Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Summary of Statute of Limitations Applicable to Open Tax Years

SPS is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. The statutes of limitations applicable to Xcel Energy’s federal income tax returns expire as follows:

Tax Year(s)	Expiration
2009 - 2011	June 2018
2012 - 2013	October 2018
2014	September 2018
2015	September 2019
2016	September 2020

Reconciliation of Unrecognized Tax Benefits

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

(Millions of Dollars)	Dec. 31, 2017		Dec. 31, 2016
Unrecognized tax benefit — Permanent tax positions	$	2.3	$	4.5
Unrecognized tax benefit — Temporary tax positions	2.0		24.2
Total unrecognized tax benefit	$	4.3	$	28.7

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

(Millions of Dollars)	2017			2016			2015
Balance at Jan. 1	$	28.7		$	24.7		$	13.2
Additions based on tax positions related to the current year	0.9			1.4			4.2
Reductions based on tax positions related to the current year	(0.6		)	—			(0.6		)
Additions for tax positions of prior years	1.3			3.9			9.0
Reductions for tax positions of prior years	(19.9		)	(1.3		)	(1.1		)
Settlements with taxing authorities	(6.1		)	—			—
Balance at Dec. 31	$	4.3		$	28.7		$	24.7

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, 2017			Dec. 31, 2016
NOL and tax credit carryforwards	$	(5.9	)	$	(5.9	)

Interest Payable related to Unrecognized Tax Benefits

The payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax credit carryforwards. A reconciliation of the beginning and ending amount of the payable for interest related to unrecognized tax benefits are as follows:

(Millions of Dollars)	2017			2016			2015
Payable for interest related to unrecognized tax benefits at Jan. 1	$	(0.9	)	$	—		$	(0.1	)
Interest income (expense) income related to unrecognized tax benefits	1.4			(0.9		)	0.1
Receivable (payable) for interest related to unrecognized tax benefits at Dec. 31	$	0.5		$	(0.9	)	$	—

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)	2017		2016
Federal NOL carryforward	$	115	$	275
Federal tax credit carryforwards	5		4
State NOL carryforwards	40		60

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:

	2017		2016 (a)		2015 (a)
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income tax on pretax income, net of federal tax effect	0.9	%	1.0	%	1.0	%
Increases (decreases) in tax from:
Tax reform	(3.5	)	—		—
Change in unrecognized tax benefits	(1.0	)	0.8		0.5
Tax credits recognized, net of federal income tax expense	(0.7	)	(0.5	)	(0.3	)
Regulatory differences - other utility plant items	(0.8	)	(1.0	)	(0.8	)
Other, net	0.2		(0.2	)	1.7
Effective income tax rate	30.1	%	35.1	%	37.1	%

^(a)  The prior periods included in this footnote have been reclassified to conform to current year presentation.

Schedule of Components of Income Tax Expense (Benefit)

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

(Thousands of Dollars)	2017			2016			2015
Current federal tax benefit	$	(20,858	)	$	(40,853	)	$	(1,327	)
Current state tax (benefit) expense	(12,725		)	(2,929		)	2,448
Current change in unrecognized tax (benefit) expense	(24,333		)	3,126			11,281
Deferred federal tax expense	89,934			116,404			67,640
Deferred state tax expense	14,437			7,757			5,399
Deferred change in unrecognized tax expense (benefit)	22,094			(1,178		)	(10,203		)
Deferred investment tax credits	(133		)	(213		)	(213		)
Total income tax expense	$	68,416		$	82,114		$	75,025

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

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax liability at Dec. 31 were as follows:

(Thousands of Dollars)	2017		2016 (a)
Deferred tax liabilities:
Differences between book and tax bases of property	$	659,165	$	1,034,675
Regulatory assets	47,519		14,811
Pension expense	33,815		51,895
Other	4,604		3,267
Total deferred tax liabilities	$	745,103	$	1,104,648
Deferred tax assets:
Regulatory liabilities	115,302		(13,167		)
NOL carryforward	26,238		100,179
Deferred fuel costs	10,448		10,226
Other employee benefits	5,769		9,656
Tax credit carryforward	5,178		3,738
Other	7,262		4,879
Total deferred tax assets	$	170,197	$	115,511
Net deferred tax liability	$	574,906	$	989,137

^(a)  The prior period included in this footnote has been reclassified to conform to current year presentation.