Defined Benefit Pension and Other Postretirement Plans

9 Months Ended

Jun. 30, 2011

Defined Benefit Pension and Other Postretirement Plans [Abstract]

Defined Benefit Pension and Other Postretirement Plans

7. Defined Benefit Pension and Other Postretirement Plans

We currently sponsor one defined benefit pension plan (“Pension Plan”) for employees hired prior to January 1, 2009 of UGI Utilities, PNG, CPG, UGI and certain of UGI’s other wholly owned domestic subsidiaries. In addition, we provide postretirement health care benefits to certain retirees and a limited number of active employees, and postretirement life insurance benefits to nearly all active and retired employees.

Net periodic pension expense and other postretirement benefit costs relating to our employees include the following components:

	Pension Benefits						Other Postretirement Benefits
	Three Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Service cost	$	1,751		$	1,745		$	54		$	40
Interest cost		5,564			5,284			182			212
Expected return on assets		(5,972	)		(5,858	)		(131	)		(126	)
Amortization of:
Prior service cost (benefit)		80			9			(174	)		(102	)
Actuarial loss		1,570			1,333			122			89
Net benefit cost		2,993			2,513			53			113
Change in associated regulatory liabilities		—			—			785			736
Net expense	$	2,993		$	2,513		$	838		$	849

	Pension Benefits						Other Postretirement Benefits
	Nine Months Ended						Nine Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Service cost	$	5,426		$	5,235		$	161		$	121
Interest cost		16,483			15,852			547			635
Expected return on assets		(17,965	)		(17,575	)		(392	)		(378	)
Amortization of:
Prior service cost (benefit)		222			27			(522	)		(305	)
Actuarial loss		5,268			3,999			364			268
Net benefit cost		9,434			7,538			158			341
Change in associated regulatory liabilities		—			—			2,356			2,208
Net expense	$	9,434		$	7,538		$	2,514		$	2,549

Pension Plan assets are held in trust and consist principally of publicly traded, diversified equity and fixed income mutual funds and UGI Common Stock. It is our general policy to fund amounts for pension benefits equal to at least the minimum contribution required by ERISA. Based upon current assumptions, the Company estimates that it will be required to contribute approximately $15,978 to the Pension Plan during the next twelve months. During the nine months ended June 30, 2011, the Company made contributions to the Pension Plan of $16,682. UGI Utilities has established a Voluntary Employees’ Beneficiary Association (“VEBA”) trust to pay UGI Gas and Electric Utility’s postretirement health care and life insurance benefits referred to above by depositing into the VEBA the annual amount of postretirement benefit costs determined under GAAP. The difference between such amounts calculated under GAAP and the amounts included in UGI Gas’ and Electric Utility’s rates is deferred for future recovery from, or refund to, ratepayers. Amounts contributed to the VEBA by UGI Utilities were not material during the nine months ended June 30, 2011, nor are they expected to be material for all of Fiscal 2011.

We also participate in an unfunded and non-qualified defined benefit supplemental executive retirement plan. Net benefit costs associated with this plan for all periods presented were not material.

Effective December 31, 2010, UGI Utilities merged its two defined benefit pension plans. The merged plan maintains the separate benefit formulas and specific rights and features of each predecessor plan. As a result of the merger and in accordance with GAAP relating to accounting for retirement benefits, the Company remeasured the combined plan’s assets and benefit obligations as of December 31, 2010 which decreased pension and postretirement benefit obligations by $46,672; decreased associated regulatory assets by $43,150; and increased pre-tax other comprehensive income by $3,522 (see Notes 2 and 6).

The following table provides a reconciliation of the projected benefit obligation (“PBO”), plan assets and the funded status of the merged Pension Plan as of December 31, 2010:

	Three Months
	Ended
	December 31,
	2010
Change in benefit obligations:
Benefit obligations — October 1, 2010	$	464,976
Service cost		2,188
Interest cost		5,805
Actuarial gain		(30,639	)
Benefits paid		(4,664	)
Benefit obligations — December 31, 2010	$	437,666
Change in plan assets:
Fair value of plan assets — October 1, 2010	$	287,902
Actual gain on assets		19,285
Employer contribution		1,788
Benefits paid		(4,664	)
Fair value of plan assets — December 31, 2010	$	304,311
Funded status of the merged plan — December 31, 2010	$	(133,355	)
Liabilities recorded in the balance sheet:
Unfunded liabilities — included in other current liabilities	$	(20,303	)
Unfunded liabilities — included in other noncurrent liabilities		(113,052	)
Net amount recognized	$	(133,355	)
Amounts recorded in regulatory assets and liabilities:
Prior service cost	$	257
Net actuarial loss		112,733
Total	$	112,990
Amounts recorded in stockholder’s equity:
Prior service cost	$	29
Net actuarial loss		9,925
Total	$	9,954

The accumulated benefit obligation (“ABO”) of the merged plan at December 31, 2010 is $391,192. Actuarial assumptions for the merged plan at December 31, 2010 are as follows: discount rate — 5.5%; expected return on plan assets — 8.5%; rate of increase in salary levels — 3.8%.