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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | I NCOME T AXES Judgment and the use of estimates are required in developing the provision for income taxes and reporting of tax-related assets and liabilities. The interpretation of tax laws involves uncertainty, since tax authorities may interpret the laws differently. The Companies are routinely audited by federal and state tax authorities. Ultimate resolution of income tax matters may result in favorable or unfavorable impacts to net income and cash flows, and adjustments to tax-related assets and liabilities could be material. In December 2015, U.S. federal legislation was enacted, providing an extension of the 50% bonus depreciation allowance for qualifying expenditures incurred in 2015, 2016 and 2017, and a phasing down of the allowance to 40% in 2018 and 30% in 2019 and expiration thereafter. In addition, the legislation extends the 30% investment tax credit for qualifying expenditures incurred through 2019 and provides a phase down of the credit to 26% in 2020, 22% in 2021 and 10% in 2022 and thereafter. Continuing Operations Details of income tax expense for continuing operations including noncontrolling interests were as follows:
| Dominion | Virginia Power | Dominion Gas
Year Ended December 31, | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal | $ | (155 | ) | $ | (24 | ) | $ | (11 | ) | $ | 168 |  | $ | 316 |  | $ | 85 |  | $ | (27 | ) | $ | 90 |  | $ | 86 |
State | 85 |  | 75 |  | 14 |  | 90 |  | 92 |  | 67 |  | 4 |  | 30 |  | 32 |
Total current expense (benefit) | (70 | ) | 51 |  | 3 |  | 258 |  | 408 |  | 152 |  | (23 | ) | 120 |  | 118 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Taxes before operating loss carryforwards and investment tax credits | 1,050 |  | 384 |  | 956 |  | 435 |  | 154 |  | 381 |  | 239 |  | 156 |  | 192 |
Tax utilization (benefit) of operating loss carryforwards | (161 | ) | 539 |  | (352 | ) | (2 | ) | 96 |  | — |  | (2 | ) | 6 |  | — |
Investment tax credits | (248 | ) | (134 | ) | (152 | ) | (25 | ) | (11 | ) | — |  | — |  | — |  | — |
State | 50 |  | 66 |  | (2 | ) | 27 |  | 13 |  | 16 |  | 1 |  | 1 |  | 24 |
Total deferred expense | 691 |  | 855 |  | 450 |  | 435 |  | 252 |  | 397 |  | 238 |  | 163 |  | 216 |
Investment tax credit - gross deferral | 35 |  | — |  | — |  | 35 |  | — |  | — |  | — |  | — |  | — |
Investment tax credit - amortization | (1 | ) | (1 | ) | (1 | ) | (1 | ) | (1 | ) | (1 | ) | — |  | — |  | — |
Total income tax expense | $ | 655 |  | $ | 905 |  | $ | 452 |  | $ | 727 |  | $ | 659 |  | $ | 548 |  | $ | 215 |  | $ | 283 |  | $ | 334 |
In 2016, Dominion realized a taxable gain resulting from the contribution of Questar Pipeline to Dominion Midstream. The contribution and related transactions resulted in increases in the tax basis of Questar Pipeline’s assets and the number of Dominion Midstream’s common and convertible preferred units held by noncontrolling interests. The direct tax effects of the transactions included a provision for current income taxes ($212 million) and an offsetting benefit for deferred income taxes ($96 million) and were charged to common shareholders’ equity. The federal tax liability was reduced by $129 million of tax credits generated in 2016 that otherwise would have resulted in additional credit carryforwards and a $17 million benefit provided by the domestic production activities deduction. These benefits, as indirect effects of the contribution transaction, are reflected in Dominion’s current federal income tax expense. In 2015, Dominion’s current federal income tax benefit includes the recognition of a $20 million benefit related to a carryback to be filed for nuclear decommissioning expenditures included in its 2014 net operating loss. For continuing operations including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies' effective income tax rate as follows:
| Dominion | Virginia Power | Dominion Gas
Year Ended December 31, | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
U.S. statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | %
Increases (reductions) resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State taxes, net of federal benefit | 2.4 |  | 3.7 |  | — |  | 3.8 |  | 3.9 |  | 3.8 |  | 0.5 |  | 2.7 |  | 4.4 |
Investment tax credits | (11.7 | ) | (4.7 | ) | (8.6 | ) | — |  | (0.6 | ) | — |  | — |  | — |  | — |
