PENSION PLANS AND OTHER POSTRETIREMENT BENEFIT PLANS

Avista Utilities

Avista Utilities’ pension and other postretirement plans have not changed during the three months ended March 31, 2018. The Company’s funding policy is to contribute at least the minimum amounts that are required to be funded under the Employee Retirement Income Security Act, but not more than the maximum amounts that are currently deductible for income tax purposes. The Company contributed $7.3 million in cash to the pension plan for the three months ended March 31, 2018 and expects to contribute a total of $22.0 million in 2018.

The Company uses a December 31 measurement date for its defined benefit pension and other postretirement benefit plans. The following table sets forth the components of net periodic benefit costs for the three months ended March 31 (dollars in thousands):



	Pension Benefits						Other Postretirement Benefits
	2018			2017			2018			2017
Three months ended March 31:
Service cost (a)	$	5,450		$	5,042		$	804		$	824
Interest cost	6,466			6,951			1,197			1,399
Expected return on plan assets	(8,250		)	(7,900		)	(500		)	(475		)
Amortization of prior service cost	75			—			(815		)	(312		)
Net loss recognition	2,088			2,546			1,655			1,273
Net periodic benefit cost	$	5,829		$	6,639		$	2,341		$	2,709


(a)	Total service costs in the table above are recorded to the same accounts as labor expense. Labor and benefits expense is recorded to various projects based on whether the work is a capital project or an operating expense. Approximately 40 percent of all labor and benefits is capitalized to utility property and 60 percent is expensed to utility other operating expenses.

See Note 2 for discussion regarding the adoption of ASU No. 2017-07 and its impact to the presentation of pension and other postretirement benefits in the Condensed Consolidated Statements of Income and the Condensed Consolidated Balance Sheets.