When a county public utility agency buys discounted hydroelectric 'preference power' from the state power authority and arranges for Con Edison to distribute and bill for it as the agency's operator, who owes sales tax, utility gross-earnings/receipts tax, and local utility tax on each piece of the arrangement?

Plain-English summary

The County of Westchester established a Public Utility Service Agency ("Utility") to buy discounted hydroelectric "preference power" from the New York Power Authority and arrange for its distribution to Utility's own customers. Because Utility has no distribution network of its own, it entered into a Lease and Operating Agreement with Consolidated Edison ("Con Edison"): Con Edison leases Utility an undivided interest in Con Edison's distribution system (to the extent needed to deliver the preference power), and acts as Utility's "operator" -- handling all billing and collection from Utility's customers. Con Edison keeps exclusive control over its entire system (design, construction, maintenance, etc.) and indemnifies Utility for anything arising from that control. Con Edison charges Utility "rental" calculated to match what Con Edison would have billed at its own tariff rates (minus Con Edison's own fuel/power costs) -- effectively Con Edison's fee for the service. Separately, Con Edison collects money from Utility's customers, remits the "funds collected for preference power" (customer billings adjusted for uncollectibles, after deducting the rental and other Con Edison costs) back to Utility, and bills Utility for any shortfall. Utility asked the Department to sort out four different taxes across this arrangement: sales/use tax, the utility franchise tax (section 186), the utility gross receipts tax (section 186-a), and local City/Village utility taxes.

On sales tax, Utility itself -- as a government agency/instrumentality -- is exempt from sales tax on anything it purchases for its own use (using a governmental purchase order), and the sale of preference power TO Utility by the Power Authority is exempt if Utility furnishes a Resale Certificate. The lease of Con Edison's distribution system to Utility is treated, for sales tax purposes, as Utility purchasing an exempt SERVICE (not a taxable lease), and Con Edison's billing/collection services aren't separately taxed either. But when Utility resells the preference power to its own retail customers, THAT sale is taxable (governments selling utility-type services ordinarily sold by private parties must collect sales tax just like a private utility would) -- and both Con Edison (as Utility's billing agent) and Utility share responsibility for properly collecting that tax and obtaining exemption certificates from exempt customers.

On the franchise taxes, Utility itself owes nothing under section 186 (it's a municipality, not a taxable corporation) or section 186-a (which specifically excludes municipalities from its definition of taxable "person"). But Con Edison's OWN rental/service fee from Utility is Con Edison's taxable gross earnings under section 186 and gross income under section 186-a (with the temporary MTA surcharges under §§ 186-b/186-c applying proportionally if Con Edison operates inside the Metropolitan Commuter Transportation District). Critically, the Department determined that despite being labeled a "rental," the distribution-system arrangement is actually a SERVICE for tax purposes -- because Con Edison, not Utility, retains exclusive possession and control of the system -- which matters for how the pass-through customer funds are characterized: the money Con Edison collects from customers specifically as "funds collected for preference power" and passes through to Utility is NOT Con Edison's own receipt (Con Edison is acting purely as Utility's agent for that portion), but any amount Con Edison collects and does NOT pass through (i.e., keeps as extra profit beyond its cost recovery) becomes Con Edison's own taxable receipt. Finally, the Department declined entirely to address the separate City/Village utility taxes, since it doesn't administer those statutes.

What this means for you

Municipalities and public power agencies arranging third-party distribution of purchased power

Your own agency's purchase and resale-for-distribution arrangement can remain largely tax-exempt at your level, but your RETAIL sale of power to end customers is still taxable sales tax just like a private utility's sale would be -- and you and your distribution partner (acting as your billing agent) share the collection obligation.

Utilities acting as billing/distribution "operators" for a government power agency

Your own fee for providing the distribution service and handling billing is your own taxable receipt under both section 186 and section 186-a -- but pure pass-through customer payments you collect on the government agency's behalf and remit in full are NOT your receipts, as long as you're genuinely acting as agent and not retaining the funds.

Determining whether an arrangement is a "rental" or a "service" for utility tax purposes

Labeling an arrangement a "lease" or "rental" doesn't control -- what matters is who has actual POSSESSION AND CONTROL of the property. If the utility retains exclusive control over its own distribution system (as Con Edison did here), the arrangement is treated as a service, not a rental, which affects how associated receipts are characterized.

