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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company applies SFAS No. 109, “Accounting for Income Taxes,” which requires recognition
of deferred income taxes using the liability method for temporary differences that are reported in
different years for financial reporting and tax purposes. Under the liability method, deferred tax lia-
bilities or assets are computed using the tax rates that will be in effect when temporary differences
reverse. Generally, for regulated companies, the change in tax rates may not be immediately rec-
ognized in operating results because of rate-making treatment and provisions in the Tax Reform
Act of 1986.
The following is the detail of the Company’s accumulated deferred income taxes:
61
National Grid USA / Annual Report
(In thousands) 2006 2005
Deferred tax assets:
Plant related 112,757$ 110,725$
Alternative minimum tax 119,294 111,609
Unbilled revenues 17,070 54,030
Non-utilized NOL carryforward - 105,023
Liability for environmental costs 191,307 229,723
Voluntary early retirement program 42,089 41,558
Bad debts 62,210 62,046
Pension and other post-retirement benefits 248,446 185,324
Investment tax credit 10,560 12,146
Other 416,477 276,520
Total deferred tax assets 1,220,210 1,188,704
Deferred tax liabilities:
Plant related (1,429,641) (1,358,129)
Equity AFUDC (63,668) (62,468)
Deferred environmental restoration costs (186,842) (200,175)
Merger rate plan stranded costs (795,184) (848,182)
Merger fair value pension and OPEB adjustment (109,478) (128,188)
Bond redemption and debt discount (30,009) (29,233)
Pension and other post-retirement benefits (61,784) (141,422)
Other (569,349) (284,903)
Total deferred tax liabilities (3,245,955) (3,052,700)
Net accumulated deferred income tax liability (2,025,745) (1,863,996)
Current portion (net deferred tax asset) 197,209 340,837
Net accumulated deferred income tax liability
(noncurrent) (2,222,954)$ (2,204,833)$
At March 31,