RETIREMENT BENEFITS:

Postretirement Benefit Plans

Postretirement benefits expense for the years ended December 31, 2015 and 2014 reflect the impact of changes the Company or its affiliates adopted as of September 30, 2013, to modify its retiree medical benefits program, effective January 1, 2014. The modification placed all eligible retirees on a common medical benefit platform, subject to limits on the Company’s annual contribution toward eligible retirees’ medical premiums. Prior to January 1, 2013, affiliates of the Company offered postretirement health care and life insurance benefit plans (other postretirement plans) that covered substantially all employees. Effective January 1, 2013, participation in the plan was frozen and medical benefits were no longer offered to non-union employees. Effective January 1, 2014, retiree medical benefits were no longer offered to union employees.

Obligations and Funded Status

Other postretirement benefit liabilities are accrued on an actuarial basis during the years an employee provides services. The following tables contain information at the dates indicated about the obligations and funded status of the Company’s other postretirement plans.



	December 31,
	2015			2014
Change in benefit obligation:
Benefit obligation at beginning of period	$	24		$	25
Interest cost	1			1
Actuarial (gain) loss	(2		)	1
Benefits paid, net	(2		)	(2		)
Dispositions	—			(1		)
Benefit obligation at end of period	$	21		$	24
Change in plan assets:
Fair value of plan assets at beginning of period	$	114		$	110
Return on plan assets and other	(1		)	4
Employer contributions	7			7
Benefits paid, net	(2		)	(2		)
Dispositions	—			(5		)
Fair value of plan assets at end of period	$	118		$	114

Amount overfunded at end of period ⁽¹⁾	$	(97	)	$	(90	)

Amounts recognized in accumulated other comprehensive income (pre-tax basis) consist of:
Net actuarial loss	$	(10	)	$	(16	)
Prior service cost	14			15
	$	4		$	(1	)


⁽¹⁾	Recorded as a non-current asset in the consolidated balance sheets.

Components of Net Periodic Benefit Cost

The following tables set forth the components of net periodic benefit cost of the Company’s postretirement benefit plan for the periods presented:



	Years Ended December 31,
	2015			2014			2013
Interest cost	$	1		$	1		$	1
Expected return on plan assets	(6		)	(5		)	(5		)
Prior service credit amortization	1			1			1
Actuarial loss amortization	(1		)	(1		)	(1		)
Net periodic benefit cost	$	(5	)	$	(4	)	$	(4	)

The estimated prior service cost for other postretirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2016 is $1 million.

Assumptions. The weighted-average discount rate used in determining benefit obligations was 3.84% and 3.68% at December 31, 2015 and 2014, respectively.

The weighted-average assumptions used in determining net periodic benefit cost for the periods presented are shown in the table below:



	Years Ended December 31,
	2015		2014		2013
Discount rate	3.60	%	4.29	%	3.66	%
Expected return on assets:
Tax exempt accounts	7.00	%	7.00	%	7.00	%
Taxable accounts	4.50	%	4.50	%	4.50	%

The Company employs a building block approach in determining the expected long-term rate of return on the plans’ assets with proper consideration for diversification and rebalancing. Historical markets are studied and long-term historical relationships between equities and fixed-income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term market assumptions are determined. Peer data and historical returns are reviewed to check for reasonableness and appropriateness.

The assumed health care cost trend rates used to measure the expected cost of benefits covered by the plans are shown in the table below:



	December 31,
	2015		2014
Health care cost trend rate	8.10	%	7.60	%
Rate to which the cost trend is assumed to decline (the ultimate trend rate)	4.71	%	4.90	%
Year that the rate reaches the ultimate trend rate	2021		2021

Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:



	One Percentage Point Increase		One Percentage Point Decrease
Effect on accumulated postretirement benefit obligation	$	1	$	(1	)

Plan Assets. The Company’s overall investment strategy is to maintain an appropriate balance of actively managed investments while maintaining a high standard of portfolio quality and achieving proper diversification. To achieve diversity within its other postretirement plan asset portfolio, the Company has targeted the following asset allocations: equity of 25% to 35%, fixed income of 65% to 75% and cash and cash equivalents of up to 10%. These target allocations are monitored by the Investment Committee of ETP’s Board of Directors in conjunction with an external investment advisor. On occasion, the asset allocations may fluctuate as compared to these guidelines as a result of Investment Committee actions.

The fair value of the Company’s other postretirement plan assets at the dates indicated by asset category is as follows:



	December 31,
	2015		2014
Cash and cash equivalents	$	3	$	3
Mutual fund ⁽¹⁾	115		111
Total	$	118	$	114


⁽¹⁾	This fund of funds invests primarily in a diversified portfolio of equity, fixed income and short-term mutual funds. As of December 31, 2015, the fund was primarily comprised of 36% equities, 54% fixed income securities and 10% cash. As of December 31, 2014, the fund was primarily comprised of 38% equities, 52% fixed income securities, and 10% cash.

The other postretirement plan assets are classified as Level 1 assets within the fair-value hierarchy as their fair values are based on active market quotes.

Contributions. The Company expects to make $8 million contributions to its other postretirement plans in 2016 and annually thereafter until modified by rate case proceedings.

Benefit Payments. The Company’s estimate of expected benefit payments, which reflect expected future service, as appropriate, in each of the next five years and in the aggregate for the five years thereafter are shown in the table below.



Years	Expected Benefit Payments
2016	$	2
2017	2
2018	1
2019	1
2020	1
2021 – 2025	6

The Medicare Prescription Drug Act provides for a prescription drug benefit under Medicare (“Medicare Part D”) as well as a federal subsidy to sponsors of retiree health plans that provide a prescription drug benefit that is at least actuarially equivalent to Medicare Part D. The Company was eligible for such subsidies through December 31, 2013. As a result of changes the Company made to the retiree medical plan effective January 1, 2014, the Company no longer receives such subsidy payments for coverage provided after December 31, 2013.

Defined Contribution Plan

The Company participates in ETP’s defined contribution savings plan (“Savings Plan”) that is available to virtually all employees. The Company provided matching contributions of 100% of the first 5% of the participant’s compensation paid into the Savings Plan. Company contributions to the Savings Plan during the years ended December 31, 2015, 2014, and 2013 were $2 million, $3 million, and $6 million, respectively.

In addition, the Company provides a 3% discretionary profit sharing contribution to eligible employees with annual base compensation below a specific threshold. Company contributions are 100% vested after five years of continuous service. The Company’s discretionary profit sharing contributions during the years ended December 31, 2015, 2014, and 2013 were $1 million, $2 million, and $3 million, respectively.