Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

Income tax expense consists of the following components:

(millions)
For the year ended December 31,	2020			2019			2018
Current income taxes
Federal	$	35		$	56		$	72
State		(7	)		6			10
Deferred income taxes
Federal		32			7			(13	)
State		29			13			13
Investment tax credits amortization		(7	)		(5	)		(1	)
Total income tax expense	$	82		$	77		$	81

Schedule of Income Taxes Calculated on Income before Income Taxes and Provision for Income Taxes

For the three years presented, the overall effective tax rate differs from the U.S. federal statutory rate as presented below:

(millions)
For the year ended December 31,	2020			2019			2018
Income before provision for income taxes	$	506		$	447		$	422
Federal statutory income tax rates		21	%		21	%		21	%
Income taxes, at statutory income tax rate		106			94			89
Increase (decrease) due to
State income tax, net of federal income tax		17			15			19
Excess deferred tax amortization		(26	)		(25	)		(24	)
ITC amortization		(7	)		(5	)		(1	)
AFUDC-equity		(6	)		(2	)		(2	)
Tax credits		(8	)		(1	)		(2	)
Other		6			1			2
Total income tax expense on consolidated statements of income	$	82		$	77		$	81
Income tax expense as a percent of income before income taxes		16.2	%		17.2	%		19.2	%

Schedule of Deferred Tax Assets and Liabilities

The principal components of TEC’s deferred tax assets and liabilities recognized in the balance sheet are as follows:

(millions)
As of December 31,	2020		2019
Deferred tax liabilities (1)
Property related	$	1,121	$	1,036
Pension and postretirement benefits		116		111
Total deferred tax liabilities		1,237		1,147
Deferred tax assets (1)
Loss and credit carryforwards (2)		301		243
Medical benefits		27		27
Insurance reserves		16		16
Pension and postretirement benefits		66		63
Capitalized energy conservation assistance costs		18		17
Other		26		23
Total deferred tax assets		454		389
Total deferred tax liability, net	$	783	$	758

(1) Certain property related assets and liabilities have been netted.

(2) Deferred tax assets for net operating loss and tax credit carryforwards have been reduced by unrecognized tax benefits of $9 million.

Schedule of Unrecognized Tax Benefits

The following table provides details of the change in unrecognized tax benefits as follows:

(millions)	2020			2019		2018
Balance at January 1,	$	9		$	8	$	8
Decreases due to tax positions related to prior year		(2	)	0		0
Increases due to tax positions related to prior year	1			1		0
Increases due to tax positions related to current year	1			0		0
Balance at December 31,	$	9		$	9	$	8