Three Months Ended September 30,

Nine Months Ended September 30,

2011

2010

2011

2010

(millions of dollars)

Income tax at federal statutory rate

$

47

35.0

%

$

5

35.0

%

$

133

35.0

%

$

62

35.0

%

Increases (decreases) resulting from:

State income taxes, net of federal effect

9

6.7

(6

)

(37.3

)

19

5.0

4

2.0

Depreciation

(1

)

(0.7

)

2

9.3

(2

)

(0.5

)

4

2.4

Cross-border energy lease investments

(5

)

(3.7

)

(2

)

(10.0

)

15

3.9

(4

)

(2.3

)

Change in estimates and interest related to uncertain and effectively settled tax positions

5

3.7

—

(0.7

)

(11

)

(2.9

)

10

5.5

Tax credits

(1

)

(0.7

)

(1

)

(6.0

)

(3

)

(0.8

)

(3

)

(1.6

)

Dividends on PHI shares held in retirement savings plan

(1

)

(0.7

)

—

(3.3

)

(2

)

(0.5

)

(2

)

(0.9

)

Release of deferred tax asset valuation allowance

—

(8

)

(4.4

)

Change in state deferred tax balances as a result of corporate restructuring

—

2

14.0

—

(6

)

(3.6

)

Asset removal costs

(2

)

(1.5

)

(1

)

(4.7

)

(4

)

(1.1

)

(2

)

(1.0

)

Adjustment to prior year taxes

—

(3.3

)

—

(1

)

(0.4

)

Deferred tax basis adjustments

—

(4

)

(28.7

)

1

0.3

—

(0.2

)

Other, net

4

2.6

(1

)

(4.3

)

(3

)

(0.8

)

(2

)

(1.1

)

Consolidated income tax expense related to continuing operations

$

55

40.7

%

$

(6

)

(40.0

)%

$

143

37.6

%

$

52

29.4

%