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Employee Benefit Plans (Notes)
12 Months Ended
Dec. 31, 2017
Defined Benefit Plan Disclosure [Line Items]  
Employee Benefit Plans [Text Block]
Employee Benefit Plans

Defined Benefit Plans

Domestic Operations

PacifiCorp, MidAmerican Energy and NV Energy sponsor defined benefit pension plans that cover a majority of all employees of BHE and its domestic energy subsidiaries. These pension plans include noncontributory defined benefit pension plans, supplemental executive retirement plans ("SERP") and a restoration plan for certain executives of NV Energy. PacifiCorp, MidAmerican Energy and NV Energy also provide certain postretirement healthcare and life insurance benefits through various plans to eligible retirees.

Net Periodic Benefit Cost

For purposes of calculating the expected return on plan assets, a market-related value is used. The market-related value of plan assets is calculated by spreading the difference between expected and actual investment returns over a five-year period beginning after the first year in which they occur.

Net periodic benefit cost for the plans included the following components for the years ended December 31 (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
24

 
$
29

 
$
33

 
$
9

 
$
9

 
$
11

Interest cost
116

 
126

 
121

 
29

 
31

 
31

Expected return on plan assets
(160
)
 
(160
)
 
(169
)
 
(40
)
 
(41
)
 
(45
)
Net amortization
25

 
46

 
53

 
(14
)
 
(12
)
 
(11
)
Net periodic benefit cost (credit)
$
5

 
$
41

 
$
38

 
$
(16
)
 
$
(13
)
 
$
(14
)


Funded Status

The following table is a reconciliation of the fair value of plan assets for the years ended December 31 (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Plan assets at fair value, beginning of year
$
2,525

 
$
2,489

 
$
666

 
$
662

Employer contributions
64

 
78

 
5

 
2

Participant contributions

 

 
10

 
10

Actual return on plan assets
390

 
163

 
106

 
41

Settlement
(15
)
 
(11
)
 

 

Benefits paid
(203
)
 
(194
)
 
(51
)
 
(49
)
Plan assets at fair value, end of year
$
2,761

 
$
2,525

 
$
736

 
$
666



The following table is a reconciliation of the benefit obligations for the years ended December 31 (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Benefit obligation, beginning of year
$
2,952

 
$
2,934

 
$
734

 
$
740

Service cost
24

 
29

 
9

 
9

Interest cost
116

 
126

 
29

 
31

Participant contributions

 

 
10

 
10

Actuarial loss (gain)
132

 
67

 
(10
)
 
(7
)
Amendment

 
1

 

 

Settlement
(15
)
 
(11
)
 

 

Benefits paid
(203
)
 
(194
)
 
(51
)
 
(49
)
Benefit obligation, end of year
$
3,006

 
$
2,952

 
$
721

 
$
734

Accumulated benefit obligation, end of year
$
2,988

 
$
2,929

 
 
 
 

The funded status of the plans and the amounts recognized on the Consolidated Balance Sheets as of December 31 are as follows (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Plan assets at fair value, end of year
$
2,761

 
$
2,525

 
$
736

 
$
666

Benefit obligation, end of year
3,006

 
2,952

 
721

 
734

Funded status
$
(245
)
 
$
(427
)
 
$
15

 
$
(68
)
 
 
 
 
 
 
 
 
Amounts recognized on the Consolidated Balance Sheets:
 
 
 
 
 
 
 
Other assets
$
66

 
$
26

 
$
32

 
$
19

Other current liabilities
(14
)
 
(15
)
 

 

Other long-term liabilities
(297
)
 
(438
)
 
(17
)
 
(87
)
Amounts recognized
$
(245
)
 
$
(427
)
 
$
15

 
$
(68
)


The SERPs and restoration plan have no plan assets; however, the Company has Rabbi trusts that hold corporate-owned life insurance and other investments to provide funding for the future cash requirements of the SERPs and restoration plan. The cash surrender value of all of the policies included in the Rabbi trusts, net of amounts borrowed against the cash surrender value, plus the fair market value of other Rabbi trust investments, was $272 million and $242 million as of December 31, 2017 and 2016, respectively. These assets are not included in the plan assets in the above table, but are reflected in noncurrent investments and restricted cash and investments on the Consolidated Balance Sheets.

The fair value of plan assets, projected benefit obligation and accumulated benefit obligation for (1) pension and other postretirement benefit plans with a projected benefit obligation in excess of the fair value of plan assets and (2) pension plans with an accumulated benefit obligation in excess of the fair value of plan assets as of December 31 are as follows (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Fair value of plan assets
$
2,016

 
$
1,841

 
$
126

 
$
413

 
 
 
 
 
 
 
 
Projected benefit obligation
$
2,327

 
$
2,294

 
$
143

 
$
500

 
 
 
 
 
 
 
 
Accumulated benefit obligation
$
2,316

 
$
2,278

 
 
 
 


Unrecognized Amounts

The portion of the funded status of the plans not yet recognized in net periodic benefit cost as of December 31 is as follows (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Net loss
$
649

 
$
775

 
$
14

 
$
88

Prior service credit
(3
)
 
(7
)
 
(37
)
 
(52
)
Regulatory deferrals
(4
)
 
(7
)
 
7

 
7

Total
$
642

 
$
761

 
$
(16
)
 
$
43



A reconciliation of the amounts not yet recognized as components of net periodic benefit cost for the years ended December 31, 2017 and 2016 is as follows (in millions):
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Other
 
 
 
Regulatory
 
Regulatory
 
Comprehensive
 
 
 
Asset
 
Liability
 
Loss
 
Total
Pension
 
 
 
 
 
 
 
Balance, December 31, 2015
$
729

 
$
(1
)
 
$
13

 
$
741

Net loss (gain) arising during the year
76

 
(11
)
 

 
65

Net prior service cost arising during the year
1

 

 

 
1

Net amortization
(45
)
 
(1
)
 

 
(46
)
Total
32

 
(12
)
 

 
20

Balance, December 31, 2016
761

 
(13
)
 
13

 
761

Net (gain) loss arising during the year
(68
)
 
(29
)
 
3

 
(94
)
Net amortization
(28
)
 
(1
)
 
4

 
(25
)
Total
(96
)
 
(30
)
 
7

 
(119
)
Balance, December 31, 2017
$
665

 
$
(43
)
 
$
20

 
$
642


 
Regulatory
 
Regulatory
 
 
 
Asset
 
Liability
 
Total
Other Postretirement
 
 
 
 
 
Balance, December 31, 2015
$
49

 
$
(12
)
 
$
37

Net gain arising during the year
(5
)
 
(1
)
 
(6
)
Net amortization
11

 
1

 
12

Total
6

 

 
6

Balance, December 31, 2016
55

 
(12
)
 
43

Net gain arising during the year
(52
)
 
(21
)
 
(73
)
Net amortization
7

 
7

 
14

Total
(45
)
 
(14
)
 
(59
)
Balance, December 31, 2017
$
10

 
$
(26
)
 
$
(16
)


The net loss, prior service credit and regulatory deferrals that will be amortized in 2018 into net periodic benefit cost are estimated to be as follows (in millions):
 
Net
 
Prior Service
 
Regulatory
 
 
 
Loss
 
Credit
 
Deferrals
 
Total
 
 
 
 
 
 
 
 
Pension
$
32

 
$
(1
)
 
$
(3
)
 
$
28

Other postretirement
1

 
(15
)
 
1

 
(13
)
Total
$
33

 
$
(16
)
 
$
(2
)
 
$
15



Plan Assumptions

Weighted-average assumptions used to determine benefit obligations and net periodic benefit cost were as follows:
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligations as of December 31:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
3.60
%
 
4.06
%
 
4.43
%
 
3.57
%
 
4.01
%
 
4.33
%
Rate of compensation increase
2.75
%
 
2.75
%
 
2.75
%
 
NA

 
NA

 
NA

 
 
 
 
 
 
 
 
 
 
 
 
Net periodic benefit cost for the years ended December 31:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.06
%
 
4.43
%
 
4.00
%
 
4.01
%
 
4.33
%
 
3.93
%
Expected return on plan assets
6.55
%
 
6.78
%
 
6.88
%
 
6.73
%
 
7.03
%
 
7.00
%
Rate of compensation increase
2.75
%
 
2.75
%
 
2.75
%
 
NA

 
NA

 
NA



In establishing its assumption as to the expected return on plan assets, the Company utilizes the asset allocation and return assumptions for each asset class based on historical performance and forward-looking views of the financial markets.
 