Production tax credits | (0.8 | ) | (0.8 | ) | (1.2 | ) | (0.6 | ) | (0.6 | ) | (0.6 | ) | — |  | — |  | — |
Valuation allowances | 1.2 |  | (0.3 | ) | 0.7 |  | 0.1 |  | — |  | — |  | — |  | — |  | — |
AFUDC - equity | (0.6 | ) | (0.3 | ) | — |  | (0.6 | ) | (0.6 | ) | — |  | (0.2 | ) | 0.2 |  | — |
Legislative change | (0.6 | ) | (0.1 | ) | — |  | — |  | — |  | — |  | — |  |  |  |  |
Employee stock ownership plan deduction | (0.6 | ) | (0.6 | ) | (0.9 | ) | — |  | — |  | — |  | — |  | — |  | — |
Other, net | (1.4 | ) | 0.1 |  | 0.4 |  | (0.3 | ) | 0.6 |  | 0.8 |  | 0.1 |  | 0.3 |  | 0.1 |
Effective tax rate | 22.9 | % | 32.0 | % | 25.4 | % | 37.4 | % | 37.7 | % | 39.0 | % | 35.4 | % | 38.2 | % | 39.5 | %
In 2016, Dominion's effective tax rate reflects valuation allowance on state credit not expected to be utilized by a Dominion subsidiary which files a separate state return. The Companies' deferred income taxes consist of the following:
| Dominion | Virginia Power | Dominion Gas
At December 31, | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
(millions) |  |  |  |  |  |
Deferred income taxes: |  |  |  |  |  |
Total deferred income tax assets | $ | 1,827 |  | $ | 1,152 |  | $ | 268 |  | $ | 164 |  | $ | 126 |  | $ | 129 |
Total deferred income tax liabilities | 10,381 |  | 8,552 |  | 5,323 |  | 4,805 |  | 2,564 |  | 2,343 |
Total net deferred income tax liabilities | $ | 8,554 |  | $ | 7,400 |  | $ | 5,055 |  | $ | 4,641 |  | $ | 2,438 |  | $ | 2,214 |
Total deferred income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Plant and equipment, primarily depreciation method and basis differences | $ | 7,782 |  | $ | 6,299 |  | $ | 4,604 |  | $ | 4,133 |  | $ | 1,726 |  | $ | 1,541 |
Nuclear decommissioning | 1,240 |  | 1,158 |  | 406 |  | 378 |  | — |  | — |
Deferred state income taxes | 747 |  | 646 |  | 321 |  | 302 |  | 204 |  | 205 |
Federal benefit of deferred state income taxes | (261 | ) | (226 | ) | (112 | ) | (106 | ) | (71 | ) | (72 | )
Deferred fuel, purchased energy and gas costs | (25 | ) | (1 | ) | (29 | ) | (3 | ) | 4 |  | 1 |
Pension benefits | 155 |  | 291 |  | (138 | ) | (99 | ) | 646 |  | 613 |
Other postretirement benefits | (68 | ) | (15 | ) | 49 |  | 30 |  | (6 | ) | (7 | )
Loss and credit carryforwards | (1,547 | ) | (1,004 | ) | (88 | ) | (53 | ) | (5 | ) | (4 | )
Valuation allowances | 135 |  | 73 |  | 3 |  | — |  | — |  | — |
Partnership basis differences | 688 |  | 367 |  | — |  | — |  | 43 |  | 41 |
Other | (292 | ) | (188 | ) | 39 |  | 59 |  | (103 | ) | (104 | )
Total net deferred income tax liabilities | $ | 8,554 |  | $ | 7,400 |  | $ | 5,055 |  | $ | 4,641 |  | $ | 2,438 |  | $ | 2,214 |
Deferred investment tax credits - regulated operations | 48 |  | 14 |  | 48 |  | 13 |  | — |  | — |
Total deferred taxes and deferred investment tax credits | $ | 8,602 |  | $ | 7,414 |  | $ | 5,103 |  | $ | 4,654 |  | $ | 2,438 |  | $ | 2,214 |
At December 31, 2016, Dominion had the following deductible loss and credit carryforwards:
| Deductible amount |  | Deferred tax asset |  | Valuation allowance |  | Expiration period
(millions) |  |  |  |
Federal losses | $ | 1,060 |  | $ | 358 |  | $ | — |  | 2031-2036
Federal investment credits | — |  | 708 |  | — |  | 2033-2036
Federal production credits | — |  | 102 |  | — |  | 2031-2036
Other federal credits | — |  | 48 |  | — |  | 2031-2036
State losses | 1,383 |  | 102 |  | (59 | ) | 2018-2034
State minimum tax credits | — |  | 135 |  | — |  | No expiration
State investment tax credits | — |  | 94 |  | (76 | ) | 2017-2027
Total |  |  | $ | 1,547 |  | $ | (135 | ) |
At December 31, 2016, Virginia Power had the following deductible loss and credit carryforwards:
| Deductible amount |  | Deferred tax asset |  | Valuation allowance |  | Expiration period
(millions) |  |  |  |
Federal losses | $ | 12 |  | $ | 3 |  | $ | — |  | 2031-2034
Federal investment credits | — |  | 40 |  | — |  | 2034-2036
Federal production and other credits | — |  | 35 |  | — |  | 2031-2036
State investment credits | — |  | 10 |  | (3 | ) | 2018-2024
Total |  |  | $ | 88 |  | $ | (3 | ) |
At December 31, 2016, Dominion Gas had the following deductible loss and credit carryforwards:
| Deductible amount |  | Deferred tax asset |  | Valuation allowance |  | Expiration period
(millions) |  |  |  |
Federal losses | $ | 14 |  | $ | 4 |  | $ | — |  | 2031-2036
Other federal credits | — |  | 1 |  | — |  | 2032-2035
