Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

Income tax expense consists of the following components:

(millions)
For the year ended December 31,	2021			2020			2019
Current income taxes
Federal	$	48		$	35		$	56
State		4			(7	)		6
Deferred income taxes
Federal		24			32			7
State		13			29			13
Investment tax credits amortization		(9	)		(7	)		(5	)
Total income tax expense	$	80		$	82		$	77

Schedule of Income Taxes Calculated on Income before Income Taxes and Provision for Income Taxes

For the three years presented, the overall effective tax rate differs from the U.S. federal statutory rate as presented below:

(millions)
For the year ended December 31,	2021			2020			2019
Income before provision for income taxes	$	526		$	506		$	447
Federal statutory income tax rates		21	%		21	%		21	%
Income taxes, at statutory income tax rate		110			106			94
Increase (decrease) due to
State income tax, net of federal income tax		13			17			15
Excess deferred tax amortization		(26	)		(26	)		(25	)
ITC amortization		(9	)		(7	)		(5	)
AFUDC-equity		(9	)		(6	)		(2	)
Tax credits		(3	)		(8	)		(1	)
Other		4			6			1
Total income tax expense on consolidated statements of income	$	80		$	82		$	77
Income tax expense as a percent of income before income taxes		15.2	%		16.2	%		17.2	%

Schedule of Deferred Tax Assets and Liabilities

The principal components of TEC’s deferred tax assets and liabilities recognized in the balance sheet are as follows:

(millions)
As of December 31,	2021		2020
Deferred tax liabilities (1)
Property related	$	1,210	$	1,121
Pension and postretirement benefits		98		116
Total deferred tax liabilities		1,308		1,237
Deferred tax assets (1)
Loss and credit carryforwards (2)		340		301
Medical benefits		26		27
Insurance reserves		15		16
Pension and postretirement benefits		46		66
Capitalized energy conservation assistance costs		20		18
Other		3		26
Total deferred tax assets		450		454
Total deferred tax liability, net	$	858	$	783

(1)Certain property related assets and liabilities have been netted.

(2)Deferred tax assets for net operating loss and tax credit carryforwards have been reduced by unrecognized tax benefits of $6 million and $9 million at December 31, 2021 and 2020, respectively.

Schedule of Unrecognized Tax Benefits

The following table provides details of the change in unrecognized tax benefits as follows:

(millions)	2021			2020			2019
Balance at January 1,	$	9		$	9		$	8
Decreases due to tax positions related to prior year	0				(2	)	0
Increases due to tax positions related to prior year	1			1			1
Increases due to tax positions related to current year	1			1			0
Decreases due to settlements with tax authorities		(5	)	0			0
Balance at December 31,	$	6		$	9		$	9