Chapter 2 - Public Utility Gross Receipts Assessment
- Statutory Assessment
- General Information
- Subject Taxpayers
- Gross Receipts and Rates
- Taxable Receipts
- Nontaxable Receipts
The Public Utility Commission assessment is described in Chapter 16 of the Utilities Code. The assessment applies to both telecommunications and electric utilities. This manual discusses the PUC Assessment only as it pertains to electric utilities. For information on the PUC Assessment on telecommunications, refer to the Telecommunications Taxes audit manual.
The PUC assessment is imposed on the electric utility company, not the ultimate consumer or customer. The statute does not provide any exemptions from the assessment, so the utility company should pay the assessment on rates charged all its customers regardless of type (commercial, residential, governmental, exempt organizations, etc.) The utility company may collect a reimbursement of the assessment from the customer if it is a separate line item on the customer's billing labeled "utility gross receipts assessment reimbursement." If this reimbursement is collected from the customer, it is to be included in the utility’s gross receipts that are subject to the assessment.
The Utilities Code includes all the provisions for regulation of the electric and telecommunications industries. Chapter 11 includes definitions, Chapter 16 provides for the assessment, and Chapters 31-43 govern electric utilities. Chapter 39 governs deregulation of the retail electric industry.
The statutory authority for the Public Utility Commission Gross Receipts Assessment (PUC Gross Receipts Assessment) comes from the Utilities Code, Chapter 16.
Utilities Code, Title 2, Public Utility Regulatory Act
One-sixth of one percent of gross receipts from rates charged the ultimate consumer in Texas = (.001667 of taxable receipts).
10% of the assessment, levied on the first day after the due date.
12% per annum, on the amount of the assessment plus penalty, beginning 31 days after the due date. (Fluctuating interest rates and credit interest provisions do not apply.)
Annual assessment covers July 1 through June 30 of each year and is due on or before August 15. Quarterly payments may be elected by the taxpayer, in writing, and must be received by the Comptroller at least 30 days prior to August 15. If an election is made, the assessment covers calendar quarters, with reports due on May 15, August 15, November 15 and February 15.
All returns and reports are sent to the Comptroller from the utility companies, using Form #20-106. The reported data is maintained manually and is not accessible via the mainframe. To obtain information on reported figures, contact Revenue Accounting, Miscellaneous Tax Section, at (512) 463-4276.
Statute of Limitations:
General Provisions of the Tax Code apply, and Section 111.201 imposes the 4 year statute of limitations. In an audit of the PUC Gross Receipts Assessment, an Agreement to Extend Period of Limitation should be obtained as necessary. For "Type of Tax" use "Public Utility Gross Receipts Assessment, Utilities Code, Title 2."
There is no computer inquiry nor taxpayer history available for the PUC Assessment. Contact Revenue Accounting for reported data. (See Reported Data above).
The audit should be completed under Tax Type 47, always as an annual filer, covering the period July 1 through June 30 of each year in which the taxpayer was in business. Send the audit to the RPC for review. Include an Audit Adjustment Report for all audit adjustments. In the audit cover letter, refer to this as the "PUC Gross Receipts Assessment."
Schedules should be prepared to fit the situation. The auditor should use judgment in determining how the adjustments can be best displayed given the particular circumstance.
There are several important electric industry definitions used in the Utilities Code, Section 31.002, that must be used in interpreting the statute:
Section 16.001, subsection (a) says “an assessment is imposed on each”
- Utility or Public utility, as defined by Section 11.004 means an electric utility, as that term is defined by Section 31.002 as a person or river authority that owns or operates for compensation in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity in this state.
