Understanding the Gross Receipts Tax and Sales and Use Tax
The Gross Receipts Tax (GRT) and Sales and Use Tax (SUT) can affect how much a customer pays for electricity. Depending on the region, these taxes are either included by the local utility company (LDC) or by the electric supplier. In deregulated electricity markets, the tax will be included in the supply rate charged by the energy supplier.
The Gross Receipts Tax (GRT)
In states such as Pennsylvania, the gross receipts tax is charged to the Retail Electric Providers (REPs) who then pass this cost onto the customer. The GRT is included in the price to compare. The price to compare is the default rate charged by the utility companies to customers who have not switched to a competing energy supplier. Most energy suppliers will include the GRT as a separate line item in the electric bill. The gross receipts tax is collected by the Pennsylvania Department of Revenue.
A tax-exempt customer will still have to pay the gross receipts tax. This is because the tax is not directly imposed on the customer by the state. Instead, the tax is imposed on the energy supplier who then passes these costs onto the customer.
The Sales and Use Tax (SUT)
If you’re a customer shopping around for electricity in the state of New Jersey, then the supply rate charged by the utility companies will be subject to the sales and use tax (SUT). New Jersey law requires this tax to be included in the supply rate. This means the utility company, or the energy suppliers cannot charge this tax as a separate line item on the electric bill.
Much like the GRT, a tax-exempt customer must still pay the SUT since this tax is imposed on the utility companies and not directly on the customer.