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Income Taxes | 12 Months Ended
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Dec. 31, 2019
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 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSEG |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 1,693 |  |  | $ | 1,438 |  |  | $ | 1,574 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | 84 |  |  | $ | (97 | ) |  | $ | 86 |  |
| State |  | 18 |  |  | 83 |  |  | (31 | ) |
| Total Current |  | 102 |  |  | (14 | ) |  | 55 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 3 |  |  | 373 |  |  | (482 | ) |
| State |  | 132 |  |  | 71 |  |  | 92 |  |
| Total Deferred |  | 135 |  |  | 444 |  |  | (390 | ) |
| Investment Tax Credit (ITC) |  | 20 |  |  | (13 | ) |  | 29 |  |
| Total Income Tax Expense (Benefit) |  | $ | 257 |  |  | $ | 417 |  |  | $ | (306 | ) |
| Pre-Tax Income |  | $ | 1,950 |  |  | $ | 1,855 |  |  | $ | 1,268 |  |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 410 |  |  | $ | 390 |  |  | $ | 444 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 117 |  |  | 123 |  |  | 36 |  |
| Uncertain Tax Positions |  | — |  |  | (24 | ) |  | (3 | ) |
| Manufacturing Deduction |  | — |  |  | — |  |  | (13 | ) |
| NDT Fund |  | 34 |  |  | (13 | ) |  | 19 |  |
| Plant-Related Items |  | (2 | ) |  | (10 | ) |  | (23 | ) |
| Tax Credits |  | (18 | ) |  | (16 | ) |  | (22 | ) |
| Audit Settlement |  | — |  |  | — |  |  | 6 |  |
| Tax Adjustment Credit |  | (272 | ) |  | (30 | ) |  | — |  |
| Deferred Tax Expense (Benefit) - Tax Act |  | — |  |  | 3 |  |  | (755 | ) |
| Other |  | (12 | ) |  | (6 | ) |  | 5 |  |
| Subtotal |  | (153 | ) |  | 27 |  |  | (750 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 257 |  |  | $ | 417 |  |  | $ | (306 | ) |
| Effective Income Tax Rate |  | 13.2 | % |  | 22.5 | % |  | (24.1 | )% |
The following is an analysis of deferred income taxes for PSEG:
|  |  | As of December 31, |
| PSEG |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 539 |  |  | $ | 606 |  |
| OPEB |  | 151 |  |  | 163 |  |
| Related to Uncertain Tax Positions |  | 97 |  |  | 71 |  |
| Interest Disallowance Carry Forward |  | 76 |  |  | — |  |
| Operating Leases |  | 64 |  |  | — |  |
| Other |  | 128 |  |  | — |  |
| Total Noncurrent Assets |  | $ | 1,055 |  |  | $ | 840 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 5,051 |  |  | $ | 4,817 |  |
| New Jersey Corporate Business Tax |  | 876 |  |  | 756 |  |
| Leasing Activities |  | 284 |  |  | 307 |  |
| AROs and NDT Fund |  | 277 |  |  | 196 |  |
| Taxes Recoverable Through Future Rates (net) |  | 108 |  |  | 89 |  |
| Pension Costs |  | 98 |  |  | 111 |  |
| Operating Leases |  | 59 |  |  | — |  |
| Other |  | 273 |  |  | 12 |  |
| Total Noncurrent Liabilities |  | $ | 7,026 |  |  | $ | 6,288 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 5,971 |  |  | $ | 5,448 |  |
| ITC |  | 285 |  |  | 265 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 6,256 |  |  | $ | 5,713 |  |
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. 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 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSE&G |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 1,250 |  |  | $ | 1,067 |  |  | $ | 973 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | 121 |  |  | $ | (62 | ) |  | $ | (52 | ) |
| State |  | — |  |  | 1 |  |  | (1 | ) |
| Total Current |  | 121 |  |  | (61 | ) |  | (53 | ) |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | (156 | ) |  | 287 |  |  | 492 |  |
| State |  | 117 |  |  | 122 |  |  | 129 |  |
| Total Deferred |  | (39 | ) |  | 409 |  |  | 621 |  |
| ITC |  | 11 |  |  | (4 | ) |  | (5 | ) |
| Total Income Tax Expense |  | $ | 93 |  |  | $ | 344 |  |  | $ | 563 |  |
| Pre-Tax Income |  | $ | 1,343 |  |  | $ | 1,411 |  |  | $ | 1,536 |  |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 282 |  |  | $ | 296 |  |  | $ | 538 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 92 |  |  | 98 |  |  | 83 |  |
| Uncertain Tax Positions |  | 1 |  |  | (1 | ) |  | (9 | ) |
| Plant-Related Items |  | (2 | ) |  | (10 | ) |  | (23 | ) |
| Tax Credits |  | (8 | ) |  | (8 | ) |  | (9 | ) |
| Tax Adjustment Credit |  | (272 | ) |  | (30 | ) |  | — |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | — |  |  | (10 | ) |
| Other |  | — |  |  | (1 | ) |  | (7 | ) |
| Subtotal |  | (189 | ) |  | 48 |  |  | 25 |  |
| Total Income Tax Expense |  | $ | 93 |  |  | $ | 344 |  |  | $ | 563 |  |
| Effective Income Tax Rate |  | 6.9 | % |  | 24.4 | % |  | 36.7 | % |
The following is an analysis of deferred income taxes for PSE&G:
|  |  | As of December 31, |
| PSE&G |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 539 |  |  | $ | 606 |  |
| OPEB |  | 97 |  |  | 114 |  |
| Related to Uncertain Tax Positions |  | 42 |  |  | — |  |
| Operating Leases |  | 21 |  |  | — |  |
| Other |  | 55 |  |  | — |  |
| Total Noncurrent Assets |  | $ | 754 |  |  | $ | 720 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 3,754 |  |  | $ | 3,622 |  |
| New Jersey Corporate Business Tax |  | 588 |  |  | 486 |  |
| Pension Costs |  | 160 |  |  | 159 |  |
| Taxes Recoverable Through Future Rates (net) |  | 108 |  |  | 89 |  |
| Conservation Costs |  | 44 |  |  | 36 |  |
| Operating Leases |  | 21 |  |  | — |  |
| Other |  | 183 |  |  | 84 |  |
| Total Noncurrent Liabilities |  | $ | 4,858 |  |  | $ | 4,476 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 4,104 |  |  | $ | 3,756 |  |
| ITC |  | 85 |  |  | 74 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 4,189 |  |  | $ | 3,830 |  |
