Friday, February 19, 2010

Town House West Tenants Seek PSC Ruling to Clarify Tax Issues in Setting Rates for Submetered Electric Service

The Town House West Tenants Association today filed a Petition for a Declaratory Ruling with the New York Public Service Commission to decide the proper treatment of taxes in their landlord's method of calculation of rates for submetered electric service.

When a New York City landlord resells electric service to tenants, a per kilowatt hour rate is developed based on the total monthly charges for bulk service to the building (which the owner pays to Con Edison based on Con Edison's master meter reading), and then the owner charges each tenant for the kilowatt hour usage based on the landlord's reading of the tenant's submeter. The amount of the Con Edison bill not covered by aggregate tenant billings is paid by the landlord, as it would involve charges for common areas, parking lot lighting, the landlord's HVAC system, and so forth.

Con Edison bills to the landlord typically would include amounts added to the Con Edison rates for New York State Sales Tax, New York City Sales Tax, and MTA surcharges. Under the landlord's petition to submeter at Town House West, the rate for submetered service passes through any taxes included in the landlord's Con Edison bill. This was approved by the PSC, without discussion, in its submetering order for Town House West Apartments.

Residential customers are exempt from the State Sales Tax and the MTA tax. Also, they are being charged New York City Sales Tax as a surcharge on their bills. Under various tax rulings, it appears that the landlord can obtain exemption, credit, or refund of taxes paid by the landlord in the Con Edison bill, and can obtain a credit or refund of City Sales Tax if it was paid twice - once on the Con Edison bill of the landlord, and by the tenant through the separate surcharge.

The Petition for a Declaratory Ruling seeks a clarification that the landlord should not be including any taxes in the computation of the tenant submetering rate for which exemption, credit, or refund is available to the landlord.

See PULP's web page on submetering for more background information.

See Power Companies Overcharging Some Co-ops & Condos: How to Stop Them
Habitat Magazine, 02-01-2010, discussing availability of tax refunds to owners of residential buildings who purchase utility service in non-residential service classifications.

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