XML 126 R20.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Income Tax Expense | 12 Months Ended
--- | ---
Dec. 31, 2011
Income Tax Disclosure [Abstract] |
Income Tax Expense [Text Block] | Income Tax Expense
Income Tax Expense |  |  |
Year Ended December 31 | 2011 | 2010 | 2009
Millions |  |  |
Current Tax Expense (Benefit) |  |  |
Federal (a) |  | $1.4 |  | $(23.0) | $(42.6)
State (a) | (1.6 | ) | 1.3 |  | (1.8 | )
Total Current Tax Expense (Benefit) | (0.2 | ) | (21.7 | ) | (44.4 | )
Deferred Tax Expense |  |  |
Federal (b) | 27.3 |  | 61.4 |  | 66.0 |
State (b) | 9.5 |  | 5.3 |  | 10.3 |
Change in Valuation Allowance | (0.1 | ) | 0.2 |  | (0.1 | )
Investment Tax Credit Amortization | (0.9 | ) | (0.9 | ) | (1.0 | )
Total Deferred Tax Expense | 35.8 |  | 66.0 |  | 75.2 |
Total Income Tax Expense |  | $35.6 |  |  | $44.3 |  |  | $30.8 |
(a) | For the year ended December 31, 2011, the federal and state current tax expense (benefit) of $1.4 million and $(1.6) million, respectively, was due to an NOL which resulted primarily from the bonus depreciation provision of the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010. The 2011 federal and state NOLs will be carried forward to offset future taxable income. For the year ended December 31, 2010, we recorded a federal current tax benefit as a result of tax planning initiatives and the bonus depreciation provision in the Small Business Jobs Act of 2010. The 2010 federal NOL was partially utilized by carrying it back against prior years' income with the remainder carried forward to offset future years' income. The 2009 federal current tax benefit was primarily due to the bonus depreciation provision of the American Recovery and Reinvestment Act of 2009.
(b) | The year ended December 31, 2011, included an income tax benefit of $2.9 million related to the MPUC approval of our request to defer the retail portion of the tax charge taken in 2010 as a result of PPACA and a benefit for the reversal of a $6.2 million deferred tax liability related to a revenue receivable that Minnesota Power agreed to forgo as part of a stipulation and settlement agreement in its 2010 rate case. Included in the year ended December 31, 2010, was a charge of $4.0 million as a result of PPACA. (See Note 5. Regulatory Matters.)
Reconciliation of Taxes from Federal Statutory |  |  |
Rate to Total Income Tax Expense |  |  |
Year Ended December 31 | 2011 | 2010 | 2009
Millions |  |  |
Income Before Non-Controlling Interest and Income Taxes |  | $129.2 |  |  | $119.1 |  |  | $91.5 |
Statutory Federal Income Tax Rate | 35 | % | 35 | % | 35 | %
Income Taxes Computed at 35 percent Statutory Federal Rate |  | $45.2 |  |  | $41.7 |  |  | $32.0 |
Increase (Decrease) in Tax Due to: |  |  |
State Income Taxes – Net of Federal Income Tax Benefit | 6.0 |  | 4.5 |  | 5.4 |
Impact of PPACA | — |  | 4.0 |  | — |
Deferred Accounting for Retail Portion of PPACA | (2.9 | ) | — |  | — |
2010 Rate Case Stipulation Agreement - Deferred Tax Reversal | (6.2 | ) | — |  | — |
Regulatory Differences for Utility Plant | (1.2 | ) | (2.0 | ) | (2.5 | )
Production Tax Credits | (4.3 | ) | (1.6 | ) | (1.2 | )
Other | (1.0 | ) | (2.3 | ) | (2.9 | )
Total Income Tax Expense |  | $35.6 |  |  | $44.3 |  |  | $30.8 |
Note 14. | Income Tax Expense (Continued)
The effective tax rate on income was 27.6 percent for 2011 (37.2 percent for 2010; 33.7 percent for 2009). The 2011 effective tax rate was primarily impacted by deductions for AFUDC-Equity (included in Regulatory Differences for Utility Plant, above), renewable tax credits, the MPUC's approval of our request to defer the retail portion of the tax charge taken in 2010 as a result of PPACA, and the reversal of a deferred tax liability related to a revenue receivable that Minnesota Power agreed to forgo as part of a stipulation and settlement agreement in its 2010 rate case. The 2010 effective tax rate was primarily impacted by deductions for AFUDC-Equity (included in Regulatory Differences for Utility Plant, above), renewable tax credits and the impact of PPACA eliminating the tax deduction for expenses that are reimbursed under Medicare Part D. The 2009 effective tax rate was impacted by deductions for AFUDC-Equity (included in Regulatory Differences for Utility Plant, above) and wind production tax credits.
