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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Taxes [Line Items] |
Income Taxes | Income Taxes A reconciliation of reported income tax expense for PSEG with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| PSEG |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 1,438 |  |  | $ | 1,574 |  |  | $ | 887 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (97 | ) |  | $ | 86 |  |  | $ | (74 | ) |
| State |  | 83 |  |  | (31 | ) |  | 61 |  |
| Total Current |  | (14 | ) |  | 55 |  |  | (13 | ) |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 373 |  |  | (482 | ) |  | 311 |  |
| State |  | 71 |  |  | 92 |  |  | 28 |  |
| Total Deferred |  | 444 |  |  | (390 | ) |  | 339 |  |
| Investment Tax Credit (ITC) |  | (13 | ) |  | 29 |  |  | 85 |  |
| Total Income Tax Expense (Benefit) |  | $ | 417 |  |  | $ | (306 | ) |  | $ | 411 |  |
| Pre-Tax Income |  | $ | 1,855 |  |  | $ | 1,268 |  |  | $ | 1,298 |  |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 390 |  |  | $ | 444 |  |  | $ | 454 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 123 |  |  | 36 |  |  | 56 |  |
| Uncertain Tax Positions |  | (24 | ) |  | (3 | ) |  | (31 | ) |
| Manufacturing Deduction |  | — |  |  | (13 | ) |  | (17 | ) |
| NDT Fund |  | (13 | ) |  | 19 |  |  | 3 |  |
| Plant-Related Items |  | (10 | ) |  | (23 | ) |  | (20 | ) |
| Tax Credits |  | (16 | ) |  | (22 | ) |  | (25 | ) |
| Audit Settlement |  | — |  |  | 6 |  |  | — |  |
| Tax Adjustment Credit |  | (30 | ) |  | — |  |  | — |  |
| Deferred Tax Expense (Benefit) - Tax Act |  | 3 |  |  | (755 | ) |  | — |  |
| Other |  | (6 | ) |  | 5 |  |  | (9 | ) |
| Sub-Total |  | 27 |  |  | (750 | ) |  | (43 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 417 |  |  | $ | (306 | ) |  | $ | 411 |  |
| Effective Income Tax Rate |  | 22.5 | % |  | (24.1 | )% |  | 31.7 | % |
The following is an analysis of deferred income taxes for PSEG:
|  |  | As of December 31, |
| PSEG |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 606 |  |  | $ | 602 |  |
| OPEB |  | 163 |  |  | 217 |  |
| Related to Uncertain Tax Position |  | 71 |  |  | 142 |  |
| Total Noncurrent Assets |  | $ | 840 |  |  | $ | 961 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 4,817 |  |  | $ | 4,257 |  |
| New Jersey Corporate Business Tax |  | 756 |  |  | 674 |  |
| Leasing Activities |  | 307 |  |  | 384 |  |
| AROs and NDT Fund |  | 196 |  |  | 233 |  |
| Pension Costs |  | 111 |  |  | 123 |  |
| Taxes Recoverable Through Future Rates (net) |  | 89 |  |  | 80 |  |
| Other |  | 12 |  |  | 171 |  |
| Total Noncurrent Liabilities |  | $ | 6,288 |  |  | $ | 5,922 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 5,448 |  |  | $ | 4,961 |  |
| ITC |  | 265 |  |  | 279 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 5,713 |  |  | $ | 5,240 |  |
The deferred tax effect of certain assets and liabilities is presented in the table above net of the deferred tax effect associated with the respective regulatory deferrals. In December 2017, new tax legislation was enacted, reducing the statutory U.S. corporate income tax rate from a maximum of 35% to 21%, effective January 1, 2018. PSEG is subject to ASC 740, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate was enacted. A reconciliation of reported income tax expense for PSE&G with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| PSE&G |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 1,067 |  |  | $ | 973 |  |  | $ | 889 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (62 | ) |  | $ | (52 | ) |  | $ | (153 | ) |
| State |  | 1 |  |  | (1 | ) |  | 10 |  |
| Total Current |  | (61 | ) |  | (53 | ) |  | (143 | ) |
| Deferred Expense: |  |  |  |  |  |  |
| Federal |  | 287 |  |  | 492 |  |  | 551 |  |
| State |  | 122 |  |  | 129 |  |  | 102 |  |
| Total Deferred |  | 409 |  |  | 621 |  |  | 653 |  |
| ITC |  | (4 | ) |  | (5 | ) |  | 5 |  |
| Total Income Tax Expense |  | $ | 344 |  |  | $ | 563 |  |  | $ | 515 |  |
| Pre-Tax Income |  | $ | 1,411 |  |  | $ | 1,536 |  |  | $ | 1,404 |  |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 296 |  |  | $ | 538 |  |  | $ | 491 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 98 |  |  | 83 |  |  | 72 |  |
| Uncertain Tax Positions |  | (1 | ) |  | (9 | ) |  | (18 | ) |
| Plant-Related Items |  | (10 | ) |  | (23 | ) |  | (20 | ) |
| Tax Credits |  | (8 | ) |  | (9 | ) |  | (7 | ) |
| Tax Adjustment Credit |  | (30 | ) |  | — |  |  | — |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | (10 | ) |  | — |  |
| Other |  | (1 | ) |  | (7 | ) |  | (3 | ) |
| Sub-Total |  | 48 |  |  | 25 |  |  | 24 |  |
| Total Income Tax Expense |  | $ | 344 |  |  | $ | 563 |  |  | $ | 515 |  |
| Effective Income Tax Rate |  | 24.4 | % |  | 36.7 | % |  | 36.7 | % |
The following is an analysis of deferred income taxes for PSE&G:
|  |  | As of December 31, |
| PSE&G |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 606 |  |  | $ | 602 |  |
| OPEB |  | 114 |  |  | 116 |  |
| Total Noncurrent Assets |  | $ | 720 |  |  | $ | 718 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 3,622 |  |  | $ | 3,311 |  |
| New Jersey Corporate Business Tax |  | 486 |  |  | 378 |  |
| Pension Costs |  | 159 |  |  | 152 |  |
| Conservation Costs |  | 36 |  |  | 24 |  |
| Taxes Recoverable Through Future Rates (net) |  | 89 |  |  | 80 |  |
| Other |  | 84 |  |  | 86 |  |
| Total Noncurrent Liabilities |  | $ | 4,476 |  |  | $ | 4,031 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 3,756 |  |  | $ | 3,313 |  |
| ITC |  | 74 |  |  | 78 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 3,830 |  |  | $ | 3,391 |  |
The deferred tax effect of certain assets and liabilities is presented in the table above net of the deferred tax effect associated with the respective regulatory deferrals. In December 2017, new tax legislation was enacted, reducing the statutory U.S. corporate income tax rate from a maximum of 35% to 21%, effective January 1, 2018. PSE&G is subject to ASC 740, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate was enacted. A reconciliation of reported income tax expense for Power with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| Power |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 365 |  |  | $ | 479 |  |  | $ | 18 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (164 | ) |  | $ | 95 |  |  | $ | 107 |  |
| State |  | 24 |  |  | (17 | ) |  | 40 |  |
| Total Current |  | (140 | ) |  | 78 |  |  | 147 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 214 |  |  | (804 | ) |  | (222 | ) |
| State |  | 1 |  |  | (37 | ) |  | (68 | ) |
| Total Deferred |  | 215 |  |  | (841 | ) |  | (290 | ) |
| ITC |  | (9 | ) |  | 34 |  |  | 82 |  |
| Total Income Tax Expense (Benefit) |  | $ | 66 |  |  | $ | (729 | ) |  | $ | (61 | ) |
| Pre-Tax Income (Loss) |  | $ | 431 |  |  | $ | (250 | ) |  | $ | (43 | ) |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 91 |  |  | $ | (88 | ) |  | $ | (15 | ) |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 21 |  |  | (36 | ) |  | (18 | ) |
| Manufacturing Deduction |  | — |  |  | (13 | ) |  | (17 | ) |
| NDT Fund |  | (13 | ) |  | 19 |  |  | 3 |  |
| Tax Credits |  | (7 | ) |  | (12 | ) |  | (18 | ) |
| Uncertain Tax Positions |  | (24 | ) |  | 7 |  |  | 9 |  |
| Audit Settlement |  | — |  |  | 1 |  |  | — |  |
