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Employee benefit plans

12 Months Ended

Dec. 31, 2019

Pension and other postretirement benefit plans

The Company has noncontributory qualified defined benefit pension plans and other postretirement benefit plans for certain eligible employees. The Company uses a measurement date of December 31 for all of its pension and postretirement benefit plans.

Prior to 2013, defined benefit pension plan benefits and accruals for all nonunion and certain union plans were frozen and on June 30, 2015, the remaining union plan was frozen. These employees were eligible to receive additional defined contribution plan benefits. In October 2018, the Company transferred the liability of certain participants in the defined benefit pension plan, who are currently receiving benefits, to an annuity company. The transfer of the benefit payments for these participants reduced the Company's liability and future premiums.

Effective January 1, 2010, eligibility to receive retiree medical benefits was modified at certain of the Company's businesses. Employees who had attained age 55 with 10 years of continuous service by December 31, 2010, were provided the option to choose between a pre-65 comprehensive medical plan coupled with a Medicare supplement or a specified company funded Retiree Reimbursement Account, regardless of when they retire. All other eligible employees must meet the new eligibility criteria of age 60 and 10 years of continuous service at the time they retire to be eligible for a specified company funded Retiree Reimbursement Account. Employees hired after December 31, 2009, will not be eligible for retiree medical benefits at certain of the Company's businesses.

In 2012, the Company modified health care coverage for certain retirees. Effective January 1, 2013, post-65 coverage was replaced by a fixed-dollar subsidy for retirees and spouses to be used to purchase individual insurance through an exchange.

Changes in benefit obligation and plan assets for the years ended December 31, 2019 and 2018, and amounts recognized in the Consolidated Balance Sheets at December 31, 2019 and 2018, were as follows:



	Pension Benefits						Other Postretirement Benefits
	2019			2018			2019			2018
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	391,602		$	445,923		$	81,201		$	91,206
Service cost	—			—			1,142			1,494
Interest cost	15,225			14,591			2,986			2,899
Plan participants' contributions	—			—			1,040			1,282
Actuarial (gain) loss	40,219			(32,637		)	2,632			(10,115		)
Benefits paid	(25,880		)	(36,275		)	(5,387		)	(5,565		)
Benefit obligation at end of year	421,166			391,602			83,614			81,201
Change in net plan assets:
Fair value of plan assets at beginning of year	307,809			354,384			82,516			88,739
Actual gain (loss) on plan assets	58,409			(21,138		)	15,731			(2,781		)
Employer contribution	24,926			10,838			687			842
Plan participants' contributions	—			—			1,040			1,281
Benefits paid	(25,880		)	(36,275		)	(5,387		)	(5,565		)
Fair value of net plan assets at end of year	365,264			307,809			94,587			82,516
Funded status - over (under)	$	(55,902	)	$	(83,793	)	$	10,973		$	1,315
Amounts recognized in the Consolidated Balance Sheets at December 31:
Deferred charges and other assets - other	$	—		$	—		$	30,475		20,843
Other accrued liabilities	—			—			647			660
Deferred credits and other liabilities - other	55,902			83,793			18,855			18,868
Benefit obligation assets (liabilities) - net amount recognized	$	(55,902	)	$	(83,793	)	$	10,973		$	1,315
Amounts recognized in accumulated other comprehensive loss:
Actuarial loss	$	27,748		$	28,796		$	6,118		$	6,372
Prior service credit	—			—			(731		)	(848		)
Total	$	27,748		$	28,796		$	5,387		$	5,524
Amounts recognized in regulatory assets or liabilities:
Actuarial (gain) loss	$	155,484		$	159,939		$	(4,450	)	$	3,944
Prior service credit	—			—			(8,109		)	(9,390		)
Total	$	155,484		$	159,939		$	(12,559	)	$	(5,446	)

Employer contributions and benefits paid in the preceding table include only those amounts contributed directly to, or paid directly from, plan assets. Amounts related to regulated operations are recorded as regulatory assets or liabilities and are expected to be reflected in rates charged to customers over time. For more information on regulatory assets and liabilities, see Note 7.

Unrecognized pension actuarial 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 life expectancy of plan participants for frozen plans. The market-related value of assets is determined using a five-year average of assets.

The pension plans all have accumulated benefit obligations in excess of plan assets. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for these plans at December 31 were as follows:



	2019		2018
	(In thousands)
Projected benefit obligation	$	421,166	$	391,602
Accumulated benefit obligation	$	421,166	$	391,602
Fair value of plan assets	$	365,264	$	307,809

Components of net periodic benefit cost (credit) for the Company's pension and other postretirement benefit plans for the years ended December 31 were as follows:



	Pension Benefits									Other Postretirement Benefits
	2019			2018			2017			2019			2018			2017
	(In thousands)
Components of net periodic benefit cost (credit):
Service cost	$	—		$	—		$	—		$	1,142		$	1,494		$	1,508
Interest cost	15,225			14,591			16,207			2,986			2,899			3,265
Expected return on assets	(18,236		)	(20,753		)	(20,528		)	(4,804		)	(4,866		)	(4,641		)
Amortization of prior service credit	—			—			—			(1,398		)	(1,394		)	(1,371		)
Recognized net actuarial loss	5,548			7,005			6,355			353			640			857
Net periodic benefit cost (credit), including amount capitalized	2,537			843			2,034			(1,721		)	(1,227		)	(382		)
Less amount capitalized	—			—			310			113			153			(370		)
Net periodic benefit cost (credit)	2,537			843			1,724			(1,834		)	(1,380		)	(12		)
Other changes in plan assets and benefit obligations recognized in accumulated comprehensive loss:
Net (gain) loss	(144		)	991			(1,091		)	(127		)	(1,735		)	1,742
Amortization of actuarial loss	(904		)	(1,084		)	(1,040		)	(110		)	(354		)	(289		)
Amortization of prior service (cost) credit	—			—			—			100			(220		)	161
Total recognized in accumulated other comprehensive loss	(1,048		)	(93		)	(2,131		)	(137		)	(2,309		)	1,614
Other changes in plan assets and benefit obligations recognized in regulatory assets or liabilities:
Net (gain) loss	189			8,263			(4,736		)	(8,168		)	(732		)	(4,932		)
Amortization of actuarial loss	(4,644		)	(5,921		)	(5,315		)	(242		)	(286		)	(568		)
Amortization of prior service credit	—			—			—			1,297			1,614			1,210
Total recognized in regulatory assets or liabilities	(4,455		)	2,342			(10,051		)	(7,113		)	596			(4,290		)
Total recognized in net periodic benefit cost (credit), accumulated other comprehensive loss and regulatory assets or liabilities	$	(2,966	)	$	3,092		$	(10,458	)	$	(9,084	)	$	(3,093	)	$	(2,688	)

The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss and regulatory assets or liabilities into net periodic benefit cost in 2020 is $7.2 million. The estimated net loss and prior service credit for the other postretirement benefit plans that will be amortized from accumulated other comprehensive loss and regulatory assets or liabilities into net periodic benefit credit in 2020 are $250,000 and $1.4 million, respectively. Prior service credit is amortized on a straight-line basis over the average remaining service period of active participants.

Weighted average assumptions used to determine benefit obligations at December 31 were as follows:



	Pension Benefits				Other Postretirement Benefits
	2019		2018		2019		2018
Discount rate	2.96	%	4.03	%	3.00	%	4.05	%
Expected return on plan assets	6.25	%	6.75	%	5.75	%	5.75	%
Rate of compensation increase	N/A		N/A		3.00	%	3.00	%

Weighted average assumptions used to determine net periodic benefit cost (credit) for the years ended December 31 were as follows:



	Pension Benefits				Other Postretirement Benefits
	2019		2018		2019		2018
Discount rate	4.03	%	3.38	%	4.05	%	3.41	%
Expected return on plan assets	6.25	%	6.75	%	5.75	%	5.75	%
Rate of compensation increase	N/A		N/A		3.00	%	3.00	%

The expected rate of return on pension plan assets is based on a targeted asset allocation range determined by the funded ratio of the plan. As of December 31, 2019, the expected rate of return on pension plan assets is based on the targeted asset allocation range of 40 percent

to 50 percent equity securities and 50 percent to 60 percent fixed-income securities and the expected rate of return from these asset categories. The expected rate of return on other postretirement plan assets is based on the targeted asset allocation range of 30 percent equity securities and 70 percent fixed-income securities and the expected rate of return from these asset categories. The expected return on plan assets for other postretirement benefits reflects insurance-related investment costs.

Health care rate assumptions for the Company's other postretirement benefit plans as of December 31 were as follows:



	2019					2018
Health care trend rate assumed for next year	7.1	%	–	7.4	%	7.5	%	–	8.1	%
Health care cost trend rate - ultimate				4.5	%				4.5	%
Year in which ultimate trend rate achieved				2024					2024

The Company's other postretirement benefit plans include health care and life insurance benefits for certain retirees. The plans underlying these benefits may require contributions by the retiree depending on such retiree's age and years of service at retirement or the date of retirement. The Company contributes a flat dollar amount to the monthly premiums which is updated annually on January 1.

Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. A one percentage point change in the assumed health care cost trend rates would have had the following effects at December 31, 2019:



	1 Percentage Point Increase		1 Percentage Point Decrease
	(In thousands)
Effect on total of service and interest cost components	$	245	$	(203	)
Effect on postretirement benefit obligation	$	3,751	$	(3,155	)

In 2019, the Company contributed an additional $20.0 million to its defined benefit pension plans, which increased the funded status and decreased future expenses for the plans. The Company does not expect to contribute to its defined benefit pension plans and expects to contribute approximately $660,000 to its postretirement benefit plans in 2020.

The following benefit payments, which reflect future service, as appropriate, and expected Medicare Part D subsidies at December 31, 2019, are as follows:



Years	Pension Benefits		Other Postretirement Benefits		Expected Medicare Part D Subsidy
			(In thousands)
2020	$	24,128	$	5,024	$	92
2021	24,432		5,073		86
2022	24,642		5,098		80
2023	24,874		5,091		73
2024	24,924		5,000		65
2025-2029	121,205		24,242		222

Outside investment managers manage the Company's pension and postretirement assets. The Company's investment policy with respect to pension and other postretirement assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive purpose of providing benefits accrued and defraying the reasonable expenses of administration. The Company strives to maintain investment diversification to assist in minimizing the risk of large losses. The Company's policy guidelines allow for investment of funds in cash equivalents, fixed-income securities and equity securities. The guidelines prohibit investment in commodities and futures contracts, equity private placement, employer securities, leveraged or derivative securities, options, direct real estate investments, precious metals, venture capital and limited partnerships. The guidelines also prohibit short selling and margin transactions. The Company's practice is to periodically review and rebalance asset categories based on its targeted asset allocation percentage policy.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The fair value ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company's pension plans' assets are determined using the market approach.

The carrying value of the pension plans' Level 2 cash equivalents approximates fair value and is determined using observable inputs in active markets or the net asset value of shares held at year end, which is determined using other observable inputs including pricing from outside sources.

The estimated fair value of the pension plans' Level 1 equity securities is based on the closing price reported on the active market on which the individual securities are traded. The estimated fair value of the pension plans' Level 1 and Level 2 collective and mutual funds are based on the net asset value of shares held at year end, based on either published market quotations on active markets or other known sources including pricing from outside sources. The estimated fair value of the pension plans' Level 2 corporate and municipal bonds is determined using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, future cash flows and other reference data. The estimated fair value of the pension plans' Level 1 U.S. Government securities are valued based on quoted prices on an active market. The estimated fair value of the pension plans' Level 2 U.S. Government securities are valued mainly using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, to be announced prices, future cash flows and other reference data. Some of these securities are valued using pricing from outside sources.

Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the years ended December 31, 2019 and 2018, there were no transfers between Levels 1 and 2.

The fair value of the Company's pension plans' assets (excluding cash) by class were as follows:



	Fair Value Measurements at December 31, 2019, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2019
	(In thousands)
Assets:
Cash equivalents	$	—	$	26,166	$	—	$	26,166
Equity securities:
U.S. companies	14,457		—		—		14,457
International companies	—		938		—		938
Collective and mutual funds*	160,906		58,894		—		219,800
Corporate bonds	—		80,768		—		80,768
Municipal bonds	—		11,828		—		11,828
U.S. Government securities	7,296		2,082		—		9,378
Total assets measured at fair value	$	182,659	$	180,676	$	—	$	363,335


*	Collective and mutual funds invest approximately 29 percent in common stock of international companies, 21 percent in common stock of large-cap U.S. companies, 18 percent in U.S. Government securities, 9 percent in corporate bonds, 6 percent in cash equivalents and 17 percent in other investments.



	Fair Value Measurements at December 31, 2018, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2018
	(In thousands)
Assets:
Cash equivalents	$	—	$	4,930	$	—	$	4,930
Equity securities:
U.S. companies	11,038		—		—		11,038
International companies	—		967		—		967
Collective and mutual funds*	145,960		51,600		—		197,560
Corporate bonds	—		73,110		—		73,110
Municipal bonds	—		10,624		—		10,624
U.S. Government securities	479		5,896		—		6,375
Total assets measured at fair value	$	157,477	$	147,127	$	—	$	304,604


*	Collective and mutual funds invest approximately 27 percent in common stock of international companies, 31 percent in corporate bonds, 18 percent in common stock of large-cap U.S. companies, 5 percent in cash equivalents and 19 percent in other investments.

The estimated fair values of the Company's other postretirement benefit plans' assets are determined using the market approach.

The estimated fair value of the other postretirement benefit plans' Level 2 cash equivalents is valued at the net asset value of shares held at year end, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated fair value of the other postretirement benefit plans' Level 1 equity securities is based on the closing price reported on the active market on which the individual securities are traded. The estimated fair value of the other postretirement benefit plans' Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data.

The fair value of the Company's other postretirement benefit plans' assets (excluding cash) by asset class were as follows:



	Fair Value Measurements at December 31, 2019, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2019
	(In thousands)
Assets:
Cash equivalents	$	—	$	4,017	$	—	$	4,017
Equity securities:
U.S. companies	2,073		—		—		2,073
International companies	—		1		—		1
Insurance contract*	10		88,486		—		88,496
Total assets measured at fair value	$	2,083	$	92,504	$	—	$	94,587


*	The insurance contract invests approximately 50 percent in corporate bonds, 25 percent in common stock of large-cap U.S. companies, 7 percent in U.S. Government securities, 7 percent in common stock of small-cap U.S. companies and 11 percent in other investments.



	Fair Value Measurements at December 31, 2018, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2018
	(In thousands)
Assets:
Cash equivalents	$	—	$	3,866	$	—	$	3,866
Equity securities:
U.S. companies	1,767		—		—		1,767
International companies	—		2		—		2
Insurance contract*	1		76,880		—		76,881
Total assets measured at fair value	$	1,768	$	80,748	$	—	$	82,516


*	The insurance contract invests approximately 51 percent in corporate bonds, 23 percent in common stock of large-cap U.S. companies, 7 percent in U.S. Government securities, 7 percent in common stock of small-cap U.S. companies and 12 percent in other investments.