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. A reconciliation of reported income tax expense for PSEG Power with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSEG Power |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 468 |  |  | $ | 365 |  |  | $ | 479 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (48 | ) |  | $ | (164 | ) |  | $ | 95 |  |
| State |  | 3 |  |  | 24 |  |  | (17 | ) |
| Total Current |  | (45 | ) |  | (140 | ) |  | 78 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 208 |  |  | 214 |  |  | (804 | ) |
| State |  | 31 |  |  | 1 |  |  | (37 | ) |
| Total Deferred |  | 239 |  |  | 215 |  |  | (841 | ) |
| ITC |  | 9 |  |  | (9 | ) |  | 34 |  |
| Total Income Tax Expense (Benefit) |  | $ | 203 |  |  | $ | 66 |  |  | $ | (729 | ) |
| Pre-Tax Income (Loss) |  | $ | 671 |  |  | $ | 431 |  |  | $ | (250 | ) |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 141 |  |  | $ | 91 |  |  | $ | (88 | ) |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 25 |  |  | 21 |  |  | (36 | ) |
| Manufacturing Deduction |  | — |  |  | — |  |  | (13 | ) |
| NDT Fund |  | 34 |  |  | (13 | ) |  | 19 |  |
| Tax Credits |  | (10 | ) |  | (7 | ) |  | (12 | ) |
| Related to Uncertain Tax Positions |  | 11 |  |  | (24 | ) |  | 7 |  |
| Audit Settlement |  | — |  |  | — |  |  | 1 |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | (1 | ) |  | (610 | ) |
| Other |  | 2 |  |  | (1 | ) |  | 3 |  |
| Subtotal |  | 62 |  |  | (25 | ) |  | (641 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 203 |  |  | $ | 66 |  |  | $ | (729 | ) |
| Effective Income Tax Rate |  | 30.3 | % |  | 15.3 | % |  | 291.6 | % |
The following is an analysis of deferred income taxes for PSEG Power:
|  |  | As of December 31, |
| PSEG Power |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Related to Uncertain Tax Positions |  | $ | 72 |  |  | $ | 60 |  |
| Pension Costs |  | 61 |  |  | 52 |  |
| OPEB |  | 40 |  |  | 37 |  |
| Operating Leases |  | 15 |  |  | — |  |
| Interest Disallowance Carry Forward |  | 12 |  |  | — |  |
| Contractual Liabilities & Environmental Costs |  | 7 |  |  | 9 |  |
| Other |  | 30 |  |  | 61 |  |
| Total Noncurrent Assets |  | $ | 237 |  |  | $ | 219 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 1,292 |  |  | $ | 1,189 |  |
| New Jersey Corporate Business Tax |  | 282 |  |  | 260 |  |
| AROs and NDT Fund |  | 278 |  |  | 197 |  |
| Operating Leases |  | 15 |  |  | — |  |
| Other |  | 45 |  |  | — |  |
| Total Noncurrent Liabilities |  | $ | 1,912 |  |  | $ | 1,646 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 1,675 |  |  | $ | 1,427 |  |
| ITC |  | 201 |  |  | 192 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 1,876 |  |  | $ | 1,619 |  |
PSEG, PSE&G and PSEG 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 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. Effective January 1, 2018, the U.S. federal corporate income tax rate was reduced from a maximum of 35% to 21% resulting in a decrease in PSEG’s, PSE&G’s and PSEG Power’s effective income tax rates. To the extent allowed under the Tax Act, PSEG Power’s operating cash flows reflect the full expensing of qualifying capital investments for income tax purposes. The impact of the lower federal income tax rate on PSE&G was reflected in PSE&G’s 2018 distribution base rate proceeding and its 2018 transmission rate filing. The distribution base rate proceeding established a TAC mechanism that provides for the refund to customers of the excess deferred income tax regulatory liabilities as well as the flowback of previously realized and current period deferred income taxes related to tax repair deductions. The accounting for the TAC mechanism results in lower revenues and lower tax expense and a current effective tax rate for PSEG and PSE&G that is significantly lower than the statutory rate. The decrease in the federal tax rate resulted in PSE&G recording excess deferred income taxes of approximately $2.1 billion and a Regulatory Liability of approximately $2.9 billion as of December 31, 2018. In 2019, PSE&G returned approximately $380 million of excess deferred income taxes and previously realized and current period deferred income taxes related to tax repair deductions to its customers with a reduction to tax expense of approximately $272 million. The flowback to customers of the excess deferred income taxes and previously realized tax repair deductions resulted in a decrease of approximately $321 million in the Regulatory Liability. The current period tax repair deduction reduces tax expense and revenue and recognizes a Regulatory Asset as PSE&G believes it is probable that the current period tax repair deductions flowed through to the customers will be recovered from customers in the future. See Note 7. Regulatory Assets and Liabilities for additional information. The Tax Act is generally expected to result in lower operating cash flows for PSE&G resulting from the elimination of bonus depreciation, partially offset by higher revenues due to the higher rate base. 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 and 2019, a portion of PSEG’s and PSEG Power’s interest expense was disallowed for tax purposes but it is anticipated that these amounts will be realized in future periods. However, certain aspects of the proposed regulations are unclear. PSEG recorded taxes based on its interpretation of the relevant statutes. In September 2019, the IRS released final and additional proposed regulations regarding the application of tax depreciation rules as amended by the Tax Act. PSEG, PSE&G and PSEG Power do not believe the final or proposed regulations will materially impact their respective financial statements. Amounts recorded under the Tax Act, including but not limited to depreciation and interest disallowance, are subject to change based on several factors, including but not limited to, the IRS and state taxing authorities issuing additional guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s and PSEG Power’s financial statements. In 2019, PSE&G generated a $16 million New Jersey Corporate Business Tax NOL that is expected to be fully realized in the future. 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, PSEG Power and Energy Holdings:
