PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The Spire information in this note reflects all plans of the Company, including information for plans covering employees of Spire EnergySouth since September 12, 2016. The net pension and postretirement obligations were re-measured at that acquisition date as well as at the fiscal year end.

Pension Plans

The pension plans of Spire consist of plans for employees at the Missouri Utilities, the employees of Spire Alabama and employees of the subsidiaries of Spire 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 U.S. government obligations and a growth segment consisting of exposure to equity markets, commodities, real estate and inflation-indexed securities, achieved through derivative instruments.

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

The net periodic pension costs include the following components:



	Spire									Spire Missouri									Spire Alabama
	2018			2017			2016			2018			2017			2016			2018			2017			2016
Service cost – benefits earned during the period	$	20.2		$	20.5		$	15.3		$	12.7		$	12.7		$	10.0		$	6.4		$	6.2		$	5.3
Interest cost on projected benefit obligation	27.4			27.9			28.0			19.5			19.5			21.7			5.5			6.1			6.3
Expected return on plan assets	(37.0		)	(38.5		)	(34.9		)	(27.2		)	(28.1		)	(26.7		)	(6.5		)	(7.2		)	(8.2		)
Amortization of prior service cost (credit)	(0.9		)	1.0			0.4			0.9			1.0			0.4			(1.8		)	—			—
Amortization of actuarial loss	10.9			12.5			8.0			9.4			10.7			7.9			1.5			1.8			0.1
Loss on lump-sum settlements and curtailments	18.6			17.9			3.3			16.1			13.5			—			2.4			4.6			3.3
Special termination benefits	—			0.9			1.6			—			—			1.6			—			—			—
Subtotal	39.2			42.2			21.7			31.4			29.3			14.9			7.5			11.5			6.8
Regulatory adjustment	37.4			(2.4		)	17.8			32.1			(4.1		)	11.7			4.5			1.8			6.1
Net pension cost	$	76.6		$	39.8		$	39.5		$	63.5		$	25.2		$	26.6		$	12.0		$	13.3		$	12.9

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



	Spire									Spire Missouri									Spire Alabama
	2018			2017			2016			2018			2017			2016			2018			2017			2016
Current year actuarial (gain) loss	$	(1.4	)	$	14.1		$	46.8		$	2.2		$	14.8		$	21.6		$	(0.6	)	$	3.3		$	25.2
Amortization of actuarial loss	(10.9		)	(12.5		)	(8.0		)	(9.4		)	(10.7		)	(7.9		)	(1.5		)	(1.8		)	(0.1		)
Acceleration of loss recognized due to settlement	(18.5		)	(18.2		)	(3.3		)	(16.1		)	(13.5		)	—			(2.4		)	(4.5		)	(3.3		)
Current year service (credit) cost	(0.1		)	—			5.0			—			—			5.0			—			—			—
Current year prior year service cost	—			(20.7		)	—			—			—			—			—			(20.7		)	—
Transfer due to merger	0.1			—			—			0.1			—			—			—			—			—
Amortization of prior service cost	(2.9		)	(1.0		)	(0.4		)	(0.9		)	(1.0		)	(0.4		)	—			—			—
Amortization of transition asset	1.8			—			—			—			—			—			1.8			—			—
Subtotal	(31.9		)	(38.3		)	40.1			(24.1		)	(10.4		)	18.3			(2.7		)	(23.7		)	21.8
Regulatory adjustment	31.6			38.0			(39.8		)	23.8			10.1			(18.0		)	2.7			23.7			(21.8		)
Total recognized in OCI	$	(0.3	)	$	(0.3	)	$	0.3		$	(0.3	)	$	(0.3	)	$	0.3		$	—		$	—		$	—

Spire pension obligations are driven by separate plan and regulatory provisions governing Spire Missouri, Spire Alabama and Spire EnergySouth pension plans.

