Retirement Benefits

9 Months Ended

Sep. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Retirement Benefits

Retirement Benefits

PSE has a defined benefit pension plan covering substantially all PSE employees.  Pension benefits earned are a function of age, salary, years of service and, in the case of employees in the cash balance formula plan, the applicable annual interest crediting rates.  PSE also maintains a non-qualified Supplemental Executive Retirement Plan (SERP) for its key senior management employees.  In addition to providing pension benefits, PSE provides group health care and life insurance benefits for certain retired employees.  These benefits are provided principally through an insurance company.  The insurance premiums, paid primarily by retirees, are based on the benefits provided during the year.

The 2009 merger of Puget Energy with Puget Holdings triggered a new basis of accounting for PSE’s retirement benefit plans in the Puget Energy consolidated financial statements.  Such purchase accounting adjustments associated with the remeasurement of the retirement plans are recorded at Puget Energy.

The following tables summarize the Company’s net periodic benefit cost for the three and nine months ended September 30, 2013 and 2012:

Puget Energy
Three Months Ended September 30,	Qualified Pension Benefits						SERP Pension Benefits					Other Benefits
(Dollars in Thousands)	2013			2012			2013			2012		2013			2012
Components of net periodic benefit cost:
Service cost	$	4,822		$	4,232		$	375		$	268	$	34		$	35
Interest cost	6,188			6,496			511			538		166			188
Expected return on plan assets	(9,774		)	(9,051		)	—			—		(109		)	(109		)
Amortization of prior service cost	(495		)	(495		)	(4		)	—		—			—
Amortization of net loss (gain)	722			192			365			176		17			13
Net periodic benefit cost	$	1,463		$	1,374		$	1,247		$	982	$	108		$	127

Puget Energy
Nine Months Ended September 30,	Qualified Pension Benefits						SERP Pension Benefits					Other Benefits
(Dollars in Thousands)	2013			2012			2013			2012		2013			2012
Components of net periodic benefit cost:
Service cost	$	14,464		$	12,695		$	1,123		$	805	$	100		$	105
Interest cost	18,565			19,490			1,534			1,614		498			563
Expected return on plan assets	(29,321		)	(27,153		)	—			—		(327		)	(327		)
Amortization of prior service cost	(1,485		)	(1,485		)	(13		)	—		—			—
Amortization of net loss (gain)	2,167			576			1,096			527		52			40
Net periodic benefit cost	$	4,390		$	4,123		$	3,740		$	2,946	$	323		$	381

Puget Sound Energy
Three Months Ended September 30,	Qualified						SERP					Other
	Pension Benefits						Pension Benefits					Benefits
(Dollars in Thousands)	2013			2012			2013			2012		2013			2012
Components of net periodic benefit cost:
Service cost	$	4,822		$	4,232		$	375		$	268	$	34		$	35
Interest cost	6,188			6,496			511			538		166			188
Expected return on plan assets	(10,172		)	(10,384		)	—			—		(109		)	(109		)
Amortization of prior service cost	(393		)	(393		)	(4		)	74		7			9
Amortization of net loss (gain)	5,153			3,754			548			358		(71		)	(61		)
Amortization of transition obligation	—			—			—			—		—			12
Net periodic benefit cost	$	5,598		$	3,705		$	1,430		$	1,238	$	27		$	74

Puget Sound Energy
Nine Months Ended September 30,	Qualified						SERP					Other
	Pension Benefits						Pension Benefits					Benefits
(Dollars in Thousands)	2013			2012			2013			2012		2013			2012
Components of net periodic benefit cost:
Service cost	$	14,464		$	12,695		$	1,123		$	805	$	100		$	105
Interest cost	18,565			19,490			1,534			1,614		498			563
Expected return on plan assets	(30,514		)	(31,150		)	—			—		(327		)	(327		)
Amortization of prior service cost	(1,180		)	(1,180		)	(13		)	220		22			27
Amortization of net loss (gain)	15,459			11,261			1,645			1,074		(213		)	(184		)
Amortization of transition obligation	—			—			—			—		—			37
Net periodic benefit cost	$	16,794		$	11,116		$	4,289		$	3,713	$	80		$	221

The following table summarizes the Company’s change in benefit obligation for the periods ended September 30, 2013 and December 31, 2012:

Puget Energy and Puget Sound Energy	Qualified Pension Benefits						SERP Pension Benefits						Other Benefits
	Nine Months Ended			Year Ended			Nine Months Ended			Year Ended			Nine Months Ended			Year Ended
(Dollars in Thousands)	September 30, 2013			December 31, 2012			September 30, 2013			December 31, 2012			September 30, 2013			December 31, 2012
Change in benefit obligation:
Benefit obligation at beginning of period	$	616,290		$	565,997		$	51,795		$	48,370		$	17,672		$	16,436
Service cost	14,464			16,926			1,123			1,073			100			139
Interest cost	18,565			25,986			1,534			2,152			498			751
Amendment	—			—			—			(122		)	—			—
Actuarial loss/(gain)	3,436			40,914			—			5,483			(1,055		)	1,199
Benefits paid	(34,875		)	(33,533		)	(5,061		)	(5,161		)	(1,202		)	(1,523		)
Medicare part D subsidiary received	—			—			—			—			125			670
Benefit obligation at end of period	$	617,880		$	616,290		$	49,391		$	51,795		$	16,138		$	17,672

The fair value of the Company’s qualified pension plan assets was $585.1 million and $531.2 million at September 30, 2013 and December 31, 2012, respectively.

The aggregate expected contributions by the Company to fund the qualified pension plan, SERP and the other postretirement plans for the year ending December 31, 2013 are expected to be at least $20.4 million, $5.0 million and $0.8 million, respectively. During the three months ended September 30, 2013, the Company contributed $5.1 million, $1.9 million, and $0.1 million to fund the qualified pension plan, SERP and the other postretirement plan, respectively. During the nine months ended September 30, 2013, the Company contributed $15.3 million, $5.1 million and $0.8 million to fund the qualified pension plan, SERP and the other postretirement plan, respectively.