Benefit Plans

12 Months Ended

Dec. 31, 2015

Note 10 – Benefit Plans

Defined contribution plans

DP&L sponsors two defined contribution plans. One is for non-union employees (the management plan) and one is for collective bargaining employees (the union plan). Both plans are qualified under Section 401 of the Internal Revenue Code.

Certain non-union employees become eligible to participate in the management plan on the first day of the month following the first full calendar month of employment; provided the employee worked at least 160 hours in that calendar month. Union employees become eligible to participate in the union plan on the first day of the first month following 30 days of employment. Effective January 1, 2016, employees in both plans are eligible to participate upon date of hire.

Participants may elect to contribute up to 85% of eligible compensation to their plan. Non-union participant contributions are matched 100% on the first 1% of eligible compensation and 50% on the next 5% of eligible compensation and they are fully vested in their employer contributions after 2 years of service. Union participant contributions are matched 150% but are capped at $2,100 for 2015 and they are fully vested in their employer contributions after 3 years of service. All participants are fully vested in their own contributions.

For the years ended December 31, 2015, 2014 and 2013, DP&L's contributions to all defined contribution plans were $4.8 million, $4.7 million and $4.8 million per year, respectively.

Defined benefit plans

DP&L sponsors a traditional defined benefit pension plan for most of the employees of DPL and its subsidiaries. For collective bargaining employees, the defined benefits are based on a specific dollar amount per year of service. For all other employees (management employees), the traditional defined benefit pension plan is based primarily on compensation and years of service. As of December 31, 2010, this traditional pension plan was closed to new management employees. A participant is 100% vested in all amounts credited to his or her account upon the completion of five vesting years, as defined in The Dayton Power and Light Company Retirement Income Plan, or the participant’s death or disability. If a participant’s employment is terminated, other than by death or disability, prior to such participant becoming 100% vested in his or her account, the account shall be forfeited as of the date of termination. Effective January 1, 2014, the Service Company began providing services including accounting, legal, human resources, information technology and other corporate services on behalf of companies that are part of the U.S. SBU, including among other companies, DPL and DP&L. Employees that transferred from DP&L to the Service Company maintain their previous eligibility to participate in the DP&L pension plan.

Almost all management employees beginning employment on or after January 1, 2011 participate in a cash balance pension plan. Similar to the traditional pension plan for management employees, the cash balance benefits are based on compensation and years of service. A participant shall become 100% vested in all amounts credited to his or her account upon the completion of three vesting years, as defined in The Dayton Power and Light Company Retirement Income Plan, or the participant’s death or disability. If a participant’s employment is terminated, other than by death or disability, prior to such participant becoming 100% vested in his or her account, the account shall be forfeited as of the date of termination. Vested benefits in the cash balance plan are fully portable upon termination of employment.

In addition, we have a Supplemental Executive Retirement Plan (SERP) for certain retired key executives. The SERP has an immaterial unfunded liability related to agreements for retirement benefits of certain terminated and retired key executives. We also include our net liability to our partners related to our share of their pension costs within Pension, retiree and other benefits on our Consolidated Balance Sheets.

We recognize an asset for a plan’s overfunded status and a liability for a plan’s underfunded status and recognize, as a component of OCI, the changes in the funded status of the plan that arise during the year that are not recognized as a component of net periodic benefit cost. For the transmission and distribution areas of our electric business, these amounts are recorded as regulatory assets and liabilities which represent the regulated portion that would otherwise be charged or credited to AOCI. We have historically recorded these costs on the accrual basis and this is how these costs have been historically recovered through customer rates. This factor, combined with the historical precedents from the PUCO and FERC, make these costs probable of future rate recovery.

Postretirement benefits

Qualified employees who retired prior to 1987 and their dependents are eligible for health care and life insurance benefits until their death, while qualified employees who retired after 1987 are eligible for life insurance benefits and partially subsidized health care. The partially subsidized health care is at the election of the employee, who pays the majority of the cost, and is available only from their retirement until they are covered by Medicare. We have funded a portion of the union-eligible benefits using a Voluntary Employee Beneficiary Association Trust.

The following tables set forth the changes in our pension and postemployment benefit plans’ obligations and assets recorded on the balance sheets at December 31, 2015 and 2014. The amounts presented in the following tables for pension obligations include the collective bargaining plan formula, traditional management plan formula and cash balance plan formula and the SERP in the aggregate. The amounts presented for postemployment obligations include both health and life insurance benefits.



