Retirement Plan And Other Post-Retirement Benefits

12 Months Ended

Sep. 30, 2021

Retirement Benefits [Abstract]

Retirement Plan And Other Post-Retirement Benefits

Retirement Plan and Other Post-Retirement BenefitsThe Company has a tax-qualified, noncontributory, defined-benefit retirement plan (Retirement Plan). The Retirement Plan covers certain non-collectively bargained employees hired before July 1, 2003 and certain collectively bargained employees hired before November 1, 2003. Certain non-collectively bargained employees hired after June 30, 2003 and certain collectively bargained employees hired after October 31, 2003

are eligible for a Retirement Savings Account benefit provided under the Company’s defined contribution Tax-Deferred Savings Plans. Costs associated with the Retirement Savings Account were $4.8 million, $4.2 million and $3.9 million for the years ended September 30, 2021, 2020 and 2019, respectively. Costs associated with the Company’s contributions to the Tax-Deferred Savings Plans, exclusive of the costs associated with the Retirement Savings Account, were $7.2 million, $6.7 million, and $6.4 million for the years ended September 30, 2021, 2020 and 2019, respectively.

The Company provides health care and life insurance benefits (other post-retirement benefits) for a majority of its retired employees. The other post-retirement benefits cover certain non-collectively bargained employees hired before January 1, 2003 and certain collectively bargained employees hired before October 31, 2003.

The Company’s policy is to fund the Retirement Plan with at least an amount necessary to satisfy the minimum funding requirements of applicable laws and regulations and not more than the maximum amount deductible for federal income tax purposes. The Company has established VEBA trusts for its other post-retirement benefits. Contributions to the VEBA trusts are tax deductible, subject to limitations contained in the Internal Revenue Code and regulations and are made to fund employees’ other post-retirement benefits, as well as benefits as they are paid to current retirees. In addition, the Company has established 401(h) accounts for its other post-retirement benefits. They are separate accounts within the Retirement Plan trust used to pay retiree medical benefits for the associated participants in the Retirement Plan. Although these accounts are in the Retirement Plan trust, for funding status purposes as shown below, the 401(h) accounts are included in Fair Value of Assets under Other Post-Retirement Benefits. Contributions are tax-deductible when made, subject to limitations contained in the Internal Revenue Code and regulations.

The expected return on Retirement Plan assets, a component of net periodic benefit cost shown in the tables below, is applied to the market-related value of plan assets. The market-related value of plan assets is the market value as of the measurement date adjusted for variances between actual returns and expected returns (from previous years) that have not been reflected in net periodic benefit costs. The expected return on other post-retirement benefit assets (i.e. the VEBA trusts and 401(h) accounts), which is a component of net periodic benefit cost shown in the tables below, is applied to the fair value of assets as of the measurement date.

Reconciliations of the Benefit Obligations, Plan Assets and Funded Status, as well as the components of Net Periodic Benefit Cost and the Weighted Average Assumptions of the Retirement Plan and other post-retirement benefits are shown in the tables below. The components of net periodic benefit cost other than service cost are presented in Other Income (Deductions) on the Consolidated Statements of Income. The date used to measure the Benefit Obligations, Plan Assets and Funded Status is September 30 for fiscal years 2021, 2020 and 2019.

