Benefits

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements [Abstract]

Benefits

9.Benefits

Postretirement Benefit Plans.

The Company has postretirement health care and life insurance plans (other postretirement plans) that cover substantially all employees. The health care plans generally provide for cost sharing between the Company and its retirees in the form of retiree contributions, deductibles and coinsurance on the amount the Company pays annually to provide future retiree health care coverage under certain of these plans.

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.

		Other Postretirement Benefits
		December 31,
		2011		2010
		(In thousands)
Change in benefit obligation:
	Benefit obligation at beginning of period	$	69,124	$	58,929
	Service cost		2,475		2,215
	Interest cost		3,999		3,515
	Actuarial loss and other		12,704		4,665
	Benefits paid, net		(481)		(220)
	Medicare Part D subsidy receipts		12		20
	Benefit obligation at end of period	$	87,833	$	69,124
Change in plan assets:
	Fair value of plan assets at beginning of period	$	68,128	$	54,361
	Return on plan assets and other		74		6,308
	Employer contributions		7,643		7,679
	Benefits paid, net		(481)		(220)
	Fair value of plan assets at end of period	$	75,364	$	68,128
Amount underfunded at end of period (1)		$	12,469	$	996
Amounts recognized in Accumulated other comprehensive income (pre-tax basis) consist of:
	Net actuarial loss	$	22,701	$	6,399
	Prior service cost (credit)		935		(1,153)
		$	23,636	$	5,246

_____________________

• Underfunded balance is recognized as a noncurrent liability in the Consolidated Balance Sheet.

Net Periodic Benefit Cost. Net periodic benefit cost of the Company's other postretirement benefit plan for the periods presented includes the components noted in the table below.

	Years Ended December 31,
	2011		2010		2009
	(In thousands)
Service cost	$	2,475	$	2,215	$	2,230
Interest cost		3,999		3,515		3,245
Expected return on plan assets		(3,879)		(3,355)		(2,435)
Prior service credit amortization		(2,089)		(2,089)		(2,089)
Actuarial loss amortization		207		-		498
Net periodic benefit cost	$	713	$	286	$	1,449

The estimated net actuarial loss and prior service credit for other postretirement plans that will be amortized from Accumulated other comprehensive income into net periodic benefit cost during 2012 are $1.4million and $(1.4) million, respectively.

Assumptions. The weighted-average discount rate used in determining benefit obligations was 4.26 percent and5.54 percentat December 31, 2011 and 2010, 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,
		2011		2010		2009
Discount rate		5.54	%	6.00	%	5.90	%
Expected return on assets:
	Tax exempt accounts	7.00	%	7.00	%	7.00	%
	Taxable accounts	4.50	%	5.00	%	5.00	%

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,
		2011		2010
Health care cost trend rate assumed for next year		8.50	%	9.00	%
Rate to which the cost trend is assumed
	to decline (the ultimate trend rate)	4.75	%	4.75	%
Year that the rate reaches the ultimate trend rate		2019		2019

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		One Percentage
	Point Increase		Point Decrease
	(In thousands)
Effect on total of service and interest cost	$	771	$	(743)
Effect on accumulated postretirement benefit obligation		10,808		(9,846)

Plan Assets. The Company's overall investment strategy is to maintain an appropriate balance of actively managed investments with the objective of optimizing longer-term returns 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 percent to 35 percent, fixed income of 65 percent to 75 percent and cash and cash equivalents of 0 percent to 10 percent. These target allocations are monitored by the Investment Committee of Southern Union Company'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:

		Fair Value as of December 31,
		2011		2010
		(In thousands)
Asset Category:
	Cash and cash equivalents	$	2,118	$	1,919
	Mutual fund (1)		73,246		66,209
	Total	$	75,364	$	68,128

___________________

• This fund of funds invests primarily in a diversified portfolio of equity, fixed income and short-term mutual funds. As of December 31, 2011, the fund was primarily comprised of approximately 19 percent large-cap U.S. equities, 2 percent small-cap U.S. equities,10 percent international equities, 55 percent fixed income securities, 8 percent cash, and 6 percent in other investments. As of December 31, 2010, the fund was primarily comprised of approximately 17 percent large-cap U.S. equities, 4 percent small-cap U.S. equities,10 percent international equities, 57 percent fixed income securities, 10 percent cash, and 2 percent in other investments.

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. See Note 2 – Summary of Significant Accounting Policies and Other Matters – Fair Value Measurement for information related to the framework used by the Company to measure the fair value of its other postretirement plan assets.

Contributions. The Company expects to contribute approximately $7.6 million to its other postretirement plans in 2012 and approximately $7.6 million 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.

			Expected Benefits		Payments
			Before Effect of		Medicare Part D
Years			Medicare Part D		Subsidy Receipts		Net
			(In thousands)
2012			$	1,513	$	24	$	1,489
2013				2,134		32		2,102
2014				2,773		83		2,690
2015				3,411		139		3,272
2016				3,992		224		3,768
2017	-	2021		27,611		2,780		24,831

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 care benefit plans that provide a prescription drug benefit that is at least actuarially equivalent to Medicare Part D.

Defined Contribution Plan

The Company sponsors a defined contribution savings plan (Savings Plan) that is available to all employees. The Company provided matching contributions of 100 percent of the first five percent of the participant's compensation paid into the Savings Plan beginning January 16, 2009. Prior to that date, the Company provided matching contributions of 100 percent of the first two percent and 50 percent of the next three percent of the participant's compensation paid into the Savings Plan. Company contributions are 100 percent vested after five years of continuous service. Company contributions to the Savings Plan during the years ended December 31, 2011, 2010 and 2009 were $4.6 million, $4.5 million and$4.4 million, respectively.

In addition, the Company makes employer contributions to separate accounts, referred to as Retirement Power Accounts, within the defined contribution plan. The contribution amounts are determined as a percentage of compensation with the amount generally varying based on age and years of service. Company contributions are 100 percent vested after five years of continuous service. Company contributions to Retirement Power Accounts during the years ended December 31, 2011, 2010 and 2009 were $5.5 million, $5.4 million and$5.5 million, respectively.