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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following is a detail of the Company’s accumulated deferred income taxes:
In December 1998, Niagara Mohawk received a ruling from the IRS which provided that the
amount of cash and the value of common stock that was paid by Niagara Mohawk to the subject
terminated IPP Parties was deductible in 1998 which resulted in Niagara Mohawk not paying any
regular federal income taxes for 1998, and further generated a substantial net operating loss for
federal income tax purposes. Niagara Mohawk carried back a portion of the unused net operating
loss (NOL) to the years 1996 and 1997, and also for the years 1988 through 1990, which resulted
in federal income tax refunds of $135 million that were received in January 1999. As a result of the
merger with the Company, Niagara Mohawk is now part of the consolidated tax return filing group
of NGGP. The Company anticipates that the consolidated tax filing group will be able to utilize the
remaining NOL carryforward prior to its expiration in 2019. The amount of the NOL carryforward
as of March 31, 2005 and 2004 was $301 million and $909 million, respectively. The Company’s
ability to utilize the NOL carryforward generated as a result of the Merger Rate Agreement and the
utilization of alternative minimum tax credits is affected by the rules of Section 382 of the Internal
Revenue Code. There were no valuation allowances for deferred tax assets deemed necessary at
March 31, 2005 or 2004.
56
National Grid USA / Annual Report
(In thousands) 2005 2004
Deferred tax assets:
Plant related 110,725$ 104,576$
Alternative Minimum Tax 111,609 81,639
Unbilled revenues 54,030 22,611
Non-utilized NOL carryforward 105,023 307,743
Liability for environmental costs 229,723 148,325
Voluntary early retirement program 41,558 219,237
Bad debts 62,046 29,474
Pension and other post-retirement benefits 185,324 40,830
Investment tax credit 12,146 14,080
Other 276,520 464,789
Total deferred tax assets 1,188,704 1,433,304
Deferred tax liabilities:
Plant related (1,358,129) (1,342,168)
Equity AFUDC (62,468) (62,127)
Deferred environmental restoration costs (200,175) (148,325)
Merger rate plan stranded costs (848,182) (896,816)
Merger fair value pension and OPEB adjustment (128,188) (146,898)
Bond redemption and debt discount (29,233) (30,772)
Pension and other post-retirement benefits (141,422) (110,163)
Other (284,903) (400,870)
Total deferred tax liabilities (3,052,700) (3,138,139)
Net accumulated deferred income tax liability (1,863,996) (1,704,835)
Current portion (net deferred tax asset) 340,837 248,642
Net accumulated deferred income tax liability
(noncurrent) (2,204,833)$ (1,953,477)$
At March 31,