| 2019 |  | PSEG |  | PSE&G |  | PSEG Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2019 |  | $ | 318 |  |  | $ | 108 |  |  | $ | 151 |  |  | $ | 54 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 17 |  |  | 5 |  |  | 8 |  |  | 5 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (37 | ) |  | (1 | ) |  | (13 | ) |  | (22 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 27 |  |  | 12 |  |  | 15 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | (4 | ) |  | — |  |  | — |  |  | (4 | ) |
| Decreases due to Lapses of Applicable Statute of Limitations |  | — |  |  | — |  |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2019 |  | $ | 321 |  |  | $ | 124 |  |  | $ | 161 |  |  | $ | 33 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (184 | ) |  | (71 | ) |  | (105 | ) |  | (7 | ) |
| 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) |  | $ | 91 |  |  | $ | 7 |  |  | $ | 56 |  |  | $ | 26 |  |
| 2018 |  | PSEG |  | PSE&G |  | PSEG 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 |  | PSEG 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 |  |
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, |
|  |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| PSEG |  | $ | 40 |  |  | $ | 43 |  |  | $ | 70 |  |
| PSE&G |  | $ | 16 |  |  | $ | 12 |  |  | $ | 25 |  |
| PSEG Power |  | $ | 12 |  |  | $ | 9 |  |  | $ | 24 |  |
| Energy Holdings |  | $ | 13 |  |  | $ | 22 |  |  | $ | 21 |  |
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 |  | $ | 190 |  |
| PSE&G |  | $ | 107 |  |
| PSEG Power |  | $ | 77 |  |
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 |  | PSEG Power |
| United States |  |  |  |  |  |  |
| Federal |  | 2011-2018 |  | N/A |  | N/A |
| New Jersey |  | 2011-2018 |  | 2011-2018 |  | N/A |
| Pennsylvania |  | 2015-2018 |  | 2015-2018 |  | N/A |
| Connecticut |  | 2016-2018 |  | N/A |  | N/A |
| Maryland |  | 2016-2018 |  | N/A |  | N/A |
| New York |  | 2017-2018 |  | N/A |  | N/A |
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. 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. The State of New Jersey issued further guidance regarding the temporary surtax and clarified that New Jersey net operating loss carryovers can be deducted in computing a taxpayer’s entire net income. This guidance has the effect of lowering or eliminating the temporary surtax. There are certain aspects of the law that remain unclear. In particular, PSEG anticipates that the State of New Jersey will issue clarifying guidance regarding the combined reporting rules. Any further guidance or clarification could impact PSEG’s and PSEG Power’s financial statements.
PSEG Power LLC |
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 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSEG |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 1,693 |  |  | $ | 1,438 |  |  | $ | 1,574 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | 84 |  |  | $ | (97 | ) |  | $ | 86 |  |
| State |  | 18 |  |  | 83 |  |  | (31 | ) |
| Total Current |  | 102 |  |  | (14 | ) |  | 55 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 3 |  |  | 373 |  |  | (482 | ) |
| State |  | 132 |  |  | 71 |  |  | 92 |  |
| Total Deferred |  | 135 |  |  | 444 |  |  | (390 | ) |
| Investment Tax Credit (ITC) |  | 20 |  |  | (13 | ) |  | 29 |  |
| Total Income Tax Expense (Benefit) |  | $ | 257 |  |  | $ | 417 |  |  | $ | (306 | ) |
| Pre-Tax Income |  | $ | 1,950 |  |  | $ | 1,855 |  |  | $ | 1,268 |  |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 410 |  |  | $ | 390 |  |  | $ | 444 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 117 |  |  | 123 |  |  | 36 |  |
| Uncertain Tax Positions |  | — |  |  | (24 | ) |  | (3 | ) |
| Manufacturing Deduction |  | — |  |  | — |  |  | (13 | ) |
| NDT Fund |  | 34 |  |  | (13 | ) |  | 19 |  |
| Plant-Related Items |  | (2 | ) |  | (10 | ) |  | (23 | ) |
| Tax Credits |  | (18 | ) |  | (16 | ) |  | (22 | ) |
| Audit Settlement |  | — |  |  | — |  |  | 6 |  |
| Tax Adjustment Credit |  | (272 | ) |  | (30 | ) |  | — |  |
| Deferred Tax Expense (Benefit) - Tax Act |  | — |  |  | 3 |  |  | (755 | ) |
| Other |  | (12 | ) |  | (6 | ) |  | 5 |  |
| Subtotal |  | (153 | ) |  | 27 |  |  | (750 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 257 |  |  | $ | 417 |  |  | $ | (306 | ) |
| Effective Income Tax Rate |  | 13.2 | % |  | 22.5 | % |  | (24.1 | )% |
The following is an analysis of deferred income taxes for PSEG:
|  |  | As of December 31, |
| PSEG |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 539 |  |  | $ | 606 |  |
| OPEB |  | 151 |  |  | 163 |  |
| Related to Uncertain Tax Positions |  | 97 |  |  | 71 |  |
| Interest Disallowance Carry Forward |  | 76 |  |  | — |  |
| Operating Leases |  | 64 |  |  | — |  |
| Other |  | 128 |  |  | — |  |
| Total Noncurrent Assets |  | $ | 1,055 |  |  | $ | 840 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 5,051 |  |  | $ | 4,817 |  |
| New Jersey Corporate Business Tax |  | 876 |  |  | 756 |  |
| Leasing Activities |  | 284 |  |  | 307 |  |
| AROs and NDT Fund |  | 277 |  |  | 196 |  |
| Taxes Recoverable Through Future Rates (net) |  | 108 |  |  | 89 |  |
| Pension Costs |  | 98 |  |  | 111 |  |
| Operating Leases |  | 59 |  |  | — |  |
| Other |  | 273 |  |  | 12 |  |
| Total Noncurrent Liabilities |  | $ | 7,026 |  |  | $ | 6,288 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 5,971 |  |  | $ | 5,448 |  |
