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Post-retirement and Similar Obligations
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Post-retirement and Similar Obligations Post-retirement and Similar Obligations
AVANGRID and its subsidiaries sponsor a number of retirement benefit plans. The plans include qualified defined benefit pension plans, supplemental non-qualified pension plans, defined contribution plans and other postretirement benefit plans for eligible employees and retirees. Eligibility and benefits vary depending on each plan's design. For example, certain benefits are based on years of service and final average compensation while others may use a cash balance formula that calculates benefits using a percentage of annual compensation.
Qualified Retirement Benefit Plans
As of December 31, 2021 and 2020, our obligations and funded status consisted of:
 Pension BenefitsPostretirement Benefits
As of December 31,2021202020212020
(Millions)    
Change in benefit obligation    
Benefit Obligation as of January 1,$3,819 $3,669 $452 $439 
Service cost40 47 3 3 
Interest cost87 107 10 13 
Plan amendments2 7 — — 
Actuarial loss (gain)(184)236 (23)29 
Curtailments(38)(21)— — 
Benefits paid(239)(226)(34)(32)
Benefit Obligation as of December 31,3,487 3,819 408 452 
Change in plan assets
Fair Value of Plan Assets as of January 1,3,092 2,848 167 155 
Actual return on plan assets237 388 15 26 
Employer contributions27 84 12 18 
Curtailments(38)(2)— — 
Benefits paid(239)(226)(67)(32)
Fair Value of Plan Assets as of December 31,3,079 3,092 127 167 
Funded Status as of December 31,$(408)$(727)$(281)$(285)
During 2021, the pension benefit obligation had an actuarial gain of $184 million, primarily due to a $205 million gain from increases in discount rates. There were no significant gains or losses relating to the postretirement benefit obligations.
During 2020, the pension benefit obligation had an actuarial loss of $236 million, primarily due to a $276 million loss from decreases in discount rates. The only significant plan change in 2020 was an agreement to freeze the UI union pension plan. There were no significant gains or losses relating to the postretirement benefit obligations.
As of December 31, 2021 and 2020, funded status amounts recognized on our consolidated balance sheets consisted of:
 Pension BenefitsPostretirement Benefits
As of December 31,2021202020212020
(Millions)    
Current liabilities$— $— $(5)$(5)
Non-current liabilities(408)(727)(276)(280)
Total$(408)$(727)$(281)$(285)
We have determined that Networks’ regulated operating companies are allowed to defer as regulatory assets or regulatory liabilities items that would have otherwise been recorded in accumulated OCI pursuant to the accounting requirements concerning defined benefit pension and other postretirement plans.
Amounts recognized as a component of regulatory assets or regulatory liabilities for Networks for the years ended December 31, 2021 and 2020 consisted of:
 Pension BenefitsPostretirement Benefits
Years Ended December 31,2021202020212020
(Millions)    
Net loss (gain)$271 $610 $(18)$14 
Prior service cost (credit)$10 $10 $(1)$(8)
Amounts recognized in OCI for ARHI for the years ended December 31, 2021 and 2020, consisted of:
 Pension BenefitsPostretirement Benefits
Years Ended December 31,2021202020212020
(Millions)    
Net loss (gain)$16 $21 $(5)$(7)
As of December 31, 2021 and 2020, the projected benefit obligation (PBO) exceeded the fair value of pension plan assets for all qualified plans. The accumulated benefit obligation (ABO) exceeded the fair value of pension plan assets for all but one plan, as of December 31, 2021, and for all of our qualified plans, as of December 31, 2020. The aggregate PBO and ABO and the fair value of plan assets for our underfunded qualified plans consisted of: 
 PBO in excess of plan assets
As of December 31,20212020
(Millions)  
Projected benefit obligation$3,487 $3,819 
Fair value of plan assets$3,079 $3,092 
ABO in excess of plan assets
As of December 31,20212020
(Millions)  
Accumulated benefit obligation$1,790 $3,629 
Fair value of plan assets$1,536 $3,092 
As of December 31, 2021 and 2020, the accumulated postretirement benefits obligation for all qualified plans exceeded the fair value of plan assets.
