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Income Taxes | 12 Months Ended
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Dec. 31, 2022
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% is as follows:
|  |  | Years Ended December 31, |
| PSEG |  | 2022 |  | 2021 |  | 2020 |
|  |  | Millions |
| Net Income (Loss) |  | $ | 1,031 |  |  | $ | (648) |  |  | $ | 1,905 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | 262 |  |  | $ | 407 |  |  | $ | 385 |  |
| State |  | (30) |  |  | (3) |  |  | 48 |  |
| Total Current |  | 232 |  |  | 404 |  |  | 433 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | (335) |  |  | (700) |  |  | (164) |  |
| State |  | 80 |  |  | (136) |  |  | 141 |  |
| Total Deferred |  | (255) |  |  | (836) |  |  | (23) |  |
| ITC |  | (6) |  |  | (9) |  |  | (14) |  |
| Total Income Tax Expense (Benefit) |  | $ | (29) |  |  | $ | (441) |  |  | $ | 396 |  |
| Pre-Tax Income (Loss) |  | $ | 1,002 |  |  | $ | (1,089) |  |  | $ | 2,301 |  |
| Tax Computed at Statutory Rate @ 21% |  | $ | 210 |  |  | $ | (229) |  |  | $ | 483 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 41 |  |  | (109) |  |  | 147 |  |
| Uncertain Tax Positions |  | (22) |  |  | 19 |  |  | 3 |  |
| NDT Fund |  | (22) |  |  | 23 |  |  | 32 |  |
| Plant-Related Items |  | (6) |  |  | (7) |  |  | (9) |  |
| Tax Credits |  | (10) |  |  | 29 |  |  | (18) |  |
| Audit Settlement |  | — |  |  | (8) |  |  | (27) |  |
| Leasing Activities |  | — |  |  | (1) |  |  | (35) |  |
| GPRC-CEF-EE |  | (37) |  |  | (13) |  |  | — |  |
| TAC |  | (193) |  |  | (171) |  |  | (205) |  |
| Bad Debt Flow-Through |  | (1) |  |  | 27 |  |  | 28 |  |
| Other |  | 11 |  |  | (1) |  |  | (3) |  |
| Subtotal |  | (239) |  |  | (212) |  |  | (87) |  |
| Total Income Tax Expense (Benefit) |  | $ | (29) |  |  | $ | (441) |  |  | $ | 396 |  |
| Effective Income Tax Rate |  | (2.9) | % |  | 40.5 | % |  | 17.2 | % |
The following is an analysis of deferred income taxes for PSEG:
|  |  | As of December 31, |
| PSEG |  | 2022 |  | 2021 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 390 |  |  | $ | 439 |  |
| OPEB |  | 74 |  |  | 107 |  |
| Bad Debt |  | 66 |  |  | 67 |  |
| Related to Uncertain Tax Positions |  | 1 |  |  | 30 |  |
| Operating Leases |  | 42 |  |  | 48 |  |
| Other |  | 378 |  |  | 253 |  |
| Total Noncurrent Assets |  | $ | 951 |  |  | $ | 944 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 4,663 |  |  | $ | 4,701 |  |
| New Jersey Corporate Business Tax |  | 1,009 |  |  | 939 |  |
| Leasing Activities |  | 99 |  |  | 113 |  |
| AROs and NDT Fund |  | 161 |  |  | 270 |  |
| Taxes Recoverable Through Future Rates (net) |  | 149 |  |  | 120 |  |
| Pension Costs |  | 164 |  |  | 169 |  |
| Operating Leases |  | 37 |  |  | 43 |  |
| Other |  | 324 |  |  | 271 |  |
| Total Noncurrent Liabilities |  | $ | 6,606 |  |  | $ | 6,626 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 5,655 |  |  | $ | 5,682 |  |
| ITC |  | 70 |  |  | 77 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 5,725 |  |  | $ | 5,759 |  |
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% is as follows:
|  |  | Years Ended December 31, |
| PSE&G |  | 2022 |  | 2021 |  | 2020 |
|  |  | Millions |
| Net Income |  | $ | 1,565 |  |  | $ | 1,446 |  |  | $ | 1,327 |  |
| Income Taxes: |  |  |  |  |  |  |
| Operating Income: |  |  |  |  |  |  |
| Current (Benefit) Expense: |  |  |  |  |  |  |
| Federal |  | $ | 130 |  |  | $ | 208 |  |  | $ | 179 |  |
| State |  | — |  |  | 1 |  |  | 8 |  |
| Total Current |  | 130 |  |  | 209 |  |  | 187 |  |
| Deferred Expense (Benefit): |  |  |  |  |  |  |
| Federal |  | (17) |  |  | (33) |  |  | (71) |  |
| State |  | 159 |  |  | 153 |  |  | 128 |  |
| Total Deferred |  | 142 |  |  | 120 |  |  | 57 |  |
| ITC |  | (5) |  |  | (5) |  |  | (4) |  |
| Total Income Tax Expense |  | $ | 267 |  |  | $ | 324 |  |  | $ | 240 |  |
| Pre-Tax Income |  | $ | 1,832 |  |  | $ | 1,770 |  |  | $ | 1,567 |  |
| Tax Computed at Statutory Rate @ 21% |  | $ | 385 |  |  | $ | 372 |  |  | $ | 329 |  |
| Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: |  |  |  |  |  |  |
| State Income Taxes (net of federal income tax) |  | 126 |  |  | 122 |  |  | 106 |  |
| Uncertain Tax Positions |  | 2 |  |  | 2 |  |  | 4 |  |
| Plant-Related Items |  | (6) |  |  | (7) |  |  | (9) |  |
| Tax Credits |  | (9) |  |  | (8) |  |  | (9) |  |
| Audit Settlement |  | — |  |  | (1) |  |  | (2) |  |
| GPRC-CEF-EE |  | (37) |  |  | (13) |  |  | — |  |
| TAC |  | (193) |  |  | (171) |  |  | (205) |  |
| Bad Debt Flow-Through |  | (1) |  |  | 27 |  |  | 28 |  |
| Other |  | — |  |  | 1 |  |  | (2) |  |
| Subtotal |  | (118) |  |  | (48) |  |  | (89) |  |
| Total Income Tax Expense |  | $ | 267 |  |  | $ | 324 |  |  | $ | 240 |  |
