Duke Energy 2011 Annual Report Download - page 217

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
Amounts Recognized in the Consolidated Balance Sheets:
Qualified Pension Plans
The following table provides the amounts related to Duke
Energy’s Carolinas’ qualified pension plans that are reflected in Other
within Investments and Other Assets on the Consolidated Balance
Sheets at December 31, 2011 and 2010:
As of and for the Years
Ended December 31,
(in millions) 2011 2010
Prefunded pension cost $— $51
Accrued pension liability (11) —
The following table provides the amounts related to Duke Energy
Carolinas’ qualified pension plans that are reflected in Other within
Regulatory Assets and Deferred Debits on the Consolidated Balance
Sheets at December 31, 2011 and 2010:
As of December 31,
(in millions) 2011 2010
Regulatory assets $693 $628
Of the amounts above, $46 million of unrecognized net
actuarial loss and $1 million of unrecognized prior service cost will be
recognized in net periodic pension costs in 2012.
Additional Information: Qualified Pension Plans
Information for Plans with Accumulated Benefit Obligation in
Excess of Plan Assets as allocated by Duke Energy
As of December 31,
(in millions) 2011 2010
Projected benefit obligation $— $—
Accumulated benefit obligation ——
Fair value of plan assets ——
Assumptions Used for Pension Benefits Accounting
As of December 31,
(percentages) 2011 2010 2009
Benefit Obligations
Discount rate 5.10 5.00 5.50
Salary increase (graded by age) 4.40 4.10 4.50
2011 2010 2009
Net Periodic Benefit Cost
Discount rate 5.00 5.50 6.50
Salary increase 4.10 4.50 4.50
Expected long-term rate of return on plan
assets 8.25 8.50 8.50
The discount rate used to determine the current year other post-
retirement benefits obligation and following year’s other post-
retirement benefits expense is based on a bond selection-settlement
portfolio approach. This approach develops a discount rate by
selecting a portfolio of high quality corporate bonds that generate
sufficient cash flow to provide for the projected benefit payments of
the plan. The selected bond portfolio is derived from a universe of
non-callable corporate bonds rated Aa quality or higher. After the
bond portfolio is selected, a single interest rate is determined that
equates the present value of the plan’s projected benefit payments
discounted at this rate with the market value of the bonds selected.
Non-Qualified Pension Plans
Components of Net Periodic Pension Costs as allocated by Duke
Energy: Non-Qualified Pension Plans
For the Years Ended
December 31,
(in millions) 2011 2010 2009
Amortization of prior service cost $— $1 $1
Interest cost on projected benefit obligation 111
Net periodic pension costs $1 $2 $2
Other Changes in Plan Assets and Projected Benefit Obligations
Recognized in Regulatory Assets: Non-Qualified Pension Plans
For the Years Ended
December 31,
2011 2010
(in millions)
Regulatory assets, net increase $— $3
Reconciliation of Funded Status to Net Amount Recognized:
Non-Qualified Pension Plans
As of and for the Years
Ended December 31,
(in millions) 2011 2010
Change in Projected Benefit Obligation
Obligation at prior measurement date $21 $22
Transfers (1) —
Interest cost 11
Actuarial losses —1
Benefits paid (3) (3)
Obligation at measurement date $18 $21
Change in Fair Value of Plan Assets
Benefits paid $(3) $(3)
Employer contributions 33
Plan assets at measurement date $— $—
The accumulated benefit obligation was $17 million and $20
million at December 31, 2011 and 2010, respectively.
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