Common questions

Q: Does the county utility agency owe any franchise tax on this arrangement?
A: No -- it's a municipality, not a taxable corporation under section 186, and section 186-a specifically excludes municipalities from its definition of a taxable "person."

Q: Is Con Edison's rental fee from Utility taxable to Con Edison?
A: Yes -- it's Con Edison's own receipt for services performed (using its distribution system and handling billing/collection), fully includible in Con Edison's gross earnings/income under both section 186 and section 186-a.

Q: What happens to money Con Edison collects from customers for the power itself?
A: The portion Con Edison passes through to Utility as "funds collected for preference power" isn't Con Edison's own receipt; but any amount collected and NOT passed through becomes Con Edison's taxable receipt.

Q: Can this ruling be used to determine the local City/Village utility tax treatment?
A: No -- the Department expressly declined to address General City Law § 20-b or Village Law § 5-530, since it doesn't administer those taxes.

Q: Can another county or municipal power agency rely on this specific ruling?
A: No. It binds the Department only for this petitioner's specific facts and can't be relied upon by other municipalities, even ones with similar preference-power distribution arrangements.

Citations and references

Statutes and regulations:

• Tax Law § 1105, § 1110, § 1116(a) (sales/use tax and governmental exemption)
• Sales and Use Tax Regulations § 529.2, § 527.2(e), § 527.7(d)(3)
• Tax Law § 1101(b)(8)(ii) (agent-as-vendor)
• Tax Law § 186, § 186-a, § 186-b, § 186-c (utility franchise/receipts taxes and MTA surcharges)
• General City Law § 20-b; Village Law § 5-530 (outside Department's jurisdiction)
• 1946 Op. Atty. Gen. 326; New York City Energy Office, TSB-A-85(23)C, (49)S

Related rulings:

• TSB-A-87(1)C/(4)S -- the twin companion ruling, same transaction, filed by Con Edison itself the same day
• TSB-A-86(22)C/(49)S -- the direct precedent, applying the same doctrine to a nearly identical Con Edison/New York City preference-power arrangement about 13 months earlier
• TSB-A-85(23)C, (49)S -- the original 1985 contract-carriage precedent underlying this whole doctrine chain

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/corporation_ao_1987.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/multitax/a87_2c_5s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. Z860520C

On May 20, 1986, a Petition for Advisory Opinion was received from County of Westchester
Public Utility Service Agency, Michaelian County Office Building, 148 Martine Avenue, White
Plains, New York 10601.
The Petition raises four issues regarding tax consequences with respect to transactions arising
from a Lease and Operating Agreement between Consolidated Edison Company of New York and
the County of Westchester Public Utility Service Agency whereby the County of Westchester Public
Utility Service Agency arranges for the distribution and sale, through Consolidated Edison Company
of New York facilities, of preference power it purchases from the New York State Power Authority.
These issues involve the (1) Sales and Use Tax; (2) Franchise Tax on Utility Companies; (3) New
York State Tax on the Furnishing of Utility Services; and (4) Local Tax on the Furnishing of Utility
Services.
The County of Westchester has established the County of Westchester Public Utility Service
Agency ("Utility"), which, among other things, is authorized to purchase hydroelectric power and
energy ("preference power") from the Power Authority of the State of New York ("PASNY") and
from other entities, and must make the necessary arrangements for the distribution of such preference
power to Utility's customers. Utility has entered into a lease and operating agreement with
Consolidated Edison Company of New York "(Con Edison") for the distribution of preference power
to Utility's customers located within the service area of Con Edison. Utility will determine who is
to receive the preference power. Con Edison will act as Utility's operator in the sale of such power.
Con Edison will do all billing and collection.
Con Edison will lease to Utility an undivided interest in Con Edison's distribution system,
to the extent required to sell and distribute preference power to Utility's customers. Con Edison has
exclusive control of its entire system, including all matters relating to the design, construction,
expansion, operation, use, maintenance and retirement of the system. Con Edison will indemnify and
hold Utility harmless from and against any and all liability, suits, claims, demands, actions,
judgments, costs and expenses arising from Con Edison's exercise of exclusive control of its system.
Con Edison will make arrangements with other utilities, if available, for transmission of
preference power to Con Edison's system, and where feasible, Utility will contract with and pay such
other utilities directly for such transmission.
The rental is calculated on the basis of kilowatt-hours of preference power sold by, and
distributed on behalf of Utility during each billing period. The amount of the rental is equal to the
charges which would have been billed at Con Edison's applicable tariffs, including the fuel
adjustment clause less Con Edison's fuel and purchased power costs reflected in such tariffs.
RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

