INCOME TAXES

3 Months Ended

Mar. 31, 2013

INCOME TAXES

INCOME TAXES

NOTE 11 — INCOME TAXES

We calculate our interim period provision for income taxes based on our projected annual effective tax rate as adjusted for certain discrete items.

The table below shows our effective tax rates:

	Three Months Ended March 31
	2013		2012
Effective Tax Rate	37.6	%	32.4	%

Our effective tax rate normally differs from the federal statutory tax rate of 35% due to additional provision for multistate income tax obligations. Other significant items that had an impact on our effective tax rates are noted below.

Our effective tax rate for the three months ended March 31, 2012, was lowered by the federal income tax benefit of wind production tax credits (PTCs). The effective income tax rate in 2013 was not impacted by wind PTCs. In the fourth quarter of 2012, we elected to claim and subsequently received a Section 1603 Grant for WPS's Crane Creek Wind Project in lieu of wind PTCs.

Our effective tax rate for the three months ended March 31, 2012, was also lowered by the effective settlement of certain state income tax examinations and a remeasurement of uncertain tax positions included in our liability for unrecognized tax benefits.

During the three months ended March 31, 2013, we decreased our liability for unrecognized tax benefits by $6.8 million. This decrease primarily related to a remeasurement of uncertain tax positions driven by an effective settlement of a certain state income tax examination. We reduced the provision for income taxes related to this remeasurement, of which the majority was reported as discontinued operations.