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INCOME TAXES (Tables) | 12 Months Ended
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Sep. 30, 2020
Income Tax Disclosure [Abstract] |
Schedule of Components of Income Tax Benefit | The income tax benefit from operations for the fiscal years ended September 30, consists of the following:
(Thousands) | 2020 | 2019 | 2018
Current: |  |  |
Federal | $ | (2,164) |  | $ | 10,933 |  | $ | (2,848) |
State | 6,763 |  | 3,530 |  | 4,563 |
Deferred: |  |  |
Federal | 31,577 |  | 7,988 |  | (40,785) |
State | (900) |  | 5,833 |  | 6,731 |
Investment/production tax credits | (42,220) |  | (66,035) |  | (21,446) |
Income tax benefit | $ | (6,944) |  | $ | (37,751) |  | $ | (53,785) |
Schedule of Deferred Tax Assets and Liabilities | As of September 30, the temporary differences, which give rise to deferred tax assets (liabilities), consist of the following:
(Thousands) | 2020 |  | 2019
Deferred tax assets |  |  |
Investment tax credits (1) | $ | 194,840 |  |  | $ | 156,153 |
Federal net operating losses (2) | 24,091 |  |  | 24,173 |
State net operating losses | 33,233 |  |  | 25,302 |
Fair value of derivatives | 13,979 |  |  | 9,673 |
Postemployment benefits | 8,544 |  |  | 9,192 |
Incentive compensation | 7,071 |  |  | 7,231 |
Amortization of intangibles | 5,892 |  |  | 4,991 |
Overrecovered natural gas costs | 7,244 |  |  | — |
Other | 2,370 |  |  | 7,139 |
Total deferred tax assets | $ | 297,264 |  |  | $ | 243,854 |
Less: Valuation allowance | (17,639) |  |  | (4,035) |
Total deferred tax assets net of valuation allowance | $ | 279,625 |  |  | $ | 239,819 |
Deferred tax liabilities |  |  |
Property related items | $ | (419,075) |  |  | $ | (379,673) |
Remediation costs | (10,207) |  |  | (10,720) |
Investments in equity investees | (23,395) |  |  | (21,730) |
Underrecovered natural gas costs | — |  |  | (2,657) |
Conservation incentive plan | (5,345) |  |  | (942) |
Other | (6,639) |  |  | (4,776) |
Total deferred tax liabilities | $ | (464,661) |  |  | $ | (420,498) |
Total net deferred tax liabilities | $ | (185,036) |  |  | $ | (180,679) |
(1)Includes $898,000 and $2 million for NJNG for fiscal 2020 and 2019, respectively, which is being amortized over the life of the related assets. (2)See discussion of federal net operating loss utilization in the Other Tax Items section of this note.
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the U.S. federal statutory rate to the effective rate from operations for the fiscal years ended September 30, is as follows:
(Thousands) | 2020 | 2019 | 2018
Statutory income tax expense | $ | 39,265 |  | $ | 27,668 |  | $ | 44,014 |
Change resulting from: |  |  |
Investment/production tax credits | (42,220) |  | (66,035) |  | (21,446) |
Cost of removal of assets placed in service prior to 1981 | (5,362) |  | (6,349) |  | (5,829) |
AFUDC equity | (4,933) |  | (2,313) |  | (2,117) |
State income taxes, net of federal benefit | 8,657 |  | 7,707 |  | 7,092 |
NJ Unitary method change | (15,345) |  | — |  | — |
Basis adjustment of solar assets due to ITC | 4,399 |  | 6,500 |  | 1,080 |
Valuation allowance | 13,604 |  | — |  | — |
Tax Act - utility excess deferred income taxes amortized (1) | (3,573) |  | (3,573) |  | (1,786) |
Tax Act - nonutility excess deferred income taxes (1) | — |  | — |  | (59,627) |
Tax Act - utility excess deferred income taxes refunded to customers (1) | — |  | — |  | (14,323) |
Other | (1,436) |  | (1,356) |  | (843) |
Income tax benefit | $ | (6,944) |  | $ | (37,751) |  | $ | (53,785) |
Effective income tax rate (2) (3) | (3.7) | % | (28.7) | % | (29.9) | %
(1)For a more detailed description, see The Tax Act section of this note. (2)The U.S. federal statutory rate was 21 percent for both fiscal 2020 and 2019 and 24.5 percent for fiscal 2018. (3)The effective tax rate without the impact of the Tax Act would have been 12.4 percent for fiscal 2018
Schedule of the Reserve for Uncertain Tax Benefits | The reserve for uncertain tax benefits for the fiscal year ended September 30, is as follows:
(Thousands) | 2020 | 2019 |
Balance at October 1, | $ | 4,930 |  | $ | — |  |
Additions based on tax positions related to the current fiscal period | — |  | 4,930 |  |
Balance at period end | $ | 4,930 |  | $ | 4,930 |  |

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