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Income Tax Expense (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Expense [Abstract]

Income Tax Expense [Table Text Block]

Income Tax Expense
Year Ended December 31	2012			2011			2010
Millions
Current Tax Expense (Benefit)
Federal (a)	—			$1.4			$(23.0)
State (a)	$0.5			(1.6		)	1.3
Total Current Tax Expense (Benefit)	0.5			(0.2		)	(21.7		)
Deferred Tax Expense
Federal (b)	38.1			27.3			61.4
State (b)	(1.7		)	9.5			5.3
Change in Valuation Allowance (c)	2.0			(0.1		)	0.2
Investment Tax Credit Amortization	(0.9		)	(0.9		)	(0.9		)
Total Deferred Tax Expense	37.5			35.8			66.0
Total Income Tax Expense		$38.0			$35.6			$44.3

(a) For the years ended December 31, 2012 and 2011, the federal and state current tax expense (benefit) was due to NOLs which resulted primarily from the bonus depreciation provision of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The 2012 and 2011 federal and state NOLs will be carried forward to offset future taxable income. For the year ended December 31, 2010, a federal current tax benefit was recorded 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.

(b) For the year ended December 31, 2012, the state deferred tax benefit of $1.7 million is due to state renewable tax credits earned which will be carried forward to offset future state income tax expense. The year ended December 31, 2011, included an income tax 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 and a 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 the PPACA. Included in the year ended December 31, 2010, was a charge of $4.0 million as a result of the PPACA. (See Note 5. Regulatory Matters.)

(c) For the year ending December 31, 2012, the change in the valuation allowance is due to state renewable tax credits earned in 2012 which are not expected to be utilized within their allowable tax carryforward period.

Reconciliation of Taxes from Federal Statutory Rate to Total Income Tax Expense [Table Text Block]

Reconciliation of Taxes from Federal Statutory
Rate to Total Income Tax Expense
Year Ended December 31	2012			2011			2010
Millions
Income Before Non-Controlling Interest and Income Taxes		$135.1			$129.2			$119.1
Statutory Federal Income Tax Rate	35		%	35		%	35		%
Income Taxes Computed at 35 percent Statutory Federal Rate		$47.3			$45.2			$41.7
Increase (Decrease) in Tax Due to:
State Income Taxes – Net of Federal Income Tax Benefit	1.2			6.0			4.5
Impact of the PPACA	—			—			4.0
Deferred Accounting for Retail Portion of the PPACA	—			(2.9		)	—
2010 Rate Case Stipulation Agreement - Deferred Tax Reversal	—			(6.2		)	—
Regulatory Differences for Utility Plant	(2.2		)	(1.2		)	(2.0		)
Production Tax Credits	(7.6		)	(4.3		)	(1.6		)
Other	(0.7		)	(1.0		)	(2.3		)
Total Income Tax Expense		$38.0			$35.6			$44.3

Deferred Tax Assets and Liabilities [Table Text Block]

Deferred Tax Assets and Liabilities
As of December 31	2012			2011
Millions
Deferred Tax Assets
Employee Benefits and Compensation		$120.2			$132.7
Property Related	59.8			56.4
NOL Carryforwards	90.8			61.7
Tax Credit Carryforwards	28.3			12.2
Other	24.6			20.4
Gross Deferred Tax Assets	323.7			283.4
Deferred Tax Asset Valuation Allowance	(2.4		)	(0.4		)
Total Deferred Tax Assets		$321.3			$283.0
Deferred Tax Liabilities
Property Related		$577.1			$482.7
Regulatory Asset for Benefit Obligations	104.3			117.9
Unamortized Investment Tax Credits	11.9			12.8
Partnership Basis Differences	28.6			24.4
Other	30.1			24.0
Total Deferred Tax Liabilities		$752.0			$661.8
Net Deferred Income Taxes		$430.7			$378.8
Recorded as:
Net Current Deferred Tax Liabilities (a)		$6.9			$5.2
Net Long-Term Deferred Tax Liabilities	423.8			373.6
Net Deferred Income Taxes		$430.7			$378.8

(a) Included in Other Current Liabilities.

NOL and Tax Credit Carryforwards [Table Text Block]

NOL and Tax Credit Carryforwards
Year Ended December 31	2012			2011
Millions
Federal NOL carryforwards (a)		$244.1			$162.0
Federal tax credit carryforwards	$16.0			$8.4
State NOL carryforwards (a) (b)	$90.6			$73.1
State tax credit carryforwards (c)	$10.3			$3.8

(a) Pretax amounts

(b) Net of $0.4 million valuation allowance.

(c) Net of $2.0 million valuation allowance.

Gross Unrecognized Income Tax Benefits [Table Text Block]

Gross Unrecognized Income Tax Benefits	2012			2011			2010
Millions
Balance at January 1		$11.4			$12.3			$9.5
Reductions for Tax Positions Related to the Current Year	—			—			(0.2		)
Additions for Tax Positions Related to Prior Years	—			—			4.4
Reductions for Tax Positions Related to Prior Years	(8.7		)	(0.9		)	—
Reductions for Settlements	—			—			(0.3		)
Reductions for Expired Statute of Limitations	—			—			(1.1		)
Balance as of December 31		$2.7			$11.4			$12.3

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Summary of Operating Loss and Tax Credit Carryforwards [Table Text Block] [Table Text Block]

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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-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.

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