Utilities are among the nation's biggest dividend-payers, and since 2003, the Internal Revenue Service has taxed corporate dividends at the same rate as capital gains — currently, 15 percent. But tax parity is set to expire at year's end, part of the looming "fiscal cliff" that will trigger massive tax hikes and budget cuts, unless Congress takes action.

Among those urging Congress to preserve tax parity for dividends and capital gains is Caroline Dorsa, chief financial officer of Public Service Enterprise Group, who met last week in Washington with staff in a half dozen congressional offices. Dorsa said if tax parity expires, the top tax rate on capital gains rises to 23.8 percent, and the top rate on dividends rises to 43.8 percent. Faced with higher taxes, utility shareholders would likely seek higher dividends, and she said the loss of tax parity could impact the cost and availability of investment capital for PSEG and other utilities.

Dorsa said she presented the issue to congressional staffers "from the perspective of a company that puts a lot of capital, investment and jobs in New Jersey, and the impact it would have on our ability to continue to do even more — to really make strides toward assisting the economy of the state." Newark-based PSEG has about 10,000 employees, most of them in New Jersey.

Dorsa said taxing dividends and capital gains at the same rate "is a good thing for the economy, because that means the tax code isn't picking winners or losers. We don't want something special: what we really want is equivalence, and the ability to continue to invest." Dorsa declined to say which congressional offices she visited.

In New Jersey, PSEG pays about $100 million a year in dividends to 86,000 shareholders, "many of whom are retirees of the company," Dorsa said. PSEG said it pays out $700 million in dividends a year, including $290 million to individual investors.

If Congress does nothing and lets tax parity expire, "We would certainly get questions from our investors, relative to would we do anything to keep them whole, given the dividend tax increase," Dorsa said.

She said there has been no decision on how PSEG's capital spending would be impacted if tax parity ends. "I think it would be better if we could really focus where we want to focus, which is on making investments in the state, versus putting back on the table what would be the impact of changing the taxes on our shareholders," she said.

Dorsa said the loss of tax parity would not impact core investments in system reliability, "but the incremental investments become harder, because the cost of capital is higher, and that is bad for all companies."