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Pa. PUC Issues Guidance to Electric Suppliers Regarding Billing of Taxes
July 12, 2011
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The Pennsylvania PUC has issued guidance on the placement of tax information on residential customer electric bills.
Gross Receipts Tax
The PUC's regulations at 52 Pa. Code Sec. 56.15(4) require that customer bills, "indicate that a State gross receipts tax is being charged and a reasonable estimate of the charge." This regulation is applicable to both electric distribution companies (EDCs) and electric generation suppliers (EGSs).
However, the gross receipts tax (GRT) does not need to be a line item on the bill, the PUC said. "Thus, in practice, an EGS must include its GRT on a separate supplier bill when the customer has elected to receive dual billing. When the EDC renders a consolidated bill, an EGS must provide its GRT information to the EDC for inclusion on its consolidated bill to the customer. When an EGS issues a SCB [supplier consolidated bill], the EGS must include the EDC's GRT information on the SCB."
The PUC has been alerted to a problem regarding the inability of several EDCs to include an EGS's estimated GRT on a customer's bill. Because of constraints on some EDCs' billing systems, only the EDC's GRT appears on customer bills. "Since we are aware of this problem, we believe that it is reasonable to grant a temporary waiver of the GRT bill presentment requirement in Section 56.15(4) for affected EGSs," the PUC said.
The PUC directed that each EDC provide the Office of Competitive Market Oversight (OCMO) with a list of EGSs for which the EDC cannot display the EGS's GRT on its bill. EDCs shall provide this list to OCMO within 10 days. OCMO will distribute this information to other PUC staff for use in responding customer inquiries and complaints relating to this issue.
OCMO was further directed to raise this issue with the retail electric market and EDI workgroups for the purpose of discussing possible interim solutions that will permit an affected EGS's GRT to be displayed on the EDC consolidated bill, and for establishing a timeline for when this problem can be remedied for affected EGSs. OCMO was directed to report back to the Commission on the status of remedying this issue by September 30, 2011.
Class A Utility Total State Tax Information
The Commission's regulations at 52 Pa. Code Sec. 56.15(4) require a Class A electric utility, one with annual operating revenues greater than $2.5 million, to include on a customer's bill, "a statement of the dollar amount of total State taxes included in the current billing period charge." The regulation does not require that this statement be a line item on the bill.
"Because this requirement is directed only to Class A utilities, it is not applicable to EGSs. In other words, an EGS does not need to present 'total state tax' on its bill when a customer receives separate bills from the EGS and EDC. Additionally, an EGS is not required to provide total tax information to an EDC where both EGS and EDC charges appear on an EDC-consolidated bill," the PUC clarified.
However, if an EGS renders a supplier consolidated bill (SCB) that contains both EDC and EGS charges, "the EGS must include a statement of total dollar amount of state taxes attributable to the EDC's charges for the customer's current billing period." In this case, the EDC shall provide this information along with its other charges to the EGS for presentment on the supplier consolidated bill, the PUC said.
"Since an EGS is required to include on its SCB a statement of the total dollar amount of State taxes for an EDC that is a Class A utility, EDEWG [Electronic Data Exchange Working Group] is advised that a field for this information should be included in SCB bill formats that the group may be asked to develop. Again, the statement of total dollar amount of state taxes does not need to be presented as a line item on the bill," the Commission added.
State Sales Tax Section 1509 of the Public Utility Code requires that a State tax adjustment surcharge (STAS), if other than zero, and state sales tax be listed on a customer's bill. This information shall be included on a customer's bill when applicable, regardless of whether the bill is a separate supplier (dual) bill, a supplier consolidated bill, or an EDC consolidated bill As the PUC more fully explained in a May Secretarial Letter (see 6/1), the residential use of electricity is generally exempted from state sales tax by Section 7204 of the Tax Reform Code of 1971. In the May Secretarial Letter, the PUC explained the circumstances where the residential use of electricity is taxable. For example, electricity purchased for use in an office or business within a home is subject to sales tax.
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