Xcel Energy 2005 Annual Report Download - page 64

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The actual composition of postretirement benefit plan assets at Dec. 31 was: 2005 2004
Equity and equity mutual fund securities 61% 54%
Fixed income/debt securities 17 21
Cash equivalents 21 25
Nontraditional Investments 1–
100% 100%
Xcel Energy bases its investment-return assumption for the postretirement health care fund assets on expected long-term performance for
each of the investment types included in its postretirement health care asset portfolio. Investment-return volatility is not considered to be a
material factor in postretirement health care costs.
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) 2005 2004
Change in Benefit Obligation
Obligation at Jan. 1 $929,125 $775,230
Service cost 6,684 6,100
Interest cost 55,060 52,604
Plan amendments –(1,600)
Plan participants’ contributions 12,008 9,532
Actuarial gain (loss) (3,175) 148,341
Benefit payments (61,530) (61,082)
Obligation at Dec. 31 $938,172 $929,125
Change in Fair Value of Plan Assets
Fair value of plan assets at Jan. 1 $318,667 $285,861
Actual return on plan assets 14,507 21,950
Plan participants’ contributions 12,008 9,532
Employer contributions 68,211 62,406
Benefit payments (61,530) (61,082)
Fair value of plan assets at Dec. 31 $351,863 $318,667
Funded Status at Dec. 31
Net obligation $586,309 $610,458
Unrecognized transition obligation (103,022) (117,600)
Unrecognized prior service cost 15,736 17,914
Unrecognized loss (364,745) (383,026)
Accrued benefit liability recorded
(a)
$134,278 $ 127,746
Measurement Date Dec. 31, 2005 Dec. 31, 2004
Significant Assumptions Used to Measure Benefit Obligations
Discount rate for year-end valuation 5.75% 6.00%
(a) $3.1 million of the 2005 accrued benefit liability and $1.7 million of the 2004 accrued benefit liability relate to Xcel Energy’s remaining obligation for
companies that are now classified as discontinued operations.
Effective Dec. 31, 2004, Xcel Energy raised its initial medical trend assumption from 6.5 percent to 9.0 percent and lowered the ultimate trend
assumption from 5.5 percent to 5.0 percent. The period until the ultimate rate is reached also was increased from two years to six years. Xcel
Energy bases its medical trend assumption on the long-term cost inflation expected in the health care market, considering the levels projected
and recommended by industry experts, as well as recent actual medical cost increases experienced by Xcel Energy’s retiree medical plan.
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, 2005 $104,967
1-percent decrease in APBO components at Dec. 31, 2005 $ (87,450)
1-percent increase in service and interest components of the net periodic cost $ 8,177
1-percent decrease in service and interest components of the net periodic cost $ (6,696)
62 XCEL ENERGY 2005 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS