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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Statute of Limitations Applicable to Open Tax Years [Table Text Block]

NSP-Wisconsin is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. The statutes of limitations applicable to Xcel Energy’s federal income tax returns expire as follows:



Tax Year(s)		Expiration
2009 - 2011		June 2018
2012 - 2013		October 2018
2014		September 2018
2015		September 2019
2016		September 2020

Reconciliation of Unrecognized Tax Benefits

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



(Millions of Dollars)	Dec. 31, 2017		Dec. 31, 2016
Unrecognized tax benefit — Permanent tax positions	$	1.4	$	0.4
Unrecognized tax benefit — Temporary tax positions	1.0		4.9
Total unrecognized tax benefit	$	2.4	$	5.3

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



(Millions of Dollars)	2017			2016			2015
Balance at Jan. 1	$	5.3		$	4.5		$	3.0
Additions based on tax positions related to the current year	0.4			0.5			1.9
Reductions based on tax positions related to the current year	(0.3		)	—			(0.3		)
Additions for tax positions of prior years	1.3			0.5			0.8
Reductions for tax positions of prior years	(4.3		)	(0.2		)	(0.9		)
Balance at Dec. 31	$	2.4		$	5.3		$	4.5

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, 2017			Dec. 31, 2016
NOL and tax credit carryforwards	$	(1.9	)	$	(1.2	)

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:



(Millions of Dollars)	2017		2016
Federal NOL carryforward	$	58	$	97
Federal tax credit carryforwards	4		4
State NOL carryforward	5		3

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:



	2017		2016 ^(b)		2015 ^(b)
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax on pretax income, net of federal tax effect	5.1	%	5.1	%	5.1	%
Increases (decreases) in tax from:
Adjustments attributable to tax returns	(2.3	)	(0.3	)	(0.4	)
Regulatory differences - effects of rate changes ^(a)	(0.1	)	(0.2	)	(0.2	)
Regulatory differences - other utility plant items	(1.7	)	(0.6	)	(1.8	)
Tax credits recognized, net of federal income tax expense	(1.0	)	(0.7	)	(0.7	)
Change in unrecognized tax benefits	0.8		0.1		0.1
Other, net	(0.1	)	(0.1	)	0.1
Effective income tax rate	35.7	%	38.3	%	37.2	%


^(a)	The amortization of excess deferred taxes.


^(b)	The prior periods included in this footnote have been reclassified to conform to current year presentation.

Schedule of Components of Income Tax Expense (Benefit)

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



(Thousands of Dollars)	2017			2016			2015
Current federal tax expense (benefit)	$	2,765		$	5,367		$	(4,715	)
Current state tax (benefit) expense	(1		)	131			2,150
Current change in unrecognized tax (benefit) expense	(3,626		)	559			1,498
Deferred federal tax expense	32,919			29,588			40,580
Deferred state tax expense	7,972			8,212			6,675
Deferred change in unrecognized tax expense (benefit)	4,666			(432		)	(1,422		)
Deferred investment tax credits	(523		)	(523		)	(528		)
Total income tax expense	$	44,172		$	42,902		$	44,238

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



(Thousands of Dollars)	2017			2016			2015
Deferred tax (benefit) expense excluding items below	$	(173,906	)	$	39,530		$	51,084
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities	219,514			(2,112		)	(5,200		)
Tax expense allocated to other comprehensive income, net of adoption of ASU No. 2018-02, and other	(51		)	(50		)	(51		)
Deferred tax expense	$	45,557		$	37,368		$	45,833

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax liability at Dec. 31 were as follows:



(Thousands of Dollars)	2017		2016 ^(a)
Deferred tax liabilities:
Difference between book and tax bases of property	$	270,425	$	412,071
Regulatory assets	58,436		63,825
Pension expense	14,245		21,575
Other	6,855		9,666
Total deferred tax liabilities	$	349,961	$	507,137
Deferred tax assets:
Regulatory liabilities	$	55,768	$	(5,788	)
NOL carryforward	12,606		35,216
Environmental remediation	8,068		25,842
Tax credit carryforward	4,644		3,704
Other employee benefits	3,868		6,132
Deferred investment tax credits	3,175		4,996
Other	5,145		6,442
Total deferred tax assets	$	93,274	$	76,544
Net deferred tax liability	$	256,687	$	430,593


^(a)	The prior period included in this footnote has been reclassified to conform to current year presentation.