2010 Pennsylvania Code
Title 66 - PUBLIC UTILITIES
Chapter 28 - Restructuring of Electric Utility Industry
2810 - Revenue-neutral reconciliation.

     § 2810.  Revenue-neutral reconciliation.
        (a)  General intent of revenue-neutral reconciliation.--It is
     the intention of the General Assembly that the restructuring of
     the electric industry be accomplished in a manner that allows
     Pennsylvania to enjoy the benefits of competition, promotes the
     competitiveness of Pennsylvania's electric utilities and
     maintains revenue neutrality to the Commonwealth. This section
     is not intended to cause a shift in proportional tax obligations
     among customer classes or individual electric distribution
     companies. It is the intention of the General Assembly to
     establish this revenue replacement at a level necessary to
     recoup losses that may result from the restructuring of the
     electric industry and the transition thereto.
        (b)  Imposition.--
            (1)  For tax periods beginning on or after January 1,
        1999, a tax at the rate provided in subsection (c) is imposed
        upon the gross receipts of electric distribution companies
        and electric generation suppliers.
            (2)  A tax at the rate provided in subsection (c) is
        imposed upon the gross receipts of any municipality owned or
        operated public utility or of any public utility service
        furnished by any municipality. Gross receipts shall be exempt
        from the tax to the extent that gross receipts are derived
        from sales of electric energy inside the limits of the
        municipality owning or operating the public utility or
        furnishing the public utility service.
            (3)  A tax at the rate provided in subsection (c) is
        imposed upon the gross receipts derived from any electric
        cooperative owned or operated public utility or from any
        public utility service furnished by any electric cooperative.
        Gross receipts shall be exempt from the tax to the extent
        that gross receipts are derived from sales for resale or
        sales of electric energy within the limits of its service
        territory as set forth in 15 Pa.C.S. § 7406 (relating to
        competition by electric cooperatives).
        (c)  Rate.--
            (1)  By December 1, 1998, and each October 1 thereafter
        until and including October 1, 2002, the Secretary of Revenue
        shall publish the rate of tax as provided in paragraph (2) in
        the form of a notice in the Pennsylvania Bulletin and the
        rate shall apply to the tax imposed by subsection (b) for the
        period beginning the next January 1. The tax rate published
        on October 1, 2002, shall continue in force without further
        adjustment. If the commission determines under section
        2806(c) (relating to implementation, pilot programs and
        performance-based rates) to extend the transition period by
        more than six months, the requirement for an annual
        adjustment of the tax rate shall be extended by one
        additional year. The secretary shall also certify the rate
        calculated to the majority and minority chairs of the
        Appropriations Committee of the Senate and the Appropriations
        Committee of the House of Representatives and detail the
        calculations of the rate.
            (2)  The secretary shall calculate the rate for the
        periods beginning on and after January 1, 1999, in the manner
        set forth in this paragraph:
                (i)  Multiply the 1995-1996 fiscal tax revenue base
            by a fraction, the numerator of which is the total
            kilowatt hours of electricity distributed for ultimate
            consumption in Pennsylvania in the preceding calendar
            year as certified by the commission and the denominator
            of which is the total kilowatt hours of electricity
            distributed for ultimate consumption in Pennsylvania in
            the calendar year 1995 as certified by the commission.
                (ii)  From the product derived under subparagraph
            (i), subtract the total cash payments made to the
            department during the Commonwealth's preceding fiscal
            year on account of affected taxes actually paid by each
            electric distribution company and electric generation
            supplier and by any other entity, including a successor,
            whose affected taxes are contained in the 1995-1996
            fiscal tax revenue base.
                (iii)  Divide the difference derived under
            subparagraph (ii) by the total gross receipts in the
            preceding calendar year as certified by the commission to
            determine the tax rate. The tax rate under this
            subparagraph shall be a decimal rounded to three places.
            (3)  On August 1, 2000, August 1, 2001, and August 1,
        2002, the department shall deliver a report to the General
        Assembly and the Governor that shall describe the dynamic
        economic effect upon the affected taxes due to electric
        utility restructuring. It is the purpose of this report to
        provide the General Assembly and the Governor with
        information to determine whether it is appropriate to
        consider modifying the calculation described in paragraph (2)
        to reflect additional tax revenues, if any, resulting from
        the dynamic economic effects upon the affected taxes.
            (4)  If the effective rate for any affected tax is
        different from the effective rate for such affected tax in
        the 1995-1996 fiscal tax revenue base, an adjustment shall be
        made to the computation of the rate of tax under paragraph
        (2) by multiplying that portion of the 1995-1996 fiscal tax
        revenue base attributable to the affected tax by a fraction,
        the numerator of which is the effective rate of the affected
        tax for the preceding fiscal year and the denominator of
        which is the effective rate of tax of the affected tax in the
        base fiscal year.