Deferred Tax Assets and Liabilities |  |
As of December 31 | 2011 | 2010
Millions |  |
Deferred Tax Assets |  |
Employee Benefits and Compensation |  | $132.7 |  |  | $121.8 |
Property Related | 56.4 |  | 51.1 |
NOL and Tax Credit Carryforward | 78.1 |  | 28.2 |
Investment Tax Credits | 9.0 |  | 9.7 |
Other | 7.2 |  | 12.7 |
Gross Deferred Tax Assets | 283.4 |  | 223.5 |
Deferred Tax Asset Valuation Allowance | (0.4 | ) | (0.5 | )
Total Deferred Tax Assets |  | $283.0 |  |  | $223.0 |
Deferred Tax Liabilities |  |
Property Related |  | $482.7 |  |  | $387.2 |
Regulatory Asset for Benefit Obligations | 117.9 |  | 105.8 |
Unamortized Investment Tax Credits | 12.8 |  | 13.7 |
Partnership Basis Differences | 24.4 |  | 19.4 |
Other | 24.0 |  | 27.3 |
Total Deferred Tax Liabilities |  | $661.8 |  |  | $553.4 |
Net Deferred Income Taxes |  | $378.8 |  |  | $330.4 |
Recorded as: |  |
Net Current Deferred Tax Liabilities (a) |  | $5.2 |  |  | $5.2 |
Net Long-Term Deferred Tax Liabilities | 373.6 |  | 325.2 |
Net Deferred Income Taxes |  | $378.8 |  |  | $330.4 |
(a) | Included in Other Current Liabilities.
NOL and Tax Credit Carryforwards |  |
Year Ended December 31 | 2011 | 2010
Millions |  |
Federal NOL carryforward (a) |  | $162.0 |  |  | $62.0 |
Federal tax credit carryforwards | 8.4 |  | 3.7 |
State NOL carryforwards (a, b) | 73.1 |  | 71.7 |
State tax credit carryforwards, net of federal offset | 3.8 |  | 1.7 |
(a) | Pretax amounts
(b) | State NOL carryforwards include Minnesota, North Dakota and Florida.
In 2011, we generated federal and various state NOLs and tax credit carryforwards primarily due to the bonus depreciation provisions of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. The 2011 federal NOL will be utilized by carrying it forward to offset future years' income. We expect to fully utilize the federal NOL and tax credit carryforwards; therefore a deferred tax asset has been recorded to recognize the resulting tax benefit.
Note 14. | Income Tax Expense (Continued)
The state NOLs and tax credits will be carried forward to future tax years. We have established a valuation allowance against certain state NOL and tax credits that we do not expect to utilize before their expiration. The federal NOL and tax credit carryforward periods expire between 2019 and 2031; included in the federal NOL carryforward is $3.0 million of charitable contributions carryforward which expire between 2014 and 2015. The state NOL and tax credit carryforward periods expire between 2024 and 2031; included in the state NOL carryforwards is $2.8 million of charitable contributions carryforward which expires between 2014 and 2015.
Gross Unrecognized Income Tax Benefits | 2011 | 2010 | 2009
Millions |  |  |
Balance at January 1 |  | $12.3 |  |  | $9.5 |  |  | $8.0 |
Additions for Tax Positions Related to the Current Year | — |  | — |  | 0.5 |
Reductions for Tax Positions Related to the Current Year | — |  | (0.2 | ) | — |
Additions for Tax Positions Related to Prior Years | — |  | 4.4 |  | 1.0 |
Reductions for Tax Positions Related to Prior Years | (0.9 | ) | — |  | — |
Settlements | — |  | (0.3 | ) | — |
Lapse of Statute | — |  | (1.1 | ) | — |
Balance as of December 31 |  | $11.4 |  |  | $12.3 |  |  | $9.5 |
The gross unrecognized tax benefits as of December 31, 2011, includes $0.6 million of net unrecognized tax benefits that, if recognized, would affect the annual effective income tax rate. As of December 31, 2011, we had $1.1 million ($0.7 million for 2010 and $0.9 million for 2009) of accrued interest related to unrecognized tax benefits included in the consolidated balance sheet. We classify interest related to unrecognized tax benefits as interest expense and tax-related penalties in operating expenses in the consolidated statement of income. In 2011, we recognized interest expense of $0.4 million (interest reduction of $0.2 million for 2010 and interest expense of $0.4 million for 2009). There were no penalties recognized for 2011, 2010 or 2009. We file a consolidated federal income tax return in the U.S. and state income tax returns in various jurisdictions. ALLETE is currently under examination by the IRS for the tax years 2005 through 2009. ALLETE is no longer subject to federal or state examination for years before 2005. During the next 12 months it is reasonably possible the amount of unrecognized tax benefits could be reduced by $5.0 million due to statute expirations and anticipated audit settlements. This amount is primarily due to timing issues.

X
- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration