8. INCOME TAX

An estimate of annual income tax expense is made each interim period using estimates for annual pre-tax income, regulatory flow-through adjustments, tax credits, and other items. The estimated annual effective tax rate is applied to year-to-date, pre-tax income to determine income tax expense for the interim period consistent with the annual estimate.

The effective income tax rate varied from the combined federal and state statutory tax rates due to the following:



	Three Months Ended June 30,						Six Months Ended June 30,
Dollars in thousands	2016			2015			2016			2015
Income taxes at statutory rates (federal and state)	$	1,351		$	1,429		$	25,959		$	20,321
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	65			85			1,583			1,414
Other, net	(34		)	(100		)	(774		)	(1,238		)
Total provision for income taxes	$	1,382		$	1,414		$	26,768		$	20,497
Effective tax rate	40.6		%	39.2		%	40.9		%	40.0		%

The effective tax rate for the three and six months ended June 30, 2016, compared to the same periods in 2015, increased primarily as a result of lower estimated depletion deductions from gas reserves activity in 2016. The effective tax rate for the three and six months ended June 30, 2015 benefited from the realization of deferred depletion benefits from 2013 and 2014. See Note 9 in the 2015 Form 10-K for more detail on income taxes and effective tax rates.

The 2015 tax year is subject to examination under the Internal Revenue Service (IRS) Compliance Assurance Process (CAP). Our 2016 tax year CAP application has been accepted by the IRS.