Accounting For Income Taxes

12 Months Ended

Dec. 31, 2011

Accounting For Income Taxes [Abstract]

Accounting For Income Taxes

NOTE 11. ACCOUNTING FOR INCOME TAXES

Income tax expense consisted of the following for the years ended December 31 (dollars in thousands):

	2011		2010		2009
Taxes currently provided	$	32,625	$	13,423	$	32,470
Deferred income tax expense		24,007		37,734		13,853
Total income tax expense	$	56,632	$	51,157	$	46,323

A reconciliation of federal income taxes derived from statutory federal tax rates (35 percent in 2011, 2010 and 2009) applied to income before income taxes as set forth in the accompanying Consolidated Statements of Income is as follows for the years ended December 31 (dollars in thousands):

	2011			2010			2009
Federal income taxes at statutory rates	$	56,060		$	51,137		$	47,182
Increase (decrease) in tax resulting from:
Tax effect of regulatory treatment of utility plant differences		1,798			2,761			1,858
State income tax expense		687			624			2,746
Settlement of prior year tax returns and adjustment of tax reserves		163			(1,030	)		(2,726	)
Manufacturing deduction		(1,099	)		(1,630	)		(1,091	)
Kettle Falls tax credit		—			—			(1,622	)
Other		(977	)		(705	)		(24	)
Total income tax expense	$	56,632		$	51,157		$	46,323

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and tax credit carryforwards. The total net deferred income tax liability consisted of the following as of December 31 (dollars in thousands):

	2011		2010
Deferred income tax assets:
Allowance for doubtful accounts	$	12,086	$	12,556
Reserves not currently deductible		6,302		5,872
Net operating loss from subsidiary acquisition		14,867		6,495
Deferred compensation		3,248		3,877
Unfunded benefit obligation		80,939		54,195
Utility energy commodity derivatives		38,999		28,878
Power and natural gas deferrals		9,545		7,726
Tax credits		16,924		14,671
Other		18,838		23,226
Total deferred income tax assets		201,748		157,496
Deferred income tax liabilities:
Intangible assets from subsidiary acquisition		8,334		3,505
Differences between book and tax basis of utility plant		478,604		457,661
Power deferrals		—		8,747
Regulatory asset for pensions and other postretirement benefits		91,125		62,645
Power exchange contract		15,571		19,966
Utility energy commodity derivatives		38,992		28,880
Loss on reacquired debt		7,193		7,979
Interest rate swaps		3,720		333
Settlement with Coeur d'Alene Tribe		19,185		21,193
Other		14,505		13,239
Total deferred income tax liabilities		677,229		624,148
Net deferred income tax liability	$	475,481	$	466,652
Current deferred income tax asset	$	30,473	$	28,822
Long-term deferred income tax liability		505,954		495,474
Net deferred income tax liability	$	475,481	$	466,652

As of December 31, 2011, the Company had $12.4 million of state tax credit carryforwards. State tax credits expire from 2015 to 2025. The Company recognizes the effect of state tax credits generated from utility plant as they are utilized.

The realization of deferred income tax assets is dependent upon the ability to generate taxable income in future periods. The Company evaluated available evidence supporting the realization of its deferred income tax assets and determined it is more likely than not that deferred income tax assets will be realized.

The Company and its eligible subsidiaries file consolidated federal income tax returns. The Company also files state income tax returns in certain jurisdictions, including Idaho, Oregon and Montana. Subsidiaries are charged or credited with the tax effects of their operations on a stand-alone basis. The Internal Revenue Service (IRS) has completed its examination of all tax years through 2007 and all issues were resolved related to these years. The IRS has not completed an examination of the Company's 2008, 2009 or 2010 federal income tax returns. The Company does not believe that any open tax years for federal or state income taxes could result in any adjustments that would be significant to the consolidated financial statements.

The Company did not incur any penalties on income tax positions in 2011, 2010 or 2009. The Company would recognize interest accrued related to income tax positions as interest expense and any penalties incurred as other operating expense.

The Company had net regulatory assets related to the probable recovery of certain deferred income tax liabilities from customers through future rates as of December 31 (dollars in thousands):

	2011		2010
Regulatory assets for deferred income taxes	$	84,576	$	90,025