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INCOME TAXES | 12 Months Ended
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Sep. 30, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Spire The Company’s provision for income taxes charged during the fiscal years ended September 30, 2017, 2016, and 2015 are as follows:
| 2017 |  | 2016 |  | 2015
Federal |  |  |  |  |
Current | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | (3.3 | )
Deferred | 67.7 |  |  | 62.0 |  |  | 58.8 |
Investment tax credits | (0.2 | ) |  | (0.2 | ) |  | (0.2 | )
State and local |  |  |  |  |
Current | 0.5 |  |  | 0.6 |  |  | — |
Deferred | 9.5 |  |  | 7.0 |  |  | 6.9 |
Total income tax expense | $ | 77.6 |  |  | $ | 69.5 |  |  | $ | 62.2 |
The Company’s effective income tax rate varied from the federal statutory income tax rate for each year due to the following:
| 2017 |  | 2016 |  | 2015
Federal income tax statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes, net of federal income tax benefits | 2.8 |  |  | 2.8 |  |  | 3.0 |
Certain expenses capitalized on books and deducted on tax return | (2.3 | ) |  | (3.4 | ) |  | (3.7 | )
Taxes related to prior years | (0.9 | ) |  | (0.2 | ) |  | (0.6 | )
Other items – net * | (2.2 | ) |  | (1.7 | ) |  | (2.5 | )
Effective income tax rate | 32.4 | % |  | 32.5 | % |  | 31.2 | %
* Other consists primarily of property adjustments. The Company’s significant items comprising the net deferred tax liability recorded in the Consolidated Balance Sheets as of September 30 are as follows:
| 2017 |  | 2016
Deferred tax assets: |  |  |
Reserves not currently deductible | $ | 31.5 |  |  | $ | 21.3 |
Pension and other postretirement benefits | 58.6 |  |  | 68.3 |
Operating losses | 169.6 |  |  | 102.3 |
Other | 26.0 |  |  | — |
Deferred tax assets | 285.7 |  |  | 191.9 |
Less: valuation allowance | 0.5 |  |  | 0.9 |
Total deferred tax assets | 285.2 |  |  | 191.0 |
Deferred tax liabilities: |  |  |
Relating to property | 728.3 |  |  | 623.1 |
Regulatory pension and other postretirement benefits | 108.0 |  |  | 106.8 |
Deferred gas costs | 30.6 |  |  | 20.0 |
Other** | 125.8 |  |  | 48.4 |
Total deferred tax liabilities | 992.7 |  |  | 798.3 |
Net deferred tax liability | $ | 707.5 |  |  | $ | 607.3 |
** Other consists primarily of Goodwill related liabilities. In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers all significant available positive and negative evidence, including the existence of losses in recent years, the timing of deferred tax liability reversals, projected future taxable income, taxable income in carryback years, and tax planning strategies to assess the need for a valuation allowance. Based upon this evidence, management believes it is more likely than not the Company will realize the benefits of these deferred tax assets, except for the contribution carryforward valuation allowance noted below. The Company has federal and state loss carryforwards of approximately $478.6 at September 30, 2017. The Company also has contribution carryforwards of approximately $12.1 at September 30, 2017. The loss carryforwards begin to expire in fiscal 2030 for certain state purposes and fiscal 2035 for federal and other states purposes. The contribution carryforwards begin to expire in fiscal 2018. The Company has a valuation allowance of $0.5 as a portion of the contribution carryforward will not be realized prior to its expiration. The Company also has various tax credit carryforwards of approximately $2.5 that begin to expire in 2020. The Company recognizes the tax benefit from a tax position only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company records potential interest and penalties related to its uncertain tax positions as interest expense and other income deductions, respectively. Unrecognized tax benefits are reported as a reduction of a deferred tax asset for an operating loss carryforward. The following table presents a reconciliation of the beginning and ending balances of the Company’s unrecognized tax benefits:
| 2017 |  | 2016 |  | 2015
Unrecognized tax benefits, beginning of year | $ | 10.0 |  |  | $ | 7.1 |  |  | $ | 4.6 |
Increases related to tax positions taken in current year | 2.4 |  |  | 3.4 |  |  | 2.9 |
Reductions due to lapse of applicable statute of limitations | (1.4 | ) |  | (0.5 | ) |  | (0.4 | )
Unrecognized tax benefits, end of year | $ | 11.0 |  |  | $ | 10.0 |  |  | $ | 7.1 |