            (5)  For negative rates:
                (i)  If the rate of tax calculated for a tax year
            prior to the tax year beginning January 1, 2004, or
            January 1, 2005, in the event of an extension by more
            than six months by the commission as provided in section
            2806(c) is negative, a credit equal to the negative tax
            rate for such tax year multiplied by the taxable gross
            receipts for that tax year shall be allowed against the
            taxpayer's liability for any tax for that tax year
            imposed under Article XI of the act of March 4, 1971
            (P.L.6, No.2), known as the Tax Reform Code of 1971.
                (ii)  If the rate of tax calculated as the final
            adjustment is negative for the tax period beginning
            January 1, 2003, or January 1, 2004, in the event of an
            extension by more than six months by the commission as
            provided in section 2806(c), the rate of tax imposed by
            section 1101(b) of the Tax Reform Code of 1971 for the
            tax years beginning January 1, 2004, and thereafter, or
            January 1, 2005, and thereafter, in the event of an
            extension by more than six months, shall be adjusted and
            set as follows: the tax rate expressed as a decimal
            rounded to three positions shall be subtracted from .044
            or the current rate imposed under section 1101(b) of the
            Tax Reform Code of 1971 to determine the adjusted tax
            rate. The adjusted tax rate shall be published in the
            Pennsylvania Bulletin.
            (6)  Information to be provided to the department or the
        commission shall be as follows:
                (i)  To ensure the identification of cash payments
            for purposes of subsection (d), the commission shall
            require any licensee, electric distribution company,
            electric generation supplier or other person affected to
            disclose on its license application, renewal or transfer
            its State tax account or similar number relative to any
            of the taxes specified.
                (ii)  The commission shall report and certify to the
            secretary of the department by August 1, 1998, and each
            August 1 thereafter the total amount of electricity
            distributed for ultimate consumption in this Commonwealth
            during the previous two calendar years and the total
            gross receipts for the past year.
                (iii)  As a condition of licensure, the commission
            shall require each electric distribution company and
            electric generation supplier to report their annual gross
            receipts in this Commonwealth.
                (iv)  For purposes of enforcing sections 2806 and
            2809 (relating to requirements for electric generation
            suppliers) as they relate to the payment of State taxes,
            an applicant for the grant, renewal or transfer of a
            license issued under this title shall, by filing an
            application with the commission, waive confidentiality
            with respect to State tax information regarding the
            applicant in the possession of the department, regardless
            of the source of the information, and shall consent to
            the department providing that information to the
            commission.
            (7)  (Repealed).
        (d)  Payment of tax and reports.--The tax imposed under
     subsection (b) shall be paid within the time prescribed by law.
     For the purpose of ascertaining the amount of the tax, the
     treasurer or other appropriate officer of the taxpayer shall
     transmit to the department by March 15 an annual report, and
     under oath or affirmation, of the amount of gross receipts
     received by the taxpayer during the prior calendar year. The
     treasurer or other appropriate officer of the taxpayer liable to
     report or pay taxes imposed under subsection (b), except
     municipalities and cooperatives, shall transmit to the
     department by March 15 a tentative report for the prior calendar
     year. The tentative report shall set forth all of the following:
                (i)  The amount of gross receipts received in the
            period of 12 months next preceding and reported in the
            annual report.
                (ii)  The gross receipts received in the first three
            months of the current calendar year.
                (iii)  Other information as the department may
            require.
        (e)  Tax computation.--Upon the date its tentative report is
     required to be made, the taxpayer making a tentative report
     shall transmit the report to the department on account of the
     tax due for the current calendar year and compute and make
     payment of the tentative tax with the report under section 3003
     of the Tax Reform Code of 1971.
        (f)  Time to file reports.--The time for filing annual
     reports may be extended, estimated settlements may be made by
     the department if reports are not filed, and the penalties for
     failing to file reports and pay the taxes imposed under
     subsection (b) shall be as prescribed by the laws defining the
     powers and duties of the department. If the works of a taxpayer
     are operated by another taxpayer, the taxes imposed under
     subsection (b) shall be apportioned between the taxpayers in
     accordance with the terms of their respective leases or
     agreements. For the payment of the apportioned taxes, the
     Commonwealth shall first look to the taxpayer operating the
     works. Upon payment by that taxpayer, no other taxpayer shall be
     held liable for any tax imposed under subsection (b).
        (g)  Timely mailing treated as timely filing and payment.--
     Notwithstanding the provisions of any State tax law to the
     contrary, whenever payment of all or any portion of a State tax
     is required by law to be received by the department or other
     agency of the Commonwealth by a day certain, the taxpayer shall
     be deemed to have complied with that law if the letter
     transmitting payment of the tax which has been received by the
     department is postmarked by the United States Postal Service on
     or prior to the final day on which the payment is to be
     received.
