Note 18. Employee Benefit Plans

In the first quarter of 2016, the Companies announced an organizational design initiative that reduced their total workforces during 2016. The goal of the organizational design initiative was to streamline leadership structure and push decision making lower while also improving efficiency. During the first six months ended June 30, 2016, Dominion Energy recorded a $65 million ($40 million after-tax) charge, including $33 million ($20 million after-tax) at Virginia Power and $8 million ($5 million after-tax) at Dominion Energy Gas, primarily reflected in other operations and maintenance expense in their Consolidated Statements of Income due to severance pay and other costs related to the organizational design initiative. The terms of the severance under the organizational design initiative were consistent with the Companies’ existing severance plans.

Plan Amendment and Remeasurement

In the first quarter of 2017, Dominion Energy and Dominion Energy Gas remeasured an other postretirement benefit plan as a result of an amendment that changed post-65 retiree medical coverage for certain current and future Local 69 retirees effective July 1, 2017. The remeasurement resulted in a decrease in Dominion Energy's and Dominion Energy Gas' accumulated postretirement benefit obligation of $73 million and $61 million, respectively. As a result of regulatory accounting, the remeasurement will have an immaterial impact on net income for both Dominion Energy and Dominion Energy Gas. The discount rate used for the remeasurement was 4.30%. All other assumptions used were consistent with the measurement as of December 31, 2016.

During the six months ended June 30, 2017, Dominion Energy recorded a $7 million ($4 million after-tax) charge, including $6 million ($4 million after-tax) at Dominion Energy Gas, as a result of additional payments associated with the new collective bargaining agreement, which is reflected in other operations and maintenance expense in their Consolidated Statements of Income.

Dominion Energy

The components of Dominion Energy's provision for net periodic benefit cost (credit) were as follows:

	Pension Benefits						Other Postretirement Benefits
	2017			2016			2017			2016
(millions)
Three Months Ended June 30,
Service cost	$	34		$	28		$	6		$	8
Interest cost		87			78			14			17
Expected return on plan assets		(161	)		(139	)		(31	)		(30	)
Amortization of prior service cost (credit)		1			1			(13	)		(7	)
Amortization of net actuarial loss		41			27			3			2
Net periodic benefit cost (credit)	$	2		$	(5	)	$	(21	)	$	(10	)
Six Months Ended June 30,
Service cost	$	69		$	57		$	13		$	16
Interest cost		173			155			30			34
Expected return on plan assets		(320	)		(278	)		(63	)		(59	)
Amortization of prior service cost (credit)		1			1			(25	)		(14	)
Amortization of net actuarial loss		81			55			6			3
Settlements		1			—			—			—
Net periodic benefit cost (credit)	$	5		$	(10	)	$	(39	)	$	(20	)

Employer Contributions

During the six months ended June 30, 2017, Dominion Energy made no contributions to its defined benefit pension plans or other postretirement benefit plans, except for a $75 million contribution made in January 2017 to Dominion Energy Questar’s qualified pension plan to satisfy a regulatory condition to closing of the Dominion Energy Questar Combination. Dominion Energy expects to contribute approximately $12 million to its other postretirement benefit plans through VEBAs during the remainder of 2017.

Dominion Energy Gas

Dominion Energy Gas participates in certain Dominion Energy benefit plans as described in Note 21 to the Consolidated Financial Statements in the Companies' Annual Report on Form 10-K for the year ended December 31, 2016. See Note 17 for more information.

The components of Dominion Energy Gas' provision for net periodic benefit credit for employees represented by collective bargaining units were as follows:

	Pension Benefits						Other Postretirement Benefits
	2017			2016			2017			2016
(millions)
Three Months Ended June 30,
Service cost	$	4		$	4		$	1		$	2
Interest cost		8			7			3			4
Expected return on plan assets		(36	)		(34	)		(6	)		(7	)
Amortization of prior service credit		—			—			(1	)		—
Amortization of net actuarial loss		4			4			—			1
Net periodic benefit credit	$	(20	)	$	(19	)	$	(3	)	$	—
Six Months Ended June 30,
Service cost	$	8		$	7		$	2		$	3
Interest cost		15			15			6			7
Expected return on plan assets		(71	)		(67	)		(12	)		(12	)
Amortization of prior service credit		—			—			(1	)		—
Amortization of net actuarial loss		8			7			1			1
Net periodic benefit credit	$	(40	)	$	(38	)	$	(4	)	$	(1	)

Employer Contributions

During the six months ended June 30, 2017, Dominion Energy Gas made no contributions to its defined benefit pension plans or other postretirement benefit plans. Dominion Energy Gas expects to contribute approximately $12 million to its other postretirement benefit plans through VEBAs, for both employees represented by collective bargaining units and employees not represented by collective bargaining units, during the remainder of 2017.