Eversource 2012 Annual Report Download - page 126

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accompanying consolidated statements of income. The amount of interest expense/(income) on uncertain tax positions recognized and
the related accrued interest payable/(receivable) by company are as follows:
Other Interest
For the Years Ended December 31,
Accrued Interest
As of December 31,
Expense/(Income)
2012
2011
2010
Expense
2012
2011
(Millions of Dollars)
(Millions of Dollars)
NU $ 3.1
$ (2.8)
$ (24.8)
NU $ 10.1
$ 7.1
CL&P
1.3
(3.7)
(7.4)
CL&P
4.0
2.7
NSTAR Electric (1)
-
2.0
(7.4)
NSTAR Electric (1)
-
0.7
PSNH
-
(0.6)
0.1
PSNH
-
-
(1) NSTAR Electric amounts are included in NU consolidated from the date of the merger, April 10, 2012, through December 31, 2012.
NSTAR Electric amounts are not included in NU consolidated for the years ended December 31, 2011 and 2010.
Tax Positions: During 2012, NU did not resolve any of its uncertain tax positions.
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).
During 2010, NU settled various tax matters including state obligations, which resulted in the recognition during the year of an after-tax
gain of approximately $35 million. This gain was recorded as a reduction to both interest expense and income tax expense (including
NU and CL&P tax expense reductions of approximately $6 million and $4 million, respectively).
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, 2012:
Description
Tax Years
Federal
2012
Connecticut
2005-2012
Massachusetts 2009-2012
New Hampshire
2009-2012
Receipt of Federal Tax Refund: During 2011, NSTAR Electric received a $166.8 million refund from the IRS relating to the 2001
through 2007 tax years. The approved settlement and the receipt of the refund resolved all outstanding tax matters for these years.
NU is currently working to resolve the treatments and certain timing and other costs in the remaining open periods. While tax audits are
currently ongoing, it is reasonably possible that one or more of these open tax years could be resolved within the next twelve months.
Management estimates that potential resolutions of differences of a non-timing nature could result in a zero to $50 million decrease in
unrecognized tax benefits by NU and a zero to $39 million decrease in unrecognized tax benefits by CL&P. These estimated changes
could have an impact on NU's and CL&P's 2013 earnings of zero to $6 million and zero to $16 million, respectively. Other companies’
impacts are not expected to be material.
2013 Federal Legislation: On January 2, 2013, President Obama signed into law the "American Taxpayer Relief Act of 2012," which
extends certain tax rules allowing the accelerated deduction of depreciation from the "American Recovery and Reinvestment Act of
2009" to businesses through 2013. This extended stimulus is expected to provide cash flow benefits of approximately $200 million to
$250 million in 2013 and 2014. Management is still evaluating the other provisions of this legislation, which are not expected to have a
significant impact on its future financial position, results of operations, or cash flows.
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
contamination at the site, the extent of NU, CL&P, NSTAR Electric, PSNH and WMECO's responsibility or the extent of remediation
required, recently enacted laws and regulations or a change in cost estimates due to certain economic factors.