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Income Tax Expense | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Tax Expense [Text Block] | INCOME TAX EXPENSE
Income Tax Expense |  |  |
Year Ended December 31 | 2018 |  | 2017 |  | 2016 |
Millions |  |  |
Current Income Tax Expense (a) |  |  |
Federal | — |  | — |  | — |
State | $0.3 | $0.3 | $0.4
Total Current Income Tax Expense |  | $0.3 |  |  | $0.3 |  |  | $0.4 |
Deferred Income Tax Expense (Benefit) |  |  |
Federal (b) | $(26.2) |  | $12.1 |  |  | $12.0 |
Federal – Remeasurement of Deferred Income Taxes (c) | — |  | (13.0 | ) | — |
State | 11.0 |  | 15.8 |  | 8.1 |
Investment Tax Credit Amortization | (0.6 | ) | (0.5 | ) | (0.7 | )
Total Deferred Income Tax Expense (Benefit) | $(15.8) |  | $14.4 |  |  | $19.4 |
Total Income Tax Expense (Benefit) | $(15.5) |  | $14.7 |  |  | $19.8 |
(a) | For the years ended December 31, 2018, 2017 and 2016, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of the Protecting Americans from Tax Hikes Act of 2015, the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012. Federal and state NOLs are being carried forward to offset current and future taxable income.
(b) | For the year ended December 31, 2018, the federal tax benefit is primarily due to production tax credits, and the reduction of the federal statutory tax rate from 35 percent to 21 percent enacted as part of the TCJA.
(c) | For the year ended December 31, 2017, the federal deferred income tax benefit is due to the remeasurement of deferred income tax assets and liabilities resulting from the TCJA.
NOTE 13. INCOME TAX EXPENSE (Continued).
Reconciliation of Taxes from Federal Statutory |  |  |
Rate to Total Income Tax Expense |  |  |
Year Ended December 31 | 2018 |  | 2017 |  | 2016 |
Millions |  |  |
Income Before Non-Controlling Interest and Income Taxes |  | $158.6 |  |  | $186.9 |  |  | $175.6 |
Statutory Federal Income Tax Rate | 21 | % | 35 | % | 35 | %
Income Taxes Computed at Statutory Federal Rate |  | $33.3 |  |  | $65.4 |  |  | $61.5 |
Increase (Decrease) in Tax Due to: |  |  |
State Income Taxes – Net of Federal Income Tax Benefit | 8.9 |  | 10.5 |  | 5.6 |
Production Tax Credits | (45.0 | ) | (45.1 | ) | (41.5 | )
Regulatory Differences – Excess Deferred Tax Benefit (a) | (8.2 | ) | 1.2 |  | 1.4 |
Change in Fair Value of Contingent Consideration | (0.4 | ) | — |  | (3.8 | )
Remeasurement of Deferred Income Taxes (b) | — |  | (13.0 | ) | — |
Other | (4.1 | ) | (4.3 | ) | (3.4 | )
Total Income Tax Expense (Benefit) | $(15.5) |  | $14.7 |  |  | $19.8 |
(a) | Excess deferred income taxes are being returned to customers under both the Average Rate Assumption Method and amortization periods as approved by regulators. (See Note 4. Regulatory Matters.)
(b) | Deferred income tax benefit from the remeasurement of deferred income tax assets and liabilities resulting from the TCJA.
The effective tax rate was a benefit of 9.8 percent for 2018 (expense of 7.9 percent for 2017; expense of 11.3 percent for 2016). The 2018 effective tax rate was primarily impacted by production tax credits, and the reduction of the federal income tax rate from 35 percent to 21 percent enacted as part of the TCJA. The 2017 effective tax rate was primarily impacted by production tax credits and the remeasurement of deferred income tax assets and liabilities resulting from the TCJA. The 2016 effective tax rate was primarily impacted by production tax credits.
