Xcel Energy 2015 Annual Report Download - page 125
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2015 2014
Significant Assumptions Used to Measure Benefit Obligations:
Discount rate for year-end valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.66% 4.11%
Expected average long-term increase in compensation level. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.00 3.75
Mortality table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RP 2014 RP 2014
Mortality — In 2014, the Society of Actuaries published a new mortality table and projection scale that increased the overall life
expectancy of males and females. Xcel Energy has reviewed its own population through a credibility analysis and adopted the RP
2014 table, with modifications, based on its population and specific experience. During 2015, a new projection table was released
(MP 2015). Xcel Energy evaluated the updated projection table and concluded that the methodology, adopted at Dec. 31, 2014, is
consistent with the recently updated table and continues to be representative of its population.
Cash Flows — Cash funding requirements can be impacted by changes to actuarial assumptions, actual asset levels and other
calculations prescribed by the funding requirements of income tax and other pension-related regulations. Required contributions were
made in 2013 through 2016 to meet minimum funding requirements.
Total voluntary and required pension funding contributions across all four of Xcel Energy’s pension plans were as follows:
• $125.0 million in January 2016;
• $90.1 million in 2015;
• $130.6 million in 2014; and
• $192.4 million in 2013.
For future years, Xcel Energy anticipates contributions will be made as necessary.
Plan Amendments — In 2015 and 2014 there were no plan amendments made which affected the projected benefit obligation. The
2013 decrease of the projected benefit obligation for plan amendments is due to fully insuring the long-term disability benefit for NSP
bargaining participants. This decrease was partially offset by an increase to the projected benefit obligation resulting from a change in
the discount rate basis for lump sum conversion of annuities for participants in the Xcel Energy Pension Plan.
Benefit Costs — The components of Xcel Energy’s net periodic pension cost were:
(Thousands of Dollars) 2015 2014 2013
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,311 $ 88,342 $ 96,282
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,524 156,619 140,690
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (213,890)(207,205) (198,452)
Amortization of prior service (credit) cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,805)(1,746) 5,871
Amortization of net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,152 116,762 144,151
Net periodic pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,292 152,772 188,542
Costs not recognized due to effects of regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,633)(26,315) (36,724)
Net benefit cost recognized for financial reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 127,659 $ 126,457 $ 151,818
2015 2014 2013
Significant Assumptions Used to Measure Costs:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11% 4.75% 4.00%
Expected average long-term increase in compensation level . . . . . . . . . . . . . . . . . . . . . . . 3.75 3.75 3.75
Expected average long-term rate of return on assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.09 7.05 6.88
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 2016 pension cost calculations is 6.87 percent.
Defined Contribution Plans
Xcel Energy maintains 401(k) and other defined contribution plans that cover substantially all employees. Total expense to these
plans was approximately $34.1 million in 2015, $32.4 million in 2014 and $30.3 million in 2013.