Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

Income tax expense consists of the following components:

Income Tax Expense (Benefit)

(millions)
For the year ended December 31,	2023			2022			2021
Current income taxes
Federal	$	84		$	(13	)	$	48
State		25			(3	)		4
Deferred income taxes
Federal		(19	)		105			24
State		5			38			13
Investment tax credits amortization		(8	)		(6	)		(9	)
Total income tax expense	$	87		$	121		$	80

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,	2023			2022			2021
Income before provision for income taxes	$	553		$	661		$	526
Federal statutory income tax rates		21	%		21	%		21	%
Income taxes, at statutory income tax rate		116			139			110
Increase (decrease) due to
State income tax, net of federal income tax		23			27			13
Excess deferred tax amortization		(25	)		(25	)		(26	)
ITC amortization		(8	)		(6	)		(9	)
AFUDC-equity		(4	)		(7	)		(9	)
Production Tax Credits		(15	)		(6	)		0
Other Tax credits		(4	)		(3	)		(3	)
Other		4			2			4
Total income tax expense on consolidated statements of income	$	87		$	121		$	80
Income tax expense as a percent of income before income taxes		15.7	%		18.3	%		15.2	%

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,	2023		2022
Deferred tax liabilities (1)
Property related	$	1,227	$	1,318
Deferred fuel		23		133
Pension and postretirement benefits		100		111
Insurance reserves		0		15
Total deferred tax liabilities		1,350		1,577
Deferred tax assets (1)
Loss and credit carryforwards (2)		383		408
Medical benefits		19		24
Insurance reserves		1		0
Pension and postretirement benefits		49		57
Capitalized energy conservation assistance costs		0		23
Other		18		20
Total deferred tax assets		470		532
Total deferred tax liability, net	$	880	$	1,045

(1)Certain property related assets and liabilities have been netted. At December 31, 2022, PGS total deferred tax liabilities and deferred tax assets were $213 million and $37 million, respectively, with the majority of the balances related to property and capitalized energy conservation assistance costs.

(2)Deferred tax assets for net operating loss and tax credit carryforwards have been reduced by unrecognized tax benefits of $10 million and $9 million at December 31, 2023 and 2022, respectively.

Schedule of Unrecognized Tax Benefits

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

(millions)	2023		2022		2021
Balance at January 1,	$	9	$	6	$	9
Increases due to tax positions related to prior year	0		2		1
Increases due to tax positions related to current year	1		1		1
Decreases due to settlements with tax authorities	0		0			(5	)
Balance at December 31,	$	10	$	9	$	6

Summary of expiration of TEC's tax credits and NOL carryforwards

The expiration of TEC's tax credits and NOL carryforwards are as follows:

(millions)	December 31, 2023		Expiration Year
General business credits	$	324	2027-2043
Federal NOL carryforwards		135	2037
Federal NOL carryforwards (1)		199	indefinite
State NOL carryforwards (1)		305	indefinite
Total tax credits and NOL carryforwards	$	963

(1)Indefinite carryforward for Federal NOLs and NOLs for states that have adopted the U.S. Tax Cuts and Jobs Act of 2017 provisions, generated in tax years beginning after December 31, 2017.