PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The Spire information in this note reflects all plans of the Company, including information for plans of EnergySouth since September 12, 2016 and Alagasco since August 31, 2014. The net pension and postretirement obligations were re-measured at those acquisition dates as well as at the fiscal year end.

Pension Plans

The pension plans of Spire consist of plans for employees at the Missouri Utilities, plans covering the employees of Alagasco, and plans covering employees for EnergySouth.

The Missouri Utilities have non-contributory, defined benefit, trusteed forms of pension plans covering the majority of their employees. Plan assets consist primarily of corporate and US government obligations and a growth segment consisting of exposure to equity markets, commodities, real estate and inflation-indexed securities, achieved through derivative instruments and investments in diversified mutual funds.

Alagasco has non-contributory, defined benefit, trusteed forms of pension plans covering the majority of its employees. Qualified plan assets are comprised of United States equities consisting of mutual and commingled funds with varying strategies, global equities consisting of mutual funds, alternative investments of limited partnerships and commingled and mutual funds, and fixed income investments.

The net periodic pension costs include the following components:



	Spire									Laclede Gas									Alagasco
	2016			2015			2014			2016			2015			2014			2016			2015			2014*
Service cost – benefits earned during the period	$	15.3		$	17.3		$	10.2		$	10.0		$	11.5		$	9.7		$	5.3		$	5.8		$	5.1
Interest cost on projected benefit obligation	28.0			29.5			24.5			21.7			23.3			24.0			6.3			6.2			4.1
Expected return on plan assets	(34.9		)	(37.4		)	(27.2		)	(26.7		)	(29.2		)	(26.5		)	(8.2		)	(8.2		)	(5.2		)
Amortization of other comprehensive income	—			—			0.4			—			—			—			—			—			—
Amortization of prior service cost	0.4			0.5			0.5			0.4			0.5			0.5			—			—			0.1
Amortization of actuarial loss	8.0			7.5			7.1			7.9			7.5			7.1			0.1			—			2.2
Loss on lump-sum settlements	3.3			19.6			1.5			—			18.0			1.5			3.3			1.6			10.1
Special termination benefits	1.6			—			—			1.6			—			—			—			—			—
Subtotal	21.7			37.0			17.0			14.9			31.6			16.3			6.8			5.4			16.4
Regulatory adjustment	17.8			(2.1		)	10.4			11.7			(5.2		)	10.4			6.1			3.1			0.4
Net pension cost	$	39.5		$	34.9		$	27.4		$	26.6		$	26.4		$	26.7		$	12.9		$	8.5		$	16.8
													* Nine months ended September 30

Other changes in plan assets and pension benefit obligations recognized in other comprehensive income or loss (OCI) include the following:



	Spire									Laclede Gas									Alagasco
	2016			2015			2014			2016			2015			2014			2016			2015			2014*
Current year actuarial loss	$	46.8		$	48.3		$	15.7		$	21.6		$	26.0		$	14.2		$	25.2		$	22.3		$	1.5
Amortization of actuarial loss	(8.0		)	(7.5		)	(7.1		)	(7.9		)	(7.5		)	(7.1		)	(0.1		)	—			—
Acceleration of loss recognized due to settlement	(3.3		)	(19.6		)	(1.5		)	—			(18.0		)	(1.5		)	(3.3		)	(1.6		)	—
Amortization of current year service cost	5.0			—			—			5.0			—			—			—			—			—
Amortization of prior service cost	(0.4		)	(0.5		)	(0.5		)	(0.4		)	(0.5		)	(0.5		)	—			—			—
Subtotal	40.1			20.7			6.6			18.3			—			5.1			21.8			20.7			1.5
Regulatory adjustment	(39.8		)	(21.2		)	(6.1		)	(18.0		)	(0.5		)	(4.7		)	(21.8		)	(20.7		)	(1.5		)
Total recognized in OCI	$	0.3		$	(0.5	)	$	0.5		$	0.3		$	(0.5	)	$	0.4		$	—		$	—		$	—
													* Nine months ended September 30

Spire pension obligations are driven by separate plan and regulatory provisions governing Laclede Gas, Alagasco and EnergySouth pension plans.

Pursuant to the provisions of the Missouri Utilities’ and Alagasco’s pension plans, pension obligations may be satisfied by lump-sum cash payments. Lump-sum payments are recognized as settlements (which can result in gains or losses) only if the total of such payments exceeds 100% of the sum of service and interest costs in a specific year. Special termination benefits, when offered, are also recognized as settlements which can result in gains or losses. Two Alagasco plans and one Laclede plan met the criteria for settlement recognition in the fiscal year ended September 30, 2016, requiring re-measurement of the obligation under those plans using updated census data and assumptions for discount rate and mortality. Lump-sum payments recognized as settlements during fiscal year 2016, 2015, and 2014 were $16.6 (attributable to Alagasco), $71.1, and $22.1, respectively.

Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets implemented prospectively over a four-year period. Gains or losses not yet includible in pension cost are amortized only to the extent that such gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets. Such excess is amortized over the average remaining service life of active participants. The recovery in rates for Laclede Gas’ eastern Missouri qualified pension plan is based on an annual allowance of $15.5 effective January 1, 2011. The recovery in rates for MGE’s qualified pension plan is based on an annual allowance of $10 effective February 20, 2010. The difference between these amounts and pension expense as calculated pursuant to the above and that otherwise would be included in the statements of income and statements of comprehensive income is deferred as a regulatory asset or regulatory liability.

The following table shows the reconciliation of the beginning and ending balances of the pension benefit obligation at September 30:



	Spire						Laclede Gas						Alagasco
	2016			2015			2016			2015			2016			2015
Benefit obligation, beginning of year	$	652.3		$	692.4		$	497.6		$	543.6		$	154.7		$	148.8
Service cost	15.3			17.3			10.0			11.5			5.3			5.8
Interest cost	28.0			29.5			21.7			23.3			6.3			6.2
Actuarial loss (gain)	85.8			(12.8		)	59.2			(20.7		)	26.6			7.9
Plan amendments	5.1			—			5.1			—			—			—
EnergySouth acquisition	60.4			—			—			—			—			—
Settlement loss	1.1			16.5			—			14.5			1.1			2.0
Special termination benefits	1.6			—			1.6			—			—			—
Settlement benefits paid	(16.6		)	(71.1		)	—			(58.2		)	(16.6		)	(12.9		)
Regular benefits paid	(38.3		)	(19.5		)	(35.2		)	(16.4		)	(3.1		)	(3.1		)
Benefit obligation, end of year	$	794.7		$	652.3		$	560.0		$	497.6		$	174.3		$	154.7
Accumulated benefit obligation, end of year	724.5			$	591.4		517.7			$	456.9		149.8			$	134.5

The following table sets forth the reconciliation of the beginning and ending balances of the fair value of plan assets at September 30:



	Spire						Laclede Gas						Alagasco
	2016			2015			2016			2015			2016			2015
Fair value of plan assets, beginning of year	$	448.9		$	506.6		$	339.9		$	387.4		$	109.0		$	119.2
Actual return on plan assets	75.1			(7.2		)	64.4			(3.0		)	10.7			(4.2		)
Employer contributions	26.6			40.1			26.6			30.1			—			10.0
EnergySouth acquisition	44.8			—			—			—			—			—
Settlement benefits paid	(16.6		)	(71.1		)	—			(58.2		)	(16.6		)	(12.9		)
Regular benefits paid	(38.3		)	(19.5		)	(35.2		)	(16.4		)	(3.1		)	(3.1		)
Fair value of plan assets, end of year	$	540.5		$	448.9		$	395.7		$	339.9		$	100.0		$	109.0
Funded status of plans, end of year	$	(254.2	)	$	(203.4	)	$	(164.3	)	$	(157.7	)	$	(74.3	)	$	(45.7	)

The following table sets forth the amounts recognized in the balance sheets at September 30:



	Spire						Laclede Gas						Alagasco
	2016			2015			2016			2015			2016			2015
Current liabilities	$	(0.6	)	$	(0.5	)	$	(0.6	)	$	(0.5	)	$	—		$	—
Noncurrent liabilities	(253.6		)	(202.9		)	(163.7		)	(157.2		)	(74.3		)	(45.7		)
Total	$	(254.2	)	$	(203.4	)	$	(164.3	)	$	(157.7	)	$	(74.3	)	$	(45.7	)

Pre-tax amounts recognized in accumulated other comprehensive loss not yet recognized as components of net periodic pension cost consist of:



	Spire						Laclede Gas						Alagasco
	2016			2015			2016			2015			2016			2015
Net actuarial loss	$	179.4		$	143.9		$	135.5		$	121.9		$	43.9		$	22.0
Prior service costs	8.2			3.5			8.2			3.5			—			—
Subtotal	187.6			147.4			143.7			125.4			43.9			22.0
Adjustments for amounts included in regulatory assets	(184.8		)	(144.9		)	(140.9		)	(122.9		)	(43.9		)	(22.0		)
Total	$	2.8		$	2.5		$	2.8		$	2.5		$	—		$	—

