When most of us think about trimming energy costs, we picture switching bulbs or sealing drafts. But for many factories, sawmills, and food processors across the Pineywoods, a far bigger opportunity is hiding in plain sight: the sales tax baked into every electric or natural-gas bill. Under Texas law, if more than half of the power that flows through a single meter is used directly for manufacturing, that entire bill can be sales-tax free—and you can even reclaim taxes you’ve already paid. The key is a predominant-use utility study.
What’s a Predominant-Use Study, Anyway?
Think of it as a forensic audit of where every kilowatt-hour (or cubic foot of gas) goes:
- Inventory every load tied to the meter—from 200-horsepower chippers to high-bay LED lights.
- Classify each load as exempt (directly touches the product) or taxable (office AC, break-room fridge).
- Run the math over 12 consecutive months to see whether exempt use tops 50 percent.
- Certify the report—usually with a Texas-licensed Professional Engineer—and file a simple exemption form with the utility.
If your exempt slice wins the 50-percent race, the entire meter flips to tax-free status until your load mix changes.
East Texas Loads That Usually Qualify
| Likely Exempt | Local Examples |
| Direct production equipment | Sawmill debarkers, poultry-processing lines, plastic-molding presses |
| Process environmental control | Kilns curing lumber, chillers keeping sausage rooms below spec |
| Production-area lighting & HVAC | LED fixtures over the shop floor, makeup-air units that run only when the line runs |
| Pollution-control gear | Bag-house fans, wastewater treatment pumps tied to production |
Loads That Usually Stay Taxable
- Office lighting and HVAC
- Employee amenities (break-room microwaves, vending machines)
- Finished-goods warehousing and shipping docks
- Outdoor security and parking-lot lights
Local tip: Many plants lose their exemption because office circuits share the same meter. Asking the utility for a second meter—or sub-metering the front office—often tips the scales back in your favor.
Why Bother Now?
Power prices have whipsawed since Winter Storm Uri, and every penny counts. For a mid-size plant burning $40,000 a month in electricity, knocking off 6–8.25 percent sales tax can free up $30,000–$40,000 a year—money that can hire workers, buy safer equipment, or fund community projects. Even better, the Comptroller allows qualified businesses to look back up to four years for a refund on tax already paid.
Getting Started
- Pull the last 12 months of power and gas bills.
- Walk your facility with an engineer or energy consultant to document equipment and run hours.
- Ask whether re-metering offices or warehouses would boost your exempt percentage.
- File the study and exemption form; then follow up with your accountant about refund claims.
For many East Texas manufacturers, this is the lowest-hanging fruit on the energy-savings tree—no new equipment, no production downtime, just smart paperwork.
This article is part of a regular weekly column provided by Amerigy Energy, your East Texas partner for competitive electricity plans and practical energy advice.
