New York State Assembly, Senate Budgets Would Eliminate Delivery Sales Tax Exemption For Customers Taking ESCO Service

The New York State Assembly and Senate have released budget resolutions which include elimination of a current exemption from "sales" tax for deliveries of electricity and natural gas supply to customers of ESCOs.

As previously reported by EnergyChoiceMatters.com, New York Gov. Andrew Cuomo's proposed budget also eliminates such sales tax exemption for ESCO customers

Non-residential transmission and distribution charges are subject to what is colloquially known as state sales tax (technically a compensating use tax), and non-residential default service customers pay such tax for T&D service. However, ESCO customers are exempt from paying this T&D sales tax.

Non-residential commodity supply is subject to state sales tax regardless of the supplier. There is no residential state sales tax on utility delivery service, regardless of the customer's supplier.

The Assembly's budget reflected in updated bill A. 2009 would enact the elimination of the T&D sales tax exemption for ESCO customers by amending section 1105 of the tax law to provide that the applicable tax on receipts from the sale of gas, electricity, refrigeration and steam, and gas, electric, refrigeration and steam service of whatever nature includes, "the transportation, transmission or distribution of gas or electricity, even if sold separately."

Additionally, Section 1105-C of the tax law, which currently addresses certain exemptions, would be repealed under A. 2009

The Senate budget resolution explicitly states that, "The Senate concurs with the Executive proposal to discontinue the energy services (ESCO) sales tax exemption."

The Senate also, "concurs with the Executive's proposal to make permanent the ability of state agencies and municipal corporations to procure wholesale electricity, and expand such authority to state authorities and public benefit corporations."

This proposal is included in bill A. 2005

The Governor's budget submission has proposed to make permanent State Finance Law § 97-g and amend this section of law to authorize public authorities and public benefit corporations to acquire energy products as a centralized service from OGS. State Finance Law already permits State agencies and local governments to purchase energy products (primarily electricity) as a centralized service provided by OGS to reduce their costs for energy products. "By expanding the centralized service program for energy products, this bill would produce energy cost savings for public authorities and public benefit corporations. Making the law permanent would benefit the State with regard to securing energy savings," the Governor's office has said

A. 2005 as included in the Assembly's budget proposal also includes the creation of a State Office of the Utility Consumer Advocate