Retirement and Postemployment Benefits (Tables)
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12 Months Ended |
Dec. 31, 2012
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Net Periodic Defined Benefit Costs (Credits) [Line Items] |
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Schedule Of Net Periodic Defined Benefit Costs (Credits) |
The following disclosures distinguish between the domestic (U.S.) and WPD (U.K.) pension plans. | | | | Pension Benefits | | | | | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010 | PPL | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net periodic defined benefit costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (credits): | | | | | | | | | | | | | | | | | | | | | | | | | | | | Service cost | | $ | 103 | | $ | 95 | | $ | 64 | | $ | 54 | | $ | 44 | | $ | 17 | | $ | 12 | | $ | 12 | | $ | 8 | Interest cost | | | 220 | | | 217 | | | 159 | | | 340 | | | 282 | | | 151 | | | 31 | | | 33 | | | 28 | Expected return on plan assets | | | (259) | | | (245) | | | (184) | | | (458) | | | (338) | | | (202) | | | (23) | | | (23) | | | (20) | Amortization of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transition (asset) obligation | | | | | | | | | | | | | | | | | | | | | 2 | | | 2 | | | 5 | | | Prior service cost | | | 24 | | | 24 | | | 21 | | | 4 | | | 4 | | | 4 | | | 1 | | | | | | 4 | | | Actuarial (gain) loss | | | 42 | | | 30 | | | 8 | | | 79 | | | 57 | | | 48 | | | 4 | | | 6 | | | 6 | Net periodic defined benefit costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (credits) prior to settlement | | | | | | | | | | | | | | | | | | | | | | | | | | | | | charges and termination benefits | | | 130 | | | 121 | | | 68 | | | 19 | | | 49 | | | 18 | | | 27 | | | 30 | | | 31 | Settlement charges | | | 11 | | | | | | | | | | | | | | | | | | | | | | | | | Termination benefits (a) | | | | | | | | | | | | 2 | | | 50 | | | | | | | | | | | | | Net periodic defined benefit costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (credits) | | $ | 141 | | $ | 121 | | $ | 68 | | $ | 21 | | $ | 99 | | $ | 18 | | $ | 27 | | $ | 30 | | $ | 31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other Changes in Plan Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | and Benefit Obligations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Recognized in OCI and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Regulatory Assets/Liabilities - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Settlements | | $ | (11) | | | | | | | | | | | | | | | | | | | | | | | | | Net (gain) loss | | | 372 | | $ | 117 | | $ | 142 | | $ | 1,073 | | $ | 152 | | $ | 17 | | $ | 13 | | $ | (9) | | $ | 20 | Prior service cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (credit) | | | | | | 8 | | | | | | | | | | | | | | | (1) | | | 10 | | | (71) | Amortization of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transition asset | | | | | | | | | | | | | | | | | | | | | (2) | | | (2) | | | (5) | | | Prior service cost | | | (24) | | | (24) | | | (21) | | | (4) | | | (4) | | | (4) | | | (1) | | | | | | (4) | | | Actuarial gain (loss) | | | (42) | | | (30) | | | (7) | | | (79) | | | (57) | | | (48) | | | (4) | | | (6) | | | (6) | Acquisition of regulatory assets/ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transition obligation | | | | | | | | | | | | | | | | | | | | | | | | | | | 4 | | | Prior service cost | | | | | | | | | 31 | | | | | | | | | | | | | | | | | | 6 | | | Actuarial (gain) loss | | | | | | | | | 303 | | | | | | | | | | | | | | | | | | (2) | Total recognized in OCI and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | regulatory assets/liabilities (b) | | | 295 | | | 71 | | | 448 | | | 990 | | | 91 | | | (35) | | | 5 | | | (7) | | | (58) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total recognized in net periodic | | | | | | | | | | | | | | | | | | | | | | | | | | | | | defined benefit costs, OCI and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | regulatory assets/liabilities (b) | | $ | 436 | | $ | 192 | | $ | 516 | | $ | 1,011 | | $ | 190 | | $ | (17) | | $ | 32 | | $ | 23 | | $ | (27) |
(a) Related to the WPD Midlands separations in the U.K. (b) WPD is not subject to accounting for the effects of certain types of regulation as prescribed by GAAP. As a result, WPD does not record regulatory assets/liabilities. |
Schedule of Amounts Recognized in Other Comprehensive Income and Regulatory Assets and Liabilities |
For PPL's U.S. pension benefits and for other postretirement benefits, the amounts recognized in OCI and regulatory assets/liabilities for the years ended December 31 were as follows: | | | U.S. Pension Benefits | | | Other Postretirement Benefits | | | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | | | | | | | | | | | | | | | | | | | | | OCI | | $ | 181 | | $ | 47 | | $ | 84 | | $ | 12 | | $ | (6) | | $ | (40) | Regulatory assets/liabilities | | | 114 | | | 24 | | | 364 | | | (7) | | | (1) | | | (18) | Total recognized in OCI and | | | | | | | | | | | | | | | | | | | | regulatory assets/liabilities | | $ | 295 | | $ | 71 | | $ | 448 | | $ | 5 | | $ | (7) | | $ | (58) |
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Schedule of Amounts to be Amortized from AOCI and Regulatory Assets/Liabilities in Next Fiscal Year |
The estimated amounts to be amortized from AOCI and regulatory assets/liabilities into net periodic defined benefit costs in 2013 are as follows: | | | | | | | | Other | | | Pension Benefits | | Postretirement | | | U.S. | | U.K. | | Benefits | | | | | | | | | | | Prior service cost | | $ | 22 | | | | | | | Actuarial loss | | | 78 | | $ | 154 | | $ | 6 | Total | | $ | 100 | | $ | 154 | | $ | 6 | | | | | | | | | | | Amortization from Balance Sheet: | | | | | | | | | | AOCI | | $ | 43 | | $ | 154 | | $ | 3 | Regulatory assets/liabilities | | | 57 | | | | | | 3 | Total | | $ | 100 | | $ | 154 | | $ | 6 |
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Schedule of Net Periodic Defined Benefit Costs Included in Income Statement |
Net periodic defined benefit costs (credits) charged to operating expense, excluding amounts charged to construction and other non-expense accounts were: | | Pension Benefits | | | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010(a) | | 2012 | | 2011 | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PPL | | $ | 119 | | $ | 98 | | $ | 59 | | $ | 25 | | $ | 82 | | $ | 16 | | $ | 22 | | $ | 24 | | $ | 27 | PPL Energy Supply | | | 37 | | | 27 | | | 24 | | | | | | | | | 16 | | | 6 | | | 7 | | | 12 | PPL Electric (b) | | | 19 | | | 14 | | | 12 | | | | | | | | | | | | 3 | | | 4 | | | 8 |
