Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

We file a consolidated federal income tax return. Income tax expense allocated to our subsidiaries is based upon their respective taxable incomes and tax credits. State income tax returns are filed on a separate company basis in most states where we have operations and/or are required to file. Our state returns for tax years after 2017 are subject to examination. At December 31, 2024, the 2015 through 2019 federal income tax returns are no longer under examination.

For state income tax purposes, we had NOL in various states of $99.3 million and $72.9 million as of December 31, 2024 and 2023, respectively, almost all of which will expire in 2040. Excluding NOL from discontinued operations, we have recorded deferred tax assets of $1.1 million and $1.8 million related to state NOL carry-forwards at December 31, 2024 and 2023,

respectively. We have not recorded a valuation allowance to reduce the future benefit of the tax NOL because we believe they will be fully utilized.

Tax Law Changes

In December 2017, the TCJA was signed into law. Substantially all of the provisions of the TCJA were effective for taxable years beginning on or after January 1, 2018. The provisions that significantly impacted us include the reduction of the corporate federal income tax rate from 35 percent to 21 percent. Our federal income tax expense for periods beginning on January 1, 2018 are based on the new federal corporate income tax rate. The TCJA included changes to the Internal Revenue Code, which materially impacted our 2017 financial statements. ASC 740, Income Taxes, requires recognition of the effects of changes in tax laws in the period in which the law is enacted. ASC 740 requires deferred tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. During 2018, we completed the assessment of the impact of accounting for certain effects of the TCJA. At the date of enactment in 2017, we re-measured deferred income taxes based upon the new corporate tax rate. See Note 18, Rates and Other Regulatory Activities, for further discussion of the TCJA's impact on our regulated businesses.

The following tables provide: (a) the components of income tax expense in 2024, 2023, and 2022; (b) the reconciliation between the statutory federal income tax rate and the Company's effective income tax rate for 2024, 2023, and 2022; and (c) the components of accumulated deferred income tax assets and liabilities at December 31, 2024 and 2023.

	For the Year Ended December 31,
	2024		2023		2022
(in millions)
Current Income Tax Expense
Federal	$	3.7	$	14.7	$	8.3
State	2.7		5.5		1.9
Other	(0.4)		—		—
Total current income tax expense	6.0		20.2		10.2
Deferred Income Tax Expense (1)
Property, plant and equipment	33.2		17.8		15.0
Amortization of FCG goodwill	7.8		—		—
Deferred gas costs	(1.0)		(7.7)		8.9
Pensions and other employee benefits	(0.3)		(1.0)		1.1
Net operating loss carryforwards	(2.5)		(0.4)		—
Other	—		(0.8)		(1.4)
Total deferred income tax expense	37.2		7.9		23.6
Total Income Tax Expense	$	43.2	$	28.1	$	33.8

(1) Includes $7.9 million, less than $0.1 million, and $7.8 million of deferred state income taxes for the years 2024, 2023, and 2022, respectively.

	For the Year Ended December 31,
	2024			2023			2022
(in millions)
Reconciliation of Effective Income Tax Rates
Federal income tax expense (1)	$	34.0		$	24.2		$	26.0
State income taxes, net of federal benefit (2)	8.4			4.4			7.7
Other	0.8			(0.5)			0.1
Total Income Tax Expense	$	43.2		$	28.1		$	33.8
Effective Income Tax Rate	26.71		%	24.35		%	27.34		%

(1) Federal income taxes were calculated at 21 percent for 2024, 2023, and 2022.

(2) 2023 includes the impact of the one-time benefit associated with the reduction in the Pennsylvania state tax rate. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations for an additional information.

	As of December 31,
	2024		2023
(in millions)
Deferred Income Taxes
Deferred income tax liabilities:
Property, plant and equipment	$	289.7	$	252.1
Acquisition adjustment	5.2		5.6
Deferred gas costs	2.5		3.6
Natural gas conversion costs	4.6		4.8
Storm reserve liability	5.8		5.8
Intangible assets	6.4		—
Other	8.4		9.7
Total deferred income tax liabilities	322.6		281.6
Deferred income tax assets:
Pension and other employee benefits	5.1		5.0
Net operating loss carryforwards	1.1		1.8
Accrued expenses	4.0		3.3
Regulatory asset	6.0		4.1
Intangible assets	—		2.8
Other	10.3		5.5
Total deferred income tax assets	26.5		22.5
Deferred Income Taxes	$	296.1	$	259.1