Xcel Energy 2003 Annual Report Download - page 52

68 XCEL ENERGY 2003 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Benefit Obligations A comparison of the actuarially computed benefit obligation and plan assets for Xcel Energy postretirement health care plans
that benefit employees of its utility subsidiaries is presented in the following table:
(Thousands of dollars) 2003 2002
Change in Benefit Obligation
Obligation at Jan. 1 $767,975 $687,455
Service cost 5,893 7,173
Interest cost 52,426 50,135
Acquisitions (divestitures) (31,584) 773
Plan amendments (33,304) –
Plan participants’ contributions 16,577 5,755
Actuarial loss 122,864 61,276
Special termination benefits –(173)
Curtailments (249) –
Benefit payments (60,754) (44,419)
Impact of Medicare Prescription Drug, Improvement and Modernization Act of 2003 (64,614) –
Obligation at Dec. 31 $775,230 $767,975
Change in Fair Value of Plan Assets
Fair value of plan assets at Jan. 1 $250,983 $242,803
Actual return on plan assets 11,045 (13,632)
Plan participants’ contributions 16,577 5,755
Employer contributions 68,010 60,476
Benefit payments (60,754) (44,419)
Fair value of plan assets at Dec. 31 $285,861 $250,983
Funded Status at Dec. 31
Net obligation $489,369 $516,992
Unrecognized transition asset (obligation) (69,164) (169,328)
Unrecognized prior service cost 20,093 10,904
Unrecognized gain (loss) (319,788) (206,601)
Accrued benefit liability recorded(a) $120,510 $151,967
Measurement Date Dec. 31, 2003 Dec. 31, 2002
Significant Assumptions Used to Measure Benefit Obligations
Discount rate for year-end valuation 6.25% 6.75%
(a) ($0.6) million of the 2003 accrued benefit liability relates to Xcel Energy’s remaining obligation for companies that are now classified as discontinued operations, and $28.3 million
of the 2002 accrued benefit liability relates to such discontinued operations.
The assumed health care cost trend rate for 2003 for most Xcel Energy plans is approximately 7.5 percent, decreasing gradually to 5.5 percent in 2007
and remaining level thereafter. A 1-percent change in the assumed health care cost trend rate would have the following effects:
(Thousands of dollars)
1-percent increase in APBO components at Dec. 31, 2003 $ 95.8
1-percent decrease in APBO components at Dec. 31, 2003 $(79.4)
1-percent increase in service and interest components of the net periodic cost $ 7.3
1-percent decrease in service and interest components of the net periodic cost $ (6.0)
The employer subsidy for retiree medical coverage was eliminated for former New Century Energies, Inc. nonbargaining employees who retire after
July 1, 2003.
Xcel Energy’s subsidiary Viking Gas Transmission Co. was sold on Jan. 17, 2003. The sale created a one-time curtailment gain of $0.8 million. NRG
participants withdrew from the retiree life plan, resulting in a $1.3 million one-time curtailment gain in 2003.
NRG employees’ participation in the Xcel Energy postretirement health care plan ended when NRG emerged from bankruptcy on Dec. 5, 2003. A
settlement gain of $0.9 million was recognized.
Cash Flows The postretirement health care plans have no funding requirements under income tax and other retirement-related regulations other than
fulfilling benefit payment obligations, when claims are presented and approved under the plans. Additional cash funding requirements are prescribed by
certain state and federal rate regulatory authorities, as discussed previously. Xcel Energy expects to contribute approximately $51.4 million during 2004.