INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2018

Sep. 30, 2017

Schedule of Components of Income Tax Provision (Benefit)

The income tax (benefit) provision from operations for the fiscal years ended September 30, consists of the following:



(Thousands)	2018			2017			2016
Current:
Federal	$	(2,848	)	$	(16,023	)	$	(23,597	)
State	4,563			2,470			(2,209		)
Deferred:
Federal	(40,785		)	54,965			70,386
State	6,731			11,457			11,441
Investment/production tax credits	(21,446		)	(34,526		)	(32,491		)
Income tax (benefit) provision	$	(53,785	)	$	18,343		$	23,530

Schedule of Deferred Tax Assets and Liabilities

he temporary differences, which give rise to deferred tax assets and (liabilities), consist of the following:



(Thousands)	2018			2017
Deferred tax assets
Investment tax credits ⁽¹⁾	$	123,258		$	111,642
Deferred service contract revenue	—			3,877
Incentive compensation	4,646			6,260
Fair value of derivatives	8,411			11,519
Federal net operating losses ⁽²⁾	24,500			28,487
State net operating losses	34,754			23,597
Amortization of intangibles	3,737			2,747
Conservation incentive plan	1,955			—
Other	8,213			11,098
Total deferred tax assets	$	209,474		$	199,227
Deferred tax liabilities
Property related items	$	(392,886	)	$	(620,850	)
Remediation costs	(9,229		)	(11,625		)
Equity investments	(31,956		)	(38,370		)
Postemployment benefits	(353		)	(6,855		)
Conservation incentive plan	—			(7,195		)
Underrecovered gas costs	(1,156		)	(4,035		)
Other	(7,826		)	(16,643		)
Total deferred tax liabilities	$	(443,406	)	$	(705,573	)

Total net deferred tax liabilities	$	(233,932	)	$	(506,346	)


(1)	Includes $2.2 million and $2.3 million for NJNG for fiscal 2018 and 2017, respectively, which is being amortized over the life of the related assets, and$121.1 million and $109.3 million for Clean Energy Ventures for fiscal 2018 and 2017, respectively, which is ITC carryforward.


(2)	See discussion of federal net operating loss utilization in the Other Tax Items section of this note.

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the U.S. federal statutory rate to the effective rate from operations for the fiscal years ended September 30, is as follows:



(Thousands)	2018			2017			2016
Statutory income tax expense	$	44,014		$	52,643		$	54,321
Change resulting from:
Tax Act - nonutility excess deferred income taxes ⁽¹⁾	(59,627		)	—			—
Tax Act - utility excess deferred income taxes refunded to customers⁽¹⁾	(14,323		)	—			—
Tax Act - utility excess deferred income taxes amortized⁽¹⁾	(1,786		)	—			—
State income taxes, net of federal benefit	7,092			8,222			6,044
Cost of removal of assets placed in service prior to1981	(5,829		)	(6,886		)	(5,738		)
Investment/production tax credits	(21,446		)	(34,526		)	(32,491		)
Basis adjustment of solar assets due to ITC	1,080			4,256			4,453
AFUDC equity	(2,117		)	(2,624		)	(1,531		)
Other	(843		)	(2,742		)	(1,528		)
Income tax (benefit) provision	$	(53,785	)	$	18,343		$	23,530
Effective income tax rate ^{(2) (3)}	(29.9		)%	12.2		%	15.2		%


(1)	For a more detailed description, see The Tax Act section of this note.


(2)	The U.S. federal statutory rate was 24.5 percent for fiscal 2018 and 35 percent for fiscal 2017 and 2016.


(3)	The effective tax rate without the impact of the Tax Act would have been 12.4 percent for fiscal 2018

Schedule of Deferred Tax Liability Due to Tax Act

The (decrease) increase of the net deferred tax liability due to the impact of the Tax Act that was recognized on the Consolidated Statements of Operations for the remaining entities, was as follows:



(Thousands)	2018
Income tax (benefit) provision
Clean Energy Ventures	$	(61,423	)
Energy Services	6,062
Midstream	(13,946		)
Home Services and Other	9,680
Total	$	(59,627	)