Total |  |  | $ | 5 |  | $ | — |  |
A reconciliation of changes in the Companies' unrecognized tax benefits follows:
| Dominion | Virginia Power | Dominion Gas
| 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
(millions) |  |  |  |  |  |  |  |  |
Balance at January 1 | $ | 103 |  | $ | 145 |  | $ | 222 |  | $ | 12 |  | $ | 36 |  | $ | 39 |  | $ | 29 |  | $ | 29 |  | $ | 29 |
Increases-prior period positions | 9 |  | 2 |  | 24 |  | 4 |  | — |  | 2 |  | 1 |  | — |  | — |
Decreases-prior period positions | (44 | ) | (40 | ) | (26 | ) | (3 | ) | (25 | ) | (16 | ) | (19 | ) | — |  | — |
Increases-current period positions | 6 |  | 8 |  | 16 |  | — |  | 1 |  | 11 |  | — |  | — |  | — |
Settlements with tax authorities | (8 | ) | (5 | ) | — |  | — |  | — |  | — |  | (4 | ) | — |  | — |
Expiration of statutes of limitations | (2 | ) | (7 | ) | (91 | ) | — |  | — |  | — |  | — |  | — |  | — |
Balance at December 31 | $ | 64 |  | $ | 103 |  | $ | 145 |  | $ | 13 |  | $ | 12 |  | $ | 36 |  | $ | 7 |  | $ | 29 |  | $ | 29 |
Certain unrecognized tax benefits, or portions thereof, if recognized, would affect the effective tax rate. Changes in these unrecognized tax benefits may result from remeasurement of amounts expected to be realized, settlements with tax authorities and expiration of statutes of limitations. For Dominion and its subsidiaries, these unrecognized tax benefits were $45 million, $69 million and $77 million at December 31, 2016, 2015 and 2014, respectively. For Dominion, the change in these unrecognized tax benefits decreased income tax expense by $18 million, $6 million and $47 million in 2016, 2015 and 2014, respectively. For Virginia Power, these unrecognized tax benefits were $9 million at December 31, 2016 and $8 million at December 31, 2015 and 2014. For Virginia Power, the change in these unrecognized tax benefits increased income tax expense by $1 million in 2016 and affected income tax expense by less than $1 million in 2015 and 2014. For Dominion Gas, these unrecognized tax benefits were $5 million at December 31, 2016 and $19 million at December 31, 2015 and 2014. For Dominion Gas, the change in these unrecognized tax benefits decreased income tax expense by $11 million in 2016 and affected income tax expense by less than $1 million in 2015 and 2014. Effective for its 2014 tax year, Dominion was accepted into the CAP. Through the CAP, Dominion has the opportunity to resolve complex tax matters with the IRS before filing its federal income tax returns, thus achieving certainty for such tax return filing positions agreed to by the IRS. The IRS has completed its audit of tax years 2013, 2014 and 2015, for which the statute of limitations has not yet expired. Although Dominion has not received a final letter indicating no changes to its taxable income for tax year 2015, no adjustments are expected. The IRS examination of tax year 2016 is ongoing. It is reasonably possible that settlement negotiations and expiration of statutes of limitations could result in a decrease in unrecognized tax benefits in 2017 by up to $25 million for Dominion, $3 million for Virginia Power and $7 million for Dominion Gas. If such changes were to occur, other than revisions of the accrual for interest on tax underpayments and overpayments, earnings could increase by up to $20 million for Dominion, $3 million for Virginia Power and $5 million for Dominion Gas. Otherwise, with regard to 2016 and prior years, Dominion, Virginia Power and Dominion Gas cannot estimate the range of reasonably possible changes to unrecognized tax benefits that may occur in 2017. For each of the major states in which Dominion operates, the earliest tax year remaining open for examination is as follows:
State | Earliest Open Tax Year
Pennsylvania(1) | 2012
Connecticut | 2013
Virginia(2) | 2013
West Virginia(1) | 2013
New York(1) | 2007
(1) | Considered a major state for Dominion Gas' operations.
(2) | Considered a major state for Virginia Power's operations.
The Companies are also obligated to report adjustments resulting from IRS settlements to state tax authorities. In addition, if Dominion utilizes operating losses or tax credits generated in years for which the statute of limitations has expired, such amounts are generally subject to examination.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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