Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the amount of unrecognized tax benefit is as follows:



(Millions of Dollars)	Dec. 31, 2013		Dec. 31, 2012
Unrecognized tax benefit — Permanent tax positions	$	1.2	$	0.2
Unrecognized tax benefit — Temporary tax positions	2.9		3.7
Total unrecognized tax benefit	$	4.1	$	3.9

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:



(Millions of Dollars)	2013			2012			2011
Balance at Jan. 1	$	3.9		$	4.8		$	4.3
Additions based on tax positions related to the current year	1.6			1.1			1.5
Reductions based on tax positions related to the current year	—			(1.6		)	(0.2		)
Additions for tax positions of prior years	3.1			0.8			2.5
Reductions for tax positions of prior years	(0.3		)	(1.2		)	(0.3		)
Settlements with taxing authorities	(4.2		)	—			(3.0		)
Balance at Dec. 31	$	4.1		$	3.9		$	4.8

Tax Benefits Associated with NOL and Tax Credit Carryforwards

The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryforwards are as follows:



(Millions of Dollars)	Dec. 31, 2013			Dec. 31, 2012
NOL and tax credit carryforwards	$	(2.4	)	$	(2.0	)

NOL and Tax Credit Carryforwards

Other Income Tax Matters — NOL amounts represent the amount of the tax loss that is carried forward and tax credits represent the deferred tax asset. NOL and tax credit carryforwards as of Dec. 31 were as follows:

Schedule of Effective Income Tax Rate Reconciliation

Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense. The following reconciles such differences for the years ending Dec. 31:



	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
Increases (decreases) in tax from:
State income taxes, net of federal income tax benefit	2.0		2.2		2.9
Change in unrecognized tax benefits	0.7		—		—
Regulatory differences — utility plant items	(1.1	)	(0.4	)	(0.1	)
Tax credits recognized	(0.4	)	(0.2	)	(0.3	)
Other, net	(0.1	)	0.3		0.5
Effective income tax rate	36.1	%	36.9	%	38.0	%

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense for the years ending Dec. 31 were:



(Thousands of Dollars)	2013			2012			2011
Current federal tax expense (benefit)	$	14,947		$	6,549		$	(1,993	)
Current state tax expense	2,943			2,712			3,287
Current change in unrecognized tax benefit	(263		)	(824		)	(1,394		)
Deferred federal tax expense	33,489			50,189			50,903
Deferred state tax expense	1,754			3,069			3,240
Deferred change in unrecognized tax expense	1,232			861			1,365
Deferred investment tax credits	(341		)	(327		)	(275		)
Total income tax expense	$	53,761		$	62,229		$	55,133

The components of deferred income tax expense for the years ending Dec. 31 were:



(Thousands of Dollars)	2013			2012			2011
Deferred tax expense excluding items below	$	38,333		$	55,749		$	56,181
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities	(1,761		)	(1,533		)	(575		)
Tax expense allocated to other comprehensive income	(97		)	(97		)	(98		)
Deferred tax expense	$	36,475		$	54,119		$	55,508

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax liability (current and noncurrent) at Dec. 31 were as follows:



(Thousands of Dollars)	2013		2012
Deferred tax liabilities:
Differences between book and tax bases of property	$	705,416	$	654,259
Employee benefits	52,081		51,394
Other	30,066		24,034
Total deferred tax liabilities	$	787,563	$	729,687
Deferred tax assets:
NOL carryforward	$	61,330	$	59,562
Rate refund	17,192		2,911
Unbilled revenue - fuel costs	13,316		10,555
Regulatory liabilities	9,724		6,176
Deferred fuel costs	6,877		11,952
Other	6,708		4,448
Total deferred tax assets	$	115,147	$	95,604
Net deferred tax liability	$	672,416	$	634,083

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

+ References+ Details

(Millions of Dollars)

Federal NOL carryforward

Federal tax credit carryforwards

State NOL carryforwards