	Retirement Plan									Other Post-Retirement Benefits
	Year Ended September 30									Year Ended September 30
	2021			2020			2019			2021			2020			2019
	(Thousands)
Change in Benefit Obligation
Benefit Obligation at Beginning of Period	$	1,139,105		$	1,097,625		$	985,690		$	476,722		$	468,163		$	435,986
Service Cost	9,865			9,318			8,482			1,602			1,609			1,519
Interest Cost	21,686			29,930			38,378			9,303			12,913			17,145
Plan Participants’ Contributions	—			—			—			3,216			3,058			2,930
Retiree Drug Subsidy Receipts	—			—			—			1,244			1,411			1,855
Actuarial (Gain) Loss	(8,141)			65,908			127,748			(34,729)			16,396			34,401
Benefits Paid	(64,059)			(63,676)			(62,673)			(26,145)			(26,828)			(25,673)
Benefit Obligation at End of Period	$	1,098,456		$	1,139,105		$	1,097,625		$	431,213		$	476,722		$	468,163
Change in Plan Assets
Fair Value of Assets at Beginning of Period	$	1,016,796		$	968,449		$	924,506		$	547,885		$	524,127		$	513,800
Actual Return on Plan Assets	122,992			87,402			77,401			47,541			44,448			30,006
Employer Contributions	20,000			24,621			29,215			3,068			3,080			3,064
Plan Participants’ Contributions	—			—			—			3,216			3,058			2,930
Benefits Paid	(64,059)			(63,676)			(62,673)			(26,145)			(26,828)			(25,673)
Fair Value of Assets at End of Period	$	1,095,729		$	1,016,796		$	968,449		$	575,565		$	547,885		$	524,127
Net Amount Recognized at End of Period (Funded Status)	$	(2,727)		$	(122,309)		$	(129,176)		$	144,352		$	71,163		$	55,964
Amounts Recognized in the Balance Sheets Consist of:
Non-Current Liabilities	$	(2,727)		$	(122,309)		$	(129,176)		$	(4,799)		$	(4,872)		$	(4,553)
Non-Current Assets	—			—			—			149,151			76,035			60,517
Net Amount Recognized at End of Period	$	(2,727)		$	(122,309)		$	(129,176)		$	144,352		$	71,163		$	55,964
Accumulated Benefit Obligation	$	1,060,659		$	1,096,427		$	1,053,914		N/A			N/A			N/A
Weighted Average Assumptions Used to Determine Benefit Obligation at September 30
Discount Rate	2.75		%	2.66		%	3.15		%	2.76		%	2.71		%	3.17		%
Rate of Compensation Increase	4.70		%	4.70		%	4.70		%	4.70		%	4.70		%	4.70		%

	Retirement Plan									Other Post-Retirement Benefits
	Year Ended September 30									Year Ended September 30
	2021			2020			2019			2021			2020			2019
	(Thousands)
Components of Net Periodic Benefit Cost
Service Cost	$	9,865		$	9,318		$	8,482		$	1,602		$	1,609		$	1,519
Interest Cost	21,686			29,930			38,378			9,303			12,913			17,145
Expected Return on Plan Assets	(58,148)			(60,063)			(62,368)			(28,964)			(29,232)			(30,157)
Amortization of Prior Service Cost (Credit)	631			729			826			(429)			(429)			(429)
Recognition of Actuarial Loss(1)	36,814			39,384			32,096			849			535			5,962
Net Amortization and Deferral for Regulatory Purposes	14,063			5,359			2,493			28,010			25,596			16,481
Net Periodic Benefit Cost	$	24,911		$	24,657		$	19,907		$	10,371		$	10,992		$	10,521
Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost at September 30
Effective Discount Rate for Benefit Obligations	2.66		%	3.15		%	4.30		%	2.71		%	3.17		%	4.31		%
Effective Rate for Interest on Benefit Obligations	1.96		%	2.81		%	4.03		%	2.01		%	2.84		%	4.05		%
Effective Discount Rate for Service Cost	3.01		%	3.31		%	4.40		%	3.20		%	3.39		%	4.43		%
Effective Rate for Interest on Service Cost	2.60		%	3.12		%	4.29		%	2.98		%	3.30		%	4.39		%
Expected Return on Plan Assets	6.00		%	6.40		%	6.75		%	5.40		%	5.70		%	6.00		%
Rate of Compensation Increase	4.70		%	4.70		%	4.70		%	4.70		%	4.70		%	4.70		%

(1)Distribution Corporation’s New York jurisdiction calculates the amortization of the actuarial loss on a vintage year basis over 10 years, as mandated by the NYPSC. All the other subsidiaries of the Company utilize the corridor approach.

The Net Periodic Benefit Cost in the table above includes the effects of regulation. The Company recovers pension and other post-retirement benefit costs in its Utility and Pipeline and Storage segments in accordance with the applicable regulatory commission authorizations. Certain of those commission authorizations established tracking mechanisms which allow the Company to record the difference between the amount of pension and other post-retirement benefit costs recoverable in rates and the amounts of such costs as determined under the existing authoritative guidance as either a regulatory asset or liability, as appropriate. Any activity under the tracking mechanisms (including the amortization of pension and other post-retirement regulatory assets and liabilities) is reflected in the Net Amortization and Deferral for Regulatory Purposes line item above.