| Deferred Tax Benefit - Tax Act |  | (1 | ) |  | (610 | ) |  | — |  |
| Other |  | (1 | ) |  | 3 |  |  | (5 | ) |
| Sub-Total |  | (25 | ) |  | (641 | ) |  | (46 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 66 |  |  | $ | (729 | ) |  | $ | (61 | ) |
| Effective Income Tax Rate |  | 15.3 | % |  | 291.6 | % |  | 141.9 | % |
The following is an analysis of deferred income taxes for Power:
|  |  | As of December 31, |
| Power |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Related to Uncertain Tax Positions |  | $ | 60 |  |  | $ | 45 |  |
| Pension Costs |  | 52 |  |  | 40 |  |
| Contractual Liabilities & Environmental Costs |  | 9 |  |  | 12 |  |
| Other |  | 98 |  |  | 93 |  |
| Total Noncurrent Assets |  | $ | 219 |  |  | $ | 190 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 1,189 |  |  | $ | 935 |  |
| AROs and NDT Fund |  | 197 |  |  | 235 |  |
| New Jersey Corporate Business Tax |  | 260 |  |  | 225 |  |
| Total Noncurrent Liabilities |  | $ | 1,646 |  |  | $ | 1,395 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 1,427 |  |  | $ | 1,205 |  |
| ITC |  | 192 |  |  | 201 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 1,619 |  |  | $ | 1,406 |  |
PSEG, PSE&G and Power each provide deferred taxes at the enacted statutory tax rate for all temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities irrespective of the treatment for rate-making purposes. Management believes that it is probable that the accumulated tax benefits that previously have been treated as a flow-through item to PSE&G customers will be recovered from or refunded to PSE&G’s customers in the future. See Note 7. Regulatory Assets and Liabilities. 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 (AMT); (3) a new limitation on deductible interest expense; (4) the repeal of the manufacturing deduction; (5) limitations on the deductibility of certain executive compensation; and (6) limitations on net operating losses (NOLs) generated after December 31, 2017, to 80% of taxable income with an indefinite carryforward period. In addition, certain changes were made to the bonus depreciation rules that impacted 2017. In 2018 and beyond, it is expected that Power will be entitled to 100% expensing and bonus depreciation will no longer apply to PSE&G. As required under ASC 740, the ending 2017 deferred tax balances were adjusted to reflect the enacted lower tax rate, which resulted in a deferred tax benefit of $755 million, including $610 million related to Power and $149 million related to Energy Holdings (including other impacts related to the new tax legislation, PSEG’s net non-cash provisional earnings benefit was $745 million, including $588 million related to Power and $147 million related to Energy Holdings). There were no further material deferred tax benefits recorded in 2018 as a result of the Tax Act. In addition, PSE&G had excess deferred taxes of approximately $2.1 billion as of December 31, 2017 and recorded a $2.9 billion revenue impact of these excess deferred taxes as Regulatory Liabilities. In 2018, PSE&G recorded an additional $34 million of excess deferred taxes and a $46 million revenue impact of these excess taxes as Regulatory Liabilities associated with the 2017 return to accrual. PSEG, PSE&G and Power completed their accounting for the Tax Act based on the current regulatory guidance available at the end of the Staff Accounting Bulletin No. 118 measurement period, not to extend beyond one year from the enactment date of the Tax Act. The Tax Act has led to lower customer rates due to lower income tax expense recoveries and the BPU and FERC have approved our proposals to refund excess deferred income tax Regulatory Liabilities. See Note 7. Regulatory Assets and Liabilities for additional information. In August 2018, the IRS issued a Notice of Proposed Rulemaking (Notice) regarding the application of tax depreciation rules as amended by the Tax Act. While the Notice provides some guidance as to the application of the changes made by the Tax Act to the bonus depreciation rules, certain aspects still remain unclear. Further, in November 2018 the IRS issued Proposed Regulations addressing the interest disallowance rules contained in the Tax Act. For non-regulated businesses, these rules set a cap on the amount of interest that can be deducted in a given year. Any amount that is disallowed can be carried forward indefinitely. For 2018, PSEG and Power expect that a portion of the interest will be disallowed in the current period but realized in future periods. As a result, PSEG and Power recorded a deferred tax asset of $54 million and $8 million, respectively, in 2018. However, certain aspects of the proposed regulations are unclear; therefore, PSEG recorded taxes based on its interpretation of the relevant statute. Depreciation amounts recorded in 2018 were based on PSEG’s interpretation of the Tax Act and the depreciation rules contained in the Notice. Such amounts are subject to change based on several factors, including but not limited to, the IRS and state taxing authorities issuing final guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s 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 has modified the bonus depreciation rules of the 2015 Tax Act. In 2018, Power generated a $14 million consolidated federal income tax NOL and PSE&G generated a $21 million New Jersey Corporate Business tax NOL. Both PSE&G and Power expect to fully realize their respective NOLs. There are no other material tax carryforwards in other jurisdictions. PSEG recorded the following amounts related to its unrecognized tax benefits, which were primarily comprised of amounts recorded for PSE&G, Power and Energy Holdings:
| 2018 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2018 |  | $ | 334 |  |  | $ | 135 |  |  | $ | 142 |  |  | $ | 53 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 11 |  |  | 4 |  |  | 4 |  |  | 3 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (70 | ) |  | (31 | ) |  | (37 | ) |  | (2 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 52 |  |  | 3 |  |  | 48 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | (3 | ) |  | (3 | ) |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | (6 | ) |  | — |  |  | (6 | ) |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | — |  |  | — |  |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2018 |  | $ | 318 |  |  | $ | 108 |  |  | $ | 151 |  |  | $ | 54 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (173 | ) |  | (57 | ) |  | (104 | ) |  | (12 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (46 | ) |  | (46 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 99 |  |  | $ | 5 |  |  | $ | 47 |  |  | $ | 42 |  |
| 2017 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2017 |  | $ | 328 |  |  | $ | 140 |  |  | $ | 128 |  |  | $ | 57 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 40 |  |  | 15 |  |  | 18 |  |  | 8 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (32 | ) |  | (11 | ) |  | (10 | ) |  | (13 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 12 |  |  | 5 |  |  | 6 |  |  | 1 |  |
