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 March 31, 2018 and December 31, 2017 relate primarily to utility plant. At March 31, 2018 and December 31, 2017 the New Hampshire BPT effective tax rate was 3.8 percent for both periods and was applied to PNGTS’ taxable income.

	Three months ended
(unaudited)	March 31,
(millions of dollars)	2018	2017(a)

State income taxes
Current	1	1
Deferred	—	—

	1	1

(a)

Recast to consolidate PNGTS (Refer to Note 2).