How do solar net-metering credits and time-of-use periods affect Florida gross receipts tax on electric bills?

Plain-English summary

A Florida electric utility asked how solar net-metering credits should affect the gross receipts tax imposed on utility services under Fla. Stat. Sec. 203.01.

The Department said the tax follows the amount of money received from the customer after credits:

• A credit stored in a customer's solar “PV Bank” reduced the billed electricity before gross receipts tax was calculated.
• For commercial time-of-use rates, peak, shoulder, and off-peak periods were netted together to determine total net consumption rather than taxed independently.
• If total net consumption was negative, the resulting credit could offset fixed customer and demand charges.
• Fixed customer charges, solar-block charges, and electricity consumed above the solar allotment were components of taxable utility gross receipts. The utility could itemize gross receipts tax for each component on the bill.
• A credit from consumption below the solar allotment reduced the customer or solar-block charge before the tax calculation.

What this means for you

Electric utilities

Calculate gross receipts tax from the net utility amount actually collected after applying the customer's solar credits. Preserve the supporting calculations across time-of-use periods and fixed-charge components.

Solar customers and billing teams

Credits can reduce the gross-receipts-tax base, including fixed charges in the scenarios addressed, but the underlying fixed and energy components remain utility-service receipts before those offsets.

Common questions

Is gross receipts tax calculated before applying a PV-bank credit? No. The TAA used the net billed amount after the credit.

Are time-of-use periods taxed separately? No. The three periods were netted together.

Can the tax be itemized by charge component? Yes, although the total components on the utility bill form the gross-receipts base before applicable credits.

Citations and references

• Fla. Stat. Sec. 203.01
• Fla. Stat. Sec. 203.012(1), (3)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 22A-020

Original ruling text

QUESTIONS & ANSWERS:
Scenario I
Question 1: Should GRT be calculated on the customer’s net positive consumption before the
credit from the PV Bank balance is applied, or after?
Response: Gross receipt tax should be calculated based on the amount of money received from
Taxpayer’s customers for charges for utility services. This would be the net amount of electricity
billed to the customer after allowing a credit for the excess electricity generated by the customer
and returned to the utility.
Scenario II
Question 1: Should the GRT tax be calculated on each of the three TOU periods independently or
should the three periods be netted together to get total Net Consumption (“Total Net
Consumption”)? For example, the two periods (Peak and Shoulder) with a negative Net
Consumption would have no tax, but the Off-Peak period with positive consumption would be
subject to the tax.
Response: Gross receipts tax should be calculated on the three TOU periods together to get total
net consumption.
Question 2: If the Total Net Consumption should be used for the GRT calculations, would the
credits resulting from negative Total Net Consumption offset the fixed Customer and Demand
Charges, when calculating GRT?
Response: Gross receipt tax should be calculated based on the amount of money received from
Taxpayer’s customers for charges for utility services; therefore, the credits resulting from
negative total net consumption would offset the fixed customer and demand charges.
Scenario III
Question 1: Should the GRT be calculated on each of the three components and if so, is it
permissible to itemize the GRT for each of the three components on an individual customer’s
bill?
Response: The fixed customer charge, the block charge, and additional consumption of above
their solar allotment are subject to Florida gross receipts tax for utility services. The gross receipts
tax is imposed on the total amount of gross receipts received by the utility provider for electrical
power or energy; therefore, the three components total in one utility bill is subject to the gross

Technical Assistance Advisement
October 4, 2022
Page 2

receipts tax. It would be permissible to itemize the GRT for each of the three components on an
individual customer’s bill.
Scenario IV
Question 1: Would the credit be netted against the customer charge (or the solar block charges
in the previous scenario) when calculating the GRT?
Response: Gross receipt tax should be calculated based on the amount of money received from
Taxpayer’s customers for charges for utility services; therefore, the credit would be netted
against the customer charge or the solar block charge when calculating the gross receipts tax.

