Income Taxes

3 Months Ended

Mar. 31, 2018

Income Taxes [Line Items]

Income Taxes

Income Taxes

PSEG’s, PSE&G’s and Power’s effective tax rates for the three months ended March 31, 2018 and 2017 were as follows:

	Three Months Ended
	March 31,
	2018	2017
PSEG	26.6%	20.3%
PSE&G	26.8%	36.4%
Power	26.2%	40.6%

For the three months ended March 31, 2018, the difference in PSEG’s effective tax rate as compared to the same period in the prior year was due primarily to the absence of benefits associated with uncertain tax positions and interest received in 2017 from a New Jersey state income tax refund, offset by the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act. For the three months ended March 31, 2018, the difference in PSEG’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to changes in uncertain tax positions, tax credits and plant-related items.

For the three months ended March 31, 2018, the difference in PSE&G’s effective tax rate as compared to the same period in the prior year was due primarily to the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act, as well as changes in uncertain tax positions in 2017. For the three months ended March 31, 2018, the difference in PSE&G’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to plant-related items and tax credits.

For the three months ended March 31, 2018, the difference in Power’s effective tax rate as compared to the same period in the prior year was due primarily to the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act, as well as changes in uncertain tax positions. For the three months ended March 31, 2018, the difference in Power’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to changes in uncertain tax positions and the additional tax benefit on a pre-tax loss on the NDT qualified fund being taxed at a higher rate than the statutory rate.

PSEG’s federal tax returns for the years 2011 and 2012 are currently being audited by the IRS. The audit and other related claims are reasonably expected to be completed within the next 12 months. As a result, it is reasonably possible that a decrease in PSEG’s total unrecognized tax benefits may be necessary in the range of $80 million to $180 million based on current estimates.

In December 2017, the U.S. government enacted comprehensive tax legislation. The Tax Act establishes new tax laws that took effect in 2018, including, but not limited to (1) reduction of the U.S. federal corporate tax rate from a maximum of 35% to 21%; (2) elimination of the corporate alternative minimum tax; (3) a new limitation on deductible interest expense; (4) the repeal of the domestic production activity deduction; (5) limitations on the deductibility of certain executive compensation; and (6) limitations on net operating losses generated after December 31, 2017, to 80% of taxable income. In addition, certain changes were made to the bonus depreciation rules that will impact 2018.

The SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. PSEG, PSE&G and Power are subject to ASC 740. In accordance with SAB 118, PSEG, PSE&G and Power made reasonable, good faith estimates for which provisional amounts were recorded.

PSEG’s accounting for certain elements of the Tax Act is incomplete. However, PSEG recorded provisional adjustments for the following: the tax rules regarding the appropriate bonus depreciation rate that should be applied to assets placed in service after September 27, 2017 for Power and PSE&G, including the information required to compute the applicable depreciable tax basis, and the impact on PSEG’s, PSE&G’s and Power’s deferred taxes associated with FIN 48 reserves.

Further, the Tax Act is unclear in certain respects and will require interpretations and implementing regulations by the IRS, as well as state tax authorities. The Tax Act could also be subject to potential amendments and technical corrections which could impact PSEG, PSE&G and Power’s financial statements.

The Protecting Americans from Tax Hikes Act of 2015 (2015 Tax Act), among other provisions, included an extension of the bonus depreciation rules and the 30% investment tax credit for qualified property placed into service after 2016. Qualified property that is placed into service from January 1, 2015 through December 31, 2017 is eligible for the 50% bonus depreciation. The provisions of the 2015 Tax Act have generated significant cash tax benefits for PSEG, PSE&G and Power through tax benefits related to the accelerated depreciation.

For the period beginning September 28, 2017, subject to the transition rules, the Tax Act modified the bonus depreciation rules of the 2015 Tax Act. Subject to further guidance, it is expected that Power is entitled to 100% expensing and bonus depreciation will no longer apply to PSE&G.

