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INCOME TAXES | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of income tax expense are as follows:
Eversource (Millions of Dollars) | For the Years Ended December 31,
2022 |  | 2021 |  | 2020
Current Income Taxes: |  |  |  |  |
Federal | $ | 95.8 |  |  | $ | 21.5 |  |  | $ | 73.6 |
State | 13.6 |  |  | (21.6) |  |  | 19.1 |
Total Current | 109.4 |  |  | (0.1) |  |  | 92.7 |
Deferred Income Taxes, Net: |  |  |  |  |
Federal | 198.8 |  |  | 199.7 |  |  | 173.5 |
State | 148.0 |  |  | 147.4 |  |  | 83.7 |
Total Deferred | 346.8 |  |  | 347.1 |  |  | 257.2 |
Investment Tax Credits, Net | (2.6) |  |  | (2.8) |  |  | (3.7) |
Income Tax Expense | $ | 453.6 |  |  | $ | 344.2 |  |  | $ | 346.2 |
| For the Years Ended December 31,
| 2022 |  | 2021 |  | 2020
(Millions of Dollars) | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH
Current Income Taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal | $ | 106.2 |  |  | $ | 55.0 |  |  | $ | 29.6 |  |  | $ | 15.0 |  |  | $ | 52.3 |  |  | $ | 43.1 |  |  | $ | 12.0 |  |  | $ | 53.9 |  |  | $ | 20.6 |
State | 20.1 |  |  | 8.7 |  |  | 5.9 |  |  | (7.0) |  |  | 6.2 |  |  | 10.8 |  |  | (6.1) |  |  | 6.9 |  |  | 3.8 |
Total Current | 126.3 |  |  | 63.7 |  |  | 35.5 |  |  | 8.0 |  |  | 58.5 |  |  | 53.9 |  |  | 5.9 |  |  | 60.8 |  |  | 24.4 |
Deferred Income Taxes, Net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal | 17.2 |  |  | 35.6 |  |  | 5.9 |  |  | 76.3 |  |  | 16.3 |  |  | (14.9) |  |  | 101.1 |  |  | 33.8 |  |  | (1.3) |
State | 28.2 |  |  | 42.4 |  |  | 9.9 |  |  | 47.6 |  |  | 41.2 |  |  | 0.4 |  |  | 43.4 |  |  | 38.8 |  |  | 8.6 |
Total Deferred | 45.4 |  |  | 78.0 |  |  | 15.8 |  |  | 123.9 |  |  | 57.5 |  |  | (14.5) |  |  | 144.5 |  |  | 72.6 |  |  | 7.3 |
Investment Tax Credits, Net | (0.5) |  |  | (1.7) |  |  | — |  |  | (0.6) |  |  | (1.7) |  |  | — |  |  | (0.7) |  |  | (2.6) |  |  | — |
Income Tax Expense | $ | 171.2 |  |  | $ | 140.0 |  |  | $ | 51.3 |  |  | $ | 131.3 |  |  | $ | 114.3 |  |  | $ | 39.4 |  |  | $ | 149.7 |  |  | $ | 130.8 |  |  | $ | 31.7 |
A reconciliation between income tax expense and the expected tax expense at the statutory rate is as follows:
Eversource (Millions of Dollars, except percentages) | For the Years Ended December 31,
2022 |  | 2021 |  | 2020
Income Before Income Tax Expense | $ | 1,866.0 |  |  | $ | 1,572.3 |  |  | $ | 1,558.9 |
Statutory Federal Income Tax Expense at 21% | 391.9 |  |  | 330.2 |  |  | 327.4 |
Tax Effect of Differences: |  |  |  |  |
Depreciation | (17.1) |  |  | (18.1) |  |  | (11.1) |
Investment Tax Credit Amortization | (2.6) |  |  | (2.8) |  |  | (3.7) |
State Income Taxes, Net of Federal Impact | 75.9 |  |  | 54.4 |  |  | 44.9 |
Dividends on ESOP | (5.1) |  |  | (5.1) |  |  | (5.1) |
Tax Asset Valuation Allowance/Reserve Adjustments | 51.6 |  |  | 44.6 |  |  | 33.4 |
Excess Stock Benefit | (2.1) |  |  | (4.0) |  |  | (6.6) |
EDIT Amortization | (49.1) |  |  | (69.1) |  |  | (48.7) |
Other, Net | 10.2 |  |  | 14.1 |  |  | 15.7 |
Income Tax Expense | $ | 453.6 |  |  | $ | 344.2 |  |  | $ | 346.2 |
Effective Tax Rate | 24.3 | % |  | 21.9 | % |  | 22.2 | %
| For the Years Ended December 31,
| 2022 |  | 2021 |  | 2020
(Millions of Dollars, except percentages) | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH |  | CL&P |  | NSTAR Electric |  | PSNH
Income Before Income Tax Expense | $ | 704.1 |  |  | $ | 632.4 |  |  | $ | 222.9 |  |  | $ | 533.0 |  |  | $ | 590.9 |  |  | $ | 189.8 |  |  | $ | 607.6 |  |  | $ | 575.8 |  |  | $ | 179.0 |
Statutory Federal Income Tax Expense at 21% | 147.9 |  |  | 132.8 |  |  | 46.8 |  |  | 111.9 |  |  | 124.1 |  |  | 39.9 |  |  | 127.6 |  |  | 120.9 |  |  | 37.6 |
