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Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2021

The rates are presented in the table below:


	December 31,
	2021		2020
Discount rate	3.00	%	2.75	%
Weighted-average rate of compensation increase	3.25	%	3.00	%
Asset return assumption	6.50	%	6.50	%

Schedule of Defined Benefit Plans Disclosures

The following table sets forth the retirement plan, SERP, and PBOP funded statuses and amounts recognized on the Consolidated Balance Sheets and Consolidated Statements of Income.


	Year Ended December 31,
	2021									2020
(Thousands of dollars)	Qualified Retirement Plan			SERP			PBOP			Qualified Retirement Plan			SERP			PBOP
Change in benefit obligations:
Benefit obligation for service rendered to date at beginning of year (PBO/PBO/APBO)	$	1,499,239		$	53,631		$	82,205		$	1,329,577		$	47,397		$	76,111
Service cost	41,159			526			1,691			34,299			389			1,581
Interest cost	40,432			1,431			2,193			45,555			1,604			2,582

Actuarial loss (gain)	8,908			(3,244)			3,438			145,440			7,240			6,547
Benefits paid	(58,541)			(2,814)			(5,301)			(55,632)			(2,999)			(4,616)
Benefit obligation at end of year (PBO/PBO/APBO)	1,531,197			49,530			84,226			1,499,239			53,631			82,205
Change in plan assets:
Market value of plan assets at beginning of year	1,186,433			—			52,286			974,993			—			52,838
Actual return on plan assets	136,151			—			7,717			165,072			—			5,320
Employer contributions	102,000			2,814			—			102,000			2,999			—
Benefits paid	(58,541)			(2,814)			(7,835)			(55,632)			(2,999)			(5,872)
Market value of plan assets at end of year	1,366,043			—			52,168			1,186,433			—			52,286
Funded status at year end	$	(165,154)		$	(49,530)		$	(32,058)		$	(312,806)		$	(53,631)		$	(29,919)
Weighted-average assumptions (benefit obligation):
Discount rate	3.00		%	3.00		%	3.00		%	2.75		%	2.75		%	2.75		%
Weighted-average rate of compensation increase	3.25		%	3.25		%	N/A			3.00		%	3.00		%	N/A

Schedule of Accumulated Benefit Obligation

The accumulated benefit obligation for the retirement plan and the SERP is presented below:


	December 31,
(Thousands of dollars)	2021		2020
Retirement plan	$	1,395,773	$	1,367,179
SERP	46,885		50,471

Schedule of Expected Benefit Payments

Benefits expected to be paid for pension, SERP, and PBOP over the next 10 years are as follows:


(Millions of dollars)	2022		2023		2024		2025		2026		2027-2031
Pension	$	62.0	$	64.0	$	65.0	$	67.0	$	68.0	$	365.0
SERP	3.0		3.0		3.0		3.0		2.9		13.9
PBOP	5.0		5.2		5.2		5.2		5.3		27.3

Schedule of Net Benefit Cost

Components of net periodic benefit cost:


	Qualified Retirement Plan						SERP						PBOP
(Thousands of dollars)	2021		2020		2019		2021		2020		2019		2021		2020		2019
Service cost	$41,159		$34,299		$25,864		$526		$389		$266		$1,691		$1,581		$1,276
Interest cost	40,432		45,555		49,006		1,431		1,604		1,760		2,193		2,582		3,046
Expected return on plan assets	(72,352)		(65,296)		(60,244)		—		—		—		(3,239)		(3,408)		(3,156)
Amortization of prior service cost	—		—		—		—		—		—		959		1,155		1,271
Amortization of net actuarial loss	41,955		36,025		22,356		2,642		1,805		1,020		—		—		—
Net periodic benefit cost	$51,194		$50,583		$36,982		$4,599		$3,798		$3,046		$1,604		$1,910		$2,437
Weighted-average assumptions (net benefit cost)
Discount rate	2.75	%	3.50	%	4.50	%	2.75	%	3.50	%	4.50	%	2.75	%	3.50	%	4.50	%
Expected return on plan assets	6.50	%	6.75	%	7.00	%	N/A		N/A		N/A		6.50	%	6.75	%	7.00	%
Weighted-average rate of compensation increase	3.00	%	3.25	%	3.25	%	3.00	%	3.25	%	3.25	%	N/A		N/A		N/A

Schedule of Amounts Recognized in Other Comprehensive Income

The following table represents amounts (before income tax impacts) included in AOCI (in the tables above), that have not yet been recognized in net periodic benefit cost:


	Year Ended December 31,
(Thousands of dollars)	2021		2020
Net actuarial loss	$	(399,010)	$	(502,783)
Prior service cost	(1,528)		(2,487)
Less: amount recognized in regulatory assets	339,356		427,550
Recognized in AOCI	$	(61,182)	$	(77,720)

Other Changes in Plan Assets and Benefit Obligations Recognized in Net Periodic Benefit Cost and Other Comprehensive Income


	Year Ended December 31,
	2021								2020								2019
(Thousands of dollars)	Total		Qualified Retirement Plan		SERP		PBOP		Total		Qualified Retirement Plan		SERP		PBOP		Total		Qualified Retirement Plan		SERP		PBOP
Net actuarial loss (gain) (a)	$	(59,176)	$	(54,892)	$	(3,245)	$	(1,039)	$	57,539	$	45,665	$	7,240	$	4,634	$	71,087	$	66,557	$	7,975	$	(3,445)
Amortization of prior service cost (b)	(959)		—		—		(959)		(1,155)		—		—		(1,155)		(1,271)		—		—		(1,271)
Amortization of net actuarial loss (b)	(44,597)		(41,955)		(2,642)		—		(37,830)		(36,025)		(1,805)		—		(23,376)		(22,356)		(1,020)		—
Prior service cost	—		—		—		—		—		—		—		—		1,878		—		—		1,878
Regulatory adjustment	88,194		86,196		—		1,998		(7,435)		(3,956)		—		(3,479)		(36,944)		(39,782)		—		2,838
Recognized in other comprehensive (income) loss	(16,538)		(10,651)		(5,887)		—		11,119		5,684		5,435		—		11,374		4,419		6,955		—
Net periodic benefit costs recognized in net income	57,397		51,194		4,599		1,604		56,291		50,583		3,798		1,910		42,465		36,982		3,046		2,437
Total of amount recognized in net periodic benefit cost and other comprehensive (income) loss	$	40,859	$	40,543	$	(1,288)	$	1,604	$	67,410	$	56,267	$	9,233	$	1,910	$	53,839	$	41,401	$	10,001	$	2,437

Schedule of Fair Value of Plan Assets

The following table sets forth, by level within the three-level fair value hierarchy, the fair values of the assets of the qualified pension plan and the PBOP as of December 31, 2021 and 2020. The SERP has no assets.


	December 31,
	2021						2020
(Thousands of dollars)	Qualified Retirement Plan		PBOP		Total		Qualified Retirement Plan		PBOP		Total
Assets at fair value:
Level 1 – Quoted prices in active markets for identical financial assets
Mutual funds	$	—	$	35,194	$	35,194	$	—	$	30,358	$	30,358
Total Level 1 Assets (1)	—		35,194		35,194		—		30,358		30,358
Level 2 – Significant other observable inputs
Private commingled equity funds (2)
Global	373,936		4,538		378,474		324,084		5,878		329,962
International	158,461		1,923		160,384		141,290		2,563		143,853
U.S. equity securities	279,062		3,386		282,448		223,374		4,051		227,425
Emerging markets	82,004		995		82,999		76,679		1,391		78,070
Private commingled fixed income funds (3)	463,942		5,630		469,572		412,230		7,476		419,706
Pooled funds and mutual funds	5,979		500		6,479		5,990		565		6,555
Government fixed income and mortgage backed securities	196		2		198		201		4		205
Total Level 2 assets (4)	1,363,580		16,974		1,380,554		1,183,848		21,928		1,205,776
Total Plan assets at fair value	1,363,580		52,168		1,415,748		1,183,848		52,286		1,236,134
Insurance company general account contracts (5)	2,463		—		2,463		2,585		—		2,585
Total Plan assets	$	1,366,043	$	52,168	$	1,418,211	$	1,186,433	$	52,286	$	1,238,719

