INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2012

The net provisions for income taxes charged during the fiscal years ended September 30, 2012, 2011, and 2010 are as follows:

(Thousands)	2012			2011			2010

Included in Statements of Income:
Federal
Current	$	(11,288	)	$	133		$	(11,412	)
Deferred		27,186			19,848			27,222
Investment tax credits		(213	)		(213	)		(216	)
State and local
Current		(1,825	)		(152	)		(1,892	)
Deferred		4,600			3,380			4,448
Total Income Tax Expense	$	18,460		$	22,996		$	18,150

Effective income tax rate variation from stated tax rate

The effective income tax rate varied from the federal statutory income tax rate for each year due to the following:

	2012			2011			2010

Federal income tax statutory rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal
income tax benefits		2.6			2.7			2.9
Certain expenses capitalized on books and
deducted on tax return		(8.9	)		(6.1	)		(5.6	)
Taxes related to prior years		(0.6	)		(0.8	)		(0.4	)
Other items – net		(1.1	)		(0.8	)		(0.5	)
Effective income tax rate		27.0	%		30.0	%		31.4	%

Significant Items in Net Deferred Tax Liability

The significant items comprising the net deferred tax liability recognized in the Balance Sheets as of September 30 are as follows:

(Thousands)	2012			2011

Deferred tax assets:
Reserves not currently deductible	$	16,400		$	18,146
Pension and other postretirement benefits		73,480			69,112
Unamortized investment tax credits		1,955			2,088
Other		14,513			9,529
Total deferred tax assets		106,348			98,875

Deferred tax liabilities:
Relating to property		303,332			278,422
Regulatory pension and other postretirement benefits		121,554			111,327
Deferred gas costs		20,652			14,674
Other		26,414			18,942
Total deferred tax liabilities		471,952			423,365

Net deferred tax liability		365,604			324,490
Net deferred tax liability – current		(10,146	)		(9,165	)
Net deferred tax liability – non-current	$	355,458		$	315,325

Unrecognized Tax Benefit Reconciliation

The following table presents a reconciliation of the beginning and ending balances of unrecognized tax benefits at September 30 as reported in the Balance Sheets:

(Thousands)	2012			2011

Unrecognized tax benefits, beginning of year	$	5,536		$	6,383
Increases (decreases) related to tax positions taken in current year		490			(233	)
Reductions due to lapse of applicable statute of limitations		(411	)		(614	)
Unrecognized tax benefits, end of year	$	5,615		$	5,536