(a) As a result of PPL Energy Supply's January 2011 distribution of its membership interest in PPL Global to its parent, PPL Energy Funding, these amounts are included in "Income (Loss) from Discontinued Operations (net of income taxes)" on PPL Energy Supply's Statements of Income. See Note 9 for additional information. (b) PPL Electric does not directly sponsor any defined benefit plans. PPL Electric was allocated these costs of defined benefit plans sponsored by PPL Services, based on its participation in those plans, which management believes are reasonable. |
Defined Benefit Plan Assumptions and Impact of One Point Change on Postretirement Plans |
The following weighted-average assumptions were used in the valuation of the benefit obligations at December 31. | | | Pension Benefits | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | | 2012 | | 2011 | | 2012 | | 2011 | | 2012 | | 2011 | PPL | | | | | | | | | | | | | | | | | | | | Discount rate | | | 4.22% | | | 5.06% | | | 4.27% | | | 5.24% | | | 4.00% | | | 4.80% | | Rate of compensation increase | | | 3.98% | | | 4.02% | | | 4.00% | | | 4.00% | | | 3.97% | | | 4.00% | | | | | | | | | | | | | | | | | | | | PPL Energy Supply | | | | | | | | | | | | | | | | | | | | Discount rate | | | 4.25% | | | 5.12% | | | | | | | | | 3.77% | | | 4.60% | | Rate of compensation increase | | | 3.95% | | | 4.00% | | | | | | | | | 3.95% | | | 4.00% |
The following weighted-average assumptions were used to determine the net periodic defined benefit costs for the year ended December 31. | | | Pension Benefits | | | | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010 | PPL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount rate | | | 5.06% | | | 5.42% | | | 5.96% | | | 5.24% | | | 5.59% | | | 5.59% | | | 4.80% | | | 5.14% | | | 5.47% | | Rate of compensation increase | | | 4.02% | | | 4.88% | | | 4.79% | | | 4.00% | | | 3.75% | | | 4.00% | | | 4.00% | | | 4.90% | | | 4.78% | | Expected return on plan assets (a) | | | 7.07% | | | 7.25% | | | 7.96% | | | 7.17% | | | 7.04% | | | 7.91% | | | 5.99% | | | 6.57% | | | 6.90% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PPL Energy Supply | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount rate | | | 5.12% | | | 5.47% | | | 6.00% | | | | | | | | | 5.59% | | | 4.60% | | | 4.95% | | | 5.55% | | Rate of compensation increase | | | 4.00% | | | 4.75% | | | 4.75% | | | | | | | | | 4.00% | | | 4.00% | | | 4.75% | | | 4.75% | | Expected return on plan assets (a) | | | 7.00% | | | 7.25% | | | 8.00% | | | | | | | | | 7.91% | | | N/A | | | N/A | | | N/A |
(PPL, PPL Energy Supply, LKE and LG&E) (a) The expected long-term rates of return for PPL's, PPL Energy Supply's, LKE's and LG&E's U.S. pension and other postretirement benefits have been developed using a best-estimate of expected returns, volatilities and correlations for each asset class. The best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes. PPL management corroborates these rates with expected long-term rates of return calculated by its independent actuary, who uses a building block approach that begins with a risk-free rate of return with factors being added such as inflation, duration, credit spreads and equity risk. Each plan's specific asset allocation is also considered in developing a reasonable return assumption. The expected long-term rates of return for PPL's U.K. pension plans have been developed by PPL management with assistance from an independent actuary using a best estimate of expected returns, volatilities and correlations for each asset class. The best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes. The following table provides the assumed health care cost trend rates for the year ended December 31: | | | | | 2012 | | 2011 | | 2010 | PPL and PPL Energy Supply | | | | | | | | | | | Health care cost trend rate assumed for next year | | | | | | | | | | | | | - obligations | | | 8.0% | | | 8.5% | | | 9.0% | | | | - cost | | | 8.5% | | | 9.0% | | | 8.0% | | Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | | | | | | | | | | | | | - obligations | | | 5.5% | | | 5.5% | | | 5.5% | | | | - cost | | | 5.5% | | | 5.5% | | | 5.5% | | Year that the rate reaches the ultimate trend rate | | | | | | | | | | | | | - obligations | | | 2019 | | | 2019 | | | 2019 | | | | - cost | | | 2019 | | | 2019 | | | 2016 |
A one percentage point change in the assumed health care costs trend rate assumption would have had the following effects on the other postretirement benefit plans in 2012: | | | One Percentage Point | | | | Increase | | Decrease | Effect on accumulated postretirement benefit obligation | | | | | | | | PPL | | $ | 7 | | $ | (6) | | LKE | | | 5 | | | (4) |
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Schedule of Funded Status of Defined Benefit Plans |
The funded status of the PPL plans was as follows: | | | | Pension Benefits | | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | | | 2012 | | 2011 | | 2012 | | 2011 | | 2012 | | 2011 | Change in Benefit Obligation | | | | | | | | | | | | | | | | | | | Benefit Obligation, beginning of period | | $ | 4,381 | | $ | 4,007 | | $ | 6,638 | | $ | 2,841 | | $ | 687 | | $ | 667 | | | Service cost | | | 103 | | | 95 | | | 54 | | | 44 | | | 12 | | | 12 | | | Interest cost | | | 220 | | | 217 | | | 340 | | | 282 | | | 31 | | | 33 | | | Participant contributions | | | | | | | | | 15 | | | 11 | | | 6 | | | 5 | | | Plan amendments | | | | | | 8 | | | | | | | | | (1) | | | 10 | | | Actuarial loss | | | 546 | | | 220 | | | 1,081 | | | 257 | | | 31 | | | 6 | | | Acquisition (a) | | | | | | | | | | | | 3,501 | | | | | | | | | Settlements | | | (25) | | | | | | | | | | | | | | | | | | Termination benefits | | | | | | | | | 2 | | | 50 | | | | | | | | | Net transfer in (out) | | | | | | | | | 12 | | | | | | | | | | | | Actual expenses paid | | | (3) | | | | | | | | | | | | | | | | | | Gross benefits paid | | | (176) | | | (166) | | | (397) | | | (309) | | | (46) | | | (47) | | | Federal subsidy | | | | | | | | | | | | | | | 2 | | | 1 | | | Currency conversion | | | | | | | | | 143 | | | (39) | | | | | | | Benefit Obligation, end of period | | | 5,046 | | | 4,381 | | | 7,888 | | | 6,638 | | | 722 | | | 687 | | | | | | | | | | | | | | | | | | | | | | Change in Plan Assets | | | | | | | | | | | | | | | | | | | Plan assets at fair value, beginning of period | | | 3,471 | | | 2,819 | | | 6,351 | | | 2,524 | | | 391 | | | 360 | | | Actual return on plan assets | | | 432 | | | 349 | | | 476 | | | 444 | | | 42 | | | 38 | | | Employer contributions | | | 239 | | | 470 | | | 341 | | | 164 | | | 27 | | | 33 | | | Participant contributions | | | | | | | | | 15 | | | 11 | | | 5 | | | 5 | | | Acquisition (a) | | | | | | | | | | | | 3,567 | | | | | | | | | Settlements | | | (25) | | | | | | | | | | | | | | | | | | Actual expenses paid | | | (2) | | | (1) | | | | | | | | | | | | | | | Gross benefits paid | | | (176) | | | (166) | | | (397) | | | (309) | | | (44) | | | (45) | | | Currency conversion | | | | | | | | | 125 | | | (50) | | | | | | | Plan assets at fair value, end of period | | | 3,939 | | | 3,471 | | | 6,911 | | | 6,351 | | | 421 | | | 391 | | | | | | | | | | | | | | | | | | | | | | Funded Status, end of period | | $ | (1,107) | | $ | (910) | | $ | (977) | | $ | (287) | | $ | (301) | | $ | (296) | | | | | | | | | | | | | | | | | | | | | | Amounts recognized in the Balance | | | | | | | | | | | | | | | | | | | | Sheets consist of: | | | | | | | | | | | | | | | | | | | | | Noncurrent asset | | | | | | | | | | | $ | 130 | | | | | | | | | Current liability | | $ | (8) | | $ | (29) | | | | | | | | $ | (1) | | $ | (1) | | | Noncurrent liability | | | (1,099) | | | (881) | | $ | (977) | | | (417) | | | (300) | | | (295) | Net amount recognized, end of period | | $ | (1,107) | | $ | (910) | | $ | (977) | | $ | (287) | | $ | (301) | | $ | (296) | | | | | | | | | | | | | | | | | | | | | | Amounts recognized in AOCI and | | | | | | | | | | | | | | | | | | | | regulatory assets/liabilities (pre-tax) | | | | | | | | | | | | | | | | | | | | consist of: | | | | | | | | | | | | | | | | | | | Transition obligation | | | | | | | | | | | | | | | | | $ | 2 | Prior service cost (credit) | | $ | 91 | | $ | 115 | | $ | 1 | | $ | 3 | | $ | (7) | | | (5) | Net actuarial loss | | | 1,241 | | | 922 | | | 2,184 | | | 1,191 | | | 106 | | | 97 | Total (b) | | $ | 1,332 | | $ | 1,037 | | $ | 2,185 | | $ | 1,194 | | $ | 99 | | $ | 94 | | | | | | | | | | | | | | | | | | | | | | Total accumulated benefit obligation | | | | | | | | | | | | | | | | | | | | for defined benefit pension plans | | $ | 4,569 | | $ | 3,949 | | $ | 7,259 | | $ | 6,144 | | | | | | |
(a) Includes the pension plans of WPD Midlands, which was acquired in 2011. See Note 10 for additional information. (b) WPD is not subject to accounting for the effects of certain types of regulation as prescribed by GAAP. As a result, WPD does not record regulatory assets/liabilities. For PPL's U.S. pension and other postretirement benefit plans, the amounts recognized in AOCI and regulatory assets/liabilities at December 31 were as follows: | | | U.S. Pension Benefits | | Other Postretirement Benefits | | | | 2012 | | 2011 | | 2012 | | 2011 | | | | | | | | | | | AOCI | | $ | 659 | | $ | 481 | | $ | 59 | | $ | 56 | Regulatory assets/liabilities | | | 673 | | | 556 | | | 40 | | | 38 | Total | | $ | 1,332 | | $ | 1,037 | | $ | 99 | | $ | 94 |
For the U.K. pension plans of PPL WW, projected and accumulated benefit obligations were in excess of plan assets at December 31 as follows (in billions): | | 2012 | | 2011 | | | | | | | | Projected benefit obligation | | $ | 3.6 | | $ | 3.0 | Accumulated benefit obligation | | | 3.3 | | | 2.8 | Fair value of plan assets | | | 2.8 | | | 2.6 |
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Contributions Made to Multiemployer Plans |
The table below details total contributions to all multiemployer pension and other postretirement plans, including the plan identified as significant above. | | 2012 | | 2011 | | 2010 | | | | | | | | | | | Pension Plans | | $ | 31 | | $ | 36 | | $ | 26 | Other Postretirement Medical Plans | | | 28 | | | 31 | | | 23 | Total Contributions | | $ | 59 | | $ | 67 | | $ | 49 |
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Schedules of Asset Allocation of U.S. Pension Trusts Assets |
The asset allocation for the trusts and the target allocation by portfolio, at December 31, are as follows: PPL Services Corporation Master Trust | | | | | | | | | 2012 Target Asset Allocation (a) | | | | Percentage of trust assets | | | Weighted | | | | | | | | | | 2012 (a) | | | 2011 | | | Average | | | PPL Plans | | | LKE Plans | | | | | | | | | | | | | | | | | Growth Portfolio | | | 58% | | | 57% | | | 56% | | | 55% | | | 59% | | Equity securities | | | 31% | | | 31% | | | | | | | | | | | Debt securities (b) | | | 18% | | | 17% | | | | | | | | | | | Alternative investments | | | 9% | | | 9% | | | | | | | | | | Immunizing Portfolio | | | 41% | | | 41% | | | 42% | | | 43% | | | 38% | | Debt securities (b) | | | 40% | | | 40% | | | | | | | | | | | Derivatives | | | 1% | | | 1% | | | | | | | | | | Liquidity Portfolio | | | 1% | | | 2% | | | 2% | | | 2% | | | 3% | Total | | | 100% | | | 100% | | | 100% | | | 100% | | | 100% |
(a) Allocations exclude consideration of cash for the WKE Bargaining Employees' Retirement Plan and a guaranteed annuity contract held by the LG&E and KU Retirement Plan. (b) Includes commingled debt funds, which PPL treats as debt securities for asset allocation purposes. LG&E and KU Energy LLC Pension Trusts | | | | | | | | | | Percentage | | Target Asset | | | | of trust assets | | Allocation | | | 2011 | | 2011 | | | | | | | | | Growth Portfolio | | | 54% | | | 59% | | Equity securities | | | 33% | | | | | Debt securities (a) | | | 21% | | | | Immunizing Portfolio | | | 34% | | | 38% | | Debt securities (a) (b) | | | 34% | | | | Liquidity Portfolio (b) | | | 12% | | | 3% | Total | | | 100% | | | 100% |
a) Includes commingled debt funds, which LKE treats as debt securities for asset allocation purposes. (b) The asset allocation for this portfolio was not within the established target range due to the transition of assets at the end of 2011 in anticipation of transfer into the PPL Services Corporation Master Trust in January 2012. |
Schedule of Fair Value of Financial Assets for U.S. Pension Plan Assets |
The fair value of net assets in the U.S. pension plan trusts by asset class and level within the fair value hierarchy was: | | | | | December 31, 2012 | | December 31, 2011 | | | | | | | | | Fair Value Measurements Using | | | | | Fair Value Measurements Using | | | | | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | PPL Services Corporation Master Trust | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | $ | 84 | | $ | 84 | | | | | | | | $ | 78 | | $ | 78 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | | 558 | | | 206 | | $ | 352 | | | | | | 371 | | | 247 | | $ | 124 | | | | | | | Small-cap | | | 124 | | | 124 | | | | | | | | | 112 | | | 112 | | | | | | | | | | Commingled debt | | | 676 | | | 56 | | | 620 | | | | | | 458 | | | | | | 458 | | | | | | International | | | 557 | | | 184 | | | 373 | | | | | | 299 | | | 102 | | | 197 | | | | Debt securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Treasury and U.S. government sponsored | | | | | | | | | | | | | | | | | | | | | | | | | | | | agency | | | 704 | | | 634 | | | 70 | | | | | | 515 | | | 443 | | | 72 | | | | | | Residential/commercial backed securities | | | 12 | | | | | | 11 | | $ | 1 | | | 9 | | | | | | 9 | | | | | | Corporate | | | 874 | | | | | | 847 | | | 27 | | | 446 | | | | | | 439 | | $ | 7 | | | Other | | | 24 | | | | | | 23 | | | 1 | | | 10 | | | | | | 10 | | | | | | International | | | 7 | | | | | | 7 | | | | | | 6 | | | | | | 6 | | | | Alternative investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | Commodities | | | 59 | | | | | | 