Wake Forest, NC— Changes to the state tax law enacted by the General Assembly and Governor Pat McCrory to take effect in July will affect taxes paid by families, individuals and businesses, which includes Wake Electric as well.
Franchise Tax
Currently, Wake Electric pays the state a “franchise tax” of 3.22 percent on electricity sales. Because the franchise tax is a cost of doing business, it is incorporated into your electric bill each month even though there is not a specific line item for it displaying on the bill. What does appear on your power bill as a line item is the 3 percent state sales tax.
The new legislation eliminates the franchise tax on electric utilities, including co-ops, and increases the sales tax on electricity to 7 percent, effective July 1, 2014. By eliminating the franchise tax expense, Wake Electric members will see a decrease in kWh cost across-the-board for all electric rates with bills starting in July.
Facilities Charge Changes
A standard residential account holder will experience an increase in the facilities charge from $10 to $12 effective with July billing. Yet, the overall cost of service will largely remain unchanged with the decrease in kWh noted above for a typical member using 1,400 kWh. Likewise, a single-phase small general service account will also experience an increase in facility charge from $15 to $17. With this increase in facility charge coupled with a reduction in kWh, most accounts will experience no change in the amount paid to Wake Electric as a result of the tax law changes being implemented.
The facility charge is designed to recover the Cooperative’s member related costs that vary with the connecting and providing of service. These expenses include the operation and maintenance of the electric distribution system, meter reading and billing and customer service activities.
State Tax Holiday
The new tax legislation also eliminated the “state tax holiday” on buying efficient Energy Star-labeled appliances, effective in 2014. For specific information on the state tax law and its impact on you or your business, consult a tax professional.
Please contact us at 919.863.6300 or 800.474.6300 should you have questions related to these rate modifications.