| Effective Income Tax Rate |  | 14.6 | % |  | 18.3 | % |  | 15.3 | % |
The following is an analysis of deferred income taxes for PSE&G:
|  |  | As of December 31, |
| PSE&G |  | 2022 |  | 2021 |
|  |  | Millions |
| Deferred Income Taxes |  |  |  |  |
| Assets: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Regulatory Liability Excess Deferred Tax |  | $ | 390 |  |  | $ | 439 |  |
| OPEB |  | 42 |  |  | 61 |  |
| Related to Uncertain Tax Positions |  | 3 |  |  | — |  |
| Bad Debt |  | 66 |  |  | 67 |  |
| Operating Leases |  | 19 |  |  | 20 |  |
| Other |  | 53 |  |  | 57 |  |
| Total Noncurrent Assets |  | $ | 573 |  |  | $ | 644 |  |
| Liabilities: |  |  |  |  |
| Noncurrent: |  |  |  |  |
| Plant-Related Items |  | $ | 4,174 |  |  | $ | 4,006 |  |
| New Jersey Corporate Business Tax |  | 1,011 |  |  | 863 |  |
| Pension Costs |  | 195 |  |  | 180 |  |
| Taxes Recoverable Through Future Rates (net) |  | 149 |  |  | 120 |  |
| Conservation Costs |  | 81 |  |  | 75 |  |
| Operating Leases |  | 18 |  |  | 19 |  |
| Related to Uncertain Tax Positions |  | — |  |  | 1 |  |
| Other |  | 223 |  |  | 178 |  |
| Total Noncurrent Liabilities |  | $ | 5,851 |  |  | $ | 5,442 |  |
| Summary of Accumulated Deferred Income Taxes: |  |  |  |  |
| Net Noncurrent Deferred Income Tax Liabilities |  | $ | 5,278 |  |  | $ | 4,798 |  |
| ITC |  | 70 |  |  | 76 |  |
| Net Total Noncurrent Deferred Income Taxes and ITC |  | $ | 5,348 |  |  | $ | 4,874 |  |
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. PSEG and PSE&G 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. The 2018 decrease in the federal tax rate resulted in PSE&G recording excess deferred income taxes. As of December 31, 2022, the balance was approximately $1.5 billion with a Regulatory Liability of approximately $2.0 billion. In 2022, PSE&G returned approximately $269 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 $193 million. The flowback to customers of the excess deferred income taxes and previously realized tax repair deductions resulted in a decrease of approximately $234 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. In March 2020, the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted. Among other provisions, the CARES Act allows a five-year carryback of any net operating loss (NOL) generated in a taxable year beginning after December 31, 2017, and before January 1, 2021. In April 2020, the IRS issued a private letter ruling to PSE&G concluding that certain excess deferred taxes previously classified as protected should be classified as unprotected. Unprotected excess deferred income taxes are not subject to the normalization rules allowing them to be refunded to customers sooner as agreed to with FERC and the BPU. In July 2020, FERC and the BPU approved PSE&G’s requests to refund these unprotected excess deferred income taxes to customers. FERC approved the refund of these unprotected excess deferred income taxes within the 2019 true-up filing. The BPU approved the refund of these unprotected excess deferred income taxes beginning in July 2020 through December 31, 2024. In July 2020, the IRS issued final and proposed regulations addressing the limitation on deductible business interest expense contained in the Tax Act. These regulations retroactively allow depreciation to be added back in computing the 30% adjusted taxable income (ATI) cap, increasing the amount of interest that can be deducted by unregulated businesses in years before 2022. For 2022 and after, the regulations continue to disallow the addback of depreciation in the computation of ATI, effectively lowering the cap on the amount of deductible business interest and contain special rules in allocating interest between regulated and non-regulated businesses. The portion of PSEG’s and PSEG Power’s business interest expense that was disallowed in 2018 and 2019 under the previously issued proposed regulations will now be deductible in those respective years. In March 2021, PSEG amended its 2018 federal income tax return to deduct the previously disallowed business interest expense in accordance with the final and proposed regulations issued in July 2020. The 2018 amended return generated a NOL that was carried back to 2013 as provided by the CARES Act. In December 2022, the carryback claim was approved by the IRS, which resulted in a $28 million income statement benefit and the closure of PSEG’s federal tax years through 2018. In August 2022, the IRA was signed into law. The IRA made certain changes to existing energy tax credit laws and enacted a new 15% corporate alternative minimum tax, effective in 2023. Changes to the energy tax credit laws include: increases to the PTC rate, a new PTC for electricity generation using nuclear energy, expanded technologies that are eligible for energy tax credits, and the transferability of the energy tax credits. