NOTE 18 INCOME TAXES

The Partnership’s income taxes relate to business profits tax (BPT) levied at the partnership (PNGTS) level by the state of New Hampshire. As a result of the BPT, PNGTS recognizes deferred taxes related to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases. The deferred taxes at June 30, 2017 and December 31, 2016 relate primarily to utility plant. At June 30, 2017 and December 31, 2016 the New Hampshire BPT effective tax rate was 3.8 percent for both periods and was applied to PNGTS’ taxable income.

	Three months ended		Six months ended
(unaudited)	June 30,		June 30,
(millions of dollars)	2017	2016(a)	2017	2016(a)

State income taxes
Current	—	—	1	8
Deferred	—	—	—	(7	)

	—	—	1	1

(a)

Recast to consolidate PNGTS for all periods presented (Refer to Note 2).