At September 30, 2016, the following pre-tax amounts are expected to be amortized from accumulated other comprehensive loss into net periodic pension cost during fiscal year 2017:



	Spire			Laclede Gas			Alagasco
Amortization of net actuarial loss	$	13.5		$	11.6		$	1.9
Amortization of prior service cost	1.0			1.0			—
Subtotal	14.5			12.6			1.9
Regulatory adjustment	(14.2		)	(12.3		)	(1.9		)
Total	$	0.3		$	0.3		$	—

The assumptions used to calculate net periodic pension costs for Laclede Gas are as follows:



	2016	2015	2014
Weighted average discount rate - Laclede Gas division plans	4.40%	4.30%	4.70%
Weighted average discount rate - MGE division plans	4.50%	4.45%	5.00%
Weighted average rate of future compensation increase *	3.00%	3.00%	3.00%
Expected long-term rate of return on plan assets *	7.75%	7.75%	7.75%


*	Assumptions for weighted average rate of future compensation increase and expected long-term rate of return on plan assets are the same for both Laclede Gas and MGE plans.

The assumptions used to calculate net periodic pension costs for Alagasco are as follows:



	2016	2015	2014*
Weighted average discount rate	4.25% /4.30%	4.15% /4.25%	4.00% / 4.05%
Weighted average rate of future compensation increase	3.00%	2.92%	2.92%
Expected long-term rate of return on plan assets	7.50%	7.00% / 7.25%	7.00% / 7.25%

* Nine-month transition period ended September 30

The weighted average discount rate is based on long-term, high quality bond indices at the measurement date. The expected long-term rate of return on plan assets is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Assumed projected rates of return for each asset class were selected after analyzing historical experience and future expectations of the returns. The overall expected rate of return for the portfolio was developed based on the target allocation for each class.

The assumptions used to calculate the benefit obligations are as follows:



	2016	2015
Weighted average discount rate - Laclede Gas division	3.50%	4.40%
Weighted average discount rate - MGE division	3.50%	4.50%
Weighted average discount rate - Alagasco	3.45%/3.50%	4.25%/4.30%
Weighted average rate of future compensation increase - Laclede Gas, Alagasco and MGE	3.00%	3.00%

Following are the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for plans that have a projected benefit obligation and an accumulated benefit obligation in excess of plan assets:



	Spire				Laclede Gas				Alagasco
	2016		2015		2016		2015		2016		2015
Projected benefit obligation	$	794.8	$	652.3	$	560.0	$	497.6	$	174.3	$	154.7
Accumulated benefit obligation	724.5		591.4		517.7		456.9		149.8		134.5
Fair value of plan assets	540.5		448.9		395.7		339.9		100.0		109.0

Following are the targeted and actual plan assets by category as of September 30 of each year for Laclede Gas and Alagasco:



Laclede Gas	2016 Target		2016 Actual		2015 Target		2015 Actual
Equity markets	56.2	%	56.9	%	52.0	%	48.4	%
Debt securities	43.8	%	43.1	%	48.0	%	50.1	%
Other*	—	%	—	%	—	%	1.5	%
Total	100.0	%	100.0	%	100.0	%	100.0	%


*	Other investments in 2016 and 2015 consisted of cash equivalents.



Alagasco	2016 Target		2016 Actual		2015 Target		2015 Actual
Equity markets	60.0	%	59.2	%	60.0	%	52.9	%
Debt securities	29.0	%	28.8	%	29.0	%	27.9	%
Other*	11.0	%	12.0	%	11.0	%	19.2	%
Total	100.0	%	100.0	%	100.0	%	100.0	%


*	Other investments in 2016 included cash, real estate, commodities, natural resources and TIPS. In 2015, this included cash and cash equivalents, hedge funds, real estate, and all asset funds, which can invest in equities or fixed income.