Pursuant to the provisions of the Missouri Utilities’ and Spire Alabama’s pension plans, pension obligations may be satisfied by monthly annuities, lump-sum cash payments, or special termination benefits. Lump-sum payments are recognized as settlements (which can result in gains or losses) only if the total of such payments exceeds 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 Spire Alabama plans and one Spire Missouri plan met the criteria for settlement recognition in the fiscal year ended September 30, 2018, requiring re-measurement of the obligation under those plans using updated census data and assumptions for discount rate and mortality. For the remeasurements, the discount rates for the Missouri plans were updated to 4.20% and 4.15% at June 30, 2018 (from 3.70% and 3.75% at September 30, 2017), and the discount rate for the Alabama plan was updated to 4.20% (from 3.65%). Lump-sum payments recognized as settlements during fiscal years 2018, 2017, and 2016 were $82.8 ($65.5 attributable to Spire Missouri and $17.3 to Spire Alabama), $62.2 ($43.5 attributable to Spire Missouri and $18.7 to Spire Alabama), and $16.6 (attributable to Spire Alabama), 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.

Up to April 18, 2018, the recovery in rates for Spire Missouri East’s qualified pension plan was based on an annual allowance of $15.5 effective January 1, 2011. The recovery in rates for Spire Missouri West’s qualified pension plan was based on an annual allowance of approximately $9.9 effective February 20, 2010. Effective April 19, 2018, the pension cost for Spire Missouri West included in customer rates was reduced from $9.9 to $5.5 per year, the pension cost included in the Spire Missouri East customer rates was increased from $15.5 to $29.0 per year. Over an amortization period of eight years, Spire Missouri East rates will also include the amortization of $173.0 of assets for pension and other postretirement benefits, and Spire Missouri West rates will be reduced by the amortization of a $26.2 net liability for pension and other postretirement benefits. These changes are discussed further in Note 14, Regulatory Matters.

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						Spire Missouri						Spire Alabama
	2018			2017			2018			2017			2018			2017
Benefit obligation, beginning of year	$	748.8		$	794.7		$	539.6		$	560.0		$	148.2		$	174.3
Service cost	20.2			20.5			12.7			12.7			6.4			6.2
Interest cost	27.4			27.9			19.5			19.5			5.5			6.1
Actuarial (gain) loss	(34.9		)	(0.9		)	(26.0		)	(0.5		)	(3.8		)	1.6
Plan amendments	(2.0		)	(20.7		)	—			—			—			(20.7		)
Plan mergers	—			—			(0.3		)	—			—			—
Settlement loss	7.6			14.6			7.6			12.2			—			2.4
Special termination benefits	—			0.9			—			—			—			—
Settlement benefits paid	(82.8		)	(62.2		)	(65.5		)	(43.5		)	(17.3		)	(18.7		)
Regular benefits paid	(19.7		)	(26.0		)	(14.3		)	(20.8		)	(2.7		)	(3.0		)
Benefit obligation, end of year	$	664.6		$	748.8		$	473.3		$	539.6		$	136.3		$	148.2
Accumulated benefit obligation, end of year	$	636.0		$	701.4		$	446.5		$	500.4		$	134.5		$	142.8

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



	Spire						Spire Missouri						Spire Alabama
	2018			2017			2018			2017			2018			2017
Fair value of plan assets, beginning of year	$	531.6		$	540.5		$	385.9		$	395.7		$	97.9		$	100.0
Actual return on plan assets	11.2			38.0			6.4			25.1			3.3			7.7
Employer contributions	58.9			41.3			36.9			29.4			20.1			11.9
Divestitures	—			—			(0.3		)	—			—			—
Settlement benefits paid	(82.8		)	(62.2		)	(65.5		)	(43.5		)	(17.3		)	(18.7		)
Regular benefits paid	(19.7		)	(26.0		)	(14.3		)	(20.8		)	(2.7		)	(3.0		)
Fair value of plan assets, end of year	$	499.2		$	531.6		$	349.1		$	385.9		$	101.3		$	97.9
Funded status of plans, end of year	$	(165.4	)	$	(217.2	)	$	(124.2	)	$	(153.7	)	$	(35.0	)	$	(50.3	)

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



	Spire						Spire Missouri						Spire Alabama
	2018			2017			2018			2017			2018			2017
Current liabilities	$	(0.6	)	$	(0.5	)	$	(0.6	)	$	(0.5	)	$	—		$	—
Noncurrent liabilities	(164.8		)	(216.7		)	(123.6		)	(153.2		)	(35.0		)	(50.3		)
Total	$	(165.4	)	$	(217.2	)	$	(124.2	)	$	(153.7	)	$	(35.0	)	$	(50.3	)