PSE And G [Member]

Income Taxes [Line Items]

Income Taxes

Income Taxes

PSEG’s, PSE&G’s and Power’s effective tax rates for the three months ended March 31, 2018 and 2017 were as follows:

	Three Months Ended
	March 31,
	2018	2017
PSEG	26.6%	20.3%
PSE&G	26.8%	36.4%
Power	26.2%	40.6%

For the three months ended March 31, 2018, the difference in PSEG’s effective tax rate as compared to the same period in the prior year was due primarily to the absence of benefits associated with uncertain tax positions and interest received in 2017 from a New Jersey state income tax refund, offset by the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act. For the three months ended March 31, 2018, the difference in PSEG’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to changes in uncertain tax positions, tax credits and plant-related items.

For the three months ended March 31, 2018, the difference in PSE&G’s effective tax rate as compared to the same period in the prior year was due primarily to the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act, as well as changes in uncertain tax positions in 2017. For the three months ended March 31, 2018, the difference in PSE&G’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to plant-related items and tax credits.

For the three months ended March 31, 2018, the difference in Power’s effective tax rate as compared to the same period in the prior year was due primarily to the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act, as well as changes in uncertain tax positions. For the three months ended March 31, 2018, the difference in Power’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to changes in uncertain tax positions and the additional tax benefit on a pre-tax loss on the NDT qualified fund being taxed at a higher rate than the statutory rate.

PSEG’s federal tax returns for the years 2011 and 2012 are currently being audited by the IRS. The audit and other related claims are reasonably expected to be completed within the next 12 months. As a result, it is reasonably possible that a decrease in PSEG’s total unrecognized tax benefits may be necessary in the range of $80 million to $180 million based on current estimates.

In December 2017, the U.S. government enacted comprehensive tax legislation. The Tax Act establishes new tax laws that took effect in 2018, including, but not limited to (1) reduction of the U.S. federal corporate tax rate from a maximum of 35% to 21%; (2) elimination of the corporate alternative minimum tax; (3) a new limitation on deductible interest expense; (4) the repeal of the domestic production activity deduction; (5) limitations on the deductibility of certain executive compensation; and (6) limitations on net operating losses generated after December 31, 2017, to 80% of taxable income. In addition, certain changes were made to the bonus depreciation rules that will impact 2018.

The SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. PSEG, PSE&G and Power are subject to ASC 740. In accordance with SAB 118, PSEG, PSE&G and Power made reasonable, good faith estimates for which provisional amounts were recorded.

PSEG’s accounting for certain elements of the Tax Act is incomplete. However, PSEG recorded provisional adjustments for the following: the tax rules regarding the appropriate bonus depreciation rate that should be applied to assets placed in service after September 27, 2017 for Power and PSE&G, including the information required to compute the applicable depreciable tax basis, and the impact on PSEG’s, PSE&G’s and Power’s deferred taxes associated with FIN 48 reserves.

Further, the Tax Act is unclear in certain respects and will require interpretations and implementing regulations by the IRS, as well as state tax authorities. The Tax Act could also be subject to potential amendments and technical corrections which could impact PSEG, PSE&G and Power’s financial statements.

The Protecting Americans from Tax Hikes Act of 2015 (2015 Tax Act), among other provisions, included an extension of the bonus depreciation rules and the 30% investment tax credit for qualified property placed into service after 2016. Qualified property that is placed into service from January 1, 2015 through December 31, 2017 is eligible for the 50% bonus depreciation. The provisions of the 2015 Tax Act have generated significant cash tax benefits for PSEG, PSE&G and Power through tax benefits related to the accelerated depreciation.

For the period beginning September 28, 2017, subject to the transition rules, the Tax Act modified the bonus depreciation rules of the 2015 Tax Act. Subject to further guidance, it is expected that Power is entitled to 100% expensing and bonus depreciation will no longer apply to PSE&G.

