Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Reconciliation of the federal statutory rate to the effective income tax rate

A reconciliation of the federal statutory rate to the effective income tax rate follows:


	Year Ended December 31,
	2011		2010		2009
Statutory rate:	35.0	%	35.0	%	35.0	%
State & local taxes-net of federal benefit	4.2		3.8		2.3
Amortization of investment tax credit	(0.3	)	(0.4	)	(0.5	)
Depletion	(1.9	)	(2.0	)	(2.0	)
Other tax credits	(0.2	)	(0.2	)	(0.2	)
Adjustment of income tax accruals and all other-net	1.1		(0.4	)	(2.1	)
Effective tax rate	37.9	%	35.8	%	32.5	%

Significant components of the net deferred tax liability (assets)

Significant components of the net deferred tax liability follow:


	At December 31,
(In millions)	2011			2010
Noncurrent deferred tax liabilities (assets):
Depreciation & cost recovery timing differences	$	625.5		$	565.7
Leveraged leases		13.8			14.2
Regulatory assets recoverable through future rates		25.1			20.1
Other comprehensive income		(10.2	)		(4.2	)
Alternative minimum tax carryforward		(35.1	)		(48.6	)
Employee benefit obligations		(9.4	)		(18.9	)
Net operating loss & other carryforwards		(6.7	)		(3.8	)
Regulatory liabilities to be settled through future rates		(17.2	)		(4.8	)
Impairments		(11.4	)		(4.4	)
Other - net		1.3			-
Net noncurrent deferred tax liability		575.7			515.3
Current deferred tax (assets)/liabilities:
Deferred fuel costs-net		6.0			2.4
Demand side management programs		0.7			2.5
Alternative minimum tax carryforward		(15.6	)		(0.8	)
Other - net		(7.1	)		(7.9	)
Net current deferred tax asset		(16.0	)		(3.8	)
Net deferred tax liability	$	559.7		$	511.5

Components of income tax expense and utilization of investment tax credits

The components of income tax expense and utilization of investment tax credits follow:


	Year Ended December 31,
(In millions)	2011			2010			2009
Current:
Federal	$	4.4		$	(0.8	)	$	(21.4	)
State		10.3			6.2			0.6
Total current taxes		14.7			5.4			(20.8	)
Deferred:
Federal		66.0			65.6			78.7
State		6.4			4.5			7.3
Total deferred taxes		72.4			70.1			86.0
Amortization of investment tax credits		(0.7	)		(0.8	)		(1.1	)
Total income tax expense	$	86.4		$	74.7		$	64.1

Roll forward of unrecognized tax benefits

Following is a roll forward of unrecognized tax benefits for the three years ended December 31, 2011:


(In millions)	2011			2010			2009
Unrecognized tax benefits at January 1	$	13.3		$	11.5		$	2.2
Gross increases - tax positions in prior periods		3.3			1.6			1.1
Gross decreases - tax positions in prior periods		(4.5	)		(0.3	)		(1.8	)
Gross increases - current period tax positions		0.6			1.0			9.0
Settlements		(0.3	)		-			(0.1	)
Lapse of statute of limitations		-			(0.5	)		1.1
Unrecognized tax benefits at December 31	$	12.4		$	13.3		$	11.5

- 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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