Components of Networks’ net periodic benefit cost and other changes in plan assets and benefit obligations recognized in income and regulatory assets and liabilities for the years ended December 31, 2021, 2020 and 2019 consisted of:
Pension BenefitsPostretirement Benefits
For the years ended December 31,202120202019202120202019
(Millions)
Net Periodic Benefit Cost:      
Service cost$39 $46 $41 $3 $3 $3 
Interest cost86 106 128 10 13 16 
Expected return on plan assets(199)(198)(190)(7)(8)(7)
Amortization of prior service cost (benefit)2 1 (1)(5)(9)(10)
Amortization of net loss115 124 113 2 2 1 
Settlement charge6 — 
Net Periodic Benefit Cost49 79 91 3 1 3 
Other changes in plan assets and benefit obligations recognized in regulatory assets and regulatory liabilities:
Curtailments— (18)— — — — 
Settlement charge(6)— — — — — 
Net loss (gain)(218)46 80 (31)11 13 
Amortization of net loss(115)(124)(113)(2)(2)(1)
Current year prior service cost (credit)2 7 (2)1 — — 
Amortization of prior service (cost) benefit(2)(1)1 5 9 10 
Total Other Changes(339)(90)(34)(27)18 22 
Total Recognized$(290)$(11)$57 $(24)$19 $25 
Components of ARHI’s net periodic benefit cost and other changes in plan assets and benefit obligations recognized in income and OCI for the years ended December 31, 2021, 2020 and 2019 consisted of:
Pension BenefitsPostretirement Benefits
For the years ended December 31,202120202019202120202019
(Millions)
Net Periodic Benefit Cost:      
Service cost$1 $1 $1 $— $— $— 
Interest cost1 1 2 — — — 
Expected return on plan assets(2)(2)(2)— — — 
Amortization of net loss (gain)2 2 1 (1)(1)(1)
Settlement charge1 1 — — — — 
Net Periodic Benefit Cost3 3 2 (1)(1)(1)
Other Changes in plan assets and benefit obligations recognized in OCI:
Settlement charge(1)— — (1)— — 
Net loss (gain)(3)1 — 1 — — 
Amortization of net (loss) gain(2)(2)(1)1 1 1 
Amortization of prior service cost— — — — — (2)
Total Other Changes(6)(1)(1)1 1 (1)
Total Recognized$(3)$2 $1 $— $— $(2)
The net periodic benefit cost for postretirement benefits represents the amount expensed for providing health care benefits to retirees and their eligible dependents. We include the service cost component in other operating expenses net of capitalized portion and include the components of net periodic benefit cost other than the service cost component in other expense. 
The weighted-average assumptions used to determine our benefit obligations as of December 31, 2021 and 2020 consisted of:
 Pension BenefitsPostretirement Benefits
As of December 31,2021202020212020
Discount rate2.85 %2.34 %2.66 %2.19 %
Rate of compensation increase3.53 %3.52 %3.50 %3.50 %
Interest crediting rate2.87 %2.87 %N/AN/A
The discount rate is the rate at which the benefit obligations could presently be effectively settled. We determined the discount rates by developing yield curves derived from a portfolio of high grade noncallable bonds with yields that closely match the duration of the expected cash flows of our benefit obligations.
The weighted-average assumptions used to determine our net periodic benefit cost for the years ended December 31, 2021, 2020 and 2019 consisted of:
 Pension BenefitsPostretirement Benefits
Years Ended December 31,202120202019202120202019
Discount rate2.34 %3.01 %3.98 %2.19 %2.99 %3.97 %
Expected long-term return on plan assets7.30 %7.30 %7.30 %4.05 %5.09 %5.08 %
Rate of compensation increase3.52 %3.66 %3.79 %3.50 %3.48 %3.50 %
We developed our expected long-term rate of return on plan assets assumption based on a review of long-term historical returns for the major asset classes, the target asset allocations, and the effect of rebalancing of plan assets discussed below. Our analysis considered current capital market conditions and projected conditions. NYSEG, RG&E and UIL amortize unrecognized actuarial gains and losses over ten years from the time they are incurred as required by the NYPSC, PURA and DPU. Our other companies use the standard amortization methodology under which amounts in excess of ten-percent of the greater of the projected benefit obligation or market related value are amortized over the plan participants’ average remaining service to retirement.
