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INCOME TAXES | 12 Months Ended
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Dec. 31, 2022
INCOME TAXES [Abstract] |
INCOME TAXES | NOTE 5 INCOME TAXES Deferred income taxes are provided in accordance with FASB ASC Topic 740 on all differences between the tax basis of assets and liabilities and the amounts at which they are carried in the consolidated financial statements based on the enacted tax rates expected to be in effect when such temporary differences are expected to reverse. The Company’s rate regulated subsidiaries recognize regulatory liabilities, to the extent considered in ratemaking, for deferred taxes provided in excess of the current statutory tax rate and regulatory assets for deferred taxes provided at rates less than the current statutory rate. Such tax-related regulatory assets and liabilities are reported at the revenue requirement level and amortized to income as the related temporary differences reverse, generally over the lives of the related properties. As of December 31, 2022, the Company fully utilized all of its federal net operating loss carrybacks and carry-forwards. As of December 31, 2022, the Company has separate company state net operating loss carry-forwards aggregating approximately $13.8 million. Most of these net operating loss carry-forwards will expire if unused between 2023 and 2043. The Company has recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may not be realized due to the expiration of the state net operating loss carry-forwards. The valuation allowance increased to approximately $600,000 in 2022 from approximately $546,000 in 2021. Management believes that it is more likely than not that the Company will realize the benefit of these deferred tax assets, net of the valuation allowance.
Components of Income Tax Expense |  |  |
In thousands |  | For the Year Ended December 31, |
State income taxes |  | 2022 |  |  | 2021 |  |  | 2020 |
Current |  | $ | 1,373 |  |  | $ | 1,216 |  |  | $ | 2,348 |
Deferred |  |  | 663 |  |  |  | 776 |  |  |  | (279 | )
Total state income tax expense |  | $ | 2,036 |  |  | $ | 1,992 |  |  | $ | 2,069 |
|  | For the Year Ended December 31, |
Federal income taxes |  | 2022 |  |  | 2021 |  |  | 2020 |
Current |  | $ | 2,912 |  |  | $ | 2,144 |  |  | $ | 5,725 |
Deferred |  |  | 930 |  |  |  | 1,601 |  |  |  | (2,110 | )
Total federal income tax expense |  | $ | 3,842 |  |  | $ | 3,745 |  |  | $ | 3,615 |
Reconciliation of effective tax rate: |
|  | For the Year Ended December 31, |
In thousands |  | 2022 |  |  | 2022 |  |  | 2021 |  |  | 2021 |  |  | 2020 |  |  | 2020 |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
Reconciliation of effective tax rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income before federal and state income taxes |  | $ | 23,876 |  |  |  | 100.0 | % |  | $ | 22,564 |  |  |  | 100.0 | % |  | $ | 22,501 |  |  |  | 100.0 | %
Amount computed at statutory rate |  |  | 5,014 |  |  |  | 21.0 | % |  |  | 4,738 |  |  |  | 21.0 | % |  |  | 4,725 |  |  |  | 21.0 | %
Reconciling items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State income tax-net of federal tax benefit |  |  | 1,696 |  |  |  | 7.1 | % |  |  | 1,600 |  |  |  | 7.1 | % |  |  | 1,704 |  |  |  | 7.6 | %
Regulatory liability adjustment |  |  | (450 | ) |  |  | (1.9 | )% |  |  | (451 | ) |  |  | (2.0 | )% |  |  | (451 | ) |  |  | (2.0 | )%
Other |  |  | (382 | ) |  |  | (1.6 | )% |  |  | (150 | ) |  |  | (0.7 | )% |  |  | (294 | ) |  |  | (1.3 | )%
Total income tax expense and effective rate |  | $ | 5,878 |  |  |  | 24.6 | % |  | $ | 5,737 |  |  |  | 25.4 | % |  | $ | 5,684 |  |  |  | 25.3 | %
Deferred income taxes at December 31, 2022 and 2021 were comprised of the following:
|  | For the Year Ended December 31, |
In thousands |  | 2022 |  |  | 2021 |
Deferred tax assets related to: |  |  |  |  |  |
Federal and state operating loss carry-forwards |  | $ | 922 |  |  | $ | 629 |
Less: valuation allowance |  |  | (600 | ) |  |  | (493 | )
Bad debt allowance |  |  | 116 |  |  |  | 240 |
Stock options |  |  | 47 |  |  |  | 148 |
Other |  |  | 28 |  |  |  | 75 |
Total deferred tax assets |  | $ | 513 |  |  | $ | 599 |
Deferred tax liabilities related to: |  |  |  |  |  |  |  |
Property plant and equipment basis differences |  | $ | (52,565 | ) |  | $ | (48,536 | )
Bond retirement costs |  |  | (1,058 | ) |  |  | (1,210 | )
Property taxes |  |  | (609 | ) |  |  | (481 | )
Other |  |  | (833 | ) |  |  | (685 | )
Total deferred tax liabilities |  | $ | (55,065 | ) |  | $ | (50,912 | )
Net deferred tax liability |  | $ | (54,552 | ) |  | $ | (50,313 | )
Schedule of Valuation Allowance |
| Balance at Beginning of Period |  | Additions Charged to Costs and Expenses |  | Deductions |  | Balance at End of Period |
In thousands |  |  |  |  |  |  |  |
Classification |  |  |  |  |  |  |  |
For the Year Ended December 31, 2022 Valuation allowance for deferred tax assets |  | $ | 546 |  |  | $ | 54 |  |  |  | — |  |  | $ | 600 |
For the Year Ended December 31, 2021 Valuation allowance for deferred tax assets |  | $ | 493 |  |  | $ | 53 |  |  |  | — |  |  | $ | 546 |
For the Year Ended December 31, 2020 Valuation allowance for deferred tax assets |  | $ | 335 |  |  | $ | 158 |  |  |  | — |  |  | $ | 493 |
Under FASB ASC Topic 740, the Company establishes reserves for uncertain tax positions based upon management’s judgment as to the sustainability of these positions. The Company reserved a liability related to the difference in the tax depreciation utilizing the half-year convention rather than the mid-quarter convention for 2018. The following table provides the changes in the Company’s uncertain tax position:
|  | For the years ended December 31, |
In thousands |  | 2022 |  |  | 2021 |
Balance at beginning of year |  | $ | 202 |  |  | $ | 209 |
Additions based on tax positions related to the current year |  |  | 146 |  |  |  | — |
Additions based on tax positions related to prior years |  |  | 10 |  |  |  | 19 |
Reductions for tax positions of prior years |  |  | — |  |  |  | — |
Lapses in statutes of limitations |  |  | (212 | ) |  |  | (26 | )
Balance at end of year |  | $ | 146 |  |  | $ | 202 |

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