$ in millions	Pension
	Years ended December 31,
	2015			2014
Change in benefit obligation
Benefit obligation at January 1	$	443.8		$	370.5
Service cost	7.1			5.9
Interest cost	17.3			17.5
Plan amendments	—			6.8
Actuarial (gain) / loss	(34.5		)	67.3
Benefits paid	(22.9		)	(24.2		)
Benefit obligation at December 31	410.8			443.8
Change in plan assets
Fair value of plan assets at January 1	371.7			349.1
Actual return on plan assets	(8.8		)	46.4
Contributions to plan assets	5.4			0.4
Benefits paid	(22.9		)	(24.2		)
Fair value of plan assets at December 31	345.4			371.7

Funded status of plan	$	(65.4	)	$	(72.1	)

	December 31,
Amounts recognized in the Balance sheets	2015			2014
Current liabilities	$	(0.4	)	$	(0.4	)
Non-current liabilities	(65.0		)	(71.7		)
Net liability at December 31,	$	(65.4	)	$	(72.1	)

Amounts recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax
Components:
Prior service cost	$	12.0		$	14.1
Net actuarial loss	94.7			103.4
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax	$	106.7		$	117.5
Recorded as:
Regulatory asset	$	91.1		$	99.0
Regulatory liability	—			—
Accumulated other comprehensive income	15.6			18.5
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax	$	106.7		$	117.5



$ in millions	Postretirement
	Years ended December 31,
	2015			2014
Change in benefit obligation
Benefit obligation at beginning of period	$	19.6		$	19.7
Service cost	0.2			0.2
Interest cost	0.6			0.8
Actuarial (gain) / loss	(1.1		)	0.2
Benefits paid	(1.5		)	(1.3		)
Benefit obligation at end of period	17.8			19.6
Change in plan assets
Fair value of plan assets at beginning of period	3.3			3.7
Contributions to plan assets	1.0			0.9
Benefits paid	(1.5		)	(1.3		)
Fair value of plan assets at end of period	2.8			3.3

Funded status of plan	$	(15.0	)	$	(16.3	)

	December 31,
	2015			2014
Amounts recognized in the Balance sheets
Current liabilities	$	(0.4	)	$	(0.5	)
Non-current liabilities	(14.6		)	(15.8		)
Net liability at December 31,	$	(15.0	)	$	(16.3	)
Amounts recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax
Components:
Prior service cost	$	0.3		$	0.4
Net actuarial gain	(5.5		)	(5.0		)
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax	$	(5.2	)	$	(4.6	)
Recorded as:
Regulatory asset	$	0.3		$	0.4
Regulatory liability	(5.1		)	(4.8		)
Accumulated other comprehensive income	(0.4		)	(0.2		)
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax	$	(5.2	)	$	(4.6	)

The accumulated benefit obligation for our defined benefit pension plans was $401.2 million and $431.0 million at December 31, 2015 and 2014, respectively.

The net periodic benefit cost of the pension and postretirement plans were:



Net Periodic Benefit Cost - Pension
	Years ended December 31,
$ in millions	2015			2014			2013
Service cost	$	7.1		$	5.9		$	7.2
Interest cost	17.3			17.5			15.6
Expected return on assets ^(a)	(22.6		)	(22.9		)	(23.3		)
Amortization of unrecognized:
Actuarial gain	5.8			3.4			4.9
Prior service cost	2.0			1.5			1.5
Net periodic benefit cost	$	9.6		$	5.4		$	5.9



Net Periodic Benefit Cost - Postretirement
	Years ended December 31,
$ in millions	2015			2014			2013
Service cost	$	0.2		$	0.2		$	0.2
Interest cost	0.6			0.8			0.8
Expected return on assets ^(a)	(0.1		)	(0.2		)	(0.1		)
Amortization of unrecognized:
Actuarial loss	(0.6		)	(0.6		)	(0.5		)
Prior service cost	0.1			—			—
Net periodic benefit cost	$	0.2		$	0.2		$	0.4

Other Changes in Plan Assets and Benefit Obligation Recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities



Pension
	Years ended December 31,
$ in millions	2015			2014			2013
Net actuarial loss / (gain)	$	(3.0	)	$	43.8		$	(12.0	)
Prior service cost	—			6.8			—
Reversal of amortization item:
Net actuarial loss	(5.8		)	(3.4		)	(4.9		)
Prior service cost	(2.0		)	(1.5		)	(1.5		)
Total recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities	$	(10.8	)	$	45.7		$	(18.4	)
Total recognized in net periodic benefit cost and Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities	$	(1.2	)	$	51.1		$	(12.5	)



Postretirement
	Years ended December 31,
$ in millions	2015			2014		2013
Net actuarial loss / (gain)	$	(1.1	)	$	0.4	$	(2.0	)
Reversal of amortization item:
Net actuarial gain	0.6			0.6		0.5
Prior service cost	$	(0.1	)	$	—	$	—
Total recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities	$	(0.6	)	$	1.0	$	(1.5	)
Total recognized in net periodic benefit cost and Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities	$	(0.4	)	$	1.2	$	(1.1	)

