Benefit Plans and Other Postretirement Benefits

6 Months Ended

Jun. 30, 2012

Benefit Plans and Other Postretirement Benefits [Abstract]

Benefit Plans and Other Postretirement Benefits

11. Benefit Plans and Other Postretirement Benefits

 

SPS calculates base pension expense in accordance with accounting guidance for retirement benefits.  In 2011, the Texas retail electric jurisdiction began to allow the deferral of allocated pension costs to the extent that those costs exceed test year pension expenses included in rates, within prescribed limits.  Differences between regulatory-based pension expense for the Texas retail electric jurisdiction and expense as calculated under applicable accounting guidance are deferred as a regulatory asset or liability.

Components of Net Periodic Benefit Cost

	Three Months Ended June 30
	2012			2011			2012			2011
							Postretirement Health
(Thousands of Dollars)	Pension Benefits						Care Benefits
Service cost	$	2,127		$	1,896		$	302		$	254
Interest cost		4,920			5,087			745			684
Expected return on plan assets		(6,217	)		(6,559	)		(674	)		(754	)
Amortization of transition obligation		-			-			387			418
Amortization of prior service cost (credit)		359			377			(37	)		(13	)
Amortization of net loss		3,265			2,576			345			216
Net periodic benefit cost		4,454			3,377			1,068			805
Cost not recognized due to the effects of regulation		(1,075	)		(575	)		-			-
Net benefit cost recognized for financial reporting	$	3,379		$	2,802		$	1,068		$	805

	Six Months Ended June 30
	2012			2011			2012			2011
							Postretirement Health
(Thousands of Dollars)	Pension Benefits						Care Benefits
Service cost	$	4,260		$	3,845		$	630		$	546
Interest cost		9,800			10,018			1,416			1,361
Expected return on plan assets		(12,464	)		(13,158	)		(1,351	)		(1,503	)
Amortization of transition obligation		-			-			773			835
Amortization of prior service cost (credit)		719			753			(74	)		(26	)
Amortization of net loss		6,407			4,523			628			428
Net periodic benefit cost		8,722			5,981			2,022			1,641
Cost not recognized due to the effects of regulation		(2,150	)		(1,150	)		-			-
Net benefit cost recognized for financial reporting	$	6,572		$	4,831		$	2,022		$	1,641

In January 2012, contributions of $190.5 million were made across four of Xcel Energy's pension plans, of which $12.9 million was attributable to SPS.  Xcel Energy does not expect additional pension contributions during 2012.

In June 2012, to manage volatility in equity pricing within the pension master trust, Xcel Energy entered into equity collar contracts with a net-zero cost at initiation on a portion of the equity securities.  The equity collar strategy is designed to reduce potential equity losses while limiting gains, resulting in lower equity volatility for the pension plans.  At June 30, 2012, the mark-to-market value of these arrangements was not material to the value of the pension trust assets.  These arrangements will expire in December 2012.