Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Details of Income Tax Expense for Continuing Operations Including Noncontrolling Interests

Details of income tax expense for continuing operations including noncontrolling interests were as follows:

Year Ended December 31,	2020			2019			2018
(millions)
Current:
Federal	$	(139	)	$	—		$	(16	)
State		3			34			0
Total current expense (benefit)		(136	)		34			(16	)
Deferred:
Federal
Taxes before operating loss carryforwards, investment tax credits and tax reform		158			(90	)		(216	)
2017 Tax Reform Act impact		—			—			(176	)
Tax utilization expense of operating loss carryforwards		33			102			46
State		17			(57	)		(52	)
Total deferred expense (benefit)		208			(45	)		(398	)
Investment tax credit-amortization		(1	)		(1	)		(2	)
Total income tax expense (benefit)	$	71		$	(12	)	$	(416	)

Schedule of Effective Income Tax Rate Reconciliation

For continuing operations including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to DESC’s effective income tax rate as follows:

Year Ended December 31,	2020			2019			2018
U.S. statutory rate		21.0	%		21.0	%		21.0	%
Increases (reductions) resulting from:
State taxes, net of federal benefit		4.2			3.9			3.8
State investment tax credits		—			—			0.3
AFUDC - equity		(0.1	)		—			0.2
Amortization of federal investment tax credits		(0.4	)		0.1			0.2
Production tax credits		—			0.4			0.9
Reversal of excess deferred income taxes		(6.0	)		(1.4	)		—
Federal legislative change		—			—			17.5
NND Project impairment		—			(2.4	)		(2.3	)
Write-off of regulatory asset		—			(15.8	)		—
Changes in unrecognized tax benefits		—			(5.1	)		—
Other		0.1			0.2			(0.2	)
Effective tax rate		18.8	%		0.9	%		41.4	%

Schedule of Deferred Income Taxes

DESC’s deferred income taxes consist of the following:

At December 31,	2020			2019
(millions)
Deferred income taxes:
Total deferred income tax assets	$	1,101		$	1,258
Total deferred income tax liabilities		1,941			1,868
Total net deferred income tax liabilities	$	840		$	610
Total deferred income taxes:
Depreciation method and plant basis differences	$	1,098		$	1,007
Excess deferred income taxes		(233	)		(231	)
Unrecovered nuclear plant cost		529			553
DESC rate refund		(140	)		(169	)
Toshiba settlement		(204	)		(219	)
Nuclear decommissioning		(51	)		(43	)
Deferred state income taxes		208			200
Federal benefit of deferred state income taxes		(44	)		(42	)
Deferred fuel, purchased energy and gas costs		(12	)		7
Pension benefits		39			46
Other postretirement benefits		(37	)		(35	)
Loss and credit carryforwards		(382	)		(391	)
Other		69			(73	)
Total net deferred income tax liabilities	$	840		$	610
Deferred Investment Tax Credits-Regulated Operations		18			19
Total Deferred Taxes and Deferred Investment Tax Credits	$	858		$	629

Summary of Tax Credit Carryforwards

At December 31, 2020, DESC had the following deductible loss and credit carryforwards:

(millions)	Deductible Amount		Deferred Tax Asset		Expiration Period
Federal losses	$	1,052	$	221	2037
Federal production and other credits		—		31	2035-2038
State losses		2,418		121	2037
State investment and other credits		—		36	2026-2031
Total	$	3,470	$	409

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of changes in DESC’s unrecognized tax benefits follows:

(millions)	2020		2019			2018
Balance at January 1	$	132	$	106		$	98
Increases-prior period positions		5		76			8
Decreases-prior period positions		—		(53	)		—
Increases-current period positions		1		3			0
Balance at December 31	$	138	$	132		$	106