Pennsylvania Proposes Recurring Licensing Fee (Tax) on Retail Suppliers, Brokers

As part of its proposed default electric service end-state, the Pennsylvania PUC has proposed imposing an annual licensing fee on existing electric generation suppliers (EGSs), including retail suppliers, broker/marketers, and aggregators.

"The purpose of the annual EGS licensing fee would be to cover Commission costs associated with staff review of reports filed by EGSs, as well as the oversight of regulatory compliance issues and EGS bonding requirements," the PUC said.

Currently, EGSs pay a one-time licensing fee in the amount of $350.

The PUC is not permitted to levy assessments on EGSs under Section 510 of the Code, 66 Pa. C.S. §510, since EGSs are not considered to be public utilities except for limited purposes.

Because the Commission is prohibited from levying assessments on EGSs, the $350 EGS licensing fee is the sole funding that the Commission receives from EGSs.

"For this reason, the Commission believes that it is prudent to establish a recurring EGS licensing fee, on an annual basis, that would assist in defraying the Commission's administrative costs associated with the regulatory oversight of EGSs."

In a Tentative Order, the Commission sought comments on the feasibility of an annual EGS licensing fee, as well as comments on how to structure the fee.

"One option is to establish a flat annual fee that is the same for all EGSs. The Commission proposes that $1,000 is an appropriate amount for an annual fee and invites comments on this proposed amount."

"Another option may be to structure the fee by using a percentage of an EGS' gross intrastate revenues, subject to a maximum cap. The Commission notes that the amount of an EGS' retail sales in Pennsylvania is already provided to the Commission on reports pertaining to gross receipts and, therefore, EGS intrastate revenues may be obtained from these reports. See, 52 Pa. Code § 54.39. By using a percentage of intrastate revenues, the annual licensing fee may be lower for entities without a large amount of business in Pennsylvania," the PUC said

EGSs that do not take title to electricity and therefore are not liable for gross receipts tax, such as brokers and marketers, would pay a flat annual licensing fee of $1,000 under this proposal.

"At the same time, so as not to be unduly burdensome on EGSs with a large amount of business in Pennsylvania, the Commission suggests that the fee be capped at a certain figure under this approach. For example, the licensing fee could be 0.1% of EGS intrastate revenues or $1,000, whichever is lower," the PUC proposed.