Income taxes

9 Months Ended

Sep. 30, 2025

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

The Company’s effective tax rate (combined federal and state income tax rates) for the nine months ended September 30, 2025 was 25% tax expense. This rate differs from the combined statutory rates, primarily due to the Utilities’ amortization of excess deferred income taxes related to the 2017 Tax Cuts and Jobs Act reduction in tax rate from 35% to 21%, partially offset by recapture of investment tax credits and higher executive compensation limitations.

The Company’s effective tax rate was 26% tax benefit for the nine months ended September 30, 2024.

The Company’s effective tax rate for the first nine months of 2025 was lower than the comparable period in 2024 primarily due to the substantial pre-tax loss in 2024 resulting from the accrual of the loss contingencies related to the wildfire tort-related claims and because the impact of permanent items had a smaller impact on the effective rate in prior year, partially offset by recapture of investment tax credits and lower research and development tax credit claims in 2025.

The Utilities’ effective tax rate (combined federal and state income tax rates) for the nine months ended September 30, 2025 was 22% tax expense. This rate differs from the combined statutory rates, primarily due to the Utilities’ amortization of excess deferred income taxes related to the 2017 Tax Cuts and Jobs Act reduction in tax rate from 35% to 21%, partially offset by higher executive compensation limitations.

The Utilities’ effective tax rate was 26% tax benefit for the nine months ended September 30, 2024.

The Utilities’ effective tax rate for the first nine months of 2025 was lower than the comparable period in 2024 primarily due to the substantial pre-tax loss in 2024 resulting from the accrual of the loss contingencies related to the wildfire tort-related claims and because the impact of permanent items had a smaller impact on the effective rate in prior year, partially offset by lower research and development credit claims in 2025.

In the third quarter of fiscal 2025, federal tax legislation, commonly referred to as the One Big Beautiful Bill Act, which includes a broad range of tax reform provisions, was signed into law in the United States on July 4, 2025. For the current period including enactment, the Company recognized the impacts of the provisions, including the deduction of current year research and experimentation expenses. While the legislation is not expected to have a material impact on the Company’s financial statements, the Company will continue to assess the legislation’s impact on future reporting periods.

The Company currently has no open Internal Revenue Service or State income tax audits.