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Pa. PUC Issues Secretarial Letter Concerning "Serious" Violation of Unit Billing Requirement by Retail Suppliers
June 1, 2011
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The Pennsylvania PUC issued a Secretarial Letter regarding the failure of some electric generation suppliers (EGSs) to include the unit price (kWh) on customer bills, which the PUC deemed a "serious" deficiency, and the inappropriate inclusion of sales taxes on residential customers' bills by some EGSs.
Per 52 Pa. Code Sec. 54.4, "Generation charges shall be presented in a standard pricing unit for electricity in actual dollars or cents per kWh, actual average dollars or cents per kWh, kW or other Commission-approved standard pricing unit."
"Based on information that OCMO [Office of Competitive Market Oversight] has gathered, the Commission is aware that some EGSs may not be in full compliance with this requirement," the Secretarial Letter states.
"We view this as a serious deficiency that deprives customers of information necessary for them to fully understand the rate they are being charged. This lack of information also makes it difficult for customers to determine if they are being charged according to the agreed-upon terms in the disclosure statement that was provided to customers when they enrolled with the supplier. This is especially a concern with customers on variable-rate products," the Secretarial Letter continues.
"For EGSs that rely on the utility to bill for them, the EGS should make sure that it is providing the utility with sufficient information on kWh pricing via EDI so that the utility can include this information on customers' bills," the PUC said.
"If there are any deficiencies in this respect, we expect EGSs to take corrective action as soon as possible ... If, for some reason, an EGS is not able to immediately implement corrective action to place this information on customer bills, we urge you to communicate, through alternative methods, the price per kWh to your customers. This is especially critical if the price you are charging is a variable price," the Secretarial Letter states.
Separately, the PUC noted instances where state sales tax was inappropriately included on residential customers' bills by EGSs, though the PUC does not believe that this is a widespread problem. In some instances, EDCs have noticed the improper inclusion of state sales taxes and EGSs have been able to remove the charges prior to the bills being issued.
Section 7204 of the Tax Reform Code of 1971 exempts the residential use of electricity from Pennsylvania sales tax (72 P.S. Sec. 7204).
"[A]ny EGSs who have improperly charged this tax should immediately correct the problem and issue refunds to customers," the Secretarial Letter said.
However, electricity purchased for use in an office or business within a home is subject to sales tax (Pennsylvania Department of Revenue's regulations at 61 Pa Code Sec. 32.25).
"[I]f the residential customer provides a 'Sales and Use Tax Exemption Certificate' (Form REV-1220) to the supplier that indicates the annualized percentage of the total kilowatts used solely for residential purposes, the supplier may charge tax only on the electricity used for commercial purposes," the Secretarial Letter notes.
"[T]he Commission will be proactively monitoring these issues and staff will take further action as necessary on an individual basis to ensure compliance," the Secretarial Letter concludes.
The PUC "requests" that EGSs report by June 10, 2011 whether the companies are including unit pricing on bills and refraining from incorrectly charging state sales taxes to residential customers; identifying any problems and planned corrective measures that are necessary, along with projected timeframes; and whether the EGSs have had any consumer complaints or media inquiries about these issues.
The Secretarial Letter was filed in Docket M-2009-2082042.
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