Estimated amounts that will be amortized from AOCI, Regulatory assets and Regulatory liabilities into net periodic benefit costs during 2016 are:



$ in millions	Pension		Postretirement
Actuarial gain / (loss)	$	4.3	$	(0.6	)
Prior service cost	$	1.9	$	0.1

Assumptions

Our expected return on plan asset assumptions, used to determine benefit obligations, are based on historical long-term rates of return on investments, which use 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, as well as asset diversification and portfolio rebalancing, are evaluated when long-term capital market assumptions are determined. Peer data and historical returns are reviewed to verify reasonableness and appropriateness.

At December 31, 2015, we are maintaining our long term rate of return assumption of 6.50% for pension plan assets. In addition, we are decreasing our long-term rate of return assumption to 3.90% from 4.50% for other postemployment benefit plan assets. These rates of return represent our long-term assumptions based on our long-term portfolio mixes. Also, at December 31, 2015, we have increased our assumed discount rate to 4.49% from 4.02% for pension and to 4.10% from 3.71% for postemployment benefits expense to reflect current duration-based yield curve discount rates. A one percent increase in the rate of return assumption for pension would result in a decrease in pension expense of approximately $3.5 million. A one percent decrease in the rate of return assumption for pension would result in an increase in pension expense of approximately $3.5 million. A 25 basis point increase in the discount rate for pension would result in a decrease of approximately $0.2 million to 2016 pension expense. A 25 basis point decrease in the discount rate for pension would result in an increase of approximately $0.3 million to 2016 pension expense. A one percent change in the assumed health care cost trend rate would affect postemployment benefit costs by less than $1.0 million.

In determining the discount rate to use for valuing liabilities, we used a market yield curve on high-quality fixed income investments as of December 31, 2015. We project the expected benefit payments under the plan based on participant data and based on certain assumptions concerning mortality, retirement rates, termination rates, etc. The expected benefit payments for each year are then discounted back to the measurement date using the appropriate spot rate for each half-year from the yield curve, thereby obtaining a present value of all expected future benefit payments using the yield curve. Finally, an equivalent single discount rate is determined which produces a present value equal to the present value determined using the full yield curve.

Effective January 1, 2016, we will apply a disaggregated discount rate approach for determining service cost and interest cost for our defined benefit pension plans and postretirement plans. See Note 1 – Overview and Summary of Significant Accounting Policies for more information.

In future periods, differences in the actual return on pension and other post-employment benefit plan assets and assumed return, or changes in the discount rate, will affect the timing of contributions, if any to the plans.

The weighted average assumptions used to determine benefit obligations at December 31, 2015, 2014 and 2013 were:



Benefit Obligation Assumptions	Pension			Postretirement
	2015	2014	2013	2015	2014	2013
Discount rate for obligations	4.49%	4.02%	4.86%	4.10%	3.71%	4.58%
Rate of compensation increases	3.94%	3.94%	3.94%	N/A	N/A	N/A

The weighted-average assumptions used to determine net periodic benefit cost (income) for the years ended December 31, 2015, 2014 and 2013 were:



Net Periodic Benefit Cost / (Income) Assumptions	Pension			Postretirement
	2015	2014	2013	2015	2014	2013
Discount rate	4.02%	4.86%	4.04%	3.81%	4.51%	4.58%
Expected rate of return on plan assets	6.50%	6.75%	6.75%	4.50%	6.00%	6.00%
Rate of compensation increases	3.94%	3.94%	3.94%	N/A	N/A	N/A

The assumed health care cost trend rates at December 31, 2015, 2014 and 2013 are as follows:



Health Care Cost Assumptions	Expense			Benefit Obligation
	2015	2014	2013	2015	2014	2013
Pre - age 65
Current health care cost trend rate	6.97%	7.75%	8.00%	6.85%	6.97%	7.75%

Year trend reaches ultimate	2029	2023	2019	2036	2029	2023
Post - age 65
Current health care cost trend rate	6.97%	6.75%	7.50%	6.85%	6.97%	6.75%

Year trend reaches ultimate	2029	2021	2018	2036	2029	2021

Ultimate health care cost trend rate	4.50%	5.00%	5.00%	4.50%	4.50%	5.00%

The assumed health care cost trend rates have an effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects on the net periodic postemployment benefit cost and the accumulated postemployment benefit obligation:



Effect of change in health care cost trend rate
$ in millions	One-percent increase		One-percent decrease
Service cost plus interest cost	$	0.1	$	—
Benefit obligation	$	0.8	$	(0.7	)

Pension plan assets

Plan assets are invested using a total return investment approach whereby a mix of equity securities, debt securities and other investments are used to preserve asset values, diversify risk and achieve our target investment return benchmark. Investment strategies and asset allocations are based on careful consideration of plan liabilities, the plan's funded status and our financial condition. Investment performance and asset allocation are measured and monitored on an ongoing basis.

