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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule Of Effective Income Tax Rate Reconciliation

The following table presents the principal reasons why the effective income tax rate differed from the statutory federal income tax rate for the years ended December 31, 2012, 2011, and 2010:



	2012		2011		2010
Statutory federal income tax rate:	35	%	35	%	35	%
Increases (decreases) from:
Depreciation differences	(1	)	(1	)	(3	)
Amortization of investment tax credit	(1	)	(1	)	(1	)
State tax	5		4		5
Reserve for uncertain tax positions	—		1		(1	)
Tax credits	—		(1	)	(1	)
Change in federal tax law^(a)	—		—		2
Other permanent items^(b)	(1	)	—		—
Effective income tax rate	37	%	37	%	36	%


(a)	Relates to change in taxation of prescription drug benefits to retiree participants from the enactment in 2010 of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.


(b)	Permanent items are treated differently for book and tax purposes and primarily include nondeductible expense related to lobbying and stock issuance expenses.

Schedule Of Components Of Income Tax Expense (Benefit)

The following table presents the components of income tax expense for the years ended December 31, 2012, 2011, and 2010:



	2012			2011			2010
Current taxes:
Federal	$	40		$	(6	)	$	3
State	9			(2		)	(1		)
Deferred taxes:
Federal	205			206			247
State	61			53			32
Deferred investment tax credits, amortization	(6		)	(6		)	(7		)
Total income tax expense	$	309		$	245		$	274

Schedule Of Deferred Tax Assets And Liabilities Resulting From Temporary Differences

The following table presents the deferred tax assets and deferred tax liabilities recorded as a result of temporary differences at December 31, 2012, and 2011:



	2012			2011
Accumulated deferred income taxes, net liability (asset):
Plant related	$	3,512		$	3,162
Deferred intercompany tax gain/basis step-up	39			54
Regulatory assets, net	73			73
Deferred employee benefit costs	(323		)	(320		)
Purchase accounting	(27		)	(28		)
ARO	(17		)	(12		)
Other^(a)	(251		)	(217		)
Total net accumulated deferred income tax liabilities	$	3,006		$	2,712


(a)	Includes deferred tax assets related to net operating loss and tax credit carryforwards detailed in the table below.

Schedule Of Net Operating Loss Carryforwards And Tax Credit Carryforwards

The following table presents the components of deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2012:



	2012
Net operating loss carryforwards:
Federal^(a)	$	173
State^(b)	27
Total net operating loss carryforwards	$	200
Tax credit carryforwards:
Federal^(c)	$	86
State^(d)	25
State valuation allowance^(e)	(2		)
Total tax credit carryforwards	$	109


(a)	These will begin to expire in 2028.


(b)	These will begin to expire in 2017.


(c)	These will begin to expire in 2029.


(d)	These will begin to expire in 2013.


(e)	This balance increased by $1 million during 2012.

Schedule Of Changes To Unrecognized Tax Benefits And Related Interest

A reconciliation of the change in the unrecognized tax benefit balance during the years ended December 31, 2012, 2011, and 2010, is as follows:



	2012			2011			2010
Unrecognized tax benefits - beginning of year	$	148		$	246		$	135
Increases based on tax positions prior to current year	5			22			72
Decreases based on tax positions prior to current year	(13		)	(125		)	(38		)
Increases based on tax positions related to current year	17			17			77
Changes related to settlements with taxing authorities	—			(10		)	—
Decreases related to the lapse of statute of limitations	(1		)	(2		)	—
Unrecognized tax benefits - end of year	$	156		$	148		$	246
Total unrecognized tax benefits that, if recognized, would affect the effective tax rates	$	1		$	1		$	—

Reconciliation Of Changes In Liability For Interest On Unrecognized Tax Benefits

A reconciliation of the change in the liability for interest on unrecognized tax benefits during the years ended December 31, 2012, 2011, and 2010, is as follows:



	2012		2011			2010
Liability for interest - beginning of year	$	5	$	17		$	8
Interest charges (income)	1		(11		)	9
Interest payment	—		(1		)	—
Liability for interest - end of year	$	6	$	5		$	17

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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