Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Reconciliation of Unrecognized Tax Benefits

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



(Millions of Dollars)	Dec. 31, 2015		Dec. 31, 2014
Unrecognized tax benefit — Permanent tax positions	$	2.6	$	1.5
Unrecognized tax benefit — Temporary tax positions	22.1		11.7
Total unrecognized tax benefit	$	24.7	$	13.2

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



(Millions of Dollars)	2015			2014			2013
Balance at Jan. 1	$	13.2		$	4.1		$	3.9
Additions based on tax positions related to the current year	4.2			8.6			1.6
Reductions based on tax positions related to the current year	(0.6		)	—			—
Additions for tax positions of prior years	9.0			2.3			3.1
Reductions for tax positions of prior years	(1.1		)	(0.3		)	(0.3		)
Settlements with taxing authorities	—			(0.2		)	(4.2		)
Lapse of applicable statutes of limitations	—			(1.3		)	—
Balance at Dec. 31	$	24.7		$	13.2		$	4.1

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, 2015			Dec. 31, 2014
NOL and tax credit carryforwards	$	(5.0	)	$	(4.8	)

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:



(Millions of Dollars)	2015			2014
Federal NOL carryforward	$	306		$	192
Federal tax credit carryforwards	3			2
State NOL carryforwards	79			59
Valuation allowances for state NOL carryforwards	(11		)	—

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:



	2015		2014		2013
Federal statutory rate	35.0	%	35.0	%	35.0	%
Increases (decreases) in tax from:
State income taxes, net of federal income tax benefit	2.6		3.4		2.0
Change in unrecognized tax benefits	0.5		0.2		0.7
Regulatory differences — utility plant items	(0.8	)	(1.6	)	(1.1	)
Tax credits recognized, net of federal income tax expense	(0.3	)	(0.4	)	(0.4	)
Other, net	0.1		0.1		(0.1	)
Effective income tax rate	37.1	%	36.7	%	36.1	%

Schedule of Components of Income Tax Expense (Benefit)

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



(Thousands of Dollars)	2015			2014			2013
Current federal tax (benefit) expense	$	(1,327	)	$	(57,201	)	$	14,947
Current state tax expense	2,448			2,512			2,943
Current change in unrecognized tax expense (benefit)	11,281			6,715			(263		)
Deferred federal tax expense	67,640			121,882			33,489
Deferred state tax expense	5,399			8,025			1,754
Deferred change in unrecognized tax (benefits) expense	(10,203		)	(6,390		)	1,232
Deferred investment tax credits	(213		)	(341		)	(341		)
Total income tax expense	$	75,025		$	75,202		$	53,761

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



(Thousands of Dollars)	2015			2014			2013
Deferred tax expense excluding items below	$	63,453		$	124,875		$	38,333
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities	(780		)	(1,262		)	(1,761		)
Tax expense allocated to other comprehensive income	163			(96		)	(97		)
Deferred tax expense	$	62,836		$	123,517		$	36,475

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)	2015		2014
Deferred tax liabilities:
Differences between book and tax bases of property	$	945,142	$	842,847
Employee benefits	50,097		50,696
Other	19,593		28,591
Total deferred tax liabilities	$	1,014,832	$	922,134
Deferred tax assets:
NOL carryforward	$	112,060	$	71,956
Rate refund	1,395		18,405
Unbilled revenue - fuel costs	10,808		10,866
Regulatory liabilities	10,480		10,794
Deferred fuel costs	12,319		6,006
Other	7,026		6,816
Total deferred tax assets	$	154,088	$	124,843
Net deferred tax liability	$	860,744	$	797,291