| ITC |  | 285 |  |  | 265 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 6,256 |  |  | $ | 5,713 |  |
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. 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 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSE&G |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 1,250 |  |  | $ | 1,067 |  |  | $ | 973 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | 121 |  |  | $ | (62 | ) |  | $ | (52 | ) |
| State |  | — |  |  | 1 |  |  | (1 | ) |
| Total Current |  | 121 |  |  | (61 | ) |  | (53 | ) |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | (156 | ) |  | 287 |  |  | 492 |  |
| State |  | 117 |  |  | 122 |  |  | 129 |  |
| Total Deferred |  | (39 | ) |  | 409 |  |  | 621 |  |
| ITC |  | 11 |  |  | (4 | ) |  | (5 | ) |
| Total Income Tax Expense |  | $ | 93 |  |  | $ | 344 |  |  | $ | 563 |  |
| Pre-Tax Income |  | $ | 1,343 |  |  | $ | 1,411 |  |  | $ | 1,536 |  |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 282 |  |  | $ | 296 |  |  | $ | 538 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 92 |  |  | 98 |  |  | 83 |  |
| Uncertain Tax Positions |  | 1 |  |  | (1 | ) |  | (9 | ) |
| Plant-Related Items |  | (2 | ) |  | (10 | ) |  | (23 | ) |
| Tax Credits |  | (8 | ) |  | (8 | ) |  | (9 | ) |
| Tax Adjustment Credit |  | (272 | ) |  | (30 | ) |  | — |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | — |  |  | (10 | ) |
| Other |  | — |  |  | (1 | ) |  | (7 | ) |
| Subtotal |  | (189 | ) |  | 48 |  |  | 25 |  |
| Total Income Tax Expense |  | $ | 93 |  |  | $ | 344 |  |  | $ | 563 |  |
| Effective Income Tax Rate |  | 6.9 | % |  | 24.4 | % |  | 36.7 | % |
The following is an analysis of deferred income taxes for PSE&G:
|  |  | As of December 31, |
| PSE&G |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 539 |  |  | $ | 606 |  |
| OPEB |  | 97 |  |  | 114 |  |
| Related to Uncertain Tax Positions |  | 42 |  |  | — |  |
| Operating Leases |  | 21 |  |  | — |  |
| Other |  | 55 |  |  | — |  |
| Total Noncurrent Assets |  | $ | 754 |  |  | $ | 720 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 3,754 |  |  | $ | 3,622 |  |
| New Jersey Corporate Business Tax |  | 588 |  |  | 486 |  |
| Pension Costs |  | 160 |  |  | 159 |  |
| Taxes Recoverable Through Future Rates (net) |  | 108 |  |  | 89 |  |
| Conservation Costs |  | 44 |  |  | 36 |  |
| Operating Leases |  | 21 |  |  | — |  |
| Other |  | 183 |  |  | 84 |  |
| Total Noncurrent Liabilities |  | $ | 4,858 |  |  | $ | 4,476 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 4,104 |  |  | $ | 3,756 |  |
| ITC |  | 85 |  |  | 74 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 4,189 |  |  | $ | 3,830 |  |
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. A reconciliation of reported income tax expense for PSEG Power with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSEG Power |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 468 |  |  | $ | 365 |  |  | $ | 479 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (48 | ) |  | $ | (164 | ) |  | $ | 95 |  |
| State |  | 3 |  |  | 24 |  |  | (17 | ) |
| Total Current |  | (45 | ) |  | (140 | ) |  | 78 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 208 |  |  | 214 |  |  | (804 | ) |
| State |  | 31 |  |  | 1 |  |  | (37 | ) |
| Total Deferred |  | 239 |  |  | 215 |  |  | (841 | ) |
| ITC |  | 9 |  |  | (9 | ) |  | 34 |  |
| Total Income Tax Expense (Benefit) |  | $ | 203 |  |  | $ | 66 |  |  | $ | (729 | ) |
| Pre-Tax Income (Loss) |  | $ | 671 |  |  | $ | 431 |  |  | $ | (250 | ) |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 141 |  |  | $ | 91 |  |  | $ | (88 | ) |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 25 |  |  | 21 |  |  | (36 | ) |
| Manufacturing Deduction |  | — |  |  | — |  |  | (13 | ) |
| NDT Fund |  | 34 |  |  | (13 | ) |  | 19 |  |
| Tax Credits |  | (10 | ) |  | (7 | ) |  | (12 | ) |
| Related to Uncertain Tax Positions |  | 11 |  |  | (24 | ) |  | 7 |  |
| Audit Settlement |  | — |  |  | — |  |  | 1 |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | (1 | ) |  | (610 | ) |
| Other |  | 2 |  |  | (1 | ) |  | 3 |  |
| Subtotal |  | 62 |  |  | (25 | ) |  | (641 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 203 |  |  | $ | 66 |  |  | $ | (729 | ) |
| Effective Income Tax Rate |  | 30.3 | % |  | 15.3 | % |  | 291.6 | % |
The following is an analysis of deferred income taxes for PSEG Power:
|  |  | As of December 31, |
| PSEG Power |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Related to Uncertain Tax Positions |  | $ | 72 |  |  | $ | 60 |  |
| Pension Costs |  | 61 |  |  | 52 |  |
| OPEB |  | 40 |  |  | 37 |  |
| Operating Leases |  | 15 |  |  | — |  |
| Interest Disallowance Carry Forward |  | 12 |  |  | — |  |
| Contractual Liabilities & Environmental Costs |  | 7 |  |  | 9 |  |
| Other |  | 30 |  |  | 61 |  |
| Total Noncurrent Assets |  | $ | 237 |  |  | $ | 219 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 1,292 |  |  | $ | 1,189 |  |
| New Jersey Corporate Business Tax |  | 282 |  |  | 260 |  |
| AROs and NDT Fund |  | 278 |  |  | 197 |  |
| Operating Leases |  | 15 |  |  | — |  |
| Other |  | 45 |  |  | — |  |
| Total Noncurrent Liabilities |  | $ | 1,912 |  |  | $ | 1,646 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 1,675 |  |  | $ | 1,427 |  |
| ITC |  | 201 |  |  | 192 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 1,876 |  |  | $ | 1,619 |  |
