Benefit Plans and Other Postretirement Benefits

Consistent with the process for rate recovery of pension and postretirement benefits for its employees, PSCo accounts for its participation in, and related costs of, pension and other postretirement benefit plans sponsored by Xcel Energy Inc. as multiple employer plans. PSCo is responsible for its share of cash contributions, plan costs and obligations and is entitled to its share of plan assets; accordingly, PSCo accounts for its pro rata share of these plans, including pension expense and contributions, resulting in accounting consistent with that of a single employer plan exclusively for PSCo employees.

Xcel Energy, which includes PSCo, offers various benefit plans to its employees. Approximately 77 percent of employees that receive benefits are represented by several local labor unions under several collective-bargaining agreements. At Dec. 31, 2014, PSCo had 2,063 bargaining employees covered under a collective-bargaining agreement, which expired in May 2014. While collective bargaining is ongoing, the terms and conditions of the expired agreement are automatically extended until the parties reach an agreement or a decision is rendered by an arbitrator.

The plans invest in various instruments which are disclosed under the accounting guidance for fair value measurements which establishes a hierarchical framework for disclosing the observability of the inputs utilized in measuring fair value. The three levels in the hierarchy and examples of each level are as follows:

Level 1 — Quoted prices are available in active markets for identical assets as of the reporting date. The types of assets included in Level 1 are highly liquid and actively traded instruments with quoted prices.

Level 2 — Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets included in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.

Level 3 — Significant inputs to pricing have little or no observability as of the reporting date. The types of assets included in Level 3 are those with inputs requiring significant management judgment or estimation.

Specific valuation methods include the following:

Cash equivalents — The fair values of cash equivalents are generally based on cost plus accrued interest; money market funds are measured using quoted net asset values.

Insurance contracts — Insurance contract fair values take into consideration the value of the investments in separate accounts of the insurer, which are priced based on observable inputs.

Investments in equity securities and other funds — Equity securities are valued using quoted prices in active markets. The fair values for commingled funds, private equity investments and real estate investments are measured using net asset values, which take into consideration the value of underlying fund investments, as well as the other accrued assets and liabilities of a fund, in order to determine a per share market value. The investments in commingled funds may be redeemed for net asset value with proper notice. Proper notice varies by fund and can range from daily with one or two days notice to annually with 90 days notice. Private equity investments require approval of the fund for any unscheduled redemption, and such redemptions may be approved or denied by the fund at its sole discretion. Unscheduled distributions from real estate investments may be redeemed with proper notice, which is typically quarterly with 45-90 days notice; however, withdrawals from real estate investments may be delayed or discounted as a result of fund illiquidity. Based on the plan’s evaluation of its ability to redeem private equity and real estate investments, fair value measurements for private equity and real estate investments have been assigned a Level 3.

Investments in debt securities — Fair values for debt securities are determined by a third party pricing service using recent trades and observable spreads from benchmark interest rates for similar securities.

Derivative Instruments — Fair values for foreign currency derivatives are determined using pricing models based on the prevailing forward exchange rate of the underlying currencies. The fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts.

Pension Benefits

Xcel Energy, which includes PSCo, has several noncontributory, defined benefit pension plans that cover almost all employees. Generally, benefits are based on a combination of years of service, the employee’s average pay and, in some cases, social security benefits. Xcel Energy Inc.’s and PSCo’s policy is to fully fund into an external trust the actuarially determined pension costs recognized for ratemaking and financial reporting purposes, subject to the limitations of applicable employee benefit and tax laws.

In addition to the qualified pension plans, Xcel Energy maintains a supplemental executive retirement plan (SERP) and a nonqualified pension plan. The SERP is maintained for certain executives that were participants in the plan in 2008, when the SERP was closed to new participants. The nonqualified pension plan provides unfunded, nonqualified benefits for compensation that is in excess of the limits applicable to the qualified pension plans. The total obligations of the SERP and nonqualified plan as of Dec. 31, 2014 and 2013 were $46.5 million and $36.5 million, respectively, of which $3.8 million and $3.5 million were attributable to PSCo. In 2014 and 2013, Xcel Energy recognized net benefit cost for financial reporting for the SERP and nonqualified plans of $4.7 million and $6.6 million, respectively, of which $0.6 million in each year was attributable to PSCo. Benefits for these unfunded plans are paid out of Xcel Energy’s consolidated operating cash flows.

