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Income Taxes (Tables) | Nov. 18, 2019
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Income Tax Disclosure [Abstract] |
Income tax expense for continuing operations including noncontrolling interests | Details of income tax expense for continuing operations including noncontrolling interests were as follows:
|  | Dominion Energy |  |  | Virginia Power |  |  | Dominion Energy Gas |
Year Ended December 31, |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2018 |  |  | 2017 |  |  | 2016 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (45 | ) |  | $ | (1 | ) |  | $ | (155 | ) |  | $ | 36 |  |  | $ | 432 |  |  | $ | 168 |  |  | $ | (227 | ) |  | $ | 75 |  |  | $ | 176 |
State |  |  | 108 |  |  |  | (26 | ) |  |  | 85 |  |  |  | 40 |  |  |  | 73 |  |  |  | 90 |  |  |  | 31 |  |  |  | 13 |  |  |  | 32 |
Total current expense (benefit) |  |  | 63 |  |  |  | (27 | ) |  |  | (70 | ) |  |  | 76 |  |  |  | 505 |  |  |  | 258 |  |  |  | (196 | ) |  |  | 88 |  |  |  | 208 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2017 Tax Reform Act impact (1) |  |  | 46 |  |  |  | (851 | ) |  |  | — |  |  |  | 21 |  |  |  | (93 | ) |  |  | — |  |  |  | (6 | ) |  |  | (246 | ) |  |  | — |
Taxes before operating loss carryforwards and investment tax credits |  |  | 436 |  |  |  | 739 |  |  |  | 1,050 |  |  |  | 199 |  |  |  | 319 |  |  |  | 435 |  |  |  | 343 |  |  |  | 88 |  |  |  | 7 |
Tax utilization expense (benefit) of operating loss carryforwards |  |  | 92 |  |  |  | 174 |  |  |  | (161 | ) |  |  | — |  |  |  | 4 |  |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | — |
Investment tax credits |  |  | (56 | ) |  |  | (200 | ) |  |  | (248 | ) |  |  | (51 | ) |  |  | (23 | ) |  |  | (25 | ) |  |  | — |  |  |  | — |  |  |  | — |
State |  |  | (1 | ) |  |  | 132 |  |  |  | 50 |  |  |  | 55 |  |  |  | 59 |  |  |  | 27 |  |  |  | (17 | ) |  |  | 5 |  |  |  | (18 | )
Total deferred expense (benefit) |  |  | 517 |  |  |  | (6 | ) |  |  | 691 |  |  |  | 224 |  |  |  | 266 |  |  |  | 435 |  |  |  | 320 |  |  |  | (153 | ) |  |  | (11 | )
Investment tax credit-gross deferral |  |  | 2 |  |  |  | 5 |  |  |  | 35 |  |  |  | 2 |  |  |  | 5 |  |  |  | 35 |  |  |  | — |  |  |  | — |  |  |  | — |
Investment tax credit-amortization |  |  | (2 | ) |  |  | (2 | ) |  |  | (1 | ) |  |  | (2 | ) |  |  | (2 | ) |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |
Total income tax expense (benefit) |  | $ | 580 |  |  | $ | (30 | ) |  | $ | 655 |  |  | $ | 300 |  |  | $ | 774 |  |  | $ | 727 |  |  | $ | 124 |  |  | $ | (65 | ) |  | $ | 197 |
(1) | The 2017 Tax Reform Act impact includes an expense of $8 million for the year ended December 31, 2018 and a benefit of $93 million for the year ended December 31, 2017 arising from discontinued operations.
