Natural Gas Utility Customers Benefit From Tax Reform
Washington, D.C. – Millions of Americans that use natural gas will benefit from the Tax Cuts and Jobs Act passed by the House and Senate and headed to the President for his signature. Several provisions in the bill will keep the tax burden on natural gas utilities at a reasonable level, reducing the costs of installing and maintaining pipeline infrastructure and, in turn, benefitting natural gas utility customers and the economy.
“Natural gas utilities are capital intensive industries and the Tax Cuts and Jobs Act supports the unique nature of the long-term investments that are at the heart of the safe and reliable service that our members provide,” said AGA President and CEO Dave McCurdy. “Long-term investments in energy infrastructure, including natural gas distribution systems, strengthen our economy, make the country more attractive for corporate investment and create jobs.”
The natural gas industry has advocated for language in tax reform legislation to help increase the efficiency and simplicity of the tax code while also promoting capital investment and economic growth. Four essential components of tax reform have been included in the legislation to help support long-term investments in the critical infrastructure of America’s natural gas utilities while keeping natural gas bills low and affordable for customers:
- Maintaining the federal income tax deduction for interest expense. Gas utilities are one of the most capital-intensive industries that exists and keeping interest deductibility intact helps natural gas utilities maintain low costs for consumers, keeping energy bills more affordable.
- Providing for the continuation of normalization which allows natural gas companies to spread costs more evenly over the useful life of natural gas systems, helping to keep energy bills low and predictable for consumers.
- Maintaining the federal income tax deduction for state and local taxes will avoid taxing local infrastructure investments twice. As some of the biggest tax payers across the country, this will help natural gas utilities maintain low costs for consumers, keeping energy bills more affordable.
- Keeping dividend tax rates low and on par with capital gains. Investments are an important source of funding and stability for natural gas utilities. Parity between dividends and capital gains creates a level playing field and allows investors to make sound investment decisions rather than creating a tax code-driven bias for one over the other.
The American Gas Association, founded in 1918, represents more than 200 local energy companies that deliver clean natural gas throughout the United States. There are more than 75 million residential, commercial and industrial natural gas customers in the U.S., of which 95 percent — more than 71 million customers — receive their gas from AGA members. Today, natural gas meets more than three-tenths of the United States' energy needs.