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Accounting For Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Accounting for Income Taxes

NOTE 13. ACCOUNTING FOR INCOME TAXES

Income Tax Expense

Income tax expense consisted of the following for the years ended December 31 (dollars in millions):

 

 

 

2024

 

 

2023

 

 

2022

 

Current income tax expense

 

$

8

 

 

$

3

 

 

$

1

 

Deferred income tax benefit

 

 

(5

)

 

 

(37

)

 

 

(18

)

Total income tax expense (benefit)

 

$

3

 

 

$

(34

)

 

$

(17

)

 

A reconciliation of federal income taxes derived from the statutory federal tax rate of 21 percent applied to income before income taxes is as follows for the years ended December 31 (dollars in millions):

 

 

 

2024

 

 

2023

 

 

2022

 

Federal income taxes at statutory rates

 

$

38

 

 

 

21.0

%

 

$

29

 

 

 

21.0

%

 

$

29

 

 

 

21.0

%

Increase (decrease) in tax resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of regulatory treatment of utility
   plant differences

 

 

(12

)

 

 

(6.6

)

 

 

(12

)

 

 

(8.9

)

 

 

(12

)

 

 

(9.0

)

State income tax expense

 

 

2

 

 

 

0.9

 

 

 

2

 

 

 

1.5

 

 

 

2

 

 

 

1.2

 

Flow through related to deduction of meters
    and mixed service costs (1)

 

 

(23

)

 

 

(12.4

)

 

 

(48

)

 

 

(34.9

)

 

 

(35

)

 

 

(25.0

)

Tax credits

 

 

(1

)

 

 

(0.6

)

 

 

(3

)

 

 

(1.7

)

 

 

—

 

 

 

(0.2

)

Other

 

 

(1

)

 

 

(0.8

)

 

 

(2

)

 

 

(1.4

)

 

 

(1

)

 

 

(0.5

)

Total income tax expense (benefit)

 

$

3

 

 

 

1.5

%

 

$

(34

)

 

 

(24.4

)%

 

$

(17

)

 

 

(12.5

)%

 

(1)
The Company's general rate cases included approval of base rate increases, offset by tax customer credits. As the tax customer credits are returned to customers, this results in a decrease to income tax expense due to flowing through the benefits related to meters and mixed service costs. Once these tax customer credits have been applied to customers and are exhausted, income tax expense will increase.

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and tax credit carryforwards. The total net deferred income tax liability consisted of the following as of December 31 (dollars in millions):

 

 

 

2024

 

 

2023

 

Deferred income tax assets:

 

 

 

 

 

 

Regulatory liabilities

 

$

194

 

 

$

192

 

Tax credits and net operating loss carryforwards

 

 

36

 

 

 

77

 

Provisions for pensions

 

 

16

 

 

 

19

 

Other

 

 

49

 

 

 

48

 

Total gross deferred income tax assets

 

 

295

 

 

 

336

 

Valuation allowances for deferred tax assets

 

 

(8

)

 

 

(10

)

Total deferred income tax assets after valuation allowances

 

 

287

 

 

 

326

 

Deferred income tax liabilities:

 

 

 

 

 

 

Utility property, plant, and equipment

 

 

759

 

 

 

747

 

Regulatory assets

 

 

252

 

 

 

269

 

Other

 

 

27

 

 

 

28

 

Total deferred income tax liabilities

 

 

1,038

 

 

 

1,044

 

Net long-term deferred income tax liability

 

$

751

 

 

$

718

 

 

The realization of deferred income tax assets is dependent upon the ability to generate taxable income in future periods. The Company evaluated available evidence supporting the realization of its deferred income tax assets and determined it is more likely than not that deferred income tax assets will be realized.

As of December 31, 2024, the Company had $19 million of state tax credit carryforwards. Of the total amount, the Company believes that it is more likely than not that it will only be able to utilize $11 million of the state tax credits. As such, the Company has recorded a valuation allowance of $8 million against the state tax credit carryforwards and reflected the net amount of $11 million as an asset as of December 31, 2024. State tax credits expire from 2025 to 2038.

Status of Internal Revenue Service (IRS) and State Examinations

The Company and its eligible subsidiaries file consolidated federal income tax returns. All tax years after 2020 are open for an IRS tax examination. The IRS is reviewing tax year 2019.

The Company files state income tax returns in certain jurisdictions, including Idaho, Oregon, Montana and Alaska. Subsidiaries are charged or credited with the tax effects of their operations on a stand-alone basis.

All tax years after 2020 are open for examination in Idaho, Oregon, Montana and Alaska.

The Company believes open tax years for federal or state income taxes will not result in adjustments that would be significant to the consolidated financial statements.