5. Employee Postretirement Benefits

TEC is a participant in the comprehensive retirement plans of TECO Energy. The following table presents detail related to TECO Energy’s periodic benefit cost for pension and other postretirement benefits. Amounts disclosed for TECO Energy’s pension benefits include the amounts related to its qualified pension plan and non-qualified, non-contributory SERP.

TECO Energy Benefit Cost
(millions)	Pension Benefits							Other Postretirement Benefits
Three months ended June 30,	2017				2016			2017			2016
Components of net periodic benefit cost
Service cost	$	5			$	5		$	0		$	1
Interest cost		9				8			2			2
Expected return on assets		(12	)			(11	)		0			0
Amortization of:
Prior service (benefit) cost		0				0			1			(1	)
Actuarial loss		4				3			(1	)		0
Curtailment cost		0				1			0			0
Settlement cost		0		⁽¹⁾		1			0			0
Net periodic benefit cost	$	6			$	7		$	2		$	2
Six months ended June 30,
Components of net periodic benefit cost
Service cost	$	10			$	9		$	1		$	1
Interest cost		16				16			4			4
Expected return on assets		(24	)			(22	)		0			(1	)
Amortization of:
Prior service (benefit) cost		0				0			0			(1	)
Actuarial loss		8				7			(1	)		0
Regulatory asset		0				0			0			1
Curtailment cost		0				1			0			0
Settlement cost		7		⁽¹⁾		1			0			0
Net periodic benefit cost	$	17			$	12		$	4		$	4

(1)	Represents TECO Energy’s SERP settlement charge as a result of retirements that occurred subsequent to the Merger with Emera. The charge did not impact TEC’s financial statements.

TEC’s portion of the net periodic benefit cost for the three months ended June 30, 2017 and 2016, respectively, was $4 million and $3 million for pension benefits, and $2 million and $2 million for other postretirement benefits. TEC’s portion of the net periodic benefit cost for the six months ended June 30, 2017 and 2016, respectively, was $7 million and $6 million for pension benefits, and $3 million and $3 million for other postretirement benefits.

For the 2017 plan year, TECO Energy assumed a long-term EROA of 7.00% and a discount rate of 4.16% for pension benefits under its qualified pension plan. For the January 1, 2017 measurement of TECO Energy’s other postretirement benefits, TECO Energy used a discount rate of 4.28%.

TECO Energy made contributions of $25 million and $16 million to its qualified pension plan in the six months ended June 30, 2017 and 2016, respectively. TEC’s portion of these contributions was $20 million and $13 million, respectively.

Included in the benefit cost discussed above, for the three and six months ended June 30, 2017, TEC reclassified $3 million and $5 million, respectively, of unamortized prior service benefit and actuarial losses from regulatory assets to net income, compared with $3 million and $5 million for the three and six months ended June 30, 2016, respectively.