XML 49 R21.htm IDEA: XBRL DOCUMENT
v3.22.4

Income Tax Expense | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Tax Expense [Text Block] | INCOME TAX EXPENSE
Income Tax Expense |  |  |
Year Ended December 31 | 2022 | 2021 | 2020
Millions |  |  |
Current Income Tax Expense (a) |  |  |
Federal | $1.2 |  | — |  | — |
State | 6.1 |  | — |  | — |
Total Current Income Tax Expense | $7.3 |  | — |  | — |
Deferred Income Tax Expense (Benefit) |  |  |
Federal (b) | $(32.8) | $(37.2) | $(51.5)
State (c) | (5.2) |  | 10.8 |  | 8.6 |
Investment Tax Credit Amortization | (0.5) | (0.5) | (0.5)
Total Deferred Income Tax Expense (Benefit) | $(38.5) | $(26.9) | $(43.4)
Total Income Tax Expense (Benefit) | $(31.2) | $(26.9) | $(43.4)
(a)For the years ended December 31, 2021 and 2020, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of certain tax legislation. Federal and state NOLs are being carried forward to offset current and future taxable income. For the year ended December 31, 2022, federal NOLs were fully utilized and production tax credits were used to partially offset federal taxable income. (b)For the years ended December 31, 2022, 2021 and 2020, the federal tax benefit is primarily due to production tax credits. (c)For the year ended December 31, 2022, the state impact includes the benefit of deferred repricing as a result of the New Energy acquisition. NOTE 11. INCOME TAX EXPENSE (Continued)
Reconciliation of Taxes from Federal Statutory |  |  |  |
Rate to Total Income Tax Expense |  |  |  |
Year Ended December 31 | 2022 | 2021 | 2020 |
Millions |  |  |  |
Income Before Non-Controlling Interest and Income Taxes | $100.1 |  | $110.9 |  | $109.4 |  |
Statutory Federal Income Tax Rate | 21 | % | 21 | % | 21 | % |
Income Taxes Computed at Statutory Federal Rate | $21.0 |  | $23.3 |  | $23.0 |  |
Increase (Decrease) in Tax Due to: |  |  |  |
State Income Taxes | 8.6 |  | 8.6 |  | 6.5 |  |
Deferred Income Tax Revaluation | (7.9) |  | — |  | — |  |
Production Tax Credits | (50.7) |  | (53.5) |  | (62.7) |  |
Investment Tax Credits | (4.1) |  | — |  | — |  |
Regulatory Differences – Excess Deferred Tax Benefit (a) | (9.1) |  | (9.5) |  | (9.9) |  |
Non-Controlling Interest | 11.2 |  | 6.3 |  | 2.7 |  |
AFUDC - Equity | (1.1) |  | (1.0) |  | (0.8) |  |
Other | 0.9 |  | (1.1) |  | (2.2) |  |
Total Income Tax Benefit | $(31.2) | $(26.9) | $(43.4) |
(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.) The effective tax rate was a benefit of 31.2 percent for 2022 (benefit of 24.3 percent for 2021; benefit of 39.7 percent for 2020). The 2022 and 2021 effective tax rates were primarily impacted by production tax credits and non-controlling interests in subsidiaries. The 2020 effective tax rate was primarily impacted by production tax credits.
Deferred Income Tax Assets and Liabilities |  |
As of December 31 | 2022 | 2021
Millions |  |
Deferred Income Tax Assets |  |
Employee Benefits and Compensation | $46.4 |  | $44.5 |
Property-Related | 61.9 |  | 54.8 |
NOL Carryforwards | 16.7 |  | 67.5 |
Capital Loss Carryforwards | 13.1 |  | — |
Tax Credit Carryforwards | 548.7 |  | 509.1 |
Power Sales Agreements | 13.7 |  | 16.5 |
Regulatory Liabilities | 95.5 |  | 101.5 |
Other | 28.1 |  | 18.0 |
Gross Deferred Income Tax Assets | 824.1 |  | 811.9 |
Deferred Income Tax Asset Valuation Allowance | (60.2) |  | (69.0) |
Total Deferred Income Tax Assets | $763.9 |  | $742.9 |
Deferred Income Tax Liabilities |  |
Deferred Gain | $7.9 |  | $7.9 |
Property-Related | 661.7 |  | 680.8 |
Regulatory Asset for Benefit Obligations | 57.7 |  | 54.9 |
Unamortized Investment Tax Credits | 30.0 |  | 30.5 |
Partnership Basis Differences | 126.0 |  | 106.3 |
Fuel Adjustment Clause | 10.7 |  | 14.3 |
Regulatory Assets | 28.0 |  | 30.0 |
Total Deferred Income Tax Liabilities | $922.0 |  | $924.7 |
Net Deferred Income Taxes (a) | $158.1 |  | $181.8 |
(a)Recorded as a net Deferred Income Tax liability on the Consolidated Balance Sheet. NOTE 11. INCOME TAX EXPENSE (Continued)
NOL and Tax Credit Carryforwards |  |
As of December 31 | 2022 | 2021
Millions |  |
Federal NOL Carryforwards (a) | — |  | $177.3 |
Federal Tax Credit Carryforwards | $464.5 | $416.4
Federal Capital Loss (a) | $35.1 | — |
State NOL Carryforwards (a) | $323.0 | $506.9
State Tax Credit Carryforwards (b) | $24.5 | $24.2
State Capital Loss (a) | $83.2 | — |
(a)Pre-tax amounts. (b)Net of a $59.6 million valuation allowance as of December 31, 2022 ($68.6 million as of December 31, 2021). The federal NOL, capital loss and tax credit carryforward periods expire between 2026 and 2043. We expect to fully utilize the federal NOL, capital loss and tax credit carryforwards; therefore, no federal valuation allowance has been recognized as of December 31, 2022. The pre-apportioned state NOL, capital loss and tax credit carryforward periods expire between 2023 and 2046. We have established a valuation allowance against certain state NOL, capital loss and tax credits that we do not expect to utilize before their expiration.
Gross Unrecognized Income Tax Benefits | 2022 | 2021 | 2020
Millions |  |  |
Balance at January 1 | $1.3 |  | $1.4 |  | $1.4 |
Additions for Tax Positions Related to the Current Year | — |  | — |  | 0.1 |
Reductions for Tax Positions Related to Prior Years | — |  | (0.1) |  | (0.1) |
Balance as of December 31 | $1.3 |  | $1.3 |  | $1.4 |
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, 2022, included $0.6 million of net unrecognized tax benefits which, if recognized, would affect the annual effective income tax rate. As of December 31, 2022, we had immaterial accrued interest (none as of December 31, 2021, and 2020) 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 2022, 2021 and 2020. There were no penalties recognized in 2022, 2021 or 2020. The unrecognized tax benefit amounts have been presented as an increase to the net deferred tax liability 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 is currently under examination by the state of Wisconsin for the tax years 2018 through 2020. ALLETE has no open federal audits, and is no longer subject to federal examination for years before 2019 or state examination for years before 2018. Additionally, the statute of limitations related to the federal tax credit carryforwards will remain open until those credits are utilized in subsequent returns.

X
- References No definition available. + 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration