Utilities the big winners in fiscal cliff package

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Both the Associated Press and National Public Radio have named electric power utilities as "big beneficiaries of the new tax package."

 

NPR correspondent Elizabeth Shogren noted that the legislation does not increase taxes on dividends. "The utility industry lobbied hard to make sure that this would be the outcome. If people had to pay more taxes on dividends, utility stocks would look a lot less appealing… and it would be harder for them to invest in big projects like new power plants and wind farms."

 

Many analysts say no other industry is more sensitive to taxes on dividends.

 

Duke Energy spokesman Tom Williams was cited as being "tickled pink" by the outcome, saying: "the company's stock is so strong because shareholders get nearly 5 percent back in dividends."

 

This is good news in an industry that had a tough year because demand for electricity still hasn't returned to pre-recession levels. In fact, utilities ended 2012 down 2.9%, finishing last among sectors and underperforming the overall stock market by 16.3%.

 

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