Laclede Gas’ investment policies are designed to maximize, to the extent possible, the funded status of the plan over time, and minimize volatility of funding and costs. The policy seeks to maximize investment returns consistent with these objectives and Laclede Gas’ tolerance for risk. The duration of plan liabilities and the impact of potential changes in asset values on the funded status are fundamental considerations in the selection of plan assets. Outside investment management specialists are utilized in each asset class. Such specialists are provided with guidelines, where appropriate, designed to ensure that the investment portfolio is managed in accordance with the policy. The policy seeks to avoid significant concentrations of risk by investing in a diversified portfolio of assets. Investments in corporate, US government and agencies, and, to a lesser extent, international debt securities seek to provide duration matching with plan liabilities, and typically have investment grade ratings and reflect allocations across various entities and industries. There are also exposures to additional asset types in the target portfolio: commodities, real estate and inflation-indexed securities. During 2015, the target portfolio was rebalanced to include a higher weighting for the growth (equity) component and a lower weighting to the liability-driven (debt) component. The investment policy permits the use of derivative instruments, which may be used to achieve the desired market exposure of an index, adjust portfolio duration, or rebalance the total portfolio to the target asset allocation. The Growth Strategy utilizes a combination of derivative instruments and debt securities to achieve diversified exposure to equity and other markets while generating returns from the fixed-income investments and providing further duration matching with the liabilities. Performance and compliance with the guidelines is regularly monitored. The policy calls for increased allocations to debt securities as the funded status improves.

Alagasco employs a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets with a prudent level of risk. Risk tolerance is established through consideration of plan liabilities, plan funded status, corporate financial condition and market conditions. Alagasco has developed an investment strategy that focuses on asset allocation, diversification and quality guidelines. The investment goals are to obtain an adequate level of return to meet future obligations of the plan by providing above average risk-adjusted returns with a risk exposure in the mid-range of comparable funds. Investment managers are retained by Alagasco to manage separate pools of assets. Funds are allocated to such managers in order to achieve an appropriate, diversified, and balanced asset mix. Comparative market and peer group benchmarks are utilized to ensure that investment managers are performing satisfactorily. Alagasco seeks to maintain an appropriate level of diversification to minimize the risk of large losses in a single asset class. Accordingly, plan assets for the pension plans do not have a concentration of assets in a single entity, industry, country, commodity or class of investment fund.

Following are expected pension benefit payments for the succeeding five fiscal years, and in aggregate for the five years thereafter, for Spire, Laclede Gas, and Alagasco:



	2017		2018		2019		2020		2021		2022- 2026
Spire	$	61.3	$	56.2	$	57.1	$	56.6	$	56.8	$	286.3
Laclede Gas	48.2		43.3		43.5		42.2		40.4		196.6
Alagasco	10.9		10.6		11.2		11.9		13.7		74.5

The funding policy of Laclede Gas and Alagasco is to contribute an amount not less than the minimum required by government funding standards, nor more than the maximum deductible amount for federal income tax purposes. Laclede Gas contributions to the pension plans in fiscal year 2017 are anticipated to be $29.0 into the qualified trusts, and $0.6 into the non-qualified plans. Alagasco has no required contributions to the qualified pension plans during 2017. Additionally, it is not anticipated that the funded status of the qualified pension plans will fall below statutory thresholds requiring accelerated funding or constraints on benefit levels or plan administration. During fiscal 2017, Alagasco may make additional discretionary contributions to the qualified pension plans depending on the amount and timing of employee retirements and market conditions.

Postretirement Benefits

The Utilities provide certain life insurance benefits at retirement. Laclede Gas plans provide for medical insurance after early retirement until age 65. For retirements prior to January 1, 2015, the MGE plans provided medical insurance after retirement until death. For retirements after January 1, 2015, the MGE plans provide medical insurance after early retirement until age 65. Under the Alagasco plans, medical insurance is currently available upon retirement until death for certain retirees depending on the type of employee and the date the employee was originally hired.

Net periodic postretirement benefit costs consist of the following components:



	Spire									Laclede Gas									Alagasco
	2016			2015			2014			2016			2015			2014			2016			2015			2014*
Service cost – benefits earned during the period	$	10.9		$	12.8		$	11.3		$	10.6		$	12.3		$	11.2		$	0.3		$	0.5		$	0.4
Interest cost on accumulated postretirement benefit obligation	10.2			11.2			8.9			8.1			8.6			8.7			2.1			2.6			1.9
Expected return on plan assets	(13.5		)	(13.2		)	(7.3		)	(8.5		)	(8.1		)	(6.8		)	(5.0		)	(5.1		)	(3.6		)
Amortization of prior other comprehensive loss	—			—			(0.2		)	—			—			—			—			—			—
Amortization of prior service cost	0.3			0.8			—			0.3			0.8			—			—			—			—
Amortization of actuarial loss (gain)	3.6			5.1			6.0			3.8			5.1			6.0			(0.2		)	—			(1.0		)
Special termination benefits	2.6			—			—			2.6			—			—			—			—			—
Subtotal	14.1			16.7			18.7			16.9			18.7			19.1			(2.8		)	(2.0		)	(2.3		)
Regulatory adjustment	(6.6		)	(11.0		)	(9.6		)	(4.8		)	(9.2		)	(9.6		)	(1.8		)	(1.8		)	(0.2		)
Net postretirement benefit cost	$	7.5		$	5.7		$	9.1		$	12.1		$	9.5		$	9.5		$	(4.6	)	$	(3.8	)	$	(2.5	)
													* Nine months ended September 30