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



	Spire						Spire Missouri						Spire Alabama
	2018			2017			2018			2017			2018			2017
Net actuarial loss	$	132.1		$	163.0		$	102.8		$	126.2		$	36.4		$	40.9
Prior service (credit) cost	(14.4		)	(13.4		)	6.4			7.3			(18.8		)	(20.7		)
Subtotal	117.7			149.6			109.2			133.5			17.6			20.2
Adjustments for amounts included in regulatory assets	(115.5		)	(147.1		)	(107.0		)	(131.0		)	(17.6		)	(20.2		)
Total	$	2.2		$	2.5		$	2.2		$	2.5		$	—		$	—

At September 30, 2018, the following pre-tax amounts are expected to be amortized from accumulated other comprehensive loss into net periodic pension cost during fiscal 2019:



	Spire			Spire Missouri			Spire Alabama
Amortization of net actuarial loss	$	9.2		$	8.6		$	0.8
Amortization of prior service (credit) cost	(0.9		)	0.9			(1.8		)
Subtotal	8.3			9.5			(1.0		)
Regulatory adjustment	(8.1		)	(9.3		)	1.0
Total	$	0.2		$	0.2		$	—

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



	2018	2017	2016
Weighted average discount rate - Spire Missouri East plan	3.75%	3.50%	4.40%
Weighted average discount rate - Spire Missouri West plan	3.70%	3.50%	4.50%
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%

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



	2018	2017	2016
Weighted average discount rate	3.65%/3.70%	3.45%/3.50%	4.25%/4.30%
Weighted average rate of future compensation increase	3.00%	3.00%	3.00%
Expected long-term rate of return on plan assets	7.25%	7.25%	7.50%

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:



	2018	2017
Weighted average discount rate - Spire Missouri East plan	4.30%	3.75%
Weighted average discount rate - Spire Missouri West plan	4.35%	3.70%
Weighted average discount rate - Spire Alabama plans	4.35%	3.65%/3.70%
Weighted average rate of future compensation increase	3.00%	3.00%

Following are the year-end 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				Spire Missouri				Spire Alabama
	2018		2017		2018		2017		2018		2017
Projected benefit obligation	$	664.6	$	748.8	$	473.3	$	539.6	$	136.3	$	148.2
Accumulated benefit obligation	636.0		701.4		446.5		500.4		134.5		142.8
Fair value of plan assets	499.2		531.6		349.1		385.9		101.3		97.9

Following are the targeted and actual plan assets by category as of September 30 of each year for Spire Missouri and Spire Alabama:



Spire Missouri	2018 Target		2018 Actual		2017 Target		2017 Actual
Equity markets	56.4	%	55.3	%	56.4	%	56.8	%
Debt securities	43.6	%	42.4	%	43.6	%	42.0	%
Cash equivalents	—	%	2.3	%	—	%	1.2	%
Total	100.0	%	100.0	%	100.0	%	100.0	%



Spire Alabama	2018 Target		2018 Actual		2017 Target		2017 Actual
Equity markets	60.0	%	59.4	%	60.0	%	58.5	%
Debt securities	29.0	%	28.6	%	29.0	%	28.7	%
Other*	11.0	%	12.0	%	11.0	%	12.8	%
Total	100.0	%	100.0	%	100.0	%	100.0	%


*	Includes cash and funds invested in real estate, commodities, natural resources and inflation-protected securities.

Spire Missouri’s investment policies are designed to maximize, to the extent possible, the funded status of the plans over time, and minimize volatility of funding and costs. The policy seeks to maximize investment returns consistent with these objectives and Spire Missouri’s 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, currently including a growth (equity) component and a liability-driven (debt) component. Investments in corporate, U.S. 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. For the Missouri East plan, 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.

Spire Alabama 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. Spire Alabama 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 plans by providing above average risk-adjusted returns with a risk exposure in the mid-range of comparable funds. Investment managers are retained by Spire Alabama 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. Spire Alabama 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 fiscal years thereafter, for Spire, Spire Missouri, and Spire Alabama:



	2019		2020		2021		2022		2023		2024- 2028
Spire	$	63.0	$	63.6	$	60.0	$	58.4	$	57.1	$	266.4
Spire Missouri	50.3		50.2		46.0		43.8		41.9		184.8
Spire Alabama	10.0		10.7		11.2		11.8		12.3		65.5

The funding policy of Spire Missouri and Spire Alabama 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. Spire Missouri contributions to the pension plans in fiscal 2019 are anticipated to be $27.1 into the qualified trusts, and $0.5 into the non-qualified plans. Spire Alabama had no required contributions to the qualified pension plans during 2018 or 2017, and 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 2018 and 2017, Spire Alabama made discretionary contributions to the qualified pension plans totaling $20.1 and $11.9, respectively; none are expected in fiscal 2019.

Postretirement Benefits

The Utilities provide certain life insurance benefits at retirement. Spire Missouri plans provide for medical insurance after early retirement until age 65. For retirements prior to January 1, 2015, the Spire Missouri West plans provided medical insurance after retirement until death. For retirements after January 1, 2015, the Spire Missouri West plans provide medical insurance after early retirement until age 65. Under the Spire Alabama 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									Spire Missouri									Spire Alabama
	2018			2017			2016			2018			2017			2016			2018			2017			2016
Service cost – benefits earned during the period	$	9.4		$	11.0		$	10.9		$	9.0		$	10.4		$	10.6		$	0.2		$	0.3		$	0.3
Interest cost on accumulated postretirement benefit obligation	8.6			8.6			10.2			6.9			6.8			8.1			1.5			1.6			2.1
Expected return on plan assets	(13.9		)	(13.6		)	(13.5		)	(9.6		)	(9.0		)	(8.5		)	(4.1		)	(4.4		)	(5.0		)
Amortization of prior service cost (credit)	(0.1		)	—			0.3			0.3			0.2			0.3			(0.4		)	(0.2		)	—
Amortization of actuarial loss (gain)	0.8			2.5			3.6			0.9			2.6			3.8			(0.1		)	(0.1		)	(0.2		)
Special termination benefits	—			—			2.6			—			—			2.6			—			—			—
Subtotal	4.8			8.5			14.1			7.5			11.0			16.9			(2.9		)	(2.8		)	(2.8		)
Regulatory adjustment	2.2			(3.2		)	(6.6		)	3.9			(1.5		)	(4.8		)	(1.8		)	(1.8		)	(1.8		)
Net postretirement benefit cost	$	7.0		$	5.3		$	7.5		$	11.4		$	9.5		$	12.1		$	(4.7	)	$	(4.6	)	$	(4.6	)

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



	Spire									Spire Missouri									Spire Alabama
	2018			2017			2016			2018			2017			2016			2018			2017			2016
Current year actuarial (gain) loss	$	(45.1	)	$	(34.1	)	$	0.8		$	(47.1	)	$	(28.5	)	$	1.4		$	1.6		$	(4.5	)	$	(0.6	)
Amortization of actuarial (loss) gain	(0.8		)	(2.5		)	(3.6		)	(0.9		)	(2.6		)	(3.8		)	0.1			0.1			0.2
Current year prior service credit	—			(1.4		)	(1.8		)	—			—			—			—			(1.4		)	(1.8		)
Amortization of prior service (cost) credit	0.1			—			(0.3		)	(0.3		)	(0.2		)	(0.3		)	0.4			0.2			—
Subtotal	(45.8		)	(38.0		)	(4.9		)	(48.3		)	(31.3		)	(2.7		)	2.1			(5.6		)	(2.2		)
Regulatory adjustment	45.8			38.0			4.9			48.3			31.3			2.7			(2.1		)	5.6			2.2
Total recognized in OCI	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

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. Up to April 18, 2018, the recovery in rates for Spire Missouri’s postretirement benefit plans is based on an annual allowance of $9.5 effective January 1, 2011. Effective April 19, 2018, the allowance was reduced to $8.6. This change is discussed further in Note 14, Regulatory Matters. 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						Spire Missouri						Spire Alabama
	2018			2017			2018			2017			2018			2017
Benefit obligation, beginning of year	$	238.5		$	259.2		$	192.5		$	207.9		$	40.6		$	45.4
Service cost	9.4			11.0			9.0			10.4			0.2			0.3
Interest cost	8.6			8.6			6.9			6.8			1.5			1.6
Actuarial (gain) loss	(37.5		)	(22.1		)	(41.1		)	(20.9		)	3.1			—
Plan amendments	—			(1.4		)	—			—			—			(1.4		)
Curtailments	—			0.4			—			—			—			—
Retiree drug subsidy program	0.2			0.3			0.1			0.3			0.1			—
Benefits paid	(11.1		)	(17.5		)	(8.6		)	(12.0		)	(2.4		)	(5.3		)
Benefit obligation, end of year	$	208.1		$	238.5		$	158.8		$	192.5		$	43.1		$	40.6

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



	Spire						Spire Missouri						Spire Alabama
	2018			2017			2018			2017			2018			2017
Fair value of plan assets at beginning of year	$	265.5		$	246.4		$	174.9		$	159.7		$	86.4		$	82.8
Actual return on plan assets	21.5			26.2			15.6			16.8			5.6			8.9
Employer contributions	7.6			10.4			7.6			10.4			—			—
Benefits paid	(11.1		)	(17.5		)	(8.6		)	(12.0		)	(2.4		)	(5.3		)
Fair value of plan assets, end of year	$	283.5		$	265.5		$	189.5		$	174.9		$	89.6		$	86.4
Funded status of plans, end of year	$	75.4		$	27.0		$	30.7		$	(17.6	)	$	46.5		$	45.8

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



	Spire						Spire Missouri						Spire Alabama
	2018			2017			2018			2017			2018		2017
Current assets	$	—		$	1.4		$	—		$	1.4		$	—	$	—
Noncurrent assets	92.0			47.0			45.5			1.2			46.5		45.8
Current liabilities	(0.5		)	(0.4		)	(0.5		)	(0.4		)	—		—
Noncurrent liabilities	(16.1		)	(21.0		)	(14.3		)	(19.8		)	—		—
Total	$	75.4		$	27.0		$	30.7		$	(17.6	)	$	46.5	$	45.8

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



	Spire						Spire Missouri						Spire Alabama
	2018			2017			2018			2017			2018			2017
Net actuarial loss (gain)	$	(44.4	)	$	1.5		$	(35.7	)	$	12.3		$	(8.0	)	$	(9.7	)
Prior service credit	(6.6		)	(6.6		)	(4.0		)	(3.7		)	(2.6		)	(2.9		)
Subtotal	(51.0		)	(5.1		)	(39.7		)	8.6			(10.6		)	(12.6		)
Adjustments for amounts included in regulatory assets	51.0			5.1			39.7			(8.6		)	10.6			12.6
Total	$	—		$	—		$	—		$	—		$	—		$	—

At September 30, 2018, the following pre-tax amounts are expected to be amortized from accumulated other comprehensive loss into net periodic postretirement benefit cost during fiscal 2019:



	Spire			Spire Missouri			Spire Alabama
Amortization of net actuarial loss	$	(0.5	)	$	(0.5	)	$	—
Amortization of prior service (credit) cost	(0.1		)	0.3			(0.4		)
Subtotal	(0.6		)	(0.2		)	(0.4		)
Regulatory adjustment	0.6			0.2			0.4
Total	$	—		$	—		$	—

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



	2018	2017	2016
Weighted average discount rate - Spire Missouri East plans	3.60%	3.15%	4.00%
Weighted average discount rate - Spire Missouri West plans	3.60%	3.45%	4.30%
Weighted average rate of future compensation increase	3.00%	3.00%	3.00%
Expected long-term rate of return on plan assets - Spire Missouri East plans	5.75%/7.75%	5.75%/7.75%	6.00%/7.75%
Expected long-term rate of return on plan assets - Spire Missouri West plans	5.75%	5.50%	4.75%

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



	2018	2017	2016
Weighted average discount rate	3.80%	3.60%	4.50%
Expected long-term rate of return on plan assets	3.75%/6.00%	4.00%/6.25%	4.50%/7.25%

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



	2018	2017
Weighted average discount rate - Spire Alabama plans	4.30%	3.80%
Weighted average discount rate - Spire Missouri East plans	4.30%	3.60%
Weighted average discount rate - Spire Missouri West plans	4.30%	3.60%
Weighted average rate of future compensation increase - Spire Missouri East plans	3.00%	3.00%

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



	2018	2017
Medical cost trend assumed for next year - Spire Missouri	7.00%	7.25%
Medical cost trend assumed for next year - Spire Alabama	7.00%	7.25%
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	2025	2023

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



	Spire					Spire Missouri					Spire Alabama
	1% Increase		1% Decrease			1% Increase		1% Decrease			1% Increase		1% Decrease
Net periodic postretirement benefit cost	$	1.4	$	(1.3	)	$	1.2	$	(1.1	)	$	0.1	$	(0.1	)
Accumulated postretirement benefit obligation	8.4		(7.7		)	6.0		(5.6		)	1.6		(1.5		)

Following are the targeted and actual plan assets by category as of September 30 of each year for Spire Missouri and Spire Alabama:



Spire Missouri	Target		2018 Actual		2017 Actual
Equity securities	60.0	%	58.8	%	59.0	%
Debt securities	40.0	%	39.1	%	39.4	%
Other (cash and cash equivalents held to make benefit payments)	—	%	2.1	%	1.6	%
Total	100.0	%	100.0	%	100.0	%



Spire Alabama	Target		2018 Actual		2017 Actual
Equity securities	60.0	%	60.0	%	60.1	%
Debt securities	40.0	%	40.0	%	39.9	%
Total	100.0	%	100.0	%	100.0	%

Missouri and Alabama state laws provide for the recovery in rates of costs accrued pursuant to GAAP provided that such costs are funded through an independent, external funding mechanism. The Utilities have established Voluntary Employees’ Beneficiary Association and Rabbi Trusts as external funding mechanisms. Their investment policies seek to maximize investment returns consistent with their 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. Spire Missouri and Spire Alabama currently invest in mutual funds which are rebalanced periodically to the target allocation. The mutual funds are diversified across U.S. stock and bond markets, and for Spire Alabama, international stock markets.

Following are expected postretirement benefit payments for the succeeding five fiscal years, and in aggregate for the five fiscal years thereafter for Spire, Spire Missouri, and Spire Alabama:



	2019		2020		2021		2022		2023		2024- 2028
Spire	$	14.2	$	15.3	$	16.3	$	16.9	$	17.9	$	93.9
Spire Missouri	10.8		11.8		12.8		13.4		14.3		76.4
Spire Alabama	3.0		3.1		3.1		3.1		3.2		15.1

The Utilities’ funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated pursuant to GAAP as recovered in rates. For Spire Missouri, contributions to the postretirement plans in fiscal 2019 are anticipated to be $1.9 to the qualified trusts and $0.5 paid directly to participants from Spire Missouri funds. It is not anticipated that contributions will be made to the Spire Alabama postretirement plans in fiscal 2019.

Other Plans

Spire Services Inc. sponsors a 401(k) plan that cover substantially all employees of Spire Inc. and its subsidiaries. The plan allows employees to contribute a portion of their base pay in accordance with specific guidelines. The cost of the defined contribution plan for Spire Inc. totaled $12.2, $11.5, and $10.5 for fiscal years 2018, 2017, and 2016, respectively. Spire Missouri provides a match of such contributions within specific limits. The cost of the defined contribution plan for Spire Missouri amounted to $9.0, $8.4, and $8.2 for fiscal years 2018, 2017, and 2016, respectively. Spire Alabama also provides a match of employee contributions within specific limits. The cost of the defined contribution plan for Spire Alabama amounted to $3.0, $2.7, and $2.3 for fiscal years 2018, 2017, and 2016, 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, 2018
Cash and cash equivalents	$	50.6		$	—	$	—	$	50.6
Equity mutual funds - U.S.	42.7			21.2		—		63.9
Equity mutual funds - international	20.7			4.1		—		24.8
Debt securities:
U.S. bond mutual funds	35.8			64.9		—		100.7
U.S. government	31.7			5.6		—		37.3
U.S. corporate	152.1			—		—		152.1
U.S. municipal	3.6			3.0		—		6.6
International	43.9			7.0		—		50.9
Derivatives and margin (payable)	(0.8		)	—		—		(0.8		)
103-12 Direct Filing Entities	—			13.1		—		13.1
Total	$	380.3		$	118.9	$	—	$	499.2

As of September 30, 2017
Cash and cash equivalents	$	37.3		$	—	$	—	$	37.3
Equity mutual funds - U.S.	42.1			25.4		—		67.5
Equity mutual funds - international	37.4			11.2		—		48.6
Debt securities:
U.S. bond mutual funds	34.4			68.5		—		102.9
U.S. government	33.2			4.5		—		37.7
U.S. corporate	183.7			—		—		183.7
U.S. municipal	4.2			—		—		4.2
International	45.1			7.2		—		52.3
Derivatives and margin (payable)	(2.6		)	—		—		(2.6		)
Total	$	414.8		$	116.8	$	—	$	531.6

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, 2018
Cash and cash equivalents	$	3.7	$	—	$	—	$	3.7
U.S. stock/bond mutual funds	190.2		74.5		—		264.7
International fund	—		15.1		—		15.1
Total	$	193.9	$	89.6	$	—	$	283.5

As of September 30, 2017
Cash and cash equivalents	$	4.0	$	—	$	—	$	4.0
U.S. stock/bond mutual funds	174.1		71.7		—		245.8
International fund	1.0		14.7		—		15.7
Total	$	179.1	$	86.4	$	—	$	265.5

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.

Spire Missouri

The table below categorizes the fair value measurements of Spire Missouri’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, 2018
Cash and cash equivalents	$	35.2		$	—	$	—	$	35.2
Equity mutual funds - U.S.	—			8.4		—		8.4
Equity mutual funds - international	—			4.1		—		4.1
Debt securities:
U.S. bond mutual funds	—			64.9		—		64.9
U.S. government	31.7			3.0		—		34.7
U.S. corporate	152.1			—		—		152.1
U.S. municipal	3.6			3.0		—		6.6
International	43.9			—		—		43.9
Derivatives and margin (payable)	(0.8		)	—		—		(0.8		)
Total	$	265.7		$	83.4	$	—	$	349.1
As of September 30, 2017
Cash and cash equivalents	$	31.7		$	—	$	—	$	31.7
Equity mutual funds - U.S.	—			11.9		—		11.9
Equity mutual funds - international	—			5.7		—		5.7
Debt securities:
U.S. bond mutual funds	—			68.5		—		68.5
U.S. government	33.2			4.5		—		37.7
U.S. corporate	183.7			—		—		183.7
U.S. municipal	4.2			—		—		4.2
International	45.1			—		—		45.1
Derivatives and margin (payable)	(2.6		)	—		—		(2.6		)
Total	$	295.3		$	90.6	$	—	$	385.9

The table below categorizes the fair value measurements of Spire Missouri’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, 2018
Cash and cash equivalents	$	3.5	$	—	$	—	$	3.5
U.S. stock/bond mutual funds	186.0		—		—		186.0
Total	$	189.5	$	—	$	—	$	189.5

As of September 30, 2017
Cash and cash equivalents	$	3.9	$	—	$	—	$	3.9
U.S. stock/bond mutual funds	171.0		—		—		171.0
Total	$	174.9	$	—	$	—	$	174.9

Spire Alabama

The table below categorizes the fair value measurements of Spire Alabama’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, 2018
Cash and cash equivalents	$	10.4	$	—	$	—	$	10.4
Equity mutual funds - U.S.	28.8		8.6		—		37.4
Equity mutual funds - international	14.0		—		—		14.0
Debt securities:
U.S. bond mutual funds	24.2		—		—		24.2
U.S. government	—		1.8		—		1.8
International	—		4.7		—		4.7
103-12 Direct Filing Entities	—		8.8		—		8.8
Total	$	77.4	$	23.9	$	—	$	101.3

As of September 30, 2017
Cash and cash equivalents	$	3.4	$	—	$	—	$	3.4
Equity mutual funds - U.S.	28.4		9.1		—		37.5
Equity mutual funds - international	25.2		3.7		—		28.9
Debt securities:
U.S. bond mutual funds	23.2		—		—		23.2
International	—		4.9		—		4.9
Total	$	80.2	$	17.7	$	—	$	97.9

The table below categorizes the fair value measurements of Spire Alabama’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, 2018
U.S. stock/bond mutual funds	$	—	$	74.5	$	—	$	74.5
International fund	—		15.1		—		15.1
Total	$	—	$	89.6	$	—	$	89.6

As of September 30, 2017
U.S. stock/bond mutual funds	$	—	$	71.7	$	—	$	71.7
International fund	—		14.7		—		14.7
Total	$	—	$	86.4	$	—	$	86.4