(1)The Mutual funds category above is a balanced fund that invests in a diversified portfolio of common stocks, preferred stocks, and fixed-income securities. Under normal circumstances the balanced fund will hold no more than 75%, and no less than 25%, of its total assets in equity securities. The fund seeks regular income, conservation of principal, and an opportunity for long-term growth of principal and income.

(2)The private commingled equity funds include common collective trusts that invest in a diversified portfolio of securities regularly traded on securities exchanges. These funds are shown in the above table at net asset value (“NAV”), which is the value of securities in the fund less the amount of any liabilities outstanding. Strategies employed by the funds include investment in:

▪Global equities, including domestic equities

▪International developed countries equities

▪Domestic equities

▪Emerging markets equities

Shares in the private commingled equity funds may be redeemed given one business day notice. While they are private equity funds and reported at NAV, due to the short redemption notice period, the lack of redemption fees, the fact that the underlying investments are exchange-traded, and that substantial liabilities do not exist subject to the NAV calculation, these investments are viewed as indirectly observable (Level 2) in the fair value hierarchy and are therefore not excluded from the body of the fair value table as a reconciling item.

The global fund provides diversified exposure to global equity markets. The fund seeks to provide long-term capital growth by investing primarily in securities listed on the major developed equity markets of the U.S., Europe, and Asia, as well as within those listed on emerging country equity markets on a tactical basis.

The international fund invests in international financial markets, primarily those of developed economies in Europe and the Pacific Basin. The fund invests primarily in equity securities issued by foreign corporations, but may invest in other securities perceived as offering attractive investment return opportunities.

The domestic equities securities funds include a large and medium capitalization fund and a small capitalization fund. The large and medium capitalization fund is designed to track the performance of the large and medium capitalization companies contained in the index, which represents approximately 90% of the market capitalization of the U.S. stock market. The small capitalization fund is designed to provide maximum long-term appreciation through investments that are well diversified by industry.

The emerging markets fund was developed to invest in emerging market equities worldwide. The purposes of the fund’s operations, “emerging market countries,” include every country in the world except the developed markets of the U.S., Canada, Japan, Australia, New Zealand, Hong Kong, and Singapore, and most countries located in Western Europe. Fund investments are made directly in each country or, where direct investment is inefficient or prohibited, through appropriate financial instruments or participation in commingled funds.

(3)The private commingled fixed income funds consist primarily of fixed income debt securities issued by the U.S. Treasury, government agencies, and fixed income debt securities issued by corporations. The fixed income fund investments may include the use of

high yield, international fixed income securities and other instruments, including derivatives, to ensure prudent diversification over a broad spectrum of investments. The changes in the value of the fixed income funds are intended to offset the changes in the pension plan liabilities due to changes in the discount rate.

These funds are shown in the above table at NAV. Investments in the private commingled fixed equity funds may be redeemed given one business day notice. While they are private fixed income funds and reported at NAV, due to the short redemption notice period, the lack of redemption fees, the fact that the underlying investments are exchange-traded, and that substantial liabilities do not exist subject to the NAV calculation, these investments are viewed as indirectly observable (Level 2), and are also not excluded from the body of the fair value table as a reconciling item.

(4)With the exception of items (2) and (3), which are discussed above, the Level 2 assets consist mainly of pooled funds and mutual funds. These funds are collective short-term funds that invest in Treasury bills and money market funds and are used as a temporary cash repository.

(5)The insurance company general account contracts are annuity insurance contracts used to pay the pensions of employees who retired prior to 1989. The balance of the account disclosed in the above table is the contract value, which is the result of deposits, withdrawals, and interest credits.