Pennsylvania doesn't have a traditional sales tax on electricity but it does have the Gross Receipts Tax which utilities pass through to customers. PECO calculates it as a percentage of total bill charges. I noticed that one of my Pittsburgh clients on Duquesne Light is paying the GRT on charges that should be excluded — specifically on a demand response credit the client receives. The GRT is being applied to the gross bill before the credit is deducted. Is the GRT supposed to be calculated on the net or gross amount?
Pennsylvania gross receipts tax — commonly miscalculated on commercial bills
Good catch. The Pennsylvania GRT is calculated on the utility's gross receipts from the customer. If the customer receives a credit that reduces what the utility actually receives, the GRT should be lower. Duquesne Light's billing system may be applying the GRT to the gross bill before credits, which overstates both the utility's receipts and the customer's tax liability. I've seen this with PECO as well — particularly with solar net metering credits where the GRT gets applied before the net metering offset. It's a billing system issue that affects any customer receiving credits or adjustments.
Frank and Phil identify a subtle but real tax calculation error. Pass-through taxes like Pennsylvania's GRT should be calculated on the net amount the utility receives, not the gross bill before credits. Any customer receiving demand response credits, net metering credits, economic development credits, or other bill adjustments may be overpaying the GRT if the utility's billing system applies the tax before the credit. This is worth checking in any state that has a gross receipts or utility receipts tax passed through on the bill. The error is systemic — it affects every billing cycle, not just one month.
Filed with Duquesne Light and they acknowledged the calculation error. The GRT was being applied pre-credit instead of post-credit. Correction saved the client about $65/month and they issued a 24-month retroactive adjustment of roughly $1,560. Small per month but it compounds. Checking all my Pennsylvania clients for the same issue now.