Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes Note [Abstract]

Income Taxes

INCOME TAXES

Income tax expense/(benefit) consists of the following (in millions):

	Years Ended December 31,
	2023		2022		2021
Current:
Federal	$	11	$	9	$	4
State and local	26		24		14
	37		33		18
Deferred:
Federal	4		(1)		—
State and local	4		7		5
	8		6		5
Income tax expense	$	45	$	39	$	23

The significant differences between the U.S. Federal statutory rate and PGE’s Effective tax rate for financial reporting purposes are as follows:

	Years Ended December 31,
	2023		2022		2021
Federal statutory tax rate	21.0	%	21.0	%	21.0	%
Federal tax credits (1)	(9.5)		(12.8)		(13.0)
State and local taxes, net of federal tax benefit	8.6		8.8		8.9
Flow through depreciation and cost basis differences	(0.4)		0.8		(0.2)
Local tax flow-through adjustment (2)	—		—		(3.2)
Reversal of excess deferred income tax (3)	(3.9)		(4.5)		(4.8)
Other	0.6		1.0		(0.1)
Effective tax rate	16.4	%	14.3	%	8.6	%

(1)    Federal tax credits consist primarily of production tax credits (PTCs) earned from Company-owned wind-powered generating facilities. The federal 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. The PTCs are generated for 10 years from the corresponding facilities’ in-service dates. PGE’s PTC generation will end at various dates through 2030. Federal tax credits also includes all other federal tax credits and related deferrals. The tax credit deferrals are established to provide the benefit back to customers over a period agreed upon with the OPUC.

(2) In 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 consolidated statements of income for the year ended December 31, 2021.

(3) The majority of excess deferred income taxes related to remeasurement under the TCJA is subject to IRS normalization rules and will be reversed over the remaining regulatory life of the assets using the average rate assumption method.

Deferred income tax assets and liabilities consist of the following (in millions):

	As of December 31,
	2023		2022
Deferred income tax assets:
Employee benefits	$	99	$	99
Regulatory liabilities	21		75
Tax credits	73		102
Price risk management	57		—
Total deferred income tax assets	250		276
Deferred income tax liabilities:
Depreciation and amortization	578		547
Price risk management	—		54
Regulatory assets	146		101
Other	14		13
Total deferred income tax liabilities	738		715
Deferred income tax liability, net	$	488	$	439

As of December 31, 2023, PGE has federal credit carryforwards of $73 million, consisting of primarily PTCs, which will expire at various dates through 2043. PGE believes that it is more likely than not that its deferred income tax assets as of December 31, 2023 and 2022 will be realized; accordingly, no material valuation allowance has been recorded. As of December 31, 2023, and 2022, PGE had no material unrecognized tax benefits.

PGE and its subsidiaries file a consolidated federal income tax return. The Company also files income tax returns in the states of Oregon, California, and Montana, and in certain local jurisdictions. The Company files in other states to maintain compliance with remote worker rules and regulations. These additional state filings are not significant to the consolidated financial statements. The Internal Revenue Service (IRS) has completed its examination of all tax years through 2010 and all issues were resolved related to those years. The Company does not believe that any open tax years for federal or state income taxes could result in any adjustments that would be significant to the consolidated financial statements.