October 4, 2022

XXXX
XXXX
XXXX
XXXX
XXXX
Re:

Technical Assistance Advisement – TAA #: 22A-020
XXXX (“Taxpayer”)
Gross Receipts Tax – Net Metering
Sections 203.01, 203.012, Florida Statutes (“F.S.”)
BP #: XXXX

Dear Mr. XXXX,
This is in response to your letter dated July 25, 2022, requesting this Department’s issuance of a
TAA pursuant to Section 213.22, F.S., and Chapter 12-11, Florida Administrative Code, regarding
Gross Receipts Tax. Your request has been carefully examined, and the Department finds it to be
in compliance with the requisite criteria set forth in Chapter 12-11, F.A.C. This response to your
request constitutes a TAA and is issued to you under the authority of s. 213.22, F.S.
Stated Facts
Taxpayer is a municipal utility that provides electric and water services to more than 300,000
customers within the City of Orlando, the City of St. Cloud, and unincorporated parts of Orange
and Osceola counties in Florida.

Technical Assistance Advisement
October 4, 2022
Page 3

Taxpayer owns and operates seven electric generating units consisting of coal and natural gasfired power plants. Taxpayer also owns a minority interest in nuclear power plants owned and
operated by XXXX. In addition, Taxpayer continues to grow its renewable energy portfolio
through community solar farms and solar-related power purchase agreements. From the
combination of the aforesaid sources, Taxpayer has an electric generation capacity of
approximately 1,900 mW for retail and wholesale sales.
In November 2017, Taxpayer launched residential and commercial customer-sited renewable
energy initiatives through its net metering, solar thermal, and solar aggregation programs. Net
metering is a method of metering the energy consumed and produced at a home or business that
has its own renewable energy generator (ostensibly photovoltaic (“PV”) solar panels). Under net
metering, excess electricity produced at a home or business is used to offset the electricity
received from Taxpayer. To date, Taxpayer has over 2600 customers participating in its net
metering program with over 27,000 kW of generation capacity installed through customer-sited
residential and commercial photovoltaic systems.
For customers interested in renewable energy, but unable to have their own PV solar panels,
Taxpayer offers those customers the option to purchase solar blocks, which entitle them to a set
amount of Taxpayer produced solar energy each month. The price of the solar blocks are billed
each month (as if the customer “owned” the solar production), regardless of the amount of
energy they consume. Customers are also billed a fixed customer charge and for any additional
consumption above their solar block allotment. If the customer consumes less than their solar
block allotment, they receive a credit that is applied to their balance due.
Requested Advisements
Taxpayer is requesting guidance on the application of the Gross Receipts Tax in the following
scenarios with respect to net metering:
Solar PV Net Metering
Excess customer energy produced by its customers is sold back to Taxpayer, and Taxpayer offsets
consumption by the customer, resulting in net consumption (“Net Consumption”). The customer
is billed for their Net Consumption, as well as, a fixed customer charge (“Customer Charge”). The
Gross Receipts Tax (GRT) is calculated on the Customer Charge and Net Consumption. When the
customer’s energy production exceeds their consumption (essentially negative Net
Consumption), they receive a credit on their monthly bill which is added to their “PV Bank” and
applied to their balance due in future months. Customers are then billed only for the Customer
Charge, and the GRT is calculated only on this charge.
Scenario I

Technical Assistance Advisement
October 4, 2022
Page 4

During previous months, the customer produced and sold to Taxpayer more energy than they
consumed, resulting in a credit balance in the “PV Bank.” For the current month, the customer
consumed more energy from Taxpayer than they produced and sold, and their PV Bank balance
was applied to offset the billed amount.
Question
1.

Should GRT be calculated on the customer’s net positive consumption before the
credit from the PV Bank balance is applied, or after?

