Entergy 2007 Annual Report Download - page 91

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Entergy Corporation and Subsidiaries 2007
Notes to Consolidated Financial Statements continued
QUA L I F I E D PE N S I O N OB L I G AT I O N S , PL A N AS S E T S , FU N D E D
ST A T U S , A N D AM O U N T S RE C O G N I Z E D IN T H E BA L A N C E SH E E T
F O R EN T E R G Y CO R P O R AT I O N A N D I T S S U B S I D I A R I E S A S O F
DE C E M B E R 31, 2007 A N D 2006
(IN T H O U S A N D S ):
2007 2006
Change in Projected Benet Obligation (PBO)
Balance at beginning of year $3,122,043 $ 2,894,008
Service cost 96,565 92,706
Interest cost 185,170 167,257
Acquisitions and amendments 52,142 –
Curtailments 2,603 –
Special termination benets 4,018 –
Actuarial (gain)/loss (81,757) 4,372
Employee contributions 971 1,003
Benets paid (134,031) (123,272)
Balance at end of year $3,247,724 $3,036,074
Change in Plan Assets
Fair value of assets at beginning of year $2,508,354 $1,994,879
Actual return on plan assets 190,616 270,976
Employer contributions 176,742 318,470
Employee contributions 971 1,003
Acquisition 21,731 –
Benets paid (134,031) (123,272)
Fair value of assets at end of year $2,764,383 $2,462,056
Funded status $ (483,341) $ (574,018)
Amount recognized in the balance sheet (funded status under SFAS 158)
Non-current liabilities $ (483,341) $ (574,018)
Amount recognized as a regulatory asset
Prior service cost $ 16,564 $ 14,388
Net loss 436,789 498,502
$ 453,353 $ 512,890
Amount recognized as OCI (before tax)
Prior service cost $ 2,649 $ 9,544
Net loss 69,581 82,378
$ 72,230 $ 91,922
OT H E R PO S T R E T I R E M E N T BE N E F I T S
Entergy also currently provides health care and life insurance benets
for retired employees. Substantially all employees may become eligible
for these benets if they reach retirement age while still working
for Entergy. Entergy uses a December 31 measurement date for its
postretirement benet plans.
Eective January 1, 1993, Entergy adopted SFAS 106, which required
a change from a cash method to an accrual method of accounting for
postretirement benets other than pensions. At January 1, 1993, the
actuarially determined accumulated postretirement benet obligation
(APBO) earned by retirees and active employees was estimated to
be approximately $241.4 million for Entergy (other than the former
Entergy Gulf States) and $128 million for Entergy Gulf States, Inc.
(now split into Entergy Gulf States Louisiana and Entergy Texas.)
Such obligations are being amortized over a 20-year period that
began in 1993. For the most part, the Utility recovers SFAS 106 costs
from customers and is required to contribute postretirement benets
collected in rates to an external trust.
Entergy Arkansas, Entergy Mississippi, Entergy New Orleans,
and Entergy Texas have received regulatory approval to recover
SFAS 106 costs through rates. Entergy Arkansas began recovery in
1998, pursuant to an APSC order. is order also allowed Entergy
Arkansas to amortize a regulatory asset (representing the dierence
between SFAS 106 costs and cash expenditures for other postretirement
benets incurred for a ve-year period that began January 1, 1993)
over a 15-year period that began in January 1998.
e LPSC ordered Entergy Gulf States Louisiana and Entergy
Louisiana to continue the use of the pay-as-you-go method for
ratemaking purposes for postretirement benets other than pensions.
However, the LPSC retains the exibility to examine individual
companies’ accounting for postretirement benets to determine if
special exceptions to this order are warranted.
Pursuant to regulatory directives, Entergy Arkansas, Entergy
Mississippi, Entergy New Orleans, Entergy Texas, and System Energy
contribute the postretirement benet obligations collected in rates to
trusts. System Energy is funding, on behalf of Entergy Operations,
postretirement benets associated with Grand Gulf.
CO M P O N E N T S O F NE T OT H E R PO S T R E T I R E M E N T BE N E F I T CO S T
A N D OT H E R AM O U N T S RE C O G N I Z E D A S A RE G U L A T O R Y AS S E T
A N D /O R OT H E R CO M P R E H E N S I V E IN C O M E (OCI)
Entergy Corporation’s and its subsidiaries’ total 2007, 2006, and 2005
other postretirement benet costs, including amounts recognized
as a regulatory asset and/or other comprehensive income, including
amounts capitalized, included the following components (in thousands):
2007 2006 2005
Other postretirement costs:
Service cost - benets earned
during the period $ 44,137 $ 41,480 $ 37,310
Interest cost on APBO 63,231 57,263 51,883
Expected return on assets (25,298) (19,024) (17,402)
Amortization of transition obligation 3,831 2,169 3,368
Amortization of prior service cost (15,836) (14,751) (13,738)
Recognized net loss 18,972 22,789 22,295
Special termination benets 603 – –
Net other postretirement benet cost $ 89,640 $ 89,926 $ 83,716
Other changes in plan assets and benet
obligations recognized as a regulatory
asset and/or OCI (before tax)
Arising this period:
Prior service credit for period $ (3,520)
Net gain (15,013)
Amounts reclassied from regulatory
asset and/or accumulated OCI to net periodic
pension cost in the current year:
Amortization of transition obligation (3,831)
Amortization of prior service cost 15,836
Amortization of net loss (18,972)
Total $(25,500)
Total recognized as net periodic other
postretirement cost, regulatory asset,
and/or OCI (before tax) $ 64,140
Estimated amortization amounts from
regulatory asset and/or accumulated OCI
to net periodic cost in the following year
Transition obligation $ 3,831 $ 3,831
Prior service cost $(16,417) $(15,837)
Net loss $ 15,676 $ 18,974