Eversource 2003 Annual Report Download - page 68

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66
The components of net periodic (income)/expense are as follows:
For the Years Ended December 31,
Pension Benefits Postretirement Benefits
(Millions of Dollars) 2003 2002 2001 2003 2002 2001
Service cost $ 35.1 $ 37.2 $ 35.7 $ 5.3 $ 6.2 $ 6.2
Interest cost 117.0 119.8 119.7 26.8 29.2 27.2
Expected return on plan assets (182.5) (204.9) (214.1) (14.9) (16.6) (17.0)
Amortization of unrecognized net
transition (asset)/obligation (1.5) (1.4) (1.5) 11.9 13.6 14.5
Amortization of prior service cost 7.2 7.7 6.9 (0.4) (0.1) —
Amortization of actuarial gain (7.1) (31.8) (47.7) ———
Other amortization, net ———6.4 2.2 (2.6)
Net periodic (income)/expense —
before settlements, curtailments and
special termination benefits (31.8) (73.4) (101.0) 35.1 34.5 28.3
Settlement income —— (26.0) ———
Curtailment (income)/expense —(30.3) (64.7) —— 3.3
Special termination benefits expense/(income) —8.1 93.3 —(1.2) 8.6
Total — settlements, curtailments and special
termination benefits — (22.2) 2.6 —(1.2) 11.9
Total — net periodic (income)/expense $ (31.8) $ (95.6) $ (98.4) $ 35.1 $ 33.3 $ 40.2
For calculating pension and postretirement benefit income and expense amounts, the following assumptions were used:
For the Years Ended December 31,
Pension Benefits Postretirement Benefits
Statements of Income 2003 2002 2001 2003 2002 2001
Discount rate 6.75% 7.25% 7.50% 6.75% 7.25% 7.50%
Expected long-term rate of return 8.75% 9.25% 9.50% 8.75% 9.25% 9.50%
Compensation/progression rate 4.00% 4.25% 4.50% N/A N/A N/A
The following table represents the PBOP assumed health care cost trend
rate for the next year and the assumed ultimate trend rate:
Year Following December 31,
2003 2002
Health care cost trend rate
assumed for next year 8.00% 9.00%
Rate to which health care cost
trend rate is assumed to
decline (the ultimate trend rate) 5.00% 5.00%
Year that the rate reaches the
ultimate trend rate 2007 2007
The annual per capita cost of covered health care benefits was assumed
to decrease by one percentage point each year through 2007.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. The effect of changing the
assumed health care cost trend rate by one percentage point in each
year would have the following effects:
One Percentage One Percentage
(Millions of Dollars) Point Increase Point Decrease
Effect on total service and
interest cost components $ 0.8 $ (0.7)
Effect on postretirement
benefit obligation $12.5 $(11.3)