Duke Energy 2011 Annual Report Download - page 222

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
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 $— $651
Accumulated benefit obligation —616
Fair value of plan assets —565
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
Determined Expense
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
Duke Energy Ohio’s non-qualified pension plan pre-tax net
periodic pension benefit costs as allocated by Duke Energy was
insignificant for the years ended December 31, 2011, 2010 and
2009.
Other Changes in Plan Assets and Projected Benefit Obligations
Recognized in Regulatory Assets and Accumulated Other
Comprehensive Income: Non-Qualified Pension Plans
Duke Energy Ohio’s non-qualified pension plan Other Changes
in Plan Assets and Projected Benefit Obligations Recognized in
Regulatory Assets and Accumulated Other Comprehensive Income as
allocated by Duke Energy was insignificant for the years ended
December 31, 2011 and 2010.
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 $6 $4
Service cost ——
Interest cost ——
Actuarial losses (1) 3
Benefits paid (1) (1)
Obligation at measurement date $4 $6
Change in Fair Value of Plan Assets
Benefits paid $(1) $(1)
Employer contributions 11
Plan assets at measurement date $— $—
The accumulated benefit obligation was $4 million and $6
million at December 31, 2011 and 2010, respectively.
Amounts Recognized in the Consolidated Balance Sheets:
Non-Qualified Pension Plans
The following table provides the amounts related to Duke Energy
Ohio’s 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) $(4) $(6)
(a) Includes $1 million recognized in Other within Current Liabilities on the Consolidated
Balance Sheets as of both December 31, 2011 and 2010.
Amounts related to Duke Energy Ohio’s non-qualified pension
plans that are reflected in Other within Regulatory Assets and
Deferred Debits and AOCI on the Consolidated Balance Sheets were
insignificant at December 31, 2011 and 2010.
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,
(in millions) 2011 2010
Projected benefit obligation $4 $6
Accumulated benefit obligation 46
Fair value of plan assets ——
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
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