INCOME TAXES

12 Months Ended

Dec. 31, 2022

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 5

INCOME TAXES

Deferred income taxes are provided in accordance with FASB ASC Topic 740 on all differences between the tax basis of assets and liabilities and the amounts at which they are carried in the consolidated financial statements based on the enacted tax rates expected to be in effect when such temporary differences are expected to reverse. The Company’s rate regulated subsidiaries recognize regulatory liabilities, to the extent considered in ratemaking, for deferred taxes provided in excess of the current statutory tax rate and regulatory assets for deferred taxes provided at rates less than the current statutory rate.  Such tax-related regulatory assets and liabilities are reported at the revenue requirement level and amortized to income as the related temporary differences reverse, generally over the lives of the related properties.

As of December 31, 2022, the Company fully utilized all of its federal net operating loss carrybacks and carry-forwards.  As of December 31, 2022, the Company has separate company state net operating loss carry-forwards aggregating approximately $13.8 million. Most of these net operating loss carry-forwards will expire if unused between 2023 and 2043. The Company has recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may not be realized due to the expiration of the state net operating loss carry-forwards. The valuation allowance increased to approximately $600,000 in 2022 from approximately $546,000 in 2021. Management believes that it is more likely than not that the Company will realize the benefit of these deferred tax assets, net of the valuation allowance.

Components of Income Tax Expense
In thousands	For the Year Ended December 31,
State income taxes	2022		2021		2020
Current	$	1,373	$	1,216	$	2,348
Deferred		663		776		(279	)
Total state income tax expense	$	2,036	$	1,992	$	2,069

	For the Year Ended December 31,
Federal income taxes	2022		2021		2020
Current	$	2,912	$	2,144	$	5,725
Deferred		930		1,601		(2,110	)
Total federal income tax expense	$	3,842	$	3,745	$	3,615

Reconciliation of effective tax rate:
	For the Year Ended December 31,
In thousands	2022			2022			2021			2021			2020			2020
	Amount			Percent			Amount			Percent			Amount			Percent
Reconciliation of effective tax rate
Income before federal and state income taxes	$	23,876			100.0	%	$	22,564			100.0	%	$	22,501			100.0	%
Amount computed at statutory rate		5,014			21.0	%		4,738			21.0	%		4,725			21.0	%
Reconciling items
State income tax-net of federal tax benefit		1,696			7.1	%		1,600			7.1	%		1,704			7.6	%
Regulatory liability adjustment		(450	)		(1.9	)%		(451	)		(2.0	)%		(451	)		(2.0	)%
Other		(382	)		(1.6	)%		(150	)		(0.7	)%		(294	)		(1.3	)%
Total income tax expense and effective rate	$	5,878			24.6	%	$	5,737			25.4	%	$	5,684			25.3	%

Deferred income taxes at December 31, 2022 and 2021 were comprised of the following:

	For the Year Ended December 31,
In thousands	2022			2021
Deferred tax assets related to:
Federal and state operating loss carry-forwards	$	922		$	629
Less: valuation allowance		(600	)		(493	)
Bad debt allowance		116			240
Stock options		47			148
Other		28			75
Total deferred tax assets	$	513		$	599
Deferred tax liabilities related to:
Property plant and equipment basis differences	$	(52,565	)	$	(48,536	)
Bond retirement costs		(1,058	)		(1,210	)
Property taxes		(609	)		(481	)
Other		(833	)		(685	)
Total deferred tax liabilities	$	(55,065	)	$	(50,912	)
Net deferred tax liability	$	(54,552	)	$	(50,313	)

Schedule of Valuation Allowance
	Balance at Beginning of Period			Additions Charged to Costs and Expenses			Deductions		Balance at End of Period
In thousands
Classification
For the Year Ended December 31, 2022 Valuation allowance for deferred tax assets		$	546		$	54		—		$	600
For the Year Ended December 31, 2021 Valuation allowance for deferred tax assets		$	493		$	53		—		$	546
For the Year Ended December 31, 2020 Valuation allowance for deferred tax assets		$	335		$	158		—		$	493

Under FASB ASC Topic 740, the Company establishes reserves for uncertain tax positions based upon management’s judgment as to the sustainability of these positions.  The Company reserved a liability related to the difference in the tax depreciation utilizing the half-year convention rather than the mid-quarter convention for 2018.

The following table provides the changes in the Company’s uncertain tax position:

	For the years ended December 31,
In thousands	2022			2021
Balance at beginning of year	$	202		$	209
Additions based on tax positions related to the current year		146			—
Additions based on tax positions related to prior years		10			19
Reductions for tax positions of prior years		—			—
Lapses in statutes of limitations		(212	)		(26	)
Balance at end of year	$	146		$	202