Plan assets are managed in a balanced portfolio comprised of two major components: an equity portion and a fixed income portion. The expected role of plan equity investments is to maximize the long-term real growth of plan assets, while the role of fixed income investments is to generate current income, provide for more stable periodic returns and provide some protection against a prolonged decline in the market value of plan equity investments.

Long-term strategic asset allocation guidelines, as well as short-term tactical asset allocation guidelines, are determined by a Risk/Advisory Committee and approved by a Fiduciary Committee. These allocations take into account the Plan’s long-term objectives. The long-term target allocations for plan assets are 18% – 38% for equity securities and 58% – 86% for fixed income securities. Equity securities include U.S. and international equity, while fixed income securities include long-duration and high-yield bond funds and emerging market debt funds.

Tactically, the committees, on a short-term basis, will make asset allocations that are outside the long-term allocation guidelines. The short-term allocation positions are likely to not exceed one-year in duration. In addition to the equity and fixed income investments, the short-term allocation may also include a relatively small allocation to alternative investments. The plan currently has a small allocation to a core property fund, as well as a small allocation to a hedge fund.

Most of our Plan assets are measured using quoted, observable prices which are considered Level One inputs in the Fair Value Hierarchy. The Core property collective fund and the Common collective fund are measured using Level Two inputs that are quoted prices for identical assets in markets that are less active.

The following table summarizes our target pension plan allocation for 2015:



		Percentage of plan assets as of December 31,
Asset category	Long-Term Mid-Point Target Allocation	2015	2014
Equity Securities	28%	17%	18%
Debt Securities	72%	67%	69%
Real Estate	—%	9%	7%
Other	—%	7%	6%

The fair values of our pension plan assets at December 31, 2015 by asset category are as follows:



Fair Value Measurements for Pension Plan Assets at December 31, 2015
Asset Category $ in millions	Market Value at December 31, 2015		Quoted prices in active markets for identical assets		Significant observable inputs		Significant unobservable inputs
			(Level 1)		(Level 2)		(Level 3)
Equity securities ^(a)
Small/Mid cap equity	$	9.2	$	9.2	$	—	$	—
Large cap equity	20.2		20.2		—		—
International equity	18.2		18.2		—		—
Emerging markets equity	2.7		2.7		—		—
SIIT dynamic equity	10.0		10.0		—		—
Total equity securities	60.3		60.3		—		—

Debt securities ^(b)
Emerging markets debt	6.3		6.3		—		—
High yield bond	6.3		6.3		—		—
Long duration fund	219.5		219.5		—		—
Total debt securities	232.1		232.1		—		—

Other investments ^(c)
Core property collective fund	30.2		—		30.2		—
Common collective fund	22.8		—		22.8		—
Total other investments	53.0		—		53.0		—
Total pension plan assets	$	345.4	$	292.4	$	53.0	$	—


(a)	This category includes investments in equity securities of large, small and medium sized companies and equity securities of foreign companies including those in developing countries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.


(b)	This category includes investments in investment-grade fixed-income instruments, U.S. dollar-denominated debt securities of emerging market issuers and high yield fixed-income securities that are rated below investment grade. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.


(c)	This category represents a property fund that invests in commercial real estate and a hedge fund of funds made up of 30+ different hedge fund managers diversified over eight different hedge strategies. The fair value of the hedge fund is valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

The fair values of our pension plan assets at December 31, 2014 by asset category are as follows:



Fair Value Measurements for Pension Plan Assets at December 31, 2014
Asset Category $ in millions	Market Value at December 31, 2014		Quoted prices in active markets for identical assets		Significant observable inputs		Significant unobservable inputs
			(Level 1)		(Level 2)		(Level 3)
Equity securities ^(a)
Small/Mid cap equity	$	10.6	$	10.6	$	—	$	—
Large cap equity	22.2		22.2		—		—
International equity	18.2		18.2		—		—
Emerging markets equity	2.8		2.8		—		—
SIIT dynamic equity	11.6		11.6		—		—
Total equity securities	65.4		65.4		—		—

Debt securities ^(b)
Emerging markets debt	6.0		6.0		—		—
High yield bond	6.5		6.5		—		—
Long duration fund	242.7		242.7		—		—
Total debt securities	255.2		255.2		—		—

Cash and cash equivalents ^(c)
Cash	1.6		1.6		—		—

Other investments ^(d)
Core property collective fund	26.3		—		26.3		—
Common collective fund	23.2		—		23.2		—
Total other investments	49.5		—		49.5		—
Total pension plan assets	$	371.7	$	322.2	$	49.5	$	—


(a)	This category includes investments in equity securities of large, small and medium sized companies and equity securities of foreign companies including those in developing countries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.