59 | | | | | | | | | | | | | | | | | | Real estate | | | 93 | | | | | | 93 | | | | | | 85 | | | | | | 85 | | | | | | Private equity | | | 75 | | | | | | | | | 75 | | | 45 | | | | | | | | | 45 | | | Hedge funds | | | 125 | | | | | | 125 | | | | | | 92 | | | | | | 92 | | | | Derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps and swaptions | | | 36 | | | | | | 36 | | | | | | 20 | | | | | | 20 | | | | | | Other | | | 2 | | | | | | 2 | | | | | | 5 | | | | | | 5 | | | | Insurance contracts | | | 42 | | | | | | | | | 42 | | | | | | | | | | | | | Receivables | | | 55 | | | 29 | | | 26 | | | | | | 50 | | | 31 | | | 19 | | | | Payables | | | (66) | | | (55) | | | (11) | | | | | | (48) | | | (40) | | | (8) | | | | Total PPL Services Corporation Master Trust assets | | | 4,041 | | | 1,262 | | | 2,633 | | | 146 | | | 2,553 | | | 973 | | | 1,528 | | | 52 | 401(h) account restricted for other | | | | | | | | | | | | | | | | | | | | | | | | | | postretirement benefit obligations | | | (102) | | | (32) | | | (66) | | | (4) | | | (26) | | | (10) | | | (16) | | | | Fair value - PPL Services Corporation Master | | | | | | | | | | | | | | | | | | | | | | | | | | Trust pension assets | | | 3,939 | | | 1,230 | | | 2,567 | | | 142 | | | 2,527 | | | 963 | | | 1,512 | | | 52 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (PPL, LKE and LG&E) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LG&E and KU Energy LLC Pension Trusts | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | | | | | | | | | | | | | 122 | | | 122 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | | | | | | | | | | | | | | 220 | | | | | | 220 | | | | | | | Commingled debt | | | | | | | | | | | | | | | 65 | | | | | | 65 | | | | | | International | | | | | | | | | | | | | | | 106 | | | 44 | | | 62 | | | | Debt securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Treasury | | | | | | | | | | | | | | | 97 | | | 97 | | | | | | | | | Corporate | | | | | | | | | | | | | | | 342 | | | | | | 342 | | | | Derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | | | Total return swaps | | | | | | | | | | | | | | | 4 | | | | | | 4 | | | | Insurance contracts | | | | | | | | | | | | | | | 46 | | | | | | | | | 46 | Total LG&E and KU Energy LLC | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Trusts assets | | | | | | | | | | | | | | | 1,002 | | | 263 | | | 693 | | | 46 | 401(h) account restricted for other | | | | | | | | | | | | | | | | | | | | | | | | | | postretirement benefit obligations | | | | | | | | | | | | | | | (58) | | | (13) | | | (45) | | | | Fair value - LG&E and KU Energy LLC | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Trusts pension assets | | | | | | | | | | | | | | | 944 | | | 250 | | | 648 | | | 46 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value - total U.S. pension plans | | $ | 3,939 | | $ | 1,230 | | $ | 2,567 | | $ | 142 | | $ | 3,471 | | $ | 1,213 | | $ | 2,160 | | $ | 98 |
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Reconciliation of U.S. Pension Trust Assets Classified as Level 3 Included in Earnings |
A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2012 is as follows: | | | | | | Residential/ | | | | | | | | | | | | | | | | | | | | | | commercial | | | | | | | | | | | | | | | | | | | | | backed | | Corporate | | Private | | Insurance | | Other | | | | | | | | | | securities | | debt | | equity | | contracts | | Debt | | Total | | | | | | | | | | | | | | | | | | | | | | | | Balance at beginning of period | | | | | $ | 7 | | $ | 45 | | $ | 46 | | | | | $ | 98 | | Actual return on plan assets | | | | | | | | | | | | | | | | | | | | | | Relating to assets still held | | | | | | | | | | | | | | | | | | | | | | | at the reporting date | | | | | | 1 | | | 10 | | | 3 | | | | | | 14 | | | | Relating to assets sold during the period | | | | | | 2 | | | | | | | | | | | | 2 | | Purchases, sales and settlements | | $ | 1 | | | 21 | | | 20 | | | (7) | | | | | | 35 | | Transfers from level 2 to level 3 | | | | | | | | | | | | | | $ | 1 | | | 1 | | Transfers from level 3 to level 2 | | | | | | (4) | | | | | | | | | | | | (4) | Balance at end of period | | $ | 1 | | $ | 27 | | $ | 75 | | $ | 42 | | $ | 1 | | $ | 146 |
A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2011 is as follows: | | | | | | Residential/ | | | | | | | | | | | | | | | | | | | | | | commercial | | | | | | | | | | | | | | | | | | | | | backed | | Corporate | | Private | | Insurance | | | | | | | | | | | | securities | | debt | | equity | | contracts | | Other | | Total | | | | | | | | | | | | | | | | | | | | | | | | Balance at beginning of period | | | | | $ | 6 | | $ | 10 | | $ | 47 | | | | | $ | 63 | | Actual return on plan assets | | | | | | | | | | | | | | | | | | | | | | Relating to assets still held | | | | | | | | | | | | | | | | | | | | | | | at the reporting date | | | | | | (4) | | | 8 | | | 3 | | | | | | 7 | | Purchases, sales and settlements | | | | | | 5 | | | 27 | | | (4) | | | | | | 28 | Balance at end of period | | | | | $ | 7 | | $ | 45 | | $ | 46 | | | | | $ | 98 |
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Schedules of Target Allocation of U.S. Other Postretirement Benefit Plans VEBA Trust |
The asset allocation for the VEBA trusts and the target allocation, by asset class, at December 31 are detailed below. | | | | | Target Asset | | | | Percentage of plan assets | | Allocation | | | 2012 | | 2011 | | 2012 | Asset Class | | | | | | | | | | U.S. Equity securities | | | 46% | | | 41% | | | 45% | Debt securities (a) | | | 51% | | | 53% | | | 50% | Cash and cash equivalents (b) | | | 3% | | | 6% | | | 5% | | Total | | | 100% | | | 100% | | | 100% |
(a) Includes commingled debt funds and debt securities. (b) Includes commingled money market fund. |
Schedule of Fair Value of Financial Assets for U.S. Postretirement Benefits |
The fair value of assets in the U.S. other postretirement benefit plans by asset class and level within the fair value hierarchy was: | | | | | December 31, 2012 | | December 31, 2011 | | | | | | | | | Fair Value Measurement Using | | | | | Fair Value Measurement Using | | | | | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | U.S. Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | $ | 145 | | | | | $ | 145 | | | | | $ | 126 | | | | | $ | 126 | | | | | | Commingled debt | | | 119 | | | | | | 119 | | | | | | 121 | | | | | | 121 | | | | | | Commingled money market funds | | | 13 | | $ | 13 | | | | | | | | | 20 | | | | | | 20 | | | | | | Municipalities | | | 41 | | | | | | 41 | | | | | | 40 | | | | | | 40 | | | | Receivables | | | 1 | | | | | | 1 | | | | | | | | | | | | | | | | Total VEBA trust assets | | | 319 | | | 13 | | | 306 | | | | | | 307 | | | | | | 307 | | | | 401(h) account assets (a) | | | 102 | | | 32 | | | 66 | | $ | 4 | | | 84 | | $ | 23 | | | 61 | | | | Fair value - U.S. other postretirement | | | | | | | | | | | | | | | | | | | | | | | | | | benefit plans | | $ | 421 | | $ | 45 | | $ | 372 | | $ | 4 | | $ | 391 | | $ | 23 | | $ | 368 | | | |
