Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the amount of unrecognized tax benefit is as follows:



(Millions of Dollars)	Dec. 31, 2015		Dec. 31, 2014
Unrecognized tax benefit — Permanent tax positions	$	0.2	$	0.1
Unrecognized tax benefit — Temporary tax positions	4.3		2.9
Total unrecognized tax benefit	$	4.5	$	3.0

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:



(Millions of Dollars)	2015			2014			2013
Balance at Jan. 1	$	3.0		$	1.5		$	1.3
Additions based on tax positions related to the current year	1.9			1.9			0.7
Reductions based on tax positions related to the current year	(0.3		)	(0.2		)	—
Additions for tax positions of prior years	0.8			0.1			0.5
Reductions for tax positions of prior years	(0.9		)	(0.2		)	—
Settlements with taxing authorities	—			(0.1		)	(1.0		)
Balance at Dec. 31	$	4.5		$	3.0		$	1.5

Tax Benefits Associated with NOL and Tax Credit Carryforwards

The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryforwards are as follows:



(Millions of Dollars)	Dec. 31, 2015			Dec. 31, 2014
NOL and tax credit carryforwards	$	(0.9	)	$	(0.9	)

NOL and Tax Credit Carryforwards

Other Income Tax Matters — NOL amounts represent the amount of the tax loss that is carried forward and tax credits represent the deferred tax asset. NOL and tax credit carryforwards as of Dec. 31 were as follows:

Schedule of Effective Income Tax Rate Reconciliation

Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense. The following reconciles such differences for the years ending Dec. 31:



	2015		2014		2013
Federal statutory rate	35.0	%	35.0	%	35.0	%
Increases (decreases) in tax from:
State income taxes, net of federal income tax benefit	4.8		4.9		5.0
Change in unrecognized tax benefits	0.1		—		—
Tax credits recognized	(0.7	)	(0.7	)	(0.9	)
Regulatory differences — utility plant items	(1.7	)	(1.6	)	(0.9	)
Other, net	(0.3	)	(0.1	)	(0.2	)
Effective income tax rate	37.2	%	37.5	%	38.0	%

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense for the years ending Dec. 31 were:



(Thousands of Dollars)	2015			2014			2013
Current federal tax expense (benefit)	$	(4,715	)	$	(3,932	)	$	5,902
Current state tax expense	2,150			453			4,628
Current change in unrecognized tax expense	1,498			1,013			754
Deferred federal tax expense	40,580			38,321			23,794
Deferred state tax expense	6,675			8,042			2,720
Deferred change in unrecognized tax (benefit)	(1,422		)	(967		)	(725		)
Deferred investment tax credits	(528		)	(527		)	(664		)
Total income tax expense	$	44,238		$	42,403		$	36,409

The components of deferred income tax expense for the years ending Dec. 31 were:



(Thousands of Dollars)	2015			2014			2013
Deferred tax expense excluding items below	$	51,084		$	49,793		$	27,516
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities	(5,200		)	(4,346		)	(1,676		)
Tax expense allocated to other comprehensive income	(51		)	(51		)	(51		)
Deferred tax expense	$	45,833		$	45,396		$	25,789

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax liability (current and noncurrent) at Dec. 31 were as follows:



(Thousands of Dollars)	2015		2014
Deferred tax liabilities:
Difference between book and tax bases of property	$	382,592	$	319,265
Regulatory assets	78,233		72,670
Employee benefits	18,028		18,691
Other	10,190		14,453
Total deferred tax liabilities	$	489,043	$	425,079
Deferred tax assets:
Environmental remediation	$	37,938	$	43,207
NOL carryforward	37,508		18,283
Regulatory liabilities	9,328		10,460
Deferred investment tax credits	5,312		5,628
Tax credit carryforward	4,760		4,515
Other	3,134		3,007
Total deferred tax assets	$	97,980	$	85,100
Net deferred tax liability	$	391,063	$	339,979

(Millions of Dollars)

Federal NOL carryforward

Federal tax credit carryforwards

State NOL carryforward