Allegheny Power 2013 Annual Report Download - page 99
Download and view the complete annual report
Please find page 99 of the 2013 Allegheny Power annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89 -
90 -
91 -
92 -
93 -
94 -
95 -
96 -
97 -
98 -
99 -
100 -
101 -
102 -
103 -
104 -
105 -
106 -
107 -
108 -
109 -
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
-
161
-
162
-
163
-
164
-
165
-
166
-
167
-
168
-
169
-
170
-
171
-
172
-
173
-
174
-
175
-
176
 |
 |
84
Pensions OPEB
Components of Net Periodic Benefit Costs 2013 2012 2011 2013 2012 2011
(In millions)
Service cost $ 197 $ 161 $ 130 $ 13 $ 12 $ 13
Interest cost 372 389 374 37 47 48
Expected return on plan assets (501) (486) (446) (34) (37) (40)
Amortization of prior service cost (credit) 12 12 14 (207) (203) (203)
Other adjustments (settlements, curtailments, etc.) — — 6 — — —
Pensions & OPEB mark-to-market adjustment (267) 735 729 (129) 140 36
Net periodic cost $ (187) $ 811 $ 807 $ (320) $ (41) $ (146)
Assumptions Used to Determine Net Periodic
Benefit Cost
for Years Ended December 31(1)
Pensions OPEB
2013 2012 2011 2013 2012 2011
Weighted-average discount rate 4.25% 5.00% 5.50% 4.00% 4.75% 5.00%
Expected long-term return on plan assets 7.75% 7.75% 8.25% 7.75% 7.75% 8.50%
Rate of compensation increase 4.70% 5.20% 5.20% N/A N/A N/A
(1) Excludes Pensions & OPEB mark-to-market adjustment.
In selecting an assumed discount rate, FirstEnergy considers currently available rates of return on high-quality fixed income
investments expected to be available during the period to maturity of the pensions and OPEB obligations. The assumed rates of
return on plan assets consider historical market returns and economic forecasts for the types of investments held by FirstEnergy’s
pension trusts. The long-term rate of return is developed considering the portfolio’s asset allocation strategy.
The following tables set forth pension financial assets that are accounted for at fair value by level within the fair value hierarchy.
See Note 9, Fair Value Measurements, for a description of each level of the fair value hierarchy. There were no significant transfers
between levels during 2013 and 2012.
December 31, 2013 Asset
AllocationLevel 1 Level 2 Level 3 Total
(In millions)
Cash and short-term securities $ — $ 782 $ — $ 782 13%
Equity investments
Domestic 701 3 — 704 11%
International 304 118 — 422 7%
Fixed income
Government bonds — 314 — 314 5%
Corporate bonds — 2,128 — 2,128 34%
Mortgaged-backed securities (non-
government) — 87 — 87 1%
Alternatives
Hedge funds — 1,395 — 1,395 23%
Derivatives — 14 — 14 —%
Private equity funds — — 27 27 —%
Real estate funds — — 385 385 6%
Total (1) $ 1,005 $ 4,841 $ 412 $ 6,258 100%