(a) LKE's other postretirement benefit plan was invested primarily in a 401(h) account as disclosed in the PPL Services Corporation Master trust in 2012 and the LG&E and KU Energy LLC Pension Trusts in 2011. |
Schedules of Asset Allocation of U.K. Pension Plan Assets |
The asset allocation and target allocation at December 31 of WPD's pension plans are detailed below. | | | | | | | | | Target Asset | | | | Percentage of plan assets | | Allocation | | | 2012 | | 2011 | | 2012 | Asset Class | | | | | | | | | | Cash and cash equivalents | | | | | | 5% | | | | Equity securities | | | | | | | | | | | U.K. | | | 6% | | | 14% | | | 6% | | European (excluding the U.K.) | | | 14% | | | 5% | | | 4% | | Asian-Pacific | | | | | | 5% | | | 3% | | North American | | | | | | 5% | | | 5% | | Emerging markets | | | 3% | | | 2% | | | 5% | | Currency | | | 2% | | | 1% | | | 1% | | Global Tactical Asset Allocation | | | 18% | | | | | | 18% | Debt securities (a) | | | 51% | | | 56% | | | 52% | Alternative investments | | | 6% | | | 7% | | | 6% | | Total | | | 100% | | | 100% | | | 100% |
(a) Includes commingled debt funds. |
Schedule of Fair Value of Financial Assets for U.K. Pension Plan Assets |
The fair value of assets in the U.K. pension plans by asset class and level within the fair value hierarchy was: | | | | | December 31, 2012 | | December 31, 2011 | | | | | | | | | Fair Value Measurement Using | | | | | Fair Value Measurement Using | | | | | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | $ | 14 | | $ | 14 | | | | | | | | $ | 313 | | $ | 313 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.K. companies | | | 440 | | | 223 | | $ | 217 | | | | | | 921 | | | | | $ | 921 | | | | | | European companies (excluding the U.K.) | | | 956 | | | 720 | | | 236 | | | | | | 313 | | | | | | 313 | | | | | | Asian-Pacific companies | | | | | | | | | | | | | | | 312 | | | | | | 312 | | | | | | North American companies | | | | | | | | | | | | | | | 335 | | | | | | 335 | | | | | | Emerging markets companies | | | 231 | | | | | | 231 | | | | | | 116 | | | | | | 116 | | | | | | Currency | | | 127 | | | | | | 127 | | | | | | 31 | | | | | | 31 | | | | | | Global Tactical Asset Allocation | | | 1,220 | | | | | | 1,220 | | | | | | 25 | | | | | | 25 | | | | | | Commingled debt: | | | | | | | | | | | | | | | | | | | | | | | | | | | | U.K. corporate bonds | | | 593 | | | | | | 593 | | | | | | 699 | | | | | | 699 | | | | | | | U.K. gilts | | | 1,664 | | | | | | 1,664 | | | | | | 2,109 | | | | | | 2,109 | | | | | | | U.K. index-linked gilts | | | 1,243 | | | | | | 1,243 | | | | | | 744 | | | | | | 744 | | | | Alternative investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | Real estate | | | 423 | | | | | | 423 | | | | | | 433 | | | | | | 433 | | | | Fair value - U.K. pension plans | | $ | 6,911 | | $ | 957 | | $ | 5,954 | | | | | $ | 6,351 | | $ | 313 | | $ | 6,038 | | | |
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Schedule of Expected Cash Flows - U.S. Defined Benefit Plans - Expected Payments and Related Federal Subsidy |
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid and the following federal subsidy payments are expected to be received by the separate plan trusts. | | | | | Other Postretirement | | | | | | | | | Expected | | | | | | Benefit | | Federal | | | | Pension | | Payment | | Subsidy | | | | | | | | | | | 2013 | | $ | 196 | | $ | 49 | | $ | 1 | 2014 | | | 206 | | | 53 | | | 1 | 2015 | | | 219 | | | 55 | | | 1 | 2016 | | | 232 | | | 58 | | | 1 | 2017 | | | 249 | | | 60 | | | 1 | 2018-2022 | | | 1,475 | | | 333 | | | 3 |
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Schedule of Expected Cash Flows - U.K. Pension Plans - Expected Payments |
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the separate plan trusts. | | Pension | | | | | 2013 | | $ | 379 | 2014 | | | 385 | 2015 | | | 393 | 2016 | | | 400 | 2017 | | | 406 | 2018-2022 | | | 2,141 |
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Expected Employer Contributions to U.S. Savings Plans |
Substantially all employees of PPL's domestic subsidiaries are eligible to participate in deferred savings plans (401(k)s). Employer contributions to the plans were: | | 2012 | | 2011 | | 2010 | | | | | | | | | | | PPL | | $ | 36 | | $ | 31 | | $ | 23 | PPL Energy Supply | | | 12 | | | 11 | | | 10 | PPL Electric | | | 5 | | | 5 | | | 4 |
| | | | | Successor | | | Predecessor | | | | | | | | | | | Two Months | | | Ten Months | | | | | | Year Ended | | Year Ended | | Ended | | | Ended | | | | | | December 31, | | December 31, | | December 31, | | | October 31, | | | | | | 2012 | | 2011 | | 2010 | | | 2010 | | | | | | | | | | | | | | | | | | LKE | | $ | 12 | | $ | 11 | | $ | 2 | | | $ | 9 | LG&E | | | 6 | | | 5 | | | 1 | | | | 4 | KU | | | 6 | | | 6 | | | 1 | | | | 4 |
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PPL Energy Supply LLC [Member]
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Net Periodic Defined Benefit Costs (Credits) [Line Items] |
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Schedule Of Net Periodic Defined Benefit Costs (Credits) |
(PPL Energy Supply) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Benefits | | | | | | | | | | | | | | U.S. | | U.K. (a) | | Other Postretirement Benefits | | | | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010 | PPL Energy Supply | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net periodic defined benefit costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | (credits): | | | | | | | | | | | | | | | | | | | | | | | | | | | | Service cost | | $ | 6 | | $ | 5 | | $ | 4 | | | | | | | | $ | 17 | | $ | 1 | | $ | 1 | | $ | 1 | Interest cost | | | 7 | | | 7 | | | 7 | | | | | | | | | 151 | | | 1 | | | 1 | | | 1 | Expected return on plan assets | | | (9) | | | (9) | | | (7) | | | | | | | | | (202) | | | | | | | | | | Amortization of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Prior service cost | | | | | | | | | | | | | | | | | | 4 | | | | | | | | | | | | Actuarial (gain) loss | | | 2 | | | 2 | | | 2 | | | | | | | | | 48 | | | | | | | | | | Net periodic defined benefit costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (credits) prior to settlement charges | | | 6 | | | 5 | | | 6 | | | | | | | | | 18 | | | 2 | | | 2 | | | 2 | Net periodic defined benefit costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (credits) | | $ | 6 | | $ | 5 | | $ | 6 | | | | | | | | $ | 18 | | $ | 2 | | $ | 2 | | $ | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other Changes in Plan Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | and Benefit Obligations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Recognized in OCI: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current year net (gain) loss | | $ | 16 | | $ | 7 | | $ | 4 | | | | | | | | $ | 17 | | | | | $ | (2) | | | | Current year prior service credit | | | | | | | | | | | | | | | | | | | | $ | (1) | | | | | | | Amortization of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Prior service cost | | | | | | | | | | | | | | | | | | (4) | | | | | | | | | | | | Actuarial gain (loss) | | | (2) | | | (2) | | | (2) | | | | | | | | | (48) | | | | | | | | | | Total recognized in OCI | | | 14 | | | 5 | | | 2 | | | | | | | | | (35) | | | (1) | | | (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total recognized in net periodic | | | | | | | | | | | | | | | | | | | | | | | | | | | | | defined benefit costs and OCI | | $ | 20 | | $ | 10 | | $ | 8 | | | | | | | | $ | (17) | | $ | 1 | | $ | | | $ | 2 |