Xcel Energy Inc. and PSCo base the investment-return assumption on expected long-term performance for each of the investment types included in the pension asset portfolio and consider the historical returns achieved by the asset portfolio over the past 20-year or longer period, as well as the long-term return levels projected and recommended by investment experts. Xcel Energy Inc. and PSCo continually review the pension assumptions. The pension cost determination assumes a forecasted mix of investment types over the long term.


•	Investment returns in 2014 were above the assumed levels of 6.81 percent;


•	Investment returns in 2013 were below the assumed level of 6.47 percent;


•	Investment returns in 2012 were above the assumed level of 6.65 percent; and


•	In 2015, PSCo’s expected investment-return assumption is 6.81 percent.

The assets are invested in a portfolio according to Xcel Energy Inc.’s and PSCo’s return, liquidity and diversification objectives to provide a source of funding for plan obligations and minimize the necessity of contributions to the plan, within appropriate levels of risk. The principal mechanism for achieving these objectives is the projected allocation of assets to selected asset classes, given the long-term risk, return, and liquidity characteristics of each particular asset class. There were no significant concentrations of risk in any particular industry, index, or entity. Market volatility can impact even well-diversified portfolios and significantly affect the return levels achieved by pension assets in any year.

The following table presents the target pension asset allocations for PSCo at Dec. 31 for the upcoming year:



	2014		2013
Domestic and international equity securities	32	%	29	%
Long-duration fixed income and interest rate swap securities	35		36
Short-to-intermediate term fixed income securities	12		14
Alternative investments	18		19
Cash	3		2
Total	100	%	100	%

The ongoing investment strategy is based on plan-specific investment recommendations that seek to minimize potential investment and interest rate risk as a plan’s funded status increases over time. The investment recommendations result in a greater percentage of long-duration fixed income securities being allocated to specific plans having relatively higher funded status ratios and a greater percentage of growth assets being allocated to plans having relatively lower funded status ratios. The aggregate projected asset allocation presented in the table above for the master pension trust results from the plan-specific strategies.

Pension Plan Assets

The following tables present, for each of the fair value hierarchy levels, PSCo’s pension plan assets that are measured at fair value as of Dec. 31, 2014 and 2013:



	Dec. 31, 2014
(Thousands of Dollars)	Level 1		Level 2			Level 3		Total
Cash equivalents	$	82,486	$	—		$	—	$	82,486
Derivatives	—		508			—		508
Government securities	—		180,912			—		180,912
Corporate bonds	—		115,593			—		115,593
Asset-backed securities	—		1,360			—		1,360
Mortgage-backed securities	—		3,997			—		3,997
Common stock	37,067		—			—		37,067
Private equity investments	—		—			50,210		50,210
Commingled funds	—		629,439			—		629,439
Real estate	—		—			18,410		18,410
Securities lending collateral obligation and other	—		(16,117		)	—		(16,117		)
Total	$	119,553	$	915,692		$	68,620	$	1,103,865



	Dec. 31, 2013
(Thousands of Dollars)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	42,721	$	—	$	—	$	42,721
Derivatives	—		14,755		—		14,755
Government securities	—		125,891		—		125,891
Corporate bonds	—		183,078		—		183,078
Asset-backed securities	—		2,356		—		2,356
Mortgage-backed securities	—		5,267		—		5,267
Common stock	34,742		—		—		34,742
Private equity investments	—		—		49,022		49,022
Commingled funds	—		582,722		—		582,722
Real estate	—		—		15,556		15,556
Securities lending collateral obligation and other	—		10,947		—		10,947
Total	$	77,463	$	925,016	$	64,578	$	1,067,057

The following tables present the changes in PSCo’s Level 3 pension plan assets for the years ended Dec. 31, 2014, 2013 and 2012:



(Thousands of Dollars)	Jan. 1, 2014		Net Realized Gains (Losses)		Net Unrealized Gains (Losses)			Purchases, Issuances and Settlements, Net			Transfers Out of Level 3		Dec. 31, 2014
Private equity investments	$	49,022	$	8,495	$	(4,299	)	$	(3,008	)	$	—	$	50,210
Real estate	15,556		1,180		(302		)	1,976			—		18,410
Total	$	64,578	$	9,675	$	(4,601	)	$	(1,032	)	$	—	$	68,620



