5. Employee Postretirement Benefits

Included in the table below is the periodic expense for pension and other postretirement benefits offered by the company.

Pension Expense
(millions)	Pension Benefits						Other Postretirement Benefits
Three months ended Sep 30,	2014			2013			2014			2013
Components of net periodic benefit expense
Service cost	$	4.6		$	4.5		$	0.6		$	0.7
Interest cost on projected benefit obligations		8.0			7.3			2.7			2.3
Expected return on assets		(10.5	)		(9.6	)		(0.1	)		0.0
Amortization of:
Prior service (benefit) cost		(0.1	)		(0.1	)		0.0			(0.1	)
Actuarial loss		3.3			5.1			0.0			0.2
Regulatory asset		0.0			0.0			0.1			0.0
Settlement cost		0.0			1.0			0.0			0.0
Net pension expense recognized in the TECO Energy Consolidated Condensed Statements of Income	$	5.3		$	8.2		$	3.3		$	3.1
Nine months ended Sep 30,
Components of net periodic benefit expense
Service cost	$	12.9		$	13.6		$	1.8		$	1.9
Interest cost on projected benefit obligations		24.4			21.7			7.9			7.0
Expected return on assets		(31.2	)		(28.8	)		(0.1	)		0.0
Amortization of:
Prior service (benefit) cost		(0.3	)		(0.3	)		(0.1	)		(0.3	)
Actuarial loss		10.0			15.4			0.1			0.7
Regulatory asset		0.0			0.0			0.1			0.0
Settlement cost		0.0			1.0			0.0			0.0
Net pension expense recognized in the TECO Energy Consolidated Condensed Statements of Income	$	15.8		$	22.6		$	9.7		$	9.3

On Sept. 2, 2014, TECO Energy completed the purchase of NMGI, the holding company of NMGC. The employees of NMGC became participants of TECO Energy’s pension plan effective as of the closing date of the purchase; however, NMGC employees will remain in their current partially-funded other postretirement benefit plan. As such, remeasurements of TECO’s pension plan and NMGC’s other postretirement benefits plan were performed as of Sept. 2, 2014.

For the remeasurement of the pension plan, TECO Energy is using an assumed long-term EROA of 7.00% and a discount rate of 4.277% for pension benefits under its qualified pension plan. TECO Energy assumed an EROA of 5.75% and a discount rate of 4.282% for the Sept. 2, 2014 measurement of NMGC’s other postretirement benefits. For the Jan. 1, 2014 measurement of TECO Energy’s other postretirement benefits, TECO Energy assumed a discount rate of 5.096%. Additionally, TECO Energy made contributions of $47.5 million to its pension plan for the nine months ended Sept. 30, 2014. Net pension expense presented above includes the effects of these items subsequent to Sept. 2, 2014.

For the three and nine months ended Sept. 30, 2014, TECO Energy and its subsidiaries reclassed $0.7 million and $2.0 million pretax, respectively, of unamortized prior service benefit and actuarial losses from AOCI to net income as part of periodic benefit expense. In addition, during the three and nine months ended Sept. 30, 2014, the regulated companies reclassed $2.7 million and $7.9 million, respectively, of unamortized prior service benefit and actuarial losses from regulatory assets to net income as part of periodic benefit expense.

Black Lung Liability

TECO Coal is required by federal and state statutes to provide benefits to terminated, retired or (under state statutes) qualifying active employees for benefits related to black lung disease. TECO Coal is self-insured for black lung related claims. TECO Coal applies the accounting guidance of ACS 715 and annual expense is recorded for black lung obligations as determined by an independent actuary at the present value of the actuarially-computed liability for such benefits over the employee’s applicable term of service. At Sept. 30, 2014 and Dec. 31, 2013, TECO Coal had an actuarially-determined black lung liability of $27.8 million and $24.5 million, respectively. Expense related to the black lung liability recognized during the nine months ended Sept. 30, 2014 and 2013 was not material.

As discussed in Notes 15 and 18, TECO Coal was classified as an asset held for sale at Sept. 30, 2014. In accordance with ACS 715, an after-tax settlement charge of approximately $7 million related to the unfunded black lung obligations recorded in accumulated other comprehensive income will be recognized as a loss from discontinued operations upon completion of the sale of TECO Coal which is expected to occur in the fourth quarter of 2014.