Retirement Benefits

6 Months Ended

Jun. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Retirement Benefits

Retirement Benefits

PSE has a defined benefit pension plan covering substantially all PSE employees.  Pension benefits earned are a function of age, salary, years of service and, in the case of employees in the cash balance formula plan, the applicable annual interest crediting rates.  PSE also maintains a non-qualified Supplemental Executive Retirement Plan (SERP) for its key senior management employees.  In addition to providing pension benefits, PSE provides group health care and life insurance benefits for certain retired employees.  These benefits are provided principally through an insurance company.  The insurance premiums, paid primarily by retirees, are based on the benefits provided during the year.

The February 6, 2009 merger of Puget Energy with Puget Holdings triggered a new basis of accounting for PSE’s retirement benefit plans in the Puget Energy consolidated financial statements.  Such purchase accounting adjustments associated with the remeasurement of the retirement plans are recorded at Puget Energy.

The following tables summarize the Company’s net periodic benefit cost for the three and six months ended June 30, 2013 and 2012:

Puget Energy
Three Months Ended June 30,	Qualified Pension Benefits						SERP Pension Benefits					Other Benefits
(Dollars in Thousands)	2013			2012			2013			2012		2013			2012
Components of net periodic benefit cost:
Service cost	$	4,934		$	4,229		$	375		$	268	$	32		$	32
Interest cost	6,182			6,551			511			538		155			188
Expected return on plan assets	(9,696		)	(9,101		)	—			—		(109		)	(109		)
Amortization of prior service cost	(495		)	(495		)	(4		)	—		—			—
Amortization of net loss (gain)	794			234			365			176		18			17
Net periodic benefit cost	$	1,719		$	1,418		$	1,247		$	982	$	96		$	128

Puget Energy
Six Months Ended June 30,	Qualified Pension Benefits						SERP Pension Benefits					Other Benefits
(Dollars in Thousands)	2013			2012			2013			2012		2013			2012
Components of net periodic benefit cost:
Service cost	$	9,643		$	8,463		$	749		$	537	$	67		$	70
Interest cost	12,377			12,993			1,022			1,076		332			375
Expected return on plan assets	(19,548		)	(18,102		)	—			—		(218		)	(218		)
Amortization of prior service cost	(990		)	(990		)	(9		)	—		—			—
Amortization of net loss (gain)	1,444			384			731			351		34			27
Net periodic benefit cost	$	2,926		$	2,748		$	2,493		$	1,964	$	215		$	254

Puget Sound Energy
Three Months Ended June 30,	Qualified						SERP					Other
	Pension Benefits						Pension Benefits					Benefits
(Dollars in Thousands)	2013			2012			2013			2012		2013			2012
Components of net periodic benefit cost:
Service cost	$	4,934		$	4,229		$	375		$	268	$	32		$	32
Interest cost	6,182			6,551			511			538		155			188
Expected return on plan assets	(10,094		)	(10,434		)	—			—		(109		)	(109		)
Amortization of prior service cost	(393		)	(393		)	(4		)	74		8			9
Amortization of net loss (gain)	5,221			3,790			548			358		(108		)	(63		)
Amortization of transition obligation	—			—			—			—		—			12
Net periodic benefit cost	$	5,850		$	3,743		$	1,430		$	1,238	$	(22	)	$	69

Puget Sound Energy
Six Months Ended June 30,	Qualified						SERP					Other
	Pension Benefits						Pension Benefits					Benefits
(Dollars in Thousands)	2013			2012			2013			2012		2013			2012
Components of net periodic benefit cost:
Service cost	$	9,643		$	8,463		$	749		$	537	$	67		$	70
Interest cost	12,377			12,993			1,022			1,076		332			375
Expected return on plan assets	(20,343		)	(20,767		)	—			—		(218		)	(218		)
Amortization of prior service cost	(787		)	(787		)	(8		)	146		14			18
Amortization of net loss (gain)	10,306			7,508			1,096			716		(142		)	(122		)
Amortization of transition obligation	—			—			—			—		—			25
Net periodic benefit cost	$	11,196		$	7,410		$	2,859		$	2,475	$	53		$	148

The following table summarizes the Company’s change in benefit obligation for the periods ended June 30, 2013 and December 31, 2012:

Puget Energy and Puget Sound Energy	Qualified Pension Benefits						SERP Pension Benefits						Other Benefits
	Six Months Ended			Year Ended			Six Months Ended			Year Ended			Six Months Ended			Year Ended
(Dollars in Thousands)	June 30, 2013			December 31, 2012			June 30, 2013			December 31, 2012			June 30, 2013			December 31, 2012
Change in benefit obligation:
Benefit obligation at beginning of period	$	616,290		$	565,997		$	51,795		$	48,370		$	17,672		$	16,436
Service cost	9,642			16,926			749			1,073			67			139
Interest cost	12,377			25,986			1,023			2,152			332			751
Amendment	—			—			—			(122		)	—			—
Actuarial loss/(gain)	3,436			40,914			—			5,483			(1,055		)	1,199
Benefits paid	(23,250		)	(33,533		)	(3,182		)	(5,161		)	(802		)	(1,523		)
Medicare part D subsidiary received	—			—			—			—			125			670
Benefit obligation at end of period	$	618,495		$	616,290		$	50,385		$	51,795		$	16,339		$	17,672

The fair value of the Company’s qualified pension plan assets was $560.1 million and $531.2 million at June 30, 2013 and December 31, 2012, respectively.

The aggregate expected contributions by the Company to fund the qualified pension plan, SERP and the other postretirement plans for the year ending December 31, 2013 are expected to be at least $20.4 million, $5.0 million and $0.8 million, respectively. During the three months ended June 30, 2013, the Company contributed $5.1 million, $2.7 million, and $0.3 million to fund the qualified pension plan, SERP and the other postretirement plan, respectively. During the six months ended June 30, 2013, the Company contributed $10.2 million, $3.2 million and $0.7 million to fund the qualified pension plan, SERP and the other postretirement plan, respectively.