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Income Tax Expense | 12 Months Ended
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Dec. 31, 2014
Income Tax Expense [Abstract] |
Income Tax Expense [Text Block] | INCOME TAX EXPENSE
Income Tax Expense |  |  |
Year Ended December 31 | 2014 |  | 2013 |  | 2012 |
Millions |  |  |
Current Tax Expense |  |  |
Federal (a) | $1.1 | — |  | — |
State (a) | 2.9 | $0.1 | $0.5
Total Current Tax Expense | 4.0 |  | 0.1 |  | 0.5 |
Deferred Tax Expense |  |  |
Federal | 25.3 |  | 22.9 |  | 37.0 |
State | 8.2 |  | 6.5 |  | 1.4 |
Investment Tax Credit Amortization | (0.8 | ) | (0.8 | ) | (0.9 | )
Total Deferred Tax Expense | 32.7 |  | 28.6 |  | 37.5 |
Total Income Tax Expense |  | $36.7 |  |  | $28.7 |  |  | $38.0 |
(a) | For the years ended December 31, 2014, 2013, and 2012, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012. The federal and state NOLs will be carried forward to offset future taxable income. The year ended 2014 includes the resolution of an IRS examination for the tax years 2005-2009 and the impacts of initiatives implemented on the 2013 federal and state tax returns to utilize tax carryforwards that may have expired.
Reconciliation of Taxes from Federal Statutory |  |  |
Rate to Total Income Tax Expense |  |  |
Year Ended December 31 | 2014 |  | 2013 |  | 2012 |
Millions |  |  |
Income Before Non-Controlling Interest and Income Taxes |  | $162.2 |  |  | $133.4 |  |  | $135.1 |
Statutory Federal Income Tax Rate | 35 | % | 35 | % | 35 | %
Income Taxes Computed at 35 percent Statutory Federal Rate |  | $56.8 |  |  | $46.7 |  |  | $47.3 |
Increase (Decrease) in Tax Due to: |  |  |
State Income Taxes – Net of Federal Income Tax Benefit | 7.2 |  | 4.3 |  | 1.2 |
Regulatory Differences for Utility Plant | (3.5 | ) | (2.2 | ) | (2.2 | )
Production Tax Credits | (23.7 | ) | (19.2 | ) | (7.6 | )
Other | (0.1 | ) | (0.9 | ) | (0.7 | )
Total Income Tax Expense |  | $36.7 |  |  | $28.7 |  |  | $38.0 |
The effective tax rate on income was 22.6 percent for 2014 (21.5 percent for 2013; 28.1 percent for 2012). The 2014, 2013, and 2012 effective rates were primarily impacted by production tax credits and by the deduction for AFUDC-Equity (included in Regulatory Differences for Utility Plant, above). NOTE 15. INCOME TAX EXPENSE (Continued)
Deferred Tax Assets and Liabilities |  |
As of December 31 | 2014 |  | 2013 |
Millions |  |
Deferred Tax Assets |  |
Employee Benefits and Compensation |  | $102.2 |  |  | $66.3 |
Property Related | 102.7 |  | 82.2 |
NOL Carryforwards | 156.5 |  | 112.8 |
Tax Credit Carryforwards | 95.7 |  | 55.1 |
Power Purchase Agreements | 51.8 |  | — |
Other | 17.0 |  | 16.9 |
Gross Deferred Tax Assets | 525.9 |  | 333.3 |
Deferred Tax Asset Valuation Allowance | (22.1 | ) | (8.0 | )
Total Deferred Tax Assets |  | $503.8 |  |  | $325.3 |
Deferred Tax Liabilities |  |
Property Related |  | $848.8 |  |  | $656.2 |
Regulatory Asset for Benefit Obligations | 89.9 |  | 58.7 |
Unamortized Investment Tax Credits | 10.3 |  | 11.1 |
Partnership Basis Differences | 41.9 |  | 36.7 |
Other | 16.1 |  | 22.7 |
Total Deferred Tax Liabilities |  | $1,007.0 |  |  | $785.4 |
Net Deferred Income Taxes |  | $503.2 |  |  | $460.1 |
Recorded as: |  |
Net Current Deferred Tax Assets |  | $7.5 |  | $19.0
Net Long-Term Deferred Tax Liabilities | 510.7 |  | 479.1 |
Net Deferred Income Taxes |  | $503.2 |  |  | $460.1 |
NOL and Tax Credit Carryforwards |  |
As of December 31 | 2014 | 2013 |
Millions |  |
Federal NOL Carryforwards (a) | $413.7 |  | $279.8 |
Federal Tax Credit Carryforwards | $59.3 | $35.5
State NOL Carryforwards (a) | $184.7 | $156.3
State Tax Credit Carryforwards (b) | $14.7 | $11.9
(a) | Pretax amounts.