Other changes in plan assets and postretirement benefit obligations recognized in OCI include the following:



	Spire									Laclede Gas									Alagasco
	2016			2015			2014			2016			2015			2014			2016			2015			2014*
Current year actuarial loss (gain)	$	0.8		$	(8.5	)	$	(3.1	)	$	1.4		$	(2.4	)	$	(4.2	)	$	(0.6	)	$	(6.1	)	$	1.1
Amortization of actuarial (loss) gain	(3.6		)	(5.1		)	(6.0		)	(3.8		)	(5.1		)	(6.0		)	0.2			—			—
Amortization of prior service (cost) credit	(0.3		)	(0.8		)	2.5			(0.3		)	(0.8		)	2.5			—			—			—
Current year prior service credit	(1.8		)	(4.9		)	—			—			(4.9		)	—			(1.8		)	—			—
Subtotal	(4.9		)	(19.3		)	(6.6		)	(2.7		)	(13.2		)	(7.7		)	(2.2		)	(6.1		)	1.1
Regulatory adjustment	4.9			19.3			6.6			2.7			13.2			7.7			2.2			6.1			(1.1		)
Total recognized in OCI	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
													* Nine months ended September 30

Pursuant to a MoPSC Order, the return on plan assets is based on the market-related value of plan assets implemented prospectively over a four-year period. Gains and losses not yet includible in postretirement benefit cost are amortized only to the extent that such gain or loss exceeds 10% of the greater of the accumulated postretirement benefit obligation or the market-related value of plan assets. Such excess is amortized over the average remaining service life of active participants. The recovery in rates for Laclede Gas’ postretirement benefit plans is based on an annual allowance of $9.5 effective January 1, 2011. The difference between these amounts and postretirement benefit cost based on the above and that otherwise would be included in the statements of income and statements of comprehensive income is deferred as a regulatory asset or regulatory liability.

The following table sets forth the reconciliation of the beginning and ending balances of the postretirement benefit obligation at September 30:



	Spire						Laclede Gas						Alagasco
	2016			2015			2016			2015			2016			2015
Benefit obligation, beginning of year	$	239.2		$	258.5		$	191.9		$	197.9		$	47.3		$	60.6
Service cost	10.9			12.8			10.6			12.3			0.3			0.5
Interest cost	10.2			11.2			8.1			8.6			2.1			2.6
Actuarial loss (gain)	7.1			(23.7		)	6.7			(10.9		)	0.4			(12.8		)
Plan amendments	(1.8		)	(4.9		)	—			(4.9		)	(1.8		)	—
EnergySouth acquisition	5.9			—			—			—			—			—
Special termination benefits	2.6			—			2.6			—			—			—
Retiree drug subsidy program	0.2			0.4			—			—			0.2			0.4
Gross benefits paid	(15.1		)	(15.1		)	(12.0		)	(11.1		)	(3.1		)	(4.0		)
Benefit obligation, end of year	$	259.2		$	239.2		$	207.9		$	191.9		$	45.4		$	47.3

The following table sets forth the reconciliation of the beginning and ending balances of the fair value of plan assets at September 30:



	Spire						Laclede Gas						Alagasco
	2016			2015			2016			2015			2016			2015
Fair value of plan assets at beginning of year	$	223.3		$	222.5		$	143.6		$	137.2		$	79.7		$	85.3
Actual return on plan assets	19.9			(2.0		)	13.8			(0.4		)	6.2			(1.6		)
Employer contributions	14.3			17.9			14.3			17.9			—			—
EnergySouth acquisition	4.0			—			—			—			—			—
Gross benefits paid	(15.1		)	(15.1		)	(12.0		)	(11.1		)	(3.1		)	(4.0		)
Fair value of plan assets, end of year	$	246.4		$	223.3		$	159.7		$	143.6		$	82.8		$	79.7
Funded status of plans, end of year	$	(12.8	)	$	(15.9	)	$	(48.2	)	$	(48.3	)	$	37.4		$	32.4

