Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

The following table is a summary of income tax expense for each of the years ended December 31:



(in millions)	2019			2018			2017
Current tax expense (benefit)	$	73.4		$	(56.2	)	$	81.5
Deferred income tax expense (benefit), net	(128.9		)	0.1			110.6
Investment tax credit, net	(2.3		)	(0.8		)	(0.9		)
Total income tax expense (benefit)	$	(57.8	)	$	(56.9	)	$	191.2

Statutory rate reconciliation

The provision for income taxes for each of the years ended December 31 differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to income before income taxes as a result of the following:



	2019					2018					2017
(in millions)	Amount			Effective Tax Rate		Amount			Effective Tax Rate		Amount			Effective Tax Rate
Statutory federal income tax	$	63.9		21.0	%	$	63.3		21.0	%	$	184.4		35.0	%
State income taxes net of federal tax benefit	20.2			6.6	%	19.6			6.5	%	27.9			5.3	%
Tax repairs *	(122.9		)	(40.1	)%	(120.7		)	(39.9	)%	—			—	%
Federal excess amortization	(16.1		)	(5.3	)%	(15.5		)	(5.1	)%	—			—	%
Wind production tax credits	(9.3		)	(3.0	)%	(9.4		)	(3.1	)%	(17.6		)	(3.3	)%
Investment tax credit restored	(2.3		)	(0.8	)%	(0.8		)	(0.3	)%	(0.9		)	(0.2	)%
AFUDC – Equity	(0.8		)	(0.3	)%	(0.8		)	(0.3	)%	(1.1		)	(0.2	)%
Domestic production activities deferral (deduction)	6.1			2.0	%	6.1			2.0	%	(7.8		)	(1.5	)%
Other, net	3.4			1.0	%	1.3			0.4	%	6.3			1.1	%
Total income tax expense (benefit)	$	(57.8	)	(18.9	)%	$	(56.9	)	(18.8	)%	$	191.2		36.2	%

In accordance with a 2017 settlement agreement with the PSCW, we flowed through the tax benefit of our repair related deferred tax liabilities in 2018 and 2019, to maintain certain regulatory asset balances at their December 31, 2017 levels. The flow through treatment of the repair related deferred tax liabilities offset the negative income statement impact of holding the regulatory assets level, resulting in no change to net income. See Note 21, Regulatory Environment, for more information about the impact of the Tax Legislation and the Wisconsin rate order.

Components of deferred income taxes

The components of deferred income taxes as of December 31 were as follows:



(in millions)	2019		2018
Deferred tax assets
Tax gross up – regulatory items	$	152.7	$	203.0
Deferred revenues	126.8		129.3
Future tax benefits	41.0		15.9
Regulatory deferrals	1.3		97.3
Other	63.2		59.3
Total deferred tax assets	$	385.0	$	504.8

Deferred tax liabilities
Property-related	$	1,368.9	$	1,365.9
Deferred costs – Plant retirements	215.5		176.0
Employee benefits and compensation	55.8		55.9
Deferred costs – SSR	51.1		110.7
Other	41.1		94.6
Total deferred tax liabilities	1,732.4		1,803.1
Deferred tax liability, net	$	1,347.4	$	1,298.3

Summary of Operating Loss Carryforwards

The components of net deferred tax assets associated with federal and state tax benefit carryforwards as of December 31, 2019 and 2018 are summarized in the tables below:



2019 (in millions)	Gross Value		Deferred Tax Effect		Earliest Year of Expiration
Future tax benefits as of December 31, 2019
Federal tax credit	$	—	$	37.1	2037
State net operating loss	52.4		3.3		2035
Other state benefits	—		0.6		2019
Balance as of December 31, 2019	$	52.4	$	41.0



2018 (in millions)	Gross Value		Deferred Tax Effect		Earliest Year of Expiration
Future tax benefits as of December 31, 2018
Federal tax credit	$	—	$	11.6	2038
State net operating loss	68.7		4.3		2035
Balance as of December 31, 2018	$	68.7	$	15.9