2017
 
2016
Assumed healthcare cost trend rates as of December 31:
 
 
 
Healthcare cost trend rate assumed for next year
7.10
%
 
7.40
%
Rate that the cost trend rate gradually declines to
5.00
%
 
5.00
%
Year that the rate reaches the rate it is assumed to remain at
2025
 
2025


A one percentage-point change in assumed healthcare cost trend rates would have the following effects (in millions):
 
One Percentage-Point
 
Increase
 
Decrease
Increase (decrease) in:
 
 
 
Total service and interest cost for the year ended December 31, 2017
$

 
$

Other postretirement benefit obligation as of December 31, 2017
4

 
(4
)


Contributions and Benefit Payments

Employer contributions to the pension and other postretirement benefit plans are expected to be $39 million and $3 million, respectively, during 2018. Funding to the established pension trusts is based upon the actuarially determined costs of the plans and the requirements of the Internal Revenue Code, the Employee Retirement Income Security Act of 1974 and the Pension Protection Act of 2006, as amended. The Company considers contributing additional amounts from time to time in order to achieve certain funding levels specified under the Pension Protection Act of 2006, as amended. The Company's funding policy for its other postretirement benefit plans is to generally contribute an amount equal to the net periodic benefit cost.

The expected benefit payments to participants in the Company's pension and other postretirement benefit plans for 2018 through 2022 and for the five years thereafter are summarized below (in millions):
 
Projected Benefit
 
Payments
 
 
 
Other
 
Pension
 
Postretirement
 
 
 
 
2018
$
226

 
$
54

2019
224

 
55

2020
224

 
57

2021
222

 
55

2022
214

 
54

2023-2027
979

 
243



Plan Assets

Investment Policy and Asset Allocations

The Company's investment policy for its pension and other postretirement benefit plans is to balance risk and return through a diversified portfolio of debt securities, equity securities and other alternative investments. Maturities for debt securities are managed to targets consistent with prudent risk tolerances. The plans retain outside investment advisors to manage plan investments within the parameters outlined by each plan's Pension and Employee Benefits Plans Administrative Committee. The investment portfolio is managed in line with the investment policy with sufficient liquidity to meet near-term benefit payments.

The target allocations (percentage of plan assets) for the Company's pension and other postretirement benefit plan assets are as follows as of December 31, 2017:
 
 
 
Other
 
Pension
 
Postretirement
 
%
 
%
PacifiCorp:
 
 
 
Debt securities(1)
33-38
 
33-37
Equity securities(1)
49-60
 
61-65
Limited partnership interests
7-12
 
1-3
Other
0-1
 
0-1
 
 
 
 
MidAmerican Energy:
 
 
 
Debt securities(1)
20-50
 
25-45
Equity securities(1)
60-80
 
45-80
Real estate funds
2-8
 
Other
0-3
 
0-5
 
 
 
 
NV Energy:
 
 
 
Debt securities(1)
53-77
 
40
Equity securities(1)
23-47
 
60

(1)
For purposes of target allocation percentages and consistent with the plans' investment policy, investment funds are allocated based on the underlying investments in debt and equity securities.

Fair Value Measurements

The following table presents the fair value of plan assets, by major category, for the Company's defined benefit pension plans (in millions):
 
Input Levels for Fair Value Measurements(1)
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
As of December 31, 2017:
 
 
 
 
 
 
 
Cash equivalents
$
10

 
$
76

 
$

 
$
86

Debt securities:
 
 
 
 
 
 
 
United States government obligations
218

 

 

 
218

Corporate obligations

 
350

 

 
350

Municipal obligations

 
16

 

 
16

Agency, asset and mortgage-backed obligations

 
110

 

 
110

Equity securities:
 
 
 
 
 
 
 
United States companies
622

 

 

 
622

International companies
136

 

 

 
136

Investment funds(2)
83

 
20

 

 
103

Total assets in the fair value hierarchy
$
1,069

 
$
572

 
$

 
1,641

Investment funds(2) measured at net asset value
 
 
 
 
 
 
1,019

Limited partnership interests(3) measured at net asset value
 
 
 
 
 
 
63

Real estate funds measured at net asset value
 
 
 
 
 
 
38

Total assets measured at fair value
 
 
 
 
 
 
$
2,761

 
 
 
 
 
 
 
 
As of December 31, 2016:
 
 
 
 
 
 
 
Cash equivalents
$
4

 
$
54

 
$

 
$
58

Debt securities:
 
 
 
 
 
 
 
United States government obligations
161

 

 

 
161

International government obligations

 
2

 

 
2

Corporate obligations

 
295

 

 
295

Municipal obligations

 
20

 

 
20

Agency, asset and mortgage-backed obligations

 
112

 

 
112

Equity securities:
 
 
 
 
 
 
 
United States companies
583

 

 

 
583

International companies
117

 

 

 
117

Investment funds(2)
146

 

 

 
146

Total assets in the fair value hierarchy
$
1,011

 
$
483

 
$

 
1,494

Investment funds(2) measured at net asset value
 
 
 
 
 
 
920

Limited partnership interests(3) measured at net asset value
 
 
 
 
 
 
61

Real estate funds measured at net asset value
 
 
 
 
 
 
50

Total assets measured at fair value
 
 
 
 
 
 
$
2,525


(1)
Refer to Note 15 for additional discussion regarding the three levels of the fair value hierarchy.
(2)
Investment funds are comprised of mutual funds and collective trust funds. These funds consist of equity and debt securities of approximately 62% and 38%, respectively, for both 2017 and 2016. Additionally, these funds are invested in United States and international securities of approximately 68% and 32%, respectively, for 2017 and 60% and 40%, respectively, for 2016.
(3)
Limited partnership interests include several funds that invest primarily in real estate, buyout, growth equity and venture capital.
The following table presents the fair value of plan assets, by major category, for the Company's defined benefit other postretirement plans (in millions):
 
Input Levels for Fair Value Measurements(1)
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
As of December 31, 2017:
 
 
 
 
 
 
 
Cash equivalents
$
11

 
$
3

 
$

 
$
14

Debt securities:
 
 
 
 
 
 
 
United States government obligations
20

 

 

 
20

Corporate obligations

 
36

 

 
36

Municipal obligations

 
46

 

 
46

Agency, asset and mortgage-backed obligations

 
29

 

 
29

Equity securities:
 
 
 
 
 
 
 
United States companies
185

 

 

 
185

International companies
8

 

 

 
8

Investment funds
219

 
1

 

 
220

Total assets in the fair value hierarchy
$
443

 
$
115

 
$

 
558

Investment funds measured at net asset value
 
 
 
 
 
 
174

Limited partnership interests measured at net asset value
 
 
 
 
 
 
4

Total assets measured at fair value
 
 
 
 
 
 
$
736

 
 
 
 
 
 
 
 
As of December 31, 2016:
 
 
 
 
 
 
 
Cash equivalents
$
18

 
$
2

 
$

 
$
20

Debt securities:
 
 
 
 
 
 
 
United States government obligations
19

 

 

 
19

Corporate obligations

 
29

 

 
29

Municipal obligations

 
39

 

 
39

Agency, asset and mortgage-backed obligations

 
25

 

 
25

Equity securities:
 
 
 
 
 
 
 
United States companies
217

 

 

 
217

International companies
5

 

 

 
5

Investment funds(2)
152

 

 

 
152

Total assets in the fair value hierarchy
$
411

 
$
95

 
$

 
506

Investment funds(2) measured at net asset value
 
 
 
 
 
 
156

Limited partnership interests(3) measured at net asset value
 
 
 
 
 
 
4

Total assets measured at fair value
 
 
 
 
 
 
$
666


(1)
Refer to Note 15 for additional discussion regarding the three levels of the fair value hierarchy.
(2)
Investment funds are comprised of mutual funds and collective trust funds. These funds consist of equity and debt securities of approximately 68% and 32%, respectively, for 2017 and 63% and 37%, respectively, for 2016. Additionally, these funds are invested in United States and international securities of approximately 73% and 27%, respectively, for 2017 and 72% and 28%, respectively, for 2016.
(3)
Limited partnership interests include several funds that invest primarily in real estate, buyout, growth equity and venture capital.

