Income Taxes

PSEG’s, Power’s and PSE&G’s effective tax rates for the three months and six months ended June 30, 2014 and 2013 were as follows:




	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
PSEG	34.8	%	39.6	%	38.4	%	40.1	%
Power	28.9	%	39.9	%	37.8	%	39.6	%
PSE&G	36.5	%	37.2	%	38.6	%	39.6	%

For the three months and six months ended June 30, 2014, as compared to the same periods in the prior year, the decrease in PSEG's and Power's effective tax rates were due primarily to Power's manufacturing deduction under Section 199 of the Internal Revenue Code.

PSEG's federal tax returns for the years 2007 through 2010 are currently being audited by the IRS. The audit is reasonably expected to be completed within the next 12 months.

In September 2013, the U.S. Department of the Treasury and the IRS released final regulations effective in 2014 that provide guidance on applying Section 263(a) of the IRC to amounts paid to acquire, produce, or improve tangible property, as well as rules for materials and supplies. Implementation of these regulations did not have any material impact on PSEG’s and its subsidiaries’ results of operations, financial condition or cash flows.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 included a provision making qualified property placed into service after September 8, 2010 and before January 1, 2012, eligible for 100% bonus depreciation for tax purposes. In addition, qualified property placed into service in 2012 was eligible for 50% bonus depreciation for tax purposes. The American Taxpayer Relief Act of 2012 further extended the 50% bonus depreciation for qualified property placed into service before January 1, 2014. In addition, long production property placed into service in 2014 is eligible for 50% bonus depreciation for tax purposes. These provisions have generated cash for PSEG through tax benefits related to the accelerated depreciation. These tax benefits otherwise would have been received over an estimated average 20 year period.

Income Taxes

PSEG’s, Power’s and PSE&G’s effective tax rates for the three months and six months ended June 30, 2014 and 2013 were as follows:




	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
PSEG	34.8	%	39.6	%	38.4	%	40.1	%
Power	28.9	%	39.9	%	37.8	%	39.6	%
PSE&G	36.5	%	37.2	%	38.6	%	39.6	%

For the three months and six months ended June 30, 2014, as compared to the same periods in the prior year, the decrease in PSEG's and Power's effective tax rates were due primarily to Power's manufacturing deduction under Section 199 of the Internal Revenue Code.

PSEG's federal tax returns for the years 2007 through 2010 are currently being audited by the IRS. The audit is reasonably expected to be completed within the next 12 months.

In September 2013, the U.S. Department of the Treasury and the IRS released final regulations effective in 2014 that provide guidance on applying Section 263(a) of the IRC to amounts paid to acquire, produce, or improve tangible property, as well as rules for materials and supplies. Implementation of these regulations did not have any material impact on PSEG’s and its subsidiaries’ results of operations, financial condition or cash flows.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 included a provision making qualified property placed into service after September 8, 2010 and before January 1, 2012, eligible for 100% bonus depreciation for tax purposes. In addition, qualified property placed into service in 2012 was eligible for 50% bonus depreciation for tax purposes. The American Taxpayer Relief Act of 2012 further extended the 50% bonus depreciation for qualified property placed into service before January 1, 2014. In addition, long production property placed into service in 2014 is eligible for 50% bonus depreciation for tax purposes. These provisions have generated cash for PSEG through tax benefits related to the accelerated depreciation. These tax benefits otherwise would have been received over an estimated average 20 year period.

Income Taxes

PSEG’s, Power’s and PSE&G’s effective tax rates for the three months and six months ended June 30, 2014 and 2013 were as follows:




	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
PSEG	34.8	%	39.6	%	38.4	%	40.1	%
Power	28.9	%	39.9	%	37.8	%	39.6	%
PSE&G	36.5	%	37.2	%	38.6	%	39.6	%

For the three months and six months ended June 30, 2014, as compared to the same periods in the prior year, the decrease in PSEG's and Power's effective tax rates were due primarily to Power's manufacturing deduction under Section 199 of the Internal Revenue Code.

PSEG's federal tax returns for the years 2007 through 2010 are currently being audited by the IRS. The audit is reasonably expected to be completed within the next 12 months.

In September 2013, the U.S. Department of the Treasury and the IRS released final regulations effective in 2014 that provide guidance on applying Section 263(a) of the IRC to amounts paid to acquire, produce, or improve tangible property, as well as rules for materials and supplies. Implementation of these regulations did not have any material impact on PSEG’s and its subsidiaries’ results of operations, financial condition or cash flows.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 included a provision making qualified property placed into service after September 8, 2010 and before January 1, 2012, eligible for 100% bonus depreciation for tax purposes. In addition, qualified property placed into service in 2012 was eligible for 50% bonus depreciation for tax purposes. The American Taxpayer Relief Act of 2012 further extended the 50% bonus depreciation for qualified property placed into service before January 1, 2014. In addition, long production property placed into service in 2014 is eligible for 50% bonus depreciation for tax purposes. These provisions have generated cash for PSEG through tax benefits related to the accelerated depreciation. These tax benefits otherwise would have been received over an estimated average 20 year period.