Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

Income tax expense consists of the following components:

(millions)
For the year ended December 31,	2019			2018			2017
Current income taxes
Federal	$	56		$	72		$	(1	)
State		6			10			6
Deferred income taxes
Federal		7			(13	)		170
State		13			13			23
Investment tax credits amortization		(5	)		(1	)		(1	)
Total income tax expense	$	77		$	81		$	197

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,	2019			2018			2017
Income before provision for income taxes	$	447		$	422		$	513
Federal statutory income tax rates		21	%		21	%		35	%
Income taxes, at statutory income tax rate		94			89			180
Increase (decrease) due to
State income tax, net of federal income tax		15			19			19
Excess deferred tax amortization		(25	)		(24	)		0
ITC amortization		(5	)		(1	)		(1	)
AFUDC-equity		(2	)		(2	)		(1	)
Tax credits		(1	)		(2	)		(3	)
Other		1			2			3
Total income tax expense on consolidated statements of income	$	77		$	81		$	197
Income tax expense as a percent of income before income taxes		17.2	%		19.2	%		38.4	%

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,	2019		2018
Deferred tax liabilities (1)
Property related	$	1,036	$	969
Pension and postretirement benefits		111		105
Total deferred tax liabilities		1,147		1,074
Deferred tax assets (1)
Loss and credit carryforwards (2)		243		146
Medical benefits		27		24
Insurance reserves		16		17
Pension and postretirement benefits		63		63
Capitalized energy conservation assistance costs		17		16
Other		23		9
Total deferred tax assets		389		275
Total deferred tax liability, net	$	758	$	799

(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 $9 million.

Schedule of Unrecognized Tax Benefits

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

(millions)	2019		2018		2017
Balance at January 1,	$	8	$	8	$	7
Increases due to tax positions related to prior year	1		0		0
Increases due to tax positions related to current year	0		0			1
Balance at December 31,	$	9	$	8	$	8