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Utilities CEOs are meeting with the senate and White House officials today to discuss the impact of rising tax rates on -- industry I'm joined now by.
Two of those executives -- nick Akins as CEO and president of American Electric Power.
And Patricia -- and call one.
Is the chairwoman and CEO and president of PNM resources folks good to see -- thanks for coming -- pat I wanna go to you first out -- dividend taxes.
You don't often think of the of the effect that they may have on utilities but you mortgage today that they would have a direct effect.
Perhaps unintended consequences but what would be the effect we're seeing that they could almost triple.
The rate of taxes on dividends how would that affect your industry and your customers.
They're actually a couple ways first of all we raise a lot of capital of this industry we're gonna spend about 94 billion dollars a year.
-- investing in our electric -- in this company.
And -- the dividend taxes go up stock prices could go down -- for making capital.
In my company particular -- -- 50% of all of our projects with equity so cost to capital got in their for rates to our customers can go up.
They can also get impacted another way lot of our customers are also are shareholders.
In a lot of -- that's actually 62% of them make below a 100000 dollars -- those taxes go up.
For those folks.
That's gonna hurt -- of the money they have to spend and the value of their retirement and borrowing K account.
Savers are really getting killed in this regard but nick you have five million customers who you are -- big utility five million customers if they see their rates go up.
You know as well as -- they're not gonna be blaming it -- dividend tax rates they're gonna be blaming you correct.
So that's exactly right I mean we passed -- our -- net dividend taxes go.
It is a cost is borne by the customers -- only borne by the customers -- borne -- Our investors who are primarily.
The elderly depending on the fixed and count.
That's why they invest in our utilities let me -- -- -- neck if -- if that is true and I I believe that that they're gonna be blaming you would not that not the tax man if if the rates go up how do you get that message across from it is it worth perhaps.
Sending letters to all your customers -- what.
-- I think it's clear that we have to go to our customers explain to the situation because it's a different level of increases if you increase from.
Or to ordinary income tax tax rates is supposed to the president dividend tax rate 15%.
It does have an impact it also has an impact on how much we can invest in the system.
And -- our cost of capital goes up as a result will pass on those costs we have to explain that your customers he'll be a difficult proposition all right well pat it must have been -- difficult proposition explain it to the politicians inside the beltway -- they can't seem to get anything right.
-- who did you meet we have today and did you get any sense that they get the message that you guys just explain.
Oh absolutely we met with a variety of senators from our service territories and the White House.
And they understand the issue and actually our customers we've had defend my dividend campaign for some time and gotten over 250000.
Letters and emails to members of congress.
I think they understand that what we're trying to do here is make sure we keep growing our economy.
By investing in our economy and they all were very receptive to the message that we said today and I have to say they're all working very hard to make sure we don't go over this -- Well -- -- words are cheap particularly in Washington -- promises for that matter insight about what but did you get any specific.
Promises that people would hold the line and -- dividend tax at least by some amount.
I think I think we did get an indication first of all that they did not warranty with the issue of that parity between capital gains.
And dividend taxes they understood that understood as a concept going the discussions in them from an increase perspective.
They did understand it would have an impact on the economy would have an impact on our rates.
But I think there's a sense of frustration.
Is an -- that there's a whole big issue to deal with here and that.
In a comprehensive deal and they really don't know exactly where is going to come out but there was optimism.
That it would be something something less than ordinary income good luck let's hope you made some progress that nick Akins.
Pat Vincent college thank you both appreciate -- -- thank you David.
Thank you thank you.