For level 1 investments, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value. For level 2 investments, the fair value is determined using pricing models based on observable market inputs. Shares of mutual funds not registered under the Securities Act of 1933, private equity limited partnership interests, common and commingled trust funds and investment entities are reported at fair value based on the net asset value per unit, which is used for expedience purposes. A fund's net asset value is based on the fair value of the underlying assets held by the fund less its liabilities.

Foreign Operations

Certain wholly-owned subsidiaries of Northern Powergrid participate in the Northern Powergrid group of the United Kingdom industry-wide Electricity Supply Pension Scheme (the "UK Plan"), which provides pension and other related defined benefits, based on final pensionable pay, to the majority of the employees of Northern Powergrid. The UK Plan is closed to employees hired after July 23, 1997. Employees hired after that date are covered by a defined contribution plan sponsored by a wholly-owned subsidiary of Northern Powergrid.

Net Periodic Benefit Cost

For purposes of calculating the expected return on pension plan assets, a market-related value is used. The market-related value of plan assets is calculated by spreading the difference between expected and actual investment returns over a five-year period beginning after the first year in which they occur.

Net periodic benefit cost for the UK Plan included the following components for the years ended December 31 (in millions):
 
2017
 
2016
 
2015
 
 
 
 
 
 
Service cost
$
23

 
$
20

 
$
24

Interest cost
58

 
72

 
79

Expected return on plan assets
(100
)
 
(110
)
 
(116
)
Settlement
31

 

 

Net amortization
63

 
44

 
62

Net periodic benefit cost
$
75

 
$
26

 
$
49

    
Funded Status

The following table is a reconciliation of the fair value of plan assets for the years ended December 31 (in millions):
 
2017
 
2016
 
 
 
 
Plan assets at fair value, beginning of year
$
2,169

 
$
2,276

Employer contributions
58

 
55

Participant contributions
1

 
1

Actual return on plan assets
145

 
349

Settlement
(144
)
 

Benefits paid
(68
)
 
(115
)
Foreign currency exchange rate changes
207

 
(397
)
Plan assets at fair value, end of year
$
2,368

 
$
2,169


The following table is a reconciliation of the benefit obligation for the years ended December 31 (in millions):
 
2017
 
2016
 
 
 
 
Benefit obligation, beginning of year
$
2,125

 
$
2,142

Service cost
23

 
20

Interest cost
58

 
72

Participant contributions
1

 
1

Actuarial loss (gain)
(4
)
 
387

Settlement
(131
)
 

Benefits paid
(68
)
 
(115
)
Foreign currency exchange rate changes
197

 
(382
)
Benefit obligation, end of year
$
2,201

 
$
2,125

Accumulated benefit obligation, end of year
$
1,933

 
$
1,858


The funded status of the UK Plan and the amounts recognized on the Consolidated Balance Sheets as of December 31 are as follows (in millions):
 
2017
 
2016
 
 
 
 
Plan assets at fair value, end of year
$
2,368

 
$
2,169

Benefit obligation, end of year
2,201

 
2,125

Funded status
$
167

 
$
44

 
 
 
 
Amounts recognized on the Consolidated Balance Sheets:
 
 
 
Other assets
$
167

 
$
44


Unrecognized Amounts

The portion of the funded status of the UK Plan not yet recognized in net periodic benefit cost as of December 31 is as follows (in millions):
 
2017
 
2016
 
 
 
 
Net loss
$
510

 
$
590


A reconciliation of the amounts not yet recognized as components of net periodic benefit cost, which are included in accumulated other comprehensive loss on the Consolidated Balance Sheets, for the years ended December 31 is as follows (in millions):
 
2017
 
2016
 
 
 
 
Balance, beginning of year
$
590

 
$
592

Net (gain) loss arising during the year
(50
)
 
148

Settlement
(17
)
 

Net amortization
(63
)
 
(44
)
Foreign currency exchange rate changes
50

 
(106
)
Total
(80
)
 
(2
)
Balance, end of year
$
510

 
$
590


The net loss that will be amortized from accumulated other comprehensive loss in 2018 into net periodic benefit cost is estimated to be $60 million.

Plan Assumptions
Assumptions used to determine benefit obligations and net periodic benefit cost were as follows:
 
2017
 
2016
 
2015
 
 
 
 
 
 
Benefit obligations as of December 31:
 
 
 
 
 
Discount rate
2.60
%
 
2.70
%
 
3.70
%
Rate of compensation increase
3.45
%
 
3.00
%
 
2.90
%
Rate of future price inflation
2.95
%
 
3.00
%
 
2.90
%
 
 
 
 
 
 
Net periodic benefit cost for the years ended December 31:
 
 
 
 
 
Discount rate
2.70
%
 
3.70
%
 
3.60
%
Expected return on plan assets
5.00
%
 
5.60
%
 
5.60
%
Rate of compensation increase
3.00
%
 
2.90
%
 
2.80
%
Rate of future price inflation
3.00
%
 
2.90
%
 
2.80
%
    
Contributions and Benefit Payments

Employer contributions to the UK Plan are expected to be £45 million during 2018. The expected benefit payments to participants in the UK Plan for 2018 through 2022 and for the five years thereafter excluding lump sum settlement elections, using the foreign currency exchange rate as of December 31, 2017, are summarized below (in millions):
2018
$
72

2019
74

2020
75

2021
77

2022
79

2023-2027
427

    
Plan Assets

Investment Policy and Asset Allocations

The investment policy for the UK Plan is to balance risk and return through a diversified portfolio of debt securities, equity securities, real estate and other asset classes. Maturities for debt securities are managed to targets consistent with prudent risk tolerances. The UK Plan retains outside investment advisors to manage plan investments within the parameters set by the trustees of the UK Plan in consultation with Northern Powergrid. The investment portfolio is managed in line with the investment policy with sufficient liquidity to meet near-term benefit payments. The return on assets assumption is based on a weighted-average of the expected historical performance for the types of assets in which the UK Plan invests.

The target allocations (percentage of plan assets) for the UK Plan assets are as follows as of December 31, 2017:
 
%
Debt securities(1)
50-55
Equity securities(1)
35-40
Real estate funds and other
5-15

(1)
For purposes of target allocation percentages and consistent with the plans' investment policy, investment funds have been allocated based on the underlying investments in debt and equity securities.

Fair Value Measurements

The following table presents the fair value of the UK Plan assets, by major category (in millions):
 
Input Levels for Fair Value Measurements(1)
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
As of December 31, 2017:
 
 
 
 
 
 
 
Cash equivalents
$
4

 
$
30

 
$

 
$
34

Debt securities:
 
 
 
 
 
 
 
United Kingdom government obligations
870

 

 

 
870

Equity securities:
 
 
 
 
 
 
 
Investment funds(2)

 
1,027

 

 
1,027

Real estate funds

 

 
230

 
230

Total
$
874

 
$
1,057

 
$
230

 
2,161

Investment funds(2) measured at net asset value
 
 
 
 
 
 
207

Total assets measured at fair value
 
 
 
 
 
 
$
2,368

 
 
 
 
 
 
 
 
As of December 31, 2016:
 
 
 
 
 
 
 
Cash equivalents
$
4

 
$
83

 
$

 
$
87

Debt securities:
 
 
 
 
 
 
 
United Kingdom government obligations
718

 

 

 
718

Equity securities:
 
 
 
 
 
 
 
Investment funds(2)

 
1,095

 

 
1,095

Real estate funds

 

 
105

 
105

Total
$
722

 
$
1,178

 
$
105

 
2,005

Investment funds(2) measured at net asset value
 
 
 
 
 
 
164

Total assets measured at fair value
 
 
 
 
 
 
$
2,169


(1)
Refer to Note 15 for additional discussion regarding the three levels of the fair value hierarchy.
(2)
Investment funds are comprised of mutual funds and collective trust funds. These funds consist of equity and debt securities of approximately 21% and 79%, respectively, for 2017 and 44% and 56%, respectively, for 2016.

