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Income Taxes
12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES We file a consolidated federal income tax return. Income tax expense allocated to our subsidiaries is based upon their respective taxable incomes and tax credits. State income tax returns are filed on a separate company basis in most states where we have
operations and/or are required to file. Our state returns for tax years after 2015 are subject to examination. At December 31, 2021, the 2015 through 2019 federal income tax returns are under examination, and no report has been issued at this time.

We expect to have federal NOLs totaling $6.3 million and $12.2 million in 2019 and 2018 respectively upon the settlement of the Internal Revenue Service examination described above. Under the CARES Act, discussed below, we elected to carry the losses back to 2015 and 2013. For state income tax purposes, we had NOLs in various states of $14.6 million and $40.0 million as of December 31, 2021 and 2020, respectively, almost all of which will expire in 2039. Excluding NOL from discontinued operations, we have recorded deferred tax assets of $1.5 million and $1.6 million related to state NOL carry-forwards at December 31, 2021 and 2020, respectively. We have not recorded a valuation allowance to reduce the future benefit of the tax NOLs because we believe they will be fully utilized.

Tax Law Changes
In March 2020, the CARES Act was signed into law and included several significant changes to the Internal Revenue Code. The CARES Act includes certain tax relief provisions including the ability to carryback five years net operating losses arising in a tax year beginning in 2018, 2019, or 2020. This provision allows a taxpayer to recover taxes previously paid at a 35 percent federal income tax rate during tax years prior to 2018. In addition, the CARES Act removed the taxable income limitation to allow a tax NOL to fully offset taxable income for tax years beginning before January 1, 2021. Our income tax expense for the years ended December 31, 2021 and 2020 included a tax benefit of $0.9 million and $1.8 million, respectively, attributable to the tax NOL carryback provided under the CARES Act for losses generated in 2018 and 2019 and then applied back to our 2013 and 2015 tax years in which we paid federal income taxes at a 35 percent tax rate.

On December 22, 2017, President Trump signed into law the TCJA. Substantially all of the provisions of the TCJA were effective for taxable years beginning on or after January 1, 2018. The provisions that significantly impacted us include the reduction of the corporate federal income tax rate from 35 percent to 21 percent. Our federal income tax expense for periods beginning on January 1, 2018 and thereafter are based on the new federal corporate income tax rate. The TCJA included changes to the Internal Revenue Code, which materially impacted our 2017 financial statements. ASC 740, Income Taxes, requires recognition of the effects of changes in tax laws in the period in which the law is enacted. ASC 740 requires deferred tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. During 2018, we completed the assessment of the impact of accounting for certain effects of the TCJA. At the date of enactment in 2017, we re-measured deferred income taxes based upon the new corporate tax rate. See Note 19, Rates and Other Regulatory Activities, for further discussion of the TCJA's impact on our regulated businesses.

The following tables provide: (a) the components of income tax expense in 2021, 2020, and 2019; (b) the reconciliation between the statutory federal income tax rate and the effective income tax rate for 2021, 2020, and 2019 from continuing operations; and (c) the components of accumulated deferred income tax assets and liabilities at December 31, 2021 and 2020.
For the Year Ended December 31,
202120202019
(in thousands)   
Current Income Tax Expense
Federal$2,775 $(2,777)$(2,252)
State(96)2,162 (491)
Other(47)(47)(47)
Total current income tax expense (benefit)2,632 (662)(2,790)
Deferred Income Tax Expense (1)
Property, plant and equipment24,074 23,224 25,907 
Deferred gas costs1,857 (714)79 
Pensions and other employee benefits(655)(75)(454)
FPU merger-related premium cost and deferred gain(351)156 (278)
Net operating loss carryforwards97 5,107 (3,772)
Other1,577 (3,498)2,422 
Total deferred income tax expense26,599 24,200 23,904 
Income Tax Expense from Continuing Operations29,231 23,538 21,114 
Income Tax Expense from Discontinued Operations 153 1,416 
Total Income Tax$29,231 $23,691 $22,530 
(1) Includes $8.2 million, $4.9 million, and $4.7 million of deferred state income taxes for the years 2021, 2020 and 2019, respectively.
For the Year Ended December 31,
202120202019
(in thousands)   
Reconciliation of Effective Income Tax Rates from Continuing Operations
Federal income tax expense (1)
$23,666 $19,778 $17,264 
State income taxes, net of federal benefit6,371 5,051 5,093 
ESOP dividend deduction(180)(218)(173)
CARES Act Tax Benefit(919)(1,841)— 
Depreciation(15)— — 
Other308 768 (1,070)
Total Income Tax Expense from Continuing Operations$29,231 $23,538 $21,114 
Effective Income Tax Rate from Continuing Operations25.94 %24.99 %25.65 %
(1) Federal income taxes were calculated at 21 percent for 2021, 2020, and 2019.
 
As of December 31,
20212020
(in thousands)  
Deferred Income Taxes
Deferred income tax liabilities:
Property, plant and equipment$224,034 $199,287 
Acquisition adjustment6,266 6,618 
Loss on reacquired debt183 201 
Deferred gas costs2,366 509 
Natural gas conversion costs5,529 5,379 
Storm reserve liability5,783 7,073 
Other6,301 5,587 
Total deferred income tax liabilities250,462 224,654 
Deferred income tax assets:
Pension and other employee benefits5,354 4,636 
Environmental costs996 1,064 
Net operating loss carryforwards1,490 1,587 
Storm reserve liability448 409 
Accrued expenses4,843 6,153 
Other3,781 5,417 
Total deferred income tax assets16,912 19,266 
Deferred Income Taxes Per Consolidated Balance Sheets$233,550 $205,388