely used in company proxy statements and industry benchmarking.