Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income taxes

Income Taxes

The components of income before income taxes from continuing operations for each of the years ended December 31 were as follows:

	2020		2019		2018
	(In thousands)
United States	$	474,856	$	398,532	$	317,655
Foreign	261		(87)		(784)
Income before income taxes from continuing operations	$	475,117	$	398,445	$	316,871

Income tax expense (benefit) from continuing operations for the years ended December 31 was as follows:

	2020		2019		2018
	(In thousands)
Current:
Federal	$	65,006	$	(3,502)	$	(15,901)
State	21,234		3,366		3,651
Foreign	151		—		—
	86,391		(136)		(12,250)
Deferred:
Income taxes:
Federal	(3,735)		50,218		50,755
State	(625)		12,098		7,206
Investment tax credit - net	2,559		1,099		1,774
	(1,801)		63,415		59,735
Total income tax expense	$	84,590	$	63,279	$	47,485

The TCJA was enacted on December 22, 2017. The SEC issued rules that allowed for a measurement period of up to 12 months after the enactment date of the TCJA to finalize the recording of the related tax impacts. The Company reviewed the impacts of the TCJA and completed its assessment of the transitional impacts during the period ending December 31, 2018, of which there were no such material adjustments.

Components of deferred tax assets and deferred tax liabilities at December 31 were as follows:

	2020		2019
	(In thousands)
Deferred tax assets:
Postretirement	$	51,495	$	51,075
Compensation-related	40,477		37,330
Operating lease liabilities	25,963		24,459
Payroll tax deferral	14,010		—
Legal and environmental contingencies	9,467		6,601
Asset retirement obligations	8,060		7,450
Customer advances	7,463		7,325
Federal renewable energy credit	—		5,343
Other	37,944		32,533
Total deferred tax assets	194,879		172,116
Deferred tax liabilities:
Depreciation and basis differences on property, plant and equipment	536,966		511,867
Postretirement	49,233		48,927
Operating lease right-of-use-assets	25,858		24,436
Intangible asset amortization	19,514		18,930
Other	67,922		61,385
Total deferred tax liabilities	699,493		665,545
Valuation allowance	11,484		13,154
Net deferred income tax liability	$	516,098	$	506,583

As of December 31, 2020 and 2019, the Company had various state income tax net operating loss carryforwards of $151.5 million and $149.8 million, respectively, and federal and state income tax credit carryforwards, excluding alternative minimum tax credit carryforwards, of $37.1 million and $43.7 million, respectively. Included in the state credits are various regulatory investment tax credits of approximately $36.3 million and $37.4 million at December 31, 2020 and 2019, respectively. The state income tax credit carryforwards are due to expire between

2021 and 2034. Changes in tax regulations or assumptions regarding current and future taxable income could require additional valuation allowances in the future.

The following table reconciles the change in the net deferred income tax liability from December 31, 2019, to December 31, 2020, to deferred income tax benefit:

	2020
(In thousands)
Change in net deferred income tax liability from the preceding table	$	9,515
Deferred taxes associated with other comprehensive loss	1,817
Excess deferred income tax amortization	(12,517)
Other	(616)
Deferred income tax benefit for the period	$	(1,801)

Total income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before taxes. The reasons for this difference were as follows:

Years ended December 31,	2020			2019			2018
	Amount		%	Amount		%	Amount		%
	(Dollars in thousands)
Computed tax at federal statutory rate	$	99,775	21.0	$	83,674	21.0	$	66,543	21.0
Increases (reductions) resulting from:
State income taxes, net of federal income tax	17,845		3.8	14,029		3.5	12,190		3.8
Federal renewable energy credit	(16,009)		(3.4)	(15,843)		(4.0)	(11,759)		(3.7)
Tax compliance and uncertain tax positions	(3,543)		(.7)	(2,739)		(.7)	(2,725)		(.9)
Excess deferred income tax amortization	(12,517)		(2.6)	(11,904)		(3.0)	(9,319)		(2.9)
TCJA revaluation	—		—	—		—	(5,947)		(1.9)
TCJA revaluation related to accumulated other comprehensive loss balance	—		—	—		—	(42)		—
Other	(961)		(.3)	(3,938)		(.9)	(1,456)		(.4)
Total income tax expense	$	84,590	17.8	$	63,279	15.9	$	47,485	15.0

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state, local and foreign jurisdictions. The Company is no longer subject to U.S. federal or non-U.S. income tax examinations by tax authorities for years ending prior to 2016. With few exceptions, as of December 31, 2020, the Company is no longer subject to state and local income tax examinations by tax authorities for years ending prior to 2016.

For the years ended December 31, 2020, 2019 and 2018, total reserves for uncertain tax positions were not material. The Company recognizes interest and penalties accrued relative to unrecognized tax benefits in income tax expense.