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Employee Benefit Plans
6 Months Ended
Jun. 30, 2019
Compensation And Retirement Disclosure [Abstract]  
Employee Benefit Plans

10. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost recorded by DESC were as follows:

 

(millions)

 

Pension Benefits

 

 

Other Postretirement Benefits

 

Three Months Ended June 30,

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Service cost

 

$

3

 

 

$

4

 

 

$

 

 

$

1

 

Interest cost

 

 

7

 

 

 

7

 

 

 

2

 

 

 

2

 

Expected return on assets

 

 

(10

)

 

 

(12

)

 

 

 

 

 

 

Amortization of actuarial losses

 

 

3

 

 

 

3

 

 

 

 

 

 

1

 

Curtailment(1)

 

 

6

 

 

 

 

 

 

3

 

 

 

 

Net periodic benefit cost

 

$

9

 

 

$

2

 

 

$

5

 

 

$

4

 

Six Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

7

 

 

$

8

 

 

$

1

 

 

$

2

 

Interest cost

 

 

15

 

 

 

15

 

 

 

4

 

 

 

4

 

Expected return on assets

 

 

(20

)

 

 

(24

)

 

 

 

 

 

 

Amortization of actuarial losses

 

 

7

 

 

 

5

 

 

 

 

 

 

1

 

Curtailment(1)

 

 

6

 

 

 

 

 

 

3

 

 

 

 

Net periodic benefit cost

 

$

15

 

 

$

4

 

 

$

8

 

 

$

7

 

 

(1) Related to a voluntary retirement program.

 

No significant contribution to the pension trust is expected for the remainder of 2019 based on current market conditions and assumptions, nor is a limitation on benefit payments expected to apply. DESC recovers current pension costs through either a rate rider that may be adjusted annually for retail electric operations or through cost of service rates for gas operations.

 

Voluntary Retirement Program

In March 2019, Dominion Energy announced a voluntary retirement program to employees, including employees of DESC, that meet certain age and service requirements. The voluntary retirement program will not compromise safety or DESC’s ability to comply with applicable laws and regulations. In the second quarter of 2019, upon the determinations made concerning the number of employees that elected to participate in the program, DESC recorded a charge of $62 million ($47 million after-tax), of which $50 million was included within other operations and maintenance expense, $3 million within other taxes and $9 million within other income (expense), net.

 

In the second quarter of 2019, DESC remeasured its pension and other postretirement benefit plans as a result of the voluntary retirement program.  The remeasurement resulted in an increase in the pension benefit obligation of $16 million and an increase in the accumulated postretirement benefit obligation of $10 million. In addition, the remeasurement resulted in an increase in the fair value of pension plan assets of $27 million. The impact of the remeasurement on net periodic benefit cost was recognized prospectively from the remeasurement date. The remeasurement is expected to increase the net periodic benefit cost for 2019 by approximately $1 million, excluding the impacts of curtailments. The discount rate used for the remeasurement was 4.07% for the pension plan and 4.08% for the other postretirement benefit plan. All other assumptions used for the remeasurement were consistent with the measurement as of December 31, 2018.