SCANA sponsors a noncontributory defined benefit pension plan covering regular, full-time employees hired before January 1, 2014. DESC participates in SCANA’s pension plan. SCANA’s policy has been to fund the plan as permitted by applicable federal income tax regulations, as determined by an independent actuary.

The pension plan provides benefits under a cash balance formula for employees hired before January 1, 2000 who elected that option and all eligible employees hired subsequently through December 31, 2013. Under the cash balance formula, benefits accumulate as a result of compensation credits and interest credits. Employees hired before January 1, 2000 who elected to remain under the final average pay formula earn benefits based on years of credited service and the employee’s average annual base earnings received during the last three years of employment. Benefits under the final average pay formula continued to accrue through December 31, 2023, after which date eligible participants began accruing benefits under the cash balance formula.

In addition to pension benefits, SCANA provides certain unfunded postretirement health care and life insurance benefits to certain active and retired employees. DESC participates in these programs. Retirees hired before January 1, 2011 share in a portion of their medical care cost, while employees hired subsequently are responsible for the full cost of retiree medical benefits elected by them. The costs of postretirement benefits other than pensions are accrued during the years the employees render the services necessary to be eligible for these benefits.

The same benefit formula applies to all SCANA subsidiaries participating in the parent sponsored plans and, with regard to the pension plan, there are no legally separate asset pools. The postretirement benefit plans are accounted for as multiple employer plans.

The measurement date used to determine pension and other postretirement benefit obligations is December 31. Data related to the changes in the projected benefit obligation for pension benefits and the accumulated benefit obligation for other postretirement benefits are presented below.


	Pension Benefits						Other Postretirement Benefits
(millions)	2023			2022			2023			2022
Beginning balance	$	580		$	702		$	121		$	171
Service cost		8			8			1			1
Interest cost		33			21			8			6
Amendments		1			—			—			—
Actuarial (gain) loss		1			(105	)		1			(44	)
Benefits paid		(39	)		(46	)		(11	)		(13	)
Ending balance	$	584		$	580		$	120		$	121

The accumulated benefit obligation for pension benefits for DESC was $579 million and $578 million at December 31, 2023 and 2022, respectively. The accumulated pension benefit obligation differs from the projected pension benefit obligation above in that it reflects no assumptions about future compensation levels.

Significant assumptions used to determine the above benefit obligations are as follows:


	Pension Benefits						Other Postretirement Benefits
	2023			2022			2023			2022
Annual discount rate used to determine benefit obligation		5.39	%		5.69	%		5.42	%		5.70	%
Assumed annual rate of future salary increases for projected benefit obligation		3.54	%		3.93	%	N/A			N/A
Crediting interest rate for cash balance plans		4.14	%		4.44	%	N/A			N/A

DESC’s pension benefit obligations include a loss of $1 million in 2023 resulting primarily from a $10 million loss due to a decrease in the discount rate that was offset by a $9 million gain from other experience. DESC’s pension benefit obligations include a gain of $105 million in 2022 resulting primarily from an increase in the discount rate and a completed experience study. Actuarial losses recognized in DESC’s other postretirement benefit obligations include a $1 million loss in 2023 resulting from a $4 million loss due to a decrease in the discount rate that was offset by a $3 million gain from other experience. Actuarial gains recognized in DESC’s other postretirement benefit obligations include a $44 million gain in 2022 resulting from an increase in the discount rate.

A 7.00% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2023. The rate was assumed to decrease gradually to 5.0% in 2031 and to remain at that level thereafter.


	Pension Benefits					Other Postretirement Benefits
At December 31,	2023		2022			2023			2022
(millions)
Fair value of plan assets	$	588	$	561		$	—		$	—
Benefit obligation		584		580			120			121
Funded status	$	4	$	(19	)	$	(120	)	$	(121	)

Amounts recognized on the consolidated balance sheets were as follows:


	Pension Benefits					Other Postretirement Benefits
At December 31,	2023		2022			2023			2022
(millions)
Noncurrent assets	$	4	$	—		$	—		$	—
Current liability		—		—			(11	)		(11	)
Noncurrent liability		—		(19	)		(109	)		(110	)

Amounts recognized in regulatory assets were as follows:


	Pension Benefits				Other Postretirement Benefits
At December 31,	2023		2022		2023			2022
(millions)
Net actuarial (gain) loss	$	126	$	164	$	(41	)	$	(46	)
Prior service cost		1		—		—			—
Total	$	127	$	164	$	(41	)	$	(46	)

In connection with the joint ownership of Summer, costs related to pensions attributable to Santee Cooper as of both December 31, 2023 and 2022 totaled $19 million and $21 million and were recorded within deferred debits. Costs related to other postretirement benefits attributable to Santee Cooper as of December 31, 2023 and 2022 totaled $10 million and $9 million were recorded within deferred debits.

