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Benefit Plans
 9 Months Ended
Sep. 30, 2012
Benefit Plans Disclosure [Line Items]  
Benefit Plans

12.       BENEFIT PLANS

COSTS OF BENEFIT PLANS

Net periodic benefit costs disclosed in the following tables for the qualified pension, non-qualified pension and other post-retirement benefit plans represent the cost of the respective benefit plan to the Progress Energy Registrants for the periods presented. However, portions of the net periodic benefit costs disclosed in the tables below have been capitalized as a component of property, plant and equipment.

Each of the Utilities participate in the qualified pension plans, non-qualified pension plans and other post-retirement benefit plans sponsored by Progress Energy. The net periodic benefit costs shown in the tables below represent their allocated cost of the respective benefit plan for the periods presented. Additionally, the Utilities are allocated their proportionate share of pension and other post-retirement benefit costs for PESC employees that provide support to the Utilities. These allocated amounts are included in the governance and shared services costs for the Utilities discussed in Note 15.

In conjunction with the merger, we offered a voluntary severance plan to certain employees in November 2011. The voluntary severance plan included additional coverage of healthcare costs to certain eligible employees. The cost of the healthcare benefits are reflected in the tables below as special termination costs. See further discussion at Note 13.

The components of the net periodic benefit cost for the respective Progress Energy Registrants for the three months ended September 30 were:

PROGRESS ENERGY           
  Qualified  Non-Qualified Other Post-Retirement
  Pension Plans Pension Plans Benefit Plans
(in millions) 2012  2011  2012  2011  2012  2011
Service cost$16 $13 $0 $0 $5 $3
Interest cost on projected benefit obligation 32  33  2  2  11  10
Expected return on plan assets (48)  (45)  0  0  0  0
Amortization of prior service cost (a) 2  2  0  0  0  0
Amortization net transition liability(a) 0  0  0  0  1  1
Amortization of actuarial loss(a) 24  15  1  1  10  3
Special termination costs 0  0  0  0  5  0
Other 1  0  0  0  0  0
 Net periodic cost $27 $18 $3 $3 $32 $17
                   
(a) Adjusted to reflect PEF’s rate treatment. See Note 17B in the 2011 Form 10-K.
                   
PEC           
  Qualified  Non-Qualified Other Post-Retirement
  Pension Plans Pension Plans Benefit Plans
(in millions) 2012  2011  2012  2011  2012  2011
Service cost$6 $5 $0 $0 $2 $2
Interest cost on projected benefit obligation 15  15  1  1  6  5
Expected return on plan assets (25)  (23)  0  0  0  0
Amortization of prior service cost  2  1  0  0  0  0
Amortization net transition liability 0  0  0  0  0  0
Amortization of actuarial loss 9  7  0  0  6  1
Special termination costs 0  0  0  0  2  0
Other 1  0  0  0  0  0
 Net periodic cost$8 $5 $1 $1 $16 $8
                   
PEF           
  Qualified  Non-Qualified Other Post-Retirement
  Pension Plans Pension Plans Benefit Plans
(in millions) 2012  2011  2012  2011  2012  2011
Service cost$8 $6 $0 $0 $2 $1
Interest cost on projected benefit obligation 14  14  1  1  4  4
Expected return on plan assets (21)  (19)  0  0  0  0
Amortization net transition liability 0  0  0  0  1  1
Amortization of actuarial loss 13  8  0  0  3  2
Special termination costs 0  0  0  0  1  0
 Net periodic cost $14 $9 $1 $1 $11 $8
                   

The components of the net periodic benefit cost for the respective Progress Energy Registrants for the nine months ended September 30 were:

PROGRESS ENERGY           
   Qualified  Non-QualifiedOther Post-Retirement
   Pension Plans  Pension Plans  Benefit Plans
(in millions) 2012  2011  2012  2011  2012  2011
Service cost$47 $39 $1 $1 $12 $8
Interest cost on projected benefit obligation 95  98  6  7  32  30
Expected return on plan assets (141)  (136)  0  0  (1)  (1)
Amortization of prior service cost (a) 7  5  0  0  0  0
Amortization of net transition liability(a) 0  0  0  0  3  4
Amortization of actuarial loss(a) 69  47  3  2  25  9
Special termination cost 0  0  0  0  5  0
Other  1  0  0  0  0  0
 Net periodic cost$78 $53 $10 $10 $76 $50
                   
(a) Adjusted to reflect PEF’s rate treatment. See Note 17B in the 2011 Form 10-K.
                   
PEC           
   Qualified  Non-Qualified Other Post-Retirement
   Pension Plans  Pension Plans  Benefit Plans
(in millions) 2012  2011  2012  2011  2012  2011
Service cost$19 $15 $1 $1 $6 $3
Interest cost on projected benefit obligation 43  46  1  1  17  15
Expected return on plan assets (72)  (68)  0  0  0  0
Amortization of prior service cost  6  4  0  0  0  0
Amortization of net transition liability 0  0  0  0  0  1
Amortization of actuarial loss 28  19  1  0  14  4
Special termination cost 0  0  0  0  2  0
Other  1  0  0  0  0  0
 Net periodic cost$25 $16 $3 $2 $39 $23
                   
PEF           
   Qualified  Non-Qualified Other Post-Retirement
   Pension Plans  Pension Plans  Benefit Plans
(in millions) 2012  2011  2012  2011  2012  2011
Service cost$22 $18 $0 $0 $5 $3
Interest cost on projected benefit obligation 42  43  2  2  13  13
Expected return on plan assets (61)  (59)  0  0  (1)  (1)
Amortization of net transition liability 0  0  0  0  2  3
Amortization of actuarial loss 36  25  0  0  9  6
Special termination cost 0  0  0  0  1  0
 Net periodic cost $39 $27 $2 $2 $29 $24
                   

BENEFIT OBLIGATIONS

Upon consummation of the merger with Duke Energy, all defined benefit plan obligations were remeasured. Progress Energy, PEC and PEF updated the assumptions used to determine their accrued benefit obligations and prospective net periodic benefit costs. The weighted-average assumptions used to determine benefit obligations are as follows:

    
  Qualified Pension Benefits Non-Qualified Pension Benefits Other Post-Retirement Benefits
Discount rate4.60% 4.60% 4.60%
Rate of increase in future compensation     
 Bargaining4.00% N/A N/A
 Supplementary plansN/A 5.25% N/A
Expected long-term rate of return on plan assets8.00% N/A N/A
       

The salary increase for qualified pension benefits relates to bargaining employees only. Our primary defined benefit plan for non-bargaining employees is a “cash balance” plan that uses the traditional unit credit method for purposes of measuring the benefit obligation. Under the traditional unit credit method, no assumptions are included about future changes in compensation, and the accumulated benefit obligation and projected benefit obligation are the same.

 

The assumed health care cost trend rates for our other post-retirement benefit plans are as follows:

  
Health care cost trend rate assumed for 20128.75%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)5.00%
Year that the rate reaches the ultimate trend rate2020
  

As a result of the remeasurement, we recorded net increases in our benefit obligations of $122 million, including $40 million for PEC and $75 million for PEF. These net increases were primarily offset by a $128 million increase in our regulatory assets, including $44 million for PEC and $75 million for PEF. In addition, $39 million of investments previously reported as plan assets of PEF's benefit plans were reclassified to investments and other assets, other in the Balance Sheets at September 30, 2012.

CONTRIBUTIONS

To date in 2012, we have made contributions directly to pension plan assets of approximately $146 million for us, including $71 million for PEC and $74 million for PEF. Our contributions during the nine months ended September 30, 2012 totaled $122 million, including $60 million for PEC and $61 million for PEF. Future amounts we contribute may be impacted by recently enacted legislation as well as other factors.

Additionally, we sponsor employee savings plans that cover substantially all employees. We made pre-tax employer contributions of $12 million and $12 million for the three months ended September 30, 2012 and 2011, respectively. We made pre-tax employer contributions of $35 million and $34 million for the nine months ended September 30, 2012 and 2011, respectively. The Utilities participate in our employee savings plans. The following table shows the respective expense related to their proportionate share of pre-tax employer contributions.

             
  Three months ended September 30 Nine months ended September 30
(in millions) 2012  2011  2012  2011
PEC$7 $6 $18 $18
PEF 4  4  11  11