New Tax Rule Impacting ERCOT, Related To Collection Or Issuance Of Resale Certificates, Takes Effect

ERCOT informed market participants that, on October 13, 2020, an amendment to a Texas Comptroller of Public Accounts rule impacting the ERCOT market went into effect.

More specifically, new subsection (c)(6) was added to 34 Texas Administrative Code (TAC) § 3.285, a sales tax rule concerning resale certificates and sales for resale. The new subsection provides that ERCOT, as the independent organization certified under Texas Utilities Code § 39.151, is not required to collect or issue resale certificates for electricity sold for resale in the ERCOT market to qualify for an exemption from state sales tax.

In proposing the rule, the Texas Comptroller of Public Accounts had stated in the state register that, "The comptroller adds new subsection (c)(6) that provides that the independent organization certified under Texas Utilities Code, §39.151 - currently, the Electric Reliability Council of Texas, Inc. (ERCOT) - is not required to collect a resale certificate from a person who purchases electricity from it solely for the purpose of resale and is not required to provide a resale certificate to a person from whom it purchases electricity solely for the purpose of resale. Collection or issuance of resale certificates is not necessary in this context because, due to the manner in which the ERCOT market functions, all electricity purchased or sold by ERCOT must necessarily be resold before it is used by an electricity consumer."

As adopted, 34 TAC § 3.285(c)(6) provides as follows: "Electricity sales and purchases by independent organization certified under Texas Utilities Code, §39.151. A resale certificate is not required to be issued by a person who purchases electricity solely for the purpose of resale from the independent organization certified under Texas Utilities Code, §39.151. The independent organization certified under Texas Utilities Code, §39.151 is not required to issue a resale certificate to a person from whom it purchases electricity solely for the purpose of resale."