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Income Taxes
9 Months Ended
Jun. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The effective tax rate for the quarters ended June 30, 2018 and June 30, 2017 was 23.3% and 37.4%, respectively. The difference was primarily a result of the lower statutory rate of 24.5% under the 2017 Tax Reform Act (as discussed below). The effective tax rate was negative 7.2% for the nine months ended June 30, 2018 and 37.9% for the nine months ended June 30, 2017. The difference was a result of the impact of the one-time remeasurement of the deferred income tax liability and a lower statutory rate of 24.5% under the 2017 Tax Reform Act.
On December 22, 2017, federal tax legislation referred to as the “Tax Cuts and Jobs Act” (the 2017 Tax Reform Act) was enacted. The 2017 Tax Reform Act significantly changed the taxation of business entities and included a reduction in the corporate federal income tax rate from 35% to a blended 24.5% for fiscal 2018 and 21% for fiscal 2019 and beyond. The changes had a material impact on the financial statements in the quarter and nine months ended June 30, 2018. The Company’s deferred income taxes were remeasured based upon the new tax rates. For the non-rate regulated activities through the nine months ended June 30, 2018, the change in deferred income taxes of $107.0 million was recorded as a reduction to income tax expense. For the Company's rate regulated activities, the reduction in deferred income taxes of $336.7 million was recorded as a decrease to Recoverable Future Taxes of $65.7 million and an increase to Taxes Refundable to Customers of $271.0 million. The 2017 Tax Reform Act includes provisions that stipulate how these excess deferred taxes are to be passed back to customers for certain accelerated tax depreciation benefits. Potential refunds of other deferred income taxes will be determined by the federal and state regulatory agencies. The Company is currently reviewing guidance issued by regulatory agencies in the jurisdictions in which it operates. For further discussion, refer to Note 9 - Regulatory Matters.
The 2017 Tax Reform Act also repealed the corporate alternative minimum tax (AMT) and provides that the Company’s existing AMT credit carryovers are refundable beginning in fiscal 2019. As of June 30, 2018, the Company had $90.2 million of AMT credit carryovers that are expected to be utilized or refunded between fiscal 2019 and fiscal 2022. During the quarter ended March 31, 2018, the Company recorded a $4.0 million estimate of the potential sequestration of the refunds of the AMT credits.
The SEC issued guidance in Staff Accounting Bulletin 118 (SAB 118) which provides for up to a one year period (the measurement period) in which to complete the required analysis and income tax accounting for the 2017 Tax Reform Act. The Company has determined a reasonable estimate for the measurement of the changes in deferred income taxes (noted above), which have been reflected as provisional amounts in the June 30, 2018 financial statements. The final determination of the impact of the income tax effects of these items will require additional analysis and further interpretation of the 2017 Tax Reform Act from yet to be issued U.S. Treasury regulations, state income tax guidance, federal/state regulatory guidance, and possible technical corrections. The Company expects to finalize the analysis within SAB 118’s one-year measurement period based upon existing guidance at that time. Any subsequent guidance will be accounted for in the period issued.