Entergy 2012 Annual Report Download - page 92

Entergy Corporation and Subsidiaries 2012
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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
external trusts. System Energy is funding, on behalf of Entergy Opera-
tions, other postretirement benefits associated with Grand Gulf.
Trust assets contributed by participating Registrant Subsidiaries
are in bank-administered master trusts, established by Entergy Cor-
poration and maintained by a trustee. Each participating Registrant
Subsidiary holds a beneficial interest in the trusts’ assets. The assets
in the master trusts are commingled for investment and administra-
tive purposes. Although assets are commingled, supporting records
are maintained for the purpose of allocating the beneficial interest in
net earnings/(losses) and the administrative expenses of the invest-
ment 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, realized
and unrealized gains and losses, and expenses. Beneficial interest
from these investments is allocated to the plans and participating
Registrant Subsidiary based on their 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 2012, 2011, and 2010
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):
2012 2011 2010
Other postretirement costs:
Service cost - benefits earned
during the period $ 68,883 $ 59,340 $ 52,313
Interest cost on APBO 82,561 74,522 76,078
Expected return on assets (34,503) (29,477) (26,213)
Amortization of transition obligation 3,177 3,183 3,728
Amortization of prior service credit (18,163) (14,070) (12,060)
Recognized net loss 36,448 21,192 17,270
Net other postretirement benefit cost $138,403 $114,690 $111,116
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 $ – $(29,507) $ (50,548)
Net loss 92,584 236,594 82,189
Amounts reclassified from regulatory
asset and/or AOCI to net periodic
benefit cost in the current year:
Amortization of transition obligation (3,177) (3,183) (3,728)
Amortization of prior service credit 18,163 14,070 12,060
Amortization of net loss (36,448) (21,192) (17,270)
Total $ 71,122 $196,782 $ 22,703
Total recognized as net periodic
benefit cost, regulatory asset,
and/or AOCI (before tax) $209,525 $311,472 $133,819
Estimated amortization amounts from
regulatory asset and/or AOCI to net
periodic benefit cost in the following year
Transition obligation $ – $ 3,177 $ 3,183
Prior service credit $ (13,336) $(18,163) $ (14,070)
Net loss $ 45,217 $ 43,127 $ 21,192
Other Postretirement Benefit Obligations,
Plan Assets, Funded Status, and Amounts Not Yet
Recognized and Recognized in the Balance Sheet
of Entergy Corporation and its Subsidiaries as of
December 31, 2012 and 2011 (in thousands):
2012 2011
Change in APBO
Balance at beginning of year $ 1,652,369 $ 1,386,370
Service cost 68,883 59,340
Interest cost 82,561 74,522
Plan amendments – (29,507)
Plan participant contributions 18,102 14,650
Actuarial loss 102,833 216,549
Benefits paid (83,825) (77,454)
Medicare Part D subsidy received 5,999 4,551
Early Retiree Reinsurance Program proceeds – 3,348
Balance at end of year $ 1,846,922 $ 1 , 6 5 2 , 3 6 9
Change in Plan Assets
Fair value of assets at beginning of year $ 427,172 $ 404,430
Actual return on plan assets 44,752 9,432
Employer contributions 82,247 76,114
Plan participant contributions 18,102 14,650
Early Retiree Reinsurance Program proceeds – –
Benefits paid (83,825) (77,454)
Fair value of assets at end of year $ 488,448 $ 427,172
Funded status $(1,358,474) $(1,225,197)
Amounts recognized in the balance sheet
Current liabilities $ (33,813) $ (32,832)
Non-current liabilities (1,324,661) (1,192,365)
Total funded status $(1,358,474) $(1,225,197)
Amounts recognized as a regulatory asset
Transition obligation $ – $ 2,557
Prior service credit (5,307) (6,628)
Net loss 367,519 353,905
$ 362,212 $ 349,834
Amounts recognized as AOCI (before tax)
Transition obligation $ – $ 620
Prior service credit (49,335) (66,176)
Net loss 355,900 313,379
$ 306 ,565 $ 247,823
Non-Qualified Pension Plans
Entergy also sponsors non-qualified, non-contributory defined benefit
pension plans that provide benefits to certain key employees. Entergy
recognized net periodic pension cost related to these plans of $26.5
million in 2012, $24 million in 2011, and $27.2 million in 2010. In
2012, 2011, and 2010 Entergy recognized $6.3 million, $4.6 mil-
lion, and $9.3 million, respectively in settlement charges related to
the payment of lump sum benefits out of the plan that is included
in the non-qualified pension plan cost above. The projected benefit
obligation was $199.3 million and $164.4 million as of December
31, 2012 and 2011, respectively. The accumulated benefit obligation
was $180.6 million and $146.5 million as of December 31, 2012 and
2011, respectively.
Entergy’s non-qualified, non-current pension liability at December
31, 2012 and 2011 was $137.2 million and $153.2 million, respec-
tively; and its current liability was $62.1 million and $11.2 million,
respectively. The unamortized transition asset, prior service cost
and net loss are recognized in regulatory assets ($81.2 million at
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