| Decreases as a Result of Positions Taken during the Current Period |  | (1 | ) |  | (1 | ) |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | (13 | ) |  | (13 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2017 |  | $ | 334 |  |  | $ | 135 |  |  | $ | 142 |  |  | $ | 53 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (157 | ) |  | (73 | ) |  | (72 | ) |  | (12 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (56 | ) |  | (56 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 121 |  |  | $ | 6 |  |  | $ | 70 |  |  | $ | 41 |  |
| 2016 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2016 |  | $ | 386 |  |  | $ | 181 |  |  | $ | 111 |  |  | $ | 93 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 12 |  |  | 3 |  |  | 6 |  |  | 2 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (62 | ) |  | (23 | ) |  | (1 | ) |  | (38 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 19 |  |  | 6 |  |  | 12 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | (27 | ) |  | (27 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2016 |  | $ | 328 |  |  | $ | 140 |  |  | $ | 128 |  |  | $ | 57 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (200 | ) |  | (106 | ) |  | (74 | ) |  | (20 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (31 | ) |  | (31 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 97 |  |  | $ | 3 |  |  | $ | 54 |  |  | $ | 37 |  |
PSEG and its subsidiaries include accrued interest and penalties related to uncertain tax positions required to be recorded, as Income Tax Expense in the Consolidated Statements of Operations. Accumulated interest and penalties that are recorded on the Consolidated Balance Sheets on uncertain tax positions were as follows:
|  |  | Accumulated Interest and Penalties on Uncertain Tax Positions as of December 31, |
|  |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| PSE&G |  | $ | 12 |  |  | $ | 25 |  |  | $ | 22 |  |
| Power |  | 9 |  |  | 24 |  |  | 17 |  |
| Energy Holdings |  | 22 |  |  | 21 |  |  | 20 |  |
| Total |  | $ | 43 |  |  | $ | 70 |  |  | $ | 59 |  |
It is reasonably possible that total unrecognized tax benefits will significantly increase or decrease within the next twelve months due to either agreements with various taxing authorities upon audit, the expiration of the Statute of Limitations, or other pending tax matters. These potential increases or decreases are as follows:
| Possible (Increase)/Decrease in Total Unrecognized Tax Benefits |  | Over the next 12 Months |
|  |  | Millions |
| PSEG |  | $ | 112 |  |
| PSE&G |  | $ | 62 |  |
| Power |  | $ | 34 |  |
A description of income tax years that remain subject to examination by material jurisdictions, where an examination has not already concluded are:
|  |  | PSEG |  | PSE&G |  | Power |
| United States |  |  |  |  |  |  |
| Federal |  | 2011-2017 |  | N/A |  | N/A |
| New Jersey |  | 2006-2017 |  | 2011-2017 |  | N/A |
| Pennsylvania |  | 2015-2017 |  | 2015-2017 |  | N/A |
| Connecticut |  | 2016-2017 |  | N/A |  | N/A |
| California |  | 2006-2017 |  | N/A |  | N/A |
| New York |  | 2017 |  | N/A |  | 2017 |
New Jersey State Tax Reform In July 2018, the State of New Jersey made changes to its income tax laws, including imposing a temporary surtax on allocated corporate taxable income of 2.5% effective January 1, 2018 and 2019 and 1.5% in 2020 and 2021, as well as requiring corporate taxpayers to file in a combined reporting group as defined under New Jersey law starting in 2019. Both provisions include an exemption for public utilities. At this time, PSEG believes PSE&G meets the definition of a public utility and, therefore, will not be impacted by the temporary surtax or be included in the combined reporting group. In 2018, PSEG’s non-utility business recorded $7 million of surtax as a result of these new provisions. This New Jersey tax legislation did not have a material impact on PSEG’s deferred income tax balance.
PSE&G [Member] |
Income Taxes [Line Items] |
Income Taxes | Income Taxes A reconciliation of reported income tax expense for PSEG with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| PSEG |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 1,438 |  |  | $ | 1,574 |  |  | $ | 887 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (97 | ) |  | $ | 86 |  |  | $ | (74 | ) |
| State |  | 83 |  |  | (31 | ) |  | 61 |  |
| Total Current |  | (14 | ) |  | 55 |  |  | (13 | ) |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 373 |  |  | (482 | ) |  | 311 |  |
| State |  | 71 |  |  | 92 |  |  | 28 |  |
| Total Deferred |  | 444 |  |  | (390 | ) |  | 339 |  |
| Investment Tax Credit (ITC) |  | (13 | ) |  | 29 |  |  | 85 |  |
| Total Income Tax Expense (Benefit) |  | $ | 417 |  |  | $ | (306 | ) |  | $ | 411 |  |
| Pre-Tax Income |  | $ | 1,855 |  |  | $ | 1,268 |  |  | $ | 1,298 |  |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 390 |  |  | $ | 444 |  |  | $ | 454 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 123 |  |  | 36 |  |  | 56 |  |
| Uncertain Tax Positions |  | (24 | ) |  | (3 | ) |  | (31 | ) |
| Manufacturing Deduction |  | — |  |  | (13 | ) |  | (17 | ) |
| NDT Fund |  | (13 | ) |  | 19 |  |  | 3 |  |
| Plant-Related Items |  | (10 | ) |  | (23 | ) |  | (20 | ) |
| Tax Credits |  | (16 | ) |  | (22 | ) |  | (25 | ) |
| Audit Settlement |  | — |  |  | 6 |  |  | — |  |
| Tax Adjustment Credit |  | (30 | ) |  | — |  |  | — |  |
| Deferred Tax Expense (Benefit) - Tax Act |  | 3 |  |  | (755 | ) |  | — |  |
| Other |  | (6 | ) |  | 5 |  |  | (9 | ) |
| Sub-Total |  | 27 |  |  | (750 | ) |  | (43 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 417 |  |  | $ | (306 | ) |  | $ | 411 |  |
| Effective Income Tax Rate |  | 22.5 | % |  | (24.1 | )% |  | 31.7 | % |
The following is an analysis of deferred income taxes for PSEG:
|  |  | As of December 31, |
| PSEG |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 606 |  |  | $ | 602 |  |
| OPEB |  | 163 |  |  | 217 |  |
| Related to Uncertain Tax Position |  | 71 |  |  | 142 |  |
| Total Noncurrent Assets |  | $ | 840 |  |  | $ | 961 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 4,817 |  |  | $ | 4,257 |  |
| New Jersey Corporate Business Tax |  | 756 |  |  | 674 |  |
| Leasing Activities |  | 307 |  |  | 384 |  |
| AROs and NDT Fund |  | 196 |  |  | 233 |  |
| Pension Costs |  | 111 |  |  | 123 |  |
| Taxes Recoverable Through Future Rates (net) |  | 89 |  |  | 80 |  |
| Other |  | 12 |  |  | 171 |  |
| Total Noncurrent Liabilities |  | $ | 6,288 |  |  | $ | 5,922 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 5,448 |  |  | $ | 4,961 |  |
| ITC |  | 265 |  |  | 279 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 5,713 |  |  | $ | 5,240 |  |
The deferred tax effect of certain assets and liabilities is presented in the table above net of the deferred tax effect associated with the respective regulatory deferrals. In December 2017, new tax legislation was enacted, reducing the statutory U.S. corporate income tax rate from a maximum of 35% to 21%, effective January 1, 2018. PSEG is subject to ASC 740, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate was enacted. A reconciliation of reported income tax expense for PSE&G with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| PSE&G |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 1,067 |  |  | $ | 973 |  |  | $ | 889 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (62 | ) |  | $ | (52 | ) |  | $ | (153 | ) |
| State |  | 1 |  |  | (1 | ) |  | 10 |  |
| Total Current |  | (61 | ) |  | (53 | ) |  | (143 | ) |
