Duke Energy 2014 Annual Report Download - page 215

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PART II
DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. •
DUKE ENERGY PROGRESS, INC. • DUKE ENERGY FLORIDA, INC. • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
Assumptions Used for Pension Benefi ts Accounting
The discount rate used to determine the current year pension obligation and following year’s pension 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 suffi cient cash fl ow to provide for projected
benefi t 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 benefi t payments discounted at this rate with the market value
of the bonds selected.
The average remaining service period of active covered employees is 13 years for Duke Energy and Progress Energy, nine years for Duke Energy Carolinas, Duke
Energy Ohio and Duke Energy Indiana, 12 years for Duke Energy Progress and 17 years for Duke Energy Florida.
The following tables present the assumptions used for pension benefi t accounting.
December 31,
2014 2013 2012(a)
Benefi t Obligations
Discount rate 4.10% 4.70% 4.10%
Salary increase 4.40% 4.40% 4.30%
Net Periodic Benefi t Cost
Discount rate 4.70% 4.10% 4.60% - 5.10%
Salary increase 4.40% 4.30% 4.40%
(a) For Progress Energy plans, the assumptions used in 2012 to determine net periodic pension costs refl ect remeasurement as of July 1, 2012, due to the merger between Duke Energy and Progress Energy.
Expected Benefi t Payments
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Years ending December 31,
2015 $ 28 $ 2 $ 8 $ 3 $ 4 $ — $—
2016 27 2 8 3 4 — —
2017 27 28 34——
2018 24 2 8 3 4 — —
2019 24 2 8 3 4 — —
2020 – 2024 116 6 38 13 19 2 2
OTHER POST-RETIREMENT BENEFIT PLANS
Duke Energy provides, and the Subsidiary Registrants participate in, some health care and life insurance benefi ts for retired employees on a contributory and
non-contributory basis. Employees are eligible for these benefi ts if they have met age and service requirements at retirement, as defi ned in the plans. The health care
benefi ts include medical, dental, and prescription drug coverage and are subject to certain limitations, such as deductibles and co-payments.
Duke Energy did not make any pre-funding contributions to its other post-retirement benefi t plans during the years ended December 31, 2014, 2013 or 2012.
Components of Net Periodic Other Post-Retirement Benefi t Costs
Year Ended December 31, 2014
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Service cost $10 $2 $4 $1 $3 $— $1
Interest cost on accumulated post-retirement benefi t obligation 49 12 22 11 12 2 5
Expected return on plan assets (13) (9) — — — — (1)
Amortization of actuarial loss (gain) 39 3 42 31 10 (2) —
Amortization of prior service credit (125) (11) (95) (73) (21) — —
Net periodic post-retirement benefi t costs $ (40) $ (3) $(27) $(30) $ 4 $— $ 5