Repeals the gross earnings tax on electric and gas companies.
Senate Bill 0895 amends Rhode Island’s Public Service Corporation Tax law to suspend, rather than permanently repeal, the gross earnings tax imposed on electric and gas companies. Under current law, electric utilities are taxed at 4% of gross earnings and gas utilities at 3% of gross earnings. The bill provides that the tax rate for subsection (2), which covers companies manufacturing, selling, distributing, or transmitting electricity, will be suspended beginning January 1, 2026, and remain suspended until January 1, 2035. The bill does not change the tax rates for other public service corporations, such as telecommunications, cable, rail, ferry, water, toll bridge, or gas appliance-related businesses.
The practical effect is to remove the gross earnings tax burden from electric companies for the suspension period and, by extension, reduce tax obligations for affected utility providers operating in Rhode Island. Because the bill targets only the electric utility tax provision, it would alter state revenue collections from that sector while leaving the broader public service corporation tax structure intact. The act is scheduled to take effect on January 1, 2026.
The overall sentiment reflected in the available materials is limited but appears supportive or at least favorable to utility tax relief, as indicated by the bill’s introduction by a group of senators and the absence of recorded opposition, committee testimony, or votes in the provided record. The bill caption also frames the measure as a repeal of the gross earnings tax on electric and gas companies, though the statutory text itself uses a temporary suspension for electric companies and does not eliminate the gas company tax provision in the same way.
The main point of contention, based on the text itself, is the scope and duration of the tax change. The bill title and caption suggest a broader repeal affecting both electric and gas companies, while the operative language only suspends the electric utility tax rate and leaves the gas utility rate unchanged. That discrepancy could matter to utilities, taxpayers, and fiscal policymakers because it affects both the revenue impact and which industries receive relief. Another likely issue is the long suspension period through 2035, which effectively functions as a multi-year tax holiday and may raise concerns about state revenue loss and fairness among regulated utilities.
This bill would amend Rhode Island General Laws chapter 44-13, section 44-13-4, by suspending the 4% gross earnings tax on electric utilities beginning January 1, 2026, through January 1, 2035. It would not change the tax rates for other categories of public service corporations, including telecommunications, cable, rail, ferry, water, or gas-related merchandising. The measure would therefore reduce or eliminate state tax liability for affected electric companies during the suspension period and reduce related state tax revenue, while leaving the rest of the public service corporation tax framework in place.
The available record suggests a generally favorable or pro-relief sentiment toward the bill, with no recorded committee testimony, floor debate, or votes indicating organized opposition. The bill was introduced by multiple senators, which suggests some level of legislative support or interest in utility tax relief. At the same time, the absence of recorded discussion means the public or legislative sentiment cannot be measured precisely from the provided materials.
The most notable contention is the mismatch between the bill’s caption and its operative language: the caption says it repeals the gross earnings tax on electric and gas companies, but the text only suspends the tax on electric companies and does not repeal the gas tax provision. That could create confusion about the bill’s actual scope. A second likely point of contention is fiscal policy, since suspending the tax for nearly nine years would reduce state revenue from electric utilities and may prompt debate over whether the relief is justified, how it affects ratepayers, and whether it gives preferential treatment to one utility sector over others.