Effective Income Tax | 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 Energy |  |  | Virginia Power |  |  | Dominion Energy Gas |
Year Ended December 31, |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2018 |  |  | 2017 |  |  | 2016 |
U.S. statutory rate |  |  | 21.0 | % |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 21.0 | % |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 21.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Increases (reductions) resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State taxes, net of federal benefit |  |  | 3.0 |  |  |  | 2.0 |  |  |  | 2.4 |  |  |  | 4.7 |  |  |  | 3.7 |  |  |  | 3.8 |  |  |  | 3.2 |  |  |  | 2.6 |  |  |  | 2.0 |
Investment tax credits |  |  | (1.9 | ) |  |  | (6.3 | ) |  |  | (11.7 | ) |  |  | (3.5 | ) |  |  | (0.8 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Production tax credits |  |  | (0.7 | ) |  |  | (0.7 | ) |  |  | (0.8 | ) |  |  | (0.7 | ) |  |  | (0.4 | ) |  |  | (0.5 | ) |  |  | — |  |  |  | — |  |  |  | — |
Valuation allowances |  |  | 0.3 |  |  |  | 0.2 |  |  |  | 1.2 |  |  |  | — |  |  |  | — |  |  |  | 0.1 |  |  |  | — |  |  |  | 0.3 |  |  |  | — |
Reversal of excess deferred income taxes |  |  | (2.0 | ) |  |  | — |  |  |  | — |  |  |  | (3.2 | ) |  |  | — |  |  |  | — |  |  |  | (0.6 | ) |  |  | — |  |  |  | — |
Federal legislative change |  |  | 1.5 |  |  |  | (27.5 | ) |  |  | — |  |  |  | 1.3 |  |  |  | (4.0 | ) |  |  | — |  |  |  | (0.5 | ) |  |  | (41.0 | ) |  |  | — |
State legislative change |  |  | (0.6 | ) |  |  | — |  |  |  | (0.6 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2.0 | ) |  |  | (0.7 | ) |  |  | — |
AFUDC—equity |  |  | (0.8 | ) |  |  | (1.4 | ) |  |  | (0.6 | ) |  |  | (0.5 | ) |  |  | (0.6 | ) |  |  | (0.6 | ) |  |  | (0.3 | ) |  |  | (0.9 | ) |  |  | (0.2 | )
Employee stock ownership plan deduction |  |  | (0.4 | ) |  |  | (0.6 | ) |  |  | (0.6 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other, net |  |  | (0.9 | ) |  |  | (1.7 | ) |  |  | (1.4 | ) |  |  | (0.1 | ) |  |  | 0.6 |  |  |  | (0.4 | ) |  |  | (4.4 | ) (1) |  |  | (6.0 | ) (1) |  |  | (5.2 | ) (1)
Effective tax rate |  |  | 18.5 | % |  |  | (1.0 | )% |  |  | 22.9 | % |  |  | 19.0 | % |  |  | 33.5 | % |  |  | 37.4 | % |  |  | 16.4 | % |  |  | (10.7 | ) % |  |  | 31.6 | %
(1) | Includes (4.6)%, (6.7)% and (6.0)% relating to the absence of tax on noncontrolling interest in 2018, 2017 and 2016, respectively.
