National Grid 2012 Annual Report Download - page 34

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Service Company Audits
In February 2011, the NYPSC selected Overland Consulting Inc., a management consulting firm, to perform an audit of
the Company's service company cost allocations, policies and procedures. A report of this review to the NYPSC is
expected by September 2012. Management is not aware of any material misallocation of costs from the service company
to the New York utilities and we do not expect the audit to result in any material adjustment to the consolidated financial
statements.
In November 2008, the FERC commenced an audit of NGUSA, including its service companies and other affiliates in
the National Grid holding company system. The audit evaluated our compliance with: 1) cross-subsidization restrictions
on affiliate transactions; 2) accounting, recordkeeping and reporting requirements; 3) preservation of records
requirements for holding companies and service companies; and 4) Uniform System of Accounts for centralized service
companies. The final audit report from the FERC was received in February 2011. In April 2011, NGUSA replied to the
FERC and outlined its plan to address the findings in the report, which we are currently in the process of implementing.
None of the findings had a material impact on the consolidated financial statements of the Company.
Note 3. Employee Benefits
The Company sponsors several non-contributory defined benefit pension plans (the “Pension Plans”) and several
postretirement benefit other than pension plans (the “PBOP Plans”). In general, we calculate benefits under these plans
based on age, years of service and pay using March 31 as a measurement date. In addition, the Company also sponsors
defined contribution plans for eligible employees. The Company participates in the following Plans: The Final Average
Pay Pension Plan (FAPP), National Grid USA Companies' Executive SERP (Version I-FAPP) (ESRP), National Grid
Deferred Compensation Plan, National Grid Executive Life Insurance Plan, National Grid Directors' Retirement Plan
Eastern Utilities Associates (EUA) Retirement Plans, National Grid Retirees Health and Life Plan I (Non-union),
National Grid Retirees Health and Life Plan II (Union), The KeySpan Retirement Plan, Retirement Income plan of
KeySpan Corporation, National Grid USA Companies’ Executive SERP, Excess Benefit Plan of KeySpan Corp.,
Supplemental Retirement of KeySpan Corp., KeySpan Executive Supplement Pension Plan, Retirement Income
Restoration Plan, Supplemental Death and Retirement Plan, Supplemental Death and Retirement Plan, Eastern
Enterprises Supplemental Executive Retirement Plan, Eastern Enterprises Supplemental Retirement Plan for Certain
Officers, Eastern Enterprises Trustees' SERP, Colonial Gas Company SERP, Transgas SERP, Essex Gas SERP,
KeySpan Benefit Plan for Retired (West) Union Employees, KeySpan Benefit Plan for Retired (West) Management
Employees, KeySpan Benefit Plan for Retired (East) Union Employees, KeySpan Benefit Plan for Retired (East)
Management Employees, KeySpan Benefit Plan for Retired Boston Gas Company Union Employees, KeySpan Benefit
Plan for Retired Eastern Enterprises Employees, KeySpan Benefit Plan for Retired Essex Gas Union Employees,
KeySpan Benefit Plan for Retired Essex Gas Management Employees, KeySpan Benefit Plan for Retired Colonial Gas
Management and Union Employees, KeySpan Benefit Plan for Retired EnergyNorth Hourly Employees, and KeySpan
Benefit Plan for Retired EnergyNorth Salaried Employees.
Pension Plans
The Pension Plans are comprised of both qualifying and non-qualifying plans. The qualified pension plans provide
union employees and non-union employees hired before January 1, 2011 with a retirement benefit. Supplemental, non-
qualified, non-contributory executive retirement programs provide additional defined pension benefits for certain
executives. We fund the qualified plans by contributing at least the minimum amount required under IRS regulations.
The Company expects to contribute approximately $359 million to the Pension Plans during fiscal year 2013.
PBOP Plans
PBOP Plans provide health care and life insurance coverage to eligible retired employees. Eligibility is based on age and
length of service requirements and, in most cases, retirees must contribute to the cost of their coverage. We fund these
plans based on the requirements of the various regulatory jurisdictions which the Company operates. The Company
expects to contribute approximately $396.5 million to the PBOP Plans during fiscal year 2013.