The fair value of the UK Plan's assets are determined similar to the plan assets of the domestic plans as previously discussed.

The following table reconciles the beginning and ending balances of the UK Plan assets measured at fair value using significant Level 3 inputs for the years ended December 31 (in millions):
 
Real Estate Funds
 
2017
 
2016
 
2015
 
 
 
 
 

Beginning balance
$
105

 
$
204

 
$
199

Actual return on plan assets still held at period end
6

 
10

 
18

Purchases (sales)
104

 
(80
)
 

Foreign currency exchange rate changes
15

 
(29
)
 
(13
)
Ending balance
$
230

 
$
105

 
$
204


Defined Contribution Plans

The Company sponsors various defined contribution plans covering substantially all employees. The Company's contributions vary depending on the plan, but matching contributions are based on each participant's level of contribution, and certain participants receive contributions based on eligible pre-tax annual compensation. Contributions cannot exceed the maximum allowable for tax purposes. The Company's contributions to these plans were $103 million, $102 million and $90 million for the years ended December 31, 2017, 2016 and 2015, respectively.
PacifiCorp [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Employee Benefit Plans [Text Block]
Employee Benefit Plans

PacifiCorp sponsors defined benefit pension and other postretirement benefit plans that cover the majority of its employees, as well as a defined contribution 401(k) employee savings plan ("401(k) Plan"). In addition, PacifiCorp contributes to a joint trustee pension plan and a subsidiary previously contributed to a multiemployer pension plan for benefits offered to certain bargaining units.

Pension and Other Postretirement Benefit Plans

PacifiCorp's pension plans include non-contributory defined benefit pension plans, collectively the PacifiCorp Retirement Plan ("Retirement Plan"), and the Supplemental Executive Retirement Plan ("SERP"). The Retirement Plan is closed to all non-union employees hired after January 1, 2008. All non-union Retirement Plan participants hired prior to January 1, 2008 that did not elect to receive equivalent fixed contributions to the 401(k) Plan effective January 1, 2009 earned benefits based on a cash balance formula through December 31, 2016. Effective January 1, 2017, non-union employee participants with a cash balance benefit in the Retirement Plan are no longer eligible to receive pay credits in their cash balance formula. In general for union employees, benefits under the Retirement Plan were frozen at various dates from December 31, 2007 through December 31, 2011 as they are now being provided with enhanced 401(k) Plan benefits. However, certain limited union Retirement Plan participants continue to earn benefits under the Retirement Plan based on the employee's years of service and a final average pay formula. The SERP was closed to new participants as of March 21, 2006 and froze future accruals for active participants as of December 31, 2014.

PacifiCorp's other postretirement benefit plan provides healthcare and life insurance benefits to eligible retirees.

Net Periodic Benefit Cost

For purposes of calculating the expected return on plan assets, a market-related value is used. The market-related value of plan assets is calculated by spreading the difference between expected and actual investment returns over a five-year period beginning after the first year in which they occur.

Net periodic benefit cost for the plans included the following components for the years ended December 31 (in millions):

 
Pension
 
Other Postretirement
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$

 
$
4

 
$
4

 
$
2

 
$
2

 
$
3

Interest cost
49

 
54

 
53

 
14

 
15

 
16

Expected return on plan assets
(72
)
 
(75
)
 
(77
)
 
(21
)
 
(21
)
 
(23
)
Net amortization
14

 
34

 
42

 
(6
)
 
(5
)
 
(4
)
Net periodic benefit cost (credit)
$
(9
)
 
$
17

 
$
22

 
$
(11
)
 
$
(9
)
 
$
(8
)



Funded Status

The following table is a reconciliation of the fair value of plan assets for the years ended December 31 (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Plan assets at fair value, beginning of year
$
999

 
$
1,043

 
$
302

 
$
305

Employer contributions
54

 
5

 
1

 
1

Participant contributions

 

 
7

 
6

Actual return on plan assets
166

 
51

 
49

 
17

Benefits paid
(108
)
 
(100
)
 
(27
)
 
(27
)
Plan assets at fair value, end of year
$
1,111

 
$
999

 
$
332

 
$
302



The following table is a reconciliation of the benefit obligations for the years ended December 31 (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Benefit obligation, beginning of year
$
1,276

 
$
1,289

 
$
358

 
$
362

Service cost

 
4

 
2

 
2

Interest cost
49

 
54

 
14

 
15

Participant contributions

 

 
7

 
6

Actuarial (gain) loss
34

 
29

 
(23
)
 

Benefits paid
(108
)
 
(100
)
 
(27
)
 
(27
)
Benefit obligation, end of year
$
1,251

 
$
1,276

 
$
331

 
$
358

Accumulated benefit obligation, end of year
$
1,251

 
$
1,276

 
 
 
 


The funded status of the plans and the amounts recognized on the Consolidated Balance Sheets as of December 31 are as follows (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Plan assets at fair value, end of year
$
1,111

 
$
999

 
$
332

 
$
302

Less - Benefit obligation, end of year
1,251

 
1,276

 
331

 
358

Funded status
$
(140
)
 
$
(277
)
 
$
1

 
$
(56
)
 
 
 
 
 
 
 
 
Amounts recognized on the Consolidated Balance Sheets:
 
 
 
 
 
 
 
Other assets
$
5

 
$

 
$
1

 
$

Other current liabilities
(4
)
 
(5
)
 

 

Other long-term liabilities
(141
)
 
(272
)
 

 
(56
)
Amounts recognized
$
(140
)
 
$
(277
)
 
$
1

 
$
(56
)


The SERP has no plan assets; however, PacifiCorp has a Rabbi trust that holds corporate-owned life insurance and other investments to provide funding for the future cash requirements of the SERP. The cash surrender value of all of the policies included in the Rabbi trust, net of amounts borrowed against the cash surrender value, plus the fair market value of other Rabbi trust investments, was $60 million and $55 million as of December 31, 2017 and 2016, respectively. These assets are not included in the plan assets in the above table, but are reflected in cash and cash equivalents, totaling $9 million and $- million as of December 31, 2017 and 2016, respectively, and noncurrent other assets, totaling $51 million and 55 million as of December 31, 2017 and 2016, respectively, on the Consolidated Balance Sheets.

Unrecognized Amounts

The portion of the funded status of the plans not yet recognized in net periodic benefit cost as of December 31 is as follows (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Net loss (gain)
$
442

 
$
518

 
$
(12
)
 
$
39

Prior service credit

 

 
(6
)
 
(13
)
Regulatory deferrals
(4
)
 
(7
)
 
7

 
8

Total
$
438

 
$
511

 
$
(11
)
 
$
34


A reconciliation of the amounts not yet recognized as components of net periodic benefit cost for the years ended December 31, 2017 and 2016 is as follows (in millions):
 
 
 
Accumulated
 
 
 
 
 
Other
 
 
 
Regulatory
 
Comprehensive
 
 
 
Asset
 
Loss
 
Total
Pension
 
 
 
 
 
Balance, December 31, 2015
$
473

 
$
19

 
$
492

Net loss arising during the year
51

 
2

 
53

Net amortization
(33
)
 
(1
)
 
(34
)
Total
18

 
1

 
19

Balance, December 31, 2016
491

 
20

 
511

Net (gain) loss arising during the year
(60
)
 
1

 
(59
)
Net amortization
(13
)
 
(1
)
 
(14
)
Total
(73
)
 

