Pension and Other Postretirement Benefits

(8) PENSION AND OTHER POSTRETIREMENT BENEFITS

The table below provides the components of net periodic benefit costs recognized by Pepco Holdings for the three months ended June 30, 2015 and 2014:


	Pension Benefits						Other Postretirement Benefits
	2015			2014			2015			2014
	*(millions of dollars)*
Service cost	$	14		$	9		$	1		$	2
Interest cost		27			28			6			6
Expected return on plan assets		(35	)		(36	)		(5	)		(6	)
Amortization of prior service cost (benefit)		1			1			(3	)		(4	)
Amortization of net actuarial loss		17			11			1			(1	)

Net periodic benefit cost	$	24		$	13		$	—		$	(3	)

The table below provides the components of net periodic benefit costs recognized by Pepco Holdings for the six months ended June 30, 2015 and 2014:


	Pension Benefits						Other Postretirement Benefits
	2015			2014			2015			2014
	*(millions of dollars)*
Service cost	$	28		$	21		$	3		$	4
Interest cost		54			55			12			13
Expected return on plan assets		(70	)		(71	)		(11	)		(12	)
Amortization of prior service cost (benefit)		1			1			(6	)		(7	)
Amortization of net actuarial loss		33			22			4			2

Net periodic benefit cost	$	46		$	28		$	2		$	—

Pension and Other Postretirement Benefits

Net periodic benefit cost related to continuing operations is included in Other operation and maintenance expense, net of the portion of the net periodic benefit cost that is capitalized as part of the cost of labor for internal construction projects. PHI anticipates approximately 36% of annual net periodic pension and other postretirement benefit costs will be capitalized.

Pension Contributions

PHI’s funding policy with regard to PHI’s non-contributory retirement plan (the PHI Retirement Plan) is to maintain a funding level that is at least equal to the target liability as defined under the Pension Protection Act of 2006. In the first and second quarters of 2015 and 2014, PHI, Pepco, DPL and ACE made no discretionary tax-deductible contributions to the PHI Retirement Plan.

Pension and Other Postretirement Benefits

(7) PENSION AND OTHER POSTRETIREMENT BENEFITS

Pepco accounts for its participation in PHI’s single-employer plans, PHI’s noncontributory retirement plan (the PHI Retirement Plan) and its other postretirement benefits plan, the Pepco Holdings, Inc. Welfare Plan for Retirees (the OPEB Plan), as participation in multiemployer plans. PHI’s pension and other postretirement net periodic benefit cost for the three months ended June 30, 2015 and 2014, before intercompany allocations from the PHI Service Company, were $24 million and $10 million, respectively. Pepco’s allocated share was $7 million and $4 million, respectively, for the three months ended June 30, 2015 and 2014. PHI’s pension and other postretirement net periodic benefit cost for the six months ended June 30, 2015 and 2014, before intercompany allocations from the PHI Service Company, were $48 million and $28 million, respectively. Pepco’s allocated share was $15 million and $11 million, respectively, for the six months ended June 30, 2015 and 2014.

In the first and second quarters of 2015 and 2014, Pepco made no discretionary tax-deductible contributions to the PHI Retirement Plan.

Pension and Other Postretirement Benefits

(8) PENSION AND OTHER POSTRETIREMENT BENEFITS

DPL accounts for its participation in PHI’s single-employer plans, PHI’s noncontributory retirement plan (the PHI Retirement Plan) and its other postretirement benefits plan, the Pepco Holdings, Inc. Welfare Plan for Retirees (the OPEB Plan), as participation in multiemployer plans. PHI’s pension and other postretirement net periodic benefit cost for the three months ended June 30, 2015 and 2014, before intercompany allocations from the PHI Service Company, were $24 million and $10 million, respectively. DPL’s allocated share was $4 million and $1 million for the three months ended June 30, 2015 and 2014, respectively. PHI’s pension and other postretirement net periodic benefit cost for the six months ended June 30, 2015 and 2014, before intercompany allocations from the PHI Service Company, were $48 million and $28 million, respectively. DPL’s allocated share was $8 million and $4 million for the six months ended June 30, 2015 and 2014, respectively.

In the first and second quarters of 2015 and 2014, DPL made no discretionary tax-deductible contributions to the PHI Retirement Plan.

Pension and Other Postretirement Benefits

(7) PENSION AND OTHER POSTRETIREMENT BENEFITS

ACE accounts for its participation in PHI’s single-employer plans, PHI’s noncontributory retirement plan (the PHI Retirement Plan) and its other postretirement benefits plan, the Pepco Holdings, Inc. Welfare Plan for Retirees (the OPEB Plan), as participation in multiemployer plans. PHI’s pension and other postretirement net periodic benefit cost for the three months ended June 30, 2015 and 2014, before intercompany allocations from the PHI Service Company, were $24 million and $10 million, respectively. ACE’s allocated share was $4 million and $2 million for the three months ended June 30, 2015 and 2014, respectively. PHI’s pension and other postretirement net periodic benefit cost for the six months ended June 30, 2015 and 2014, before intercompany allocations from the PHI Service Company, were $48 million and $28 million, respectively. ACE’s allocated share was $8 million and $6 million for the six months ended June 30, 2015 and 2014, respectively.

In the first and second quarters of 2015 and 2014, ACE made no discretionary tax-deductible contributions to the PHI Retirement Plan.