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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | (15) INCOME TAXES IRS Revenue Procedure 2023-15 On April 14, 2023, the IRS released Revenue Procedure 2023-15 “Amounts paid to improve tangible property.” The Revenue Procedure provides a safe harbor method of accounting that taxpayers may use to determine whether costs to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized. The revenue procedure may be adopted in tax years ending after May 1, 2023. We are currently assessing the Revenue Procedure to determine its impact on our tax repairs deduction. Income Tax Expense (Benefit) Income tax expense (benefit) from continuing operations for the years ended December 31 was (in millions):
| 2023 |  | 2022 |  | 2021 |
Current: |  |  |  |  |  |
Federal | $ | (0.8 | ) | $ | (0.5 | ) | $ | 0.6 |
State |  | 1.0 |  |  | 0.1 |  |  | (0.7 | )
Current income tax (benefit) |  | 0.2 |  |  | (0.4 | ) |  | (0.1 | )
Deferred: |  |  |  |  |  |
Federal |  | 30.9 |  |  | 23.2 |  |  | 2.2 |
State |  | (5.5 | ) |  | 2.4 |  |  | 5.1 |
Deferred income tax expense |  | 25.4 |  |  | 25.6 |  |  | 7.3 |
Income tax expense | $ | 25.6 |  | $ | 25.2 |  | $ | 7.2 |
Effective Tax Rates The effective tax rate differs from the federal statutory rate for the years ended December 31, as follows:
| 2023 |  | 2022 |  | 2021 |
Federal statutory rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income tax (net of federal tax effect) (a) |  | (0.8 | ) |  | 0.5 |  |  | 1.2 |
Non-controlling interest (b) |  | (1.0 | ) |  | (0.9 | ) |  | (1.2 | )
Tax credits |  | (6.2 | ) |  | (7.7 | ) |  | (8.4 | )
Flow-through adjustments (c) |  | (1.7 | ) |  | (1.4 | ) |  | (3.2 | )
Amortization of excess deferred income taxes (d) |  | (3.0 | ) |  | (2.5 | ) |  | (3.1 | )
TCJA bill credits (e) |  | — |  |  | (0.4 | ) |  | (3.6 | )
Other |  | 0.2 |  |  | (0.1 | ) |  | 0.1 |
Effective Tax Rate |  | 8.5 | % |  | 8.5 | % |  | 2.8 | %
(a) The state effective tax rate contains the tax expense attributable to multiple statutory state rate changes in the Company's state jurisdictions. For the year ended December 31, 2023, we recognized an $8.2 million tax benefit from a Nebraska income tax rate decrease. (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 and certain indirect costs. 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 Note 2 for additional information. (e) Primarily related to one-time bill credits of TCJA benefits 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. 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 millions):
| 2023 |  | 2022 |
Deferred tax assets: |  |  |  |
Regulatory liabilities | $ | 74.0 |  | $ | 74.7 |
State tax credits |  | 22.8 |  |  | 22.8 |
Federal NOL |  | 146.6 |  |  | 192.0 |
State NOL |  | 16.5 |  |  | 23.0 |
Partnership |  | 12.2 |  |  | 12.8 |
Credit Carryovers |  | 110.1 |  |  | 90.9 |
Other deferred tax assets |  | 33.7 |  |  | 45.4 |
Less: Valuation allowance |  | (15.4 | ) |  | (15.5 | )
Total deferred tax assets |  | 400.5 |  |  | 446.1 |
Deferred tax liabilities: |  |  |  |
Accelerated depreciation, amortization and other property-related differences |  | (686.2 | ) |  | (645.7 | )
Regulatory assets |  | (65.6 | ) |  | (94.4 | )
Goodwill |  | (67.8 | ) |  | (57.9 | )
State deferred tax liability |  | (84.5 | ) |  | (98.2 | )
Other deferred tax liabilities |  | (44.4 | ) |  | (58.8 | )
Total deferred tax liabilities |  | (948.5 | ) |  | (955.0 | )
Net deferred tax liability | $ | (548.0 | ) | $ | (508.9 | )
Net Operating Loss and Tax Credit Carryforwards At December 31, 2023, we have federal NOL and state NOL and tax credit carryforwards that will expire at various dates as follows (in millions):
| Amounts |  | Expiration Dates
Federal NOL Carryforward | $ | 111.0 |  | 2036-2037
Federal NOL Carryforward | $ | 587.3 |  | No expiration
Federal Tax Credit Carryforward | $ | 110.1 |  | 2028-2043
State NOL Carryforward (a) | $ | 325.3 |  | 2024-2042
State Tax Credit Carryforward | $ | 22.8 |  | 2024-2038
(a) The carryforward balance is reflected on the basis of apportioned tax losses to jurisdictions imposing state income taxes. As of December 31, 2023, we h ad a $1.0 million valuat ion allowance against the state NOL carryforwards. Our 2023 analysis of the ability to utilize such NOLs resulte d in no increa se in the valuation allowance. If the valuation allowance is adjusted due to higher or lower than anticipated utilization of the NOLs, the offsetting amount will affect tax expense. As of December 31, 2023, we had a $14.4 million valuation allowance against the state ITC carryforwards. Our 2023 analysis of the ability to utilize such ITC resulted in a slight decrease in the valuation allowance. Unrecognized Tax Benefits 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 millions):
Changes in Uncertain Tax Positions: | 2023 |  | 2022 |  | 2021 |
Beginning balance | $ | 11.9 |  | $ | 10.6 |  | $ | 8.4 |
Additions for prior year tax positions |  | — |  |  | — |  |  | 0.5 |
Reductions for prior year tax positions |  | (0.3 | ) |  | (0.8 | ) |  | (0.7 | )
Additions for current year tax positions |  | 2.1 |  |  | 2.1 |  |  | 2.4 |
Ending balance | $ | 13.7 |  | $ | 11.9 |  | $ | 10.6 |
The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is approximately $6.5 million. We recognized no interest expense associated with income taxes for the years ended December 31, 2023, 2022 and 2021. We had no accrued interest (before tax effect) associated with income taxes at December 31, 2023 and 2022. As of December 31, 2023, we do not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease on or before December 31, 2024.

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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/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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