PSEG, PSE&G and PSEG 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 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. Effective January 1, 2018, the U.S. federal corporate income tax rate was reduced from a maximum of 35% to 21% resulting in a decrease in PSEG’s, PSE&G’s and PSEG Power’s effective income tax rates. To the extent allowed under the Tax Act, PSEG Power’s operating cash flows reflect the full expensing of qualifying capital investments for income tax purposes. The impact of the lower federal income tax rate on PSE&G was reflected in PSE&G’s 2018 distribution base rate proceeding and its 2018 transmission rate filing. The distribution base rate proceeding established a TAC mechanism that provides for the refund to customers of the excess deferred income tax regulatory liabilities as well as the flowback of previously realized and current period deferred income taxes related to tax repair deductions. The accounting for the TAC mechanism results in lower revenues and lower tax expense and a current effective tax rate for PSEG and PSE&G that is significantly lower than the statutory rate. The decrease in the federal tax rate resulted in PSE&G recording excess deferred income taxes of approximately $2.1 billion and a Regulatory Liability of approximately $2.9 billion as of December 31, 2018. In 2019, PSE&G returned approximately $380 million of excess deferred income taxes and previously realized and current period deferred income taxes related to tax repair deductions to its customers with a reduction to tax expense of approximately $272 million. The flowback to customers of the excess deferred income taxes and previously realized tax repair deductions resulted in a decrease of approximately $321 million in the Regulatory Liability. The current period tax repair deduction reduces tax expense and revenue and recognizes a Regulatory Asset as PSE&G believes it is probable that the current period tax repair deductions flowed through to the customers will be recovered from customers in the future. See Note 7. Regulatory Assets and Liabilities for additional information. The Tax Act is generally expected to result in lower operating cash flows for PSE&G resulting from the elimination of bonus depreciation, partially offset by higher revenues due to the higher rate base. 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 and 2019, a portion of PSEG’s and PSEG Power’s interest expense was disallowed for tax purposes but it is anticipated that these amounts will be realized in future periods. However, certain aspects of the proposed regulations are unclear. PSEG recorded taxes based on its interpretation of the relevant statutes. In September 2019, the IRS released final and additional proposed regulations regarding the application of tax depreciation rules as amended by the Tax Act. PSEG, PSE&G and PSEG Power do not believe the final or proposed regulations will materially impact their respective financial statements. Amounts recorded under the Tax Act, including but not limited to depreciation and interest disallowance, are subject to change based on several factors, including but not limited to, the IRS and state taxing authorities issuing additional guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s and PSEG Power’s financial statements. In 2019, PSE&G generated a $16 million New Jersey Corporate Business Tax NOL that is expected to be fully realized in the future. 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, PSEG Power and Energy Holdings:
| 2019 |  | PSEG |  | PSE&G |  | PSEG Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2019 |  | $ | 318 |  |  | $ | 108 |  |  | $ | 151 |  |  | $ | 54 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 17 |  |  | 5 |  |  | 8 |  |  | 5 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (37 | ) |  | (1 | ) |  | (13 | ) |  | (22 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 27 |  |  | 12 |  |  | 15 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | (4 | ) |  | — |  |  | — |  |  | (4 | ) |
| Decreases due to Lapses of Applicable Statute of Limitations |  | — |  |  | — |  |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2019 |  | $ | 321 |  |  | $ | 124 |  |  | $ | 161 |  |  | $ | 33 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (184 | ) |  | (71 | ) |  | (105 | ) |  | (7 | ) |
| 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) |  | $ | 91 |  |  | $ | 7 |  |  | $ | 56 |  |  | $ | 26 |  |
| 2018 |  | PSEG |  | PSE&G |  | PSEG 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 |  | PSEG 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 |  |
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, |
|  |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| PSEG |  | $ | 40 |  |  | $ | 43 |  |  | $ | 70 |  |
| PSE&G |  | $ | 16 |  |  | $ | 12 |  |  | $ | 25 |  |
| PSEG Power |  | $ | 12 |  |  | $ | 9 |  |  | $ | 24 |  |
| Energy Holdings |  | $ | 13 |  |  | $ | 22 |  |  | $ | 21 |  |
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 |  | $ | 190 |  |
| PSE&G |  | $ | 107 |  |
| PSEG Power |  | $ | 77 |  |
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 |  | PSEG Power |
| United States |  |  |  |  |  |  |
| Federal |  | 2011-2018 |  | N/A |  | N/A |
| New Jersey |  | 2011-2018 |  | 2011-2018 |  | N/A |
| Pennsylvania |  | 2015-2018 |  | 2015-2018 |  | N/A |
| Connecticut |  | 2016-2018 |  | N/A |  | N/A |
| Maryland |  | 2016-2018 |  | N/A |  | N/A |
| New York |  | 2017-2018 |  | N/A |  | N/A |
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. 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. The State of New Jersey issued further guidance regarding the temporary surtax and clarified that New Jersey net operating loss carryovers can be deducted in computing a taxpayer’s entire net income. This guidance has the effect of lowering or eliminating the temporary surtax. There are certain aspects of the law that remain unclear. In particular, PSEG anticipates that the State of New Jersey will issue clarifying guidance regarding the combined reporting rules. Any further guidance or clarification could impact PSEG’s and PSEG Power’s financial statements.
