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Income Taxes (Tables)
 9 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
Summary of Significant Factors Impact on Difference Between Effective Tax Rate and Federal Statutory Rate

The following table summarizes the significant factors impacting the difference between our effective tax rate and the federal statutory rate for the three and nine months ended September 30 (dollars in thousands):

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Federal income taxes at statutory

   rates

 

$

1,204

 

 

 

21.0

%

 

$

1,041

 

 

 

21.0

%

 

$

15,167

 

 

 

21.0

%

 

$

36,554

 

 

 

21.0

%

Increase (decrease) in tax resulting

   from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of regulatory

   treatment of utility plant

   differences

 

 

(2,427

)

 

 

(42.3

)

 

 

(2,139

)

 

 

(43.1

)

 

 

(7,244

)

 

 

(10.0

)

 

 

(6,358

)

 

 

(3.7

)

State income tax expense

 

 

(363

)

 

 

(6.3

)

 

 

(800

)

 

 

(16.1

)

 

 

539

 

 

 

0.7

 

 

 

851

 

 

 

0.5

 

Settlement of prior year tax returns

 

 

524

 

 

 

9.1

 

 

 

(604

)

 

 

(12.2

)

 

 

1,565

 

 

 

2.2

 

 

 

1,995

 

 

 

1.1

 

Acquisition costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,712

)

 

 

(1.0

)

Non-plant excess deferred turnaround (1)

 

 

—

 

 

 

—

 

 

 

(20

)

 

 

(0.4

)

 

 

(8,476

)

 

 

(11.8

)

 

 

(5,621

)

 

 

(3.2

)

Tax loss on sale of METALfx

 

 

—

 

 

 

—

 

 

 

(13

)

 

 

(0.2

)

 

 

—

 

 

 

—

 

 

 

(1,272

)

 

 

(0.7

)

Valuation allowance

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,245

 

 

 

0.7

 

Settlement of equity awards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

165

 

 

 

0.2

 

 

 

612

 

 

 

0.4

 

Other

 

 

1,921

 

 

 

33.5

 

 

 

2,404

 

 

 

48.4

 

 

 

(244

)

 

 

(0.3

)

 

 

1,851

 

 

 

1.1

 

Total income tax expense

 

$

859

 

 

 

15.0

%

 

$

(131

)

 

 

(2.6

)%

 

$

1,472

 

 

 

2.0

%

 

$

28,145

 

 

 

16.2

%

(1)

In March 2020, the WUTC approved an all-party settlement agreement related to electric tax benefits that were set aside for Colstrip in the 2020 general rate case order. In the approved settlement agreement, the parties agreed to utilize approximately $10.9 million ($8.4 million when tax-effected) of the electric tax benefits to offset costs associated with accelerating the depreciation of Colstrip Units 3 & 4, to reflect a remaining useful life of those units through December 31, 2025. In the second quarter 2020, the Company recorded a one-time increase to depreciation expense with an offsetting decrease to income tax expense.

 

In March 2019, the IPUC approved an all-party settlement agreement related to electric tax benefits that were set aside for Colstrip in the 2020 general rate case order. In the approved settlement agreement, the parties agreed to utilize approximately $6.4 million ($5.1 million when tax-effected) of the electric tax benefits to offset costs associated with accelerating the depreciation of Colstrip Units 3 & 4, to reflect a remaining useful life of those units through December 31, 2027. In the second quarter 2019, the Company recorded a one-time increase to depreciation expense with an offsetting decrease to income tax expense.