- Retail electric provider, as defined by Section 31.002 (17), and
- Electric cooperative, as defined by Section 11.003 (9) = Electric cooperative" means:
- a corporation organized under Chapter 161 or a predecessor statute to Chapter 161 and operating under that chapter; or
- a corporation organized as an electric cooperative in a state other than Texas that has obtained a certificate of authority to conduct affairs in the State of Texas
Taxpayers excluded from assessment base:
- Municipal corporations
- Qualifying facility or exempt wholesale generator
- Power marketer
- Transmission and distribution utility (TDU)
- Power generation company (PGC)
Chapter 16.001, subsection (a) also says these taxpayers must be under the jurisdiction of the commission. Jurisdiction is defined in Chapter 32 for electric utilities:
- Section 32.001 for electric utilities states that the Commission has jurisdiction over each public utility, retail electric provider, and electric cooperative in: (1) areas outside a Texas municipality; and (2) areas inside a Texas municipality that surrenders its jurisdiction to the commission under Section 33.002.
- The Commission does not have jurisdiction over (1) municipally owned utilities, or (2) a River Authority operating a steam generating plant for generation and sale of electricity at wholesale, not to the ultimate consumer.
Gross Receipts and Rates
Chapter 16.001, subsection (b), says “an assessment under this section is equal to one-sixth of one percent of the public utility’s gross receipts from rates charged to the ultimate consumer in this state.”
- Gross Receipts: includes receipts from charges for services, products, or commodities that are supplied or sold to an ultimate consumer. This does not include receipts derived from the sale of products or services that will be resold by the purchaser.
- Rate includes:
- any compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected by a public utility for a service, product, or commodity described in the definition of utility in Section 51.002; and
- a rule, practice, or contract affecting the compensation, tariff, charge, fare, toll, rental, or classification. (Section 11.003, subsection (16))
"Service" has its broadest and most inclusive meaning. The term includes any act performed, anything supplied, and any facilities used or supplied by a public utility in the performance of the utility's duties under this title to its patrons, employees, other public utilities, an electric cooperative, and the public. The term also includes the interchange of facilities between two or more public utilities. The term does not include the printing, distribution, or sale of advertising in a telephone directory. (Section 11.003, subsection 19)
(references italicized in parentheses refer to documents on STARS)
- Residential/general sales
- Commercial and industrial sales
- Receipts from governmental entities (public sales)
- Charges for transmission and distribution services (200107391L)
- Competition transition charges (200107391L)
- Late penalties and forfeited customer deposits (200204035L)
- Returned check charges
- Charges for security lights
- Field collection charges
- Customer connect, disconnect, re-connect fees
- Account initiation fees, new or existing service
- Master metered apartment collection letters
- Service charges for overhead costs (200204035L)
- Minimum billing charges (200204035L)
- Interest earned on security deposits (200204035L)
- Charges for energy pulse
- Charges for meter tests
- Charges for load reports
- Charges for out-of-cycle meter readings
- Temporary service charges
- Service diversion fees
- Bad debt recoveries on previously deducted taxable receipts
- Charges for statements of electric usage
- Charges for special billings
- Municipal franchise fees and other reimbursements from customers for charges paid to a city (200107391L), (200201770L)
- Taxes or assessments levied on a utility which are passed on to the customers (200204035L), (9601886L), (200210502L)
- Receipts from city for furnishing street lighting
- Rental of substations to large industrial consumers (ultimate consumers)
- Receipts from the Bill Payment Assistance Program for reimbursement of discounted rates for low-income electric customers
- Rent from electric property (realty)
- Bad debts of taxable receipts written off for federal income tax purposes
- Taxes levied on customers which are collected by the utility company as agent for the taxing authority, i.e., sales tax (200204035L)
- Sales for resale (9705884L), (200202829L), (200404580L)
- Electricity generated by the company for the company’s own use (200404580L)
- Miscellaneous revenues not related to the provision of utility service, i.e., financial/legal services, interest, dividends
- Interdepartment sales between departments or divisions of the utility itself
- System benefit fund fees (200107391L)
- Nuclear decommission fees (200107391L)
- Transition charges (200107391L)
- Other electric revenues which are not received from the ultimate consumer