Public Service Electric and Gas Company |
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 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSEG |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 1,693 |  |  | $ | 1,438 |  |  | $ | 1,574 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | 84 |  |  | $ | (97 | ) |  | $ | 86 |  |
| State |  | 18 |  |  | 83 |  |  | (31 | ) |
| Total Current |  | 102 |  |  | (14 | ) |  | 55 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 3 |  |  | 373 |  |  | (482 | ) |
| State |  | 132 |  |  | 71 |  |  | 92 |  |
| Total Deferred |  | 135 |  |  | 444 |  |  | (390 | ) |
| Investment Tax Credit (ITC) |  | 20 |  |  | (13 | ) |  | 29 |  |
| Total Income Tax Expense (Benefit) |  | $ | 257 |  |  | $ | 417 |  |  | $ | (306 | ) |
| Pre-Tax Income |  | $ | 1,950 |  |  | $ | 1,855 |  |  | $ | 1,268 |  |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 410 |  |  | $ | 390 |  |  | $ | 444 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 117 |  |  | 123 |  |  | 36 |  |
| Uncertain Tax Positions |  | — |  |  | (24 | ) |  | (3 | ) |
| Manufacturing Deduction |  | — |  |  | — |  |  | (13 | ) |
| NDT Fund |  | 34 |  |  | (13 | ) |  | 19 |  |
| Plant-Related Items |  | (2 | ) |  | (10 | ) |  | (23 | ) |
| Tax Credits |  | (18 | ) |  | (16 | ) |  | (22 | ) |
| Audit Settlement |  | — |  |  | — |  |  | 6 |  |
| Tax Adjustment Credit |  | (272 | ) |  | (30 | ) |  | — |  |
| Deferred Tax Expense (Benefit) - Tax Act |  | — |  |  | 3 |  |  | (755 | ) |
| Other |  | (12 | ) |  | (6 | ) |  | 5 |  |
| Subtotal |  | (153 | ) |  | 27 |  |  | (750 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 257 |  |  | $ | 417 |  |  | $ | (306 | ) |
| Effective Income Tax Rate |  | 13.2 | % |  | 22.5 | % |  | (24.1 | )% |
The following is an analysis of deferred income taxes for PSEG:
|  |  | As of December 31, |
| PSEG |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 539 |  |  | $ | 606 |  |
| OPEB |  | 151 |  |  | 163 |  |
| Related to Uncertain Tax Positions |  | 97 |  |  | 71 |  |
| Interest Disallowance Carry Forward |  | 76 |  |  | — |  |
| Operating Leases |  | 64 |  |  | — |  |
| Other |  | 128 |  |  | — |  |
| Total Noncurrent Assets |  | $ | 1,055 |  |  | $ | 840 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 5,051 |  |  | $ | 4,817 |  |
| New Jersey Corporate Business Tax |  | 876 |  |  | 756 |  |
| Leasing Activities |  | 284 |  |  | 307 |  |
| AROs and NDT Fund |  | 277 |  |  | 196 |  |
| Taxes Recoverable Through Future Rates (net) |  | 108 |  |  | 89 |  |
| Pension Costs |  | 98 |  |  | 111 |  |
| Operating Leases |  | 59 |  |  | — |  |
| Other |  | 273 |  |  | 12 |  |
| Total Noncurrent Liabilities |  | $ | 7,026 |  |  | $ | 6,288 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 5,971 |  |  | $ | 5,448 |  |
| ITC |  | 285 |  |  | 265 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 6,256 |  |  | $ | 5,713 |  |
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. 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 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSE&G |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 1,250 |  |  | $ | 1,067 |  |  | $ | 973 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | 121 |  |  | $ | (62 | ) |  | $ | (52 | ) |
| State |  | — |  |  | 1 |  |  | (1 | ) |
| Total Current |  | 121 |  |  | (61 | ) |  | (53 | ) |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | (156 | ) |  | 287 |  |  | 492 |  |
| State |  | 117 |  |  | 122 |  |  | 129 |  |
| Total Deferred |  | (39 | ) |  | 409 |  |  | 621 |  |
| ITC |  | 11 |  |  | (4 | ) |  | (5 | ) |
| Total Income Tax Expense |  | $ | 93 |  |  | $ | 344 |  |  | $ | 563 |  |
| Pre-Tax Income |  | $ | 1,343 |  |  | $ | 1,411 |  |  | $ | 1,536 |  |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 282 |  |  | $ | 296 |  |  | $ | 538 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 92 |  |  | 98 |  |  | 83 |  |
| Uncertain Tax Positions |  | 1 |  |  | (1 | ) |  | (9 | ) |
| Plant-Related Items |  | (2 | ) |  | (10 | ) |  | (23 | ) |
| Tax Credits |  | (8 | ) |  | (8 | ) |  | (9 | ) |
| Tax Adjustment Credit |  | (272 | ) |  | (30 | ) |  | — |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | — |  |  | (10 | ) |
| Other |  | — |  |  | (1 | ) |  | (7 | ) |
| Subtotal |  | (189 | ) |  | 48 |  |  | 25 |  |
| Total Income Tax Expense |  | $ | 93 |  |  | $ | 344 |  |  | $ | 563 |  |
| Effective Income Tax Rate |  | 6.9 | % |  | 24.4 | % |  | 36.7 | % |
The following is an analysis of deferred income taxes for PSE&G:
|  |  | As of December 31, |
| PSE&G |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 539 |  |  | $ | 606 |  |
| OPEB |  | 97 |  |  | 114 |  |
| Related to Uncertain Tax Positions |  | 42 |  |  | — |  |
| Operating Leases |  | 21 |  |  | — |  |
| Other |  | 55 |  |  | — |  |
| Total Noncurrent Assets |  | $ | 754 |  |  | $ | 720 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 3,754 |  |  | $ | 3,622 |  |
