Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Note 3 – Income Taxes

Income tax expense differs from the amount computed by applying the statutory rate on book income subject to tax for the following reasons:

	(Thousands of Dollars)
	Years Ended December 31,
	2012			2011			2010
Income Tax at Statutory Rate	$	7,420		$	6,816		$	7,224
Tax Effect of:
Utility Plant Related		(442	)		(620	)		(826	)
State Income Taxes – Net		420			305			336
Employee Benefits		(23	)		1			33
Other		8			25			19
Total Income Tax Expense	$	7,383		$	6,527		$	6,786

Income tax expense is comprised of the following:

	(Thousands of Dollars)
	Years Ended December 31,
	2012			2011			2010
Current:
Federal	$	2,994		$	3,550		$	5,584
State		430			395			481
Deferred:
Federal		3,832			2,594			770
State		206			67			30
Investment Tax Credits		(79	)		(79	)		(79	)
Total Income Tax Expense	$	7,383		$	6,527		$	6,786

The statutory review periods for income tax returns for the years prior to 2010 have been closed. An examination by the Internal Revenue Service of Middlesex’s Federal income tax returns for 2007 and 2008 was completed during 2010 and resulted in a net refund, including interest, of less than $0.1 million. The refund noted above was recorded to the appropriate current and deferred tax accounts and the interest was reported as other income. In the event that there is interest and penalties associated with income tax adjustments in future examinations, these amounts will be reported under interest expense and other expense, respectively. There are no unrecognized tax benefits resulting from prior period tax positions. The Company is not aware of any uncertain tax positions that could result in a future tax liability.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax purposes. The components of the net deferred tax liability are as follows:

	(Thousands of Dollars)
	December 31,
	2012			2011
Utility Plant Related	$	39,020		$	35,135
Customer Advances		(3,673	)		(3,737	)
Employee Benefits		6,523			6,342
Investment Tax Credits (ITC)		1,068			1,146
Other		(94	)		(718	)
Total Deferred Tax Liability and ITC	$	42,844		$	38,168