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TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

Utility's rates are fixed to provide revenue in an amount not less than necessary to recover
the following costs and expenses: the actual cost to Utility for the purchase, transmission,
distribution and delivery including the rental paid by Utility; the actual expenses necessary for
administration of Utility; and any other costs or charges that Utility incurs or has an obligation to pay
under the agreement.
The "funds collected for preference power" is the amount billed at Utility's rates, adjusted
to reflect amounts uncollected. The adjustment is computed as follows:
1.

Subtract the rental from the gross amount billed.

2.

Multiply the remainder by the provision for uncollectible accounts approved by the
PSC in the most recent rate case.

Con Edison will forward to Utility all "funds collected for preference power" after deducting
the rental amount, any transmission cost incurred by Con Edison, and any additional costs actually
incurred by Con Edison. In the event the funds collected for preference power are less than the
deductions, Con Edison will bill Utility for the deficiency.
ISSUE I - Sales and Use Tax
Questions Presented
(a) Is the County of Westchester Public Utility Service Agency, which is an
agency, instrumentality or political subdivision of New York State as defined in
section 1116 of the Tax Law, exempt from the imposition of sales and use taxes as
imposed by sections 1105 and 1110 of the Tax Law?
Article 28 of the New York State Sales and Use Tax Law provides in section 1116(a) that
any sale by or to the following and any use by any of the following shall not be subject to the sales
and compensating use taxes imposed under such Article:
"(1) The state of New York, or any of its agencies, instrumentalities, public corporations.
. . or political subdivisions where it is the purchaser, user or consumer, or where it is the vendor of
services or of property of a kind not ordinarily sold by private persons".
Regulation 529.2, subdivision (a), offers the following definitions:
(1) Agencies and instrumentalities of the State as used in this section means any authority,
commission or independent board created by an act of the Legislature for a public purpose.

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TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

(2) A public corporation as used in this section means any corporation created by an act of
the Legislature for a public purpose or pursuant to an agreement or compact with another
state or Canada.
Subdivision (b)(2) provides that "governmental entities [as defined above] as purchasers,
users, consumers, occupants or patrons must exercise their right to exemption through the issuance
of governmental purchase orders or the appropriate exemption document".
Accordingly, upon issuing a governmental purchase order to its vendors, Utility is not
required to pay sales or use tax on property or services purchased for its own use or consumption.
(b) Is the sale of preference power by PASNY to Utility exempt from sales
taxes?
Section 1105(b) of the Tax Law imposes tax on the receipts from every sale, other than sales
for resale, of electricity and electric service of whatever nature.
Regulation 527.2(e) provides that the purchaser of utility services intended for resale must
furnish its supplier with a Resale Certificate (Form ST-120).
Consequently, the sale of preference power by PASNY to Utility is exempt from tax if Utility
furnishes a Resale Certificate to PASNY when purchasing preference power which will be resold.
(c) Are charges to Utility for the rental of Con Edison's distribution system,
and for Con Edison's services of billing and collecting monies, taxable?
Although the utilization of Con Edison's transmission system in the distribution of preference
power is viewed as a lease transaction by the Petitioner, for sales tax purposes it is considered the
purchase of a service by a governmental entity which is exempt from taxation under Tax Law
1116(a)(1), supra. Furthermore, Con Edison's charges for billing and collecting monies from Utility's
customers are exempt because the Tax Law imposes no sales tax on such services.
(d) Is the sale of preference power by Utility to the ultimate consumer
subject to sales taxes?
Section 529.2(c) of the Sales and Use Tax Regulations relating to governmental entities as
vendors, states in part that "(2) [s]ales by New York State governmental entities of tangible personal
property or services of a kind which are ordinarily sold by private persons . . . are subject to the sales
and use tax. . . .
Example 6: A municipality sells electricity to its residents. The sale is taxable."