(b)	This category includes investments in investment-grade fixed-income instruments, U.S. dollar-denominated debt securities of emerging market issuers and high yield fixed-income securities that are rated below investment grade. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.


(c)	This category comprises cash held to pay beneficiaries. The fair value of cash equals its book value.


(d)	This category represents a property fund that invests in commercial real estate and a hedge fund of funds made up of 30+ different hedge fund managers diversified over eight different hedge strategies. The fair value of the hedge fund is valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

The fair values of our other postemployment benefit plan assets at December 31, 2015 by asset category are as follows:



Fair Value Measurements for Other Postemployment Benefit Plan Assets at December 31, 2015
Asset Category $ in millions	Market Value at December 31, 2015		Quoted prices in active markets for identical assets		Significant observable inputs		Significant unobservable inputs
			(Level 1)		(Level 2)		(Level 3)
JP Morgan Core Bond Fund ^(a)	$	2.8	$	2.8	$	—	$	—


(a)	This category includes investments in U.S. government obligations and mortgage-backed and asset-backed securities.

The fair values of our other postemployment benefit plan assets at December 31, 2014 by asset category are as follows:



Fair Value Measurements for Other Postemployment Benefit Plan Assets at December 31, 2014
Asset Category $ in millions	Market Value at December 31, 2014		Quoted prices in active markets for identical assets		Significant observable inputs		Significant unobservable inputs
			(Level 1)		(Level 2)		(Level 3)
JP Morgan Core Bond Fund ^(a)	$	3.3	$	3.3	$	—	$	—


(a)	This category includes investments in U.S. government obligations and mortgage-backed and asset-backed securities.

Pension funding

We generally fund pension plan benefits as accrued in accordance with the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and, in addition, make voluntary contributions from time to time. We contributed $5.0 million, $0.0 million, and $0.0 million to the pension plan during the years ended December 31, 2015, 2014 and 2013, respectively.

We expect to make contributions of $0.4 million to our SERP in 2016 to cover benefit payments. We also expect to contribute $1.1 million to our other postemployment benefit plans in 2016 to cover benefit payments. We made contributions of $5.0 million to our pension plan during January 2016.

The Pension Protection Act of 2006 (the Act) contained new requirements for our single employer defined benefit pension plan. In addition to establishing a 100% funding target for plan years beginning after December 31, 2008, the Act also limits some benefits if the funded status of pension plans drops below certain thresholds. Among other restrictions under the Act, if the funded status of a plan falls below a predetermined ratio of 80%, lump-sum payments to new retirees are limited to 50% of amounts that otherwise would have been paid and new benefit improvements may not go into effect. For the 2015 plan year, the funded status of our defined benefit pension plan as calculated under the requirements of the Act was 112.54% and is estimated to be 112.54% until the 2016 status is certified in September 2016 for the 2016 plan year. The Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), which was signed into law on December 23, 2008, grants plan sponsors certain relief from funding requirements and benefit restrictions of the Act.

Benefit payments, which reflect future service, are expected to be paid as follows:



Estimated future benefit payments and Medicare Part D reimbursements
$ in millions due within the following years:	Pension		Postretirement
2016	$	24.6	$	1.7
2017	$	25.2	$	1.6
2018	$	25.8	$	1.5
2019	$	26.3	$	1.4
2020	$	26.7	$	1.4
2021 - 2025	$	134.8	$	5.7

THE DAYTON POWER AND LIGHT COMPANY [Member]

Benefit Plans

Note 9 – Benefit Plans

Defined contribution plans

For the years ended December 31, 2015, 2014 and 2013 DP&L's contributions to all defined contribution plans were $4.8 million, $4.7 million and $4.8 million per year, respectively.

