Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Tax-Related Interest Income

Tax-related interest income included in income tax expense in the consolidated statements of income is shown in the table below (in thousands):

	2012		2011		2010
Tax-related interest income	$	24	$	100	$	500

Tax-Related Interest Receivable and Payable

Tax-related interest receivable and payable included in the consolidated balance sheets are shown in the table below (in thousands):

	2012		2011
Tax-related interest receivable (payable)	$	—	$	6

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits in 2011 is as follows (thousands of dollars):

	2011
Unrecognized tax benefits at beginning of year	$	1,445
Gross increases – tax positions in prior period		—
Gross decreases – tax positions in prior period		—
Gross increases – current period tax positions		—
Gross decreases – current period tax positions		—
Settlements		—
Lapse of statute of limitations		(1,445	)
Unrecognized tax benefits at end of year	$	—

Summary of Income Tax Expense (Benefit)

Income tax expense (benefit) consists of the following (thousands of dollars):

Year Ended December 31,	2012		2011			2010
Current:
Federal	$	2,296	$	(265	)	$	4,204
State		5,744		2,122			4,442
		8,040		1,857			8,646
Deferred:
Federal		65,551		58,584			44,778
State		1,685		2,862			1,501
		67,236		61,446			46,279
Total income tax expense	$	75,276	$	63,303		$	54,925

Significant Components of Deferred Income Tax Expense (Benefit)

Deferred income tax expense (benefit) consists of the following significant components (thousands of dollars):

Year Ended December 31,	2012			2011			2010
Deferred federal and state:
Property-related items	$	64,249		$	51,710		$	43,420
Purchased gas cost adjustments		1,755			(92	)		(315	)
Employee benefits		564			11,766			8,753
All other deferred		1,529			(1,070	)		(4,711	)
Total deferred federal and state		68,097			62,314			47,147
Deferred ITC, net		(861	)		(868	)		(868	)
Total deferred income tax expense	$	67,236		$	61,446		$	46,279

Consolidated Effective Income Tax Rate

The sources of these differences and the effect of each are summarized as follows:

Year Ended December 31,	2012			2011			2010
Federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Net state taxes		2.6			2.7			2.8
Property-related items		0.2			0.2			0.2
Effect of income tax settlements		—			(0.9	)		(0.3	)
Tax credits		(0.4	)		(0.6	)		(0.5	)
Company owned life insurance		(1.3	)		(0.1	)		(2.3	)
All other differences		0.1			(0.1	)		(0.2	)
Consolidated effective income tax rate		36.2	%		36.2	%		34.7	%

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities consist of the following (thousands of dollars):

December 31,	2012			2011
Deferred tax assets:
Deferred income taxes for future amortization of ITC	$	3,211		$	3,743
Employee benefits		27,097			24,605
Alternative minimum tax credit		18,467			17,411
Net operating losses and credits		36,206			59,096
Interest rate swap		11,164			13,352
Other		17,866			15,099
Valuation allowance		(141	)		(142	)
		113,870			133,164
Deferred tax liabilities:
Property-related items, including accelerated depreciation		652,380			611,022
Regulatory balancing accounts		2,498			743
Property-related items previously flowed through		1,729			2,797
Unamortized ITC		5,131			5,992
Debt-related costs		4,602			4,379
Other		16,626			11,914
		682,966			636,847
Net deferred tax liabilities	$	569,096		$	503,683
Current	$	(47,088	)	$	(53,435	)
Noncurrent		616,184			557,118
Net deferred tax liabilities	$	569,096		$	503,683