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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Summary of Income Before Taxes and Noncontrolling Interest for Domestic and Foreign Operations

The following is a summary of income before taxes and noncontrolling interests for domestic and foreign operations:


	Year ended December 31,
(Thousands of dollars)	2021		2020		2019
U.S.	$	221,507	$	282,489	$	261,525
Foreign	25,343		22,249		11,145
Total income before income taxes	$	246,850	$	304,738	$	272,670

Summary of Income Tax Expense (Benefit)

Income tax expense (benefit) consists of the following:


	Year Ended December 31,
(Thousands of dollars)	2021		2020		2019
Current:
Federal	$	(2,872)	$	6,287	$	622
State	(11,516)		8,617		(1,510)
Foreign	6,524		4,666		5,013
	(7,864)		19,570		4,125
Deferred:
Federal	39,117		44,547		45,593
State	8,239		414		8,212
Foreign	156		1,222		(1,907)
	47,512		46,183		51,898
Total income tax expense	$	39,648	$	65,753	$	56,023

Income tax expense (benefit) consists of the following:


	Year Ended December 31,
(Thousands of dollars)	2021		2020		2019
Current:
Federal	$	(3,643)	$	(4,678)	$	4,109
State	(6,556)		(179)		250
	(10,199)		(4,857)		4,359
Deferred:
Federal	36,842		38,561		29,543
State	2,695		2,051		1,071
	39,537		40,612		30,614
Total income tax expense	$	29,338	$	35,755	$	34,973

Significant Components of Deferred Income Tax Expense (Benefit)

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


	Year Ended December 31,
(Thousands of dollars)	2021		2020		2019
Deferred federal and state:
Property-related items	$	35,072	$	50,504	$	60,449
Purchased gas cost adjustments	73,613		(5,726)		3,834
Employee benefits	(1,484)		459		7,680
Regulatory adjustments	(10,101)		(9,885)		(11,962)
Deferred payroll taxes	(6,344)		(9,055)		—
Deferred revenue	6,021		588		822
Net operating loss	(65,509)		3,349		5,658
Alternative minimum tax	—		4,409		441
All other deferred	16,296		11,592		(14,778)
Total deferred federal and state	47,564		46,235		52,144
Deferred ITC, net	(52)		(52)		(246)
Total deferred income tax expense	$	47,512	$	46,183	$	51,898

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


	Year Ended December 31,
(Thousands of dollars)	2021		2020		2019
Deferred federal and state:
Property-related items	$	23,077	$	36,029	$	34,398
Purchased gas cost adjustments	73,613		(5,726)		3,834
Employee benefits	5,508		11,437		6,493
Regulatory adjustments	(10,101)		(9,885)		(11,962)
Deferred payroll taxes	(892)		(1,810)		—
Alternative minimum tax	—		4,409		441
Net operating loss	(59,119)		—		—
All other deferred	7,503		6,210		(2,344)
Total deferred federal and state	39,589		40,664		30,860
Deferred ITC, net	(52)		(52)		(246)
Total deferred income tax expense	$	39,537	$	40,612	$	30,614

Reconciliation of U.S Federal Statutory Rate to Consolidated Effective Tax Rate

A reconciliation of the U.S. federal statutory rate to the consolidated effective tax rate (and the sources of these differences and the effect of each) are summarized as follows:


	Year Ended December 31,
	2021		2020		2019
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Net state taxes	1.0		3.0		2.1
Tax credits	(0.5)		(0.5)		(0.3)
Company-owned life insurance	(1.1)		(0.8)		(1.5)

Amortization of excess deferred taxes	(4.3)		(0.8)		(0.9)
All other differences	—		(0.3)		0.1
Consolidated effective income tax rate	16.1	%	21.6	%	20.5	%

A reconciliation of the U.S. federal statutory rate to the consolidated effective tax rate (and the sources of these differences and the effect of each) are summarized as follows:


	Year Ended December 31,
	2021		2020		2019
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Net state taxes	0.3		1.7		0.7
Tax credits	(0.6)		(0.7)		(0.4)
Company-owned life insurance	(0.9)		(1.0)		(1.9)

Amortization of excess deferred taxes	(4.9)		(1.3)		(1.2)
All other differences	(1.3)		(1.4)		(0.5)
Effective income tax rate	13.6	%	18.3	%	17.7	%

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities consist of the following:


	December 31,
(Thousands of dollars)	2021		2020
Deferred tax assets:
Deferred income taxes for future amortization of ITC and excess deferred taxes	$	116,496	$	104,314
Employee benefits	39,181		39,907

Federal net operating losses	94,383		4,118
Deferred payroll taxes	6,344		9,055
Lease-related item	18,462		20,890
Other	15,739		14,350
Valuation allowance	(22)		(22)
	290,583		192,612
Deferred tax liabilities:
Property-related items, including accelerated depreciation	843,559		785,734
Regulatory balancing accounts	77,818		4,205

Debt-related costs	2,277		2,585
Intangibles	97,860		13,511
Lease-related item	17,254		19,789
Other	20,562		13,786
	1,059,330		839,610
Net noncurrent deferred tax liabilities	$	768,747	$	646,998

Deferred tax assets and liabilities consist of the following:


	December 31,
(Thousands of dollars)	2021		2020
Deferred tax assets:
Deferred income taxes for future amortization of ITC and excess deferred taxes	$	101,133	$	104,314
Employee benefits	(4,671)		4,806
Federal net operating losses	59,119		—
Deferred payroll taxes	892		1,810
Other	6,777		7,790
Valuation allowance	(22)		(22)
	163,228		118,698
Deferred tax liabilities:
Property-related items, including accelerated depreciation	703,374		680,294
Regulatory balancing accounts	77,818		4,205

Debt-related costs	2,277		2,585
Other	18,587		12,714
	802,056		699,798
Net deferred tax liabilities	$	638,828	$	581,100

Reconciliation of Unrecognized Tax Benefits

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


	December 31,
(Thousands of dollars)	2021		2020
Unrecognized tax benefits at beginning of year	$	1,928	$	1,056
Gross increases – tax positions in prior period	442		641
Gross decreases – tax positions in prior period	—		—
Gross increases – current period tax positions	259		231
Gross decreases – current period tax positions	—		—
Settlements	—		—
Lapse in statute of limitations	—		—
Unrecognized tax benefits at end of year	$	2,629	$	1,928

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


	December 31,
(Thousands of dollars)	2021		2020
Unrecognized tax benefits at beginning of year	$	1,793	$	1,056
Gross increases – tax positions in prior period	310		506
Gross decreases – tax positions in prior period	—		—
Gross increases – current period tax positions	259		231
Gross decreases – current period tax positions	—		—
Settlements	—		—
Lapse in statute of limitations	—		—
Unrecognized tax benefits at end of year	$	2,362	$	1,793

Summary of Income Before Taxes for Continuing and Discontinued Operations

The following is a summary of income before taxes:


	Year ended December 31,
(Thousands of dollars)	2021		2020		2019
Total income before income taxes	$	216,473	$	194,873	$	198,144