(a) In January 2011, PPL Energy Supply distributed its membership interest in PPL Global to PPL Energy Supply's parent. See Note 9 for additional information. |
Schedule of Net Periodic Defined Benefit Costs Included in Income Statement |
Net periodic defined benefit costs (credits) charged to operating expense, excluding amounts charged to construction and other non-expense accounts were: | | Pension Benefits | | | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010(a) | | 2012 | | 2011 | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PPL | | $ | 119 | | $ | 98 | | $ | 59 | | $ | 25 | | $ | 82 | | $ | 16 | | $ | 22 | | $ | 24 | | $ | 27 | PPL Energy Supply | | | 37 | | | 27 | | | 24 | | | | | | | | | 16 | | | 6 | | | 7 | | | 12 | PPL Electric (b) | | | 19 | | | 14 | | | 12 | | | | | | | | | | | | 3 | | | 4 | | | 8 |
(a) As a result of PPL Energy Supply's January 2011 distribution of its membership interest in PPL Global to its parent, PPL Energy Funding, these amounts are included in "Income (Loss) from Discontinued Operations (net of income taxes)" on PPL Energy Supply's Statements of Income. See Note 9 for additional information. (b) PPL Electric does not directly sponsor any defined benefit plans. PPL Electric was allocated these costs of defined benefit plans sponsored by PPL Services, based on its participation in those plans, which management believes are reasonable. In the table above, for PPL Energy Supply, amounts include costs for the specific plans it sponsors and the following allocated costs of defined benefit plans sponsored by PPL Services, based on PPL Energy Supply's participation in those plans, which management believes are reasonable: | | | | Pension Benefits | | | Other Postretirement Benefits | | | | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | PPL Energy Supply | | $ | 31 | | $ | 23 | | $ | 19 | | $ | 5 | | $ | 6 | | $ | 10 |
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Defined Benefit Plan Assumptions and Impact of One Point Change on Postretirement Plans |
The following weighted-average assumptions were used in the valuation of the benefit obligations at December 31. | | | Pension Benefits | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | | 2012 | | 2011 | | 2012 | | 2011 | | 2012 | | 2011 | PPL | | | | | | | | | | | | | | | | | | | | Discount rate | | | 4.22% | | | 5.06% | | | 4.27% | | | 5.24% | | | 4.00% | | | 4.80% | | Rate of compensation increase | | | 3.98% | | | 4.02% | | | 4.00% | | | 4.00% | | | 3.97% | | | 4.00% | | | | | | | | | | | | | | | | | | | | PPL Energy Supply | | | | | | | | | | | | | | | | | | | | Discount rate | | | 4.25% | | | 5.12% | | | | | | | | | 3.77% | | | 4.60% | | Rate of compensation increase | | | 3.95% | | | 4.00% | | | | | | | | | 3.95% | | | 4.00% |
The following weighted-average assumptions were used to determine the net periodic defined benefit costs for the year ended December 31. | | | Pension Benefits | | | | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010 | PPL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount rate | | | 5.06% | | | 5.42% | | | 5.96% | | | 5.24% | | | 5.59% | | | 5.59% | | | 4.80% | | | 5.14% | | | 5.47% | | Rate of compensation increase | | | 4.02% | | | 4.88% | | | 4.79% | | | 4.00% | | | 3.75% | | | 4.00% | | | 4.00% | | | 4.90% | | | 4.78% | | Expected return on plan assets (a) | | | 7.07% | | | 7.25% | | | 7.96% | | | 7.17% | | | 7.04% | | | 7.91% | | | 5.99% | | | 6.57% | | | 6.90% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PPL Energy Supply | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount rate | | | 5.12% | | | 5.47% | | | 6.00% | | | | | | | | | 5.59% | | | 4.60% | | | 4.95% | | | 5.55% | | Rate of compensation increase | | | 4.00% | | | 4.75% | | | 4.75% | | | | | | | | | 4.00% | | | 4.00% | | | 4.75% | | | 4.75% | | Expected return on plan assets (a) | | | 7.00% | | | 7.25% | | | 8.00% | | | | | | | | | 7.91% | | | N/A | | | N/A | | | N/A |
(PPL, PPL Energy Supply, LKE and LG&E) (a) The expected long-term rates of return for PPL's, PPL Energy Supply's, LKE's and LG&E's U.S. pension and other postretirement benefits have been developed using a best-estimate of expected returns, volatilities and correlations for each asset class. The best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes. PPL management corroborates these rates with expected long-term rates of return calculated by its independent actuary, who uses a building block approach that begins with a risk-free rate of return with factors being added such as inflation, duration, credit spreads and equity risk. Each plan's specific asset allocation is also considered in developing a reasonable return assumption. The expected long-term rates of return for PPL's U.K. pension plans have been developed by PPL management with assistance from an independent actuary using a best estimate of expected returns, volatilities and correlations for each asset class. The best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes. The following table provides the assumed health care cost trend rates for the year ended December 31: | | | | | 2012 | | 2011 | | 2010 | PPL and PPL Energy Supply | | | | | | | | | | | Health care cost trend rate assumed for next year | | | | | | | | | | | | | - obligations | | | 8.0% | | | 8.5% | | | 9.0% | | | | - cost | | | 8.5% | | | 9.0% | | | 8.0% | | Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | | | | | | | | | | | | | - obligations | | | 5.5% | | | 5.5% | | | 5.5% | | | | - cost | | | 5.5% | | | 5.5% | | | 5.5% | | Year that the rate reaches the ultimate trend rate | | | | | | | | | | | | | - obligations | | | 2019 | | | 2019 | | | 2019 | | | | - cost | | | 2019 | | | 2019 | | | 2016 |
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Schedule of Funded Status of Defined Benefit Plans |