Assumed health care cost trend rates used to determine benefit obligations as of December 31, 2021 and 2020 consisted of:
As of December 31,20212020
Health care cost trend rate assumed for next year5.00%/7.00%5.25%/7.25%
Rate to which cost trend rate is assumed to decline (ultimate trend rate) 4.50 %4.50 %
Year that the rate reaches the ultimate trend rate2029 / 20252029 / 2025
Contributions
We make annual contributions in accordance with our funding policy of not less than the minimum amounts as required by applicable regulations. We expect to contribute $22 million and $11 million, respectively, to our pension and other postretirement benefit plans during 2022.
Estimated Future Benefit Payments
Expected benefit payments as of December 31, 2021 consisted of:
(Millions)Pension BenefitsPostretirement Benefits
2022$217 $30 
2023$212 $29 
2024$214 $29 
2025$213 $28 
2026$215 $27 
2027 - 2031$1,057 $122 
Non-Qualified Retirement Benefit Plans
We also sponsor various unfunded pension plans for certain current employees, former employees and former directors. The total liability for these plans, which is included in Other current and Other non-current liabilities on our consolidated balance sheets, was $63 million and $59 million at December 31, 2021 and 2020, respectively.
Plan Assets
Our pension plan assets are consolidated in one master trust. A consolidated master trust provides for a uniform investment manager lineup and an efficient, cost effective means of allocating income and expenses to each plan. Our primary investment objective is to have a diversified asset allocation policy that mitigates risk and volatility while meeting or exceeding our projected expected return to ensure that current and future benefit obligations are adequately funded. Further diversification and risk mitigation is achieved within each asset class by avoiding significant concentrations in certain markets, utilizing a combination or passive and active investment managers with unique skill and expertise, a systematic allocation to various asset classes and providing broad exposure to different segments of the equity, fixed income and alternative investment markets.
Networks and ARHI have established target asset allocation policies with allowable ranges for their pension plan assets within broad categories of asset classes made up of Return-Seeking investments and Liability-Hedging/Fixed Income investments. In 2020, a streamlined investment policy was implemented, which aligned Networks target allocations to the estimated funded status of each specific plan. Return-Seeking assets range from 25%-60% and Liability-Hedging assets range from 40%-75%. Return-Seeking assets include investments in domestic, international and emerging equity real estate, global asset allocation strategies and hedge funds. Liability-Hedging investments generally consist of long-term corporate bonds, annuity contracts, long-term treasury STRIPS and opportunistic fixed income investments. Systematic rebalancing within the target ranges increases the probability that the annualized return on the investments will be enhanced, while realizing lower overall risk, should any asset categories drift outside their specified ranges.
The fair values of pension plan assets, by asset category, as of December 31, 2021, consisted of:
As of December 31, 2021Fair Value Measurements
(Millions)TotalLevel 1Level 2Level 3
Asset Category    
Cash and cash equivalents$69 $20 $49 $— 
U.S. government securities298 298 — — 
Common stocks138 138 — — 
Registered investment companies276 276 — — 
Corporate bonds837 — 837 — 
Preferred stocks1 1 — — 
Common collective trusts862 — 862 — 
Other, principally annuity, fixed income51 — 51 — 
$2,532 $733 $1,799 $— 
Other investments measured at net asset value547 
Total$3,079 
The fair values of pension plan assets, by asset category, as of December 31, 2020, consisted of:
As of December 31, 2020Fair Value Measurements
(Millions)TotalLevel 1Level 2Level 3
Asset Category    
Cash and cash equivalents$120 $— $120 $— 
U.S. government securities177 177 — — 
Common stocks107 107 — — 
Registered investment companies301 301 — — 
Corporate bonds710 — 710 — 
Preferred stocks1 1 — — 
Common collective trusts1,018 — 1,018 — 
Other, principally annuity, fixed income50 6 44 — 
$2,484 $592 $1,892 $— 
Other investments measured at net asset value608 
Total$3,092 
Valuation Techniques
We value our pension plan assets as follows:
•Cash and cash equivalents – Level 1: at cost, plus accrued interest, which approximates fair value. Level 2: proprietary cash associated with other investments, based on yields currently available on comparable securities of issuers with similar credit ratings.
•U.S. government securities – at the closing price reported in the active market in which the security is traded.
•Common stocks – at the closing price reported in the active market in which the individual investment is traded.
•Corporate bonds – based on yields currently available on comparable securities of issuers with similar credit ratings.
•Preferred stocks – at the closing price reported in the active market in which the individual investment is traded.
