Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

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,	2024			2023			2022
Current income taxes
Federal	$	2		$	84		$	(13	)
State		0			25			(3	)
Deferred income taxes
Federal		36			(19	)		105
State		34			5			38
Investment tax credits amortization		(4	)		(8	)		(6	)
Total income tax expense	$	68		$	87		$	121

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,	2024			2023			2022
Income before provision for income taxes	$	536		$	553		$	661
Federal statutory income tax rates		21	%		21	%		21	%
Income taxes, at statutory income tax rate		113			116			139
Increase (decrease) due to
State income tax, net of federal income tax		23			23			27
Excess deferred tax amortization		(25	)		(25	)		(25	)
ITC amortization		(4	)		(8	)		(6	)
AFUDC-equity		(3	)		(4	)		(7	)
Production tax credits		(30	)		(15	)		(6	)
Other tax credits		(7	)		(4	)		(3	)
Other		1			4			2
Total income tax expense on consolidated statements of income	$	68		$	87		$	121
Income tax expense as a percent of income before income taxes		12.7	%		15.7	%		18.3	%

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,	2024		2023
Deferred tax liabilities (1)
Property related	$	1,314	$	1,227
Deferred fuel		5		23
Pension and postretirement benefits		123		100
Storm reserve		95		2
Total deferred tax liabilities		1,537		1,352
Deferred tax assets (1)
Loss and credit carryforwards (2)		438		383
Medical benefits		22		19
Insurance reserves		2		3
Pension and postretirement benefits		62		49
Other		37		18
Total deferred tax assets		561		472
Total deferred tax liability, net	$	976	$	880

(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 $10 million and $10 million at December 31, 2024 and 2023, respectively.

Schedule of Unrecognized Tax Benefits

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

(millions)	2024		2023		2022
Balance at January 1,	$	10	$	9	$	6
Increases due to tax positions related to prior year	0		0		2
Increases due to tax positions related to current year	0		1		1
Balance at December 31,	$	10	$	10	$	9

Summary of expiration of TEC's tax credits and net operating loss (NOL) carryforwards

The expiration of TEC's tax credits and net operating loss (NOL) carryforwards are as follows:

(millions)	December 31, 2024		Expiration Year
General business credits	$	361	2027-2044
Federal NOL carryforwards		135	2037
Federal NOL carryforwards (1)		248	indefinite
State NOL carryforwards (1)		359	indefinite
Total tax credits and NOL carryforwards	$	1,103

(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.