Defined benefit plans

Postretirement benefits



$ in millions	Pension
	Years ended December 31,
	2015			2014
Change in benefit obligation
Benefit obligation at beginning of period	$	443.8		$	370.5
Service cost	7.1			5.9
Interest cost	17.3			17.5
Plan amendments	—			6.8
Actuarial (gain) / loss	(34.5		)	67.3
Benefits paid	(22.9		)	(24.2		)
Benefit obligation at end of period	410.8			443.8
Change in plan assets
Fair value of plan assets at beginning of period	371.7			349.1
Actual return on plan assets	(8.8		)	46.4
Contributions to plan assets	5.4			0.4
Benefits paid	(22.9		)	(24.2		)
Fair value of plan assets at end of period	345.4			371.7

Funded status of plan	$	(65.4	)	$	(72.1	)

	December 31,
	2015			2014
Amounts recognized in the Balance sheets
Current liabilities	$	(0.4	)	$	(0.4	)
Non-current liabilities	(65.0		)	(71.7		)
Net liability at Year ended December 31,	$	(65.4	)	$	(72.1	)
Amounts recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax
Components:
Prior service cost	$	17.0		$	20.3
Net actuarial loss / (gain)	139.7			152.5
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax	$	156.7		$	172.8
Recorded as:
Regulatory asset	$	91.1		$	99.0
Regulatory liability	—			—
Accumulated other comprehensive income	65.6			73.8
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax	$	156.7		$	172.8



$ in millions	Postretirement
	Years ended December 31,
	2015			2014
Change in benefit obligation
Benefit obligation at beginning of period	$	19.6		$	19.7
Service cost	0.2			0.2
Interest cost	0.6			0.8
Actuarial (gain) / loss	(1.1		)	0.2
Benefits paid	(1.5		)	(1.3		)
Benefit obligation at end of period	17.8			19.6
Change in plan assets
Fair value of plan assets at beginning of period	3.3			3.7
Contributions to plan assets	1.0			0.9
Benefits paid	(1.5		)	(1.3		)
Fair value of plan assets at end of period	2.8			3.3

Funded status of plan	$	(15.0	)	$	(16.3	)

	December 31,
	2015			2014
Amounts recognized in the Balance sheets
Current liabilities	$	(0.4	)	$	(0.5	)
Non-current liabilities	(14.6		)	(15.8		)
Net liability at Year ended December 31,	$	(15.0	)	$	(16.3	)
Amounts recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax
Components:
Prior service cost	$	0.5		$	0.6
Net actuarial loss / (gain)	(6.2		)	(5.8		)
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax	$	(5.7	)	$	(5.2	)
Recorded as:
Regulatory asset	$	0.3		$	—
Regulatory liability	(5.1		)	(4.5		)
Accumulated other comprehensive income	(0.9		)	(0.7		)
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax	$	(5.7	)	$	(5.2	)

The accumulated benefit obligation for our defined benefit pension plans was $401.2 million and $431.0 million at December 31, 2015 and 2014, respectively.

The net periodic benefit cost of the pension and postretirement plans were:



Net Periodic Benefit Cost - Pension
	Years ended December 31,
$ in millions	2015			2014			2013
Service cost	$	7.1		$	5.9		$	7.2
Interest cost	17.3			17.5			15.6
Expected return on assets ^(a)	(22.6		)	(22.9		)	(23.6		)
Amortization of unrecognized:
Actuarial gain	9.8			6.4			9.3
Prior service cost	3.3			2.8			2.8
Net periodic benefit cost	$	14.9		$	9.7		$	11.3



Net Periodic Benefit Cost - Postretirement
	Years ended December 31,
$ in millions	2015			2014			2013
Service cost	$	0.2		$	0.2		$	0.2
Interest cost	0.6			0.8			0.8
Expected return on assets ^(a)	(0.1		)	(0.2		)	(0.2		)
Amortization of unrecognized:
Actuarial loss	(0.6		)	(0.8		)	(0.7		)
Prior service cost	0.1			0.1			0.1
Net periodic benefit cost	$	0.2		$	0.1		$	0.2

Other Changes in Plan Assets and Benefit Obligation Recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities



Pension
	Years ended December 31,
$ in millions	2015			2014			2013
Net actuarial loss / (gain)	$	(3.0	)	$	43.8		$	(11.7	)
Prior service cost	—			6.8			—
Reversal of amortization item:
Net actuarial loss	(9.8		)	(6.4		)	(9.3		)
Prior service cost	(3.3		)	(2.8		)	(2.8		)
Total recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities	$	(16.1	)	$	41.4		$	(23.8	)

Total recognized in net periodic benefit cost and Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities	$	(1.2	)	$	51.1		$	(12.5	)



Postretirement
	Years ended December 31,
$ in millions	2015			2014			2013
Net actuarial loss / (gain)	$	(1.1	)	$	0.4		$	(1.9	)
Reversal of amortization item:
Net actuarial gain	0.6			0.8			0.7
Prior service credit	(0.1		)	(0.1		)	(0.1		)
Total recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities	$	(0.6	)	$	1.1		$	(1.3	)

Total recognized in net periodic benefit cost and Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities	$	(0.4	)	$	1.2		$	(1.1	)

Estimated amounts that will be amortized from AOCI, Regulatory assets and Regulatory liabilities into net periodic benefit costs during 2016 are:



$ in millions	Pension		Postretirement
Actuarial gain / (loss)	$	7.2	$	(0.8	)
Prior service cost	$	3.1	$	0.1

Assumptions

At December 31, 2015, we are maintaining our long term rate of return assumption of 6.50% for pension plan assets. In addition, we are decreasing our long-term rate of return assumption to 3.90% from 4.50% for other postemployment benefit plan assets. These rates of return represent our long-term assumptions based on our long-term portfolio mixes. Also, at December 31, 2015, we have increased our assumed discount rate to 4.49% from 4.02% for pension and to 4.10% from 3.71% for postemployment benefits expense to reflect current duration-based yield curve discount rates. A one percent increase in the rate of return assumption for pension would result in a decrease in pension expense of approximately $3.5 million. A 1% decrease in the rate of return assumption for pension would result in an increase in pension expense of approximately $3.5 million. A 25 basis point increase in the discount rate for pension would result in a decrease of approximately $0.2 million to 2016 pension expense. A 25 basis point decrease in the discount rate for pension would result in an increase of approximately $0.3 million to 2016 pension expense. A one percent change in the assumed health care cost trend rate would affect postemployment benefit costs by less than $1.0 million.

Effective January 1, 2016 we will apply the spot rate approach for determining service cost and interest cost for its defined benefit pension plans and other post-retirement plan. The expected 2016 service costs and interest costs included above reflect the change in methodology. The impact of the change in approach is a reduction in: (1) expected service costs of $0.4 million for pension plans in 2016 ($0.4 million Defined Benefit Pension Plan and $0.0 million Supplemental Retirement Plan), and (2) expected interest costs of $3.2 million for pension plans in 2016 ($3.1 million Defined Benefit Pension Plan and $0.1 million Supplemental Retirement Plan).

The weighted average assumptions used to determine benefit obligations during the years ended December 31, 2015, 2014 and 2013 were:



Benefit Obligation Assumptions	Pension			Postretirement
	2015	2014	2013	2015	2014	2013
Discount rate for obligations	4.49%	4.02%	4.86%	4.10%	3.71%	4.58%
Rate of compensation increases	3.94%	3.94%	3.94%	N/A	N/A	N/A

The weighted-average assumptions used to determine net periodic benefit cost (income) for the years ended December 31, 2015, 2014 and 2013 were:



Net Periodic Benefit Cost / (Income) Assumptions	Pension			Postretirement
	2015	2014	2013	2015	2014	2013
Discount rate	4.02%	4.86%	4.04%	3.81%	4.51%	4.58%
Expected rate of return on plan assets	6.50%	6.75%	6.75%	4.50%	6.00%	6.00%
Rate of compensation increases	3.94%	3.94%	3.94%	N/A	N/A	N/A

The assumed health care cost trend rates at December 31, 2015, 2014 and 2013 are as follows:



Health Care Cost Assumptions	Expense			Benefit Obligation
	2015	2014	2013	2015	2014	2013
Pre - age 65
Current health care cost trend rate	6.97%	7.75%	8.00%	6.85%	6.97%	7.75%

Year trend reaches ultimate	2029	2023	2019	2036	2029	2023
Post - age 65
Current health care cost trend rate	6.97%	6.75%	7.50%	6.85%	6.97%	6.75%

Year trend reaches ultimate	2029	2021	2018	2036	2029	2021

Ultimate health care cost trend rate	4.50%	5.00%	5.00%	4.50%	4.50%	5.00%



Effect of change in health care cost trend rate
$ in millions	One-percent increase		One-percent decrease
Service cost plus interest cost	$	0.1	$	—
Benefit obligation	$	1.1	$	(0.7	)

Pension plan assets

The following table summarizes our target pension plan allocation for 2015:



		Percentage of plan assets as of December 31,
Asset Category	Long-Term Mid-Point Target Allocation	2015	2014
Equity Securities	28%	17%	18%
Debt Securities	72%	67%	69%
Real Estate	—%	9%	7%
Other	—%	7%	6%

The fair values of our pension plan assets at December 31, 2015 by asset category are as follows:



Fair Value Measurements for Pension Plan Assets at December 31, 2015
Asset Category $ in millions	Market Value at December 31, 2015		Quoted prices in active markets for identical assets		Significant observable inputs		Significant unobservable inputs
			(Level 1)		(Level 2)		(Level 3)
Equity securities ^(a)
Small/Mid cap equity	$	9.2	$	9.2	$	—	$	—
Large cap equity	20.2		20.2		—		—
International equity	18.2		18.2		—		—
Emerging markets equity	2.7		2.7		—		—
SIIT dynamic equity	10.0		10.0		—		—
Total equity securities	60.3		60.3		—		—

Debt Securities ^(b)
Emerging markets debt	6.3		6.3		—		—
High yield bond	6.3		6.3		—		—
Long duration fund	219.5		219.5		—		—
Total debt securities	232.1		232.1		—		—

Other investments ^(c)
Core property collective fund	30.2		—		30.2		—
Common collective fund	22.8		—		22.8		—
Total other investments	53.0		—		53.0		—

Total pension plan assets	$	345.4	$	292.4	$	53.0	$	—


(a)	This category includes investments in equity securities of large, small and medium sized companies and equity securities of foreign companies including those in developing countries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.


