Income Tax Expense

3 Months Ended

Mar. 31, 2015

Income Tax Expense [Abstract]

Income Tax Expense [Text Block]

INCOME TAX EXPENSE

	Three Months Ended
	March 31,
	2015			2014
Millions
Current Tax Expense
Federal (a)	—			—
State (a)	$0.1			—
Total Current Tax Expense	$0.1			—
Deferred Tax Expense
Federal		$4.8			$6.3
State	1.5			2.7
Investment Tax Credit Amortization	(0.2		)	(0.2		)
Total Deferred Tax Expense	6.1			8.8
Total Income Tax Expense		$6.2			$8.8

(a) For the three months ended March 31, 2015 and 2014, the federal and state current tax expense was minimal due to the utilization of NOL carryforwards from prior periods. The NOL carryforwards resulted from the bonus depreciation provisions of the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012.

For the three months ended March 31, 2015, the effective tax rate was 13.4 percent (20.7 percent for the three months ended March 31, 2014). The decrease in the effective tax rate from March 31, 2014, was primarily due to increased production tax credits. The effective rate deviated from the statutory rate of approximately 41 percent primarily due to deductions for AFUDC–Equity, investment tax credits, production tax credits and depletion.

Uncertain Tax Positions. As of March 31, 2015, we had gross unrecognized tax benefits of $2.0 million ($2.0 million as of December 31, 2014). Of the total gross unrecognized tax benefits, $0.3 million represents the amount of unrecognized tax benefits included in the Consolidated Balance Sheet that, if recognized, would favorably impact the effective income tax rate. The unrecognized tax benefit amounts have been presented as reductions to the tax benefits associated with NOL and tax credit carryforwards on the Consolidated Balance Sheet.

ALLETE and its subsidiaries file a consolidated federal income tax return as well as combined and separate state income tax returns in various jurisdictions. ALLETE is no longer subject to federal examination for years before 2011, or state examination for years before 2010.