INCOME TAXES

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The components of income tax expense are as follows:

Eversource (Millions of Dollars)	For the Years Ended December 31,
	2020		2019		2018
Current Income Taxes:
Federal	$	73.6	$	56.9	$	106.5
State	19.1		10.5		10.6
Total Current	92.7		67.4		117.1
Deferred Income Taxes, Net:
Federal	173.5		138.4		122.6
State	83.7		71.4		52.2
Total Deferred	257.2		209.8		174.8
Investment Tax Credits, Net	(3.7)		(3.7)		(2.9)
Income Tax Expense	$	346.2	$	273.5	$	289.0

	For the Years Ended December 31,
	2020						2019						2018
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Current Income Taxes:
Federal	$	12.0	$	53.9	$	20.6	$	68.4	$	82.6	$	22.9	$	54.2	$	79.3	$	12.2
State	(6.1)		6.9		3.8		15.4		18.2		2.2		20.9		30.0		(0.5)
Total Current	5.9		60.8		24.4		83.8		100.8		25.1		75.1		109.3		11.7
Deferred Income Taxes, Net:
Federal	101.1		33.8		(1.3)		35.2		0.1		5.8		48.5		27.9		15.4
State	43.4		38.8		8.6		18.8		27.0		10.1		6.4		13.5		20.5
Total Deferred	144.5		72.6		7.3		54.0		27.1		15.9		54.9		41.4		35.9
Investment Tax Credits, Net	(0.7)		(2.6)		—		(0.8)		(2.6)		—		(0.9)		(1.8)		—
Income Tax Expense	$	149.7	$	130.8	$	31.7	$	137.0	$	125.3	$	41.0	$	129.1	$	148.9	$	47.6

A reconciliation between income tax expense and the expected tax expense at the statutory rate is as follows:

Eversource (Millions of Dollars, except percentages)	For the Years Ended December 31,
	2020			2019			2018
Income Before Income Tax Expense	$	1,558.9		$	1,190.1		$	1,329.5
Statutory Federal Income Tax Expense at 21%	327.4			249.9			279.2
Tax Effect of Differences:
Depreciation	(11.1)			1.9			(30.8)
Investment Tax Credit Amortization	(3.7)			(3.7)			(2.9)
State Income Taxes, Net of Federal Impact	44.9			24.6			44.4
Dividends on ESOP	(5.1)			(5.1)			(5.1)
Tax Asset Valuation Allowance/Reserve Adjustments	33.4			40.1			5.2
Excess Stock Benefit	(6.6)			(1.5)			(1.5)
EDIT Amortization	(48.7)			(37.4)			(5.0)
Other, Net	15.7			4.7			5.5
Income Tax Expense	$	346.2		$	273.5		$	289.0
Effective Tax Rate	22.2		%	23.0		%	21.7		%

	For the Years Ended December 31,
	2020									2019									2018
(Millions of Dollars, except percentages)	CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH			CL&P			NSTAR Electric			PSNH
Income Before Income Tax Expense	$	607.6		$	575.8		$	179.0		$	547.8		$	557.3		$	175.0		$	506.8		$	532.0		$	163.5
Statutory Federal Income Tax Expense at 21%	127.6			120.9			37.6			115.0			117.0			36.8			106.4			111.7			34.3
Tax Effect of Differences:
Depreciation	0.4			(3.7)			(1.4)			(0.2)			(3.0)			(0.8)			(1.2)			(2.8)			0.1
Investment Tax Credit Amortization	(0.7)			(2.6)			—			(0.8)			(2.6)			—			(0.9)			(1.8)			—
State Income Taxes,   Net of Federal Impact	(1.2)			36.0			9.8			2.5			35.7			9.8			14.5			33.2			15.8
Tax Asset Valuation   Allowance/Reserve Adjustments	30.7			—			—			24.5			—			—			7.1			1.2			—
Excess Stock Benefit	(2.3)			(2.3)			(0.8)			(0.5)			(0.5)			(0.2)			(0.1)			(0.1)			(0.1)
EDIT Amortization	(9.0)			(20.4)			(15.4)			(5.8)			(22.9)			(4.0)			—			—			(4.4)
Other, Net	4.2			2.9			1.9			2.3			1.6			(0.6)			3.3			7.5			1.9
Income Tax Expense	$	149.7		$	130.8		$	31.7		$	137.0		$	125.3		$	41.0		$	129.1		$	148.9		$	47.6
Effective Tax Rate	24.6		%	22.7		%	17.7		%	25.0		%	22.5		%	23.4		%	25.5		%	28.0		%	29.1		%

Eversource, CL&P, NSTAR Electric and PSNH file a consolidated federal income tax return and unitary, combined and separate state income tax returns.  These entities are also parties to a tax allocation agreement under which taxable subsidiaries do not pay any more taxes than they would have otherwise paid had they filed a separate company tax return, and subsidiaries generating tax losses, if any, are paid for their losses when utilized.

