Duke Energy 2011 Annual Report Download - page 218

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:
Non-Qualified Pension Plans
The following table provides the amounts related to Duke Energy
Carolinas’ non-qualified pension plans that are reflected in Other
within Deferred Credits and Other Liabilities on the Consolidated
Balance Sheets at December 31, 2011 and 2010:
As of December 31,
(in millions) 2011 2010
Accrued pension liability(a) $(18) $(21)
(a) Includes $3 million and $5 million recognized in Other within Current Liabilities on the
Consolidated Balance Sheets as of December 31, 2011 and 2010, respectively.
The following table provides the amounts related to Duke
Energy’s non-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 $3 $3
Of the amounts above, an insignificant amount will be
recognized in net periodic pension costs in 2012.
Additional Information: Non-Qualified Pension Plans
Information for Plans with Accumulated Benefit Obligation in
Excess of Plan Assets as allocated by Duke Energy
As of December 31,
2011 2010
(in millions)
Projected benefit obligation $18 $21
Accumulated benefit obligation 17 20
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 4.40 4.10 4.50
2011 2010 2009
Determined Expense
Discount rate 5.00 5.50 6.50
Salary increase 4.10 4.50 4.50
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.
Other Post-Retirement Benefit Plans
In conjunction with Duke Energy, Duke Energy Carolinas
provides some health care and life insurance benefits for retired
employees on a contributory and non-contributory basis. Employees
are eligible for these benefits if they have met age and service
requirements at retirement, as defined in the plans.
These benefit costs are accrued over an employee’s active
service period to the date of full benefits eligibility. The net
unrecognized transition obligation is amortized over 20 years.
Actuarial gains and losses are amortized over the average remaining
service period of the active employees. The average remaining service
period of the active employees covered by the plan is ten years.
Components of Net Periodic Other Post-Retirement Benefit Costs
as allocated by Duke Energy
For the Years Ended
December 31,
2011 2010 2009
(in millions)
Service cost benefit earned during the year $2 $2 $2
Interest cost on accumulated post-retirement
benefit obligation 16 17 21
Expected return on plan assets (10) (10) (11)
Amortization of prior service credit (5) (5) (5)
Amortization of net transition liability 999
Amortization of actuarial loss 231
Net periodic other post-retirement benefit
costs $14 $16 $17
Other Changes in Plan Assets and Projected Benefit Obligations
Recognized in Regulatory Assets: Other Post-Retirement Benefit
Plans
For the Years Ended
December 31,
2011 2010
(in millions)
Regulatory assets, net (decrease) increase $(12) $49
198