Duke Energy 2011 Annual Report Download - page 225

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
Duke Energy uses a December 31 measurement date for its
defined benefit retirement plan assets and obligations.
Amounts presented below represent the amounts of pension
and other post-retirement benefit cost allocated to Duke Energy
Indiana. Additionally, Duke Energy Indiana is allocated its
proportionate share of pension and other post-retirement benefit cost
for employees of Duke Energy’s shared services affiliate that provides
support to Duke Energy Indiana. These allocated amounts are
included in the governance and shared services costs discussed in
Note 13.
Qualified Pension Plans
Duke Energy’s qualified defined benefit pension plans cover
substantially all employees meeting certain minimum age and service
requirements. The plans cover most employees using a cash balance
formula. Under a cash balance formula, a plan participant
accumulates a retirement benefit consisting of pay credits that are
based upon a percentage (which varies with age and years of service)
of current eligible earnings and current interest credits. Certain legacy
Cinergy employees are covered under plans that use a final average
earnings formula. Under a final average earnings formula, a plan
participant accumulates a retirement benefit equal to a percentage of
their highest 3-year average earnings, plus a percentage of their
highest 3-year average earnings in excess of covered compensation
per year of participation (maximum of 35 years), plus a percentage of
their highest 3-year average earnings times years of participation in
excess of 35 years. Duke Energy Indiana also participates in Duke
Energy sponsored non-qualified, non-contributory defined benefit
pension plans which cover certain executives.
Duke Energy’s policy is to fund amounts on an actuarial basis to
provide assets sufficient to meet benefits to be paid to plan
participants. The following table includes information related to Duke
Energy Indiana’s contributions to Duke Energy’s qualified defined
benefit pension plans.
Years ended
December 31,
(in millions) 2012 2011 2010 2009
Contributions made — $52 $46 $140
Anticipated contributions $24 — — —
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
qualified retirement plans is 10 years. The average remaining service
period of the active employees covered by the qualified retirement
plans is also 10 years. Duke Energy determines the market-related
value of plan assets using a calculated value that recognizes changes
in fair value of the plan assets over five years.
Components of Net Periodic Pension Costs as allocated by Duke
Energy: Qualified Pension Plans
For the Years Ended
December 31,
(in millions) 2011 2010 2009
Service cost $11 $11 $ 9
Interest cost on projected benefit obligation 30 32 33
Expected return on plan assets (45) (45) (42)
Amortization of prior service cost 222
Amortization of actuarial loss 14 12 5
Other 222
Net periodic pension costs $14 $14 $ 9
Other Changes in Plan Assets and Projected Benefit Obligations
Recognized in Regulatory Assets
For the Years Ended
December 31,
(in millions) 2011 2010
Regulatory assets, net increase (decrease) $5 $(4)
Reconciliation of Funded Status to Net Amount Recognized:
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 $628 $602
Service cost 11 11
Interest cost 30 32
Actuarial (gains) losses (11) 32
Plan amendments (1) 2
Transfers 1(7)
Benefits paid (45) (44)
Obligation at measurement date $613 $628
The accumulated benefit obligation was $582 million and
$578 million at December 31, 2011 and 2010, respectively.
As of and for the Years Ended
December 31,
(in millions) 2011 2010
Change in Fair Value of Plan Assets
Plan assets at prior measurement date $565 $505
Actualreturnonplanassets 965
Benefits paid (45) (44)
Transfers 1(7)
Employer contributions 52 46
Plan assets at measurement date $582 $565
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