Deferred tax assets and liabilities are recognized for the future tax effects of temporary differences between the carrying amounts and the tax basis of assets and liabilities.  The tax effect of temporary differences is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and relevant accounting authoritative literature.  The tax effects of temporary differences that give rise to the net accumulated deferred income tax obligations are as follows:

	As of December 31,
	2020								2019
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Deferred Tax Assets:
Employee Benefits	$	602.4	$	144.5	$	79.8	$	56.6	$	509.4	$	125.4	$	54.8	$	46.7
Derivative Liabilities	92.6		91.8		—		—		105.0		103.6		—		—
Regulatory Deferrals - Liabilities	259.8		30.2		161.8		13.4		267.0		37.1		165.7		19.0
Allowance for Uncollectible Accounts	87.5		42.3		20.9		4.6		56.7		25.7		17.7		2.8
Tax Effect - Tax Regulatory Liabilities	810.9		331.4		271.8		105.2		830.4		333.5		280.9		111.3
Net Operating Loss Carryforwards	12.7		—		—		—		9.1		—		—		—
Purchase Accounting Adjustment	54.5		—		—		—		58.7		—		—		—
Other	200.3		100.9		14.3		19.8		190.4		92.0		35.8		20.0
Total Deferred Tax Assets	2,120.7		741.1		548.6		199.6		2,026.7		717.3		554.9		199.8
Less:  Valuation Allowance	48.3		33.7		—		—		43.0		24.9		—		—
Net Deferred Tax Assets	$	2,072.4	$	707.4	$	548.6	$	199.6	$	1,983.7	$	692.4	$	554.9	$	199.8
Deferred Tax Liabilities:
Accelerated Depreciation and Other   Plant-Related Differences	$	4,153.6	$	1,438.1	$	1,489.4	$	453.8	$	3,901.0	$	1,362.2	$	1,391.9	$	428.9
Property Tax Accruals	88.7		39.0		37.0		5.8		76.8		36.8		29.0		4.7
Regulatory Amounts:
Regulatory Deferrals - Assets	1,376.7		444.8		324.4		263.4		1,155.6		340.7		276.2		260.9
Tax Effect - Tax Regulatory Assets	244.6		174.4		11.3		8.6		238.2		171.7		11.7		8.3
Goodwill Regulatory Asset - 1999 Merger	86.0		—		73.8		—		90.6		—		77.8		—
Derivative Assets	17.8		17.8		—		—		19.7		19.7		—		—
Other	200.3		1.6		72.6		5.6		257.6		5.9		125.6		3.2
Total Deferred Tax Liabilities	$	6,167.7	$	2,115.7	$	2,008.5	$	737.2	$	5,739.5	$	1,937.0	$	1,912.2	$	706.0

2020 Federal Legislation: On March 27, 2020, President Trump signed the $2.2 trillion bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among other provisions, the CARES Act provides for loans and other benefits to small and large businesses, expanded unemployment insurance, direct payments to those with wages middle-income and below, new appropriations funding for health care and other priorities, and tax changes like deferrals of employer payroll tax liabilities coupled with an employee retention tax credit and rollbacks of Tax Cuts and Jobs Act of 2017 limitations on net operating losses and certain business interest limitation. For the year ended December 31, 2020, we have recorded a tax liability of approximately $39 million related to the deferral of employer payroll tax liability provision. Fifty percent of the deferral of employer payroll tax liability must be paid by December 31, 2021 and the remaining amount by December 31, 2022. Other than the cash flow benefit described, the CARES Act did not have a material impact.