 
(73
)
Balance, December 31, 2017
$
418

 
$
20

 
$
438


 
Regulatory
 
Asset (Liability)
Other Postretirement
 
Balance, December 31, 2015
$
26

Net loss arising during the year
3

Net amortization
5

Total
8

Balance, December 31, 2016
34

Net gain arising during the year
(51
)
Net amortization
6

Total
(45
)
Balance, December 31, 2017
$
(11
)


The net loss, prior service credit and regulatory deferrals that will be amortized in 2018 into net periodic benefit cost are estimated to be as follows (in millions):
 
 
Net
 
Prior Service
 
Regulatory
 
 
 
 
Loss
 
Credit
 
Deferrals
 
Total
 
 
 
 
 
 
 
 
 
Pension
 
$
16

 
$

 
$
(2
)
 
$
14

Other postretirement
 

 
(6
)
 
1

 
(5
)
Total
 
$
16

 
$
(6
)
 
$
(1
)
 
$
9



Plan Assumptions

Assumptions used to determine benefit obligations and net periodic benefit cost were as follows:
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligations as of December 31:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
3.60
%
 
4.05
%
 
4.40
%
 
3.60
%
 
4.05
%
 
4.35
%
Rate of compensation increase
N/A

 
N/A

 
2.75

 
N/A

 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
Net periodic benefit cost for the years ended December 31:
 
 
 
 
 
 
 
 
 
 
Discount rate
4.05
%
 
4.40
%
 
4.00
%
 
4.05
%
 
4.35
%
 
3.99
%
Expected return on plan assets
7.25

 
7.50

 
7.50

 
7.25

 
7.50

 
7.08

Rate of compensation increase
N/A

 
2.75

 
2.75

 
N/A

 
N/A

 
N/A


In establishing its assumption as to the expected return on plan assets, PacifiCorp utilizes the asset allocation and return assumptions for each asset class based on historical performance and forward-looking views of the financial markets.

As a result of a plan amendment effective on January 1, 2017, the benefit obligation for the Retirement Plan is no longer affected by future increases in compensation. As a result of a labor settlement reached with UMWA in December 2014, the benefit obligation for the other postretirement plan is no longer affected by healthcare cost trends.

Contributions and Benefit Payments

Employer contributions to the pension and other postretirement benefit plans are expected to be $4 million and $- million, respectively, during 2018. Funding to PacifiCorp's Retirement Plan trust is based upon the actuarially determined costs of the plan and the requirements of the Internal Revenue Code, the Employee Retirement Income Security Act of 1974 ("ERISA") and the Pension Protection Act of 2006, as amended ("PPA"). PacifiCorp considers contributing additional amounts from time to time in order to achieve certain funding levels specified under the PPA. PacifiCorp's funding of its other postretirement benefit plan is subject to tax deductibility and subordination limits and other considerations.

The expected benefit payments to participants in PacifiCorp's pension and other postretirement benefit plans for 2018 through 2022 and for the five years thereafter are summarized below (in millions):
 
Projected Benefit Payments
 
Pension
 
Other Postretirement
 
 
 
 
2018
$
108

 
$
25

2019
107

 
25

2020
103

 
26

2021
99

 
23

2022
94

 
23

2023-2027
393

 
100



Plan Assets

Investment Policy and Asset Allocations

PacifiCorp's investment policy for its pension and other postretirement benefit plans is to balance risk and return through a diversified portfolio of debt securities, equity securities and other alternative investments. Maturities for debt securities are managed to targets consistent with prudent risk tolerances. The plans retain outside investment advisors to manage plan investments within the parameters outlined by the PacifiCorp Pension Committee. The investment portfolio is managed in line with the investment policy with sufficient liquidity to meet near-term benefit payments.

The target allocations (percentage of plan assets) for PacifiCorp's pension and other postretirement benefit plan assets are as follows as of December 31, 2017:
 
Pension(1)
 
Other Postretirement(1)
 
%
 
%
Debt securities(2)
33 - 38
 
33 - 37
Equity securities(2)
49 - 60
 
61 - 65
Limited partnership interests
7 - 12
 
1 - 3
Other
0 - 1
 
0 - 1

(1)
PacifiCorp's Retirement Plan trust includes a separate account that is used to fund benefits for the other postretirement benefit plan. In addition to this separate account, the assets for the other postretirement benefit plan are held in Voluntary Employees' Beneficiary Association ("VEBA") trusts, each of which has its own investment allocation strategies. Target allocations for the other postretirement benefit plan include the separate account of the Retirement Plan trust and the VEBA trusts.
(2)
For purposes of target allocation percentages and consistent with the plans' investment policy, investment funds are allocated based on the underlying investments in debt and equity securities.

Fair Value Measurements
The following table presents the fair value of plan assets, by major category, for PacifiCorp's defined benefit pension plan (in millions):
 
 
Input Levels for Fair Value Measurements
 
 
 
 
Level 1(1)
 
Level 2(1)
 
Level 3(1)
 
Total
As of December 31, 2017:
 
 
 
 
 
 
 
 
Cash equivalents
 
$

 
$
43

 
$

 
$
43

Debt securities:
 
 
 
 
 
 
 
 
United States government obligations
 
45

 

 

 
45

Corporate obligations
 

 
60

 

 
60

Municipal obligations
 

 
9

 

 
9

Agency, asset and mortgage-backed obligations
 

 
37

 

 
37

Equity securities:
 
 
 
 
 
 
 
 
United States companies
 
416

 

 

 
416

International companies
 
22

 

 

 
22

Total assets in the fair value hierarchy
 
$
483

 
$
149

 
$

 
632

Investment funds(2) measured at net asset value
 
 
 
 
 
 
 
416

Limited partnership interests(3) measured at net asset value
 
 
 
 
 
 
 
63

Investments at fair value
 
 
 
 
 
 
 
$
1,111

 
 
 
 
 
 
 
 
 
As of December 31, 2016:
 
 
 
 
 
 
 
 
Cash equivalents
 
$

 
$
10

 
$

 
$
10

Debt securities:
 
 
 
 
 
 
 
 
United States government obligations
 
25

 

 

 
25

Corporate obligations
 

 
36

 

 
36

Municipal obligations
 

 
6

 

 
6

Agency, asset and mortgage-backed obligations
 

 
37

 

 
37

Equity securities:
 
 
 
 
 
 
 
 
United States companies
 
389

 

 

 
389

International companies
 
15

 

 

 
15

Investment funds(2)
 
83

 

 

 
83

Total assets in the fair value hierarchy
 
$
512

 
$
89

 
$

 
601

Investment funds(2) measured at net asset value
 
 
 
 
 
 
 
337

Limited partnership interests(3) measured at net asset value
 
 
 
 
 
 
 
61

Investments at fair value
 
 
 
 
 
 
 
$
999


(1)
Refer to Note 12 for additional discussion regarding the three levels of the fair value hierarchy.
(2)
Investment funds are substantially comprised of mutual funds and collective trust funds. These funds consist of equity and debt securities of approximately 60% and 40% respectively, for 2017 and 54% and 46%, respectively, for 2016, and are invested in United States and international securities of approximately 57% and 43%, respectively, for 2017 and 39% and 61%, respectively, for 2016.
(3)
Limited partnership interests include several funds that invest primarily in real estate, buyout, growth equity and venture capital.
The following table presents the fair value of plan assets, by major category, for PacifiCorp's defined benefit other postretirement plan (in millions):
 
 
Input Levels for Fair Value Measurements
 
 
 
 
Level 1(1)
 
Level 2(1)
 
Level 3(1)
 
Total
As of December 31, 2017:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
4

 
$
3

 
$

 
$
7

Debt securities:
 
 
 
 
 
 
 
 
United States government obligations
 
11

 

 

 
11

Corporate obligations
 

 
16

 

 
16

Municipal obligations
 

 
2

 

 
2

Agency, asset and mortgage-backed obligations
 

 
16

 

 
16

Equity securities:
 
 
 
 
 
 
 
 
United States companies
 
98

 

 

 
98

International companies
 
6

 

 

 
6

Investment funds(2)
 
