Eversource 2015 Annual Report Download - page 102

90
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, 2013 $ 83.1 $ 49.0
Gross Increases - Current Year 8.2 2.1
Gross Decreases - Prior Year (1.1) (0.3)
Settlements (49.8) (39.4)
Lapse of Statute of Limitations (2.2) -
Balance as of December 31, 2013 38.2 11.4
Gross Increases - Current Year 9.3 2.7
Gross Increases - Prior Year 0.3 0.2
Lapse of Statute of Limitations (1.6) -
Balance as of December 31, 2014 46.2 14.3
Gross Increases - Current Year 9.9 2.6
Gross Increases - Prior Year 0.1 -
Lapse of Statute of Limitations (8.2) (3.4)
Balance as of December 31, 2015 $ 48.0 $ 13.5
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. The amount of interest expense/(income) on uncertain
tax positions recognized and the related accrued interest payable/(receivable) are as follows:
Other Interest Expense/(Income) Accrued Interest Expense
For the Years Ended December 31, As of December 31,
(Millions of Dollars)
2015 2014 2013 2015 2014
Eversource $ 0.1 $ 0.4 $ (8.6) $ 2.0 $ 1.9
CL&P - - (4.0) - -
Tax Positions: During 2015 and 2014, Eversource did not resolve any of its uncertain tax positions.
Open Tax Years: The following table summarizes Eversource, CL&P, NSTAR Electric, PSNH and WMECO’s tax years that remain subject to
examination by major tax jurisdictions as of December 31, 2015:
Description Tax Years
Federal 2015
Connecticut 2012 - 2015
Massachusetts 2012 - 2015
New Hampshire
2012 - 2015
Eversource estimates that during the next twelve months, differences of a non-timing nature could be resolved, resulting in a zero to $2.3 million
decrease in unrecognized tax benefits by Eversource. These estimated changes are not expected to have a material impact on the earnings of
Eversource. Other companies’ impacts are not expected to be material.
2015 Federal Legislation: On December 18, 2015, the “Protecting Americans from Tax Hikes” Act became law, which extended the accelerated
deduction of depreciation to businesses from 2015 through 2019. This extended stimulus provides Eversource with cash flow benefits in 2016 of
approximately $275 million (including approximately $105 million for CL&P, $72 million for NSTAR Electric, $46 million for PSNH, and $25
million for WMECO) due to a refund of taxes paid in 2015 and lower expected tax payments in 2016 of approximately $300 million.
2015 Connecticut Legislation: In 2015, the state of Connecticut enacted several changes to its corporate tax laws. Among the changes, commencing
as of January 1, 2015, is the reduction in the amount of tax credits that corporations can utilize against its tax liability in a year and a continuation of
the corporate income tax surcharge through 2018, which effectively increases the state corporate tax rate to 9 percent for the years 2016 and 2017 and
8.25 percent for 2018. Also, effective January 1, 2016, all Connecticut companies have a mandatory unitary tax filing requirement. Management
continues to review the tax law changes and their impact on the effective tax rates of Eversource and CL&P.
2014 Federal Legislation: On December 19, 2014, the “Tax Increase Prevention Act of 2014” became law, which extended the accelerated
deduction of depreciation to businesses through 2014. This extended stimulus provided Eversource with cash flow benefits of approximately $250
million (approximately $86 million at CL&P, $64 million at NSTAR Electric, $44 million at PSNH, and $21 million at WMECO) in 2015.
11. COMMITMENTS AND CONTINGENCIES
A. Environmental Matters
General: Eversource, 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.
Eversource, 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.