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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
Federal Tax Loss Carryback Claims — In 2020, Xcel Energy identified certain expenses related to tax years 2009 - 2011 that qualify for an extended carryback claim. NSP-Wisconsin is not expected to accrue any income tax expense related to this adjustment.
Federal Audit — NSP-Wisconsin is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. Statute of limitations applicable to Xcel Energy’s consolidated federal income tax returns expire as follows:
Tax Year(s)Expiration
2014 - 2016December 2022
2018September 2022
Additionally, the statute of limitations related to certain federal tax credit carryforwards will remain open until those credits are utilized in subsequent returns. Further, the statute of limitations related to the additional federal tax loss carryback claim filed in 2020 has been extended. Xcel Energy has recognized its best estimate of income tax expense that will result from a final resolution of this issue; however, the outcome and timing of a resolution is unknown.
State Audits — NSP-Wisconsin is a member of the Xcel Energy affiliated group that files consolidated state income tax returns. As of Dec. 31, 2021, NSP-Wisconsin’s earliest open tax year that is subject to examination by state taxing authorities under applicable statutes of limitations is 2016. In March 2021, Wisconsin began an audit of tax years 2016 - 2019. As of Dec. 31, 2021 no material adjustments have been proposed.
Unrecognized Tax Benefits — Unrecognized tax benefit balance includes permanent tax positions, which if recognized would affect the ETR. In addition, the unrecognized tax benefit balance includes temporary tax positions for which deductibility is highly certain, but for which there is uncertainty about the timing. A change in the timing of deductibility would not affect the ETR but would accelerate the payment to the taxing authority.
Unrecognized tax benefits — permanent vs. temporary:
(Millions of Dollars)Dec. 31, 2021Dec. 31, 2020
Unrecognized tax benefit — Permanent tax positions$2 $1 
Unrecognized tax benefit — Temporary tax positions1 1 
Total unrecognized tax benefit$3 $2 
Changes in unrecognized tax benefits:
(Millions of Dollars)202120202019
Balance at Jan. 1$2 $3 $3 
Additions for tax positions of prior years1 1 — 
Reductions for tax positions of prior years— (2)— 
Balance at Dec. 31$3 $2 $3 
Unrecognized tax benefits were reduced by tax benefits associated with NOL and tax credit carryforwards:
(Millions of Dollars)Dec. 31, 2021Dec. 31, 2020
NOL and tax credit carryforwards$(2)$(2)
As the IRS progresses its review of the tax loss carryback claims and as state audits progress, it is reasonably possible that the amount of unrecognized tax benefit could decrease up to approximately $1 million in the next 12 months.
Payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax credit carryforwards. Payables for interest related to unrecognized tax benefits at Dec. 31, 2021, 2020 and 2019 were not material. No amounts were accrued for penalties related to unrecognized tax benefits as of Dec. 31, 2021, 2020 or 2019.
Other Income Tax Matters — NOL amounts represent 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)20212020
Federal tax credit carryforwards$8 $7 
State NOL carryforward2 2 
Federal carryforward periods expire between 2031 and 2041 and state carryforward periods expire between 2031 and 2036.
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.
Effective income tax rate for years ended Dec. 31:
20212020
2019 (a)
Federal statutory rate21.0 %21.0 %21.0 %
State income tax on pretax income, net of federal tax effect6.2 6.2 6.2 
Increases (decreases) in tax from:
Plant regulatory differences (b)
(4.1)(19.3)(5.2)
Other tax credits, net NOL & tax credit allowances(1.0)(1.5)(1.8)
Change in unrecognized tax benefits0.3 (0.8)0.7 
Amortization of excess nonplant deferred taxes— (12.6)— 
Reversal of prior regulatory differences— — (3.6)
Other, net(0.7)— (0.5)
Effective income tax rate21.7 %(7.0)%16.8 %
(a)Prior periods have been reclassified to conform to current year presentation.
(b)Regulatory differences for income tax primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit of excess deferred credits are offset by corresponding revenue reductions.
Components of income tax expense for years ended Dec. 31:
(Millions of Dollars)202120202019
Current federal tax expense$17 $25 $6 
Current state tax expense4 6 5 
Current change in unrecognized tax (benefit) expense— (1)1 
Deferred federal tax expense (benefit)3 (37)3 
Deferred state tax expense6 1 2 
Deferred ITCs— (1)(1)
Total income tax expense (benefit)$30 $(7)$16 
Components of deferred income tax expense as of Dec. 31:
(Millions of Dollars)202120202019
Deferred tax expense excluding items below$18 $9 $17 
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities(10)(45)(12)
Other1 — — 
Deferred tax expense (benefit)$9 $(36)$5 
Components of net deferred tax liability as of Dec. 31:
(Millions of Dollars)2021
2020 (a)
Deferred tax liabilities:
Difference between book and tax bases of property$331 $324 
Regulatory assets29 32 
Pension expense11 12 
Deferred fuel costs8 — 
Other7 9 
Total deferred tax liabilities$386 $377 
Deferred tax assets:
Regulatory liabilities$38 $41 
Tax credit carryforward8 8 
Environmental remediation5 6 
Other employee benefits4 4 
Rate refund— 4 
Deferred ITCs2 3 
Other4 4 
Total deferred tax assets$61 $70 
Net deferred tax liability$325 $307 
(a) Prior periods have been reclassified to conform to current year presentation.