Power [Member]

Income Taxes [Line Items]

Income Taxes

Income Taxes

PSEG’s, PSE&G’s and Power’s effective tax rates for the three months ended March 31, 2018 and 2017 were as follows:

	Three Months Ended
	March 31,
	2018	2017
PSEG	26.6%	20.3%
PSE&G	26.8%	36.4%
Power	26.2%	40.6%

For the three months ended March 31, 2018, the difference in PSEG’s effective tax rate as compared to the same period in the prior year was due primarily to the absence of benefits associated with uncertain tax positions and interest received in 2017 from a New Jersey state income tax refund, offset by the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act. For the three months ended March 31, 2018, the difference in PSEG’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to changes in uncertain tax positions, tax credits and plant-related items.

For the three months ended March 31, 2018, the difference in PSE&G’s effective tax rate as compared to the same period in the prior year was due primarily to the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act, as well as changes in uncertain tax positions in 2017. For the three months ended March 31, 2018, the difference in PSE&G’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to plant-related items and tax credits.

For the three months ended March 31, 2018, the difference in Power’s effective tax rate as compared to the same period in the prior year was due primarily to the change in the statutory federal tax rate from 35% to 21% as a result of the Tax Act, as well as changes in uncertain tax positions. For the three months ended March 31, 2018, the difference in Power’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to changes in uncertain tax positions and the additional tax benefit on a pre-tax loss on the NDT qualified fund being taxed at a higher rate than the statutory rate.

PSEG’s federal tax returns for the years 2011 and 2012 are currently being audited by the IRS. The audit and other related claims are reasonably expected to be completed within the next 12 months. As a result, it is reasonably possible that a decrease in PSEG’s total unrecognized tax benefits may be necessary in the range of $80 million to $180 million based on current estimates.

In December 2017, the U.S. government enacted comprehensive tax legislation. The Tax Act establishes new tax laws that took effect in 2018, including, but not limited to (1) reduction of the U.S. federal corporate tax rate from a maximum of 35% to 21%; (2) elimination of the corporate alternative minimum tax; (3) a new limitation on deductible interest expense; (4) the repeal of the domestic production activity deduction; (5) limitations on the deductibility of certain executive compensation; and (6) limitations on net operating losses generated after December 31, 2017, to 80% of taxable income. In addition, certain changes were made to the bonus depreciation rules that will impact 2018.

The SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. PSEG, PSE&G and Power are subject to ASC 740. In accordance with SAB 118, PSEG, PSE&G and Power made reasonable, good faith estimates for which provisional amounts were recorded.

PSEG’s accounting for certain elements of the Tax Act is incomplete. However, PSEG recorded provisional adjustments for the following: the tax rules regarding the appropriate bonus depreciation rate that should be applied to assets placed in service after September 27, 2017 for Power and PSE&G, including the information required to compute the applicable depreciable tax basis, and the impact on PSEG’s, PSE&G’s and Power’s deferred taxes associated with FIN 48 reserves.

Further, the Tax Act is unclear in certain respects and will require interpretations and implementing regulations by the IRS, as well as state tax authorities. The Tax Act could also be subject to potential amendments and technical corrections which could impact PSEG, PSE&G and Power’s financial statements.

The Protecting Americans from Tax Hikes Act of 2015 (2015 Tax Act), among other provisions, included an extension of the bonus depreciation rules and the 30% investment tax credit for qualified property placed into service after 2016. Qualified property that is placed into service from January 1, 2015 through December 31, 2017 is eligible for the 50% bonus depreciation. The provisions of the 2015 Tax Act have generated significant cash tax benefits for PSEG, PSE&G and Power through tax benefits related to the accelerated depreciation.

For the period beginning September 28, 2017, subject to the transition rules, the Tax Act modified the bonus depreciation rules of the 2015 Tax Act. Subject to further guidance, it is expected that Power is entitled to 100% expensing and bonus depreciation will no longer apply to PSE&G.