What is gross receipts tax (GRT) on sales of electric energy?
Gross receipts tax is paid by both electric distribution companies and electric generation suppliers on the basis of the company’s or the supplier’s gross receipts from the sale of electric generation supply within the Commonwealth of Pennsylvania. Electric distribution companies and electric generation suppliers include the GRT as part of the cost of electric generation supply. By law, the current GRT rate in Pennsylvania for 2011 is 6.06% (5.9% base plus .16% surtax). However, since the tax is embedded in the cost of electric generation supply, electric distribution companies and electric generation suppliers apply a gross-up factor to determine the amount of GRT that must be paid to Pennsylvania. As a result, electric distribution companies and electric generation suppliers pay GRT to Pennsylvania in the amount of 6.45% on the base price of electric generation supply. This gross-up factor, resulting in a GRT of 6.45%, is calculated by the following formula: 1/1-6.06%. For example, i
