Income tax Income tax (Notes)

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

Income tax expense for interim periods is based on the estimated annual effective tax rate, which includes tax credits, regulatory flow-through adjustments, and other items, applied to the Company’s year-to-date, pre-tax income. The significant differences between the U.S. Federal statutory tax rate and PGE’s effective tax rate are reflected in the following table:

	Three Months Ended March 31,
	2022		2021
Federal statutory tax rate	21.0	%	21.0	%
Federal tax credits*	(10.5)		(8.9)
State and local taxes, net of federal tax benefit	8.9		8.8
Flow-through depreciation and cost basis differences	0.7		0.3
Amortization of excess deferred income tax	(4.5)		(3.2)
Local tax flow-through adjustment	—		(8.2)
Other	(0.1)		(1.2)
Effective tax rate	15.5	%	8.6	%

* Federal tax credits primarily consist of production tax credits (PTCs) earned from Company-owned wind-powered generating facilities. PTCs are earned based on a per-kilowatt hour rate and, as a result, the annual amount of PTCs earned will vary based on weather conditions and availability of the facilities. PTCs are earned for 10 years from the in-service dates of the corresponding facilities. PGE’s wind-powered generating facilities are eligible to earn PTCs until various dates through 2030.

Local tax flow-through adjustment

The Company is subject to a local tax that is recovered through a supplemental tariff based on current tax expense, but for which the Company has also recognized deferred income tax expenses over time. Because it is probable that the local deferred taxes will be flowed through future customer prices in accordance with the supplemental tariff, PGE determined a corresponding regulatory asset should have been recorded. In the first quarter of 2021, PGE recognized a regulatory asset to defer previously recorded deferred income tax expenses in the amount of $9 million with a corresponding credit to Income tax expense reflected in the condensed consolidated statements of income for the three months ended March 31, 2021. The adjustment has no impact to the three months ended March 31, 2022.

Carryforwards

Federal tax credit carryforwards as of March 31, 2022 and December 31, 2021 were $100 million and $98 million, respectively. These credits primarily consist of PTCs, which will expire at various dates through 2042. PGE believes that it is more likely than not that its deferred income tax assets as of March 31, 2022 will be realized; accordingly, no valuation allowance has been recorded. As of March 31, 2022, and December 31, 2021, PGE had no material unrecognized tax benefits.