INCOME TAXES

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The provision for income taxes differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to income before income taxes as a result of the following:

	Three Months Ended September 30, 2024				Three Months Ended September 30, 2023
(in millions)	Amount		Effective Tax Rate		Amount		Effective Tax Rate
Statutory federal income tax	$	57.0	21.0	%	$	79.0	21.0	%
State income taxes net of federal tax benefit	16.9		6.2	%	23.2		6.2	%
PTCs, net	(33.7)		(12.4)	%	(30.2)		(8.0)	%
Federal excess deferred tax amortization	(5.8)		(2.1)	%	(8.5)		(2.3)	%
Other, net	(2.8)		(1.0)	%	(3.1)		(0.8)	%
Total income tax expense	$	31.6	11.7	%	$	60.4	16.1	%
	Nine Months Ended September 30, 2024				Nine Months Ended September 30, 2023
(in millions)	Amount		Effective Tax Rate		Amount		Effective Tax Rate
Statutory federal income tax	$	259.2	21.0	%	$	272.2	21.0	%
State income taxes net of federal tax benefit	75.9		6.2	%	80.0		6.2	%
PTCs, net	(143.9)		(11.7)	%	(130.3)		(10.1)	%
Federal excess deferred tax amortization	(26.1)		(2.1)	%	(28.9)		(2.2)	%
Other, net	(4.2)		(0.3)	%	(10.0)		(0.8)	%
Total income tax expense	$	160.9	13.1	%	$	183.0	14.1	%

The effective tax rates for the three and nine months ended September 30, 2024 and 2023, differ from the United States statutory federal income tax rate of 21%, primarily due to PTCs generated from ownership interests in renewable generation facilities in our non-utility energy infrastructure and Wisconsin segments and the impact of the protected deferred tax benefits associated with the Tax Legislation, as discussed in more detail below. These items were partially offset by state income taxes.

The Tax Legislation required our regulated utilities to remeasure their deferred income taxes, and we began to amortize the resulting excess protected deferred income taxes beginning in 2018 in accordance with normalization requirements (see federal excess deferred tax amortization lines above). See Note 26, Regulatory Environment, in our 2023 Annual Report on Form 10-K for more information about the impact of the Tax Legislation.

The IRA contains a tax credit transferability provision that allows us to sell PTCs produced after December 31, 2022, to third parties. In September 2023 and May 2024, under this transferability provision, we entered into agreements to sell substantially all of the PTCs we generated in 2023 and substantially all of the PTCs expected to be generated in 2024 to third parties. We elect to account for tax credits transferred under the scope of ASC 740. We include the discount from the sale of tax credits as a component of income tax expense. We also include any expected proceeds from the sale of tax credits in the evaluation of the realizability of deferred tax assets related to PTCs. The sale of tax credits is presented in the operating activities section of the statements of cash flows consistent with the presentation of cash taxes paid.

In April 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized for tax purposes. We adopted the safe harbor method of accounting for certain of our utilities on our 2023 tax return, which increased our deferred tax liabilities. We are still evaluating how this new guidance can be adopted by our remaining utilities and plan to adopt the guidance for them on a future tax return.