With a bevy of federal tax breaks set to expire at year's end, the largest lobbying group for the utility industry is taking White House budget officials to task for assuming Congress won't extend a key tax cut for power companies.

President Obama's proposed budget for fiscal 2013, released yesterday, counts on being able to draw more than $200 billion over a decade from the expiration of a George W. Bush-era tax cut that set the tax rate for dividend income at 15 percent.

The Edison Electric Institute, which represents about 70 percent of the U.S. power sector, said the White House should be pushing for the renewal of that tax cut or otherwise keep it level with the capital gains tax. EEI President Tom Kuhn said in a statement that the dividend tax will be one of the top 2012 lobbying priorities for the deep-pocketed group, which spent upward of $12.3 million on lobbying in 2011, according to federal disclosures.

If the dividend tax cut expires, dividends will again be exposed to maximum tax rates that are currently as high as 35 percent and would rise to 40 percent unless Congress acts on another tax cut for the highest-earning Americans. The proposed budget would tax dividends as ordinary income for households making more than $250,000 and set the top capital gains tax rate at 20 percent.

Such a change would "badly skew federal tax policy in favor of capital gains at the expense of dividends, which will certainly hurt the electric utility sector, which is very capital-intensive," Kuhn said.

The proposed budget is unlikely to become law, but it let the Obama administration, which is looking for new revenue sources and wants to make the tax code more progressive, lay out its position for upcoming talks on tax reform.

Policymakers and lobbyists are already bracing for a legislative push. It is expected to take place after the presidential election but before the tax cuts expire at the end of the year.

As an outline of the administration's desires for the upcoming fiscal year, Obama's proposed budget assumes that Congress will extend certain subsidies, such as tax credits for renewable energy firms. The budget would fund some of its new spending by canceling other breaks, such as the tax credits that go to profitable oil and gas companies.

All of those credits could land on the table as Congress looks for ways to raise revenue and streamline the tax code.

Utilities, which are more likely than other companies to return their profits to shareholders as dividends, have long argued that having a lower tax rate for capital gains than for dividends puts their stocks at a disadvantage. They argue that allowing the dividend tax cut to lapse would make it more expensive for them to raise capital, hiking electricity costs for ratepayers.

Yet the tax cut is another reason the White House has advocated for the "Warren Buffett rule," named after the billionaire investor and CEO of Berkshire Hathaway Inc. who pays a lower tax rate than his longtime secretary. Because the tax rate for both capital gains and dividends is now set at 15 percent, which is below the income tax rates for most middle-class taxpayers, wealthy people who make most of their money from capital gains or dividends can end up paying a lower tax rate than wage-earners.

With the current tax break and several others set to expire at the end of 2012, the utility industry will find itself forced to negotiate on the broader tax reform packages that some lawmakers plan to pursue. Otherwise a price premium would go to the stocks of competitors -- including some in the energy arena -- that reinvest more of their profits and pay out less in dividends.

Mike Livermore, executive director of the Institute for Policy Integrity at New York University Law School, recently helped create an online database to document the subsidies that go to various sources of energy. He said the tax reform debate could quickly turn into a bare-knuckled brawl within the energy industry.

"Everyone says the government shouldn't be in the business of picking winners and losers, and at a high level they might agree on that," he said. "But when it comes down to it, companies are going to roll up their sleeves, and they're going to want to protect the tax provisions that they benefit from, and they don't care about the provisions that they don't benefit from."