Deferred Income Tax Assets and Liabilities |  |
As of December 31 | 2018 |  | 2017 |
Millions |  |
Deferred Income Tax Assets |  |
Employee Benefits and Compensation |  | $62.2 |  |  | $65.9 |
Property-Related | 95.2 |  | 104.3 |
NOL Carryforwards | 86.1 |  | 99.1 |
Tax Credit Carryforwards | 349.8 |  | 294.3 |
Power Sales Agreements | 27.5 |  | 35.0 |
Regulatory Liabilities | 113.4 |  | 117.7 |
Other | 25.1 |  | 33.3 |
Gross Deferred Income Tax Assets | 759.3 |  | 749.6 |
Deferred Income Tax Asset Valuation Allowance | (66.5 | ) | (60.0 | )
Total Deferred Income Tax Assets |  | $692.8 |  |  | $689.6 |
Deferred Income Tax Liabilities |  |
Property-Related |  | $752.5 |  |  | $758.3 |
Regulatory Asset for Benefit Obligations | 61.0 |  | 61.4 |
Unamortized Investment Tax Credits | 32.2 |  | 32.8 |
Partnership Basis Differences | 40.8 |  | 34.9 |
Regulatory Assets | 29.9 |  | 32.0 |
Other | — |  | 0.7 |
Total Deferred Income Tax Liabilities |  | $916.4 |  |  | $920.1 |
Net Deferred Income Taxes (a) |  | $223.6 |  |  | $230.5 |
(a) | Recorded as a net long-term Deferred Income Tax liability on the Consolidated Balance Sheet
NOTE 13. INCOME TAX EXPENSE (Continued).
NOL and Tax Credit Carryforwards |  |
As of December 31 | 2018 | 2017 |
Millions |  |
Federal NOL Carryforwards (a) | $319.0 |  | $375.2 |
Federal Tax Credit Carryforwards | $256.4 | $209.2
State NOL Carryforwards (a) | $305.8 | $289.9
State Tax Credit Carryforwards (b) | $27.4 | $25.6
(a) | Pre-tax amounts.
(b) | Net of a $66.0 million valuation allowance as of December 31, 2018 ($59.5 million as of December 31, 2017).
The federal NOL and tax credit carryforward periods expire between 2031 and 2038. 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, 2018. The state NOL and tax credit carryforward periods expire between 2024 and 2045. We have established a valuation allowance against certain state NOL and tax credits that we do not expect to utilize before their expiration. We do not expect a material impact on the Company’s ability to utilize its federal and state NOL and tax credit carryforwards due to the TCJA.
Gross Unrecognized Income Tax Benefits | 2018 |  | 2017 |  | 2016 |
Millions |  |  |
Balance at January 1 |  | $1.7 |  |  | $2.0 |  |  | $2.4 |
Additions for Tax Positions Related to the Current Year | 0.1 |  | 0.1 |  | 0.1 |
Additions for Tax Positions Related to Prior Years | 0.1 |  | 0.1 |  | 0.2 |
Reductions for Tax Positions Related to Prior Years | (0.2 | ) | (0.1 | ) | (0.3 | )
Lapse of Statute | (0.1 | ) | (0.4 | ) | (0.4 | )
Balance as of December 31 |  | $1.6 |  |  | $1.7 |  |  | $2.0 |
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, 2018, included $0.9 million of net unrecognized tax benefits which, if recognized, would affect the annual effective income tax rate. As of December 31, 2018, we had no accrued interest (none as of December 31, 2017, and 2016) related to unrecognized tax benefits included on the 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 the Consolidated Statement of Income. Interest expense related to unrecognized tax benefits on the Consolidated Statement of Income was immaterial in 2018 (immaterial in 2017, and in 2016). There were no penalties recognized in 2018, 2017 or 2016. The unrecognized tax benefit amounts have been presented as reductions to the tax benefits associated with NOL and tax credit carryforwards on the Consolidated Balance Sheet. No material changes to unrecognized tax benefits are expected during the next 12 months. 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 no open federal or state audits, and is no longer subject to federal examination for years before 2015 or state examination for years before 2014.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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