In addition to the Retirement Plan discussed above, the Company also has Non-Qualified benefit plans that cover a group of management employees designated by the Chief Executive Officer of the Company. These plans provide for defined benefit payments upon retirement of the management employee, or to the spouse upon death of the management employee. The net periodic benefit costs associated with these plans were $8.3 million, $8.9 million and $7.6 million in 2021, 2020 and 2019, respectively. The components of net periodic benefit cost other than service costs associated with these plans are presented in Other Income (Deductions) on

the Consolidated Statements of Income. The accumulated benefit obligations for the plans were $76.9 million, $78.7 million and $79.8 million at September 30, 2021, 2020 and 2019, respectively. The projected benefit obligations for the plans were $95.8 million, $98.1 million and $99.5 million at September 30, 2021, 2020 and 2019, respectively. At September 30, 2021, $15.4 million of the projected benefit obligation is recorded in Other Accruals and Current Liabilities and the remaining $80.4 million is recorded in Other Liabilities on the Consolidated Balance Sheets. At September 30, 2020, $14.5 million of the projected benefit obligation was recorded in Other Accruals and Current Liabilities and the remaining $83.6 million was recorded in Other Liabilities on the Consolidated Balance Sheets. At September 30, 2019, $13.2 million of the projected benefit obligation was recorded in Other Accruals and Current Liabilities and the remaining $86.3 million was recorded in Other Liabilities on the Consolidated Balance Sheets. The weighted average discount rates for these plans were 2.15%, 1.92% and 2.77% as of September 30, 2021, 2020 and 2019, respectively and the weighted average rates of compensation increase for these plans were 8.00%, 8.00% and 8.00% as of September 30, 2021, 2020 and 2019, respectively.

The cumulative amounts recognized in accumulated other comprehensive income (loss), regulatory assets, and regulatory liabilities through fiscal 2021, as well as the changes in such amounts during 2021, are presented in the table below:

	Retirement Plan		Other Post-Retirement Benefits		Non-Qualified Benefit Plans
	(Thousands)
Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Regulatory Assets and Regulatory Liabilities(1)
Net Actuarial Gain (Loss)	$	(105,532)	$	26,112	$	(33,241)
Prior Service (Cost) Credit	(3,009)		1,972		—
Net Amount Recognized	$	(108,541)	$	28,084	$	(33,241)
Changes to Accumulated Other Comprehensive Income (Loss), Regulatory Assets and Regulatory Liabilities Recognized During Fiscal 2021(1)
Decrease (Increase) in Actuarial Loss, excluding amortization(2)	$	72,985	$	53,307	$	(5,029)
Change due to Amortization of Actuarial Loss	36,814		849		5,852
Prior Service (Cost) Credit	631		(429)		—
Net Change	$	110,430	$	53,727	$	823

(1)Amounts presented are shown before recognizing deferred taxes.

(2)Amounts presented include the impact of actuarial gains/losses related to return on assets, as well as the Actuarial (Gain) Loss amounts presented in the Change in Benefit Obligation.

In order to adjust the funded status of its pension (tax-qualified and non-qualified) and other post-retirement benefit plans at September 30, 2021, the Company recorded a $130.9 million decrease to Other Regulatory Assets in the Company’s Utility and Pipeline and Storage segments and a $34.1 million (pre-tax) increase to Accumulated Other Comprehensive Income.

The effect of the discount rate change for the Retirement Plan in 2021 was to decrease the projected benefit obligation of the Retirement Plan by $11.2 million. The mortality improvement projection scale was updated, which decreased the projected benefit obligation of the Retirement Plan in 2021 by $2.9 million. Other actuarial experience increased the projected benefit obligation for the Retirement Plan in 2021 by $5.9 million. The effect of the discount rate change for the Retirement Plan in 2020 was to increase the projected

benefit obligation of the Retirement Plan by $61.3 million. The effect of the discount rate change for the Retirement Plan in 2019 was to increase the projected benefit obligation of the Retirement Plan by $128.4 million.

