Income Tax Expense

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Tax Expense [Text Block]

INCOME TAX EXPENSE

	Quarter Ended					Six Months Ended
	June 30,					June 30,
	2017		2016			2017			2016
Millions
Current Tax Expense (a)
Federal	—		—			—			—
State	$0.1		$0.1				$0.2		$0.2
Total Current Tax Expense	$0.1		$0.1				$0.2		$0.2
Deferred Tax Expense
Federal	$3.8			$2.1		$11.1				$6.7
State	3.6		2.7			9.5			7.5
Investment Tax Credit Amortization	(0.2	)	(0.2		)	(0.4		)	(0.4		)
Total Deferred Tax Expense	$7.2			$4.6		$20.2				$13.8
Total Income Tax Expense	$7.3			$4.7		$20.4				$14.0

(a) For the quarter and six months ended June 30, 2017, and 2016, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of the Protecting Americans from Tax Hikes Act of 2015, the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012.

The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company would make a cumulative adjustment in that quarter.

	Quarter Ended						Six Months Ended
Reconciliation of Taxes from Federal Statutory	June 30,						June 30,
Rate to Total Income Tax Expense	2017			2016			2017			2016
Millions
Income Before Non-Controlling Interest and Income Taxes		$44.2			$29.5			$106.3			$85.2
Statutory Federal Income Tax Rate	35		%	35		%	35		%	35		%
Income Taxes Computed at 35 percent Statutory Federal Rate		$15.5			$10.3			$37.2			$29.8
Increase (Decrease) in Tax Due to:
State Income Taxes – Net of Federal Income Tax Benefit	2.4			1.8			6.3			5.0
Production Tax Credits	(10.0		)	(6.6		)	(23.0		)	(20.5		)
Other	(0.6		)	(0.8		)	(0.1		)	(0.3		)
Total Income Tax Expense		$7.3			$4.7			$20.4			$14.0

For the six months ended June 30, 2017, the effective tax rate was 19.2 percent (16.4 percent for the six months ended June 30, 2016).

NOTE 9. INCOME TAX EXPENSE (Continued)

Uncertain Tax Positions. As of June 30, 2017, we had gross unrecognized tax benefits of $1.9 million ($2.0 million as of December 31, 2016). Of the total gross unrecognized tax benefits, $0.7 million represents the amount of unrecognized tax benefits included on the Consolidated Balance Sheet that, if recognized, would favorably impact the effective income tax rate. The unrecognized tax benefit amounts have been presented as reductions to the tax benefits associated with NOL and tax credit carryforwards on the Consolidated Balance Sheet.

ALLETE and its subsidiaries file a consolidated federal income tax return as well as combined and separate state income tax returns in various jurisdictions. ALLETE has no open federal or state audits, and is no longer subject to federal examination for years before 2013, or state examination for years before 2012.