(Thousands of Dollars)	Jan. 1, 2013		Net Realized Gains (Losses)			Net Unrealized Gains (Losses)			Purchases, Issuances and Settlements, Net			Transfers Out of Level 3 ^(a)			Dec. 31, 2013
Asset-backed securities	$	4,604	$	—		$	—		$	—		$	(4,604	)	$	—
Mortgage-backed securities	12,058		—			—			—			(12,058		)	—
Private equity investments	47,056		7,074			(4,027		)	(1,081		)	—			49,022
Real estate	19,273		(870		)	3,769			3,048			(9,664		)	15,556
Total	$	82,991	$	6,204		$	(258	)	$	1,967		$	(26,326	)	$	64,578


^(a)	Transfers out of Level 3 into Level 2 were principally due to diminished use of unobservable inputs that were previously significant to these fair value measurements and were subsequently sold during 2013.



(Thousands of Dollars)	Jan. 1, 2012		Net Realized Gains (Losses)		Net Unrealized Gains (Losses)			Purchases, Issuances, and Settlements, Net			Transfers Out of Level 3		Dec. 31, 2012
Asset-backed securities	$	9,824	$	1,175	$	(1,597	)	$	(4,798	)	$	—	$	4,604
Mortgage-backed securities	23,614		550		(625		)	(11,481		)	—		12,058
Private equity investments	49,489		5,206		(7,001		)	(638		)	—		47,056
Real estate	11,230		6		1,843			6,194			—		19,273
Total	$	94,157	$	6,937	$	(7,380	)	$	(10,723	)	$	—	$	82,991

Benefit Obligations — A comparison of the actuarially computed pension benefit obligation and plan assets for PSCo is presented in the following table:



(Thousands of Dollars)	2014			2013
Accumulated Benefit Obligation at Dec. 31	$	1,249,739		$	1,134,184

Change in Projected Benefit Obligation:
Obligation at Jan. 1	$	1,152,836		$	1,194,371
Service cost	23,939			25,206
Interest cost	53,277			46,160
Transfer (to) from other plan	(13,404		)	11,306
Actuarial loss (gain)	133,215			(49,384		)
Benefit payments	(71,906		)	(74,823		)
Obligation at Dec. 31	$	1,277,957		$	1,152,836



(Thousands of Dollars)	2014			2013
Change in Fair Value of Plan Assets:
Fair value of plan assets at Jan. 1	$	1,067,057		$	1,055,308
Actual return on plan assets	84,871			30,684
Employer contributions	35,156			44,582
Transfer (to) from other plan	(11,313		)	11,306
Benefit payments	(71,906		)	(74,823		)
Fair value of plan assets at Dec. 31	$	1,103,865		$	1,067,057



(Thousands of Dollars)	2014			2013
Funded Status of Plans at Dec. 31:
Funded status ^(a)	$	(174,092	)	$	(85,779	)


^(a)	Amounts are recognized in noncurrent liabilities on PSCo’s consolidated balance sheets.



(Thousands of Dollars)	2014			2013
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost:
Net loss	$	530,674		$	450,202
Prior service credit	(18,708		)	(21,800		)
Total	$	511,966		$	428,402



(Thousands of Dollars)	2014		2013
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost Have Been Recorded as Follows Based Upon Expected Recovery in Rates:
Current regulatory assets	$	31,774	$	36,271
Noncurrent regulatory assets	480,192		392,131
Total	$	511,966	$	428,402



Measurement date	Dec. 31, 2014	Dec. 31, 2013



	2014		2013
Significant Assumptions Used to Measure Benefit Obligations:
Discount rate for year-end valuation	4.11	%	4.75	%
Expected average long-term increase in compensation level	3.75		3.75
Mortality table	RP 2014		RP 2000

Mortality — In 2014, the Society of Actuaries published a new mortality table and projection scale that increased the overall life expectancy of males and females. PSCo has reviewed its own population through a credibility analysis and adopted the RP 2014 table with modifications based on its population and specific experience.

Cash Flows — Cash funding requirements can be impacted by changes to actuarial assumptions, actual asset levels and other calculations prescribed by the funding requirements of income tax and other pension-related regulations. Required contributions were made in 2012 through 2015 to meet minimum funding requirements.

Total voluntary and required pension funding contributions across all four of Xcel Energy’s pension plans were as follows:


•	$90.0 million in January 2015, of which $20.0 million was attributable to PSCo;


•	$130.6 million in 2014, of which $35.2 million was attributable to PSCo;


•	$192.4 million in 2013, of which $44.6 million was attributable to PSCo; and


•	$198.1 million in 2012, of which $41.8 million was attributable to PSCo.