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TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

Regulation 527.7(d)(3) provides that "[m]unicipalities which provide services subject to tax
are required to register as a vendor with the [sales tax] bureau and collect the appropriate tax which
shall be remitted with a timely filed return".
In the Lease and Operating Agreement, Con Edison agrees to perform, as Utility's operator,
the services of selling, billing, and collecting monies arising from the distribution and sale of
preference power. In this regard it must be noted that the Tax Law, in defining the term "vendor",
adds the following provisions:

when in the opinion of the tax commission it is necessary for the
efficient administration of this article to treat any salesman,
representative, peddler or canvasser as the agent of the vendor,
distributor, supervisor or employer under whom he operates or from
whom he obtains tangible personal property sold by him or for whom
he solicits business, the tax commission may, in its discretion, treat
such agent as the vendor jointly responsible with his principal,
distributor, supervisor or employer for the collection and payment
over of the tax. (Tax Law, 1101(b)(8)(ii)).
Consequently, Con Edison and Utility must share the obligation for the proper collection of the
tax including obtaining the proper certification from customers claiming exemption from tax. Exempt
retail purchases of electricity to be used exclusively for non-residential purposes, must be supported
by one of the following documents:
Resale Certificate, Form ST-120,
Exempt Use Certificate, Form ST-121,
Exempt Organization Certificate, Form 119.1,
Direct Payment Permit, Form AU-297, or
Governmental Purchase Order.
No certificate is required to claim the exemption from statewide sales tax provided under Tax
Law 1105-A for purchases of electric power solely for resi-dential use. This exemption, both from
statewide tax and certification, extends to billings (in a lump sum or based on a single meter)
combining both residential and non-residential power usage, if the non-residential use does not exceed
25 percent. When the portion representing residential usage is less than 75 percent of the total bill, the
purchaser must file Form TP-385, Certification of Residential Use.
Technical Services Bureau Memorandum TSB-M-78(7)S, Reduction in Rate on Certain Energy
Sources and Services, should be reviewed for additional information regarding the sale of utility
services.

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TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

ISSUE II - Franchise Tax on Utility Companies
Questions Presented
(a)

Is the County of Westchester Public Utility Service Agency subject
to the tax imposed under section 186 of the Tax Law?

Section 186 of the Tax Law imposes a franchise tax on "Every corporation, joint-stock
company or association... formed for or principally engaged in the business of supplying...
electricity...."
Since Utility is a municipality, it is not a corporation, joint-stock company or association
formed for or principally engaged in business that would subject it to tax under section 186 of the
Tax Law.
(b)
Are the rentals received by Con Edison from Utility for the use of its
distribution system and for its services in billing and collecting monies as
Utility's operator gross earnings to Con Edison subject to the tax imposed by
section 186 of the Tax Law?
(c)
Do the monies collected by Con Edison from Utility's customers as
Utility's operator for the sale of preference power constitute gross earnings
to Con Edison subject to the tax imposed by section 186 of the Tax Law?
The tax imposed by section 186 of the Tax Law is based, in part, upon gross earnings from
all sources within New York State. Such section defines the term "gross earnings" as all receipts
from the employment of capital without any deduction.
Accordingly, the rental Con Edison receives from Utility for the use of its distribution system
and for its services in billing and collecting monies as Utility's operator are receipts of Con Edison
for services performed and are included in Con Edison's gross earnings. The funds collected for
preference power that are collected by Con Edison, as Utility's operator, from Utility's customers for
the sale of preference power do not constitute gross earnings of Con Edison. However, any amount
that is not included in "funds collected for preference power" that is collected by Con Edison, as
Utility's operator, from Utility's customers for the sale of preference power is a receipt of Con Edison
and is included in Con Edison's gross earnings.
(d)
Are such rentals and preference power sales receipts collected by Con
Edison from Utility's customers as Utility's operator subject to the temporary
metropolitan transportation business tax surcharge imposed under section 186-b of
the Tax Law?