•Common collective trusts/Registered investment companies – Level 1: at the closing price reported in the active market in which the individual investment is traded. Level 2: the fair value is primarily derived from the quoted prices in active markets of the underlying securities. Because the fund shares are offered to a limited group of investors, they are not considered to be traded in an active market.
•Other investments, principally annuity and fixed income – based on yields currently available on comparable securities of issuers with similar credit ratings.
•Other investments measured at net asset value (NAV) – fund shares offered to a limited group of investors and alternative investments, such as private equity and real estate oriented investments, partnership/joint ventures and hedge funds are valued using the NAV as a practical expedient.
Our postretirement plan assets are consolidated with one trustee in multiple voluntary employees’ beneficiary association (VEBA) and 401(h) arrangements. The assets are invested in various asset classes to achieve sufficient diversification and mitigate risk. This is achieved for our VEBA assets by utilizing multiple institutional mutual and money market funds, which provide exposure to different segments of the securities markets. The 401(h) assets are invested alongside the Pension assets they are tied to and share the same asset allocation policy. Approximately 54% of the postretirement benefits plan assets are invested in VEBA and 401(h) arrangements that are not subject to income taxes with the remainder being invested in arrangements subject to income taxes.
In 2020, a streamlined investment policy was implemented for Networks and ARHI that aligned target allocations. Equities range from 49%-69% and Fixed Income assets range from 31-51%. Equity investments are diversified across U.S. and non-U.S. stocks, investment styles, and market capitalization ranges. Fixed Income investments are primarily invested in U.S. bonds and may also include some non-U.S. bonds. We primarily minimize the risk of large losses through diversification, but also through monitoring and managing other aspects of risk through quarterly investment portfolio reviews. Systematic rebalancing within target ranges increases the probability of increasing the projected expected return, while mitigating risk, should any asset categories drift outside their specified ranges.
The fair values of other postretirement plan assets, by asset category, as of December 31, 2021 consisted of:
As of December 31, 2021Fair Value Measurements
(Millions)TotalLevel 1Level 2Level 3
Asset Category    
Cash and cash equivalents$5 $— $5 $— 
U.S. government securities1 1 — — 
Common stocks1 1 — — 
Registered investment companies101 101 — — 
Corporate bonds3 — 3 — 
Preferred stocks— — — — 
Common collective trusts5 — 5 — 
Other, principally annuity, fixed income9 — 9 — 
$125 $103 $22 $— 
Other investments measured at net asset value2 
Total$127 
The fair values of other postretirement plan assets, by asset category, as of December 31, 2020 consisted of:
As of December 31, 2020Fair Value Measurements
(Millions)TotalLevel 1Level 2Level 3
Asset Category    
Cash and cash equivalents$6 $— $6 $— 
U.S. government securities1 1 — — 
Registered investment companies141 141 — — 
Corporate bonds3 — 3 — 
Common collective trusts4 — 4 — 
Other, principally annuity, fixed income9 — 9 — 
$164 $142 $22 $— 
Other investments measured at net asset value3 
Total$167 
Valuation Techniques
We value our postretirement plan assets as follows:
•Cash and cash equivalents – Level 1: at cost, plus accrued interest, which approximates fair value. Level 2: proprietary cash associated with other investments, based on yields currently available on comparable securities of issuers with similar credit ratings.
•U.S. government securities – at the closing price reported in the active market in which the security is traded.
•Common stocks and registered investment companies – at the closing price reported in the active market in which the individual investment is traded.
•Corporate bonds – based on yields currently available on comparable securities of issuers with similar credit ratings.
•Common collective trusts – the fair value is primarily derived from the quoted prices in active markets of the underlying securities. Because the fund shares are offered to a limited group of investors, they are not considered to be traded in an active market.
•Other investments, principally annuity and fixed income – based on yields currently available on comparable securities of issuers with similar credit ratings.
•Other investments measured at net asset value (NAV) – fund shares offered to a limited group of investors and alternative investments, such as private equity and real estate oriented investments, partnership/joint ventures and hedge funds are valued using the NAV as a practical expedient.
Pension and postretirement benefit plan equity securities did not include any Iberdrola common stock as of both December 31, 2021 and 2020.
Defined contribution plans
We also have defined contribution plans defined as 401(k)s for all eligible AVANGRID employees. There are various match formulas depending on years of service, age and pension plan closure/freeze date. For the years ended December 31, 2021, 2020 and 2019, the annual contributions we made to these plans was $58 million, $49 million and $40 million, respectively.