For future years, Xcel Energy and PSCo anticipate contributions will be made as necessary.

Plan Amendments — In 2014 and 2013, there were no plan amendments made which affected the benefit obligation.

Benefit Costs — The components of PSCo’s net periodic pension cost were:



(Thousands of Dollars)	2014			2013			2012
Service cost	$	23,939		$	25,206		$	22,719
Interest cost	53,277			46,160			51,192
Expected return on plan assets	(70,709		)	(63,821		)	(65,302		)
Amortization of prior service (credit) cost	(3,092		)	(1,064		)	228
Amortization of net loss	33,892			43,418			34,332
Net periodic pension cost	$	37,307		$	49,899		$	43,169



	2014		2013		2012
Significant Assumptions Used to Measure Costs:
Discount rate	4.75	%	4.00	%	5.00	%
Expected average long-term increase in compensation level	3.75		3.75		4.00
Expected average long-term rate of return on assets	6.81		6.47		6.65

In addition to the benefit costs in the table above, for the pension plans sponsored by Xcel Energy Inc., costs are allocated to PSCo based on Xcel Energy Services Inc. employees’ labor costs. Amounts allocated to PSCo were $9.4 million, $11.6 million and $9.6 million in 2014, 2013 and 2012, respectively. Pension costs include an expected return impact for the current year that may differ from actual investment performance in the plan. The return assumption used for 2015 pension cost calculations is 6.81 percent. The cost calculation uses a market-related valuation of pension assets. Xcel Energy, including PSCo, uses a calculated value method to determine the market-related value of the plan assets. The market-related value begins with the fair market value of assets as of the beginning of the year. The market-related value is determined by adjusting the fair market value of assets to reflect the investment gains and losses (the difference between the actual investment return and the expected investment return on the market-related value) during each of the previous five years at the rate of 20 percent per year. As these differences between actual investment returns and the expected investment returns are incorporated into the market-related value, the differences are recognized over the expected average remaining years of service for active employees.

Defined Contribution Plans

Xcel Energy, which includes PSCo, maintains 401(k) and other defined contribution plans that cover substantially all employees. The expense to these plans for PSCo was approximately $9.1 million in 2014, $8.7 million in 2013 and $8.6 million in 2012.

Postretirement Health Care Benefits

Xcel Energy, which includes PSCo, has a contributory health and welfare benefit plan that provides health care and death benefits to certain retirees. Xcel Energy discontinued contributing toward health care benefits for former NCE, which includes PSCo, nonbargaining employees retiring after June 30, 2003. Employees of NCE who retired in 2002 continue to receive employer-subsidized health care benefits. Nonbargaining employees of the former NCE who retired after 1998, bargaining employees of the former NCE who retired after 1999 and nonbargaining employees of NCE who retired after June 30, 2003, are eligible to participate in the Xcel Energy health care program with no employer subsidy.

In 1993, Xcel Energy Inc. and PSCo adopted accounting guidance regarding other non-pension postretirement benefits and elected to amortize the unrecognized APBO on a straight-line basis over 20 years.

Plan Assets — Certain state agencies that regulate Xcel Energy Inc.’s utility subsidiaries also have issued guidelines related to the funding of postretirement benefit costs. PSCo is required to fund postretirement benefit costs in irrevocable external trusts that are dedicated to the payment of these postretirement benefits. These assets are invested in a manner consistent with the investment strategy for the pension plan.

The following table presents the target postretirement asset allocations for Xcel Energy Inc. and PSCo at Dec. 31 for the upcoming year:



	2014		2013
Domestic and international equity securities	25	%	41	%
Short-to-intermediate fixed income securities	57		40
Alternative investments	13		13
Cash	5		6
Total	100	%	100	%

Xcel Energy Inc. and PSCo base the investment-return assumptions for the postretirement health care fund assets on expected long-term performance for each of the investment types included in the asset portfolio. Assumptions and target allocations are determined at the master trust level. The investment mix at each of Xcel Energy Inc.’s utility subsidiaries may vary from the investment mix of the total asset portfolio. The assets are invested in a portfolio according to Xcel Energy Inc.’s and PSCo’s return, liquidity and diversification objectives to provide a source of funding for plan obligations and minimize the necessity of contributions to the plan, within appropriate levels of risk. The principal mechanism for achieving these objectives is the projected allocation of assets to selected asset classes, given the long-term risk, return, correlation and liquidity characteristics of each particular asset class. There were no significant concentrations of risk in any particular industry, index, or entity. Market volatility can impact even well-diversified portfolios and significantly affect the return levels achieved by postretirement health care assets in any year.

