INCOME TAXES

12 Months Ended

Dec. 31, 2022

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,
	2022		2021		2020
Current Income Taxes:
Federal	$	95.8	$	21.5	$	73.6
State	13.6		(21.6)		19.1
Total Current	109.4		(0.1)		92.7
Deferred Income Taxes, Net:
Federal	198.8		199.7		173.5
State	148.0		147.4		83.7
Total Deferred	346.8		347.1		257.2
Investment Tax Credits, Net	(2.6)		(2.8)		(3.7)
Income Tax Expense	$	453.6	$	344.2	$	346.2

	For the Years Ended December 31,
	2022						2021						2020
(Millions of Dollars)	CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH		CL&P		NSTAR Electric		PSNH
Current Income Taxes:
Federal	$	106.2	$	55.0	$	29.6	$	15.0	$	52.3	$	43.1	$	12.0	$	53.9	$	20.6
State	20.1		8.7		5.9		(7.0)		6.2		10.8		(6.1)		6.9		3.8
Total Current	126.3		63.7		35.5		8.0		58.5		53.9		5.9		60.8		24.4
Deferred Income Taxes, Net:
Federal	17.2		35.6		5.9		76.3		16.3		(14.9)		101.1		33.8		(1.3)
State	28.2		42.4		9.9		47.6		41.2		0.4		43.4		38.8		8.6
Total Deferred	45.4		78.0		15.8		123.9		57.5		(14.5)		144.5		72.6		7.3
Investment Tax Credits, Net	(0.5)		(1.7)		—		(0.6)		(1.7)		—		(0.7)		(2.6)		—
Income Tax Expense	$	171.2	$	140.0	$	51.3	$	131.3	$	114.3	$	39.4	$	149.7	$	130.8	$	31.7

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,
	2022			2021			2020
Income Before Income Tax Expense	$	1,866.0		$	1,572.3		$	1,558.9
Statutory Federal Income Tax Expense at 21%	391.9			330.2			327.4
Tax Effect of Differences:
Depreciation	(17.1)			(18.1)			(11.1)
Investment Tax Credit Amortization	(2.6)			(2.8)			(3.7)
State Income Taxes, Net of Federal Impact	75.9			54.4			44.9
Dividends on ESOP	(5.1)			(5.1)			(5.1)
Tax Asset Valuation Allowance/Reserve Adjustments	51.6			44.6			33.4
Excess Stock Benefit	(2.1)			(4.0)			(6.6)
EDIT Amortization	(49.1)			(69.1)			(48.7)
Other, Net	10.2			14.1			15.7
Income Tax Expense	$	453.6		$	344.2		$	346.2
Effective Tax Rate	24.3		%	21.9		%	22.2		%

	For the Years Ended December 31,
	2022									2021									2020
(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	$	704.1		$	632.4		$	222.9		$	533.0		$	590.9		$	189.8		$	607.6		$	575.8		$	179.0
Statutory Federal Income Tax Expense at 21%	147.9			132.8			46.8			111.9			124.1			39.9			127.6			120.9			37.6
Tax Effect of Differences:
Depreciation	(3.7)			(4.2)			0.9			(6.4)			(3.4)			(0.2)			0.4			(3.7)			(1.4)
Investment Tax Credit Amortization	(0.5)			(1.7)			—			(0.6)			(1.7)			—			(0.7)			(2.6)			—
State Income Taxes, Net of Federal Impact	(6.6)			40.3			12.5			(4.6)			37.5			8.9			(1.2)			36.0			9.8
Tax Asset Valuation   Allowance/Reserve Adjustments	44.7			—			—			36.7			—			—			30.7			—			—
Excess Stock Benefit	(0.7)			(0.8)			(0.3)			(1.5)			(1.4)			(0.5)			(2.3)			(2.3)			(0.8)
EDIT Amortization	(9.2)			(29.2)			(7.7)			(9.8)			(43.2)			(10.5)			(9.0)			(20.4)			(15.4)
Other, Net	(0.7)			2.8			(0.9)			5.6			2.4			1.8			4.2			2.9			1.9
Income Tax Expense	$	171.2		$	140.0		$	51.3		$	131.3		$	114.3		$	39.4		$	149.7		$	130.8		$	31.7
Effective Tax Rate	24.3		%	22.1		%	23.0		%	24.6		%	19.3		%	20.8		%	24.6		%	22.7		%	17.7		%

