Duke Energy 2015 Annual Report Download - page 213

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PART II
DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. •
DUKE ENERGY PROGRESS, LLC. • DUKE ENERGY FLORIDA, LLC. • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
Assumptions Used for Pension Benefits 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 sufficient cash flow to provide for 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.
The average remaining service period of active covered employees is 10 years for Duke Energy and Progress Energy, seven 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 benefit accounting.
December 31,
2015 2014 2013
Benefit Obligations
Discount rate 4.40% 4.10% 4.70%
Salary increase 4.40% 4.40% 4.40%
Net Periodic Benefit Cost
Discount rate 4.10% 4.70% 4.10%
Salary increase 4.40% 4.40% 4.30%
Expected Benefit 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,
2016 $ 28 $ 2 $ 8 $ 3 $ 3 $ — $ —
2017 29 2 8 3 3 — —
2018 25 2 8 3 3 — —
2019 26 2 8 3 3 — —
2020 25 2 8 3 3 — 1
2021 - 2025 126 9 38 12 16 1 2
OTHER POST-RETIREMENT BENEFIT PLANS
Duke Energy provides, and the Subsidiary Registrants participate in, 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. The health care
benefits 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 benefit plans during the years ended December 31, 2015, 2014 or 2013.
Components of Net Periodic Other Post-Retirement Benefit Costs
Year Ended December 31, 2015
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Service cost $ 6 $ 1 $ 1 $ 1 $ 1 $ — $ 1
Interest cost on accumulated post-retirement benefit obligation 36 9 15 8 7 2 4
Expected return on plan assets (13) (8) — — — (1) (1)
Amortization of actuarial loss (gain) 16 (2) 28 18 10 (2) (2)
Amortization of prior service credit (140) (14) (102) (68) (35) — —
Net periodic post-retirement benefit costs(a)(b) $ (95) $(14) $ (58) $(41) $ (17) $ (1) $ 2