Deferred income taxes components | The Companies’ deferred income taxes consist of the following:
|  | Dominion Energy |  |  | Virginia Power |  |  | Dominion Energy Gas |
At December 31, |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total deferred income tax assets |  | $ | 2,748 |  |  | $ | 2,686 |  |  | $ | 1,054 |  |  | $ | 923 |  |  | $ | 296 |  |  | $ | 293 |
Total deferred income tax liabilities |  |  | 7,813 |  |  |  | 7,158 |  |  |  | 4,020 |  |  |  | 3,600 |  |  |  | 1,626 |  |  |  | 1,299 |
Total net deferred income tax liabilities |  | $ | 5,065 |  |  | $ | 4,472​​​​​​​ |  |  | $ | 2,966 |  |  | $ | 2,677 |  |  | $ | 1,330 |  |  | $ | 1,006 |
Total deferred income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Plant and equipment, primarily depreciation method and basis differences |  | $ | 4,933 |  |  | $ | 5,056 |  |  | $ | 3,367 |  |  | $ | 2,969 |  |  | $ | 671 |  |  | $ | 645 |
Excess deferred income taxes |  |  | (993 | ) |  |  | (1,050 | ) |  |  | (678 | ) |  |  | (687 | ) |  |  | (156 | ) |  |  | (155 | )
Nuclear decommissioning |  |  | 815 |  |  |  | 829 |  |  |  | 273 |  |  |  | 260 |  |  |  | — |  |  |  | — |
Deferred state income taxes |  |  | 626 |  |  |  | 834 |  |  |  | 284 |  |  |  | 378 |  |  |  | 203 |  |  |  | 258 |
Federal benefit of deferred state income taxes |  |  | (132 | ) |  |  | (175 | ) |  |  | (60 | ) |  |  | (79 | ) |  |  | (43 | ) |  |  | (51 | )
Deferred fuel, purchased energy and gas costs |  |  | 60 |  |  |  | 1 |  |  |  | 59 |  |  |  | (3 | ) |  |  | (1 | ) |  |  | - |
Pension benefits |  |  | 81 |  |  |  | 141 |  |  |  | (132 | ) |  |  | (104 | ) |  |  | 134 |  |  |  | 139 |
Other postretirement benefits |  |  | (5 | ) |  |  | (51 | ) |  |  | 55 |  |  |  | 44 |  |  |  | (3 | ) |  |  | (3 | )
Loss and credit carryforwards |  |  | (1,546 | ) |  |  | (1,536 | ) |  |  | (183 | ) |  |  | (111 | ) |  |  | (5 | ) |  |  | (5 | )
Valuation allowances |  |  | 158 |  |  |  | 146 |  |  |  | 5 |  |  |  | 5 |  |  |  | 6 |  |  |  | 4 |
Partnership basis differences |  |  | 1,135 |  |  |  | 473 |  |  |  | — |  |  |  | — |  |  |  | 570 |  |  |  | 220 |
Other |  |  | (67 | ) |  |  | (196 | ) |  |  | (24 | ) |  |  | 5 |  |  |  | (46 | ) |  |  | (46 | )
Total net deferred income tax liabilities |  | $ | 5,065 |  |  | $ | 4,472 |  |  | $ | 2,966 |  |  | $ | 2,677 |  |  | $ | 1,330 |  |  | $ | 1,006 |
Deferred Investment Tax Credits – Regulated Operations |  |  | 51 |  |  |  | 51 |  |  |  | 51 |  |  |  | 51 |  |  |  | — |  |  |  | — |
Total Deferred Taxes and Deferred Investment Tax Credits |  | $ | 5,116 |  |  | $ | 4,523 |  |  | $ | 3,017 |  |  | $ | 2,728 |  |  | $ | 1,330 |  |  | $ | 1,006 |
Summary of deductible loss and credit carryforwards | At December 31, 2018, Dominion Energy had the following deductible loss and credit carryforwards:
|  | Deductible |  |  | Deferred |  |  | Valuation |  |  | Expiration |
|  | Amount |  |  | Tax Asset |  |  | Allowance |  |  | Period |
(millions) |  |  |  |  |  |  |  |  |  |  |  |
Federal losses |  | $ | 120 |  |  | $ | 25 |  |  | $ | — |  |  |  | 2034 |
Federal investment credits |  |  | — |  |  |  | 1,007 |  |  |  | — |  |  |  | 2033-2038 |
Federal production credits |  |  | — |  |  |  | 150 |  |  |  | — |  |  |  | 2031-2038 |
Other federal credits |  |  | — |  |  |  | 62 |  |  |  | — |  |  |  | 2031-2038 |
State losses |  |  | 1,126 |  |  |  | 73 |  |  |  | (61 | ) |  |  | 2019-2038 |
State minimum tax credits |  |  | — |  |  |  | 122 |  |  |  | — |  |  |  | No expiration |