The following tables present, for each of the fair value hierarchy levels, PSCo’s proportionate allocation of the total postretirement benefit plan assets that are measured at fair value as of Dec. 31, 2014 and 2013:



	Dec. 31, 2014
(Thousands of Dollars)	Level 1		Level 2			Level 3		Total
Cash equivalents ^(a)	$	23,566	$	—		$	—	$	23,566
Derivatives	—		166			—		166
Government securities	—		43,494			—		43,494
Insurance contracts	—		45,075			—		45,075
Corporate bonds	—		48,527			—		48,527
Asset-backed securities	—		3,240			—		3,240
Mortgage-backed securities	—		10,071			—		10,071
Commingled funds	—		252,790			—		252,790
Other	—		(1,647		)	—		(1,647		)
Total	$	23,566	$	401,716		$	—	$	425,282



	Dec. 31, 2013
(Thousands of Dollars)	Level 1		Level 2			Level 3		Total
Cash equivalents ^(a)	$	18,202	$	—		$	—	$	18,202
Derivatives	—		(370		)	—		(370		)
Government securities	—		52,028			—		52,028
Insurance contracts	—		47,029			—		47,029
Corporate bonds	—		46,186			—		46,186
Asset-backed securities	—		2,991			—		2,991
Mortgage-backed securities	—		21,593			—		21,593
Commingled funds	—		265,620			—		265,620
Other	—		(15,086		)	—		(15,086		)
Total	$	18,202	$	419,991		$	—	$	438,193


^(a)	Includes restricted cash of $0.9 million and $0.6 million at Dec. 31, 2014 and 2013, respectively.

For the year ended Dec. 31, 2014 there were no assets transferred in or out of Level 3. The following tables present the changes in PSCo’s Level 3 postretirement benefit plan assets for the years ended Dec. 31, 2013 and 2012:



(Thousands of Dollars)	Jan. 1, 2013		Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Purchases, Issuances and Settlements, Net		Transfers Out of Level 3 ^(a)			Dec. 31, 2013
Asset-backed securities	$	670	$	—	$	—	$	—	$	(670	)	$	—
Mortgage-backed securities	35,394		—		—		—		(35,394		)	—
Total	$	36,064	$	—	$	—	$	—	$	(36,064	)	$	—


^(a)	Transfers out of Level 3 into Level 2 were principally due to diminished use of unobservable inputs that were previously significant to these fair value measurements and were subsequently sold during 2013.



(Thousands of Dollars)	Jan. 1, 2012		Net Realized Gains (Losses)			Net Unrealized Gains (Losses)			Purchases, Issuances, and Settlements, Net			Transfers Out of Level 3		Dec. 31, 2012
Asset-backed securities	$	6,941	$	(293	)	$	1,669		$	(7,647	)	$	—	$	670
Mortgage-backed securities	24,038		(641		)	3,429			8,568			—		35,394
Private equity investments	479		—			(65		)	(414		)	—		—
Real estate	144		—			35			(179		)	—		—
Total	$	31,602	$	(934	)	$	5,068		$	328		$	—	$	36,064

Benefit Obligations — A comparison of the actuarially computed benefit obligation and plan assets for PSCo is presented in the following table:



(Thousands of Dollars)	2014			2013
Change in Projected Benefit Obligation:
Obligation at Jan. 1	$	508,971		$	599,831
Service cost	1,915			2,564
Interest cost	23,704			22,210
Medicare subsidy reimbursements	1,753			923
Plan amendments	—			(14,571		)
Plan participants’ contributions	4,625			4,589
Actuarial gain	(63,130		)	(76,889		)
Benefit payments	(34,085		)	(29,686		)
Obligation at Dec. 31	$	443,753		$	508,971



(Thousands of Dollars)	2014			2013
Change in Fair Value of Plan Assets:
Fair value of plan assets at Jan. 1	$	438,193		$	425,917
Actual return on plan assets	11,060			30,390
Plan participants’ contributions	4,625			4,589
Employer contributions	5,489			6,983
Benefit payments	(34,085		)	(29,686		)
Fair value of plan assets at Dec. 31	$	425,282		$	438,193



(Thousands of Dollars)	2014			2013
Funded Status at Dec. 31:
Funded status ^(a)	$	(18,471	)	$	(70,778	)


^(a)	Amounts are recognized in noncurrent liabilities on PSCo’s consolidated balance sheets.