The amount of unrecognized tax benefits which, if recognized, would affect the Company’s effective tax rate were $5.1 and $3.3 as of September 30, 2017 and 2016, respectively. It is reasonably possible that events will occur in the next 12 months that could increase or decrease the amount of the Company’s unrecognized tax benefits. The Company does not expect that any such change will be significant to the Consolidated Balance Sheets. As of September 30, 2017 and 2016, interest accrued associated with the Company’s uncertain tax positions was de minimis, and no penalties were accrued as of September 30, 2017. The Company is subject to US federal income tax as well as income tax in various state and local jurisdictions. The Company is no longer subject to examination for fiscal years prior to 2014. Regarding the Company’s recent Spire EnergySouth acquisition, tax returns for calendar years 2013 through 2015 remain open and subject to examination by the Internal Revenue Service and state taxing jurisdictions. These returns cover periods during which Spire EnergySouth was owned by Sempra Global. The impact of any adjustments made to these returns by the relevant taxing authorities would be addressed by the indemnification provisions of the stock purchase agreement with Sempra Global. Spire Missouri Spire Missouri’s provision for income taxes charged during the fiscal years ended September 30, 2017, 2016, and 2015 are as follows:
| 2017 |  | 2016 |  | 2015
Federal |  |  |  |  |
Current | $ | — |  |  | $ | — |  |  | $ | (2.1 | )
Deferred | 42.0 |  |  | 37.5 |  |  | 40.9 |
Investment tax credits | (0.2 | ) |  | (0.2 | ) |  | (0.2 | )
State and local |  |  |  |  |
Current | — |  |  | 0.1 |  |  | (0.1 | )
Deferred | 5.7 |  |  | 8.0 |  |  | 4.7 |
Total income tax expense | $ | 47.5 |  |  | $ | 45.4 |  |  | $ | 43.2 |
Spire Missouri’s effective income tax rate varied from the federal statutory income tax rate for each year due to the following:
| 2017 |  | 2016 |  | 2015
Federal income tax statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes, net of federal income tax benefits | 2.8 |  |  | 2.8 |  |  | 2.8 |
Certain expenses capitalized on books and deducted on tax return | (3.5 | ) |  | (4.8 | ) |  | (4.9 | )
Taxes related to prior years | (1.4 | ) |  | (0.2 | ) |  | (0.8 | )
Other items – net * | (3.3 | ) |  | (2.8 | ) |  | (3.0 | )
Effective income tax rate | 29.6 | % |  | 30.0 | % |  | 29.1 | %
* Other consists primarily of property adjustments. Spire Missouri’s significant items comprising the net deferred tax liability reported in the Balance Sheets as of September 30 are as follows:
| 2017 |  | 2016
Deferred tax assets: |  |  |
Reserves not currently deductible | $ | 25.3 |  |  | $ | 14.9 |
Pension and other postretirement benefits | 52.7 |  |  | 56.9 |
Operating losses | 52.0 |  |  | 29.9 |
Deferred tax assets | 130.0 |  |  | 101.7 |
Less: valuation allowance | 0.5 |  |  | 0.9 |
Total deferred tax assets | 129.5 |  |  | 100.8 |
Deferred tax liabilities: |  |  |
Relating to utility property | 563.2 |  |  | 497.0 |
Regulatory pension and other postretirement benefits | 108.0 |  |  | 106.8 |
Deferred gas costs | 25.0 |  |  | 20.0 |
Other | 57.1 |  |  | 33.9 |
Total deferred tax liabilities | 753.3 |  |  | 657.7 |
Net deferred tax liability | $ | 623.8 |  |  | $ | 556.9 |
Spire files a consolidated federal return and various state income tax returns and allocates income taxes to Spire Missouri and its other subsidiaries as if each entity were a separate taxpayer. In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers all significant available positive and negative evidence, including the existence of losses in recent years, the timing of deferred tax liability reversals, projected future taxable income, taxable income in carryback years, and tax planning strategies to assess the need for a valuation allowance. Based upon this evidence, management believes it is more likely than not that Spire Missouri will realize the benefits of these deferred tax assets, except for the contribution carryforward valuation allowance noted below. Spire Missouri has federal and state loss carryforwards of approximately $166.0, at September 30, 2017, based on a separate company basis. For federal tax purposes, these loss carryforwards may be utilized against income from another member of the consolidated group. Spire Missouri also has contribution carryforwards of approximately $11.2 at September 30, 2017. The loss carryforwards begin to expire in fiscal 2035 for federal and state purposes. The contribution carryforwards begin to expire in fiscal 2018. Spire Missouri has a valuation allowance of $0.5 as a portion of the contribution carryforward will not be realized prior to its expiration. Spire Missouri also has approximately $2.0 of various tax credit carryforwards with expiration dates which begin to expire in 2020. Spire Missouri recognizes the tax benefit from a tax position only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Spire Missouri records potential interest and penalties related to its uncertain tax positions as interest expense and other income deductions, respectively. Unrecognized tax benefits are reported as a reduction of a deferred tax asset for an operating loss carryforward. The following table presents a reconciliation of the beginning and ending balances of Spire Missouri unrecognized tax benefits:
| 2017 |  | 2016 |  | 2015
Unrecognized tax benefits, beginning of year | $ | 9.7 |  |  | $ | 6.9 |  |  | $ | 4.2 |
Increases related to tax positions taken in current year | 2.4 |  |  | 3.3 |  |  | 2.9 |
Reductions due to lapse of applicable statute of limitations | (1.4 | ) |  | (0.5 | ) |  | (0.2 | )
Unrecognized tax benefits, end of year | $ | 10.7 |  |  | $ | 9.7 |  |  | $ | 6.9 |
The amount of unrecognized tax benefits, which, if recognized, would affect Spire Missouri’s effective tax rate were $4.8 and $3.1 as of September 30, 2017 and 2016, respectively. It is reasonably possible that events will occur in the next 12 months that could increase or decrease the amount of Spire Missouri’s unrecognized tax benefits. Spire Missouri does not expect that any such change will be significant to Spire Missouri’s Balance Sheets. As of September 30, 2017 and 2016, interest accrued associated with Spire Missouri’s uncertain tax positions was de minimis, and no penalties were accrued. Spire Missouri is subject to US federal income tax as well as income tax in various state and local jurisdictions, and is no longer subject to examination for fiscal years prior to 2014. Spire Alabama Spire Alabama’s provision for income taxes charged during the fiscal years ended September 30, 2017, 2016, and 2015, are as follows:
| 2017 |  | 2016 |  | 2015
Federal |  |  |  |  |
Current | $ | — |  |  | $ | (0.8 | ) |  | $ | — |
Deferred | 31.6 |  |  | 29.4 |  |  | 25.9 |
State and local |  |  |  |  |
Current | — |  |  | — |  |  | 0.1 |
Deferred | 4.2 |  |  | 3.8 |  |  | 3.3 |
Total income tax expense | $ | 35.8 |  |  | $ | 32.4 |  |  | $ | 29.3 |
Spire Alabama’s effective income tax rate varied from the federal statutory income tax rate for each year due to the following:
| 2017 |  | 2016 |  | 2015
Federal income tax statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes, net of federal income tax benefits | 2.8 |  |  | 2.8 |  |  | 2.8 |
Other items – net | 0.3 |  |  | 0.1 |  |  | 0.1 |
Effective income tax rate | 38.1 | % |  | 37.9 | % |  | 37.9 | %
Spire Alabama’s significant items comprising the net deferred tax asset reported in the Balance Sheets as of September 30 are as follows:
| 2017 |  | 2016
Deferred tax assets: |  |  |
Reserves not currently deductible | $ | 6.0 |  |  | $ | 6.3 |
Pension and other postretirement benefits | 4.4 |  |  | 11.4 |
Goodwill | 214.4 |  |  | 233.4 |
Operating losses | 88.3 |  |  | 60.2 |
Total deferred tax assets | 313.1 |  |  | 311.3 |
Deferred tax liabilities: |  |  |
Relating to utility property | 119.3 |  |  | 87.6 |
Other | 8.2 |  |  | 2.3 |
Total deferred tax liabilities | 127.5 |  |  | 89.9 |
Net deferred tax asset | $ | 185.6 |  |  | $ | 221.4 |
Spire files a consolidated federal return and various state income tax returns and allocates income taxes to Spire Alabama and its other subsidiaries as if each entity were a separate taxpayer. In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers all significant available positive and negative evidence, including the existence of losses in recent years, the timing of deferred tax liability reversals, projected future taxable income, taxable income in carryback years, and tax planning strategies to assess the need for a valuation allowance. Based upon this evidence, management believes it is more likely than not that Spire Alabama will realize the benefits of these deferred tax assets. On a separate company basis, Spire Alabama has federal and state loss carryforwards of approximately $233.5, at September 30, 2017 generated since the acquisition. The loss carryforwards begin to expire in fiscal 2030 for state purposes and fiscal 2035 for federal purposes. For federal tax purposes, these loss carryforwards may be utilized against income from another member of the consolidated group. Spire Alabama recognizes the tax benefit from a tax position only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Spire Alabama records potential interest and penalties related to its uncertain tax positions as interest expense and other income deductions, respectively. Spire Alabama has reported no unrecognized tax benefits for fiscal years 2017, 2016, and 2015. Spire Alabama is subject to US federal income tax as well as income tax in various state and local jurisdictions. Spire Alabama’s tax returns for the periods after 2013 remain open and subject to examination by the Internal Revenue Service and state taxing jurisdictions. The returns covering 2014 include the period during which Spire Alabama was owned by Energen. The impact of any adjustments made to those returns by the relevant taxing authorities would be addressed by the indemnification provisions of the stock purchase agreement with Energen.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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