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TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

Section 186-b of the Tax Law provides that the temporary metropolitan transportation
business tax surcharge on utilities is in addition to the tax imposed under section 186 of the Tax Law
and, for the taxable years such tax surcharge is applicable, the rate of the tax surcharge is applied to
the tax imposed under section 186 or to that portion of the tax imposed under section 186 which is
attributable to the taxpayer's business activity carried on within the Metropolitan Commuter
Transportation District ("MCTD"). The portion of the tax attributable to business activity carried
on within the MCTD shall be determined by multiplying the tax imposed under section 186 by the
ratio of the taxpayer's gross earnings from all sources within the MCTD to its gross earnings from
all sources within New York State.
Consequently, for the taxable years the temporary metropolitan transportation business tax
surcharge on utilities under section 186-b of the Tax Law is in effect, if Con Edison has business
activities both within and without the MCTD it must determine its gross earnings from within the
MCTD as well as its gross earnings from within New York State. Con Edison's gross earnings from
within the MCTD include the rental received from Utility for the use of its distribution system and
for its services in billing and collecting monies as Utility's operator, and any amount that is collected
from Utility's customers, as Utility's operator for the sale of preference power, that is not included
in "funds collected for preference power".

ISSUE III - New York State Tax on the Furnishing of Utility Services
Questions Presented
(a)
Is the County of Westchester Public Utility Service Agency subject
to the tax imposed under section 186-a of the Tax Law?
Section 186-a of the Tax Law provides:
. . . [A] tax equal to 3% of its gross income is imposed on every utility doing business in New York
State which is subject to the supervision of the State Department of Public Service. . . .
. . . . A tax equal to 3% of its gross operating income is imposed on every other utility doing business
in New York State. . .
. . . . The word "utility" includes every person subject to the supervision of the State Department of
Public Service,. . . . also every person who sells electricity etc. delivered through mains, pipes or
wires, or furnishes electric etc. by means of mains, pipes or wires, regardless of whether such
activities are the main business of such person or are only incidental thereto. . ..
. . . . The word "person" means persons, corporations, companies, associations, joint-stock
associations, etc. . . . except New York State, municipalities, political and civil subdivisions of the
State or municipality. . .

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TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

Utility is a municipality and as such is not subject to tax imposed under section 186-a of the
Tax Law.
(b)
Is the rental received by Con Edison from Utility for the use of its
distribution system and for its services as Utility's operator in billing and collecting
monies from Utility's customers for the sale of preference power gross income to Con
Edison subject to tax under section 186-a of the Tax Law?
(c)
Do the monies collected by Con Edison from Utility's customers as
Utility's operator for the sale of preference power constitute gross income to Con
Edison subject to tax under section 186-a of the Tax Law?
Section 186-a of the Tax Law provides:
. . . . The words "gross income" mean and include receipts received in or by reason of any sale,
conditional, or otherwise,. . . . made or service rendered for ultimate consumption or use by the
purchaser in this State, . . . .
. . . . Also profit from any transaction (except for sales for resale and rentals) within this State
whatsoever. . . .
Generally, "sales made and services rendered for ultimate consumption or use within this
State" means sales of gas, electricity, steam, water, refrigeration, telephony or telegraph when
delivered through mains, pipes or wires, sale of merchandise which are part of stock in trade, charges
for transportation of passengers and/or goods, toll charges and service charges such as charges for
installation and moving of telephones and for the delivery of messages. Thus, "sales made and
services rendered" has been defined to include sales and services which are the principal business
of the taxpayer and which are made to customers.
In order to be included under the heading "profit from any other transaction whatsoever,
except the profit on sales for resale and rentals," the profits must be from labor not performed in the
conduct of the taxpayer's principal business and from the sales of materials and supplies, other than
such as are purchased for resale. Isolated transactions also come under this item such as when a
water company, which does not make a practice of furnishing this service, lays pipes and mains for
a customer with title vesting in such customer.
In 1946, the Attorney-General of the State of New York rendered an opinion relating to the
definition of "rental" for purposes of section 186-a of the Tax Law. In that opinion, the AttorneyGeneral approved a proposed ruling by the Tax Department that equipment for street lighting and
for the control of such lighting transferred from a utility company to the City of New York, where
the equipment was clearly in the control of the City, constituted a rental. (1946 Op. Atty. Gen. 326)
However, in that opinion, the Attorney-General noted that: "Nothing in the history or language of
the statute indicates that amounts which are actually charges for service may be excluded from gross
income by merely calling them rentals."

