Pension and Other Postretirement Benefits

9 Months Ended

Sep. 30, 2011

Disclosure Pension And Other Postretirement Benefits [Abstract]

Pension and Other Postretirement Benefits Text Block

9.       Pension and Other Postretirement Benefit Costs

The following tables provide the components of net periodic benefit cost for our company-sponsored qualified and non-qualified defined benefit pension plans and other postretirement benefit plans:

		Three Months Ended September 30,
							Other Postretirement
			Pension Benefits				Benefits
Thousands			2011		2010		2011		2010
Service cost		$	1,839	$	1,435	$	168	$	156
Interest cost			4,503		4,517		344		343
Expected return on plan assets			(4,455)		(4,528)		-		-
Amortization of net actuarial loss			2,683		2,028		68		7
Amortization of prior service costs			88		(270)		50		50
Amortization of transition obligations			-		-		103		103
	Net periodic benefit cost		4,658		3,182		733		659
Amount allocated to construction			(1,279)		(897)		(234)		(231)
Amount deferred to regulatory balancing account(1)			(1,330)		-		-		-
	Net amount charged to expense	$	2,049	$	2,285	$	499	$	428
		Nine Months Ended September 30,
							Other Postretirement
			Pension Benefits				Benefits
Thousands			2011		2010		2011		2010
Service cost		$	5,638	$	4,981	$	504	$	468
Interest cost			13,556		13,500		1,031		1,028
Expected return on plan assets			(13,367)		(13,655)		-		-
Amortization of net actuarial loss			8,067		5,564		204		22
Amortization of prior service costs			264		140		148		148
Amortization of transition obligations			-		-		309		309
	Net periodic benefit cost		14,158		10,530		2,196		1,975
Amount allocated to construction			(3,765)		(2,797)		(689)		(646)
Amount deferred to regulatory balancing account(1)			(3,989)		-		-		-
	Net amount charged to expense	$	6,404	$	7,733	$	1,507	$	1,329
(1) Effective January 1, 2011, the OPUC approved the deferral of certain pension expenses above or below the amount set in rates, with recovery of these deferred amounts through the implementation of a balancing account, which includes the expectation of lower pension expenses in future years. Our recovery of deferred pension expense balances includes accrued interest at the utility’s authorized rate of return.

See Part II, Item 8., Note 9, in the 2010 Form 10-K for more information about our pension and other postretirement benefit plans.

In addition to the company-sponsored defined benefit plans referred to above, in accordance with our collective bargaining agreement, we contribute to a multiemployer pension plan for our bargaining unit employees known as the Western States Office and Professional Employees International Union Pension Fund (Western States Plan). The cost of this plan is in addition to pension expense in the table above. The Western States Plan is managed by a board of trustees that includes equal representation from participating employers and labor unions. Contribution rates are established by collective bargaining agreements, and benefit levels are set by the board of trustees based on the advice of an independent actuary regarding the level of benefits that agreed-upon contributions are expected to support. The Western States Plan has reported an accumulated funding deficit for the current plan year and remains in critical status. A plan is considered to be in critical status if its funded status is 65 percent or less. Federal law requires pension plans in critical status to adopt a rehabilitation plan designed to restore the financial health of the plan. Rehabilitation plans may specify benefit reductions, contribution surcharges, or a combination of the two.The Western States Plan trustees adopted a rehabilitation plan that reduced benefit accrual rates and adjustable benefits for active employee participants and increased future employer contribution rates. These changes are expected to improve the funding status of the plan.  We made contributions totaling $0.3 million to the Western States Plan for both the nine months ended September 30, 2011 and 2010.  This amount includes the 10 percent contribution surcharge. Contribution surcharges above the current 10 percent rate will be assessed to employer participants, but these higher surcharges will not go into effect for NW Natural until its next collective bargaining agreement, which is expected to be no earlier than June 1, 2014. Under the terms of our current collective bargaining agreement, which became effective in July 2009, we can withdraw from the Western States Plan at any time. However, if we withdraw and the plan is underfunded, we could be assessed a withdrawal liability. In accordance with accounting rules for multiemployer plans, we have not currently recognized these potential withdrawal liabilities on the balance sheet. Currently, we have no intent to withdraw from the plan, so we have not recorded a withdrawal liability.

Employer Pension Contributions

In the nine months ended September 30, 2011,we made cash contributionstotaling $19.2 million to our qualified defined benefit pension plans. We also expect to make additional contributions of up to $4 millionto these qualified plansover the last three months of 2011,plus we expect to makeongoing benefit payments under our unfunded, non-qualified pension plans and other postretirement benefit plans. For more information see Part II, Item 8., Note 9, in the 2010 Form 10-K.