On December 27, 2020, President Trump signed into law H.R. 133, the “Consolidated Appropriations Act, 2021.” The House of Representatives and Senate previously passed the bill with overwhelming support. The legislation includes tax extenders as part of Division EE, the “Taxpayer Certainty and Disaster Tax Relief Act of 2020.” The provisions within the law include the extension of the Investment Tax Credit (ITC) for solar at 26 percent for facilities the construction of which begins through the end of 2022, at 22 percent for facilities the construction of which begins in 2023, and postponement of the date after which solar facilities placed in service receive only a 10 percent ITC to December 31, 2025, the extension of the ITC at 30 percent (with no phase-down) to offshore wind if construction begins by December 31, 2025 (qualifying offshore wind includes facilities located in the inland navigable waters or in the coastal waters of the U.S.), and the extension and expansion of the CARES Act employee retention tax credit for the period from January 1, 2021 through June 30, 2021, including increasing the credit rate from 50 percent to 70 percent of qualified wages, and increasing the per-employee creditable wages limit from $10,000 per year to $10,000 for each quarter. The tax credit provision impacts to Eversource are still being evaluated but are a significant positive development for the Company and provides the opportunity to generate additional tax credits in its renewable energy projects when the projects become operational.

Carryforwards:  The following table provides the amounts and expiration dates of state tax credit and loss carryforwards and federal tax credit and net operating loss carryforwards:

	As of December 31,
	2020									2019
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range
Federal Net Operating Loss	$	—	$	—	$	—	$	—	—	$	19.8	$	—	$	—	$	—	2033 - 2037
State Net Operating Loss	183.4		—		—		—		2021 - 2040	65.5		—		—		—		2020 - 2038
State Tax Credit	186.6		133.4		—		—		2020 - 2025	168.1		122.3		—		—		2019 - 2024
State Charitable Contribution	10.2		—		—		—		2020 - 2024	9.9		—		—		—		2019 - 2023

In 2020, the company increased its valuation allowance reserve for state credits by $10.3 million ($8.8 million for CL&P), net of tax, to reflect an update for expiring tax credits. In 2019, the Company increased its valuation allowance reserve for state credits by $18.5 million ($14.2 million for CL&P), net of tax, to reflect an update for expiring tax credits.

For 2020 and 2019, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $48.3 million and $43.0 million (net of tax), respectively.  

Unrecognized Tax Benefits:  A reconciliation of the activity in unrecognized tax benefits, all of which would impact the effective tax rate if recognized, is as follows:

(Millions of Dollars)	Eversource		CL&P
Balance as of January 1, 2018	$	51.7	$	18.1
Gross Increases - Current Year	9.2		3.2
Gross Decreases - Prior Year	(6.5)		(0.9)
Lapse of Statute of Limitations	(8.5)		(2.2)
Balance as of December 31, 2018	45.9		18.2
Gross Increases - Current Year	12.1		4.0
Gross Increases - Prior Year	3.4		3.3
Lapse of Statute of Limitations	(6.4)		(2.4)
Balance as of December 31, 2019	55.0		23.1
Gross Increases - Current Year	11.9		4.6
Gross Increases - Prior Year	1.4		0.7
Lapse of Statute of Limitations	(6.5)		(2.6)
Balance as of December 31, 2020	$	61.8	$	25.8

Interest and Penalties:  Interest on uncertain tax positions is recorded and generally classified as a component of Other Interest Expense on the statements of income.  However, when resolution of uncertainties results in the Company receiving interest income, any related interest benefit is recorded in Other Income, Net on the statements of income.  No penalties have been recorded.  The amount of interest expense/(income) on uncertain tax positions recognized and the related accrued interest payable/(receivable) are as follows:  

	Other Interest Income						Accrued Interest Expense
	For the Years Ended December 31,						As of December 31,
(Millions of Dollars)	2020		2019		2018		2020		2019
Eversource	$	—	$	—	$	(1.7)	$	0.1	$	0.1

Tax Positions:  During 2020 and 2019, Eversource did not resolve any of its uncertain tax positions.

Open Tax Years:  The following table summarizes Eversource, CL&P, NSTAR Electric, and PSNH's tax years that remain subject to examination by major tax jurisdictions as of December 31, 2020:

Description	Tax Years
Federal	2020
Connecticut	2017 - 2020
Massachusetts	2017 - 2020
New Hampshire	2017 - 2020

Eversource does not estimate to have an earnings impact related to unrecognized tax benefits during the next twelve months.