INCOME TAXES (Notes)

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Tax Disclosure

INCOME TAXES

We use an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods. In calculating our estimated annual effective tax rate, we consider forecasted annual pre-tax income and estimated permanent book versus tax differences, as well as tax credits. Adjustments to the effective tax rate and estimates will occur as information and assumptions change.

At September 30, 2022, we have no uncertain tax positions. Changes in tax laws or tax rates are recognized in the financial reporting period that includes the enactment date. We are no longer subject to income tax examination for years prior to 2019.

In August 2022, the IRA of 2022 was signed into law. Based upon our review of the legislation, we do not expect it to have any material impacts to our Company.

In May 2021, a bill amending the Oklahoma state income tax code was signed into law that reduced the state income tax rate to four percent from six percent beginning January 1, 2022. As a result of the enactment of this legislation, we remeasured our ADIT. As a regulated entity, the reduction in ADIT of $29.3 million was recorded as a regulatory liability. The impact of the change in the state income tax rate on Oklahoma Natural Gas’ rates, as well as the timing and amount of the impact on the annual crediting mechanism for the EDIT regulatory liability, was not material and is included in the March 15, 2022 PBRC filing, which is pending approval by the OCC.

Income tax expense reflects credits for the amortization of the regulatory liability associated with EDIT that was returned to customers of $1.6 million and $1.5 million for the three months ended September 30, 2022 and 2021, respectively, and credits of $12.5 million and $12.2 million for the nine months ended September 30, 2022 and 2021, respectively.