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Income Taxes

3 Months Ended

Mar. 31, 2021

NOTE 7. INCOME TAXES

In accordance with interim reporting requirements, the Company uses an estimated annual effective tax rate for computing its provisions for income taxes. An estimate of annual income tax expense (or benefit) is made each interim period using estimates for annual pre-tax income, income tax adjustments, and tax credits. The estimated annual effective tax rates do not include discrete events such as tax law changes, examination settlements, accounting method changes, or adjustments to tax expense or benefits attributable to prior years. Discrete events are recorded in the interim period in which they occur or become known. The estimated annual tax rate is applied to year-to-date pre-tax income to determine income tax expense (or benefit) for the interim period consistent with the annual estimate. In subsequent interim periods, income tax expense (or benefit) for the period is computed as the difference between the year-to-date amount reported for the previous interim period and the current period’s year-to-date amount.

The following table summarizes the significant factors impacting the difference between our effective tax rate and the federal statutory rate for the three months ended March 31 (dollars in thousands):

	2021					2020
Federal income taxes at statutory rates	$	16,838		21.0	%	$	11,961		21.0	%
Increase (decrease) in tax resulting from:
Tax effect of regulatory treatment of utility plant differences		(3,240	)	(4.0	)		(2,402	)	(4.2	)
State income tax expense		552		0.7			1,227		2.1
Settlement of equity awards		930		1.1			165		0.3
Other		(2,916	)	(3.6	)		(2,419	)	(4.2	)
Total income tax expense	$	12,164		15.2	%	$	8,532		15.0	%

- 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.

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