| Deferred Expense: |  |  |  |  |  |  |
| Federal |  | 287 |  |  | 492 |  |  | 551 |  |
| State |  | 122 |  |  | 129 |  |  | 102 |  |
| Total Deferred |  | 409 |  |  | 621 |  |  | 653 |  |
| ITC |  | (4 | ) |  | (5 | ) |  | 5 |  |
| Total Income Tax Expense |  | $ | 344 |  |  | $ | 563 |  |  | $ | 515 |  |
| Pre-Tax Income |  | $ | 1,411 |  |  | $ | 1,536 |  |  | $ | 1,404 |  |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 296 |  |  | $ | 538 |  |  | $ | 491 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 98 |  |  | 83 |  |  | 72 |  |
| Uncertain Tax Positions |  | (1 | ) |  | (9 | ) |  | (18 | ) |
| Plant-Related Items |  | (10 | ) |  | (23 | ) |  | (20 | ) |
| Tax Credits |  | (8 | ) |  | (9 | ) |  | (7 | ) |
| Tax Adjustment Credit |  | (30 | ) |  | — |  |  | — |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | (10 | ) |  | — |  |
| Other |  | (1 | ) |  | (7 | ) |  | (3 | ) |
| Sub-Total |  | 48 |  |  | 25 |  |  | 24 |  |
| Total Income Tax Expense |  | $ | 344 |  |  | $ | 563 |  |  | $ | 515 |  |
| Effective Income Tax Rate |  | 24.4 | % |  | 36.7 | % |  | 36.7 | % |
The following is an analysis of deferred income taxes for PSE&G:
|  |  | As of December 31, |
| PSE&G |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 606 |  |  | $ | 602 |  |
| OPEB |  | 114 |  |  | 116 |  |
| Total Noncurrent Assets |  | $ | 720 |  |  | $ | 718 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 3,622 |  |  | $ | 3,311 |  |
| New Jersey Corporate Business Tax |  | 486 |  |  | 378 |  |
| Pension Costs |  | 159 |  |  | 152 |  |
| Conservation Costs |  | 36 |  |  | 24 |  |
| Taxes Recoverable Through Future Rates (net) |  | 89 |  |  | 80 |  |
| Other |  | 84 |  |  | 86 |  |
| Total Noncurrent Liabilities |  | $ | 4,476 |  |  | $ | 4,031 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 3,756 |  |  | $ | 3,313 |  |
| ITC |  | 74 |  |  | 78 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 3,830 |  |  | $ | 3,391 |  |
The deferred tax effect of certain assets and liabilities is presented in the table above net of the deferred tax effect associated with the respective regulatory deferrals. In December 2017, new tax legislation was enacted, reducing the statutory U.S. corporate income tax rate from a maximum of 35% to 21%, effective January 1, 2018. PSE&G is subject to ASC 740, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate was enacted. A reconciliation of reported income tax expense for Power with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| Power |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 365 |  |  | $ | 479 |  |  | $ | 18 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (164 | ) |  | $ | 95 |  |  | $ | 107 |  |
| State |  | 24 |  |  | (17 | ) |  | 40 |  |
| Total Current |  | (140 | ) |  | 78 |  |  | 147 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 214 |  |  | (804 | ) |  | (222 | ) |
| State |  | 1 |  |  | (37 | ) |  | (68 | ) |
| Total Deferred |  | 215 |  |  | (841 | ) |  | (290 | ) |
| ITC |  | (9 | ) |  | 34 |  |  | 82 |  |
| Total Income Tax Expense (Benefit) |  | $ | 66 |  |  | $ | (729 | ) |  | $ | (61 | ) |
| Pre-Tax Income (Loss) |  | $ | 431 |  |  | $ | (250 | ) |  | $ | (43 | ) |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 91 |  |  | $ | (88 | ) |  | $ | (15 | ) |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 21 |  |  | (36 | ) |  | (18 | ) |
| Manufacturing Deduction |  | — |  |  | (13 | ) |  | (17 | ) |
| NDT Fund |  | (13 | ) |  | 19 |  |  | 3 |  |
| Tax Credits |  | (7 | ) |  | (12 | ) |  | (18 | ) |
| Uncertain Tax Positions |  | (24 | ) |  | 7 |  |  | 9 |  |
| Audit Settlement |  | — |  |  | 1 |  |  | — |  |
| Deferred Tax Benefit - Tax Act |  | (1 | ) |  | (610 | ) |  | — |  |
| Other |  | (1 | ) |  | 3 |  |  | (5 | ) |
| Sub-Total |  | (25 | ) |  | (641 | ) |  | (46 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 66 |  |  | $ | (729 | ) |  | $ | (61 | ) |
| Effective Income Tax Rate |  | 15.3 | % |  | 291.6 | % |  | 141.9 | % |
The following is an analysis of deferred income taxes for Power:
|  |  | As of December 31, |
| Power |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Related to Uncertain Tax Positions |  | $ | 60 |  |  | $ | 45 |  |
| Pension Costs |  | 52 |  |  | 40 |  |
| Contractual Liabilities & Environmental Costs |  | 9 |  |  | 12 |  |
| Other |  | 98 |  |  | 93 |  |
| Total Noncurrent Assets |  | $ | 219 |  |  | $ | 190 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 1,189 |  |  | $ | 935 |  |
| AROs and NDT Fund |  | 197 |  |  | 235 |  |
| New Jersey Corporate Business Tax |  | 260 |  |  | 225 |  |
| Total Noncurrent Liabilities |  | $ | 1,646 |  |  | $ | 1,395 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 1,427 |  |  | $ | 1,205 |  |
| ITC |  | 192 |  |  | 201 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 1,619 |  |  | $ | 1,406 |  |
PSEG, PSE&G and Power each provide deferred taxes at the enacted statutory tax rate for all temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities irrespective of the treatment for rate-making purposes. Management believes that it is probable that the accumulated tax benefits that previously have been treated as a flow-through item to PSE&G customers will be recovered from or refunded to PSE&G’s customers in the future. See Note 7. Regulatory Assets and Liabilities. 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 (AMT); (3) a new limitation on deductible interest expense; (4) the repeal of the manufacturing deduction; (5) limitations on the deductibility of certain executive compensation; and (6) limitations on net operating losses (NOLs) generated after December 31, 2017, to 80% of taxable income with an indefinite carryforward period. In addition, certain changes were made to the bonus depreciation rules that impacted 2017. In 2018 and beyond, it is expected that Power will be entitled to 100% expensing and bonus depreciation will no longer apply to PSE&G. As required under ASC 740, the ending 2017 deferred tax balances were adjusted to reflect the enacted lower tax rate, which resulted in a deferred tax benefit of $755 million, including $610 million related to Power and $149 million related to Energy Holdings (including other impacts related to the new tax legislation, PSEG’s net non-cash provisional earnings benefit was $745 million, including $588 million related to Power and $147 million related to Energy Holdings). There were no further material deferred tax benefits recorded in 2018 as a result of the Tax Act. In addition, PSE&G had excess deferred taxes of approximately $2.1 billion as of December 31, 2017 and recorded a $2.9 billion revenue impact of these excess deferred taxes as Regulatory Liabilities. In 2018, PSE&G recorded an additional $34 million of excess deferred taxes and a $46 million revenue impact of these excess taxes as Regulatory Liabilities associated with the 2017 return to accrual. PSEG, PSE&G and Power completed their accounting for the Tax Act based on the current regulatory guidance available at the end of the Staff Accounting Bulletin No. 118 measurement period, not to extend beyond one year from the enactment date of the Tax Act. The Tax Act has led to lower customer rates due to lower income tax expense recoveries and the BPU and FERC have approved our proposals to refund excess deferred income tax Regulatory Liabilities. See Note 7. Regulatory Assets and Liabilities for additional information. In August 2018, the IRS issued a Notice of Proposed Rulemaking (Notice) regarding the application of tax depreciation rules as amended by the Tax Act. While the Notice provides some guidance as to the application of the changes made by the Tax Act to the bonus depreciation rules, certain aspects still remain unclear. Further, in November 2018 the IRS issued Proposed Regulations addressing the interest disallowance rules contained in the Tax Act. For non-regulated businesses, these rules set a cap on the amount of interest that can be deducted in a given year. Any amount that is disallowed can be carried forward indefinitely. For 2018, PSEG and Power expect that a portion of the interest will be disallowed in the current period but realized in future periods. As a result, PSEG and Power recorded a deferred tax asset of $54 million and $8 million, respectively, in 2018. However, certain aspects of the proposed regulations are unclear; therefore, PSEG recorded taxes based on its interpretation of the relevant statute. Depreciation amounts recorded in 2018 were based on PSEG’s interpretation of the Tax Act and the depreciation rules contained in the Notice. Such amounts are subject to change based on several factors, including but not limited to, the IRS and state taxing authorities issuing final guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s 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 has modified the bonus depreciation rules of the 2015 Tax Act. In 2018, Power generated a $14 million consolidated federal income tax NOL and PSE&G generated a $21 million New Jersey Corporate Business tax NOL. Both PSE&G and Power expect to fully realize their respective NOLs. There are no other material tax carryforwards in other jurisdictions. PSEG recorded the following amounts related to its unrecognized tax benefits, which were primarily comprised of amounts recorded for PSE&G, Power and Energy Holdings:
| 2018 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2018 |  | $ | 334 |  |  | $ | 135 |  |  | $ | 142 |  |  | $ | 53 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 11 |  |  | 4 |  |  | 4 |  |  | 3 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (70 | ) |  | (31 | ) |  | (37 | ) |  | (2 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 52 |  |  | 3 |  |  | 48 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | (3 | ) |  | (3 | ) |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | (6 | ) |  | — |  |  | (6 | ) |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | — |  |  | — |  |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2018 |  | $ | 318 |  |  | $ | 108 |  |  | $ | 151 |  |  | $ | 54 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (173 | ) |  | (57 | ) |  | (104 | ) |  | (12 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (46 | ) |  | (46 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 99 |  |  | $ | 5 |  |  | $ | 47 |  |  | $ | 42 |  |
| 2017 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2017 |  | $ | 328 |  |  | $ | 140 |  |  | $ | 128 |  |  | $ | 57 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 40 |  |  | 15 |  |  | 18 |  |  | 8 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (32 | ) |  | (11 | ) |  | (10 | ) |  | (13 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 12 |  |  | 5 |  |  | 6 |  |  | 1 |  |
| Decreases as a Result of Positions Taken during the Current Period |  | (1 | ) |  | (1 | ) |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | (13 | ) |  | (13 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2017 |  | $ | 334 |  |  | $ | 135 |  |  | $ | 142 |  |  | $ | 53 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (157 | ) |  | (73 | ) |  | (72 | ) |  | (12 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (56 | ) |  | (56 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 121 |  |  | $ | 6 |  |  | $ | 70 |  |  | $ | 41 |  |
| 2016 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2016 |  | $ | 386 |  |  | $ | 181 |  |  | $ | 111 |  |  | $ | 93 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 12 |  |  | 3 |  |  | 6 |  |  | 2 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (62 | ) |  | (23 | ) |  | (1 | ) |  | (38 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 19 |  |  | 6 |  |  | 12 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | (27 | ) |  | (27 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2016 |  | $ | 328 |  |  | $ | 140 |  |  | $ | 128 |  |  | $ | 57 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (200 | ) |  | (106 | ) |  | (74 | ) |  | (20 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (31 | ) |  | (31 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 97 |  |  | $ | 3 |  |  | $ | 54 |  |  | $ | 37 |  |
PSEG and its subsidiaries include accrued interest and penalties related to uncertain tax positions required to be recorded, as Income Tax Expense in the Consolidated Statements of Operations. Accumulated interest and penalties that are recorded on the Consolidated Balance Sheets on uncertain tax positions were as follows:
|  |  | Accumulated Interest and Penalties on Uncertain Tax Positions as of December 31, |
|  |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| PSE&G |  | $ | 12 |  |  | $ | 25 |  |  | $ | 22 |  |
| Power |  | 9 |  |  | 24 |  |  | 17 |  |
| Energy Holdings |  | 22 |  |  | 21 |  |  | 20 |  |
| Total |  | $ | 43 |  |  | $ | 70 |  |  | $ | 59 |  |
It is reasonably possible that total unrecognized tax benefits will significantly increase or decrease within the next twelve months due to either agreements with various taxing authorities upon audit, the expiration of the Statute of Limitations, or other pending tax matters. These potential increases or decreases are as follows:
| Possible (Increase)/Decrease in Total Unrecognized Tax Benefits |  | Over the next 12 Months |
|  |  | Millions |
| PSEG |  | $ | 112 |  |
| PSE&G |  | $ | 62 |  |
| Power |  | $ | 34 |  |
A description of income tax years that remain subject to examination by material jurisdictions, where an examination has not already concluded are:
|  |  | PSEG |  | PSE&G |  | Power |
| United States |  |  |  |  |  |  |
| Federal |  | 2011-2017 |  | N/A |  | N/A |
| New Jersey |  | 2006-2017 |  | 2011-2017 |  | N/A |
| Pennsylvania |  | 2015-2017 |  | 2015-2017 |  | N/A |
| Connecticut |  | 2016-2017 |  | N/A |  | N/A |
| California |  | 2006-2017 |  | N/A |  | N/A |
| New York |  | 2017 |  | N/A |  | 2017 |
New Jersey State Tax Reform In July 2018, the State of New Jersey made changes to its income tax laws, including imposing a temporary surtax on allocated corporate taxable income of 2.5% effective January 1, 2018 and 2019 and 1.5% in 2020 and 2021, as well as requiring corporate taxpayers to file in a combined reporting group as defined under New Jersey law starting in 2019. Both provisions include an exemption for public utilities. At this time, PSEG believes PSE&G meets the definition of a public utility and, therefore, will not be impacted by the temporary surtax or be included in the combined reporting group. In 2018, PSEG’s non-utility business recorded $7 million of surtax as a result of these new provisions. This New Jersey tax legislation did not have a material impact on PSEG’s deferred income tax balance.
