Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income tax expense (benefit) is comprised of the following (in thousands):



	Year Ended December 31,
	2018			2017			2016
Federal
Current	$	(5,526	)	$	806		$	723
Deferred	(15,588		)	17,378			(2,054		)
Investment tax credits	(33		)	166			(196		)
State
Current	38			33			10
Deferred	2,399			(5,015		)	(6,130		)
Income Tax (Benefit) Expense	$	(18,710	)	$	13,368		$	(7,647	)

Schedule of Effective Income Tax Rate Reconciliation

The following table reconciles our effective income tax rate to the federal statutory rate:



	Year Ended December 31,
	2018		2017		2016
Federal statutory rate	21.0	%	35.0	%	35.0	%
State income tax, net of federal provisions	0.9		(1.9	)	(2.4	)
Impact of Tax Cuts and Jobs Act	(11.1	)	—		—
Flow-through repairs deductions	(10.8	)	(17.3	)	(26.3	)
Production tax credits	(6.1	)	(6.3	)	(7.0	)
Plant and depreciation of flow through items	(1.2	)	(1.3	)	(2.9	)
Share-based compensation	0.1		(0.2	)	(1.1	)
Prior year permanent return to accrual adjustments	(1.7	)	(0.3	)	(0.1	)
Other, net	(1.6	)	(0.1	)	(0.1	)
Effective tax rate	(10.5	)%	7.6	%	(4.9	)%

The table below summarizes the significant differences in income tax (benefit) expense based on the differences between our effective tax rate and the federal statutory rate (in thousands).



	Year Ended December 31,
	2018			2017			2016
Income Before Income Taxes	$	178,250		$	176,071		$	156,525

Income tax calculated at federal statutory rate	37,433			61,625			54,784

Permanent or flow through adjustments:
State tax income, net of federal provisions	1,613			(3,258		)	(3,714		)
Impact of Tax Cuts and Jobs Act	(19,840		)	—			—
Flow-through repairs deductions	(19,323		)	(30,490		)	(41,111		)
Production tax credits	(10,890		)	(11,032		)	(10,941		)
Plant and depreciation of flow through items	(2,175		)	(2,208		)	(4,604		)
Share-based compensation	228			(363		)	(1,646		)
Prior year permanent return to accrual adjustments	(2,978		)	(629		)	(128		)
Other, net	(2,778		)	(277		)	(287		)
	(56,143		)	(48,257		)	(62,431		)

Income Tax (Benefit) Expense	$	(18,710	)	$	13,368		$	(7,647	)

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred income tax liability recognized in our Consolidated Balance Sheets are related to the following temporary differences (in thousands):



	December 31,
	2018			2017
Production tax credit	$	38,956		$	28,067
Pension / postretirement benefits	30,634			26,887
NOL carryforward	28,326			68,840
Customer advances	13,190			11,949
Unbilled revenue	12,305			5,944
Compensation accruals	11,885			12,113
AMT credit carryforward	6,799			13,599
Environmental liability	5,810			5,821
Interest rate hedges	4,074			4,323
Reserves and accruals	1,100			1,126
QF obligations	557			234
Property taxes	523			432
Regulatory liabilities	77			114
Other, net	196			1,138
Deferred Tax Asset	154,432			180,587
Excess tax depreciation	(371,216		)	(356,938		)
Goodwill amortization	(119,454		)	(117,971		)
Flow through depreciation	(57,456		)	(45,998		)
Regulatory assets	(924		)	(409		)
Deferred Tax Liability	(549,050		)	(521,316		)
Deferred Tax Liability, net	$	(394,618	)	$	(340,729	)

Summary of Income Tax Contingencies

The change in unrecognized tax benefits is as follows (in thousands):



	2018			2017			2016
Unrecognized Tax Benefits at January 1	$	57,473		$	88,429		$	92,387
Gross increases - tax positions in prior period	—			—			—
Gross decreases - tax positions in prior period	—			(22,973		)	—
Gross increases - tax positions in current period	338			—			—
Gross decreases - tax positions in current period	(1,661		)	(7,983		)	(3,958		)
Lapse of statute of limitations	—			—			—
Unrecognized Tax Benefits at December 31	$	56,150		$	57,473		$	88,429