Tax Effect of Differences: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation | (3.7) |  |  | (4.2) |  |  | 0.9 |  |  | (6.4) |  |  | (3.4) |  |  | (0.2) |  |  | 0.4 |  |  | (3.7) |  |  | (1.4) |
Investment Tax Credit Amortization | (0.5) |  |  | (1.7) |  |  | — |  |  | (0.6) |  |  | (1.7) |  |  | — |  |  | (0.7) |  |  | (2.6) |  |  | — |
State Income Taxes, Net of Federal Impact | (6.6) |  |  | 40.3 |  |  | 12.5 |  |  | (4.6) |  |  | 37.5 |  |  | 8.9 |  |  | (1.2) |  |  | 36.0 |  |  | 9.8 |
Tax Asset Valuation Allowance/Reserve Adjustments | 44.7 |  |  | — |  |  | — |  |  | 36.7 |  |  | — |  |  | — |  |  | 30.7 |  |  | — |  |  | — |
Excess Stock Benefit | (0.7) |  |  | (0.8) |  |  | (0.3) |  |  | (1.5) |  |  | (1.4) |  |  | (0.5) |  |  | (2.3) |  |  | (2.3) |  |  | (0.8) |
EDIT Amortization | (9.2) |  |  | (29.2) |  |  | (7.7) |  |  | (9.8) |  |  | (43.2) |  |  | (10.5) |  |  | (9.0) |  |  | (20.4) |  |  | (15.4) |
Other, Net | (0.7) |  |  | 2.8 |  |  | (0.9) |  |  | 5.6 |  |  | 2.4 |  |  | 1.8 |  |  | 4.2 |  |  | 2.9 |  |  | 1.9 |
Income Tax Expense | $ | 171.2 |  |  | $ | 140.0 |  |  | $ | 51.3 |  |  | $ | 131.3 |  |  | $ | 114.3 |  |  | $ | 39.4 |  |  | $ | 149.7 |  |  | $ | 130.8 |  |  | $ | 31.7 |
Effective Tax Rate | 24.3 | % |  | 22.1 | % |  | 23.0 | % |  | 24.6 | % |  | 19.3 | % |  | 20.8 | % |  | 24.6 | % |  | 22.7 | % |  | 17.7 | %
Eversource, CL&P, NSTAR Electric and PSNH file a consolidated federal income tax return and unitary, combined and separate state income tax returns. These entities are also parties to a tax allocation agreement under which taxable subsidiaries do not pay any more taxes than they would have otherwise paid had they filed a separate company tax return, and subsidiaries generating tax losses, if any, are paid for their losses when utilized. Deferred tax assets and liabilities are recognized for the future tax effects of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The tax effect of temporary differences is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and relevant accounting authoritative literature. The tax effects of temporary differences that give rise to the net accumulated deferred income tax obligations are as follows:
| As of December 31,
| 2022 |  | 2021
(Millions of Dollars) | Eversource |  | CL&P |  | NSTAR Electric |  | PSNH |  | Eversource |  | CL&P |  | NSTAR Electric |  | PSNH
Deferred Tax Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee Benefits | $ | 228.9 |  |  | $ | 25.3 |  |  | $ | 57.4 |  |  | $ | 11.6 |  |  | $ | 270.8 |  |  | $ | 23.9 |  |  | $ | 40.3 |  |  | $ | 14.1 |
Derivative Liabilities | 53.8 |  |  | 53.8 |  |  | — |  |  | — |  |  | 76.8 |  |  | 76.8 |  |  | — |  |  | — |
Regulatory Deferrals - Liabilities | 529.5 |  |  | 146.6 |  |  | 285.7 |  |  | 42.1 |  |  | 390.7 |  |  | 90.9 |  |  | 215.4 |  |  | 24.3 |
Allowance for Uncollectible Accounts | 125.5 |  |  | 60.5 |  |  | 20.7 |  |  | 7.9 |  |  | 104.1 |  |  | 48.8 |  |  | 21.5 |  |  | 6.2 |
Tax Effect - Tax Regulatory Liabilities | 762.9 |  |  | 324.6 |  |  | 241.8 |  |  | 97.8 |  |  | 783.4 |  |  | 328.2 |  |  | 254.3 |  |  | 100.9 |
Net Operating Loss Carryforwards | 16.7 |  |  | — |  |  | — |  |  | — |  |  | 7.5 |  |  | — |  |  | — |  |  | — |
Purchase Accounting Adjustment | 62.0 |  |  | — |  |  | — |  |  | — |  |  | 67.2 |  |  | — |  |  | — |  |  | — |
Other | 176.6 |  |  | 109.5 |  |  | 20.5 |  |  | 21.3 |  |  | 196.6 |  |  | 103.9 |  |  | 21.7 |  |  | 22.9 |
Total Deferred Tax Assets | 1,955.9 |  |  | 720.3 |  |  | 626.1 |  |  | 180.7 |  |  | 1,897.1 |  |  | 672.5 |  |  | 553.2 |  |  | 168.4 |
Less: Valuation Allowance | 82.8 |  |  | 63.3 |  |  | — |  |  | — |  |  | 61.5 |  |  | 44.5 |  |  | — |  |  | — |