Solar PV Net Metering – Commercial Time of Use (TOU) rate
Taxpayer recently implemented a Time of Use (TOU) or Time of Day (TOD) rate where customers
are billed different rates, depending on their consumption at different periods during the day.
The TOU or TOD rate will also be applied to the generation supplied by customer-owned
renewable generation sold back to Taxpayer. There are three different TOU periods: Peak,
Shoulder, and Off Peak. Excess customer production is sold back to Taxpayer, and offsets any
consumption by the customer, resulting in net consumption (“Net Consumption”). Net
Consumption is computed for each of the three TOU periods. The customer is billed for their Net
Consumption for all three periods, as well as, a fixed Customer Charge and Demand Charge. The
GRT is calculated on the Customer and Demand Charges, and their Net Consumption. When the
customer has excess production (essentially negative Net Consumption) for any of the three TOU
periods, they receive a credit, which is applied to their balance due in future months.
Scenario II
During the current month, the customer has negative Net Consumption during both Peak and
Shoulder periods, resulting in a credit. However, they have positive Net Consumption during the
Off-Peak period resulting in a billed amount for that period, as well as billed amounts for the fixed
Customer and Demand charges.
Question(s)
1.

Should the GRT tax be calculated on each of the three TOU periods independently or
should the three periods be netted together to get total Net Consumption (“Total Net
Consumption”)? For example, the two periods (Peak and Shoulder) with a negative
Net Consumption would have no tax, but the Off-Peak period with positive
consumption would be subject to the tax (See example below).

2.

If the Total Net Consumption should be used for the GRT calculations, would the
credits resulting from negative Total Net Consumption offset the fixed Customer and
Demand Charges, when calculating GRT?

Technical Assistance Advisement
October 4, 2022
Page 5

In the example below, Total Net Consumption would be negative 5,800 kWh and a credit of
$386.64. With a fixed customer Service Charge of $35.00 and Demand Charge of $437.36, the
total billed amount before tax considerations is $85.72 ($35.00 Service Charge plus Demand
Charge $437.36 minus $386.64 Credit).

Solar Block Purchases
Taxpayer calculates and remits GRT based on its financial statement revenue from solar block
purchases and not from billed revenue; so, the GRT with respect to the solar block purchases
does not flow through to an individual customer’s bill. Only the GRT with respect to the Customer
Charge and consumption above the customer’s respective solar block allotment is itemized on a
customer’s individual bill. Taxpayer proposes to separately itemize the gross receipts tax on the
individual customer’s bill for solar block purchases, in addition to the fixed Customer Charge and
consumption above the customer’s solar block allotment.
Scenario III
In the current month, a customer has a fixed customer charge, purchases XX solar blocks, and
uses an additional 100 kWh above their solar allotment.
Question

Technical Assistance Advisement
October 4, 2022
Page 6

1.

Should the GRT be calculated on each of the three components and if so, is it
permissible to itemize the GRT for each of the three components on an individual
customer’s bill?

Scenario IV
In the current month, a customer has a fixed customer charge, purchases XX solar blocks, and
uses 100 kWh less than their solar allotment, resulting in a credit that reduces their amount due.
Question
1.

Would the credit be netted against the customer charge (or the solar block charges in
the previous scenario) when calculating the GRT?
Law and Discussion

Gross Receipts Tax
Section 203.01, F.S., imposes the gross receipts tax on the total amount of gross receipts received
by a distribution company1 for utility services2. The rate applied to utility services is 2.5 percent.
Taxpayer is a distribution company; it would be required to pay gross receipts tax on its total
receipts from charges for utility service sold to a retail consumer. If the customer pays $100 on
the net electricity that the consumer purchased, the distribution company is taxed on the $100
received.
Taxpayer should remit the gross receipts tax based on the actual amount received from its
customers for utility services. This would be the net amount of electricity billed to the customer
after allowing a credit for the excess electricity generated by the customer and returned to the
utility.
Conclusion
Solar PV Net Metering
1

“Distribution company” means any person owning or operating local electric or natural or manufactured gas utility
distribution facilities within this state for the transmission, delivery, and sale of electricity or natural or manufactured
gas. The term does not include natural gas transmission companies that are subject to the jurisdiction of the Federal
Energy Regulatory Commission. See s. 203.012(1), F.S.
2
“Utility service” means electricity for light, heat, or power; and natural or manufactured gas for light, heat, or
power, including transportation, delivery, transmission, and distribution of the electricity or natural or manufactured
gas. This subsection does not broaden the definition of utility service to include separately stated charges for tangible
personal property or services which are not charges for the electricity or natural or manufactured gas or the
transportation, delivery, transmission, or distribution of electricity or natural or manufactured gas. See s. 203.012(3),
F.S.