| New Jersey Corporate Business Tax |  | 588 |  |  | 486 |  |
| Pension Costs |  | 160 |  |  | 159 |  |
| Taxes Recoverable Through Future Rates (net) |  | 108 |  |  | 89 |  |
| Conservation Costs |  | 44 |  |  | 36 |  |
| Operating Leases |  | 21 |  |  | — |  |
| Other |  | 183 |  |  | 84 |  |
| Total Noncurrent Liabilities |  | $ | 4,858 |  |  | $ | 4,476 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 4,104 |  |  | $ | 3,756 |  |
| ITC |  | 85 |  |  | 74 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 4,189 |  |  | $ | 3,830 |  |
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. A reconciliation of reported income tax expense for PSEG Power with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% in 2019 and 2018 and 35% in 2017 is as follows:
|  |  | Years Ended December 31, |
| PSEG Power |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| Net Income |  | $ | 468 |  |  | $ | 365 |  |  | $ | 479 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | (48 | ) |  | $ | (164 | ) |  | $ | 95 |  |
| State |  | 3 |  |  | 24 |  |  | (17 | ) |
| Total Current |  | (45 | ) |  | (140 | ) |  | 78 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | 208 |  |  | 214 |  |  | (804 | ) |
| State |  | 31 |  |  | 1 |  |  | (37 | ) |
| Total Deferred |  | 239 |  |  | 215 |  |  | (841 | ) |
| ITC |  | 9 |  |  | (9 | ) |  | 34 |  |
| Total Income Tax Expense (Benefit) |  | $ | 203 |  |  | $ | 66 |  |  | $ | (729 | ) |
| Pre-Tax Income (Loss) |  | $ | 671 |  |  | $ | 431 |  |  | $ | (250 | ) |
| Tax Computed at Statutory Rate @ 21% in 2019 and 2018 and 35% in 2017 |  | $ | 141 |  |  | $ | 91 |  |  | $ | (88 | ) |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 25 |  |  | 21 |  |  | (36 | ) |
| Manufacturing Deduction |  | — |  |  | — |  |  | (13 | ) |
| NDT Fund |  | 34 |  |  | (13 | ) |  | 19 |  |
| Tax Credits |  | (10 | ) |  | (7 | ) |  | (12 | ) |
| Related to Uncertain Tax Positions |  | 11 |  |  | (24 | ) |  | 7 |  |
| Audit Settlement |  | — |  |  | — |  |  | 1 |  |
| Deferred Tax Benefit - Tax Act |  | — |  |  | (1 | ) |  | (610 | ) |
| Other |  | 2 |  |  | (1 | ) |  | 3 |  |
| Subtotal |  | 62 |  |  | (25 | ) |  | (641 | ) |
| Total Income Tax Expense (Benefit) |  | $ | 203 |  |  | $ | 66 |  |  | $ | (729 | ) |
| Effective Income Tax Rate |  | 30.3 | % |  | 15.3 | % |  | 291.6 | % |
The following is an analysis of deferred income taxes for PSEG Power:
|  |  | As of December 31, |
| PSEG Power |  | 2019 |  | 2018 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Related to Uncertain Tax Positions |  | $ | 72 |  |  | $ | 60 |  |
| Pension Costs |  | 61 |  |  | 52 |  |
| OPEB |  | 40 |  |  | 37 |  |
| Operating Leases |  | 15 |  |  | — |  |
| Interest Disallowance Carry Forward |  | 12 |  |  | — |  |
| Contractual Liabilities & Environmental Costs |  | 7 |  |  | 9 |  |
| Other |  | 30 |  |  | 61 |  |
| Total Noncurrent Assets |  | $ | 237 |  |  | $ | 219 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 1,292 |  |  | $ | 1,189 |  |
| New Jersey Corporate Business Tax |  | 282 |  |  | 260 |  |
| AROs and NDT Fund |  | 278 |  |  | 197 |  |
| Operating Leases |  | 15 |  |  | — |  |
| Other |  | 45 |  |  | — |  |
| Total Noncurrent Liabilities |  | $ | 1,912 |  |  | $ | 1,646 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 1,675 |  |  | $ | 1,427 |  |
| ITC |  | 201 |  |  | 192 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 1,876 |  |  | $ | 1,619 |  |
PSEG, PSE&G and PSEG 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 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. Effective January 1, 2018, the U.S. federal corporate income tax rate was reduced from a maximum of 35% to 21% resulting in a decrease in PSEG’s, PSE&G’s and PSEG Power’s effective income tax rates. To the extent allowed under the Tax Act, PSEG Power’s operating cash flows reflect the full expensing of qualifying capital investments for income tax purposes. The impact of the lower federal income tax rate on PSE&G was reflected in PSE&G’s 2018 distribution base rate proceeding and its 2018 transmission rate filing. The distribution base rate proceeding established a TAC mechanism that provides for the refund to customers of the excess deferred income tax regulatory liabilities as well as the flowback of previously realized and current period deferred income taxes related to tax repair deductions. The accounting for the TAC mechanism results in lower revenues and lower tax expense and a current effective tax rate for PSEG and PSE&G that is significantly lower than the statutory rate. The decrease in the federal tax rate resulted in PSE&G recording excess deferred income taxes of approximately $2.1 billion and a Regulatory Liability of approximately $2.9 billion as of December 31, 2018. In 2019, PSE&G returned approximately $380 million of excess