Net Deferred Tax Assets | $ | 1,873.1 |  |  | $ | 657.0 |  |  | $ | 626.1 |  |  | $ | 180.7 |  |  | $ | 1,835.6 |  |  | $ | 628.0 |  |  | $ | 553.2 |  |  | $ | 168.4 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accelerated Depreciation and Other Plant-Related Differences | $ | 4,793.7 |  |  | $ | 1,602.0 |  |  | $ | 1,643.7 |  |  | $ | 523.8 |  |  | $ | 4,426.0 |  |  | $ | 1,509.5 |  |  | $ | 1,553.7 |  |  | $ | 482.9 |
Property Tax Accruals | 95.3 |  |  | 40.7 |  |  | 41.3 |  |  | 6.7 |  |  | 88.1 |  |  | 40.5 |  |  | 33.7 |  |  | 6.3 |
Regulatory Amounts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Regulatory Deferrals - Assets | 1,251.9 |  |  | 406.4 |  |  | 407.9 |  |  | 165.2 |  |  | 1,260.3 |  |  | 438.3 |  |  | 337.6 |  |  | 198.4 |
Tax Effect - Tax Regulatory Assets | 271.7 |  |  | 185.6 |  |  | 10.7 |  |  | 7.9 |  |  | 257.8 |  |  | 181.4 |  |  | 10.9 |  |  | 8.3 |
Goodwill-related Regulatory Asset - 1999 Merger | 76.8 |  |  | — |  |  | 65.9 |  |  | — |  |  | 81.4 |  |  | — |  |  | 69.9 |  |  | — |
Employee Benefits | 305.5 |  |  | 45.0 |  |  | 140.8 |  |  | 18.7 |  |  | 174.7 |  |  | 3.5 |  |  | 107.1 |  |  | 0.7 |
Derivative Assets | 10.5 |  |  | 10.5 |  |  | — |  |  | — |  |  | 14.9 |  |  | 14.9 |  |  | — |  |  | — |
Other | 135.6 |  |  | 6.8 |  |  | 16.7 |  |  | 21.2 |  |  | 129.5 |  |  | 2.0 |  |  | 19.8 |  |  | 9.8 |
Total Deferred Tax Liabilities | $ | 6,941.0 |  |  | $ | 2,297.0 |  |  | $ | 2,327.0 |  |  | $ | 743.5 |  |  | $ | 6,432.7 |  |  | $ | 2,190.1 |  |  | $ | 2,132.7 |  |  | $ | 706.4 |
2022 Federal Legislation: On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law. This is a broad package of legislation that includes incentives and support for clean energy resource development. Most notable for Eversource, the investment tax credit (ITC) on offshore wind projects increases from 30 percent to 40 percent if certain requirements for labor and domestic content are met. The act also re-establishes the production tax credit for solar and wind energy projects, gives increased credit for projects in certain communities, and sets credits for qualifying clean energy generation and energy storage projects. The tax provisions of the IRA provide additional incentives for offshore wind projects and could reduce retail electricity costs for our customers related to those clean energy investments. The IRA includes other tax provisions focused on implementing a 15 percent minimum tax on adjusted financial statement income and a one percent excise tax on corporate share repurchases. The Department of Treasury and the Internal Revenue Service issued limited guidance in the fourth quarter; however, they are expected to issue additional needed guidance with respect to the application of the newly enacted IRA provisions in the future. We will continue to monitor and evaluate impacts on our consolidated financial statements. We currently do not expect the alternative minimum tax change to have a material impact on our earnings, financial condition or cash flows. 2021 Federal Legislation: On November 5, 2021, Congress passed the Infrastructure Investment and Jobs Act. The Act provided spending of more than $500 billion on roads, highways, bridges, public transit, and utilities. For water and sewer utilities, the Act restored the exclusion from a corporation’s income for contributions in aid of construction where the corporation is a water or sewer utility eliminated by the Tax Cuts and Jobs Act of 2017. Under the Act, a regulated public utility that provides water or sewage disposal services can treat money or property received from any person as a tax-free contribution to capital if it meets certain criteria for contributions made after 2020. The Act did not have a material impact on Eversource in 2021. Carryforwards: The following table provides the amounts and expiration dates of state tax credit and loss carryforwards and federal tax credit and net operating loss carryforwards:
| As of December 31,
| 2022 |  | 2021
(Millions of Dollars) | Eversource |  | CL&P |  | NSTAR Electric |  | PSNH |  | Expiration Range |  | Eversource |  | CL&P |  | NSTAR Electric |  | PSNH |  | Expiration Range
State Net Operating Loss | $ | 288.1 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 2022 - 2041 |  | $ | 138.3 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 2021 - 2040
State Tax Credit | 204.5 |  |  | 137.7 |  |  | — |  |  | — |  |  | 2022 - 2027 |  | 197.7 |  |  | 137.0 |  |  | — |  |  | — |  |  | 2021 - 2026
State Charitable Contribution | 20.1 |  |  | — |  |  | — |  |  | — |  |  | 2022 - 2026 |  | 23.7 |  |  | — |  |  | — |  |  | — |  |  | 2021 - 2025
In 2022, the Company increased its valuation allowance reserve for state credits by $21.3 million ($18.8 million for CL&P), net of tax, to reflect an update for expiring tax credits. In 2021, the Company increased its valuation allowance reserve for state credits by $13.0 million ($10.8 million for CL&P), net of tax, to reflect an update for expiring tax credits. For 2022 and 2021, state credit and state loss carryforwards have been partially reserved by a valuation allowance of $82.8 million and $61.5 million (net of tax), respectively. Unrecognized Tax Benefits: A reconciliation of the activity in unrecognized tax benefits, all of which would impact the effective tax rate if recognized, is as follows:
(Millions of Dollars) | Eversource |  | CL&P
Balance as of January 1, 2020 | $ | 55.0 |  |  | $ | 23.1 |
Gross Increases - Current Year | 11.9 |  |  | 4.6 |
Gross Increases - Prior Year | 1.4 |  |  | 0.7 |
Lapse of Statute of Limitations | (6.5) |  |  | (2.6) |
Balance as of December 31, 2020 | 61.8 |  |  | 25.8 |
Gross Increases - Current Year | 11.3 |  |  | 3.8 |
Gross Decreases - Prior Year | (0.3) |  |  | (0.6) |
Lapse of Statute of Limitations | (7.0) |  |  | (2.8) |
Balance as of December 31, 2021 | 65.8 |  |  | 26.2 |
Gross Increases - Current Year | 11.5 |  |  | 3.5 |
Gross Decreases - Prior Year | (2.4) |  |  | (0.9) |
Lapse of Statute of Limitations | (7.8) |  |  | (3.3) |
Balance as of December 31, 2022 | $ | 67.1 |  |  | $ | 25.5 |
Interest and Penalties: Interest on uncertain tax positions is recorded and generally classified as a component of Other Interest Expense on the statements of income. However, when resolution of uncertainties results in the Company receiving interest income, any related interest benefit is recorded in Other Income, Net on the statements of income. No penalties have been recorded. There has been no interest expense or income recognized on uncertain tax positions for the years ended December 31, 2022, 2021 or 2020. The accrued interest payable was $0.1 million as of both December 31, 2022 and 2021. Tax Positions: During 2022 and 2021, Eversource did not resolve any of its uncertain tax positions. Open Tax Years: The following table summarizes Eversource, CL&P, NSTAR Electric, and PSNH's tax years that remain subject to examination by major tax jurisdictions as of December 31, 2022:
Description | Tax Years
Federal | 2022
Connecticut | 2019 - 2022
Massachusetts | 2019 - 2022
New Hampshire | 2019 - 2022
Eversource does not estimate to have an earnings impact related to unrecognized tax benefits during the next twelve months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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