(b)	This category includes investments in investment-grade fixed-income instruments, U.S. dollar-denominated debt securities of emerging market issuers and high yield fixed-income securities that are rated below investment grade. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.


(c)	This category represents a property fund that invests in commercial real estate and a hedge fund of funds made up of 30+ different hedge fund managers diversified over eight different hedge strategies. The fair value of the hedge fund is valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

The fair values of our pension plan assets at December 31, 2014 by asset category are as follows:



Fair Value Measurements for Pension Plan Assets at December 31, 2014
Asset Category $ in millions	Market Value at December 31, 2014		Quoted prices in active markets for identical assets		Significant observable inputs		Significant unobservable inputs
			(Level 1)		(Level 2)		(Level 3)
Equity securities ^(a)
Small/Mid cap equity	$	10.6	$	10.6	$	—	$	—
Large cap equity	22.2		22.2		—		—
International equity	18.2		18.2		—		—
Emerging markets equity	2.8		2.8		—		—
SIIT dynamic equity	11.6		11.6		—		—
Total equity securities	65.4		65.4		—		—

Debt Securities ^(b)
Emerging markets debt	6.0		6.0		—		—
High yield bond	6.5		6.5		—		—
Long duration fund	242.7		242.7		—		—
Total debt securities	255.2		255.2		—		—

Cash and cash equivalents ^(c)
Cash	1.6		1.6		—		—

Other investments ^(d)
Core property collective fund	26.3		—		26.3		—
Common collective fund	23.2		—		23.2		—
Total other investments	49.5		—		49.5		—

Total pension plan assets	$	371.7	$	322.2	$	49.5	$	—


(a)	This category includes investments in equity securities of large, small and medium sized companies and equity securities of foreign companies including those in developing countries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.


(b)	This category includes investments in investment-grade fixed-income instruments, U.S. dollar-denominated debt securities of emerging market issuers and high yield fixed-income securities that are rated below investment grade. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.


(c)	This category comprises cash held to pay beneficiaries. The fair value of cash equals its book value.


(d)	This category represents a property fund that invests in commercial real estate and a hedge fund of funds made up of 30+ different hedge fund managers diversified over eight different hedge strategies. The fair value of the hedge fund is valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

The fair values of our other postemployment benefit plan assets at December 31, 2015 by asset category are as follows:



Fair Value Measurements for Other Postemployment Benefit Plan Assets at December 31, 2015
Asset Category $ in millions	Fair Value at December 31, 2015 (a)		Quoted prices in active markets for identical assets		Significant observable inputs		Significant unobservable inputs
			(Level 1)		(Level 2)		(Level 3)
JP Morgan Core Bond Fund ^(a)	$	2.8	$	2.8	$	—	$	—


(a)	This category includes investments in U.S. government obligations and mortgage-backed and asset-backed securities.

The fair values of our other postemployment benefit plan assets at December 31, 2014 by asset category are as follows:



Fair Value Measurements for Other Postemployment Benefit Plan Assets at December 31, 2014
Asset Category $ in millions	Fair Value at December 31, 2014 (a)		Quoted prices in active markets for identical assets		Significant observable inputs		Significant unobservable inputs
			(Level 1)		(Level 2)		(Level 3)
JP Morgan Core Bond Fund ^(a)	$	3.2	$	3.2	$	—	$	—


(a)	This category includes investments in U.S. government obligations and mortgage-backed and asset-backed securities.

Pension funding

We generally fund pension plan benefits as accrued in accordance with the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and, in addition, make voluntary contributions from time to time. We contributed $5.0 million, $0.0 million, and $0.0 million during the years ended December 31, 2015, 2014 and 2013, respectively.

Benefit payments, which reflect future service, are expected to be paid as follows:



Estimated future benefit payments and Medicare Part D reimbursements
$ in millions due within the following years:	Pension		Postretirement
2016	$	24.6	$	1.7
2017	$	25.2	$	1.6
2018	$	25.8	$	1.5
2019	$	26.3	$	1.4
2020	$	26.7	$	1.4
2021 - 2025	$	134.8	$	5.7