Power [Member] |
Income Taxes [Line Items] |
Income Taxes | Income Taxes A reconciliation of reported income tax expense for PSEG with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| PSEG |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 1,438 |  |  | $ | 1,574 |  |  | $ | 887 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (97 | ) |  | $ | 86 |  |  | $ | (74 | ) |
| State |  | 83 |  |  | (31 | ) |  | 61 |  |
| Total Current |  | (14 | ) |  | 55 |  |  | (13 | ) |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 373 |  |  | (482 | ) |  | 311 |  |
| State |  | 71 |  |  | 92 |  |  | 28 |  |
| Total Deferred |  | 444 |  |  | (390 | ) |  | 339 |  |
| Investment Tax Credit (ITC) |  | (13 | ) |  | 29 |  |  | 85 |  |
| Total Income Tax Expense (Benefit) |  | $ | 417 |  |  | $ | (306 | ) |  | $ | 411 |  |
| Pre-Tax Income |  | $ | 1,855 |  |  | $ | 1,268 |  |  | $ | 1,298 |  |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 390 |  |  | $ | 444 |  |  | $ | 454 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 123 |  |  | 36 |  |  | 56 |  |
| Uncertain Tax Positions |  | (24 | ) |  | (3 | ) |  | (31 | ) |
| Manufacturing Deduction |  | — |  |  | (13 | ) |  | (17 | ) |
| NDT Fund |  | (13 | ) |  | 19 |  |  | 3 |  |
| Plant-Related Items |  | (10 | ) |  | (23 | ) |  | (20 | ) |
| Tax Credits |  | (16 | ) |  | (22 | ) |  | (25 | ) |
| Audit Settlement |  | — |  |  | 6 |  |  | — |  |
| Tax Adjustment Credit |  | (30 | ) |  | — |  |  | — |  |
| Deferred Tax Expense (Benefit) - Tax Act |  | 3 |  |  | (755 | ) |  | — |  |
| Other |  | (6 | ) |  | 5 |  |  | (9 | ) |
| Sub-Total |  | 27 |  |  | (750 | ) |  | (43 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 417 |  |  | $ | (306 | ) |  | $ | 411 |  |
| Effective Income Tax Rate |  | 22.5 | % |  | (24.1 | )% |  | 31.7 | % |
The following is an analysis of deferred income taxes for PSEG:
|  |  | As of December 31, |
| PSEG |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 606 |  |  | $ | 602 |  |
| OPEB |  | 163 |  |  | 217 |  |
| Related to Uncertain Tax Position |  | 71 |  |  | 142 |  |
| Total Noncurrent Assets |  | $ | 840 |  |  | $ | 961 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 4,817 |  |  | $ | 4,257 |  |
| New Jersey Corporate Business Tax |  | 756 |  |  | 674 |  |
| Leasing Activities |  | 307 |  |  | 384 |  |
| AROs and NDT Fund |  | 196 |  |  | 233 |  |
| Pension Costs |  | 111 |  |  | 123 |  |
| Taxes Recoverable Through Future Rates (net) |  | 89 |  |  | 80 |  |
| Other |  | 12 |  |  | 171 |  |
| Total Noncurrent Liabilities |  | $ | 6,288 |  |  | $ | 5,922 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 5,448 |  |  | $ | 4,961 |  |
| ITC |  | 265 |  |  | 279 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 5,713 |  |  | $ | 5,240 |  |
The deferred tax effect of certain assets and liabilities is presented in the table above net of the deferred tax effect associated with the respective regulatory deferrals. In December 2017, new tax legislation was enacted, reducing the statutory U.S. corporate income tax rate from a maximum of 35% to 21%, effective January 1, 2018. PSEG is subject to ASC 740, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate was enacted. A reconciliation of reported income tax expense for PSE&G with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| PSE&G |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 1,067 |  |  | $ | 973 |  |  | $ | 889 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (62 | ) |  | $ | (52 | ) |  | $ | (153 | ) |
| State |  | 1 |  |  | (1 | ) |  | 10 |  |
| Total Current |  | (61 | ) |  | (53 | ) |  | (143 | ) |
| Deferred Expense: |  |  |  |  |  |  |
| Federal |  | 287 |  |  | 492 |  |  | 551 |  |
| State |  | 122 |  |  | 129 |  |  | 102 |  |
| Total Deferred |  | 409 |  |  | 621 |  |  | 653 |  |
| ITC |  | (4 | ) |  | (5 | ) |  | 5 |  |
| Total Income Tax Expense |  | $ | 344 |  |  | $ | 563 |  |  | $ | 515 |  |
| Pre-Tax Income |  | $ | 1,411 |  |  | $ | 1,536 |  |  | $ | 1,404 |  |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 296 |  |  | $ | 538 |  |  | $ | 491 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 98 |  |  | 83 |  |  | 72 |  |
| Uncertain Tax Positions |  | (1 | ) |  | (9 | ) |  | (18 | ) |
| Plant-Related Items |  | (10 | ) |  | (23 | ) |  | (20 | ) |
| Tax Credits |  | (8 | ) |  | (9 | ) |  | (7 | ) |
| Tax Adjustment Credit |  | (30 | ) |  | — |  |  | — |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | (10 | ) |  | — |  |
| Other |  | (1 | ) |  | (7 | ) |  | (3 | ) |
| Sub-Total |  | 48 |  |  | 25 |  |  | 24 |  |
| Total Income Tax Expense |  | $ | 344 |  |  | $ | 563 |  |  | $ | 515 |  |
| Effective Income Tax Rate |  | 24.4 | % |  | 36.7 | % |  | 36.7 | % |
The following is an analysis of deferred income taxes for PSE&G:
|  |  | As of December 31, |
| PSE&G |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 606 |  |  | $ | 602 |  |
| OPEB |  | 114 |  |  | 116 |  |
| Total Noncurrent Assets |  | $ | 720 |  |  | $ | 718 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 3,622 |  |  | $ | 3,311 |  |
| New Jersey Corporate Business Tax |  | 486 |  |  | 378 |  |
| Pension Costs |  | 159 |  |  | 152 |  |
| Conservation Costs |  | 36 |  |  | 24 |  |
| Taxes Recoverable Through Future Rates (net) |  | 89 |  |  | 80 |  |
| Other |  | 84 |  |  | 86 |  |
| Total Noncurrent Liabilities |  | $ | 4,476 |  |  | $ | 4,031 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 3,756 |  |  | $ | 3,313 |  |
| ITC |  | 74 |  |  | 78 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 3,830 |  |  | $ | 3,391 |  |
The deferred tax effect of certain assets and liabilities is presented in the table above net of the deferred tax effect associated with the respective regulatory deferrals. In December 2017, new tax legislation was enacted, reducing the statutory U.S. corporate income tax rate from a maximum of 35% to 21%, effective January 1, 2018. PSE&G is subject to ASC 740, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate was enacted. A reconciliation of reported income tax expense for Power with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 is as follows:
|  |  | Years Ended December 31, |
