Employee Benefit Plans

9 Months Ended

Sep. 30, 2019

Net periodic benefit costs for our pension and post-retirement benefits plans for the three and nine months ended September 30, 2019 and 2018 are set forth in the following tables:



	Chesapeake Pension Plan						FPU Pension Plan						Chesapeake SERP				Chesapeake Postretirement Plan						FPU Medical Plan
For the Three Months Ended September 30,	2019			2018			2019			2018			2019		2018		2019			2018			2019		2018
(in thousands)
Interest cost	$	104		$	94		$	614		$	570		$	16	$	21	$	10		$	10		$	12	$	12
Expected return on plan assets	(127		)	(131		)	(693		)	(770		)	—		—		—			—			—		—
Amortization of prior service credit	—			—			—			—			—		—		(19		)	(19		)	—		—
Amortization of net loss	101			82			128			86			17		25		11			15			—		—
Net periodic cost (benefit)	78			45			49			(114		)	33		46		2			6			12		12
Settlement expense	—			—			—			—			58		—		—			—			—		—
Amortization of pre-merger regulatory asset	—			—			162			191			—		—		—			—			2		2
Total periodic cost	$	78		$	45		$	211		$	77		$	91	$	46	$	2		$	6		$	14	$	14



	Chesapeake Pension Plan						FPU Pension Plan						Chesapeake SERP				Chesapeake Postretirement Plan						FPU Medical Plan
For the Nine Months Ended September 30,	2019			2018			2019			2018			2019		2018		2019			2018			2019		2018
(in thousands)
Interest cost	$	314		$	288		$	1,844		$	1,754		$	58	$	63	$	29		$	29		$	36	$	38
Expected return on plan assets	(381		)	(406		)	(2,079		)	(2,318		)	—		—		—			—			—		—
Amortization of prior service credit	—			—			—			—			—		—		(58		)	(58		)	—		—
Amortization of net loss	304			258			386			302			68		75		35			45			—		—
Net periodic cost (benefit)	237			140			151			(262		)	126		138		6			16			36		38
Settlement expense	—			—			—			—			58		—		—			—			—		—
Amortization of pre-merger regulatory asset	—			—			543			571			—		—		—			—			6		6
Total periodic cost	$	237		$	140		$	694		$	309		$	184	$	138	$	6		$	16		$	42	$	44

We expect to record pension and postretirement benefit costs of approximately $1.3 million for 2019. Included in these costs is approximately $0.6 million related to amortization of the FPU pension regulatory asset, which represents the portion attributable to FPU’s regulated energy operations for the changes in funded status that occurred, but were not recognized, as part of net periodic benefit costs prior to the FPU merger in 2009. This was deferred as a regulatory asset by FPU prior to the merger, to be recovered through rates pursuant to a previous order by the Florida PSC. As of September 30, 2019, a larger portion of the regulatory asset related primarily to the FPU Pension Plan was fully amortized. The unamortized balance of this regulatory asset was approximately $0.6 million at December 31, 2018. Excluding the service cost component, the other components of the net periodic costs have been recorded or reclassified to other expense, net in the condensed consolidated statements of income.

Pursuant to a Florida PSC order, FPU continues to record, as a regulatory asset, a portion of the unrecognized pension and postretirement benefit costs related to its regulated operations after the FPU merger. The portion of the unrecognized pension and postretirement benefit costs related to FPU’s unregulated operations and Chesapeake Utilities' operations is recorded to accumulated other comprehensive loss.

In connection with the lump sum distribution from the Chesapeake SERP in July 2019 and the related settlement accounting we re-measured the benefit obligation using a discount rate of three percent.

We began executing a de-risking strategy for the Chesapeake Pension Plan. As a result, during the fourth quarter of 2019 we will purchase annuities for those retirees currently receiving monthly payments. We also offered lump-sum payments to our terminated vested employees. We will recognize the appropriate settlement accounting associated with retirees and terminated vested employees that are selecting lump sum payments in the fourth quarter of 2019.

