DTE Energy 2012 Annual Report Download - page 84
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Table of Contents
DTE Gas incurred CTA restructuring expense during a review of its operations which began in 2005. In September 2006, the MPSC issued an order
approving a settlement agreement that allowed DTE Electric and DTE Gas, commencing in 2006, to defer the incremental CTA. Further, the order provided
for DTE Electric and DTE Gas to amortize the CTA deferrals over a ten-year period beginning with the year subsequent to the year the CTA was deferred. The
September 2006 order did not provide a regulatory recovery mechanism for DTE Gas, therefore DTE Gas expensed CTA incurred during the period 2006
through 2008. A June 2010 MPSC order provided for DTE Gas’ recovery of the regulatory unamortized balance of CTA. DTE Gas deferred and recognized in
income approximately $32 million ($20 million after-tax) of previously expensed CTA in 2010.
Income Tax Summary
The Company files a consolidated federal income tax return. Total income tax expense varied from the statutory federal income tax rate for the following
reasons:
Income before income taxes
$991
$ 962
Income tax expense at 35% statutory rate
$ 347
$ 337
Production tax credits
(6)
(33)
Investment tax credits
(6)
(6)
Depreciation
(4)
(4)
Employee Stock Ownership Plan dividends
(4)
(5)
Domestic production activities deduction
(7)
(7)
Settlement of Federal tax audit
—
(12)
State and local income taxes, net of federal benefit
37
44
Enactment of Michigan Corporate Income Tax, net of federal expense
(87)
—
Other, net
(2)
1
Income tax expense
$268
$315
Effective income tax rate
27.0%
32.7%
Components of income tax expense were as follows:
Current income tax expense (benefit)
Federal
$ 27
$(168)
State and other income tax
21
26
Total current income taxes
48
(142)
Deferred income tax expense (benefit)
Federal
318
415
State and other income tax
(98)
42
Total deferred income taxes
220
457
Total income taxes from continuing operations
268
315
Discontinued operations
(1)
(4)
Total
$ 267
$311
Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or liabilities
and the reported amounts in the financial statements. Deferred tax assets and liabilities are classified as current or noncurrent according to the classification of
the related assets or liabilities. Deferred tax assets and liabilities not related to assets or liabilities are classified according to the expected reversal date of the
temporary differences. Consistent with rate making treatment, deferred taxes are offset in the table below for temporary differences which have related
regulatory assets and liabilities.
Deferred tax assets (liabilities) were comprised of the following at December 31:
82