The Company made cash contributions totaling $20.0 million to the Retirement Plan during the year ended September 30, 2021. The Company expects that the annual contribution to the Retirement Plan in 2022 will be in the range of $20.0 million to $25.0 million.

The following Retirement Plan benefit payments, which reflect expected future service, are expected to be paid by the Retirement Plan during the next five years and the five years thereafter: $67.0 million in 2022; $67.1 million in 2023; $67.2 million in 2024; $66.9 million in 2025; $66.4 million in 2026; and $320.2 million in the five years thereafter.

The effect of the discount rate change in 2021 was to decrease the other post-retirement benefit obligation by $2.5 million. The mortality improvement projection scale was updated, which decreased the other post-retirement benefit obligation in 2021 by $2.0 million. The health care cost trend rates were updated, which decreased the other post-retirement benefit obligation in 2021 by $3.7 million. Other actuarial experience decreased the other post-retirement benefit obligation in 2021 by $26.6 million, the majority of which was attributable to a revision in assumed per-capita claims cost, premiums, retiree contributions and retiree drug subsidy assumptions based on actual experience.

The effect of the discount rate change in 2020 was to increase the other post-retirement benefit obligation by $25.4 million. The mortality improvement projection scale was updated, which decreased the other post-retirement benefit obligation in 2020 by $2.5 million. Other actuarial experience decreased the other post-retirement benefit obligation in 2020 by $6.5 million, the majority of which was attributable to a revision in assumed per-capita claims cost, premiums, retiree contributions and retiree drug subsidy assumptions based on actual experience.

The effect of the discount rate change in 2019 was to increase the other post-retirement benefit obligation by $57.2 million. The mortality improvement projection scale was updated, which decreased the other post-retirement benefit obligation in 2019 by $3.9 million. Other actuarial experience decreased the other post-retirement benefit obligation in 2019 by $18.9 million, the majority of which was attributable to a revision in assumed per-capita claims cost, premiums, retiree contributions and retiree drug subsidy assumptions based on actual experience.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 provides for a prescription drug benefit under Medicare (Medicare Part D), as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D.

The estimated gross other post-retirement benefit payments and gross amount of Medicare Part D prescription drug subsidy receipts are as follows (dollars in thousands):

	Benefit Payments		Subsidy Receipts
2022	$	27,230	$	(1,900)
2023	$	27,442	$	(2,006)
2024	$	27,601	$	(2,111)
2025	$	27,691	$	(2,201)
2026	$	27,643	$	(2,289)
2027 through 2031	$	134,674	$	(12,253)

Assumed health care cost trend rates as of September 30 were:

	2021			2020			2019
Rate of Medical Cost Increase for Pre Age 65 Participants	5.38	%	(1)	5.42	%	(2)	5.50	%	(2)
Rate of Medical Cost Increase for Post Age 65 Participants	4.84	%	(1)	4.75	%	(2)	4.75	%	(2)
Annual Rate of Increase in the Per Capita Cost of Covered Prescription Drug Benefits	6.53	%	(1)	6.80	%	(2)	7.35	%	(2)
Annual Rate of Increase in the Per Capita Medicare Part B Reimbursement	4.84	%	(1)	4.75	%	(2)	4.75	%	(2)
Annual Rate of Increase in the Per Capita Medicare Part D Subsidy	6.15	%	(1)	6.20	%	(2)	6.84	%	(2)

(1)It was assumed that this rate would gradually decline to 4% by 2046.

(2)It was assumed that this rate would gradually decline to 4.5% by 2039.

The Company made cash contributions totaling $2.8 million to its VEBA trusts during the year ended September 30, 2021. In addition, the Company made direct payments of $0.3 million to retirees not covered by the VEBA trusts and 401(h) accounts during the year ended September 30, 2021. The Company expects that the annual contribution to its VEBA trusts in 2022 will be in the range of $2.5 million to $3.0 million.

Investment Valuation

The Retirement Plan assets and other post-retirement benefit assets are valued under the current fair value framework. See Note I — Fair Value Measurements for further discussion regarding the definition and levels of fair value hierarchy established by the authoritative guidance.

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Below is a listing of the major categories of plan assets held as of September 30, 2021 and 2020, as well as the associated level within the fair value hierarchy in which the fair value measurements in their entirety fall, based on the lowest level input that is significant to the fair value measurement in its entirety (dollars in thousands):

	At September 30, 2021
	Total Fair Value		Level 1		Level 2		Level 3		Measured at NAV(7)
Retirement Plan Investments
Domestic Equities(1)	$	56,511	$	146	$	—	$	—	$	56,365
International Equities(2)	28,917		—		—		—		28,917
Global Equities(3)	95,865		—		—		—		95,865
Domestic Fixed Income(4)	818,361		1,447		758,417		—		58,497
International Fixed Income(5)	13,773		—		13,773		—		—
Global Fixed Income(6)	42,454		—		—		—		42,454
Real Estate	119,451		—		—		319		119,132
Cash Held in Collective Trust Funds	27,471		—		—		—		27,471
Total Retirement Plan Investments	1,202,803		1,593		772,190		319		428,701
401(h) Investments	(90,429)		(121)		(58,840)		(24)		(31,444)
Total Retirement Plan Investments (excluding 401(h) Investments)	$	1,112,374	$	1,472	$	713,350	$	295	$	397,257
Miscellaneous Accruals, Interest Receivables, and Non-Interest Cash	(16,645)
Total Retirement Plan Assets	$	1,095,729

	At September 30, 2020
	Total Fair Value		Level 1		Level 2		Level 3		Measured at NAV(7)
Retirement Plan Investments
Domestic Equities(1)	$	188,939	$	118,124	$	—	$	—	$	70,815
International Equities(2)	94,603		—		—		—		94,603
Global Equities(3)	77,736		—		—		—		77,736
Domestic Fixed Income(4)	512,693		2,000		457,381		—		53,312
International Fixed Income(5)	20,201		—		20,201		—		—
Global Fixed Income(6)	79,595		—		—		—		79,595
Real Estate	106,167		—		—		471		105,696
Cash Held in Collective Trust Funds	18,023		—		—		—		18,023
Total Retirement Plan Investments	1,097,957		120,124		477,582		471		499,780
401(h) Investments	(80,511)		(8,809)		(35,021)		(35)		(36,646)
Total Retirement Plan Investments (excluding 401(h) Investments)	$	1,017,446	$	111,315	$	442,561	$	436	$	463,134
Miscellaneous Accruals, Interest Receivables, and Non-Interest Cash	(650)
Total Retirement Plan Assets	$	1,016,796

(1)Domestic Equities include mostly collective trust funds, common stock, and exchange traded funds.

(2)International Equities are comprised of collective trust funds.

(3)Global Equities are comprised of collective trust funds.

(4)Domestic Fixed Income securities include mostly collective trust funds, corporate/government bonds and mortgages, and exchange traded funds.

(5)International Fixed Income securities are comprised mostly of corporate/government bonds.

(6)Global Fixed Income securities are comprised of a collective trust fund.

(7)Reflects the authoritative guidance related to investments measured at net asset value (NAV).

	At September 30, 2021
	Total Fair Value		Level 1		Level 2		Level 3		Measured at NAV(1)
Other Post-Retirement Benefit Assets held in VEBA Trusts
Collective Trust Funds — Global Equities	$	165,226	$	—	$	—	$	—	$	165,226
Exchange Traded Funds — Fixed Income	313,392		313,392		—		—		—
Cash Held in Collective Trust Funds	9,700		—		—		—		9,700
Total VEBA Trust Investments	488,318		313,392		—		—		174,926
401(h) Investments	90,429		121		58,840		24		31,444
Total Investments (including 401(h) Investments)	$	578,747	$	313,513	$	58,840	$	24	$	206,370
Miscellaneous Accruals (including Current and Deferred Taxes, Claims Incurred But Not Reported, Administrative)	(3,182)
Total Other Post-Retirement Benefit Assets	$	575,565