State investment and other credits |  |  | — |  |  |  | 107 |  |  |  | (90 | ) |  |  | 2019-2025 |
Total |  | $ | 1,246 |  |  | $ | 1,546 |  |  | $ | (151 | ) |  |  |  |
At December 31, 2018, Virginia Power had the following deductible loss and credit carryforwards:
|  | Deductible |  |  | Deferred |  |  | Valuation |  |  | Expiration |
|  | Amount |  |  | Tax Asset |  |  | Allowance |  |  | Period |
(millions) |  |  |  |  |  |  |  |  |  |  |  |
Federal losses |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  |  | 2034 |
Federal investment credits |  |  | — |  |  |  | 113 |  |  |  | — |  |  |  | 2034-2038 |
Federal production and other credits |  |  | — |  |  |  | 61 |  |  |  | — |  |  |  | 2031-2038 |
State investment credits |  |  | — |  |  |  | 9 |  |  |  | (5 | ) |  |  | 2024 |
Total |  | $ | 1 |  |  | $ | 183 |  |  | $ | (5 | ) |  |  |  |
At December 31, 2018, Dominion Energy Gas had the following deductible loss and credit carryforwards:
|  | Deductible |  |  | Deferred |  |  | Valuation |  |  | Expiration |
|  | Amount |  |  | Tax Asset |  |  | Allowance |  |  | Period |
(millions) |  |  |  |  |  |  |  |  |  |  |  |
Federal losses |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  |  | 2034 |
State losses (1) |  |  | 62 |  |  |  | 3 |  |  |  | (3 | ) |  |  | 2021 |
Total |  | $ | 63 |  |  | $ | 3 |  |  | $ | (3 | ) |  |  |  |
(1) | Discontinued operations includes $53 million of deductible loss carryforwards which expire between 2036 and 2038, and are reflected as a deferred tax asset with an offsetting valuation allowance of $5 million.
Reconciliation of changes in unrecognized tax benefits | A reconciliation of changes in the Companies’ unrecognized tax benefits follows:
|  | Dominion Energy |  |  | Virginia Power |  |  | Dominion Energy Gas |
|  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | 2018 |  |  | 2017 |  |  | 2016 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1 |  | $ | 38 |  |  | $ | 64 |  |  | $ | 103 |  |  | $ | 4 |  |  | $ | 13 |  |  | $ | 12 |  |  | $ | 2 |  |  | $ | 9 |  |  | $ | 31 |
Increases-prior period positions |  |  | 10 |  |  |  | 1 |  |  |  | 9 |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | — |  |  |  | — |  |  |  | 1 |
Decreases-prior period positions |  |  | — |  |  |  | (9 | ) |  |  | (44 | ) |  |  | — |  |  |  | (1 | ) |  |  | (3 | ) |  |  | — |  |  |  | — |  |  |  | (19 | )
Increases-current period positions |  |  | 10 |  |  |  | 5 |  |  |  | 6 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Settlements with tax authorities |  |  | (6 | ) |  |  | (23 | ) |  |  | (8 | ) |  |  | (1 | ) |  |  | (8 | ) |  |  | — |  |  |  | — |  |  |  | (7 | ) |  |  | (4 | )
Expiration of statutes of limitations |  |  | (8 | ) |  |  | — |  |  |  | (2 | ) |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Balance at December 31 |  | $ | 44 |  |  | $ | 38 |  |  | $ | 64 |  |  | $ | 2 |  |  | $ | 4 |  |  | $ | 13 |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 9 |
Earliest tax year remaining | For each of the major states in which Dominion Energy operates, the earliest tax year remaining open for examination is as follows:
State |  | Earliest Open Tax Year |
Pennsylvania (1) |  |  | 2012 |
Connecticut |  |  | 2015 |
Virginia (2) |  |  | 2015 |
West Virginia (1) |  |  | 2015 |
New York (1) |  |  | 2011 |
Utah (1) |  |  | 2015 |
(1) | Considered a major state for Dominion Energy Gas’ operations.
(2) | Considered a major state for Virginia Power’s operations.

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