32

 

 

 
32

Total assets in the fair value hierarchy
 
$
151

 
$
37

 
$

 
188

Investment funds(2) measured at net asset value
 
 
 
 
 
 
 
140

Limited partnership interests(3) measured at net asset value
 
 
 
 
 
 
 
4

Investments at fair value
 
 
 
 
 
 
 
$
332

 
 
 
 
 
 
 
 
 
As of December 31, 2016:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
4

 
$
1

 
$

 
$
5

Debt securities:
 
 
 
 
 
 
 
 
United States government obligations
 
11

 

 

 
11

Corporate obligations
 

 
13

 

 
13

Municipal obligations
 

 
2

 

 
2

Agency, asset and mortgage-backed obligations
 

 
13

 

 
13

Equity securities:
 
 
 
 
 
 
 
 
United States companies
 
93

 

 

 
93

International companies
 
4

 

 

 
4

Investment funds(2)
 
32

 

 

 
32

Total assets in the fair value hierarchy
 
$
144

 
$
29

 
$

 
173

Investment funds(2) measured at net asset value
 
 
 
 
 
 
 
125

Limited partnership interests(3) measured at net asset value
 
 
 
 
 
 
 
4

Investments at fair value
 
 
 
 
 
 
 
$
302


(1)
Refer to Note 12 for additional discussion regarding the three levels of the fair value hierarchy.
(2)
Investment funds are substantially comprised of mutual funds and collective trust funds. These funds consist of equity and debt securities of approximately 63% and 37%, respectively, for 2017 and 62% and 38%, respectively, for 2016, and are invested in United States and international securities of approximately 77% and 23%, respectively, for 2017 and 71% and 29%, respectively, for 2016.
(3)
Limited partnership interests include several funds that invest primarily in real estate, buyout, growth equity and venture capital.
For level 1 investments, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value. For level 2 investments, the fair value is determined using pricing models based on observable market inputs. Shares of mutual funds not registered under the Securities Act of 1933, private equity limited partnership interests, common and commingled trust funds and investment entities are reported at fair value based on the net asset value per unit, which is used for expedience purposes. A fund's net asset value is based on the fair value of the underlying assets held by the fund less its liabilities.

Multiemployer and Joint Trustee Pension Plans

PacifiCorp contributes to the PacifiCorp/IBEW Local 57 Retirement Trust Fund ("Local 57 Trust Fund") (plan number 001) and its subsidiary, Energy West Mining Company, previously contributed to the UMWA 1974 Pension Plan (plan number 002). Contributions to these pension plans are based on the terms of collective bargaining agreements.

As a result of the Utah Mine Disposition and UMWA labor settlement, PacifiCorp's subsidiary, Energy West Mining Company, triggered involuntary withdrawal from the UMWA 1974 Pension Plan in June 2015 when the UMWA employees ceased performing work for the subsidiary. PacifiCorp recorded its estimate of the withdrawal obligation in December 2014 when withdrawal was considered probable and deferred the portion of the obligation considered probable of recovery to a regulatory asset. PacifiCorp has subsequently revised its estimate due to changes in facts and circumstances for a withdrawal occurring by July 2015. As communicated in a letter received in August 2016, the plan trustees have determined a withdrawal liability of $115 million. Energy West Mining Company began making installment payments in November 2016 and has the option to elect a lump sum payment to settle the withdrawal obligation. The ultimate amount paid by Energy West Mining Company to settle the obligation is dependent on a variety of factors, including the results of ongoing negotiations with the plan trustees.

The Local 57 Trust Fund is a joint trustee plan such that the board of trustees is represented by an equal number of trustees from PacifiCorp and the union. The Local 57 Trust Fund was established pursuant to the provisions of the Taft-Hartley Act and although formed with the ability for other employers to participate in the plan, there are no other employers that participate in this plan.

The risk of participating in multiemployer pension plans generally differs from single-employer plans in that assets are pooled such that contributions by one employer may be used to provide benefits to employees of other participating employers and plan assets cannot revert back to employers. If an employer ceases participation in the plan, the employer may be obligated to pay a withdrawal liability based on the participants' unfunded, vested benefits in the plan. This occurred as a result of Energy West Mining Company's withdrawal from the UMWA 1974 Pension Plan. If participating employers withdraw from a multiemployer plan, the unfunded obligations of the plan may be borne by the remaining participating employers, including any employers that withdrew during the three years prior to a mass withdrawal.

The following table presents PacifiCorp's and Energy West Mining Company's participation in individually significant joint trustee and multiemployer pension plans for the years ended December 31 (dollars in millions):

 
 
 
 
PPA zone status or
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
plan funded status percentage for
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
plan years beginning July 1,
 
 
 
 
 
Contributions(1)
 
 
Plan name
 
Employer Identification Number
 
2017
 
2016
 
2015
 
Funding improvement plan
 
Surcharge imposed under PPA(1)
 
2017
 
2016
 
2015
 
Year contributions to plan exceeded more than 5% of total contributions(2)
UMWA 1974 Pension Plan
 
52-1050282
 
Critical and Declining
 
Critical and Declining
 
Critical and Declining
 
Implemented
 
Yes
 
$

 
$

 
$
1

 
None
Local 57 Trust Fund
 
87-0640888
 
At least 80%
 
At least 80%
 
At least 80%
 
None
 
None
 
$
7

 
$
8

 
$
8

 
2015, 2014, 2013

(1)
PacifiCorp's and Energy West Mining Company's minimum contributions to the plans are based on the amount of wages paid to employees covered by the Local 57 Trust Fund collective bargaining agreements and the number of mining hours worked for the UMWA 1974 Pension Plan, respectively, subject to ERISA minimum funding requirements. As a result of the plan's critical status, Energy West Mining Company was required to begin paying a surcharge for hours worked on and after December 1, 2014.

(2)
For the UMWA 1974 Pension Plan, information is for plan years beginning July 1, 2015, 2014 and 2013. Information for the plan year beginning July 1, 2016 is not yet available. For the Local 57 Trust Fund, information is for plan years beginning July 1, 2015, 2014 and 2013. Information for the plan year beginning July 1, 2016 is not yet available.

The current collective bargaining agreements governing the Local 57 Trust Fund expire in 2020.

Defined Contribution Plan

PacifiCorp's 401(k) plan covers substantially all employees. PacifiCorp's matching contributions are based on each participant's level of contribution and, as of January 1, 2017, all participants receive contributions based on eligible pre-tax annual compensation. Contributions cannot exceed the maximum allowable for tax purposes. PacifiCorp's contributions to the 401(k) plan were $39 million, $34 million and $35 million for the years ended December 31, 2017, 2016 and 2015, respectively.
MidAmerican Energy Company [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Employee Benefit Plans [Text Block]
Employee Benefit Plans

MidAmerican Energy sponsors a noncontributory defined benefit pension plan covering a majority of all employees of BHE and its domestic energy subsidiaries other than PacifiCorp and NV Energy, Inc. Benefit obligations under the plan are based on a cash balance arrangement for salaried employees and most union employees and final average pay formulas for other union employees. MidAmerican Energy also maintains noncontributory, nonqualified defined benefit supplemental executive retirement plans ("SERP") for certain active and retired participants.

MidAmerican Energy also sponsors certain postretirement healthcare and life insurance benefits covering substantially all retired employees of BHE and its domestic energy subsidiaries other than PacifiCorp and NV Energy, Inc. Under the plans, a majority of all employees of the participating companies may become eligible for these benefits if they reach retirement age. New employees are not eligible for benefits under the plans. MidAmerican Energy has been allowed to recover accrued pension and other postretirement benefit costs in its electric and gas service rates.

Net Periodic Benefit Cost

For purposes of calculating the expected return on pension plan assets, a market-related value is used. The market-related value of plan assets is calculated by spreading the difference between expected and actual investment returns on equity investments over a five-year period beginning after the first year in which they occur.

