8. Interim Pension and Other Postretirement Benefit Plan Information

6 Months Ended

Mar. 31, 2012

Disclosure Interim Pension and Other Postretirement Benefit Plans

8. Interim Pension and Postretirement Benefit Plans

8. Interim Pension and Other Postretirement Benefit Plan Information

The components of our net periodic pension cost for our pension and other postretirement benefit plans for the three and six months ended March 31, 2012 and 2011 are presented in the following table. Most of these costs are recoverable through our gas distribution rates; however, a portion of these costs is capitalized into our gas distribution rate base. The remaining costs are recorded as a component of operation and maintenance expense.

			Three Months Ended March 31
			Pension Benefits				Other Benefits
			2012		2011		2012		2011
			(In thousands)
Components of net periodic pension cost:
	Service cost		$	4,298	$	4,257	$	4,088	$	3,601
	Interest cost			6,678		7,055		3,466		3,203
	Expected return on assets			(5,369)		(6,285)		(652)		(682)
	Amortization of transition asset			-		-		378		378
	Amortization of prior service cost			(36)		(105)		(363)		(363)
	Amortization of actuarial loss			4,143		2,748		662		86
	Curtailment gain			-		(40)		-		-
		Net periodic pension cost	$	9,714	$	7,630	$	7,579	$	6,223
			Six Months Ended March 31
			Pension Benefits				Other Benefits
			2012		2011		2012		2011
			(In thousands)
Components of net periodic pension cost:
	Service cost		$	8,596	$	8,637	$	8,176	$	7,202
	Interest cost			13,355		13,979		6,931		6,406
	Expected return on assets			(10,737)		(12,248)		(1,304)		(1,364)
	Amortization of transition asset			-		-		756		756
	Amortization of prior service cost			(71)		(217)		(725)		(725)
	Amortization of actuarial loss			8,285		6,242		1,324		173
	Curtailment gain			-		(40)		-		-
		Net periodic pension cost	$	19,428	$	16,353	$	15,158	$	12,448

The assumptions used to develop our net periodic pension cost for the three and six months ended March 31, 2012 and 2011 are as follows:

	Pension				Other
	Account Plan				Pension Benefits				Other Benefits
	2012		2011		2012		2011		2012		2011
Discount rate	5.05	%	5.68	%	5.05	%	5.39	%	5.05	%	5.39	%
Rate of compensation increase	3.50	%	4.00	%	3.50	%	4.00	%	N/A		N/A
Expected return on plan assets	7.75	%	8.25	%	7.75	%	8.25	%	4.70	%	5.00	%

The discount rate used to compute the present value of a plan's liabilities generally is based on rates of high-grade corporate bonds with maturities similar to the average period over which the benefits will be paid. Generally, our funding policy has been to contribute annually an amount in accordance with the requirements of the Employee Retirement Income Security Act of 1974. In accordance with the Pension Protection Act of 2006 (PPA), we determined the funded status of our plans as of January 1, 2012. Based upon this valuation, we contributed $23.0 million to our defined benefit pension plans during the second fiscal quarter to achieve a desirable PPA funding threshold. The need for this funding reflects the increased pension benefit obligation due to a decrease in the discount rate compared to the prior year as well as a decline in the fair value of plan assets. During the first six months of fiscal 2012, we contributed $34.2 million to our defined benefit plans and we anticipate contributing an additional $12.4 million during the remainder of the fiscal year.

We contributed $9.1 million to our other post-retirement benefit plans during the six months ended March 31, 2012. We expect to contribute a total of approximately $10million to $15million to these plans during the remainder of the fiscal year.