INCOME TAXES

12 Months Ended

Dec. 31, 2021

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,
	2021		2020		2019
Current Income Taxes:
Federal	$	21.5	$	73.6	$	56.9
State	(21.6)		19.1		10.5
Total Current	(0.1)		92.7		67.4
Deferred Income Taxes, Net:
Federal	199.7		173.5		138.4
State	147.4		83.7		71.4
Total Deferred	347.1		257.2		209.8
Investment Tax Credits, Net	(2.8)		(3.7)		(3.7)
Income Tax Expense	$	344.2	$	346.2	$	273.5

	For the Years Ended December 31,
	2021						2020						2019
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Current Income Taxes:
Federal	$	15.0	$	52.3	$	43.1	$	12.0	$	53.9	$	20.6	$	68.4	$	82.6	$	22.9
State	(7.0)		6.2		10.8		(6.1)		6.9		3.8		15.4		18.2		2.2
Total Current	8.0		58.5		53.9		5.9		60.8		24.4		83.8		100.8		25.1
Deferred Income Taxes, Net:
Federal	76.3		16.3		(14.9)		101.1		33.8		(1.3)		35.2		0.1		5.8
State	47.6		41.2		0.4		43.4		38.8		8.6		18.8		27.0		10.1
Total Deferred	123.9		57.5		(14.5)		144.5		72.6		7.3		54.0		27.1		15.9
Investment Tax Credits, Net	(0.6)		(1.7)		—		(0.7)		(2.6)		—		(0.8)		(2.6)		—
Income Tax Expense	$	131.3	$	114.3	$	39.4	$	149.7	$	130.8	$	31.7	$	137.0	$	125.3	$	41.0

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,
	2021			2020			2019
Income Before Income Tax Expense	$	1,572.3		$	1,558.9		$	1,190.1
Statutory Federal Income Tax Expense at 21%	330.2			327.4			249.9
Tax Effect of Differences:
Depreciation	(18.1)			(11.1)			1.9
Investment Tax Credit Amortization	(2.8)			(3.7)			(3.7)
State Income Taxes, Net of Federal Impact	54.4			44.9			24.6
Dividends on ESOP	(5.1)			(5.1)			(5.1)
Tax Asset Valuation Allowance/Reserve Adjustments	44.6			33.4			40.1
Excess Stock Benefit	(4.0)			(6.6)			(1.5)
EDIT Amortization	(69.1)			(48.7)			(37.4)
Other, Net	14.1			15.7			4.7
Income Tax Expense	$	344.2		$	346.2		$	273.5
Effective Tax Rate	21.9		%	22.2		%	23.0		%

	For the Years Ended December 31,
	2021									2020									2019
(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	$	533.0		$	590.9		$	189.8		$	607.6		$	575.8		$	179.0		$	547.8		$	557.3		$	175.0
Statutory Federal Income Tax Expense at 21%	111.9			124.1			39.9			127.6			120.9			37.6			115.0			117.0			36.8
Tax Effect of Differences:
Depreciation	(6.4)			(3.4)			(0.2)			0.4			(3.7)			(1.4)			(0.2)			(3.0)			(0.8)
Investment Tax Credit Amortization	(0.6)			(1.7)			—			(0.7)			(2.6)			—			(0.8)			(2.6)			—
State Income Taxes, Net of Federal Impact	(4.6)			37.5			8.9			(1.2)			36.0			9.8			2.5			35.7			9.8
Tax Asset Valuation   Allowance/Reserve Adjustments	36.7			—			—			30.7			—			—			24.5			—			—
Excess Stock Benefit	(1.5)			(1.4)			(0.5)			(2.3)			(2.3)			(0.8)			(0.5)			(0.5)			(0.2)
EDIT Amortization	(9.8)			(43.2)			(10.5)			(9.0)			(20.4)			(15.4)			(5.8)			(22.9)			(4.0)
Other, Net	5.6			2.4			1.8			4.2			2.9			1.9			2.3			1.6			(0.6)
Income Tax Expense	$	131.3		$	114.3		$	39.4		$	149.7		$	130.8		$	31.7		$	137.0		$	125.3		$	41.0
Effective Tax Rate	24.6		%	19.3		%	20.8		%	24.6		%	22.7		%	17.7		%	25.0		%	22.5		%	23.4		%

