Progress Energy 2008 Annual Report Download - page 100

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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the CVO holders. Future payments will include principal
and interest earned during the investment period net of
expenses deducted. The interest earned on the payments
held in trust for 2008 and 2007 was insignificant. The asset
is included in other assets and deferred debits on the
Consolidated Balance Sheet at December 31, 2008.
16. BENEFIT PLANS
A. Postretirement Benefits
We have noncontributory defined benefit retirement
plans that provide pension benefits for substantially all
full-time employees. We also have supplementary defined
benefit pension plans that provide benefits to higher-level
employees. In addition to pension benefits, we provide
contributory other postretirement benefits (OPEB),
including certain health care and life insurance benefits,
for retired employees who meet specified criteria. We
use a measurement date of December 31 for our pension
and OPEB plans.
COSTS OF BENEFIT PLANS
Prior service costs and benefits are amortized on a
straight-line basis over the average remaining service
period of active participants. Actuarial gains and losses
in excess of 10 percent of the greater of the projected
benefit obligation or the market-related value of assets
are amortized over the average remaining service period
of active participants.
To determine the market-related value of assets, we use
a five-year averaging method for a portion of the pension
assets and fair value for the remaining portion. We have
historically used the five-year averaging method. When we
acquired Florida Progress in 2000, we retained the Florida
Progress historical use of fair value to determine market-
related value for Florida Progress pension assets.
The components of the net periodic benefit cost for the
years ended December 31 were:
We adopted SFAS No. 158, “Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans,
an amendment of FASB Statements No. 87, 88, 106 and
132(R)” (SFAS No. 158), as of December 31, 2006. SFAS
No. 158 amended prior accounting requirements for
pension and OPEB plans. Prior to the implementation
of SFAS No. 158, other comprehensive income (OCI)
reflected minimum pension adjustments related to our
pension plans. Our pre-tax minimum pension adjustment
recognized as a component of OCI was a net actuarial
gain of $78 million for the year ended December 31, 2006.
No amounts related to our OPEB plans were recognized
as a component of OCI for the year ended December 31,
2006. The table below provides a summary of amounts
recognized in other comprehensive income for 2008 and
2007 and other comprehensive income reclassification
adjustments for amounts included in net income for 2008
and 2007. The table also includes comparable items that
affected regulatory assets of PEC and PEF.
Pension
Benefits
Other
Postretirement
Benefits
(in millions) 2008 2007 2008 2007
Other comprehensive income
(loss)
Recognized for the year
Net actuarial loss $(64) $24 $(8) $16
Other, net (6) (1) ––
Reclassification adjustments
Net actuarial loss 12––
Other, net 11––
Regulatory asset (increase)
decrease
Recognized for the year
Net actuarial (loss) gain (735) 66 (73) 82
Other, net (36) (8) ––
Amortized to income
Net actuarial loss 713 12
Other, net 1154
Pension Benefits Other Postretirement Benefits
(in millions) 2008 2007 2006 2008 2007 2006
Service cost $46 $46 $45 $8 $7 $9
Interest cost 128 123 117 34 32 33
Expected return on plan assets (170) (155) (148) (6) (6) (6)
Amortization of actuarial loss(a) 815 18 12 4
Other amortization, net(a) 22 – 55 5
Net periodic cost $14 $31 $32 $42 $40 $45
(a) Adjusted to reflect PEF’s rate treatment (See Note 16B).