8. Interim Pension and Other Postretirement Benefit Plan Information

3 Months Ended

Dec. 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 months ended December 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 December 31
			Pension Benefits				Other Benefits
			2012		2011		2012		2011
			(In thousands)
Components of net periodic pension cost:
	Service cost		$	5,202	$	4,298	$	4,700	$	4,088
	Interest cost			6,025		6,677		3,241		3,465
	Expected return on assets			(5,739)		(5,368)		(997)		(652)
	Amortization of transition asset			-		-		270		378
	Amortization of prior service cost			(35)		(35)		(362)		(362)
	Amortization of actuarial loss			5,561		4,142		1,049		662
		Net periodic pension cost	$	11,014	$	9,714	$	7,901	$	7,579

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

	Pension Benefits				Other Benefits
	2012		2011		2012		2011
Discount rate	4.04	%	5.05	%	4.04	%	5.05	%
Rate of compensation increase	3.50	%	3.50	%	N/A		N/A
Expected return on plan assets	7.75	%	7.75	%	4.70	%	4.70	%

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. We contributed $6.2 million to our pension plans during the three months ended December 31, 2012. In accordance with the Pension Protection Act of 2006 (PPA), we determined the funded status of our plans as of January 1, 2013. Based upon this valuation, we expect we will be required to contributebetween $30 million and $40 millionto our pension plans by September 15, 2013.

We contributed $6.2 million to our other post-retirement benefit plans during the three months ended December 31, 2012. We expect to contribute a total of between $25 million and $30 million to these plans during fiscal 2013.