| Power |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| Net Income |  | $ | 365 |  |  | $ | 479 |  |  | $ | 18 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (164 | ) |  | $ | 95 |  |  | $ | 107 |  |
| State |  | 24 |  |  | (17 | ) |  | 40 |  |
| Total Current |  | (140 | ) |  | 78 |  |  | 147 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 214 |  |  | (804 | ) |  | (222 | ) |
| State |  | 1 |  |  | (37 | ) |  | (68 | ) |
| Total Deferred |  | 215 |  |  | (841 | ) |  | (290 | ) |
| ITC |  | (9 | ) |  | 34 |  |  | 82 |  |
| Total Income Tax Expense (Benefit) |  | $ | 66 |  |  | $ | (729 | ) |  | $ | (61 | ) |
| Pre-Tax Income (Loss) |  | $ | 431 |  |  | $ | (250 | ) |  | $ | (43 | ) |
| Tax Computed at Statutory Rate @ 21% in 2018 and 35% in 2017 and 2016 |  | $ | 91 |  |  | $ | (88 | ) |  | $ | (15 | ) |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 21 |  |  | (36 | ) |  | (18 | ) |
| Manufacturing Deduction |  | — |  |  | (13 | ) |  | (17 | ) |
| NDT Fund |  | (13 | ) |  | 19 |  |  | 3 |  |
| Tax Credits |  | (7 | ) |  | (12 | ) |  | (18 | ) |
| Uncertain Tax Positions |  | (24 | ) |  | 7 |  |  | 9 |  |
| Audit Settlement |  | — |  |  | 1 |  |  | — |  |
| Deferred Tax Benefit - Tax Act |  | (1 | ) |  | (610 | ) |  | — |  |
| Other |  | (1 | ) |  | 3 |  |  | (5 | ) |
| Sub-Total |  | (25 | ) |  | (641 | ) |  | (46 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 66 |  |  | $ | (729 | ) |  | $ | (61 | ) |
| Effective Income Tax Rate |  | 15.3 | % |  | 291.6 | % |  | 141.9 | % |
The following is an analysis of deferred income taxes for Power:
|  |  | As of December 31, |
| Power |  | 2018 |  | 2017 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Related to Uncertain Tax Positions |  | $ | 60 |  |  | $ | 45 |  |
| Pension Costs |  | 52 |  |  | 40 |  |
| Contractual Liabilities & Environmental Costs |  | 9 |  |  | 12 |  |
| Other |  | 98 |  |  | 93 |  |
| Total Noncurrent Assets |  | $ | 219 |  |  | $ | 190 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 1,189 |  |  | $ | 935 |  |
| AROs and NDT Fund |  | 197 |  |  | 235 |  |
| New Jersey Corporate Business Tax |  | 260 |  |  | 225 |  |
| Total Noncurrent Liabilities |  | $ | 1,646 |  |  | $ | 1,395 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 1,427 |  |  | $ | 1,205 |  |
| ITC |  | 192 |  |  | 201 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 1,619 |  |  | $ | 1,406 |  |
PSEG, PSE&G and Power each provide deferred taxes at the enacted statutory tax rate for all temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities irrespective of the treatment for rate-making purposes. Management believes that it is probable that the accumulated tax benefits that previously have been treated as a flow-through item to PSE&G customers will be recovered from or refunded to PSE&G’s customers in the future. See Note 7. Regulatory Assets and Liabilities. 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 (AMT); (3) a new limitation on deductible interest expense; (4) the repeal of the manufacturing deduction; (5) limitations on the deductibility of certain executive compensation; and (6) limitations on net operating losses (NOLs) generated after December 31, 2017, to 80% of taxable income with an indefinite carryforward period. In addition, certain changes were made to the bonus depreciation rules that impacted 2017. In 2018 and beyond, it is expected that Power will be entitled to 100% expensing and bonus depreciation will no longer apply to PSE&G. As required under ASC 740, the ending 2017 deferred tax balances were adjusted to reflect the enacted lower tax rate, which resulted in a deferred tax benefit of $755 million, including $610 million related to Power and $149 million related to Energy Holdings (including other impacts related to the new tax legislation, PSEG’s net non-cash provisional earnings benefit was $745 million, including $588 million related to Power and $147 million related to Energy Holdings). There were no further material deferred tax benefits recorded in 2018 as a result of the Tax Act. In addition, PSE&G had excess deferred taxes of approximately $2.1 billion as of December 31, 2017 and recorded a $2.9 billion revenue impact of these excess deferred taxes as Regulatory Liabilities. In 2018, PSE&G recorded an additional $34 million of excess deferred taxes and a $46 million revenue impact of these excess taxes as Regulatory Liabilities associated with the 2017 return to accrual. PSEG, PSE&G and Power completed their accounting for the Tax Act based on the current regulatory guidance available at the end of the Staff Accounting Bulletin No. 118 measurement period, not to extend beyond one year from the enactment date of the Tax Act. The Tax Act has led to lower customer rates due to lower income tax expense recoveries and the BPU and FERC have approved our proposals to refund excess deferred income tax Regulatory Liabilities. See Note 7. Regulatory Assets and Liabilities for additional information. In August 2018, the IRS issued a Notice of Proposed Rulemaking (Notice) regarding the application of tax depreciation rules as amended by the Tax Act. While the Notice provides some guidance as to the application of the changes made by the Tax Act to the bonus depreciation rules, certain aspects still remain unclear. Further, in November 2018 the IRS issued Proposed Regulations addressing the interest disallowance rules contained in the Tax Act. For non-regulated businesses, these rules set a cap on the amount of interest that can be deducted in a given year. Any amount that is disallowed can be carried forward indefinitely. For 2018, PSEG and Power expect that a portion of the interest will be disallowed in the current period but realized in future periods. As a result, PSEG and Power recorded a deferred tax asset of $54 million and $8 million, respectively, in 2018. However, certain aspects of the proposed regulations are unclear; therefore, PSEG recorded taxes based on its interpretation of the relevant statute. Depreciation amounts recorded in 2018 were based on PSEG’s interpretation of the Tax Act and the depreciation rules contained in the Notice. Such amounts are subject to change based on several factors, including but not limited to, the IRS and state taxing authorities issuing final guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s 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 has modified the bonus depreciation rules of the 2015 Tax Act. In 2018, Power generated a $14 million consolidated federal income tax NOL and PSE&G generated a $21 million New Jersey Corporate Business tax NOL. Both PSE&G and Power expect to fully realize their respective NOLs. There are no other material tax carryforwards in other jurisdictions. PSEG recorded the following amounts related to its unrecognized tax benefits, which were primarily comprised of amounts recorded for PSE&G, Power and Energy Holdings:
| 2018 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2018 |  | $ | 334 |  |  | $ | 135 |  |  | $ | 142 |  |  | $ | 53 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 11 |  |  | 4 |  |  | 4 |  |  | 3 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (70 | ) |  | (31 | ) |  | (37 | ) |  | (2 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 52 |  |  | 3 |  |  | 48 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | (3 | ) |  | (3 | ) |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | (6 | ) |  | — |  |  | (6 | ) |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | — |  |  | — |  |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2018 |  | $ | 318 |  |  | $ | 108 |  |  | $ | 151 |  |  | $ | 54 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (173 | ) |  | (57 | ) |  | (104 | ) |  | (12 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (46 | ) |  | (46 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 99 |  |  | $ | 5 |  |  | $ | 47 |  |  | $ | 42 |  |
| 2017 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2017 |  | $ | 328 |  |  | $ | 140 |  |  | $ | 128 |  |  | $ | 57 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 40 |  |  | 15 |  |  | 18 |  |  | 8 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (32 | ) |  | (11 | ) |  | (10 | ) |  | (13 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 12 |  |  | 5 |  |  | 6 |  |  | 1 |  |
| Decreases as a Result of Positions Taken during the Current Period |  | (1 | ) |  | (1 | ) |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | (13 | ) |  | (13 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2017 |  | $ | 334 |  |  | $ | 135 |  |  | $ | 142 |  |  | $ | 53 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (157 | ) |  | (73 | ) |  | (72 | ) |  | (12 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (56 | ) |  | (56 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 121 |  |  | $ | 6 |  |  | $ | 70 |  |  | $ | 41 |  |
| 2016 |  | PSEG |  | PSE&G |  | Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2016 |  | $ | 386 |  |  | $ | 181 |  |  | $ | 111 |  |  | $ | 93 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 12 |  |  | 3 |  |  | 6 |  |  | 2 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (62 | ) |  | (23 | ) |  | (1 | ) |  | (38 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 19 |  |  | 6 |  |  | 12 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | (27 | ) |  | (27 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2016 |  | $ | 328 |  |  | $ | 140 |  |  | $ | 128 |  |  | $ | 57 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (200 | ) |  | (106 | ) |  | (74 | ) |  | (20 | ) |
| Regulatory Asset—Unrecognized Tax Benefits |  | (31 | ) |  | (31 | ) |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 97 |  |  | $ | 3 |  |  | $ | 54 |  |  | $ | 37 |  |
PSEG and its subsidiaries include accrued interest and penalties related to uncertain tax positions required to be recorded, as Income Tax Expense in the Consolidated Statements of Operations. Accumulated interest and penalties that are recorded on the Consolidated Balance Sheets on uncertain tax positions were as follows:
|  |  | Accumulated Interest and Penalties on Uncertain Tax Positions as of December 31, |
|  |  | 2018 |  | 2017 |  | 2016 |
|  |  | Millions |
| PSE&G |  | $ | 12 |  |  | $ | 25 |  |  | $ | 22 |  |
| Power |  | 9 |  |  | 24 |  |  | 17 |  |
| Energy Holdings |  | 22 |  |  | 21 |  |  | 20 |  |
| Total |  | $ | 43 |  |  | $ | 70 |  |  | $ | 59 |  |
It is reasonably possible that total unrecognized tax benefits will significantly increase or decrease within the next twelve months due to either agreements with various taxing authorities upon audit, the expiration of the Statute of Limitations, or other pending tax matters. These potential increases or decreases are as follows:
| Possible (Increase)/Decrease in Total Unrecognized Tax Benefits |  | Over the next 12 Months |
|  |  | Millions |
| PSEG |  | $ | 112 |  |
| PSE&G |  | $ | 62 |  |
| Power |  | $ | 34 |  |
A description of income tax years that remain subject to examination by material jurisdictions, where an examination has not already concluded are:
|  |  | PSEG |  | PSE&G |  | Power |
| United States |  |  |  |  |  |  |
| Federal |  | 2011-2017 |  | N/A |  | N/A |
| New Jersey |  | 2006-2017 |  | 2011-2017 |  | N/A |
| Pennsylvania |  | 2015-2017 |  | 2015-2017 |  | N/A |
| Connecticut |  | 2016-2017 |  | N/A |  | N/A |
| California |  | 2006-2017 |  | N/A |  | N/A |
| New York |  | 2017 |  | N/A |  | 2017 |
New Jersey State Tax Reform In July 2018, the State of New Jersey made changes to its income tax laws, including imposing a temporary surtax on allocated corporate taxable income of 2.5% effective January 1, 2018 and 2019 and 1.5% in 2020 and 2021, as well as requiring corporate taxpayers to file in a combined reporting group as defined under New Jersey law starting in 2019. Both provisions include an exemption for public utilities. At this time, PSEG believes PSE&G meets the definition of a public utility and, therefore, will not be impacted by the temporary surtax or be included in the combined reporting group. In 2018, PSEG’s non-utility business recorded $7 million of surtax as a result of these new provisions. This New Jersey tax legislation did not have a material impact on PSEG’s deferred income tax balance.

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