The following table sets forth the amounts recognized in the balance sheets at September 30:



	Spire						Laclede Gas						Alagasco
	2016			2015			2016			2015			2016		2015
Current assets	$	0.3		$	—		$	0.3		$	—		$	—	$	—
Noncurrent assets	37.4			35.5			—			3.1			37.4		32.4
Current liabilities	(0.4		)	(0.3		)	(0.4		)	(0.3		)	—		—
Noncurrent liabilities	(50.1		)	(51.1		)	(48.1		)	(51.1		)	—		—
Total	$	(12.8	)	$	(15.9	)	$	(48.2	)	$	(48.3	)	$	37.4	$	32.4

Pre-tax amounts recognized in accumulated other comprehensive loss not yet recognized as components of net periodic postretirement benefit cost consist of:



	Spire						Laclede Gas						Alagasco
	2016			2015			2016			2015			2016			2015
Net actuarial loss	$	38.0		$	40.8		$	43.4		$	45.8		$	(5.4	)	$	(5.0	)
Prior service credit	(5.2		)	(3.1		)	(3.4		)	(3.1		)	(1.8		)	—
Subtotal	32.8			37.7			40.0			42.7			(7.2		)	(5.0		)
Adjustments for amounts included in regulatory assets	(32.8		)	(37.7		)	(40.0		)	(42.7		)	7.2			5.0
Total	$	—		$	—		$	—		$	—		$	—		$	—

At September 30, 2016, the following pre-tax amounts are expected to be amortized from accumulated other comprehensive loss into net periodic postretirement benefit cost during fiscal year 2017:



	Spire			Laclede Gas			Alagasco
Amortization of net actuarial loss (gain)	$	2.4		$	2.5		$	(0.1	)
Amortization of prior service cost	0.1			0.3			(0.2		)
Subtotal	2.5			2.8			(0.3		)
Regulatory adjustment	(2.5		)	(2.8		)	0.3
Total	$	—		$	—		$	—

The assumptions used to calculate net periodic postretirement benefit costs for Laclede Gas are as follows:



	2016		2015		2014
Weighted average discount rate Laclede Gas division plans	4.00	%	4.15	%	4.60	%
Weighted average discount rate MGE division plans	4.30	%	4.40	%	4.95	%
Weighted average rate of future compensation increase - Laclede Gas plans	3.00	%	3.00	%	3.00	%
Expected long-term rate of return on plan assets - Laclede Gas division plans	6.00% / 7.75%		6.25% / 7.75%		6.25% / 7.75%
Expected long-term rate of return on plan assets - MGE division plans	4.75	%	5.00	%	3.75% / 5.75%

The assumptions used to calculate net periodic postretirement benefit costs for Alagasco are as follows:



	2016		2015		2014
Weighted average discount rate	4.50	%	4.40	%	4.25	%
Weighted average rate of future compensation increase	n/a		n/a		2.92	%
Expected long-term rate of return on plan assets	4.50% / 7.25%		4.75% / 7.50%		4.75% / 7.25%

The assumptions used to calculate the accumulated postretirement benefit obligations for Laclede Gas are as follows:



	2016		2015
Weighted average discount rate - Laclede Gas division plans	3.15	%	4.00	%
Weighted average discount rate - MGE division plans	3.45	%	4.30	%
Weighted average rate of future compensation increase	3.00	%	3.00	%

The assumptions used to calculate the accumulated postretirement benefit obligations for Alagasco are as follows:



	2016		2015
Weighted average discount rate	3.60	%	4.50	%
Weighted average rate of future compensation increase	n/a		n/a

The assumed medical cost trend rates at September 30 are as follows:



	2016		2015
Medical cost trend assumed for next year - Laclede Gas	7.50	%	7.00	%
Medical cost trend assumed for next year - Alagasco	7.50	%	7.00	%
Rate to which the medical cost trend rate is assumed to decline (the ultimate medical cost trend rate)	5.00	%	5.00	%
Year the rate reaches the ultimate trend	2023		2020

The following table presents the effects of an assumed 1% change in the assumed medical cost trend rate:



	Spire					Laclede Gas					Alagasco
	1% Increase		1% Decrease			1% Increase		1% Decrease			1% Increase		1% Decrease
Net periodic postretirement benefit cost	$	1.5	$	(1.4	)	$	1.5	$	(1.4	)	$	—	$	—
Accumulated postretirement benefit obligation	11.0		(10.2		)	9.0		(8.4		)	1.3		(1.2		)

