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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense (benefit) from continuing operations for the years ended December 31 was (in thousands):

		2022				2021				2020
Current:
Federal		$	(467	)		$	574			$	(6,020	)
State			80				(666	)			847
Current income tax (benefit)			(387	)			(92	)			(5,173	)
Deferred:
Federal			23,205				2,170				35,672
State			2,387				5,091				2,419
Deferred income tax expense			25,592				7,261				38,091
Income tax expense		$	25,205			$	7,169			$	32,918

Schedule of Effective Income Tax Rate Reconciliation

Effective Tax Rates

The effective tax rate differs from the federal statutory rate for the years ended December 31, as follows:

		2022				2021				2020
Federal statutory rate			21.0	%			21.0	%			21.0	%
State income tax (net of federal tax effect) (a)			0.5				1.2				2.4
Non-controlling interest (b)			(0.9	)			(1.2	)			(1.2	)
Tax credits			(7.7	)			(8.4	)			(9.2	)
Flow-through adjustments (c)			(1.4	)			(3.2	)			(1.6	)
Uncertain Tax Benefits			—				0.3				1.5
Valuation Allowance			—				—				0.7
Other tax differences			(0.1	)			(0.2	)			0.6
Amortization of excess deferred income tax expense (d)			(2.5	)			(3.1	)			(2.3	)
TCJA bill credits (e)			(0.4	)			(3.6	)			—
Effective Tax Rate			8.5	%			2.8	%			11.9	%

(a)The state effective tax rate contains the tax expense attributable to multiple statutory state rate reductions in the Company's state jurisdictions.

(b)The effective tax rate reflects the income attributable to the non-controlling interest in Black Hills Colorado IPP for which a tax provision was not recorded.

(c)Flow-through adjustments related primarily to accounting method changes for tax purposes that allow us to take a current tax deduction for repair costs, certain indirect costs and gain deferral. We recorded a deferred income tax liability in recognition of the temporary difference created between book and tax treatment and flowed the tax benefit through to tax expense. A regulatory asset was established to reflect the recovery of future increases in taxes payable from customers as the temporary differences reverse. As a result of this regulatory treatment, we continue to record tax benefits consistent with the flow-through method.

(d)Primarily TCJA - see above.

(e)Primarily related to one-time bill credits of TCJA benefits which were delivered to Colorado Electric and Nebraska Gas customers in 2021. These bill credits, which resulted in a reduction in revenue, were offset by a reduction in income tax expense and resulted in a minimal impact to Net income for the year ended December 31, 2021.

Schedule of Deferred Tax Assets and Liabilities

The temporary differences, which gave rise to the net deferred tax liability, for the years ended December 31 were as follows (in thousands):

		2022				2021
Deferred tax assets:
Regulatory liabilities		$	74,728			$	77,099
State tax credits			22,817				23,342
Federal NOL			191,992				227,535
State NOL			23,031				33,639
Partnership			12,755				13,395
Credit Carryovers			90,881				68,646
Other deferred tax assets			45,407				31,996
Less: Valuation allowance			(15,476	)			(14,719	)
Total deferred tax assets			446,135				460,933
Deferred tax liabilities:
Accelerated depreciation, amortization and other property-related differences			(645,762	)			(597,284	)
Regulatory assets			(94,433	)			(124,582	)
Goodwill			(57,884	)			(45,471	)
State deferred tax liability			(98,200	)			(109,136	)
Other deferred tax liabilities			(58,797	)			(49,848	)
Total deferred tax liabilities			(955,076	)			(926,321	)
Net deferred tax liability		$	(508,941	)		$	(465,388	)

Summary of Operating Loss and Tax Credit Carryforwards

At December 31, 2022, we have federal NOL and state NOL and tax credit carryforwards that will expire at various dates as follows (in thousands):

		Amounts				Expiration Dates
Federal NOL Carryforward		$	330,085			2023 to 2037
Federal NOL Carryforward		$	584,161			No expiration
State NOL Carryforward (a)		$	408,269			2023 to 2041
State Tax Credit Carryforward		$	22,817			2023 to 2041

(a)The carryforward balance is reflected on the basis of apportioned tax losses to jurisdictions imposing state income taxes.

Summary of Income Tax Contingencies

The following table reconciles the total amounts of unrecognized tax benefits, without interest, at the beginning and end of the period included in Other deferred credits and other liabilities on the accompanying Consolidated Balance Sheets (in thousands):

Changes in Uncertain Tax Positions:		2022				2021				2020
Beginning balance		$	10,554			$	8,383			$	4,165
Additions for prior year tax positions			7				448				3,788
Reductions for prior year tax positions			(773	)			(732	)			(1,313	)
Additions for current year tax positions			2,097				2,455				1,743
Ending balance		$	11,885			$	10,554			$	8,383

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