Components of Net Periodic Benefit Cost

9 Months Ended

Sep. 30, 2019

Note 2 – Components of Net Periodic Benefit Cost

Southwest has a noncontributory qualified retirement plan with defined benefits covering substantially all employees and a separate unfunded supplemental retirement plan (“SERP”) which is limited to officers. Southwest also provides postretirement benefits other than pensions (“PBOP”) to its qualified retirees for health care, dental, and life insurance.

The service cost component of net periodic benefit costs included in the table below are components of an overhead loading process associated with the cost of labor. The overhead process ultimately results in allocation of that portion of overall net periodic benefit costs to the same accounts to which productive labor is charged. As a result, service costs become components of various accounts, primarily operations and maintenance expense, net utility plant, and deferred charges and other assets for both the Company and Southwest. The other components of net periodic benefit cost are reflected in Other income (deductions) on the Condensed Consolidated Statements of Income of each entity.



	Qualified Retirement Plan
	Period Ended September 30,
	Three Months						Nine Months						Twelve Months
	2019			2018			2019			2018			2019			2018
(Thousands of dollars)
Service cost	$	6,466		$	7,139		$	19,398		$	21,417		$	26,536		$	27,265
Interest cost	12,252			11,043			36,755			33,130			47,799			44,652
Expected return on plan assets	(15,061		)	(14,689		)	(45,183		)	(44,066		)	(59,872		)	(57,865		)
Amortization of net actuarial loss	5,589			8,029			16,767			24,086			24,796			30,087
Net periodic benefit cost	$	9,246		$	11,522		$	27,737		$	34,567		$	39,259		$	44,139

	SERP
	Period Ended September 30,
	Three Months						Nine Months						Twelve Months
	2019			2018			2019			2018			2019			2018
(Thousands of dollars)
Service cost	$	66		$	61		$	199		$	183		$	261		$	260
Interest cost	440			415			1,320			1,244			1,734			1,714
Amortization of net actuarial loss	255			375			765			1,126			1,141			1,486
Net periodic benefit cost	$	761		$	851		$	2,284		$	2,553		$	3,136		$	3,460

	PBOP
	Period Ended September 30,
	Three Months						Nine Months						Twelve Months
	2019			2018			2019			2018			2019			2018
(Thousands of dollars)
Service cost	$	319		$	368		$	957		$	1,105		$	1,325		$	1,472
Interest cost	761			687			2,285			2,061			2,972			2,869
Expected return on plan assets	(789		)	(929		)	(2,367		)	(2,789		)	(3,296		)	(3,629		)
Amortization of prior service costs	318			334			953			1,002			1,286			1,336
Net periodic benefit cost	$	609		$	460		$	1,828		$	1,379		$	2,287		$	2,048