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EMPLOYEE BENEFIT PLANS (Notes)
12 Months Ended
Dec. 31, 2023
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]  
Employee Benefit Plans (Notes) EMPLOYEE BENEFIT PLANS
Defined Benefit Pension and Other Postemployment Benefit Plans

Defined Benefit Pension Plans - We have a defined benefit pension plan and a supplemental executive retirement plan, both of which are closed to new participants. Certain employees of the Texas Gas Service division are entitled to benefits under a frozen cash-balance pension plan. We fund our defined benefit pension costs at a level needed to maintain or exceed the minimum funding levels required by the Employee Retirement Income Security Act of 1974, as amended, and the Pension Protection Act of 2006.

Other Postemployment Benefit Plans - We sponsor health and welfare plans that provide postemployment medical and life insurance benefits to certain employees who retire with at least five years of service. The postemployment medical plan is contributory based on hire date, age and years of service, with retiree contributions adjusted periodically, and contains other cost-sharing features such as deductibles and coinsurance.

Actuarial Assumptions - The following table sets forth the weighted-average assumptions used to determine benefit obligations for pension and postemployment benefits for the periods indicated:
December 31,
 20232022
Discount rate - pension plans5.30%5.60%
Discount rate - other postemployment plans5.40%5.70%
Compensation increase rate
 3.50% - 4.30%
3.60% - 5.00%

The following table sets forth the weighted-average assumptions used by us to determine the periodic benefit costs for pension and postemployment benefits for the periods indicated:
Years Ended December 31,
 202320222021
Discount rate - pension plans5.60%
3.05%/4.55% (a)
2.80%
Discount rate - other postemployment plans5.70%3.00%2.70%
Expected long-term return on plan assets - pension plans6.75%6.40%7.15%
Expected long-term return on plan assets - other postemployment plans5.55%5.85%7.50%
Compensation increase rate
3.60% - 5.00%
3.10% - 5.00%
3.10% - 3.90%
(a) Pension plans were remeasured as of April 30, 2022.

We determine our discount rates annually. We estimate our discount rate based upon a comparison of the expected cash flows associated with our future payments under our defined benefit pension and other postemployment obligations to a hypothetical bond portfolio created using high-quality bonds that closely match expected cash flows. Bond portfolios are developed by selecting a bond for each of the next 60 years based on the maturity dates of the bonds. Bonds selected to be included in the portfolios are only those rated by Moody’s as AA- or better and exclude callable bonds, bonds with less than a minimum issue size, yield outliers and other filtering criteria to remove unsuitable bonds.

We determine our overall expected long-term rate of return on plan assets based on our review of historical returns and economic growth models. We update our assumed mortality rates to incorporate new tables issued by the Society of Actuaries as needed.

Regulatory Treatment - The OCC, KCC and regulatory authorities in Texas have approved the recovery of pension and other postemployment benefits costs through rates for Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. The costs recovered through rates are based on current funding requirements and the net periodic benefit cost for defined benefit pension and other postemployment costs. Differences, if any, between the net periodic benefit cost, net of deferrals, and the amount recovered through rates are reflected in earnings.

We historically have recovered defined benefit pension and other postemployment benefit costs through rates. We believe it is probable that regulators will continue to include the net periodic pension and other postemployment benefit costs in our cost of service.
We capitalize all eligible service cost and non-service cost components pursuant to the accounting requirements of ASC Topic 980 (Regulated Operations) for rate-regulated entities, as these costs are authorized by our regulators to be included in capitalized costs. Noncurrent regulatory assets in our consolidated balance sheets reflect the capitalized non-service cost components of $2.2 million and $2.8 million as of December 31, 2023 and 2022, respectively. See Note 3 for additional information.

Obligations and Funded Status - The following table sets forth our defined benefit pension and other postemployment benefit plans, benefit obligations and fair value of plan assets for the periods indicated:

Pension BenefitsOther Postemployment Benefits
December 31, December 31,
2023202220232022
Changes in Benefit Obligation(Thousands of dollars)
Benefit obligation, beginning of period$784,633 $1,049,990 $168,342 $222,806 
Service cost7,242 10,369 730 1,274 
Interest cost42,428 36,150 9,154 6,448 
Plan participants’ contributions — 2,823 3,035 
Actuarial loss (gain)
23,015 (259,261)(5,551)(48,609)
Benefits paid
(53,713)(55,326)(16,963)(16,612)
Plan amendments 2,711  — 
Benefit obligation, end of period$803,605 $784,633 158,535 $168,342 
Change in Plan Assets
Fair value of plan assets, beginning of period$768,961 $1,013,244 $181,877 $231,994 
Actual return (loss) on plan assets
78,827 (190,484)11,325 (38,432)
Employer contributions1,306 1,527 2,546 1,892 
Plan participants’ contributions — 2,823 3,035 
Benefits paid
(53,713)(55,326)(16,963)(16,612)
Fair value of assets, end of period795,381 768,961 181,608 181,877 
Benefit Asset (Obligation), net at December 31
$(8,224)$(15,672)$23,073 $13,535 
Other noncurrent assets$13,409 $5,267 $23,073 $13,535 
Current liabilities(1,368)(1,352) — 
Noncurrent liabilities(20,265)(19,587) — 
Benefit Asset (Obligation), net at December 31$(8,224)$(15,672)$23,073 $13,535 

The accumulated benefit obligation for our defined benefit pension plans was $772.1 million and $746.8 million at December 31, 2023 and 2022, respectively.

For the years ended December 31, 2023 and 2022, the pension benefit obligations experienced actuarial losses and gains of $23.0 million and $259.3 million, respectively, primarily due to the impact of increases in the discount rates used to calculate the benefit obligations.

In 2024, our contributions are expected to be $1.4 million to our defined benefit pension plans, and no contributions are expected to be made to our other postemployment benefit plans.
The following tables set forth the components of net periodic benefit cost for our pension and other postemployment benefit plans for the periods indicated:
Pension Benefits
Year Ended December 31,
202320222021
(Thousands of dollars)
Components of net periodic benefit cost (credit)
 
Service cost$7,242 $10,369 $13,811 
Interest cost (a)
42,428 36,150 29,458 
Expected return on assets (a)
(59,518)(58,528)(62,382)
Amortization of unrecognized prior service cost (a)
372 248 — 
Amortization of net loss (a)
2,008 16,793 45,523 
Net periodic benefit cost (credit)
$(7,468)$5,032 $26,410 
(a) These amounts, net of any amounts capitalized as a regulatory asset, have been recognized as other income (expense), net in the consolidated statement of income. See Note 13 for additional detail for our other income (expense), net.
Other Postemployment Benefits
Year Ended December 31,
202320222021
(Thousands of dollars)
Components of net periodic benefit cost (credit)
Service cost$730 $1,274 $1,587 
Interest cost (a)
9,154 6,448 6,251 
Expected return on assets (a)
(9,728)(13,181)(16,807)
Amortization of unrecognized prior service cost (credit) (a)
153 41 (279)
Amortization of net (gain) loss (a)
(48)217 373 
Net periodic benefit cost (credit)
$261 $(5,201)$(8,875)
(a) These amounts, net of any amounts capitalized as a regulatory asset, have been recognized as other income (expense), net in the consolidated statement of income. See Note 13 for additional detail for our other income (expense), net.
We use a December 31 measurement date for our plans. On April 30, 2022, we amended our defined benefit pension plans to change the variable cost of living adjustment for eligible participants to a fixed rate. Accordingly, we remeasured our net benefit obligations as of April 30, 2022, resulting in an adjustment of approximately $7.2 million to our pension expense, net of capitalization and regulatory deferrals, for the year ended December 31, 2022.

Other Comprehensive Income (Loss) - The following table sets forth the amounts recognized in other comprehensive income (loss), net of regulatory deferrals, related to our defined benefit pension benefits for the period indicated:

Pension Benefits
Year Ended December 31,
202320222021
(Thousands of dollars)
Net gain (loss) arising during the period
$(619)$7,369 $67 
Amortization of loss1 159 1,562 
Deferred income taxes140 (1,705)(379)
   Total recognized in other comprehensive income (loss)
$(478)$5,823 $1,250 

Due to our regulatory deferrals, there were no amounts recognized in other comprehensive income (loss) related to our other postemployment benefits for the periods presented.
The tables below set forth the amounts in accumulated other comprehensive loss that had not yet been recognized as components of net periodic benefit expense for the periods indicated:

Pension Benefits
December 31,
20232022
(Thousands of dollars)
Prior service cost$(2,091)$(2,463)
Accumulated loss(246,988)(245,290)
Accumulated other comprehensive loss
  before regulatory assets
(249,079)(247,753)
Regulatory asset for regulated entities247,684 246,975 
Accumulated other comprehensive loss
  after regulatory assets
(1,395)(778)
Deferred income taxes213 74 
Accumulated other comprehensive loss,
  net of tax
$(1,182)$(704)

Other Postemployment Benefits
December 31,
20232022
(Thousands of dollars)
Prior service cost$ $(153)
Accumulated loss(1.457)(8,557)
Accumulated other comprehensive loss
  before regulatory assets
(1.457)(8,710)
Regulatory asset for regulated entities1.457 8,710 
Accumulated other comprehensive loss
  after regulatory assets
$ $— 

Health Care Cost Trend Rates - The following table sets forth the assumed health care cost-trend rates for the periods indicated:

20232022
Health care cost-trend rate assumed for next year6.00%6.50%
Rate to which the cost-trend rate is assumed to decline
  (the ultimate trend rate)
4.50%4.50%
Year that the rate reaches the ultimate trend rate20302030
Plan Assets - Our investment strategy is to invest plan assets in accordance with sound investment practices that emphasize long-term fundamentals. The goal of this strategy is to maximize investment returns while managing risk in order to meet the plan’s current and projected financial obligations. To achieve this strategy, we have established a liability-driven investment strategy to change the allocations as the funded status of the defined benefit pension plan increases. The plan’s investments include a diverse blend of various domestic and international equities, investment-grade debt securities which mirror the cash flows of our liability, insurance contracts and alternative investments. The current target allocation for the assets of our defined benefit pension plan is as follows:

Investment-grade bonds70.0 %
U.S. large-cap equities13.0 %
Alternative investments7.0 %
Developed foreign large-cap equities5.0 %
Mid-cap equities3.0 %
Emerging markets equities1.0 %
Small-cap equities1.0 %
  Total100.0 %

As part of our risk management for the plans, minimums and maximums have been set for each of the asset classes listed above. All investment managers for the plan are subject to certain restrictions on the securities they purchase and, with the exception of indexing purposes, are prohibited from owning our stock.

The current target allocation for the assets of our other postemployment benefits plan is 90 percent fixed income securities and 10 percent equity securities.

The following tables set forth our pension and other postemployment benefits plan assets by fair value category as of the measurement date:

Pension Benefits
December 31, 2023
Asset CategoryLevel 1Level 2Level 3Total
(Thousands of dollars)
Investments:
Equity securities (a)$88,477 $ $ $88,477 
Government obligations 204,669  204,669 
Corporate obligations (b) 366,482  366,482 
Cash and money market funds (c)5,300 28,977  34,277 
Insurance contracts and group annuity contracts  12,350 12,350 
Other investments (d)  89,126 89,126 
  Total assets$93,777 $600,128 $101,476 $795,381 
(a) - This category represents securities of the various market sectors from diverse industries.
(b) - This category represents bonds from diverse industries.
(c) - This category primarily represents money market funds.
(d) - This category represents alternative investments such as hedge funds and other financial instruments.
Pension Benefits
December 31, 2022
Asset CategoryLevel 1Level 2Level 3Total
(Thousands of dollars)
Investments:
Equity securities (a)$150,027 $— $— $150,027 
Government obligations— 160,799 — 160,799 
Corporate obligations (b)— 329,973 — 329,973 
Cash and money market funds (c)4,466 22,185 — 26,651 
Insurance contracts and group annuity contracts— — 14,480 14,480 
Other investments (d)— — 87,031 87,031 
  Total assets$154,493 $512,957 $101,511 $768,961 
(a) - This category represents securities of the various market sectors from diverse industries.
(b) - This category represents bonds from diverse industries.
(c) - This category primarily represents money market funds.
(d) - This category represents alternative investments such as hedge funds and other financial instruments.

