Proposed Pennsylvania Budget Increases Gross Receipts Tax On Retail Electric Sales, Institutes Tax On Retail Natural Gas Sales

A proposed Pennsylvania omnibus tax bill (HB 542) which was adopted by the Pennsylvania Senate Appropriations Committee and scheduled for action in the full Senate today would raise the gross receipts tax (GRT) on retail electric sales, institute a new gross receipts tax on retail natural gas sales, and impose a new tax on virtual transactions in PJM

Per a fiscal note, the bill would increase the gross receipts tax rate on electricity, applicable to both competitive electric generation suppliers and EDCs, from 59 mills to 65 mills (i.e. from 5.9% to 6.5%), effective August 1, 2017.

The new natural gas GRT would be imposed on the retail sale of natural gas by every natural gas supply company and natural gas distribution company, at the rate of 57 mills (i.e. 5.7%), effective August 1, 2017. For purposes of the GRT, sales of natural gas to retail gas customers shall be defined to include all receipts from natural gas supply services and natural gas distribution services. Exemptions include sales made to electric generation companies for the purpose of generating electricity, sales of liquefied petroleum (LP) gas, and sales for resale.

The bill would also impose a new tax at the rate of 5% of the gross transaction amount on electric grid virtual financial transactions in the electricity markets administered by the regional transmission organization (i.e. PJM). The tax would apply to an increment transaction, decrement transaction or an up-to-congestion transaction. The tax shall be imposed on and owed by the entity initiating the electric grid virtual financial transaction in PJM