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TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

The attribute that distinguishes a rental from a service is that in a rental situation the lessee
has possession and efficient control of the rented equipment or rented real property. Since Con
Edison has exclusive control of its entire distribution system, including all matters relating to the
design, construction, expansion, operation, use, maintenance and retirement of the system, Con
Edison's lease to Utility of an undivided interest in Con Edison's distribution system, to the extent
required to sell and distribute preference power to Utility's customers, is not a rental but rather a
service being performed by Con Edison.
Accordingly, the funds collected for preference power that are collected by Con Edison, as
Utility's operator, from Utility's customers for the sale of preference power do not constitute receipts
of Con Edison. However, any amount that is not included in "funds collected for preference power"
that is collected by Con Edison, as Utility's operator, from Utility's customers for the sale of
preference power is a receipt for services performed by Con Edison.
The services that Con Edison performs for Utility are not services "for ultimate consumption
or use by the purchaser", within the meaning intended, so that the total "receipts" for such services
do not constitute gross income as defined. Such services rendered are incidental to the conduct of
Con Edison's principal business. As such, the services rendered are transactions taxable on the
profits derived therefrom. To the extent that such services are rendered on behalf of New York State
customers, such profits would be subject to tax in their entirety. New York City Energy Office, State
Tax Commission Advisory Opinion, October 16, 1985, TSB-A-85(23)C.
(d)
Is such rental and preference power sales receipts collected by Con
Edison from Utility's customers as Utility's operator subject to the tax surcharge
imposed by section 186-c of the Tax Law?
Section 186-c of the Tax Law provides that the temporary metropolitan transportation
business tax surcharge on utility services is in addition to the tax imposed under section 186-a of the
Tax Law and, for the taxable years such tax surcharge is applicable, the rate of the tax surcharge is
applied to the tax imposed under section 186-a or to that portion of the tax imposed under section
186-a which is attributable to the taxpayer's business activity carried on within the MCTD. The
portion of the tax attributable to business activity carried on within the MCTD shall be determined
by multiplying the tax imposed under section 186-a by the ratio of the taxpayer's gross income from
all sources within the MCTD to its gross income from all sources within New York State.
Consequently, for the taxable years the temporary metropolitan transportation business tax
surcharge on utility services under section 186-c of the Tax Law is in effect, if Con Edison has
business activities both within and without the MCTD it must determine its gross income from
within the MCTD as well as its gross income from within New York State. Con Edison's gross
income from within the MCTD includes the rental received from Utility for the use of its distribution
system and for its services in billing and collecting monies as Utility's operator and any amount that
is collected from Utility's customers, as Utility's operator for the sale of preference power, that is not
included in "funds collected for preference power".

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TSB-A-87 (2) C
Corporation Tax
TSB-A-87 (5) S
Sales Tax
January 12, 1987

ISSUE IV - Local Tax on the Furnishing of Utility Services
Questions Presented
(a) Is the County of Westchester Public Utility Service Agency subject to the
taxes imposed by section 20-b of the General City Law and section 5-530 of the
Village Law?
(b) Is the rental received by Con Edison from Utility for the use of its
distribution system and for its services as Utility's operator in billing and collecting
monies from Utility's customers for the sale of preference power gross income to Con
Edison subject to tax under section 20-b of the General City Law and section 5-530
of the Village Law?
(c) Do the monies collected by Con Edison from Utility's customers as
Utility's operator for the sale of preference power constitute gross income to Con
Edison subject to tax under section 20-b of the General City Law and section 5-530
of the Village Law?
Section 171, Twenty-fourth of the Tax Law provides that the State Tax Commission
shall render advisory opinions only with respect to taxes that are administered by the State
Tax Commission.
Accordingly, the State Tax Commission may not render an advisory opinion with
respect to tax consequences under section 20-b of the General City Law and section 5-530
of the Village Law since the State Tax Commission does not administer such taxes.

DATED: January 12, 1987

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.