INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Provision (Benefit)

The income tax (benefit) provision from operations for the fiscal years ended September 30, consists of the following:

(Thousands)	2019			2018			2017
Current:
Federal	$	10,933		$	(2,848	)	$	(16,023	)
State	3,530			4,563			2,470
Deferred:
Federal	7,988			(40,785		)	54,965
State	5,833			6,731			11,457
Investment/production tax credits, net	(66,035		)	(21,446		)	(34,526		)
Income tax (benefit) provision	$	(37,751	)	$	(53,785	)	$	18,343

Schedule of Deferred Tax Assets and Liabilities

As of September 30, the temporary differences, which give rise to deferred tax assets (liabilities), consist of the following:

(Thousands)	2019			2018
Deferred tax assets
Investment tax credits (1)	$	156,153		$	123,258
Federal net operating losses (2)	24,173			24,500
State net operating losses	25,302			34,754
Fair value of derivatives	9,673			8,411
Postemployment benefits	9,192			—
Incentive compensation	7,231			4,646
Amortization of intangibles	4,991			3,737
Conservation incentive plan	—			1,955
Other	3,105			8,213
Total deferred tax assets	$	239,820		$	209,474
Deferred tax liabilities
Property related items	$	(379,673	)	$	(392,886	)
Remediation costs	(10,720		)	(9,229		)
Equity investments	(21,730		)	(31,956		)
Underrecovered gas costs	(2,657		)	(1,156		)
Conservation incentive plan	(942		)	—
Postemployment benefits	—			(353		)
Other	(4,776		)	(7,826		)
Total deferred tax liabilities	$	(420,498	)	$	(443,406	)
Total net deferred tax liabilities	$	(180,678	)	$	(233,932	)

(1) Includes $2 million and $2.2 million for NJNG for fiscal 2019 and 2018, respectively, which is being amortized over the life of the related assets, and $154.2 million and $121.1 million for Clean Energy Ventures for fiscal 2019 and 2018, respectively, which is ITC carryforward.

(2) See discussion of federal net operating loss utilization in the Other Tax Items section of this note.

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the U.S. federal statutory rate to the effective rate from operations for the fiscal years ended September 30, is as follows:

(Thousands)	2019			2018			2017
Statutory income tax expense	$	27,668		$	44,014		$	52,643
Change resulting from:
Investment/production tax credits	(66,035		)	(21,446		)	(34,526		)
Cost of removal of assets placed in service prior to 1981	(6,349		)	(5,829		)	(6,886		)
AFUDC equity	(2,313		)	(2,117		)	(2,624		)
State income taxes, net of federal benefit	7,707			7,092			8,222
Basis adjustment of solar assets due to ITC	6,500			1,080			4,256
Tax Act - utility excess deferred income taxes amortized (1)	(3,573		)	(1,786		)	—
Tax Act - nonutility excess deferred income taxes (1)	—			(59,627		)	—
Tax Act - utility excess deferred income taxes refunded to customers (1)	—			(14,323		)	—
Other	(1,356		)	(843		)	(2,742		)
Income tax (benefit) provision	$	(37,751	)	$	(53,785	)	$	18,343
Effective income tax rate (2) (3)	(28.7		)%	(29.9		)%	12.2		%

(1) For a more detailed description, see The Tax Act section of this note.

(2) The U.S. federal statutory rate was 21 percent, 24.5 percent and 35 percent for fiscal 2019, 2018 and 2017, respectively.

(3)

The effective tax rate without the impact of the Tax Act would have been 12.4 percent for fiscal 2018

Schedule of the Reserve for Uncertain Tax Benefits

The reserve for uncertain tax benefits for the fiscal year ended September 30, is as follows:

(Thousands)	2019
Balance at October 1,	$	—
Additions based on tax positions related to the current fiscal period	4,930
Balance at period end	$	4,930