Retirement Plans and Other Benefits

3 Months Ended

Mar. 31, 2013

Retirement Plans and Other Benefits

Retirement Plans and Other Benefits

4. Retirement Plans and Other Benefits

Pinnacle West sponsors a qualified defined benefit and account balance pension plan, a non-qualified supplemental excess benefit retirement plan, and other postretirement benefit plans for the employees of Pinnacle West and our subsidiaries.  Pinnacle West uses a December 31 measurement date for its pension and other postretirement benefit plans.  The market-related value of our plan assets is their fair value at the measurement date.

Certain pension and other postretirement benefit costs in excess of amounts recovered in electric retail rates were deferred as a regulatory asset for future recovery, pursuant to an ACC regulatory order.  We deferred pension and other postretirement benefit costs of approximately $9 million for the three months ended March 31, 2012.  Pursuant to an ACC regulatory order, we began amortizing the regulatory asset in July 2012.  We amortized approximately $2 million for the three months ended March 31, 2013.  The following table provides details of the plans’ net periodic benefit costs and the portion of these costs charged to expense (including administrative costs and excluding amounts capitalized as overhead construction, billed to electric plant participants or charged or amortized to the regulatory asset) (dollars in millions):

	Pension Benefits						Other Benefits
	Three Months Ended March 31,						Three Months Ended March 31,
	2013			2012			2013			2012
Service cost - benefits earned during the period	$	17		$	16		$	6		$	7
Interest cost on benefit obligation	29			30			10			12
Expected return on plan assets	(37		)	(35		)	(11		)	(11		)
Amortization of net actuarial loss	9			11			3			6
Net periodic benefit cost	$	18		$	22		$	8		$	14
Portion of cost charged to expense	$	10		$	6		$	5		$	3

Contributions

We have contributed $56 million to our pension plan year to date in 2013.  The minimum contributions for the pension plan due in 2013, 2014, and 2015 under the recently enacted Moving Ahead for Progress in the 21st Century Act (MAP-21) are estimated to be zero, $89 million, and $112 million, respectively.  We expect to make voluntary contributions totaling $140 million to the pension plan in 2013, and contributions up to approximately $175 million in each of 2014 and 2015.  The contributions to our other postretirement benefit plans for 2013, 2014 and 2015 are expected to be approximately $20 million each year.