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Pension and Other Postretirement Benefit Costs
 9 Months Ended
Sep. 30, 2019
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]  
Pension and Other Postretirement Benefit Costs PENSION AND OTHER POSTRETIREMENT BENEFIT COSTS

NW Natural maintains a qualified non-contributory defined benefit pension plan, non-qualified supplemental pension plans for eligible executive officers and other key employees, and other postretirement employee benefit plans. NW Natural also has a qualified defined contribution plan (Retirement K Savings Plan) for all eligible employees. The qualified defined benefit pension plan and Retirement K Savings Plan have plan assets, which are held in qualified trusts to fund retirement benefits.

The service cost component of net periodic benefit cost for NW Natural pension and other postretirement benefit plans is recognized in operations and maintenance expense in the consolidated statements of comprehensive income. The other non-service cost components are recognized in other income (expense), net in the consolidated statements of comprehensive income.

The following table provides the components of net periodic benefit cost for the pension and other postretirement benefit plans:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
Pension Benefits
 
Other Postretirement
Benefits
 
Pension Benefits
 
Other
Postretirement
Benefits
In thousands
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Service cost
 
$
1,516

 
$
1,757

 
$
67

 
$
80

 
$
4,549

 
$
5,371

 
$
202

 
$
239

Interest cost
 
4,662

 
4,336

 
281

 
241

 
13,985

 
12,702

 
845

 
723

Expected return on plan assets
 
(5,207
)
 
(5,143
)
 
—

 
—

 
(15,621
)
 
(15,444
)
 
—

 
—

Amortization of prior service costs
 
1

 
11

 
(117
)
 
(117
)
 
5

 
32

 
(351
)
 
(351
)
Amortization of net actuarial loss
 
3,604

 
5,650

 
97

 
110

 
10,810

 
14,697

 
290

 
332

Net periodic benefit cost
 
4,576

 
6,611

 
328

 
314

 
13,728

 
17,358

 
986

 
943

Amount allocated to construction
 
(608
)
 
(659
)
 
(25
)
 
(27
)
 
(1,790
)
 
(2,026
)
 
(72
)
 
(82
)
Amount deferred to regulatory balancing account
 
—

 
(3,878
)
 
—

 
—

 
—

 
(9,381
)
 
—

 
—

Net periodic benefit cost charged to expense
 
3,968

 
2,074

 
303

 
287

 
11,938

 
5,951

 
914

 
861

Regulatory pension disallowance
 
—

 
—

 
—

 
—

 
10,500

 
—

 
—

 
—

Amortization of regulatory balancing account
 
675

 
—

 
—

 
—

 
14,467

 
—

 
—

 
—

Net amount charged to expense
 
$
4,643

 
$
2,074

 
$
303

 
$
287

 
$
36,905

 
$
5,951

 
$
914

 
$
861



The service cost component of net periodic benefit costs is reduced by amounts capitalized to NGD plant based on an approximately 25% to 35% payroll overhead charge. In addition, a certain amount of net periodic benefit costs were recorded to the regulatory balancing account, representing net periodic pension expense for the qualified plan above the amount set in rates, as approved by the OPUC, from 2011 through October 31, 2018.

In March 2019, the OPUC issued an order concluding the NW Natural 2018 Oregon rate case. The Order allowed for the application of certain deferred revenues and tax benefits from the TCJA to reduce NW Natural's pension regulatory balancing account. A corresponding total of $12.5 million in pension expenses were recognized in operating and maintenance expense and other income (expense), net in the consolidated statements of comprehensive income in the first quarter of 2019, with offsetting benefits recorded within operating revenues and income taxes. The Order also directed NW Natural to reduce the balancing account by an additional $10.5 million, which was also charged to operating and maintenance expense and other income (expense), net in the consolidated statements of comprehensive income. Amortization of the remaining amount of the balancing account began in the second quarter of 2019 in accordance with the Order.

The following table presents amounts recognized in accumulated other comprehensive loss (AOCL) and the changes in AOCL related to non-qualified employee benefit plans:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
In thousands
 
2019
 
2018
 
2019
 
2018
Beginning balance
 
$
(8,324
)
 
$
(8,131
)
 
$
(7,188
)
 
$
(8,438
)
Amounts reclassified from AOCL:
 
 
 
 
 
 
 
 
Amortization of actuarial losses
 
157

 
209

 
469

 
627

Reclassification of stranded tax effects(1)
 
—

 
—

 
(1,366
)
 
—

Total reclassifications before tax
 
157

 
209

 
(897
)
 
627

Tax (benefit) expense
 
(43
)
 
(55
)
 
(125
)
 
(166
)
Total reclassifications for the period
 
114

 
154

 
(1,022
)
 
461

Ending balance
 
$
(8,210
)
 
$
(7,977
)
 
$
(8,210
)
 
$
(7,977
)

(1)
Reclassification of $1.4 million of income tax effects resulting from the TCJA from accumulated other comprehensive loss to retained earnings was made pursuant to the adoption of ASU 2018-02. See Note 2.

Employer Contributions to Company-Sponsored Defined Benefit Pension Plans
For the nine months ended September 30, 2019, NW Natural made cash contributions totaling $7.8 million to qualified defined benefit pension plans. NW Natural expects further plan contributions of $3.2 million during the remainder of 2019.

Defined Contribution Plan
The Retirement K Savings Plan is a qualified defined contribution plan under Internal Revenue Code Sections 401(a) and 401(k). Employer contributions totaled $5.3 million and $5.0 million for the nine months ended September 30, 2019 and 2018, respectively.

See Note 9 in the 2018 Form 10-K for more information concerning these retirement and other postretirement benefit plans.