Pension and Other Postretirement Benefits (OPEB)

PSEG sponsors several qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria.

Effective January 1, 2016, PSEG changed the approach used to measure future service and interest costs for pension benefits. For 2015 and prior, PSEG calculated service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. For 2016 and beyond, PSEG has elected to calculate service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. PSEG believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of the plan obligations. As a change in accounting estimate, this change is being reflected prospectively. Pension and OPEB costs, net of amounts capitalized, were reduced by $8 million and $3 million, for the three months ended June 30, 2016 respectively, and $17 million and $6 million for the six months ended June 30, 2016, respectively, as compared to the 2016 amounts that would have been derived from applying PSEG's 2015 and prior years' methodology.

The following table provides the components of net periodic benefit costs relating to all qualified and nonqualified pension and OPEB plans on an aggregate basis.

Pension and OPEB costs for PSEG, except for Servco, are detailed as follows:




	Pension Benefits						OPEB						Pension Benefits						OPEB
	Three Months Ended						Three Months Ended						Six Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2016			2015			2016			2015			2016			2015			2016			2015
	Millions
Components of Net Periodic Benefit Costs
Service Cost	$	27		$	31		$	4		$	6		$	54		$	62		$	8		$	11
Interest Cost	51			58			14			17			101			117			29			34
Expected Return on Plan Assets	(99		)	(104		)	(7		)	(8		)	(197		)	(207		)	(15		)	(15		)
Amortization of Net
Prior Service Cost (Credit)	(5		)	(4		)	(4		)	(4		)	(9		)	(9		)	(7		)	(7		)
Actuarial Loss	40			37			10			11			79			74			20			21
Total Benefit Costs	$	14		$	18		$	17		$	22		$	28		$	37		$	35		$	44

Pension and OPEB costs for PSE&G, Power and PSEG’s other subsidiaries, except for Servco, are detailed as follows:




	Pension Benefits				OPEB				Pension Benefits				OPEB
	Three Months Ended				Three Months Ended				Six Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2016		2015		2016		2015		2016		2015		2016		2015
	Millions
PSE&G	$	7	$	10	$	11	$	14	$	14	$	20	$	22	$	28
Power	4		5		5		6		8		11		11		13
Other	3		3		1		2		6		6		2		3
Total Benefit Costs	$	14	$	18	$	17	$	22	$	28	$	37	$	35	$	44

During the three months ended March 31, 2016, PSEG contributed its entire planned contributions for the year 2016 of $21 million into its pension plans and $14 million into its OPEB plan.

Servco Pension and OPEB

At the direction of LIPA, Servco sponsors benefit plans that cover its current and former employees who meet certain eligibility criteria. Under the OSA, all of these and any future employee benefit costs are to be funded by LIPA. See Note 3. Variable Interest Entities. These obligations, as well as the offsetting long-term receivable, are separately presented on the Condensed Consolidated Balance Sheet of PSEG.

Servco amounts are not included in any of the preceding pension and OPEB benefit cost disclosures. Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. Servco plans to contribute $28 million into its pension plan during 2016. Servco's pension-related revenues and costs were $6 million and $7 million for the three months ended June 30, 2016 and 2015, respectively, and $12 million and $13 million for the six months ended June 30, 2016 and 2015, respectively. The OPEB-related revenues earned and costs incurred for each of the three months and six months ended June 30, 2016 and 2015 were immaterial.

Defined Benefit Plan Disclosure [Line Items]

Pension and Other Postretirement Benefits (OPEB)

PSEG sponsors several qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria.

Effective January 1, 2016, PSEG changed the approach used to measure future service and interest costs for pension benefits. For 2015 and prior, PSEG calculated service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. For 2016 and beyond, PSEG has elected to calculate service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. PSEG believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of the plan obligations. As a change in accounting estimate, this change is being reflected prospectively. Pension and OPEB costs, net of amounts capitalized, were reduced by $8 million and $3 million, for the three months ended June 30, 2016 respectively, and $17 million and $6 million for the six months ended June 30, 2016, respectively, as compared to the 2016 amounts that would have been derived from applying PSEG's 2015 and prior years' methodology.

The following table provides the components of net periodic benefit costs relating to all qualified and nonqualified pension and OPEB plans on an aggregate basis.

Pension and OPEB costs for PSEG, except for Servco, are detailed as follows:




	Pension Benefits						OPEB						Pension Benefits						OPEB
	Three Months Ended						Three Months Ended						Six Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2016			2015			2016			2015			2016			2015			2016			2015
	Millions
Components of Net Periodic Benefit Costs
Service Cost	$	27		$	31		$	4		$	6		$	54		$	62		$	8		$	11
Interest Cost	51			58			14			17			101			117			29			34
Expected Return on Plan Assets	(99		)	(104		)	(7		)	(8		)	(197		)	(207		)	(15		)	(15		)
Amortization of Net
Prior Service Cost (Credit)	(5		)	(4		)	(4		)	(4		)	(9		)	(9		)	(7		)	(7		)
Actuarial Loss	40			37			10			11			79			74			20			21
Total Benefit Costs	$	14		$	18		$	17		$	22		$	28		$	37		$	35		$	44

Pension and OPEB costs for PSE&G, Power and PSEG’s other subsidiaries, except for Servco, are detailed as follows:




	Pension Benefits				OPEB				Pension Benefits				OPEB
	Three Months Ended				Three Months Ended				Six Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2016		2015		2016		2015		2016		2015		2016		2015
	Millions
PSE&G	$	7	$	10	$	11	$	14	$	14	$	20	$	22	$	28
Power	4		5		5		6		8		11		11		13
Other	3		3		1		2		6		6		2		3
Total Benefit Costs	$	14	$	18	$	17	$	22	$	28	$	37	$	35	$	44

During the three months ended March 31, 2016, PSEG contributed its entire planned contributions for the year 2016 of $21 million into its pension plans and $14 million into its OPEB plan.

Servco Pension and OPEB

At the direction of LIPA, Servco sponsors benefit plans that cover its current and former employees who meet certain eligibility criteria. Under the OSA, all of these and any future employee benefit costs are to be funded by LIPA. See Note 3. Variable Interest Entities. These obligations, as well as the offsetting long-term receivable, are separately presented on the Condensed Consolidated Balance Sheet of PSEG.

Servco amounts are not included in any of the preceding pension and OPEB benefit cost disclosures. Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. Servco plans to contribute $28 million into its pension plan during 2016. Servco's pension-related revenues and costs were $6 million and $7 million for the three months ended June 30, 2016 and 2015, respectively, and $12 million and $13 million for the six months ended June 30, 2016 and 2015, respectively. The OPEB-related revenues earned and costs incurred for each of the three months and six months ended June 30, 2016 and 2015 were immaterial.