Following are the targeted and actual plan assets by category as of September 30 of each year for Laclede Gas and Alagasco:



Laclede Gas	Target		2016 Actual		2015 Actual
Equity securities	60.0	%	59.1	%	59.6	%
Debt securities	40.0	%	39.4	%	39.7	%
Other (cash and cash equivalents)	—	%	1.5	%	0.7	%
Total	100.0	%	100.0	%	100.0	%



Alagasco	Target		2016 Actual		2015 Actual
Equity securities	60.0	%	60.5	%	59.7	%
Debt securities	40.0	%	39.5	%	40.3	%
Total	100.0	%	100.0	%	100.0	%

Missouri state law provides for the recovery in rates of costs accrued pursuant to GAAP provided that such costs are funded through an independent, external funding mechanism. Laclede Gas established Voluntary Employees’ Beneficiary Association and Rabbi Trusts as its external funding mechanisms. Laclede Gas’ investment policy seeks to maximize investment returns consistent with Laclede Gas’ tolerance for risk. Outside investment management specialists are utilized in each asset class. Such specialists are provided with guidelines, where appropriate, designed to ensure that the investment portfolio is managed in accordance with policy. Performance and compliance with the guidelines is regularly monitored. Laclede Gas’ current investment policy targets an asset allocation of 60% to equity securities and 40% to debt securities, excluding cash held in short-term debt securities for the purpose of making benefit payments. Laclede Gas currently invests in a mutual fund which is rebalanced on an ongoing basis to the target allocation. The mutual fund is diversified across US stock and bond markets.

Alagasco established Voluntary Employees’ Beneficiary Association accounts as its external funding mechanisms for post-retirement benefit costs. Alagasco’s investment policy seeks to maximize investment returns consistent with its tolerance for risk. Outside investment management specialists are utilized in each asset class. Such specialists are provided with guidelines, where appropriate, designed to ensure that the investment portfolio is managed in accordance with policy. Performance and compliance with the guidelines is regularly monitored. Alagasco’s current investment policy targets an asset allocation of 60% to equity securities and 40% to debt securities. Alagasco currently invests in several mutual funds which are rebalanced periodically to the target allocation. The mutual funds are diversified across US and international stock markets and the US bond market.

Following are expected postretirement benefit payments for the succeeding five fiscal years, and in aggregate for the five years thereafter for Spire, Laclede Gas, and Alagasco:



	2017		2018		2019		2020		2021		2022- 2026
Spire	$	15.4	$	16.7	$	17.9	$	19.1	$	20.1	$	108.6
Laclede Gas	12.3		13.7		14.8		15.8		16.8		92.5
Alagasco	2.9		2.8		2.8		2.9		2.9		14.1

Laclede Gas’ funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated pursuant to GAAP as recovered in rates. Contributions to the postretirement plans in fiscal year 2017 are anticipated to be $10.3 to the qualified trusts and $0.4 paid directly to participants from Laclede Gas funds.

Alagasco’s funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated pursuant to GAAP as recovered in rates. In fiscal 2017, it is not anticipated that contributions will be made to the postretirement plans.

Other Plans

Laclede Gas and Alagasco sponsor 401(k) plans that cover substantially all employees. The plans allow employees to contribute a portion of their base pay in accordance with specific guidelines. Laclede Gas provides a match of such contributions within specific limits. The cost of the defined contribution plans of Laclede Gas amounted to $8.2, $8.0, and $6.7 for fiscal years 2016, 2015, and 2014, respectively. Alagasco also provides a match of employee contributions within specific limits. The cost of the defined contribution plans of Alagasco amounted to $2.3, $3.0, and $4.7 for fiscal years 2016 and 2015, and the nine months ended September 30, 2014, respectively.

Fair Value Measurements of Pension and Other Postretirement Plan Assets

Spire

The table below categorizes the fair value measurements of the Spire pension plan assets:



	Quoted Prices in Active Markets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of September 30, 2016
Cash and cash equivalents	$	51.2		$	—	$	—	$	51.2
Stock/bond mutual fund	99.3			26.7		0.1		126.1
Debt Securities
US bond mutual funds	23.0			126.0		—		149.0
US government	42.1			3.0		—		45.1
US corporate	137.4			—		—		137.4
US municipal	6.3			—		—		6.3
International	25.3			—		—		25.3
Derivatives and margin (payable)	(1.0		)	1.1		—		0.1
Total	$	383.6		$	156.8	$	0.1	$	540.5