Changes in Fair Value of Plan Assets


	Pension Benefits
At December 31,	2023			2022
(millions)
Beginning balance	$	561		$	768
Actual return (loss) on plan assets		66			(161	)
Benefits paid		(39	)		(46	)
Ending balance	$	588		$	561

Strategic investment policies are established for DESC’s prefunded benefit plans based upon periodic asset/liability studies. Factors considered in setting the investment policy include employee demographics, liability growth rates, future discount rates, the funded status of the plans and the expected long-term rate of return on plan assets. Deviations from the plans’ strategic allocation are a function of DESC’s assessments regarding short-term risk and reward opportunities in the capital markets and/or short-term market movements which result in the plans’ actual asset allocations varying from the strategic target asset allocations. Through periodic rebalancing, actual allocations are brought back in line with the target. Future asset/liability studies will focus on strategies to further reduce pension and other postretirement plan risk, while still achieving attractive levels of returns. Financial derivatives may be used to obtain or manage market exposures and to hedge assets and liabilities.

DESC’s overall objective for investing its pension plan assets is to achieve appropriate long-term rates of return commensurate with prudent levels of risk. To minimize risk, funds are diversified among asset classes, securities, active and passive investment strategies and investment advisors. The strategic target asset allocations for DESC’s pension fund are: 45% global equities, 53% fixed income and 2% cash. Global equities include investments in U.S. and non-U.S. companies, developed and emerging markets and small and large cap companies. The split between U.S. and non-U.S. companies is roughly 60% U.S./40% Non-U.S. Fixed income includes investments in corporate debt instruments of companies from diversified industries and U.S. Treasuries. Equity and fixed income investments are in individual securities, mutual funds and exchange traded funds.

DESC also utilizes commingled funds/collective trust funds as an investment vehicle for its defined benefit plans. A commingled fund/collective trust fund is a pooled fund operated by a bank, trust company, or investment firm for investment of the assets of various organizations and individuals in a diversified portfolio. Commingled funds/collective trust funds are funds of grouped assets that follow various investment strategies.

For 2024, the expected long-term rate of return on assets will be 7.00%. DESC determines the expected long-term rates of return on plan assets for its pension plans by using a combination of:

Assets held by the pension plan are measured at fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. At December 31, 2023 and 2022, fair value measurements, and the level within the fair value hierarchy in which the measurements fall, were as follows:


At December 31,	2023								2022
(millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	4	$	1	$	—	$	5	$	—	$	2	$	—	$	2
Corporate debt instruments		—		137		—		137		—		137		—		137
Government and other debt instruments		—		14		—		14		—		18		—		18
Total recorded at fair value	$	4	$	152	$	—	$	156	$	—	$	157	$	—	$	157
Assets recorded at NAV(1)
Commingled funds/collective trust funds								436								417
Total recorded at NAV							$	436							$	417
Total investments(2)							$	592							$	574

(1)

These investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient are not required to be categorized in the fair value hierarchy.

(2)

Excludes net assets related to pending sales of securities of $1 million, net accrued income of $1 million, and includes net assets related to pending purchases of securities of $6 million at December 31, 2023. Excludes net assets related to pending sales of securities of $1 million, net accrued income of $1 million, and includes net assets related to pending purchases of securities of $15 million at December 31, 2022.

For purposes of calculating NAV, portfolio securities and other assets for which market quotes are readily available are valued at market value. Short-term investment vehicles are funds that invest in short-term fixed income instruments and are valued using observable prices of the underlying fund assets based on trade data for identical or similar securities. U.S. Treasury securities are valued using quoted market prices or based on models using observable inputs from market sources such as external prices or spreads or benchmarked thereto. Corporate debt instruments and government and other debt instruments are valued based on recently executed transactions, using quoted market prices, or based on models using observable inputs from market sources such as external prices or spreads or benchmarked thereto. In addition, corporate debt instruments include investments in open-end mutual funds registered with the SEC that invest in corporate debt instruments. Commingled funds/common collective trust assets are valued at NAV, which are determined based on the unit values of the trust funds. Unit values are determined by the organization sponsoring such funds by dividing the funds’ net assets at fair value by the units outstanding at each valuation date.

Total benefits expected to be paid from the pension plan or company assets for the other postretirement benefits plan (net of participant contributions), respectively, are as follows:

Expected Benefit Payments


(millions)	Pension Benefits		Other Postretirement Benefits
2024	$	47	$	11
2025		47		11
2026		45		11
2027		44		11
2028		46		11
2029 - 2033		236		55

Under its funding policies, DESC evaluates plan funding requirements annually, usually in the fourth quarter after receiving updated plan information from its actuary. Based on the funded status of each plan and other factors, DESC determines the amount of contributions for the current year, if any, at that time. DESC made no contributions to the pension trust in 2023, 2022 or 2021. DESC expects to make $8 million of minimum required contributions to its qualified pension plan in 2024 and expects to receive reimbursement for such contributions from Santee Cooper.

Net periodic benefit cost is recorded utilizing beginning of the year assumptions. Disclosures required for these plans are set forth in the following tables.

Components of Net Periodic Benefit (Credit) Cost


	Pension Benefits									Other Postretirement Benefits
Year Ended December 31,	2023			2022			2021			2023			2022		2021
(millions)
Service cost	$	8		$	8		$	9		$	1		$	1	$	1
Interest cost		33			21			20			8			6		6
Expected return on assets		(34	)		(49	)		(48	)		—			—		—
Amortization of actuarial losses (gains)		12			1			6			(4	)		—		—
Net periodic benefit (credit) cost	$	19		$	(19	)	$	(13	)	$	5		$	7	$	7

In connection with regulatory orders, DESC recovers current pension costs through a rate rider that may be adjusted annually for retail electric operations or through cost of service rates for gas operations. For retail electric operations, current pension expense is recognized based on amounts collected through a rate rider, and differences between actual pension expense and amounts recognized pursuant to the rider are deferred as a regulatory asset (for under-collections) or regulatory liability (for over-collections) as applicable. In addition, DESC amortizes certain previously deferred pension costs. See Note 3.

Other changes in plan assets and benefit obligations recognized in other comprehensive income (net of tax) were as follows:


	Pension Benefits								Other Postretirement Benefits
Year Ended December 31,	2023			2022		2021			2023		2022			2021
(millions)
Current year actuarial (gain) loss	$	(1	)	$	2	$	(3	)	$	—	$	(1	)	$	—
Total recognized in other comprehensive income	$	(1	)	$	2	$	(3	)	$	—	$	(1	)	$	—

Other changes in plan assets and benefit obligations recognized in regulatory assets were as follows:


	Pension Benefits									Other Postretirement Benefits
Year Ended December 31,	2023			2022			2021			2023		2022			2021
(millions)
Current year actuarial (gain) loss	$	(27	)	$	95		$	(39	)	$	2	$	(41	)	$	(6	)
Amortization of actuarial gain (loss)		(11	)		(1	)		(5	)		3		—			—
Current year prior service cost		1			—			—			—		—			—
Total recognized in regulatory assets	$	(37	)	$	94		$	(44	)	$	5	$	(41	)	$	(6	)

Significant assumptions used in determining net periodic benefit cost:


	Pension Benefits									Other Postretirement Benefits
Year Ended December 31,	2023			2022			2021			2023			2022			2021
Discount rate		5.69	%		3.06	%		2.73	%		5.70	%		3.11	%		2.80	%
Expected return on plan assets		7.00	%		7.00	%		7.00	%	n/a			n/a			n/a
Rate of compensation increase		3.93	%		3.71	%		4.52	%	n/a			n/a			n/a
Crediting interest rate for cash balance plans		4.44	%		1.81	%		1.93	%	n/a			n/a			n/a
Health care cost trend rate											7.00	%		6.25	%		6.25	%
Ultimate health care cost trend rate											5.00	%		5.00	%		5.00	%
Year achieved										2030			2026-2027			2025-2026

Effective January 2021, eligible DESC employees hired after 2013 began accruing benefits under a cash balance formula within the Dominion Energy Pension Plan, a qualified defined benefit pension plan sponsored by Dominion Energy. In addition, DESC employees hired in 2021 prior to July 2021 are covered by the Dominion Energy Pension Plan. As a participating employer, DESC is subject to Dominion Energy’s funding policy, which is to contribute annually an amount that is in accordance with ERISA. DESC made no contributions to the Dominion Energy Pension Plan during 2023. DESC made contributions of less than $1 million to the Dominion Energy Pension Plan during 2022. DESC made no contributions to the Dominion Energy Pension Plan during 2021. DESC’s net periodic pension cost related to this plan was $2 million, $1 million, and $3 million in 2023, 2022, and 2021, respectively. Net periodic benefit (credit) cost is reflected in other operations and maintenance expense in DESC’s Consolidated Statements of Income. The funded status of various Dominion Energy subsidiary groups and employee compensation are the basis for determining the share of total pension costs for participating Dominion Energy subsidiaries. During 2023 and 2022, DESC’s pension and other postretirement benefits obligation includes $6 million and $4 million, respectively, for amounts due to Dominion Energy related to this plan.

Dominion Energy holds investments in trusts to fund employee benefit payments for the pension plan in which DESC’s employees participate. Any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for such employee benefit plans and will be included in the determination of the amount of cash that DESC will provide to Dominion Energy for its share of employee benefit plan contributions.

Effective January 2021, DESC participates in a defined contribution savings plan sponsored by Dominion Energy. Previously, DESC had participated in a defined contribution plan sponsored by SCANA, which was merged into the Dominion Energy plan in December 2020. DESC recognized employer matching contributions of $14 million, $13 million, and $11 million in 2023, 2022, and 2021, respectively.