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Income Taxes
 12 Months Ended
Dec. 31, 2019
Income Taxes Note [Abstract]  
Income Taxes INCOME TAXES

On December 22, 2017, the TCJA was enacted and signed into law with substantially all of the provisions having an effective date of January 1, 2018. The most significant change to PGE’s financial condition was the federal corporate tax rate decrease from 35% to 21%.

Income tax expense/(benefit) consists of the following (in millions):
 
Years Ended December 31,
  
2019
 
2018
 
2017
Current:
 
 
 
 
 
Federal
$
9

 
$
12

 
$
4

State and local
12

 
22

 
12

 
21

 
34

 
16

Deferred:
 
 
 
 
 
Federal
(2
)
 
(15
)
 
61

State and local
8

 
(2
)
 
9

 
6

 
(17
)
 
70

Income tax expense
$
27

 
$
17

 
$
86

 
 
 
 
 
 


The significant differences between the U.S. federal statutory rate and PGE’s effective tax rate for financial reporting purposes are as follows:
 
Years Ended December 31,
  
2019
 
2018
 
2017
Federal statutory tax rate
21.0
 %
 
21.0
 %
 
35.0
 %
Federal tax credits(1)
(13.4
)
 
(16.7
)
 
(14.0
)
Change in federal tax law(2)
—

 
—

 
6.1

State and local taxes, net of federal tax benefit
6.5

 
6.5

 
5.0

Flow through depreciation and cost basis differences
1.5

 
1.5

 
1.5

Excess deferred tax amortization(3)
(3.7
)
 
(4.1
)
 
—

Other
(0.7
)
 
(0.8
)
 
(2.1
)
Effective tax rate
11.2
 %
 
7.4
 %
 
31.5
 %
 
 
 
 
 
 

 
 
 
 
 
(1)
Federal tax credits consist primarily of production tax credits (PTCs) earned from Company-owned wind-powered generating facilities. The federal PTCs are earned based on a per-kilowatt hour rate, and as a result, the annual amount of PTCs earned will vary based on weather conditions and availability of the facilities. The PTCs are generated for 10 years from the corresponding facilities’ in-service dates. PGE’s PTC generation ended or will end at various dates between 2017 and 2024.
(2) For the year ended December 31, 2017, includes a $17 million increase to Income tax expense related to the remeasurement of deferred income taxes as a result of the enacted tax rate change under the TCJA.
(3) The majority of excess deferred income taxes related to remeasurement under the TCJA is subject to IRS normalization rules and will be amortized over the remaining regulatory life of the assets using the average rate assumption method.
  
Deferred income tax assets and liabilities consist of the following (in millions):
 
As of December 31,  
  
2019
 
2018
Deferred income tax assets:
 
 
 
Employee benefits
$
119

 
$
134

Price risk management
26

 
36

Regulatory liabilities
22

 
26

Tax credits
64

 
52

Other
—

 
9

Total deferred income tax assets
231

 
257

Deferred income tax liabilities:
 
 
 
Depreciation and amortization
496

 
511

Regulatory assets
103

 
115

Other
10

 
—

Total deferred income tax liabilities
609

 
626

Deferred income tax liability, net
$
378

 
$
369



As of December 31, 2019, PGE has federal credit carryforwards of $64 million, consisting of PTCs, which will expire at various dates through 2039. PGE believes that it is more likely than not that its deferred income tax assets as of December 31, 2019 and 2018 will be realized; accordingly, no valuation allowance has been recorded. As of December 31, 2019, and 2018, PGE had no material unrecognized tax benefits.

PGE and its subsidiaries file a consolidated federal income tax return. The Company also files income tax returns in the states of Oregon, California, and Montana, and in certain local jurisdictions. The Internal Revenue Service (IRS)
has completed its examination of all tax years through 2010 and all issues were resolved related to those years. The Company does not believe that any open tax years for federal or state income taxes could result in any adjustments that would be significant to the consolidated financial statements.