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,
	2021								2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Deferred Tax Assets:
Employee Benefits	$	270.8	$	23.9	$	40.3	$	14.1	$	602.4	$	144.5	$	79.8	$	56.6
Derivative Liabilities	76.8		76.8		—		—		92.6		91.8		—		—
Regulatory Deferrals - Liabilities	390.7		90.9		215.4		24.3		259.8		30.2		161.8		13.4
Allowance for Uncollectible Accounts	104.1		48.8		21.5		6.2		87.5		42.3		20.9		4.6
Tax Effect - Tax Regulatory Liabilities	783.4		328.2		254.3		100.9		810.9		331.4		271.8		105.2
Net Operating Loss Carryforwards	7.5		—		—		—		12.7		—		—		—
Purchase Accounting Adjustment	67.2		—		—		—		54.5		—		—		—
Other	196.6		103.9		21.7		22.9		200.3		100.9		14.3		19.8
Total Deferred Tax Assets	1,897.1		672.5		553.2		168.4		2,120.7		741.1		548.6		199.6
Less:  Valuation Allowance	61.5		44.5		—		—		48.3		33.7		—		—
Net Deferred Tax Assets	$	1,835.6	$	628.0	$	553.2	$	168.4	$	2,072.4	$	707.4	$	548.6	$	199.6
Deferred Tax Liabilities:
Accelerated Depreciation and Other   Plant-Related Differences	$	4,426.0	$	1,509.5	$	1,553.7	$	482.9	$	4,153.6	$	1,438.1	$	1,489.4	$	453.8
Property Tax Accruals	88.1		40.5		33.7		6.3		88.7		39.0		37.0		5.8
Regulatory Amounts:
Regulatory Deferrals - Assets	1,260.3		438.3		337.6		198.4		1,376.7		444.8		324.4		263.4
Tax Effect - Tax Regulatory Assets	257.8		181.4		10.9		8.3		244.6		174.4		11.3		8.6
Goodwill Regulatory Asset - 1999 Merger	81.4		—		69.9		—		86.0		—		73.8		—
Derivative Assets	14.9		14.9		—		—		17.8		17.8		—		—
Other	304.2		5.5		126.9		10.5		200.3		1.6		72.6		5.6
Total Deferred Tax Liabilities	$	6,432.7	$	2,190.1	$	2,132.7	$	706.4	$	6,167.7	$	2,115.7	$	2,008.5	$	737.2

2021 Federal Legislation: On November 5, 2021, Congress passed the Infrastructure Investment and Jobs Act. The Act provided spending of more than $500 billion on roads, highways, bridges, public transit, and utilities. For water and sewer utilities, the Act restored the exclusion from a corporation’s income for contributions in aid of construction where the corporation is a water or sewer utility eliminated by the Tax Cuts and Jobs Act of 2017. Under the Act, a regulated public utility that provides water or sewage disposal services can treat money or property received from any person as a tax-free contribution to capital if it meets certain criteria for contributions made after 2020. The Act did not have a material impact on Eversource in 2021.

2020 Federal Legislation: On March 27, 2020, former 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 years ended December 31, 2021 and 2020, we recorded a tax liability of $19.6 million and $39 million, respectively, related to the deferral of employer payroll tax liability provision. Fifty percent of the 2020 deferral of employer payroll tax liability was paid by December 31, 2021 and the remaining amount must be paid by December 31, 2022. Other than the cash flow benefit described, the CARES Act did not have a material impact.

On December 27, 2020, former 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 included 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. These credits provide the opportunity to generate additional tax credits in the Company’s renewable energy projects when the projects become operational. The tax credit provision had no impact to Eversource in 2021 and the credits will be evaluated for significant positive developments for the Company in 2022 and forward.

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,
	2021									2020
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range
State Net Operating Loss	$	138.3	$	—	$	—	$	—	2021 - 2040	$	183.4	$	—	$	—	$	—	2021 - 2040
State Tax Credit	197.7		137.0		—		—		2021 - 2026	186.6		133.4		—		—		2020 - 2025
State Charitable Contribution	23.7		—		—		—		2021 - 2025	10.2		—		—		—		2020 - 2024

In 2021, the Company increased its valuation allowance reserve for state credits by $13.0 million ($10.8 million for CL&P), net of tax, to reflect an update for expiring tax credits. 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.

For 2021 and 2020, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $61.5 million and $48.3 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, 2019	$	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
Gross Increases - Current Year	11.3		3.8
Gross Decreases - Prior Year	(0.3)		(0.6)
Lapse of Statute of Limitations	(7.0)		(2.8)
Balance as of December 31, 2021	$	65.8	$	26.2

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. There has been no interest expense or income recognized on uncertain tax positions for the years ended December 31, 2021, 2020 or 2019. The accrued interest payable was $0.1 million as of both December 31, 2021 and 2020.

Tax Positions:  During 2021 and 2020, 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, 2021:

Description	Tax Years
Federal	2021
Connecticut	2018 - 2021
Massachusetts	2018 - 2021
New Hampshire	2018 - 2021

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