(b) | Net of a $21.7 million valuation allowance as of December 31, 2014 ($7.7 million as of December 31, 2013).
The federal NOL and tax credit carryforward periods expire between 2030 and 2035. We expect to fully utilize the federal NOL and federal tax credit carryforwards; therefore no federal valuation allowance has been recognized as of December 31, 2014. The state NOL and tax credit carryforward periods expire between 2025 and 2035. We have established a valuation allowance against certain state NOL and tax credits that we do not expect to utilize before their expiration. NOTE 15. INCOME TAX EXPENSE (Continued)
Gross Unrecognized Income Tax Benefits | 2014 |  | 2013 |  | 2012 |
Millions |  |  |
Balance at January 1 |  | $1.2 |  |  | $2.7 |  |  | $11.4 |
Additions for Tax Positions Related to the Current Year | — |  | 0.1 |  | — |
Additions for Tax Positions Related to Prior Years | 1.0 |  | 1.3 |  | — |
Reductions for Tax Positions Related to Prior Years | — |  | — |  | (8.7 | )
Reductions for Settlements | — |  | (2.9 | ) | — |
Lapse of Statute | (0.2 | ) | — |  | — |
Balance as of December 31 |  | $2.0 |  |  | $1.2 |  |  | $2.7 |
Unrecognized tax benefits are the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the “more-likely-than-not” criteria. The unrecognized tax benefit balance includes permanent tax positions which, if recognized would affect the annual effective income tax rate. In addition, the unrecognized tax benefit balance includes temporary tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The gross unrecognized tax benefits as of December 31, 2014, include $0.4 million of net unrecognized tax benefits which, if recognized, would affect the annual effective income tax rate. The decrease in the unrecognized tax benefit balance of $2.9 million in 2013 was due to the removal of our uncertain tax positions for positions effectively settled with the IRS for tax years 2005 through 2009. The decrease in the unrecognized tax benefit balance of $8.7 million in 2012 was due to the removal of our uncertain tax position for our tax accounting method change for deductible repairs. During 2012, the IRS issued a directive from its Large Business and International Division to its local examination teams that led to the removal of the repairs uncertain tax position in 2012. As of December 31, 2014, we had no accrued interest ($0.5 million for 2013 and $0.5 million for 2012) related to unrecognized tax benefits included on our Consolidated Balance Sheet due to our NOL carryforwards. We classify interest related to unrecognized tax benefits as interest expense and tax-related penalties in operating expenses on our Consolidated Statement of Income. In 2014, we recognized a decrease in interest expense of $0.5 million related to unrecognized tax benefits on our Consolidated Statement of Income (zero for 2013 and decrease of $0.6 million for 2012). There were no penalties recognized in 2014, 2013 or 2012. The unrecognized tax benefit amounts have been presented as reductions to the tax benefits associated with NOL and tax credit carryforwards on our Consolidated Balance Sheet. ALLETE and its subsidiaries file a consolidated federal income tax return as well as combined and separate state income tax returns in various jurisdictions. ALLETE has settled with the IRS for the audit of tax years 2005 through 2009. ALLETE is no longer subject to federal examination for years before 2011, or state examination for years before 2010. During the next 12 months it is reasonably possible the amount of unrecognized tax benefits could be reduced by $0.1 million due to the expiration of the statute of limitations. This amount is primarily due to temporary tax positions. In September 2013, the U.S. Treasury issued final regulations addressing the tax consequences associated with the acquisition, production and improvement of tangible property. The regulations are generally effective for tax years beginning January 1, 2014. As ALLETE is adopting certain utility-specific guidance for deductible repairs previously issued by the IRS, the issuance will not have a material impact on our consolidated financial statements.

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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 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 5: 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 6: 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 + Details
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