The following tables present the amounts included in the regulatory asset and accumulated other comprehensive loss that were recognized as components of net periodic benefit cost during the three and nine months ended September 30, 2019 and 2018:



For the Three Months Ended September 30, 2019	Chesapeake Pension Plan		FPU Pension Plan		Chesapeake SERP		Chesapeake Postretirement Plan			FPU Medical Plan		Total
(in thousands)
Prior service credit	$	—	$	—	$	—	$	(19	)	$	—	$	(19	)
Net loss	101		128		17		11			—		257
Total recognized in net periodic benefit cost	101		128		17		(8		)	—		238
Recognized from accumulated other comprehensive loss/(gain) ⁽¹⁾	101		24		17		(8		)	—		134
Recognized from regulatory asset	—		104		—		—			—		104
Total	$	101	$	128	$	17	$	(8	)	$	—	$	238



For the Three Months Ended September 30, 2018	Chesapeake Pension Plan		FPU Pension Plan		Chesapeake SERP		Chesapeake Postretirement Plan			FPU Medical Plan		Total
(in thousands)
Prior service credit	$	—	$	—	$	—	$	(19	)	$	—	$	(19	)
Net loss	82		86		25		15			—		208
Total recognized in net periodic benefit cost	82		86		25		(4		)	—		189
Recognized from accumulated other comprehensive loss/(gain) ⁽¹⁾	82		16		25		(4		)	—		119
Recognized from regulatory asset	—		70		—		—			—		70
Total	$	82	$	86	$	25	$	(4	)	$	—	$	189



For the Nine Months Ended September 30, 2019	Chesapeake Pension Plan		FPU Pension Plan		Chesapeake SERP		Chesapeake Postretirement Plan			FPU Medical Plan		Total
(in thousands)
Prior service credit	$	—	$	—	$	—	$	(58	)	$	—	$	(58	)
Net loss	304		386		68		35			—		793
Total recognized in net periodic benefit cost	304		386		68		(23		)	—		735
Recognized from accumulated other comprehensive loss/(gain) ⁽¹⁾	304		73		68		(23		)	—		422
Recognized from regulatory asset	—		313		—		—			—		313
Total	$	304	$	386	$	68	$	(23	)	$	—	$	735



For the Nine Months Ended September 30, 2018	Chesapeake Pension Plan		FPU Pension Plan		Chesapeake SERP		Chesapeake Postretirement Plan			FPU Medical Plan		Total
(in thousands)
Prior service credit	$	—	$	—	$	—	$	(58	)	$	—	$	(58	)
Net loss	258		302		75		45			—		680
Total recognized in net periodic benefit cost	258		302		75		(13		)	—		622
Recognized from accumulated other comprehensive loss/(gain) ⁽¹⁾	258		57		75		(13		)	—		377
Recognized from regulatory asset	—		245		—		—			—		245
Total	$	258	$	302	$	75	$	(13	)	$	—	$	622

⁽¹⁾See Note 9, Stockholder's Equity.

During the three and nine months ended September 30, 2019, we contributed approximately $1.0 million and $1.1 million, respectively, to the Chesapeake Pension Plan and approximately $0.3 million and $0.9 million, respectively, to the FPU Pension Plan. We expect to contribute a total of approximately $1.1 million and $1.2 million, respectively to the Chesapeake Pension Plan and FPU Pension Plans during 2019, which represents the minimum annual contribution payments required.

The Chesapeake SERP, the Chesapeake Postretirement Plan and the FPU Medical Plan are unfunded and are expected to be paid out of our general funds. Cash benefits paid under the Chesapeake SERP for the nine months ended September 30, 2019 were $0.1 million. There were immaterial cash benefits paid for the three months ended September 30, 2019. We expect to pay total cash benefits of approximately $0.4 million under the Chesapeake SERP in 2019. There were no cash benefits paid under the Chesapeake Postretirement Plan, for the three and nine months ended September 30, 2019. We estimate that approximately $0.1 million will be paid, primarily for medical claims under the Chesapeake Postretirement Plan in 2019. Cash benefits paid under the FPU Medical Plan, primarily for medical claims for the three and nine months ended September 30, 2019, were immaterial for each period. We estimate that approximately $0.1 million will be paid for such benefits under the FPU Medical Plan in 2019.