XML 70 R57.htm IDEA: XBRL DOCUMENT

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

The following table is a summary of income tax expense for the years ended December 31:


(in millions)	2022		2021		2020
Current tax expense	$	50.2	$	93.9	$	49.2
Deferred income taxes, net	278.5		111.0		182.2
ITCs	(5.8)		(4.6)		(3.5)
Total income tax expense	$	322.9	$	200.3	$	227.9

Statutory rate reconciliation

The provision for income taxes for each of the years ended December 31 differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to income before income taxes as a result of the following:


	2022				2021				2020
			Effective				Effective				Effective
(in millions)	Amount		Tax Rate		Amount		Tax Rate		Amount		Tax Rate
Statutory federal income tax	$	363.5	21.0	%	$	315.1	21.0	%	$	299.9	21.0	%
State income taxes net of federal tax benefit	109.7		6.3	%	96.1		6.4	%	90.5		6.3	%
Wind PTCs	(107.6)		(6.2)	%	(81.3)		(5.4)	%	(51.5)		(3.6)	%
Federal excess deferred tax amortization (1)	(36.9)		(2.1)	%	(37.3)		(2.5)	%	(36.7)		(2.6)	%
AFUDC–Equity	(6.2)		(0.4)	%	(3.8)		(0.3)	%	(4.4)		(0.3)	%
ITC restored	(5.8)		(0.3)	%	(4.6)		(0.3)	%	(3.5)		(0.2)	%
Federal excess deferred tax amortization – Wisconsin unprotected (2)	(0.8)		—	%	(77.9)		(5.2)	%	(57.6)		(4.0)	%
Other, net	7.0		0.3	%	(6.0)		(0.3)	%	(8.8)		(0.7)	%
Total income tax expense	$	322.9	18.6	%	$	200.3	13.4	%	$	227.9	15.9	%

(1) The Tax Legislation required our regulated utilities to remeasure their deferred income taxes and we began to amortize the resulting excess protected deferred income taxes beginning in 2018 in accordance with normalization requirements. The decrease in income tax expense related to the amortization of the deferred tax benefits is offset by a decrease in revenue as the benefits are returned to customers, resulting in no impact on net income.

(2) In accordance with the rate order received from the PSCW in December 2019, our Wisconsin utilities are amortizing these unprotected deferred tax benefits over periods ranging from two years to four years, to reduce near-term rate impacts to their customers. The decrease in income tax expense related to the amortization of the deferred tax benefits is offset by a decrease in revenue as the benefits are returned to customers, resulting in no impact on net income.

Components of deferred income taxes

The components of deferred income taxes as of December 31 were as follows:


(in millions)	2022		2021
Deferred tax assets
Tax gross up – regulatory items	$	459.0	$	469.5
Future tax benefits	187.7		104.6
Deferred revenues	86.8		97.8
Other	190.2		205.9
Total deferred tax assets	923.7		877.8
Valuation allowance	(1.2)		(1.2)
Net deferred tax assets	$	922.5	$	876.6

Deferred tax liabilities
Property-related	$	4,072.5	$	3,909.0
Investment in affiliates	839.7		648.6
Employee benefits and compensation	219.5		170.6
Deferred costs – plant retirements	212.8		223.9
Other	203.6		233.0
Total deferred tax liabilities	5,548.1		5,185.1
Deferred tax liability, net	$	4,625.6	$	4,308.5

Components of deferred tax assets associated with federal and state tax benefit carryforwards

The components of net deferred tax assets associated with federal and state tax benefit carryforwards as of December 31, 2022 and 2021 are summarized in the tables below:


2022 (in millions)	Gross Value		Deferred Tax Effect		Valuation Allowance		Earliest Year of Expiration
Future tax benefits as of December 31, 2022
Federal tax credit	$	—	$	176.4	$	—	2041
State net operating loss	72.6		4.5		(1.2)		2032
Other state benefits	—		6.8		—		2023
Balance as of December 31, 2022	$	72.6	$	187.7	$	(1.2)


2021 (in millions)	Gross Value		Deferred Tax Effect		Valuation Allowance		Earliest Year of Expiration
Future tax benefits as of December 31, 2021
Federal tax credit	$	—	$	91.5	$	—	2041
State net operating loss	72.0		4.4		(1.2)		2031
Other state benefits	—		8.7		—		2023
Balance as of December 31, 2021	$	72.0	$	104.6	$	(1.2)

Schedule of unrecognized tax benefits roll forward

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


(in millions)	2022		2021		2020
Balance as of January 1	$	6.8	$	11.9	$	17.9
Additions for tax positions of prior years	0.3		—		1.6
Additions based on tax positions related to the current year	0.4		1.6		0.1
Reductions for tax positions of prior years	(1.2)		(6.7)		(7.7)



Balance as of December 31	$	6.3	$	6.8	$	11.9

Roll forward of interest accrued on unrecognized tax benefits

Interest accrued related to unrecognized tax benefits is as follows:


(in millions)	2022		2021		2020
Balance as of January 1	$	0.1	$	0.5	$	0.8
Interest expense (income) related to unrecognized tax benefits	0.4		(0.4)		(0.3)
Balance as of December 31	$	0.5	$	0.1	$	0.5

Summary of income tax examinations

As of December 31, 2022, with a few exceptions, we were subject to examination by federal and state or local tax authorities for the 2017 through 2022 tax years in our major operating jurisdictions as follows:


Jurisdiction						Years
Federal						2019–2022
Illinois						2017–2022
Michigan						2018–2022
Minnesota						2018–2022
Wisconsin						2018–2022