INCOME TAXES

Income tax expense (benefit) from continuing operations for the years ended December 31 was as follows (in thousands):



	2015		2014			2013
Current	$	14,910	$	(6	)	$	(163	)
Deferred	7,690		16,518			13,582
Total income tax expense	$	22,600	$	16,512		$	13,419

The temporary differences which gave rise to the net deferred tax liability, for the years ended December 31 were as follows (in thousands):



	2015			2014
Deferred tax assets:
Employee benefits	$	4,683		$	4,995
Net operating loss	15			14,794
Regulatory liabilities	9,908			10,824
Other	16,171			2,864
Total deferred tax assets	30,777			33,477

Deferred tax liabilities:
Accelerated depreciation and other plant related differences	(187,666		)	(184,478		)
AFUDC	(8,571		)	(8,365		)
Regulatory assets	(4,236		)	(3,910		)
Employee benefits	(3,003		)	(3,723		)
Deferred costs	(14,765		)	(11,324		)
Other	(1,497		)	(1,058		)
Total deferred tax liabilities	(219,738		)	(212,858		)

Net deferred tax assets (liabilities)	$	(188,961	)	$	(179,381	)

The effective tax rate differs from the federal statutory rate for the years ended December 31, as follows:



	2015		2014		2013
Federal statutory rate	35.0	%	35.0	%	35.0	%
Amortization of excess deferred and investment tax credits	(0.1	)	(0.3	)	(0.3	)
Equity AFUDC	(0.6	)	(0.1	)	—
Flow through adjustments ^(a)	(0.9	)	(1.9	)	(2.5	)
Tax credits	—		(0.2	)	(0.8	)
Other	—		0.5		(0.6	)
	33.4	%	33.0	%	30.8	%

_________________________

(a)

The flow-through adjustments relate primarily to an accounting method change for tax purposes that allows us to take a current tax deduction for repair costs that continue to be capitalized for book purposes. We recorded a deferred income tax liability in recognition of the temporary difference created between book and tax treatment and we flowed the tax benefit through to our customers in the form of lower rates as a result of a rate case settlement that occurred during 2010. A regulatory asset was established to reflect the recovery of future increases in taxes payable from customers as the temporary differences reverse. As a result of this regulatory treatment, we continue to record a tax benefit consistent with the flow through method.

The following table reconciles the total amounts of unrecognized tax benefits, without interest, included in Other deferred credits and other liabilities on the accompanying Balance Sheet (in thousands):



	2015			2014
Unrecognized tax benefits at January 1	$	1,623		$	2,443
Additions for prior year tax positions	888			434
Reductions for prior year tax positions	(247		)	(1,254		)
Additions for current year tax positions	—			—
Unrecognized tax benefits at December 31	$	2,264		$	1,623

The reductions for prior year tax positions relate to the reversal through otherwise allowed tax depreciation. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is approximately $0.7 million.

It is our continuing practice to recognize interest and/or penalties related to income tax matters in income tax expense. During the years ended December 31, 2015 and 2014, the interest expense recognized was not material to our financial results.

In January 2016, the Company reached an agreement in principle with IRS Appeals with respect to research and development tax credits and deductions for tax years 2007 through 2009, and expect a reduction of approximately $0.4 million with respect to our liability for unrecognized tax benefits on or before December 31, 2016.

We file income tax returns in the United States federal jurisdictions as a member of the BHC consolidated group.

At December 31, 2015, we are no longer in a federal NOL carry forward position.