deferred income taxes and previously realized and current period deferred income taxes related to tax repair deductions to its customers with a reduction to tax expense of approximately $272 million. The flowback to customers of the excess deferred income taxes and previously realized tax repair deductions resulted in a decrease of approximately $321 million in the Regulatory Liability. The current period tax repair deduction reduces tax expense and revenue and recognizes a Regulatory Asset as PSE&G believes it is probable that the current period tax repair deductions flowed through to the customers will be recovered from customers in the future. See Note 7. Regulatory Assets and Liabilities for additional information. The Tax Act is generally expected to result in lower operating cash flows for PSE&G resulting from the elimination of bonus depreciation, partially offset by higher revenues due to the higher rate base. 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 and 2019, a portion of PSEG’s and PSEG Power’s interest expense was disallowed for tax purposes but it is anticipated that these amounts will be realized in future periods. However, certain aspects of the proposed regulations are unclear. PSEG recorded taxes based on its interpretation of the relevant statutes. In September 2019, the IRS released final and additional proposed regulations regarding the application of tax depreciation rules as amended by the Tax Act. PSEG, PSE&G and PSEG Power do not believe the final or proposed regulations will materially impact their respective financial statements. Amounts recorded under the Tax Act, including but not limited to depreciation and interest disallowance, are subject to change based on several factors, including but not limited to, the IRS and state taxing authorities issuing additional guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s and PSEG Power’s financial statements. In 2019, PSE&G generated a $16 million New Jersey Corporate Business Tax NOL that is expected to be fully realized in the future. 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, PSEG Power and Energy Holdings:
| 2019 |  | PSEG |  | PSE&G |  | PSEG Power |  | Energy Holdings |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2019 |  | $ | 318 |  |  | $ | 108 |  |  | $ | 151 |  |  | $ | 54 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 17 |  |  | 5 |  |  | 8 |  |  | 5 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (37 | ) |  | (1 | ) |  | (13 | ) |  | (22 | ) |
| Increases as a Result of Positions Taken during the Current Period |  | 27 |  |  | 12 |  |  | 15 |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | (4 | ) |  | — |  |  | — |  |  | (4 | ) |
| Decreases due to Lapses of Applicable Statute of Limitations |  | — |  |  | — |  |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2019 |  | $ | 321 |  |  | $ | 124 |  |  | $ | 161 |  |  | $ | 33 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (184 | ) |  | (71 | ) |  | (105 | ) |  | (7 | ) |
| 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) |  | $ | 91 |  |  | $ | 7 |  |  | $ | 56 |  |  | $ | 26 |  |
| 2018 |  | PSEG |  | PSE&G |  | PSEG 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 |  | PSEG 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 |  |
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, |
|  |  | 2019 |  | 2018 |  | 2017 |
|  |  | Millions |
| PSEG |  | $ | 40 |  |  | $ | 43 |  |  | $ | 70 |  |
| PSE&G |  | $ | 16 |  |  | $ | 12 |  |  | $ | 25 |  |
| PSEG Power |  | $ | 12 |  |  | $ | 9 |  |  | $ | 24 |  |
| Energy Holdings |  | $ | 13 |  |  | $ | 22 |  |  | $ | 21 |  |
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 |  | $ | 190 |  |
| PSE&G |  | $ | 107 |  |
| PSEG Power |  | $ | 77 |  |
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 |  | PSEG Power |
| United States |  |  |  |  |  |  |
| Federal |  | 2011-2018 |  | N/A |  | N/A |
| New Jersey |  | 2011-2018 |  | 2011-2018 |  | N/A |
| Pennsylvania |  | 2015-2018 |  | 2015-2018 |  | N/A |
| Connecticut |  | 2016-2018 |  | N/A |  | N/A |
| Maryland |  | 2016-2018 |  | N/A |  | N/A |
| New York |  | 2017-2018 |  | N/A |  | N/A |
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. 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. The State of New Jersey issued further guidance regarding the temporary surtax and clarified that New Jersey net operating loss carryovers can be deducted in computing a taxpayer’s entire net income. This guidance has the effect of lowering or eliminating the temporary surtax. There are certain aspects of the law that remain unclear. In particular, PSEG anticipates that the State of New Jersey will issue clarifying guidance regarding the combined reporting rules. Any further guidance or clarification could impact PSEG’s and PSEG Power’s financial statements.

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