As of September 30, 2015
Cash and cash equivalents	$	43.4		$	0.2	$	—	$	43.6
Stock/bond mutual fund	46.4			74.6		9.6		130.6
Debt Securities
US bond mutual funds	—			9.3		—		9.3
US government	58.7			—		—		58.7
US corporate	123.7			42.9		—		166.6
US municipal	—			5.9		—		5.9
International	—			31.3		—		31.3
Derivative instruments	—			2.9		—		2.9
Total	$	272.2		$	167.1	$	9.6	$	448.9

The table below categorizes the fair value measurements of Spire’s postretirement plan assets:



	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of September 30, 2016
Cash and cash equivalents	$	4.8	$	—	$	—	$	4.8
US stock/bond mutual fund	157.9		68.5		—		226.4
International fund	0.9		14.3		—		15.2
Total	$	163.6	$	82.8	$	—	$	246.4

As of September 30, 2015
Cash and cash equivalents	$	1.6	$	—	$	—	$	1.6
US stock/bond mutual fund	115.5		92.8		—		208.3
International fund	—		13.4		—		13.4
Total	$	117.1	$	106.2	$	—	$	223.3

Cash and cash equivalents include money market mutual funds valued based on quoted market prices. Fair values of derivative instruments are calculated by investment managers who use valuation models that incorporate observable market inputs. Debt securities are valued based on broker/dealer quotations or by using observable market inputs. The stock and bond mutual funds are valued at the quoted market price of the identical securities.

Laclede Gas

The table below categorizes the fair value measurements of Laclede Gas’ pension plan assets:



	Quoted Prices in Active Markets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of September 30, 2016
Cash and cash equivalents	$	46.5		$	—	$	—	$	46.5
Stock/bond mutual fund	—			14.8		0.1		14.9
Debt Securities
US bond mutual funds	—			120.2		—		120.2
US government	42.1			3.0		—		45.1
US corporate	137.4			—		—		137.4
US municipal	6.3			—		—		6.3
International	25.2			—		—		25.2
Derivatives and margin (payable)	(1.0		)	1.1		—		0.1
Total	$	256.5		$	139.1	$	0.1	$	395.7

As of September 30, 2015
Cash and cash equivalents	$	31.8		$	—	$	—	$	31.8
Stock/bond mutual funds	—			67.6		0.1		67.7
Debt Securities
US government	37.7			—		—		37.7
US corporate	123.7			42.9		—		166.6
US municipal	—			5.9		—		5.9
International	—			27.3		—		27.3
Derivative instruments	—			2.9		—		2.9
Total	$	193.2		$	146.6	$	0.1	$	339.9

The table below categorizes the fair value measurements of Laclede Gas’ postretirement plan assets:



	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of September 30, 2016
Cash and cash equivalents	$	4.6	$	—	$	—	$	4.6
US stock/bond mutual funds	155.1		—		—		155.1
Total	$	159.7	$	—	$	—	$	159.7

As of September 30, 2015
Cash and cash equivalents	$	1.6	$	—	$	—	$	1.6
US stock/bond mutual funds	115.5		26.5		—		142.0
Total	$	117.1	$	26.5	$	—	$	143.6

Alagasco

The table below categorizes the fair value measurements of Alagasco’s pension plan assets:



	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of September 30, 2016
Cash and cash equivalents	$	0.4	$	—	$	—	$	0.4
Stock/bond mutual funds	59.0		11.9		—		70.9
Debt Securities
US bond mutual funds	23.0		5.7		—		28.7
Total	$	82.4	$	17.6	$	—	$	100.0

As of September 30, 2015
Cash and cash equivalents	$	11.6	$	0.2	$	—	$	11.8
Stock/bond mutual fund	46.4		7.0		9.5		62.9
Debt Securities
US bond mutual funds	—		9.3		—		9.3
US government	—		21.0		—		21.0
International	—		4.0		—		4.0
Derivative instruments (b)	—		—		—		—
Total	$	58.0	$	41.5	$	9.5	$	109.0

The table below categorizes the fair value measurements of Alagasco’s postretirement plan assets:



	Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of September 30, 2016
US stock/bond mutual fund	$	—	$	68.5	$	—	$	68.5
International fund	—		14.3		—		14.3
Total	$	—	$	82.8	$	—	$	82.8

As of September 30, 2015
US stock/bond mutual fund	—		66.3		—		66.3
International fund	—		13.4		—		13.4
Total	$	—	$	79.7	$	—	$	79.7