Technical Assistance Advisement
October 4, 2022
Page 7

Scenario I
During previous months, the customer produced and sold to Taxpayer more energy than they
consumed, resulting in a credit balance in the “PV Bank.” For the current month, the customer
consumed more energy from Taxpayer than they produced and sold, and their PV Bank balance
was applied to offset the billed amount.
Question 1: Should GRT be calculated on the customer’s net positive consumption before
the credit from the PV Bank balance is applied, or after?
Response: Gross receipt tax should be calculated based on the amount of money received
from Taxpayer’s customers for charges for utility services. This would be the net amount
of electricity billed to the customer after allowing a credit for the excess electricity
generated by the customer and returned to the utility.
Solar PV Net Metering – Commercial Time of Use (TOU) rate
Scenario II
During the current month, the customer has negative Net Consumption during both Peak and
Shoulder periods, resulting in a credit. However, they have positive Net Consumption during the
Off-Peak period resulting in a billed amount for that period, as well as billed amounts for the fixed
Customer and Demand charges.
Question 1: Should the GRT tax be calculated on each of the three TOU periods
independently or should the three periods be netted together to get total Net
Consumption (“Total Net Consumption”)? For example, the two periods (Peak and
Shoulder) with a negative Net Consumption would have no tax, but the Off-Peak period
with positive consumption would be subject to the tax.
Response: Gross receipts tax should be calculated on the three TOU periods together to
get total net consumption.
Question 2: If the Total Net Consumption should be used for the GRT calculations, would
the credits resulting from negative Total Net Consumption offset the fixed Customer and
Demand Charges, when calculating GRT?
Response: Gross receipt tax should be calculated based on the amount of money received
from Taxpayer’s customers for charges for utility services; therefore, the credits resulting
from negative total net consumption would offset the fixed customer and demand
charges.

Technical Assistance Advisement
October 4, 2022
Page 8

Solar Block Purchases
Scenario III
In the current month, a customer has a fixed customer charge, purchases XX solar blocks, and
uses an additional 100 kWh above their solar allotment.
Question 1: Should the GRT be calculated on each of the three components and if so, is it
permissible to itemize the GRT for each of the three components on an individual
customer’s bill?
Response: The fixed customer charge, the block charge, and additional consumption of
above their solar allotment are subject to Florida gross receipts tax for utility services. The
gross receipts tax is imposed on the total amount of gross receipts received by the utility
provider for electrical power or energy; therefore, the three components total in one
utility bill is subject to the gross receipts tax. It would be permissible to itemize the GRT
for each of the three components on an individual customer’s bill.
Scenario IV
In the current month, a customer has a fixed customer charge, purchases XX solar blocks, and
uses 100 kWh less than their solar allotment, resulting in a credit that reduces their amount due.
Question 1: Would the credit be netted against the customer charge (or the solar block
charges in the previous scenario) when calculating the GRT?
Response: Gross receipt tax should be calculated based on the amount of money received
from Taxpayer’s customers for charges for utility services; therefore, the credit would be
netted against the customer charge or the solar block charge when calculating the gross
receipts tax.
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is
binding on the Department only under the facts and circumstances described in the request for
this advice, as specified in Section 213.22, F.S. Our response is predicated on those facts and the
specific situation summarized above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the statutes or rules, upon which this
advice is based, may subject similar future transactions to a different treatment than expressed
in this response.
You are further advised that this response, your request and related backup documents are
public records under Chapter 119, F.S., and are subject to disclosure to the public under the
conditions of Section 213.22, F.S. Confidential information must be deleted before public
disclosure. In an effort to protect confidentiality, we request you provide the undersigned with

Technical Assistance Advisement
October 4, 2022
Page 9

an edited copy of your request for Technical Assistance Advisement, the backup material and this
response, deleting names, addresses and any other details which might lead to identification of
the Taxpayer. Your response should be received by the Department within ten (10) days of the
date of this letter.
If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at (850)717-6839.
Best Regards,

Xiaoxi Miao
Xiaoxi Miao
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850)717-6839
XM\tadrstaff
Record ID: 766260