	At September 30, 2020
	Total Fair Value		Level 1		Level 2		Level 3		Measured at NAV(1)
Other Post-Retirement Benefit Assets held in VEBA Trusts
Collective Trust Funds — Global Equities	$	153,923	$	—	$	—	$	—	$	153,923
Exchange Traded Funds — Fixed Income	301,290		301,290		—		—		—
Cash Held in Collective Trust Funds	13,841		—		—		—		13,841
Total VEBA Trust Investments	469,054		301,290		—		—		167,764
401(h) Investments	80,511		8,809		35,021		35		36,646
Total Investments (including 401(h) Investments)	$	549,565	$	310,099	$	35,021	$	35	$	204,410
Miscellaneous Accruals (Including Current and Deferred Taxes, Claims Incurred But Not Reported, Administrative)	(1,680)
Total Other Post-Retirement Benefit Assets	$	547,885

(1)Reflects the authoritative guidance related to investments measured at net asset value (NAV).

The fair values disclosed in the above tables may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables provide a reconciliation of the beginning and ending balances of the Retirement Plan and other post-retirement benefit assets measured at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3). For the years ended September 30, 2021 and September 30, 2020, there were no transfers from Level 1 to Level 2. In addition, as shown in the following tables, there were no transfers in or out of Level 3.

	Retirement Plan Level 3 Assets (Thousands)
	Real Estate		Excluding 401(h) Investments		Total
Balance at September 30, 2019	$	3,154	$	(223)	$	2,931
Unrealized Gains/(Losses)	(2,683)		188		(2,495)
Sales	—		—		—
Balance at September 30, 2020	471		(35)		436
Unrealized Gains/(Losses)	(152)		11		(141)
Sales	—		—		—
Balance at September 30, 2021	$	319	$	(24)	$	295

	Other Post-Retirement Benefit Level 3 Assets (Thousands)
	401(h) Investments
Balance at September 30, 2019	$	223
Unrealized Gains/(Losses)	(188)
Sales	—
Balance at September 30, 2020	35
Unrealized Gains/(Losses)	(11)
Sales	—
Balance at September 30, 2021	$	24

The Company’s assumption regarding the expected long-term rate of return on plan assets is 5.20% for both the Retirement Plan and other post-retirement benefits, effective for fiscal 2022. The return assumption reflects the anticipated long-term rate of return on the plan’s current and future assets. The Company utilizes projected capital market conditions and the plan’s target asset class and investment manager allocations to set the assumption regarding the expected return on plan assets.

The long-term investment objective of the Retirement Plan trust, the VEBA trusts and the 401(h) accounts is to achieve the target total return in accordance with the Company’s risk tolerance. Assets are diversified utilizing a mix of equities, fixed income and other securities (including real estate). Risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial condition. The assets of the Retirement Plan trust, VEBA trusts and the 401(h) accounts have no significant concentrations of risk in any one country (other than the United States), industry or entity. In fiscal 2021, capital market conditions led to significant improvements in the funded status of the Retirement Plan. As a result, the Company reduced the return seeking portion of its assets, particularly equity securities, held in the Retirement Plan, and increased its allocation to non-return seeking fixed income securities in conjunction with the Company’s liability driven investment strategy. The actual asset allocations as of September 30, 2021 are noted in the table above, and such allocations are subject to change, but the majority of the assets will remain non-return seeking fixed income assets. Similarly, given the level of the VEBA trust and 401(h) assets in relation to the Other Post-Retirement Benefits, the majority of those assets are and will remain in fixed income securities.

Investment managers are retained to manage separate pools of assets. Comparative market and peer group performance of individual managers and the total fund are monitored on a regular basis, and reviewed by the Company’s Retirement Committee on at least a quarterly basis.

The Company determines the service and interest cost components of net periodic benefit cost using the spot rate approach, which uses individual spot rates along the yield curve that correspond to the timing of each benefit payment in order to determine the discount rate. The individual spot rates along the yield curve are determined by an above mean methodology in that the coupon interest rates that are in the lower 50th percentile are excluded based on the assumption that the Company would not utilize more expensive (i.e. lower yield) instruments to settle its liabilities.