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Income Taxes
 9 Months Ended
Sep. 30, 2013
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
Income Taxes
 
The following table reconciles our effective income tax rate to the federal statutory rate:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2013
 
2012
 
2013
 
2012
 
Federal statutory rate
35.0
 %
 
35.0
%
 
35.0
 %
 
35.0
 %
 
Flow-through repairs deductions
(17.7
)
 
14.6

 
(16.8
)
 
(22.9
)
 
Flow-through of state bonus depreciation deduction
(4.5
)
 
2.2

 
(4.3
)
 
(5.2
)
 
Production tax credits
(2.8
)
 
—

 
(2.8
)
 
—

 
Prior year permanent return to accrual adjustments
—

 
15.0

 
0.6

 
(4.5
)
 
Recognition of state net operating loss benefit / valuation allowance release
—

 
0.4

 
—

 
(0.1
)
 
State income tax and other, net
0.4

 
2.3

 
—

 
2.5

 
 
10.4
 %
 
69.5
%
 
11.7
 %
 
4.8
 %
 

The following table summarizes the significant differences in income tax expense based on the differences between our effective tax rate and the federal statutory rate (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Income (Loss) Before Income Taxes
$
17,462

 
$
(12,360
)
 
$
76,855

 
$
41,698

 
 
 
 
 
 
 
 
Income tax calculated at 35% federal statutory rate
6,112

 
(4,326
)
 
26,899

 
14,594

 
 
 
 
 
 
 
 
Permanent or flow through adjustments:
 
 
 
 
 
 
 
Flow-through repairs deductions
(3,086
)
 
(1,808
)
 
(12,898
)
 
(9,547
)
Flow-through of state bonus depreciation deduction
(786
)
 
(276
)
 
(3,287
)
 
(2,159
)
Production tax credits
(482
)
 
—

 
(2,152
)
 
—

Prior year permanent return to accrual adjustments
—

 
(1,857
)
 
541

 
(1,857
)
Recognition of state net operating loss benefit / valuation allowance release
—

 
(51
)
 
—

 
(51
)
State income tax and other, net
57

 
(270
)
 
(138
)
 
1,009

 
$
(4,297
)
 
$
(4,262
)
 
$
(17,934
)
 
$
(12,605
)
 
 
 
 
 
 
 
 
Income tax expense (benefit)
$
1,815

 
$
(8,588
)
 
$
8,965

 
$
1,989


Our effective tax rate differs from the federal statutory tax rate of 35% primarily due to the regulatory impact of flowing through the federal and state tax benefit of repairs deductions, state tax benefit of bonus depreciation deductions and production tax credits. The regulatory accounting treatment of these deductions requires immediate income recognition for temporary tax differences of this type, which is referred to as the flow-through method. When the flow-through method of accounting for temporary differences is reflected in regulated revenues, we record deferred income taxes and establish related regulatory assets and liabilities.

Uncertain Tax Positions

We have unrecognized tax benefits of approximately $114.0 million as of September 30, 2013, including approximately $79.1 million that, if recognized, would impact our effective tax rate. It is reasonably possible that a significant portion of our unrecognized tax benefits may decrease in the next 12 months due to the expiration of statutes of limitation.

Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. During the nine months ended September 30, 2013, we recognized approximately $0.3 million of interest in the Condensed Consolidated Statement of Income. As of September 30, 2013 we have $0.3 million of interest accrued in the Condensed Consolidated Balance Sheets. During the nine months ended September 30, 2012, we did not recognize any expense for interest or penalties, and did not have any amounts accrued as of December 31, 2012, for the payment of interest and penalties.

The Internal Revenue Service (IRS) issued guidance during the third quarter of 2011 providing a safe harbor method for determining the tax treatment of repair costs related to electric transmission and distribution property. That guidance was updated in the third quarter of 2012 to allow companies additional time to adopt the safe harbor method. We are evaluating whether or not we want to elect the safe harbor method, which may result in a change in related repairs deductions and unrecognized tax benefits. In September 2013, the IRS issued final regulations addressing the tax consequences associated with the acquisition, production and improvement of tangible property. We continue to evaluate what impact the adoption of the regulations will have on our consolidated financial statements. We do not expect the adoption of the regulations to have a material impact on our consolidated financial statements.

Our federal tax returns from 2000 forward remain subject to examination by the IRS.