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,
	2022								2021
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Eversource		CL&P		NSTAR Electric		PSNH
Deferred Tax Assets:
Employee Benefits	$	228.9	$	25.3	$	57.4	$	11.6	$	270.8	$	23.9	$	40.3	$	14.1
Derivative Liabilities	53.8		53.8		—		—		76.8		76.8		—		—
Regulatory Deferrals - Liabilities	529.5		146.6		285.7		42.1		390.7		90.9		215.4		24.3
Allowance for Uncollectible Accounts	125.5		60.5		20.7		7.9		104.1		48.8		21.5		6.2
Tax Effect - Tax Regulatory Liabilities	762.9		324.6		241.8		97.8		783.4		328.2		254.3		100.9
Net Operating Loss Carryforwards	16.7		—		—		—		7.5		—		—		—
Purchase Accounting Adjustment	62.0		—		—		—		67.2		—		—		—
Other	176.6		109.5		20.5		21.3		196.6		103.9		21.7		22.9
Total Deferred Tax Assets	1,955.9		720.3		626.1		180.7		1,897.1		672.5		553.2		168.4
Less:  Valuation Allowance	82.8		63.3		—		—		61.5		44.5		—		—
Net Deferred Tax Assets	$	1,873.1	$	657.0	$	626.1	$	180.7	$	1,835.6	$	628.0	$	553.2	$	168.4
Deferred Tax Liabilities:
Accelerated Depreciation and Other   Plant-Related Differences	$	4,793.7	$	1,602.0	$	1,643.7	$	523.8	$	4,426.0	$	1,509.5	$	1,553.7	$	482.9
Property Tax Accruals	95.3		40.7		41.3		6.7		88.1		40.5		33.7		6.3
Regulatory Amounts:
Regulatory Deferrals - Assets	1,251.9		406.4		407.9		165.2		1,260.3		438.3		337.6		198.4
Tax Effect - Tax Regulatory Assets	271.7		185.6		10.7		7.9		257.8		181.4		10.9		8.3
Goodwill-related Regulatory Asset - 1999 Merger	76.8		—		65.9		—		81.4		—		69.9		—
Employee Benefits	305.5		45.0		140.8		18.7		174.7		3.5		107.1		0.7
Derivative Assets	10.5		10.5		—		—		14.9		14.9		—		—
Other	135.6		6.8		16.7		21.2		129.5		2.0		19.8		9.8
Total Deferred Tax Liabilities	$	6,941.0	$	2,297.0	$	2,327.0	$	743.5	$	6,432.7	$	2,190.1	$	2,132.7	$	706.4

2022 Federal Legislation: On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law. This is a broad package of legislation that includes incentives and support for clean energy resource development. Most notable for Eversource, the investment tax credit (ITC) on offshore wind projects increases from 30 percent to 40 percent if certain requirements for labor and domestic content are met. The act also re-establishes the production tax credit for solar and wind energy projects, gives increased credit for projects in certain communities, and sets credits for qualifying clean energy generation and energy storage projects. The tax provisions of the IRA provide additional incentives for offshore wind projects and could reduce retail electricity costs for our customers related to those clean energy investments. The IRA includes other tax provisions focused on implementing a 15 percent minimum tax on adjusted financial statement income and a one percent excise tax on corporate share repurchases. The Department of Treasury and the Internal Revenue Service issued limited guidance in the fourth quarter; however, they are expected to issue additional needed guidance with respect to the application of the newly enacted IRA provisions in the future. We will continue to monitor and evaluate impacts on our consolidated financial statements. We currently do not expect the alternative minimum tax change to have a material impact on our earnings, financial condition or cash flows.

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.

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,
	2022									2021
(Millions of Dollars)	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range	Eversource		CL&P		NSTAR Electric		PSNH		Expiration Range
State Net Operating Loss	$	288.1	$	—	$	—	$	—	2022 - 2041	$	138.3	$	—	$	—	$	—	2021 - 2040
State Tax Credit	204.5		137.7		—		—		2022 - 2027	197.7		137.0		—		—		2021 - 2026
State Charitable Contribution	20.1		—		—		—		2022 - 2026	23.7		—		—		—		2021 - 2025

In 2022, the Company increased its valuation allowance reserve for state credits by $21.3 million ($18.8 million for CL&P), net of tax, to reflect an update for expiring tax credits. 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.

For 2022 and 2021, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $82.8 million and $61.5 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, 2020	$	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
Gross Increases - Current Year	11.5		3.5
Gross Decreases - Prior Year	(2.4)		(0.9)
Lapse of Statute of Limitations	(7.8)		(3.3)
Balance as of December 31, 2022	$	67.1	$	25.5

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, 2022, 2021 or 2020. The accrued interest payable was $0.1 million as of both December 31, 2022 and 2021.

Tax Positions:  During 2022 and 2021, 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, 2022:

Description	Tax Years
Federal	2022
Connecticut	2019 - 2022
Massachusetts	2019 - 2022
New Hampshire	2019 - 2022

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