MidAmerican Energy bills to and is reimbursed currently for affiliates' share of the net periodic benefit costs from all plans in which such affiliates participate. In 2017, 2016 and 2015, MidAmerican Energy's share of the pension net periodic benefit cost (credit) was $(6) million, $(2) million and $(4) million, respectively. MidAmerican Energy's share of the other postretirement net periodic benefit cost (credit) in 2017, 2016 and 2015 totaled $(1) million, $(1) million and $- million, respectively.

Net periodic benefit cost for the plans of MidAmerican Energy and the aforementioned affiliates included the following components for the years ended December 31 (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
9

 
$
10

 
$
12

 
$
5

 
$
5

 
$
7

Interest cost
31

 
34

 
32

 
9

 
10

 
9

Expected return on plan assets
(44
)
 
(44
)
 
(46
)
 
(14
)
 
(13
)
 
(15
)
Net amortization
2

 
2

 
2

 
(4
)
 
(4
)
 
(3
)
Net periodic benefit (credit) cost
$
(2
)
 
$
2

 
$

 
$
(4
)
 
$
(2
)
 
$
(2
)


Funded Status

The following table is a reconciliation of the fair value of plan assets for the years ended December 31 (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Plan assets at fair value, beginning of year
$
684

 
$
678

 
$
252

 
$
249

Employer contributions
7

 
7

 
1

 
1

Participant contributions

 

 
1

 
1

Actual return on plan assets
114

 
57

 
36

 
14

Benefits paid
(60
)
 
(58
)
 
(13
)
 
(13
)
Plan assets at fair value, end of year
$
745

 
$
684

 
$
277

 
$
252



The following table is a reconciliation of the benefit obligations for the years ended December 31 (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Benefit obligation, beginning of year
$
773

 
$
785

 
$
233

 
$
234

Service cost
9

 
10

 
5

 
5

Interest cost
31

 
34

 
9

 
10

Participant contributions

 

 
1

 
1

Actuarial loss (gain)
46

 
2

 
11

 
(4
)
Benefits paid
(60
)
 
(58
)
 
(13
)
 
(13
)
Benefit obligation, end of year
$
799

 
$
773

 
$
246

 
$
233

Accumulated benefit obligation, end of year
$
790

 
$
764

 
 
 
 


The funded status of the plans and the amounts recognized on the Balance Sheets as of December 31 are as follows (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Plan assets at fair value, end of year
$
745

 
$
684

 
$
277

 
$
252

Less - Benefit obligation, end of year
799

 
773

 
246

 
233

Funded status
$
(54
)
 
$
(89
)
 
$
31

 
$
19

 
 
 
 
 
 
 
 
Amounts recognized on the Balance Sheets:
 
 
 
 
 
 
 
Other assets
$
66

 
$
26

 
$
31

 
$
19

Other current liabilities
(8
)
 
(8
)
 

 

Other liabilities
(112
)
 
(107
)
 

 

Amounts recognized
$
(54
)
 
$
(89
)
 
$
31

 
$
19



The SERP has no plan assets; however, MidAmerican Energy has Rabbi trusts that hold corporate-owned life insurance and other investments to provide funding for the future cash requirements of the SERP. The cash surrender value of all of the policies included in the Rabbi trusts, net of amounts borrowed against the cash surrender value, plus the fair market value of other Rabbi trust investments, was $118 million and $110 million as of December 31, 2017 and 2016, respectively. These assets are not included in the plan assets in the above table, but are reflected in investments and restricted cash and investments on the Balance Sheets.

Unrecognized Amounts

The portion of the funded status of the plans not yet recognized in net periodic benefit cost as of December 31 is as follows (in millions):
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Net (gain) loss
$
(11
)
 
$
15

 
$
23

 
$
36

Prior service cost (credit)
1

 
1

 
(25
)
 
(31
)
Total
$
(10
)
 
$
16

 
$
(2
)
 
$
5



MidAmerican Energy sponsors pension and other postretirement benefit plans on behalf of certain of its affiliates in addition to itself, and therefore, the portion of the funded status of the respective plans that has not yet been recognized in net periodic benefit cost is attributable to multiple entities. Additionally, substantially all of MidAmerican Energy's portion of such amounts is either refundable to or recoverable from its customers and is reflected as regulatory liabilities and regulatory assets.

A reconciliation of the amounts not yet recognized as components of net periodic benefit cost for the years ended December 31, 2017 and 2016 is as follows (in millions):
 
Regulatory
Asset
 
Regulatory
Liability
 
Receivables
(Payables)
with Affiliates
 
Total
Pension
 
 
 
 
 
 
 
Balance, December 31, 2015
$
22

 
$

 
$
6

 
$
28

Net loss (gain) arising during the year
1

 
(11
)
 

 
(10
)
Net amortization
(1
)
 
(1
)
 

 
(2
)
Total

 
(12
)
 

 
(12
)
Balance, December 31, 2016
22

 
(12
)
 
6

 
16

Net loss (gain) arising during the year
4

 
(29
)
 
1

 
(24
)
Net amortization
(2
)
 

 

 
(2
)
Total
2

 
(29
)
 
1

 
(26
)
Balance, December 31, 2017
$
24

 
$
(41
)
 
$
7

 
$
(10
)

 
Regulatory
Asset
 
Receivables
(Payables)
with Affiliates
 
Total
Other Postretirement
 
 
 
 
 
Balance, December 31, 2015
$
17

 
$
(11
)
 
$
6

Net gain arising during the year
(2
)
 
(3
)
 
(5
)
Net amortization
3

 
1

 
4

Total
1

 
(2
)
 
(1
)
Balance, December 31, 2016
18

 
(13
)
 
5

Net gain arising during the year
(7
)
 
(4
)
 
(11
)
Net amortization
3

 
1

 
4

Total
(4
)
 
(3
)
 
(7
)
Balance, December 31, 2017
$
14

 
$
(16
)
 
$
(2
)


The net loss and prior service cost (credit) that will be amortized in 2018 into net periodic benefit cost are estimated to be as follows (in millions):
 
Net
Loss
 
Prior
Service
Cost (Credit)
 
Total
 
 
 
 
 
 
Pension
$
1

 
$
1

 
$
2

Other postretirement
1

 
(5
)
 
(4
)
Total
$
2

 
$
(4
)
 
$
(2
)


Plan Assumptions

Assumptions used to determine benefit obligations and net periodic benefit cost were as follows:
 
Pension
 
Other Postretirement
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Benefit obligations as of December 31:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
3.60
%
 
4.10
%
 
4.50
%
 
3.50
%
 
3.90
%
 
4.25
%
Rate of compensation increase
2.75
%
 
2.75
%
 
2.75
%
 
N/A

 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
Net periodic benefit cost for the years ended December 31:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.10
%
 
4.50
%
 
4.00
%
 
3.90
%
 
4.25
%
 
3.75
%
Expected return on plan assets(1)
6.75
%
 
7.00
%
 
7.25
%
 
6.50
%
 
6.75
%
 
7.00
%
Rate of compensation increase
2.75
%
 
2.75
%
 
2.75
%
 
N/A

 
N/A

 
N/A

(1)
Amounts reflected are pre-tax values. Assumed after-tax returns for a taxable, non-union other postretirement plan were 4.81% for 2017, and 5.00% for 2016, and 5.18% for 2015.

In establishing its assumption as to the expected return on plan assets, MidAmerican Energy utilizes the asset allocation and return assumptions for each asset class based on historical performance and forward-looking views of the financial markets.
 
2017
 
2016
Assumed healthcare cost trend rates as of December 31:
 
 
 
Healthcare cost trend rate assumed for next year
7.10
%
 
7.40
%
Rate that the cost trend rate gradually declines to
5.00
%
 
5.00
%
Year that the rate reaches the rate it is assumed to remain at
2025
 
2025


A one percentage-point change in assumed healthcare cost trend rates would have the following effects (in millions):
 
One Percentage-Point
 
Increase
 
Decrease
Increase (decrease) in:
 
Total service and interest cost for the year ended December 31, 2017
$

 
$

Other postretirement benefit obligation as of December 31, 2017
3

 
(3
)


Contributions and Benefit Payments

Employer contributions to the pension and other postretirement benefit plans are expected to be $8 million and $1 million, respectively, during 2018. Funding to MidAmerican Energy's pension benefit plan trust is based upon the actuarially determined costs of the plan and the requirements of the Internal Revenue Code, the Employee Retirement Income Security Act of 1974 and the Pension Protection Act of 2006, as amended. MidAmerican Energy considers contributing additional amounts from time to time in order to achieve certain funding levels specified under the Pension Protection Act of 2006, as amended. MidAmerican Energy's funding policy for its other postretirement benefit plan is to generally contribute amounts consistent with its rate regulatory arrangements.

