Benefit Plans and Other Postretirement Benefits

9 Months Ended

Sep. 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 Sept. 30
	2012			2011			2012			2011
							Postretirement Health
(Thousands of Dollars)	Pension Benefits						Care Benefits
Service cost	$	2,130		$	1,923		$	314		$	273
Interest cost		4,900			5,008			707			681
Expected return on plan assets		(6,232	)		(6,579	)		(675	)		(752	)
Amortization of transition obligation		-			-			386			417
Amortization of prior service cost (credit)		360			376			(37	)		(12	)
Amortization of net loss		3,203			2,262			314			213
Net periodic benefit cost		4,361			2,990			1,009			820
Cost not recognized due to the effects of regulation		(1,076	)		(575	)		-			-
Net benefit cost recognized for financial reporting	$	3,285		$	2,415		$	1,009		$	820

	Nine Months Ended Sept. 30
	2012			2011			2012			2011
							Postretirement Health
(Thousands of Dollars)	Pension Benefits						Care Benefits
Service cost	$	6,390		$	5,768		$	944		$	819
Interest cost		14,700			15,026			2,123			2,042
Expected return on plan assets		(18,696	)		(19,737	)		(2,026	)		(2,255	)
Amortization of transition obligation		-			-			1,159			1,252
Amortization of prior service cost (credit)		1,079			1,129			(111	)		(38	)
Amortization of net loss		9,610			6,785			942			641
Net periodic benefit cost .		13,083			8,971			3,031			2,461
Cost not recognized due to the effects of regulation		(3,226	)		(1,725	)		-			-
Net benefit cost recognized for financial reporting .	$	9,857		$	7,246		$	3,031		$	2,461

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 Sept. 30, 2012, the mark-to-market value of these arrangements was not material to the value of the pension trust assets or SPS' results of operations, cash flows, or financial position.  These arrangements will expire in December 2012.