Eversource 2013 Annual Report Download - page 117

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statements of income. The amount of interest expense/(income) on uncertain tax positions recognized and the related accrued interest
payable/(receivable) are as follows:
Other Interest
For the Years Ended December 31,
Accrued Interest
As of December 31,
Expense/(Income)
2013
2012
2011
Expense
2013
2012
(Millions of Dollars)
(Millions of Dollars)
NU (1)
$
(8.6)
$
3.1
$
(2.8)
NU
$
1.5
$
10.1
CL&P
(4.0)
1.3
(3.7)
CL&P
-
4.0
NSTAR Electric
-
-
2.0
NSTAR Electric
-
-
PSNH
-
-
(0.6)
PSNH
-
-
(1) NSTAR amounts were included in NU beginning April 10, 2012.
Tax Positions: During 2013, NU received a Final Determination from the Connecticut Department of Revenue Services (DRS) that
concluded its audit of NU's Connecticut income tax returns for the years 2005 through 2008. The DRS Determination resulted in total
NU and CL&P after-tax benefits of $13.6 million and $6.9 million, respectively, that included a reduction in NU and CL&P pre-tax
interest expense of $8.7 million and $4 million, or $5.2 million and $2.4 million after-tax, respectively. Further, the income tax expense
impact resulted in a tax benefit to NU and CL&P of $8.4 million and $4.5 million after-tax, respectively.
During 2011, NU recorded an after-tax benefit of $29.1 million related to various state tax settlements and certain other adjustments.
This benefit was recorded as a reduction to both interest expense and income tax expense (including NU and CL&P tax expense
reductions of approximately $22.4 million).
Open Tax Years: The following table summarizes NU, CL&P, NSTAR Electric, PSNH and WMECO's tax years that remain subject to
examination by major tax jurisdictions as of December 31, 2013:
Description
Tax Years
Federal
2013
Connecticut
2010-2013
Massachusetts
2010-2013
New Hampshire
2010-2013
NU estimates that during the next twelve months, differences of a non-timing nature could be resolved, resulting in a zero to $2.0 million
decrease in unrecognized tax benefits by NU. These estimated changes are not expected to have a material impact on the earnings of
NU. Other companies' impacts are not expected to be material.
2013 Federal Legislation: On January 2, 2013, the "American Taxpayer Relief Act of 2012" became law, which extended the
accelerated deduction of depreciation to businesses through 2013. This extended stimulus provided NU with cash flow benefits of
approximately $300 million (approximately $95 million at CL&P, $85 million at NSTAR Electric, $35 million at PSNH, and $50 million at
WMECO).
On September 13, 2013, the Internal Revenue Service issued final Tangible Property regulations that are meant to simplify, clarify and
make more administrable previously issued guidance. In the third quarter of 2013, CL&P recorded an after-tax valuation allowance of
$10.5 million against its deferred tax assets as a result of these regulations. NU is in compliance with the new regulations, but
continues to evaluate several new potential elections. Therefore, a change to the valuation allowance at CL&P could result once NU
completes the review of the impact of the final regulations.
2013 Massachusetts: On July 24, 2013, Massachusetts enacted a law that changed the income tax rate applicable to utility companies
effective January 1, 2014, from 6.5 percent to 8 percent. The tax law change required NU to remeasure its accumulated deferred
income taxes and resulted in NU increasing its deferred tax liability with an offsetting regulatory asset of approximately $61 million at its
utility companies ($46.3 million at NSTAR Electric and $9.8 million at WMECO).
12. COMMITMENTS AND CONTINGENCIES
A. Environmental Matters
General: NU, CL&P, NSTAR Electric, PSNH and WMECO are subject to environmental laws and regulations intended to mitigate or
remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the
removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current
and former operating sites. NU, CL&P, NSTAR Electric, PSNH and WMECO have an active environmental auditing and training
program and believe that they are substantially in compliance with all enacted laws and regulations.
Environmental reserves are accrued when assessments indicate it is probable that a liability has been incurred and an amount can be
reasonably estimated. The approach used estimates the liability based on the most likely action plan from a variety of available
remediation options, including no action required or several different remedies ranging from establishing institutional controls to full site
remediation and monitoring.
These estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The
reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of