Xcel Energy 2011 Annual Report Download - page 116

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106
Benefit Costs — The components of Xcel Energy’s net periodic pension cost were:
(Thousands of Dollars) 2011 2010 2009
Service cost ................................
.............................
$
77,319 $
73,147 $
65,461
Interest cost ................................
.............................
161,412 165,010 169,790
Expected return on plan assets ................................
............
(221,600) (232,318) (256,538)
Amortization of prior service cost ................................
.........
22,533 20,657 24,618
Amortization of net loss................................
..................
78,510 48,315 12,455
Net periodic pension cost................................
...............
118,174 74,811 15,786
Costs not recognized due to effects of regulation
...........................
(37,198) (27,027) (2,891)
Net benefit cost recognized for financial reporting
........................
$
80,976 $
47,784 $
12,895
Significant Assumptions Used to Measure Costs:
Discount rate ................................
............................
5.50%
6.00%
6.75
%
Expected average long-term increase in compensation level
.................
4.00 4.00 4.00
Expected average long-term rate of return on assets
.........................
7.50 7.79 8.50
Pension costs include an expected return impact for the current year that may differ from actual investment performance in the
plan. The return assumption used for 2012 pension cost calculations will be 7.10 percent.
Xcel Energy also maintains noncontributory, defined benefit supplemental retirement income plans for certain qualifying
executive personnel. Benefits for these unfunded plans are paid out of Xcel Energy’s consolidated operating cash flows.
Defined Contribution Plans
Xcel Energy maintains 401(k) and other defined contribution plans that cover substantially all employees. Total contributions to
these plans were approximately $27.1 million in 2011, $27.3 million in 2010 and $21.9 million in 2009.
Postretirement Health Care Benefits
Xcel Energy has a contributory health and welfare benefit plan that provides health care and death benefits to certain Xcel Energy
retirees.
• The former NSP discontinued contributing toward health care benefits for nonbargaining employees retiring after 1998
and for bargaining employees of NSP-Minnesota and NSP-Wisconsin who retired after 1999.
• Xcel Energy discontinued contributing toward health care benefits for former NCE nonbargaining employees retiring
after June 30, 2003.
• Employees of NCE who retired in 2002 continue to receive employer-subsidized health care benefits.
• Nonbargaining employees of the former NCE who retired after 1998, bargaining employees of the former NCE who
retired after 1999 and nonbargaining employees of NCE who retired after June 30, 2003, are eligible to participate in the
Xcel Energy health care program with no employer subsidy.
In 1993, Xcel Energy adopted accounting guidance regarding other non-pension postretirement benefits and elected to amortize
the unrecognized APBO on a straight-line basis over 20 years.
Regulatory agencies for nearly all of Xcel Energy’s retail and wholesale utility customers have allowed rate recovery of accrued
postretirement benefit costs. The Colorado jurisdictional postretirement benefit costs deferred during the transition period are
being amortized to expense on a straight-line basis over the 15-year period from 1998 to 2012. PSCo transitioned to full accrual
accounting for postretirement benefit costs between 1993 and 1997.
Plan Assets — Certain state agencies that regulate Xcel Energy Inc.’s utility subsidiaries also have issued guidelines related to the
funding of postretirement benefit costs. SPS is required to fund postretirement benefit costs for Texas and New Mexico
jurisdictional amounts collected in rates and PSCo is required to fund postretirement benefit costs in irrevocable external trusts
that are dedicated to the payment of these postretirement benefits. Also, a portion of the assets contributed on behalf of
nonbargaining retirees has been funded into a sub-account of the Xcel Energy pension plans. These assets are invested in a
manner consistent with the investment strategy for the pension plan.