Other Postemployment Benefits
December 31, 2023
Asset CategoryLevel 1Level 2Level 3Total
(Thousands of dollars)
Investments:
Equity securities (a)$7,031 $ $ $7,031 
Government obligations 41,863  41,863 
Corporate obligations (b) 38,615  38,615 
Cash and money market funds (c)751 13,245  13,996 
Insurance contracts and group annuity contracts (d) 80,102  80,102 
  Total assets$7,782 $173,825 $ $181,607 
(a) - This category represents securities of the various market sectors from diverse industries.
(b) - This category represents bonds from diverse industries.
(c) - This category primarily represents money market funds.
(d) - This category includes equity securities and bonds held in a captive insurance product.
Other Postemployment Benefits
December 31, 2022
Asset CategoryLevel 1Level 2Level 3Total
(Thousands of dollars)
Investments:
Equity securities (a)$5,983 $— $— $5,983 
Government obligations— 43,291 — 43,291 
Corporate obligations (b)— 38,095 — 38,095 
Cash and money market funds (c)750 7,621 — 8,371 
Insurance contracts and group annuity contracts (d)— 86,137 — 86,137 
  Total assets$6,733 $175,144 $— $181,877 
(a) - This category represents securities of the various market sectors from diverse industries.
(b) - This category represents bonds from diverse industries.
(c) - This category primarily represents money market funds.
(d) - This category includes equity securities and bonds held in a captive insurance product.

Insurance contracts and group annuity contracts include investments in the Immediate Participation Guarantee Fund (“IPG Fund”) with John Hancock and are valued at fair value. John Hancock invests the IPG Fund in its general fund portfolio. The contract value of the IPG Fund at the end of the year, which approximates fair value, is estimated. The difference between this estimated balance and the actual balance, as subsequently determined by John Hancock, is charged or credited to the net assets of the plans.

Certain investments that are categorized as money market funds in Level 2 and “Other investments” in Level 3 represent alternative investments such as hedge funds and other financial instruments measured using the net asset value per share (or its equivalent) practical expedient.

The following tables set forth additional information regarding commitments and redemption limitations of these other investments at the periods indicated:
December 31, 2023
Fair ValueUnfunded CommitmentsRedemption FrequencyRedemption Notice Period
(in thousands)(in days)
Grosvenor Registered Multi Limited Partnership$40,872 $ quarterly65
K2 Institutional Investors II Limited Partnership$48,254 $ quarterly91

December 31, 2022
Fair ValueUnfunded CommitmentsRedemption FrequencyRedemption Notice Period
(in thousands)(in days)
Grosvenor Registered Multi Limited Partnership$40,160 $— quarterly65
K2 Institutional Investors II Limited Partnership$46,871 $— quarterly91
The following table sets forth the reconciliation of Level 3 fair value measurements of our pension plans for the periods indicated:

Pension Benefits
Insurance
Contracts
Other
Investments
Total
(Thousands of dollars)
January 1, 2022$17,301 $91,456 $108,757 
Unrealized gains1,467 — 1,467 
Unrealized losses— (7,458)(7,458)
Purchases182 3,033 3,215 
Settlements(4,470)— (4,470)
December 31, 2022$14,480 $87,031 $101,511 
Unrealized gains 2,095 2,095 
Unrealized losses(618) (618)
Purchases1,562  1,562 
Settlements(3,074) (3,074)
December 31, 2023$12,350 $89,126 $101,476 

Pension and Other Postemployment Benefit Payments - Benefit payments for our defined benefit pension and other postemployment benefit plans for the year ended December 31, 2023 were $55.3 million and $16.6 million, respectively. The following table sets forth the pension benefits and other postemployment benefits payments expected to be paid in 2023-2032:

Pension
Benefits
Other Postemployment
Benefits
Benefits to be paid in:(Thousands of dollars)
2024$55,391 $14,127 
2025$55,988 $13,890 
2026$56,422 $13,505 
2027$56,591 $13,194 
2028$57,296 $12,848 
2029 through 2033$286,471 $59,299 

The expected benefits to be paid are based on the same assumptions used to measure our benefit obligations at December 31, 2023, and include estimated future employee service.

Other Employee Benefit Plans

401(k) Plan - We have a 401(k) plan which covers all eligible employees. Employee contributions are discretionary and we match 100 percent of each participant’s eligible contribution up to 6 percent of eligible compensation, subject to certain limits. Our contributions to the plan were $16.7 million, $15.3 million and $14.3 million in 2023, 2022 and 2021, respectively.

Effective December 30, 2021, our profit sharing-plan was merged with and into our 401(k) Plan. We plan to make a profit-sharing contribution to the 401(k) Plan each quarter equal to 1 percent of each participant’s eligible compensation during the quarter. Additional discretionary profit-sharing contributions may be made at the end of each year. Our profit-sharing contributions made to the plan were $12.6 million, $10.9 million and $9.9 million in 2023, 2022 and 2021, respectively.