Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the amount of unrecognized tax benefit is as follows:



(Millions of Dollars)	Dec. 31, 2015		Dec. 31, 2014
Unrecognized tax benefit — Permanent tax positions	$	2.4	$	1.9
Unrecognized tax benefit — Temporary tax positions	15.0		10.0
Total unrecognized tax benefit	$	17.4	$	11.9

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



(Millions of Dollars)	2015			2014			2013
Balance at Jan. 1	$	11.9		$	8.4		$	9.6
Additions based on tax positions related to the current year	4.5			3.7			3.9
Reductions based on tax positions related to the current year	(1.5		)	(0.7		)	—
Additions for tax positions of prior years	2.5			2.8			3.3
Reductions for tax positions of prior years	—			(1.2		)	(0.9		)
Settlements with taxing authorities	—			(1.1		)	(7.5		)
Balance at Dec. 31	$	17.4		$	11.9		$	8.4

Tax Benefits Associated with NOL and Tax Credit Carryforwards

The unrecognized tax benefit amounts were reduced by the tax benefits associated with NOL and tax credit carryforwards. The amounts of tax benefits associated with NOL and tax credit carryforwards are as follows:



(Millions of Dollars)	Dec. 31, 2015			Dec. 31, 2014
NOL and tax credit carryforwards	$	(4.3	)	$	(3.9	)

NOL and Tax Credit Carryforwards

Other Income Tax Matters — NOL amounts represent the amount of the tax loss that is carried forward and tax credits represent the deferred tax asset. NOL and tax credit carryforwards as of Dec. 31 were as follows:



(Millions of Dollars)	2015			2014
Federal NOL carryforward	$	328		$	320
Federal tax credit carryforwards	24			22
State NOL carryforwards	684			690
State tax credit carryforwards, net of federal detriment ^(a)	13			12
Valuation allowances for state credit carryforwards, net of federal detriment ^(b)	(1		)	—


^(a)	State tax credit carryforwards are net of federal detriment of $7 million and $7 million as of Dec. 31, 2015 and 2014, respectively.


^(b)	Valuation allowances for state tax credit carryforwards were net of federal benefit of $1 million as of Dec. 31, 2015.

Schedule of Effective Income Tax Rate Reconciliation

Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense. The following reconciles such differences for the years ending Dec. 31:



	2015		2014		2013
Federal statutory rate	35.0	%	35.0	%	35.0	%
Increases (decreases) in tax from:
State income taxes, net of federal income tax benefit	3.2		2.8		3.0
Change in unrecognized tax benefits	0.1		(0.1	)	0.1
Regulatory differences — utility plant items	(0.3	)	(2.1	)	(1.4	)
Tax credits recognized, net of federal income tax expense	(0.7	)	(0.8	)	(0.8	)
Other, net	0.1		0.1		(0.3	)
Effective income tax rate	37.4	%	34.9	%	35.6	%

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense for the years ending Dec. 31 were:



(Thousands of Dollars)	2015			2014			2013
Current federal tax (benefit) expense	$	(1,166	)	$	9,550		$	(52,408	)
Current state tax (benefit) expense	(727		)	2,611			(7,252		)
Current change in unrecognized tax expense (benefit)	5,244			6,548			(2,918		)
Deferred federal tax expense	246,096			208,781			273,916
Deferred state tax expense	36,450			26,196			38,243
Deferred change in unrecognized tax (benefit) expense	(4,650		)	(7,154		)	4,094
Deferred investment tax credits	(2,807		)	(2,941		)	(2,935		)
Total income tax expense	$	278,440		$	243,591		$	250,740

The components of deferred income tax expense for the years ending Dec. 31 were:



(Thousands of Dollars)	2015			2014			2013
Deferred tax expense excluding items below	$	285,144		$	254,142		$	335,580
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities	(7,229		)	(26,649		)	(19,616		)
Tax benefit allocated to other comprehensive income and other	(19		)	330			289
Deferred tax expense	$	277,896		$	227,823		$	316,253

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax liability (current and noncurrent) at Dec. 31 were as follows:



(Thousands of Dollars)	2015		2014
Deferred tax liabilities:
Differences between book and tax bases of property	$	2,772,043	$	2,467,260
Employee benefits	105,049		110,556
Other	101,219		140,080
Total deferred tax liabilities	$	2,978,311	$	2,717,896
Deferred tax assets:
NOL carryforward	$	147,763	$	143,158
Unbilled revenue - fuel costs	48,181		57,654
Rate refund	23,352		43,735
Tax credit carryforward	35,240		34,493
Regulatory liabilities	17,201		14,549
Deferred investment tax credits	12,718		13,781
Other	35,658		37,472
Total deferred tax assets	$	320,113	$	344,842
Net deferred tax liability	$	2,658,198	$	2,373,054