INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

INCOME TAXES

Schedule of income tax expense components

Income tax expense components for the years ended December 31 are as follows (in thousands):

	2012			2011			2010
Current income taxes:
Federal	$	1,552		$	(8,604	)	$	7,713
State		708			(2,120	)		1,057
TOTAL		2,260			(10,724	)		8,770
Deferred income taxes:
Federal		28,210			39,096			17,942
State		4,018			6,297			4,349
TOTAL		32,228			45,393			22,291
Investment tax credit amortization		(329	)		(371	)		(528	)
TOTAL INCOME TAX EXPENSE	$	34,159		$	34,298		$	30,533

Schedule of deferred tax assets and liabilities as reflected on consolidated balance sheet

Deferred tax assets and liabilities are reflected on our consolidated balance sheet as follows (in thousands):

	December 31,
Deferred Income Taxes	2012		2011
Current deferred tax assets, net(1)	$	13,000	$	6,688
Non-current deferred tax liabilities, net		301,967		263,933
NET DEFERRED TAX LIABILITIES	$	288,967	$	257,245

(1)

Current deferred tax assets are included in prepaid expenses and other on the face of the balance sheet.

Summary of temporary differences related to deferred tax assets and deferred tax liabilities

Temporary differences related to deferred tax assets and deferred tax liabilities are summarized as follows (in thousands):

	December 31,
Temporary Differences	2012		2011
Deferred tax assets:
Net operating loss	$	13,000	$	6,688
Disallowed plant costs		1,010		1,097
Gains on hedging transactions		1,389		1,454
Plant related basis differences		21,571		21,044
Regulated liabilities related to income taxes		13,871		13,318
Carry forward of income tax credit		3,722		16,304
Pensions and other post-retirement benefits		693		—
Deferred fuel costs		785		—
Other		1,477		891
Total deferred tax assets	$	57,518	$	60,796
Deferred tax liabilities:
Depreciation, amortization and other plant related differences	$	279,604	$	253,743
Regulated assets related to income		39,553		40,555
Loss on reacquired debt		4,489		4,288
Pensions and other post-retirement benefits		—		673
Amortization of intangibles		7,009		5,929
Deferred fuel costs		—		2,662
Other		15,830		10,191
Total deferred tax liabilities		346,485		318,041
NET DEFERRED TAX LIABILITIES	$	288,967	$	257,245

Schedule of difference between income taxes and amounts calculated by applying the federal legal rate to income tax expense for continuing operations

Effective Income Tax Rates	2012			2011			2010
Federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Increase (decrease) in income tax rate resulting from:
State income tax (net of federal benefit)		3.1			3.1			3.1
Investment tax credit amortization		(0.4	)		(0.4	)		(0.7	)
Effect of ratemaking on property related differences		(0.2	)		0.2			(0.8	)
Effect of Medicare part D changes		—			—			2.7
Other		0.5			0.5			(0.1	)
EFFECTIVE INCOME TAX RATE		38.0	%		38.4	%		39.2	%

Schedule of unrecognized tax benefits

Unrecognized Tax Benefits	2012		2011			2010
Unrecognized tax benefits — January 1,	$	—	$	359,000		$	906,000
The gross amounts of increases in unrecognized tax benefits taken during prior periods		—		—			—
The gross amounts of decreases in unrecognized tax benefits taken during the period relating to positions accepted by taxing authorities		—		—			—
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations		—		(359,000	)		(547,000	)
UNRECOGNIZED TAX BENEFITS — December 31,	$	—	$	—		$	359,000