The provisions for income taxes consist of the following:



	2013			2012			2011
Current expense (benefit):
Federal	$	21,807		$	(909	)	$	10,447
State	11,824			2,735			2,227
Total current expense	33,631			1,826			12,674
Deferred expense:
Federal	33,349			48,336			48,967
State	2,274			5,257			2,207
Investment tax credit amortization	(342		)	(346		)	(351		)
Total income tax expense	$	68,912		$	55,073		$	63,497

A reconciliation from the U.S. federal statutory tax rate to our effective tax rate is as follows:



	2013		2012		2011
U.S. federal statutory tax rate	35.0	%	35.0	%	35.0	%
Difference in tax rate due to:
State income taxes, net of federal	5.4		4.1		1.6
Other, net	(0.1	)	(0.6	)	1.0
Effective tax rate	40.3	%	38.5	%	37.6	%

Pennsylvania utility ratemaking practice permits the flow through to ratepayers of state tax benefits resulting from accelerated tax depreciation. For Fiscal 2013, Fiscal 2012 and Fiscal 2011, the beneficial effects of state tax flow through of accelerated depreciation reduced tax expense by $1,538, $3,198 and $7,926, respectively. The state tax flow through amounts in Fiscal 2012 and Fiscal 2011 reflect the impact of 2010 U.S. Federal tax legislation that allowed taxpayers to fully deduct qualifying capital expenditures incurred after September 8, 2010, through the end of calendar 2011, when such property is placed in service before 2012. This legislation was also permitted for Pennsylvania state corporate income tax purposes.

Deferred tax liabilities (assets) comprise the following at September 30:



	2013			2012
Excess book basis over tax basis of property, plant and equipment	$	362,259		$	330,937
Goodwill	31,516			26,998
Regulatory assets	101,622			140,416
Other	949			601
Gross deferred tax liabilities	496,346			498,952
Pension plan liabilities	(35,996		)	(72,652		)
Allowance for doubtful accounts	(2,290		)	(1,489		)
Deferred investment tax credits	(1,772		)	(1,914		)
Employee-related expenses	(5,850		)	(4,859		)
Regulatory liabilities	(15,472		)	(11,761		)
Environmental liabilities	(7,002		)	(7,195		)
Derivative financial instruments	(3,397		)	(16,264		)
Other	(1,922		)	(12,202		)
Gross deferred tax assets	(73,701		)	(128,336		)
Net deferred tax liabilities	$	422,645		$	370,616

We join with UGI and its subsidiaries in filing a consolidated federal income tax return. We are charged or credited for our share of current taxes resulting from the effects of our transactions in the UGI consolidated federal income tax return including giving effect to intercompany transactions. UGI’s federal income tax returns are settled through the tax year 2009.

We file separate company income tax returns in a number of states but are subject to state income tax principally in Pennsylvania. Pennsylvania income tax returns are generally subject to examination for a period of three years after the filing of the respective returns. As of September 30, 2013, we have $18,271 of Pennsylvania net operating loss carryforwards that expire through 2029.

During Fiscal 2013, Fiscal 2012 and Fiscal 2011, interest (income) expense of $0, $(209) and $219, respectively, was recognized in income taxes in the Consolidated Statements of Income. As of September 30, 2013, we have unrecognized income tax benefits totaling $1,143 including related accrued interest of $56. If these unrecognized tax benefits were subsequently recognized, $56 would be recorded as a benefit to income taxes on the consolidated statement of income and, therefore, would impact the effective tax rate. Generally, a net reduction in unrecognized tax benefits could occur because of expiration of the statute of limitations in certain jurisdictions or as a result of settlements with tax authorities. Included in the balance at September 30, 2013, are $1,087 of tax positions for which the deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, the disallowance of the current deduction would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. There is an expected change in unrecognized tax benefits and related interest in the next twelve months in the amount of $43.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:



Balance at September 30, 2010	$	4,194
Additions for tax positions of the current year	920
Settlements with tax authorities	(216		)
Balance at September 30, 2011	4,898
Additions for tax positions of prior years	81
Settlements with tax authorities	(3,931		)
Balance at September 30, 2012	1,048
Additions for tax positions of prior years	39
Balance at September 30, 2013	$	1,087

In accordance with accounting guidance regarding uncertain tax positions, during Fiscal 2013 and Fiscal 2012, the Company added $39 and $124, respectively, to its liability for unrecognized tax benefits including interest related to its change in method of accounting for capitalizing certain repairs and maintenance costs associated with its Gas Utility and Electric Utility assets beginning with the tax year ended September 30, 2009. However, because this tax matter relates only to the timing of deductibility, we have recorded an offsetting deferred tax asset of an equal amount. For further information regarding the regulatory impact of this change, see Note 4.