        (h)  Procedure, enforcement and penalties.--Parts III, IV, VI
     and VII of Article IV and Article XXX of the Tax Reform Code of
     1971 shall apply to this section insofar as they are consistent
     with this section and applicable to the tax imposed under
     subsection (b). Notwithstanding the provisions of section 403(d)
     of the Tax Reform Code of 1971, if the officers of any
     corporation subject to tax under this chapter neglect or refuse
     to make a report as required in this chapter or knowingly make a
     false report, the department shall add to the tax determined to
     be due a penalty of 5% of the amount of tax due for each month
     or fraction of a month until the penalty has reached 25% and
     thereafter a penalty of 1% of the amount of tax due for each
     month or fraction of a month. Penalties added to the tax shall
     not bear interest.
        (i)  Electric light, waterpower and hydroelectric
     utilities.--The terms "electric light company," "waterpower
     company" and "hydro-electric company," as used in section
     1101(b) of the Tax Reform Code of 1971, shall be deemed to
     include electric distribution companies and electric generation
     suppliers.
        (j)  Sales of electric energy.--Retail sales of electric
     generation, transmission, distribution or supply of electric
     energy, dispatching services, customer services, competitive
     transition charges, intangible transition charges and universal
     service and energy conservation charges and such other retail
     sales in this Commonwealth the receipts of which, if bundled,
     would have been deemed to be sales of electric energy prior to
     the effective date of this chapter shall be deemed sales of
     electric energy for purposes of section 1101 of the Tax Reform
     Code of 1971. The phrases "doing business in this Commonwealth"
     and "engaged in electric light and power business, waterpower
     business and hydro-electric business in this Commonwealth," as
     such terms are used in section 1101(b) of the Tax Reform Code of
     1971 and in this chapter, shall be construed to include the
     direct or indirect engaging in, transacting or conducting of
     activity in this Commonwealth for the purpose of establishing or
     maintaining a market for the sales of electric energy and
     include obtaining a license or certification from the commission
     to supply electric energy. Retail sales of generation shall be
     deemed to occur at the meter of the retail consumer.
        (k)  Electric cooperatives.--Section 1101(b) of the Tax
     Reform Code of 1971 shall apply to electric cooperatives and
     impose a tax upon the gross receipts derived from any electric
     cooperative owned or operated public utility or from any public
     utility service furnished by any electric cooperative. Gross
     receipts shall be exempt from the tax to the extent that the
     gross receipts are derived from sales for resale or sales of
     electric energy within the limits of its service territory as
     set forth in 15 Pa.C.S. § 7406.
        (l)  Provisions to be construed with utilities gross receipts
     tax.--Subsections (i), (j) and (k) shall be construed in
     conjunction with Article XI of the Tax Reform Code of 1971 and
     shall be effective for tax years beginning January 1, 1997, and
     thereafter.
        (m)  Indemnification.--The electric distribution utility
     company's tariff shall provide that, if an electric distribution
     company becomes liable under sections 2806(g) and 2809(c) for
     State taxes not paid by an electric generation supplier, that
     electric generation supplier shall indemnify the electric
     distribution company for the amount of the liability so imposed
     upon the electric distribution utility.
        (n)  Definitions.--As used in this section, the following
     words and phrases shall have the meanings given to them in this
     subsection:
        "Affected taxes."  The taxes imposed under Articles II, IV,
     VI and XI and section 2301(f) of the act of March 4, 1971
     (P.L.6, No.2), known as the Tax Reform Code of 1971.
        "Base fiscal year."  The year beginning on July 1, 1995, and
     ending on June 30, 1996.
        "Department."  The Department of Revenue of the Commonwealth.
        "Effective rate."  The tax rate applicable during the fiscal
     year or, if more than one rate is applicable, the average of the
     rates that were in effect for each month of the fiscal year.
        "Fiscal year."  A year beginning on July 1 and ending on the
     subsequent June 30.
        "Gross receipts."  The gross receipts from the retail sales
     of electric energy as defined in section 1101(b) of the Tax
     Reform Code of 1971.
        "1995-1996 fiscal tax revenue base."  The receipts from
     affected taxes from the fiscal year 1995-1996, such amount being
     $984,141,837.
        "Portion of the 1995-1996 fiscal tax revenue base
     attributable to the affected tax."  The following amounts for
     the tax indicated:
                        Tax                      Amount
          Corporate net income tax          $181,628,433
          Capital stock-franchise tax       $117,495,605
          Sales and use tax                 $187,401,632
          Public utility realty tax         $ 43,883,573
          Utilities gross receipts tax      $453,732,594
        "Total utilities gross receipts."  The total gross receipts
     for a calendar year for all electric distribution companies and
     electric generation suppliers which are derived from the sales
     of electric energy and required to be reported to the commission
     under subsection (c)(6)(iii).
     (Dec. 23, 2003, P.L.250, No.46, eff. imd.)

        2003 Repeal Note.  Act 46 repealed subsec. (c)(7).
        Cross References.  Section 2810 is referred to in sections
     102, 2804 of this title.