Entergy 2010 Annual Report Download - page 96

Notes to Consolidated Financial Statements continued
Qualified Pension Obligations, Plan Assets, Funded
Status, Amounts Recognized in the Balance Sheet
for Entergy Corporation and its Subsidiaries as of
December 31, 2010 and 2009 (in thousands):
2010 2009
Change in Projected Benefit Obligation (PBO)
Balance at beginning of year $ 3,837,744 $ 3,305,315
Service cost 104,956 89,646
Interest cost 231,206 218,172
Acturarial loss 293,189 385,221
Employee contributions 894 852
Benefits paid (166,771) (161,462)
Balance at end of year $ 4,301,218 $ 3,837,744
Change in Plan Assets
Fair value of assets at beginning of year $ 2,607,274 $ 2,078,252
Actual return on plan assets 320,517 557,642
Employer contributions 454,354 131,990
Employee contributions 894 852
Benefits paid (166,771) (161,462)
Fair value of assets at end of year $ 3,216,268 $ 2,607,274
Funded status $(1,084,950) $(1,230,470)
Amount recognized in the balance sheet
Non-current liabilities $ (1,084,950) $ (1,230,470)
Amount recognized as a regulatory asset
Prior service cost $ 12,979 $ 16,376
Net loss 1,350,616 1,183,824
$ 1,363,595 $ 1,200,200
Amount recognized as AOCI (before tax)
Prior service cost $ 2,855 $ 4,116
Net loss 297,093 297,507
$ 299,948 $ 301,623
Other Postretirement Benefits
Entergy also currently provides health care and life insurance
benefits for retired employees. Substantially all employees may
become eligible for these benefits if they reach retirement age
while still working for Entergy. Entergy uses a December 31
measurement date for its postretirement benefit plans.
Effective January 1, 1993, Entergy adopted an accounting
standard requiring a change from a cash method to an accrual
method of accounting for postretirement other than pensions.
At January 1, 1993, the actuarially determined accumulated
postretirement benefit 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 the former Entergy Gulf States (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 Registrant Subsidiaries recover
other postretirement benefit costs from customers and are
required to contribute other postretirement benefits collected in
rates to an external trust.
Entergy Arkansas, Entergy Mississippi, Entergy New Orleans,
and Entergy Texas have received regulatory approval to recover
other postretirement benefit costs through rates. Entergy
Arkansas began recovery in 1998, pursuant to an APSC order. This
order also allowed Entergy Arkansas to amortize a regulatory
asset (representing the difference between other postretirement
benefit costs and cash expenditures for other postretirement
benefits incurred for a five-year period that began January 1,
1993) over a 15-year period that began in January 1998.
The 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 benefits other than
pensions. However, the LPSC retains the flexibility to examine
individual companies’ accounting for other postretirement
benefits 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 other postretirement benefit costs
collected in rates into trusts. System Energy is funding, on behalf
of Entergy Operations, other postretirement benefits associated
with Grand Gulf.
Trust assets contributed by participating Registrant Sub-
sidiaries are in three bank-administered trusts, established
by Entergy Corporation and maintained by a trustee. Each
participating Registrant Subsidiary holds a beneficial interest
in the trusts’ assets. Use of these master trusts permits the
commingling of the trust assets for investment and administrative
purposes. Although assets are commingled, the trustee maintains
supporting records for the purpose of allocating the beneficial
interest in net earnings (losses) and the administrative expenses
of the investment accounts to the various participating plans and
participating Registrant Subsidiaries. Beneficial interest in an
investment account’s net income/ (loss) is comprised of interest
and dividends and realized and unrealized gains and losses and
expense. Beneficial interest from these investments is allocated
monthly to the plans and participating Registrant Subsidiary
based on its portion of net assets in the pooled accounts.
Components of Net Other Postretirement Benefit
Cost and Other Amounts Recognized as a Regulatory
Asset and/or AOCI
Entergy Corporation’s and its subsidiaries’ total 2010, 2009, and
2008 other postretirement benefit costs, including amounts
capitalized and amounts recognized as a regulatory asset and/or
other comprehensive income, included the following components
(in thousands):
2010 2009 2008
Other postretirement costs:
Service cost - benefits earned
during the period $ 52,313 $ 46,765 $ 47,198
Interest cost on APBO 76,078 75,265 71,295
Expected return on assets (26,213) (23,484) (28,109)
Amortization of transition obligation 3,728 3,732 3,827
Amortization of prior service credit (12,060) (16,096) (16,417)
Recognized net loss 17,270 18,970 15,565
Net other postretirement benefit cost $111,116 $105,152 $ 93,359
Other changes in plan assets and benefit
obligations recognized as a regulatory
asset and/or AOCI (before tax)
Arising this period:
Prior service credit for period $(50,548) $ – $ (5,422)
Net loss 82,189 24,983 59,291
Amounts reclassified from regulatory
asset and/or AOCI to net periodic
benefit cost in the current year:
Amortization of transition obligation (3,728) (3,732) (3,827)
Amortization of prior service credit 12,060 16,096 16,417
Amortization of net loss (17,270) (18,970) (15,565)
Total $ 22,703 $ 18,377 $ 50,894
Total recognized as net periodic
benefit cost, regulatory asset,
and/or AOCI (before tax) $133,819 $123,529 $144,253
Estimated amortization amounts from
regulatory asset and/or AOCI to net
periodic benefit cost in the following year
Transition obligation $ 3,183 $ 3,728 $ 3,729
Prior service credit $(14,070) $(12,060) $(17,519)
Net loss $ 21,192 $ 17,270 $ 19,018
94