Employee Benefit Plans

In the first quarter of 2016, the Companies announced an organizational design initiative that will reduce their total workforces during 2016. The goal of the organizational design initiative was to streamline leadership structure and push decision making lower while also improving efficiency. During the nine months ended September 30, 2016, Dominion recorded a $65 million ($40 million after-tax) charge, including $33 million ($20 million after-tax) at Virginia Power and $8 million ($5 million after-tax) at Dominion Gas, primarily reflected in other operations and maintenance expense in their Consolidated Statements of Income due to severance pay and other costs related to the organizational design initiative. The terms of the severance under the organizational design initiative were consistent with the Companies’ existing severance plans.

Dominion

The components of Dominion's provision for net periodic benefit cost (credit) were as follows:



	Pension Benefits						Other Postretirement Benefits
	2016			2015			2016			2015
(millions)
Three Months Ended September 30,
Service cost	$	30		$	32		$	7		$	10
Interest cost	79			71			16			17
Expected return on plan assets	(141		)	(132		)	(28		)	(29		)
Amortization of prior service credit	—			—			(9		)	(7		)
Amortization of net actuarial loss	29			40			2			1
Net periodic benefit cost (credit)	$	(3	)	$	11		$	(12	)	$	(8	)
Nine Months Ended September 30,
Service cost	$	87		$	95		$	23		$	30
Interest cost	234			215			50			50
Expected return on plan assets	(419		)	(398		)	(87		)	(88		)
Amortization of prior service cost (credit)	1			1			(23		)	(20		)
Amortization of net actuarial loss	84			120			5			4
Net periodic benefit cost (credit)	$	(13	)	$	33		$	(32	)	$	(24	)

Plan Amendment and Remeasurement

In the third quarter of 2016, Dominion remeasured an other postretirement benefit plan as a result of an amendment that changed post-65 retiree medical coverage for certain current and future Local 50 retirees effective April 1, 2017. The remeasurement resulted in a decrease in Dominion's accumulated postretirement benefit obligation of $37 million. The impact of the remeasurement on net periodic benefit credit was recognized prospectively from the remeasurement date and is expected to increase the net periodic benefit credit for 2016 by $9 million. The discount rate used for the remeasurement was 3.71% and the demographic and mortality assumptions were updated using plan-specific studies and mortality improvement scales. The expected long-term rate of return used was consistent with the measurement as of December 31, 2015.

Employer Contributions

During the nine months ended September 30, 2016, Dominion made no contributions to its defined benefit pension plans or other postretirement benefit plans. Dominion expects to contribute approximately $12 million to its other postretirement benefit plans through VEBAs during the remainder of 2016.

Dominion Gas

Dominion Gas participates in certain Dominion benefit plans as described in Note 21 to the Consolidated Financial Statements in the Companies' Annual Report on Form 10-K for the year ended December 31, 2015. See Note 17 for more information.

The components of Dominion Gas' provision for net periodic benefit credit for employees represented by collective bargaining units were as follows:



	Pension Benefits						Other Postretirement Benefits
	2016			2015			2016			2015
(millions)
Three Months Ended September 30,
Service cost	$	3		$	4		$	1		$	2
Interest cost	7			7			3			3
Expected return on plan assets	(33		)	(31		)	(5		)	(6		)
Amortization of net actuarial loss	3			5			—			1
Net periodic benefit credit	$	(20	)	$	(15	)	$	(1	)	$	—
Nine Months Ended September 30,
Service cost	$	10		$	11		$	4		$	5
Interest cost	22			21			10			10
Expected return on plan assets	(100		)	(94		)	(17		)	(18		)
Amortization of net actuarial loss	10			15			1			2
Net periodic benefit credit	$	(58	)	$	(47	)	$	(2	)	$	(1	)

Employer Contributions

During the nine months ended September 30, 2016, Dominion Gas made no contributions to its defined benefit pension plans or other postretirement benefit plans. Dominion Gas expects to contribute approximately $12 million to its other postretirement benefit plans through VEBAs, for both employees represented by collective bargaining units and employees not represented by collective bargaining units, during the remainder of 2016.