Net periodic benefit costs assigned to MidAmerican Energy affiliates are reimbursed currently in accordance with its intercompany administrative services agreement. The expected benefit payments to participants in MidAmerican Energy's pension and other postretirement benefit plans for 2017 through 2021 and for the five years thereafter are summarized below (in millions):
 
Projected Benefit Payments
 
Pension
 
Other Postretirement
 
 
 
 
2018
$
60

 
$
19

2019
61

 
20

2020
60

 
21

2021
59

 
22

2022
57

 
21

2023-2027
256

 
98



Plan Assets

Investment Policy and Asset Allocations

MidAmerican Energy's investment policy for its pension and other postretirement benefit plans is to balance risk and return through a diversified portfolio of debt securities, equity securities and other alternative investments. Maturities for debt securities are managed to targets consistent with prudent risk tolerances. The plans retain outside investment advisors to manage plan investments within the parameters outlined by the MidAmerican Energy Pension and Employee Benefits Plans Administrative Committee. The investment portfolio is managed in line with the investment policy with sufficient liquidity to meet near-term benefit payments.

The target allocations (percentage of plan assets) for MidAmerican Energy's pension and other postretirement benefit plan assets are as follows as of December 31, 2017:
 
Pension
 
Other
Postretirement
 
%
 
%
Debt securities(1)
20-50
 
25-45
Equity securities(1)
60-80
 
45-80
Real estate funds
2-8
 
Other
0-3
 
0-5

(1)
For purposes of target allocation percentages and consistent with the plans' investment policy, investment funds are allocated based on the underlying investments in debt and equity securities.

Fair Value Measurements

The following table presents the fair value of plan assets, by major category, for MidAmerican Energy's defined benefit pension plan (in millions):
 
Input Levels for Fair Value Measurements(1)
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
As of December 31, 2017:
 
 
 
 
 
 
 
Cash equivalents
$

 
$
17

 
$

 
$
17

Debt securities:
 
 
 
 
 
 
 
United States government obligations
21

 

 

 
21

Corporate obligations

 
59

 

 
59

Municipal obligations

 
7

 

 
7

Agency, asset and mortgage-backed obligations

 
33

 

 
33

Equity securities:
 
 
 
 
 
 
 
United States companies
137

 

 

 
137

International equity securities
44

 

 

 
44

Investment funds(2)
74

 

 

 
74

Total assets in the hierarchy
$
276

 
$
116

 
$

 
392

Investment funds(2) measured at net asset value
 
 
 
 
 
 
315

Real estate funds measured at net asset value
 
 
 
 
 
 
38

Total assets measured at fair value
 
 
 
 
 
 
$
745

 
 
 
 
 
 
 
 
As of December 31, 2016:
 
 
 
 
 
 
 
Cash equivalents
$

 
$
17

 
$

 
$
17

Debt securities:
 
 
 
 
 
 
 
United States government obligations
9

 

 

 
9

Corporate obligations

 
53

 

 
53

Municipal obligations

 
6

 

 
6

Agency, asset and mortgage-backed obligations

 
22

 

 
22

Equity securities:
 
 
 
 
 
 
 
United States companies
130

 

 

 
130

International equity securities
39

 

 

 
39

Investment funds(2)
63

 

 

 
63

Total assets in the hierarchy
$
241

 
$
98

 
$

 
339

Investment funds(2) measured at net asset value
 
 
 
 
 
 
295

Real estate funds measured at net asset value
 
 
 
 
 
 
50

Total assets measured at fair value
 
 
 
 
 
 
$
684

(1)
Refer to Note 14 for additional discussion regarding the three levels of the fair value hierarchy.
(2)
Investment funds are comprised of mutual funds and collective trust funds. These funds consist of equity and debt securities of approximately 69% and 31%, respectively, for 2017 and 74% and 26%, respectively, for 2016. Additionally, these funds are invested in United States and international securities of approximately 72% and 28%, respectively, for 2017 and 71% and 29%, respectively, for 2016.
The following table presents the fair value of plan assets, by major category, for MidAmerican Energy's defined benefit other postretirement plans (in millions):
 
Input Levels for Fair Value Measurements(1)
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
As of December 31, 2017:
 
 
 
 
 
 
 
Cash equivalents
$
6

 
$

 
$

 
$
6

Debt securities:
 
 
 
 
 
 
 
United States government obligations
5

 

 

 
5

Corporate obligations

 
14

 

 
14

Municipal obligations

 
44

 

 
44

Agency, asset and mortgage-backed obligations

 
12

 

 
12

Equity securities:
 
 
 
 
 
 
 
United States companies
84

 

 

 
84

Investment funds(2)
112

 

 

 
112

Total assets measured at fair value
$
207

 
$
70

 
$

 
$
277

 
 
 
 
 
 
 
 
As of December 31, 2016:
 
 
 
 
 
 
 
Cash equivalents
$
10

 
$

 
$

 
$
10

Debt securities:
 
 
 
 
 
 
 
United States government obligations
5

 

 

 
5

Corporate obligations

 
11

 

 
11

Municipal obligations

 
37

 

 
37

Agency, asset and mortgage-backed obligations

 
11

 

 
11

Equity securities:
 
 
 
 
 
 
 
United States companies
122

 

 

 
122

Investment funds(2)
56

 

 

 
56

Total assets measured at fair value
$
193

 
$
59

 
$

 
$
252

(1)
Refer to Note 14 for additional discussion regarding the three levels of the fair value hierarchy.
(2)
Investment funds are comprised of mutual funds and collective trust funds. These funds consist of equity and debt securities of approximately 81% and 19%, respectively, for 2017 and 70% and 30%, respectively, for 2016. Additionally, these funds are invested in United States and international securities of approximately 42% and 58%, respectively, for 2017 and 30% and 70%, respectively, for 2016.

For level 1 investments, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value. For level 2 investments, the fair value is determined using pricing models based on observable market inputs. Shares of mutual funds not registered under the Securities Act of 1933, private equity limited partnership interests, common and commingled trust funds and investment entities are reported at fair value based on the net asset value per unit, which is used for expedience purposes. A fund's net asset value is based on the fair value of the underlying assets held by the fund less its liabilities.

MidAmerican Energy sponsors a defined contribution plan ("401(k) plan") covering substantially all employees. MidAmerican Energy's matching contributions are based on each participant's level of contribution, and certain participants receive contributions based on eligible pre-tax annual compensation. Contributions cannot exceed the maximum allowable for tax purposes. Certain participants now receive enhanced benefits in the 401(k) plan and no longer accrue benefits in the noncontributory defined benefit pension plans. MidAmerican Energy's contributions to the plan were $20 million, $20 million, and $20 million for the years ended December 31, 2017, 2016 and 2015, respectively.
MidAmerican Funding, LLC and Subsidiaries [Domain]  
Defined Benefit Plan Disclosure [Line Items]  
Employee Benefit Plans [Text Block]
Employee Benefit Plans

Refer to Note 11 of MidAmerican Energy's Notes to Financial Statements for additional information regarding MidAmerican Funding's pension, supplemental retirement and postretirement benefit plans.

Pension and postretirement costs allocated by MidAmerican Funding to its parent and other affiliates in each of the years ended December 31, were as follows (in millions):
 
2017
 
2016
 
2015
 
 
 
 
 
 
Pension costs
$
4

 
$
4

 
$
4

Other postretirement costs
(3
)
 
(1
)
 
(2
)