XML 39 R23.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Tax Expense. The components of income tax expense (benefit) were as follows:
Year Ended December 31, (in millions) | 2021 |  | 2020 |  | 2019
Income Taxes |  |  |  |  |
Current |  |  |  |  |
Federal | $ | (0.1) |  |  | $ | 0.2 |  |  | $ | — |
State | 6.0 |  |  | 11.7 |  |  | 5.2 |
Total Current | 5.9 |  |  | 11.9 |  |  | 5.2 |
Deferred |  |  |  |  |
Federal | 99.2 |  |  | (0.4) |  |  | 110.7 |
State | 13.8 |  |  | (27.4) |  |  | 9.0 |
Total Deferred | 113.0 |  |  | (27.8) |  |  | 119.7 |
Deferred Investment Credits | (1.1) |  |  | (1.2) |  |  | (1.4) |
Income Taxes | $ | 117.8 |  |  | $ | (17.1) |  |  | $ | 123.5 |
Statutory Rate Reconciliation. The following table represents a reconciliation of income tax expense at the statutory federal income tax rate to the actual income tax expense from continuing operations:
Year Ended December 31, (in millions) | 2021 |  | 2020 |  | 2019
Book income (loss) before income taxes | $ | 706.6 |  |  |  |  | $ | (31.3) |  |  |  |  | $ | 506.6 |  |  |
Tax expense (benefit) at statutory federal income tax rate | 148.3 |  |  | 21.0 | % |  | (6.6) |  |  | 21.0 | % |  | 106.5 |  |  | 21.0 | %
Increases (reductions) in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |
State income taxes, net of federal income tax benefit | 14.1 |  |  | 2.0 |  |  | (11.7) |  |  | 37.4 |  |  | 10.1 |  |  | 2.0 |
Amortization of regulatory liabilities | (39.1) |  |  | (5.5) |  |  | (38.4) |  |  | 122.7 |  |  | (29.4) |  |  | (5.8) |
Goodwill impairment | — |  |  | — |  |  | — |  |  | — |  |  | 43.0 |  |  | 8.5 |
Fines and penalties | — |  |  | — |  |  | 11.8 |  |  | (37.7) |  |  | 11.5 |  |  | 2.3 |
Charitable contribution carryover | — |  |  | — |  |  | — |  |  | — |  |  | (2.5) |  |  | (0.5) |
State regulatory proceedings | — |  |  | — |  |  | — |  |  | — |  |  | (9.5) |  |  | (1.9) |
Employee stock ownership plan dividends and other compensation | (1.2) |  |  | (0.2) |  |  | (1.3) |  |  | 4.2 |  |  | (2.0) |  |  | (0.4) |
Deferred taxes on TCJA regulatory liability divested | — |  |  | — |  |  | 23.3 |  |  | (74.5) |  |  | — |  |  | — |
Tax accrual adjustments | (0.1) |  |  | — |  |  | 8.9 |  |  | (28.4) |  |  | — |  |  | — |
Federal tax credits | (2.1) |  |  | (0.3) |  |  | (2.5) |  |  | 8.0 |  |  | — |  |  | — |
Other adjustments | (2.1) |  |  | (0.3) |  |  | (0.6) |  |  | 1.9 |  |  | (4.2) |  |  | (0.8) |
Income Taxes | $ | 117.8 |  |  | 16.7 | % |  | $ | (17.1) |  |  | 54.6 | % |  | $ | 123.5 |  |  | 24.4 | %
The difference in tax expense year-over-year has a relative impact on the effective tax rate proportional to pretax income or loss. The 37.9% decrease in effective tax rate in 2021 versus 2020 was primarily the result of higher pre-tax income, state jurisdictional mix of pre-tax income in 2021 tax effected at statutory tax rates and increased amortization of excess deferred federal income taxes in 2021 compared to 2020. These items were offset by decreased deferred tax expense recognized on the sale of Columbia of Massachusetts' regulatory liability in 2020, established due to TCJA in 2017, that would have otherwise been recognized over the amortization period, 2020 non-deductible penalties and valuation allowance related to Columbia of Massachusetts and 2020 one-time tax accrual adjustments. The 30.2% increase in effective tax rate in 2020 versus 2019 was primarily the result of lower pre-tax income, state jurisdictional mix of pre-tax loss in 2020 tax effected at statutory tax rates and increased amortization of excess deferred federal income taxes in 2020 compared to 2019. These items were offset by increased deferred tax expense recognized on the sale of Columbia of Massachusetts' regulatory liability, established due to TCJA in 2017, that would have otherwise been recognized over the amortization period, non-deductible penalties and non-cash impairment of goodwill related to Columbia of Massachusetts in 2019 (see Note 7, "Goodwill and Other Intangible Assets" for additional information), and one-time tax accrual adjustments. Net Deferred Income Tax Liability Components. Deferred income taxes result from temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The principal components of our net deferred tax liability were as follows:
At December 31, (in millions) | 2021 |  | 2020
Deferred tax liabilities |  |  |
Accelerated depreciation and other property differences | $ | 2,454.4 |  |  | $ | 2,339.3 |
Other regulatory assets | 308.6 |  |  | 331.8 |
Total Deferred Tax Liabilities | 2,763.0 |  |  | 2,671.1 |
Deferred tax assets |  |  |
Other regulatory liabilities and deferred investment tax credits (including TCJA) | 284.7 |  |  | 287.8 |
Pension and other postretirement/postemployment benefits | 104.8 |  |  | 118.1 |
Net operating loss carryforward and AMT credit carryforward | 545.9 |  |  | 608.5 |
Environmental liabilities | 22.2 |  |  | 22.6 |
Other accrued liabilities | 42.1 |  |  | 41.5 |
Other, net | 111.7 |  |  | 128.4 |
Total Deferred Tax Assets | 1,111.4 |  |  | 1,206.9 |
Valuation Allowance | (7.8) |  |  | (6.4) |
Net Deferred Tax Assets | 1,103.6 |  |  | 1,200.5 |
Net Deferred Tax Liabilities | $ | 1,659.4 |  |  | $ | 1,470.6 |
At December 31, 2021, we have federal net operating loss carryforwards of $464.4 million (tax effected). The federal net operating loss carryforwards are available to offset taxable income and will begin to expire in 2036. We believe it is more likely than not that we will realize the benefit from the federal net operating loss carryforwards. We also have $73.7 million (tax effected, net of federal benefit) of state net operating loss carryforwards. Depending on the jurisdiction in which the state net operating loss was generated, the carryforwards will begin to expire in 2028. We believe it is more likely than not that a portion of the benefit from certain state NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $7.8 million (net) on the deferred tax assets related to sale of Massachusetts Business assets reflected in the state net operating loss carryforward presented above. Unrecognized Tax Benefits. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
At December 31, 2021, (in millions) | 2021 |  | 2020 |  | 2019
Opening Balance | $ | 21.7 |  |  | $ | 23.2 |  |  | $ | 1.2 |
Gross decreases - tax positions in prior period | — |  |  | (1.5) |  |  | (0.6) |
Gross increases - current period tax positions | — |  |  | — |  |  | 22.6 |
Ending Balance | $ | 21.7 |  |  | $ | 21.7 |  |  | $ | 23.2 |
Offset for net operating loss carryforwards | (21.7) |  |  | (21.7) |  |  | (22.6) |
Balance, Less Net Operating Loss Carryforwards | $ | — |  |  | $ | — |  |  | $ | 0.6 |
We present accrued interest on unrecognized tax benefits, accrued interest on other income tax liabilities and tax penalties in "Income Taxes" on our Statements of Consolidated Income (Loss). Interest expense recorded on unrecognized tax benefits and other income tax liabilities was immaterial for all periods presented. There were no accruals for penalties recorded in the Statements of Consolidated Income (Loss) for the years ended December 31, 2021, 2020 and 2019, and there were no balances for accrued penalties recorded on the Consolidated Balance Sheets as of December 31, 2021 and 2020. We are subject to income taxation in the United States and various state jurisdictions, primarily Indiana, Pennsylvania, Kentucky, Massachusetts, Maryland and Virginia. We participate in the IRS CAP, which provides the opportunity to resolve tax matters with the IRS before filing each year's consolidated federal income tax return. As of December 31, 2021, tax years through 2020 have been audited and are effectively closed to further assessment. The audit of tax year 2021 under the CAP program is expected to be completed in 2022. The statute of limitations in each of the state jurisdictions in which we operate remains open between 3-4 years from the date the state income tax returns are filed. As of December 31, 2021, there were no state income tax audits in progress that would have a material impact on the consolidated financial statements.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration