INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2022

Schedule of Components of Income Tax Provision

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


(Thousands)	2022		2021		2020
Current:
Federal	$	4,238	$	651	$	(2,164)
State	2,104		1,703		6,763
Deferred:
Federal	55,968		25,030		28,817
State	14,185		6,224		3,400
Investment/production tax credits	(300)		(322)		(322)
Income tax provision	$	76,195	$	33,286	$	36,494

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)	2022		2021
Deferred tax assets
Investment tax credits (1)	$	212,506	$	225,036

State net operating losses	36,950		38,108
Fair value of derivatives	6,506		16,333
Impairment of equity method investment	14,124		15,395
Postemployment benefits	2,751		9,665
Incentive compensation	7,297		6,894
Amortization of intangibles	6,474		6,540

Overrecovered natural gas costs	4,977		1,540
Allowance for doubtful accounts	5,761		6,561
Other	5,748		6,140
Total deferred tax assets	303,094		332,212
Less: Valuation allowance	(22,241)		(23,613)
Total deferred tax assets net of valuation allowance	$	280,853	$	308,599
Deferred tax liabilities
Property-related items	$	(468,115)	$	(419,753)
Remediation costs	(18,490)		(16,347)
Investments in equity investees	(19,176)		(21,739)


Conservation incentive plan	(6,457)		(3,309)
Other	(4,615)		(6,203)
Total deferred tax liabilities	$	(516,853)	$	(467,351)

Total net deferred tax liabilities	$	(236,000)	$	(158,752)

(1)Includes approximately $732,000 and $814,000 for NJNG for fiscal 2022 and 2021, respectively, which is being amortized over the life of the related assets.

(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)	2022			2021			2020
Statutory income tax expense	$	73,735		$	31,747		$	41,896
Change resulting from:
Investment/production tax credits	(300)			(322)			(322)
Cost of removal of assets placed in service prior to 1981	(3,533)			(5,366)			(5,362)
AFUDC equity	(2,361)			(786)			(4,933)
State income taxes, net of federal benefit	13,072			6,124			11,965
NJ Unitary method change	—			—			(15,345)

Valuation allowance	(1,372)			5,974			13,604
Tax Act - utility excess deferred income taxes amortized	(3,573)			(3,573)			(3,573)
Other	527			(512)			(1,436)
Income tax provision	$	76,195		$	33,286		$	36,494
Effective income tax rate	21.7		%	22.0		%	18.3		%

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)	2022		2021
Balance at October 1,	$	—	$	4,930
Reversal of settled tax positions during the current fiscal period	—		(4,930)
Balance at period end	$	—	$	—