Could a multi-location restaurant operator use one electricity-exemption study for multiple locations instead of preparing a separate study for each?

Plain-English summary

The Texas Comptroller said each restaurant location in a multi-location operation had to qualify for the electricity exemption on its own. A study prepared for one location could be applied to others only when the claimant could substantiate that all locations covered by the study were the same—not merely similar—in the respects affecting electricity use.

Separate studies were required when building size or structure, equipment, hours of operation, heating and cooling hours, or other differences affected electricity use.

The requester had argued that representative sampling should be enough for restaurants with the same basic equipment and procedures even if minor energy-use differences meant they were not literally identical. The April response retained the stricter “same (not similar)” standard rather than adopting that broader proposal.

What this means for you

A chain could not assume that one representative utility study covered all locations. The taxpayer bore the burden of substantiating sameness, and operational or physical differences that affected electricity consumption triggered separate-study requirements.

Common questions

Was a separate study always required for every restaurant? No. One study could cover multiple locations proven to be the same in electricity-relevant respects.

Was general similarity enough? No. The April letter expressly says “the same (not similar).”

What differences required separate studies? Differences such as building size or structure, equipment, operating hours, and heating or cooling hours when they affected electricity use.

Who had to prove the locations qualified for one study? The person claiming the exemption.

Did the agency accept the requester's proposed representative-sampling approach for merely similar locations? The record does not show acceptance; the final April response repeats the same-not-similar requirement.

Citations and references

• No statute or administrative rule is cited in the correspondence.
• The April 16 letter is the controlling final response within this combined record and says each location must qualify on its own.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8704L0813F12

Original ruling text

April 16, 1987

Dear **:

Thank you for your letter of March 19, 1987, requesting clarification of our
previous correspondence about electricity usage studies for a multiple
restaurant operator.

My response to your question about identical locations was that separate
studies would not be required; however, the person claiming exemption would
have to substantiate that all locations covered by a single study are in fact
identical.

Each location in a multiple restaurant operation must qualify for exemption on
its own. A study prepared for a specific location and applied to other
locations would be accepted so long as you can substantiate that all locations
covered by the one study are the same (not similar). A separate study is
required for each location where there are differences, i.e. , building size or
structure, equipment, hours of operation, etc. that would affect the
electricity uses. Also, separate studies are required for locations where
heating and cooling hours differ.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,

(Mrs.) Jo Ann Dieck
Tax Policy Section
Tax Administration Division

March 19, 1987

Ms. Jo Ann Dieck
Comptroller of Public Accounts
Tax Administration Division
P. O. Box 13528
Austin, TX 78711

Dear Ms. Dieck:

I am in receipt of your letter of March 6, 1987 which is responding to my
letter of January 30, 1987 in which I asked for clarification of studies for a
multiple restaurant operator and the need for studies for each location when
they are the same. What I meant to refer to as "the same" was that they were
basically equipped the same electrically and had the same hours of operation
and general operation procedures regarding electrical use. There may be some
differences with regard to minor areas but with little or no effect on electric
usage. This could be true for a fast food restaurant as well as a sit down
restaurant or cafeteria.

The concept is that since they have representative usage throughout the company
and have the same basic equipment and procedures of operation, then with the
kilowatt hours being the factor of annual usage all you would need to do is
complete a good sample of the total locations by region and by actual KWHRS
annually used to prove the exemption. The variations would be created by
circumstance such as sales, additional usage for air conditioning, ice machine
and refrigeration due to temperature differences and finally any basic
differences seen in physical review.

I understand from your letter what the policy is, however you use the word
"identical" and it is hard to say that we make the contention that these units
are identical since there are many areas of minor energy usage which could be
different. This could include extra lighting in certain areas and other
differences which will not affect the outcome of the exemption study.
Therefore, I cannot state that they are "identical" as, to me, this would mean
that they are exactly the same in all respects. However, they are the same in
respect to electrical usage which is the most important aspect with regard
exemption studies such as these.

Therefore, would you please clarify this point and confirm this policy without
using the term identical so that I may be assured that the policy used in the
past as well as currently, that we have discussed many times, will be the
policy for me to continue preparing my schedules of exempt usage in the future.
Please bear in mind that this occurs with few companies compared to the total
restaurants in the State and must be proven before using this sample approach.
As you will see from a group of studies that I have recently submitted in a
restaurant chain, it is quite obvious that the similarities are line by line
with very few exceptions.

If there are any questions, please do not hesitate to contact me. I look
forward to receiving a confirmation of your policy as soon as possible so I may
continue to prepare sample studies for those operations that would qualify for
this procedure. This will make your job as well as my job much easier in the
future as it has in the past.

Very truly yours,

March 6, 1987

Dear **:

Thank you for your letter regarding electricity studies for an operator of
multiple restaurants in Texas. The situation and questions in your letter are
restated below with response:

There are many companies who have fast food restaurant locations with
buildings, equipment and operations which are the same. It is generally
unnecessary to do a study for each location if it can be shown they are
identical. In that case, what does the State ask for in the studies to show
exempt usage for the company without doing all the units? What other
information is it necessary for a company to have in order to prove their
exemption with as few problems as possible for all concerned? I am aware of the
necessity for different geographic regions such as Houston and Dallas needing
their own review.

A separate study for each location that is identical would not be required.

The person claiming the exemption is responsible for substantiating that all
locations covered by a single study are in fact identical.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

(Mrs.) Jo Ann Dieck
Tax Policy Section
Tax Administration Division