Many states offer utility sales tax incentives to encourage companies to operate facilities in their state. The qualifications for these incentives vary from state to state. However, most states require that the majority of consumption for each utility (e.g. electricity, natural gas, water, propane) be used directly for a qualifying activity (e.g. manufacturing, agriculture, long-term housing). This is referred to as “predominant use”.

To prove predominant use, a predominant use study must be performed. A predominant use study is similar to a traditional energy audit. However, the end result of a predominant use study is the facility’s overall percentage of exempt utility usage. This percentage is then used to determine what level of exemption the facility qualifies for.