(Thousands of Dollars)	2014			2013
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost:
Net loss	$	56,823		$	107,232
Prior service credit	(40,189		)	(46,436		)
Total	$	16,634		$	60,796



(Thousands of Dollars)	2014		2013
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost Have Been Recorded as Follows Based Upon Expected Recovery in Rates:
Current regulatory assets	$	—	$	8,798
Noncurrent regulatory assets	16,634		51,998
Total	$	16,634	$	60,796



Measurement date	Dec. 31, 2014	Dec. 31, 2013



	2014		2013
Significant Assumptions Used to Measure Benefit Obligations:
Discount rate for year-end valuation	4.08	%	4.82	%
Mortality table	RP 2014		RP 2000
Health care costs trend rate — initial	6.50	%	7.00	%

Effective Jan. 1, 2015, the initial medical trend rate was decreased from 7.0 percent to 6.5 percent. The ultimate trend assumption remained at 4.5 percent. The period until the ultimate rate is reached is four years. Xcel Energy Inc. and PSCo base the medical trend assumption on the long-term cost inflation expected in the health care market, considering the levels projected and recommended by industry experts, as well as recent actual medical cost increases experienced by the retiree medical plan.

A one-percent change in the assumed health care cost trend rate would have the following effects on PSCo:



	One-Percentage Point
(Thousands of Dollars)	Increase		Decrease
APBO	$	45,581	$	(38,371	)
Service and interest components	3,028		(2,488		)

Cash Flows — The postretirement health care plans have no funding requirements under income tax and other retirement-related regulations other than fulfilling benefit payment obligations, when claims are presented and approved under the plans. Additional cash funding requirements are prescribed by certain state and federal rate regulatory authorities, as discussed previously. Xcel Energy, which includes PSCo, contributed $17.1 million, $17.6 million and $47.1 million during 2014, 2013 and 2012, respectively, of which $5.5 million, $7.0 million and $27.5 million were attributable to PSCo. Xcel Energy expects to contribute approximately $12.8 million during 2015, of which amounts attributable to PSCo will be zero.

Plan Amendments — In 2014 there were no plan amendments made which affected the projected benefit obligation. The 2013 decrease of the projected Xcel Energy and PSCo postretirement health and welfare benefit obligation for plan amendments is due to changes in the participant co-pay structure for certain retiree groups.

Benefit Costs — The components of PSCo’s net periodic postretirement benefit costs were:



(Thousands of Dollars)	2014			2013			2012
Service cost	$	1,915		$	2,564		$	2,825
Interest cost	23,704			22,210			24,527
Expected return on plan assets	(30,214		)	(29,227		)	(25,056		)
Amortization of transition obligation	—			785			11,004
Amortization of prior service credit	(6,247		)	(7,666		)	(5,150		)
Amortization of net loss	6,434			13,699			10,930
Net periodic postretirement benefit (credit) cost	(4,408		)	2,365			19,080
Additional cost recognized due to effects of regulation	—			—			3,891
Net benefit (credit) cost recognized for financial reporting	$	(4,408	)	$	2,365		$	22,971



	2014		2013		2012
Significant Assumptions Used to Measure Costs:
Discount rate	4.82	%	4.10	%	5.00	%
Expected average long-term rate of return on assets	7.18		7.11		6.75

In addition to the benefit costs in the table above, for the postretirement health care plans sponsored by Xcel Energy Inc., costs are allocated to PSCo based on Xcel Energy Services Inc. employees’ labor costs.

Projected Benefit Payments

The following table lists PSCo’s projected benefit payments for the pension and postretirement benefit plans:



(Thousands of Dollars)	Projected Pension Benefit Payments		Gross Projected Postretirement Health Care Benefit Payments		Expected Medicare Part D Subsidies		Net Projected Postretirement Health Care Benefit Payments
2015	$	74,237	$	32,300	$	2,532	$	29,768
2016	77,804		32,991		2,692		30,299
2017	77,126		33,328		2,863		30,465
2018	80,003		34,146		3,033		31,113
2019	82,472		34,053		3,192		30,861
2020-2024	423,835		165,560		18,053		147,507