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information on the nuclear PTC. Since the enactment of the IRA, the U.S. Treasury issued various Notices that provide interim guidance on several provisions of the IRA. The Notices state that the U.S. Treasury anticipates issuing additional guidance and proposed and final regulations. Until the U.S. Treasury issues additional clarity to many of the provisions, the impact that the IRA will have on PSEG’s and PSE&G’s financial statements is not determinable. The enactment of additional federal or state tax legislation and clarification of previously enacted tax laws could impact PSEG’s and PSE&G’s financial statements. As of December 31, 2022, PSEG had a $60 million state NOL and PSE&G had a $29 million New Jersey Corporate Business Tax NOL that are both expected to be fully realized in the future. PSEG recorded the following amounts related to its unrecognized tax benefits, which were primarily comprised of amounts recorded for PSE&G and PSEG’s other subsidiaries:
| 2022 |  | PSEG |  | PSE&G |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2022 |  | $ | 192 |  |  | $ | 27 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 9 |  |  | 2 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (40) |  |  | (2) |  |
| Increases as a Result of Positions Taken during the Current Period |  | 1 |  |  | 1 |  |
| Decreases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | (28) |  |  | — |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | (4) |  |  | 1 |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2022 |  | $ | 130 |  |  | $ | 29 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (37) |  |  | (15) |  |
| Regulatory Asset—Unrecognized Tax Benefits |  | (8) |  |  | (8) |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 85 |  |  | $ | 6 |  |
| 2021 |  | PSEG |  | PSE&G |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2021 |  | $ | 147 |  |  | $ | 30 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 58 |  |  | 8 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (19) |  |  | (12) |  |
| Increases as a Result of Positions Taken during the Current Period |  | 6 |  |  | 1 |  |
| 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 |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2021 |  | $ | 192 |  |  | $ | 27 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (76) |  |  | (15) |  |
| Regulatory Asset—Unrecognized Tax Benefits |  | (7) |  |  | (7) |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 109 |  |  | $ | 5 |  |
| 2020 |  | PSEG |  | PSE&G |
|  |  | Millions |
| Total Amount of Unrecognized Tax Benefits as of January 1, 2020 |  | $ | 321 |  |  | $ | 124 |  |
| Increases as a Result of Positions Taken in a Prior Period |  | 33 |  |  | 21 |  |
| Decreases as a Result of Positions Taken in a Prior Period |  | (91) |  |  | (51) |  |
| Increases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |
| Decreases as a Result of Positions Taken during the Current Period |  | — |  |  | — |  |
| Decreases as a Result of Settlements with Taxing Authorities |  | (116) |  |  | (64) |  |
| Decreases due to Lapses of Applicable Statute of Limitations |  | — |  |  | — |  |
| Total Amount of Unrecognized Tax Benefits as of December 31, 2020 |  | $ | 147 |  |  | $ | 30 |  |
| Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits |  | (69) |  |  | (12) |  |
| Regulatory Asset—Unrecognized Tax Benefits |  | (15) |  |  | (15) |  |
| Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) |  | $ | 63 |  |  | $ | 3 |  |
In 2020, the IRS approved PSEG’s nuclear carryback claim and federal tax returns for the years 2011 through 2016. In 2022, the IRS approved PSEG’s 2018 carryback claim, which resulted in the closure of PSEG’s federal tax years through 2018. 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, |
|  |  | 2022 |  | 2021 |  | 2020 |
|  |  | Millions |
| PSEG |  | $ | 38 |  |  | $ | 31 |  |  | $ | 29 |  |
| PSE&G |  | $ | 8 |  |  | $ | 9 |  |  | $ | 9 |  |
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 Decrease in Total Unrecognized Tax Benefits |  | Over the next 12 Months |
|  |  | Millions |
| PSEG |  | $ | 12 |  |
| PSE&G |  | $ | 11 |  |
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 |
| United States |  |  |  |  |
| Federal |  | 2019-2021 |  | N/A |
| New Jersey |  | 2011-2021 |  | 2011-2021 |
| Pennsylvania |  | 2017-2021 |  | 2019-2021 |
| Connecticut |  | 2019-2021 |  | N/A |
| Maryland |  | 2019-2021 |  | N/A |
| New York |  | 2017-2021 |  | N/A |

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