(PPL Energy Supply) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The funded status of the PPL Energy Supply plans were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Benefits | | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | | | 2012 | | 2011 | | 2012 | | 2011 | | 2012 | | 2011 | Change in Benefit Obligation | | | | | | | | | | | | | | | | | | | Benefit Obligation, beginning of period | | $ | 143 | | $ | 121 | | | | | $ | 2,841 | | $ | 17 | | $ | 18 | | | Service cost | | | 6 | | | 5 | | | | | | | | | 1 | | | 1 | | | Interest cost | | | 7 | | | 7 | | | | | | | | | 1 | | | 1 | | | Plan amendments | | | | | | | | | | | | | | | (1) | | | | | | Actuarial loss | | | 23 | | | 13 | | | | | | | | | | | | (2) | | | Distribution to parent (a) | | | | | | | | | | | | (2,841) | | | | | | | | | Actual expenses paid | | | | | | | | | | | | | | | | | | (1) | | | Gross benefits paid | | | (3) | | | (3) | | | | | | | | | (1) | | | | Benefit Obligation, end of period | | | 176 | | | 143 | | | | | | | | | 17 | | | 17 | | | | | | | | | | | | | | | | | | | | | | Change in Plan Assets | | | | | | | | | | | | | | | | | | | Plan assets at fair value, beginning of | | | | | | | | | | | | | | | | | | | | period | | | 132 | | | 106 | | | | | | 2,524 | | | | | | | | | Actual return on plan assets | | | 16 | | | 14 | | | | | | | | | | | | | | | Employer contributions | | | 4 | | | 15 | | | | | | | | | | | | | | | Distribution to parent (a) | | | | | | | | | | | | (2,524) | | | | | | | | | Gross benefits paid | | | (3) | | | (3) | | | | | | | | | | | | | Plan assets at fair value, end of period | | | 149 | | | 132 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Funded Status, end of period | | $ | (27) | | $ | (11) | | | | | $ | | | $ | (17) | | $ | (17) | | | | | | | | | | | | | | | | | | | | | | Amounts recognized in the Balance | | | | | | | | | | | | | | | | | | | | Sheets consist of: | | | | | | | | | | | | | | | | | | | | | Current liability | | | | | | | | | | | | | | $ | (1) | | $ | (1) | | | Noncurrent liability | | $ | (27) | | $ | (11) | | | | | | | | | (16) | | | (16) | Net amount recognized, end of period | | $ | (27) | | $ | (11) | | | | | | | | $ | (17) | | $ | (17) | | | | | | | | | | | | | | | | | | | | | | Amounts recognized in AOCI | | | | | | | | | | | | | | | | | | | | (pre-tax) consist of: | | | | | | | | | | | | | | | | | | | Prior service cost (credit) | | | | | $ | 1 | | | | | | | | $ | (1) | | | | Net actuarial loss | | $ | 52 | | | 38 | | | | | | | | | 2 | | $ | 2 | Total | | $ | 52 | | $ | 39 | | | | | | | | $ | 1 | | $ | 2 | | | | | | | | | | | | | | | | | | | | | | Total accumulated benefit obligation | | | | | | | | | | | | | | | | | | | | for defined benefit pension plans | | $ | 176 | | $ | 143 | | | | | | | | | | | | |
(a) As a result of PPL Energy Supply's January 2011 distribution of its membership interest in PPL Global to its parent, PPL Energy Funding, the funded status and AOCI were removed from the balance sheet in January 2011. See Note 9 for additional information. Allocations to PPL Energy Supply resulted in liabilities at December 31 as follows: | | 2012 | | 2011 | | | | | | | | Funded status of the pension plans | | $ | 268 | | $ | 204 | Other postretirement benefits | | | 60 | | | 51 |
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Contributions Made to Multiemployer Plans |
The table below details total contributions to all multiemployer pension and other postretirement plans, including the plan identified as significant above. | | 2012 | | 2011 | | 2010 | | | | | | | | | | | Pension Plans | | $ | 31 | | $ | 36 | | $ | 26 | Other Postretirement Medical Plans | | | 28 | | | 31 | | | 23 | Total Contributions | | $ | 59 | | $ | 67 | | $ | 49 |
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Schedules of Asset Allocation of U.S. Pension Trusts Assets |
The asset allocation for the trusts and the target allocation by portfolio, at December 31, are as follows: PPL Services Corporation Master Trust | | | | | | | | | 2012 Target Asset Allocation (a) | | | | Percentage of trust assets | | | Weighted | | | | | | | | | | 2012 (a) | | | 2011 | | | Average | | | PPL Plans | | | LKE Plans | | | | | | | | | | | | | | | | | Growth Portfolio | | | 58% | | | 57% | | | 56% | | | 55% | | | 59% | | Equity securities | | | 31% | | | 31% | | | | | | | | | | | Debt securities (b) | | | 18% | | | 17% | | | | | | | | | | | Alternative investments | | | 9% | | | 9% | | | | | | | | | | Immunizing Portfolio | | | 41% | | | 41% | | | 42% | | | 43% | | | 38% | | Debt securities (b) | | | 40% | | | 40% | | | | | | | | | | | Derivatives | | | 1% | | | 1% | | | | | | | | | | Liquidity Portfolio | | | 1% | | | 2% | | | 2% | | | 2% | | | 3% | Total | | | 100% | | | 100% | | | 100% | | | 100% | | | 100% |
(b) Includes commingled debt funds, which PPL treats as debt securities for asset allocation purposes. |
Schedule of Fair Value of Financial Assets for U.S. Pension Plan Assets |
The fair value of net assets in the U.S. pension plan trusts by asset class and level within the fair value hierarchy was: | | | | | December 31, 2012 | | December 31, 2011 | | | | | | | | | Fair Value Measurements Using | | | | | Fair Value Measurements Using | | | | | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | PPL Services Corporation Master Trust | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | $ | 84 | | $ | 84 | | | | | | | | $ | 78 | | $ | 78 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | | 558 | | | 206 | | $ | 352 | | | | | | 371 | | | 247 | | $ | 124 | | | | | | | Small-cap | | | 124 | | | 124 | | | | | | | | | 112 | | | 112 | | | | | | | | | | Commingled debt | | | 676 | | | 56 | | | 620 | | | | | | 458 | | | | | | 458 | | | | | | International | | | 557 | | | 184 | | | 373 | | | | | | 299 | | | 102 | | | 197 | | | | Debt securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Treasury and U.S. government sponsored | | | | | | | | | | | | | | | | | | | | | | | | | | | | agency | | | 704 | | | 634 | | | 70 | | | | | | 515 | | | 443 | | | 72 | | | | | | Residential/commercial backed securities | | | 12 | | | | | | 11 | | $ | 1 | | | 9 | | | | | | 9 | | | | | | Corporate | | | 874 | | | | | | 847 | | | 27 | | | 446 | | | | | | 439 | | $ | 7 | | | Other | | | 24 | | | | | | 23 | | | 1 | | | 10 | | | | | | 10 | | | | | | International | | | 7 | | | | | | 7 | | | | | | 6 | | | | | | 6 | | | | Alternative investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | Commodities | | | 59 | | | | | | 59 | | | | | | | | | | | | | | | | | | Real estate | | | 93 | | | | | | 93 | | | | | | 85 | | | | | | 85 | | | | | | Private equity | | | 75 | | | | | | | | | 75 | | | 45 | | | | | | | | | 45 | | | Hedge funds | | | 125 | | | | | | 125 | | | | | | 92 | | | | | | 92 | | | | Derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps and swaptions | | | 36 | | | | | | 36 | | | | | | 20 | | | | | | 20 | | | | | | Other | | | 2 | | | | | | 2 | | | | | | 5 | | | | | | 5 | | | | Insurance contracts | | | 42 | | | | | | | | | 42 | | | | | | | | | | | | | Receivables | | | 55 | | | 29 | | | 26 | | | | | | 50 | | | 31 | | | 19 | | | | Payables | | | (66) | | | (55) | | | (11) | | | | | | (48) | | | (40) | | | (8) | | | | Total PPL Services Corporation Master Trust assets | | | 4,041 | | | 1,262 | | | 2,633 | | | 146 | | | 2,553 | | | 973 | | | 1,528 | | | 52 | 401(h) account restricted for other | | | | | | | | | | | | | | | | | | | | | | | | | | postretirement benefit obligations | | | (102) | | | (32) | | | (66) | | | (4) | | | (26) | | | (10) | | | (16) | | | | Fair value - PPL Services Corporation Master | | | | | | | | | | | | | | | | | | | | | | | | | | Trust pension assets | | | 3,939 | | | 1,230 | | | 2,567 | | | 142 | | | 2,527 | | | 963 | | | 1,512 | | | 52 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (PPL, LKE and LG&E) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LG&E and KU Energy LLC Pension Trusts | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | | | | | | | | | | | | | 122 | | | 122 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | | | | | | | | | | | | | | 220 | | | | | | 220 | | | | | | | Commingled debt | | | | | | | | | | | | | | | 65 | | | | | | 65 | | | | | | International | | | | | | | | | | | | | | | 106 | | | 44 | | | 62 | | | | Debt securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Treasury | | | | | | | | | | | | | | | 97 | | | 97 | | | | | | | | | Corporate | | | | | | | | | | | | | | | 342 | | | | | | 342 | | | | Derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | | | Total return swaps | | | | | | | | | | | | | | | 4 | | | | | | 4 | | | | Insurance contracts | | | | | | | | | | | | | | | 46 | | | | | | | | | 46 | Total LG&E and KU Energy LLC | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Trusts assets | | | | | | | | | | | | | | | 1,002 | | | 263 | | | 693 | | | 46 | 401(h) account restricted for other | | | | | | | | | | | | | | | | | | | | | | | | | | postretirement benefit obligations | | | | | | | | | | | | | | | (58) | | | (13) | | | (45) | | | | Fair value - LG&E and KU Energy LLC | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Trusts pension assets | | | | | | | | | | | | | | | 944 | | | 250 | | | 648 | | | 46 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value - total U.S. pension plans | | $ | 3,939 | | $ | 1,230 | | $ | 2,567 | | $ | 142 | | $ | 3,471 | | $ | 1,213 | | $ | 2,160 | | $ | 98 |
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Reconciliation of U.S. Pension Trust Assets Classified as Level 3 Included in Earnings |
A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2012 is as follows: | | | | | | Residential/ | | | | | | | | | | | | | | | | | | | | | | commercial | | | | | | | | | | | | | | | | | | | | | backed | | Corporate | | Private | | Insurance | | Other | | | | | | | | | | securities | | debt | | equity | | contracts | | Debt | | Total | | | | | | | | | | | | | | | | | | | | | | | | Balance at beginning of period | | | | | $ | 7 | | $ | 45 | | $ | 46 | | | | | $ | 98 | | Actual return on plan assets | | | | | | | | | | | | | | | | | | | | | | Relating to assets still held | | | | | | | | | | | | | | | | | | | | | | | at the reporting date | | | | | | 1 | | | 10 | | | 3 | | | | | | 14 | | | | Relating to assets sold during the period | | | | | | 2 | | | | | | | | | | | | 2 | | Purchases, sales and settlements | | $ | 1 | | | 21 | | | 20 | | | (7) | | | | | | 35 | | Transfers from level 2 to level 3 | | | | | | | | | | | | | | $ | 1 | | | 1 | | Transfers from level 3 to level 2 | | | | | | (4) | | | | | | | | | | | | (4) | Balance at end of period | | $ | 1 | | $ | 27 | | $ | 75 | | $ | 42 | | $ | 1 | | $ | 146 |
A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2011 is as follows: | | | | | | Residential/ | | | | | | | | | | | | | | | | | | | | | | commercial | | | | | | | | | | | | | | | | | | | | | backed | | Corporate | | Private | | Insurance | | | | | | | | | | | | securities | | debt | | equity | | contracts | | Other | | Total | | | | | | | | | | | | | | | | | | | | | | | | Balance at beginning of period | | | | | $ | 6 | | $ | 10 | | $ | 47 | | | | | $ | 63 | | Actual return on plan assets | | | | | | | | | | | | | | | | | | | | | | Relating to assets still held | | | | | | | | | | | | | | | | | | | | | | | at the reporting date | | | | | | (4) | | | 8 | | | 3 | | | | | | 7 | | Purchases, sales and settlements | | | | | | 5 | | | 27 | | | (4) | | | | | | 28 | Balance at end of period | | | | | $ | 7 | | $ | 45 | | $ | 46 | | | | | $ | 98 |
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Schedule of Expected Cash Flows - U.S. Defined Benefit Plans - Expected Payments and Related Federal Subsidy |
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the separate plan trusts. | | | | | Other | | | Pension | | Postretirement | | | | | | | | 2013 | | $ | 4 | | $ | 1 | 2014 | | | 5 | | | 2 | 2015 | | | 6 | | | 2 | 2016 | | | 6 | | | 2 | 2017 | | | 7 | | | 2 | 2018-2022 | | | 48 | | | 12 |
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PPL Electric Utilities Corp [Member]
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Net Periodic Defined Benefit Costs (Credits) [Line Items] |
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Schedule of Net Periodic Defined Benefit Costs Included in Income Statement |
Net periodic defined benefit costs (credits) charged to operating expense, excluding amounts charged to construction and other non-expense accounts were: | | Pension Benefits | | | | | | | | | | | | U.S. | | U.K. | | Other Postretirement Benefits | | | 2012 | | 2011 | | 2010 | | 2012 | | 2011 | | 2010(a) | | 2012 | | 2011 | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PPL | | $ | 119 | | $ | 98 | | $ | 59 | | $ | 25 | | $ | 82 | | $ | 16 | | $ | 22 | | $ | 24 | | $ | 27 | PPL Energy Supply | | | 37 | | | 27 | | | 24 | | | | | | | | | 16 | | | 6 | | | 7 | | | 12 | PPL Electric (b) | | | 19 | | | 14 | | | 12 | | | | | | | | | | | | 3 | | | 4 | | | 8 |
(b) PPL Electric does not directly sponsor any defined benefit plans. PPL Electric was allocated these costs of defined benefit plans sponsored by PPL Services, based on its participation in those plans, which management believes are reasonable. |
Schedule of Funded Status of Defined Benefit Plans |
Allocations to PPL Electric resulted in liabilities at December 31 as follows: | | 2012 | | 2011 | | | | | | | | Funded status of the pension plans | | $ | 237 | | $ | 186 | Other postretirement benefits | | | 61 | | | 53 |
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LG And E And KU Energy LLC [Member]
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Net Periodic Defined Benefit Costs (Credits) [Line Items] |
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Schedule Of Net Periodic Defined Benefit Costs (Credits) |
The following table provides the components of net periodic defined benefit costs for LKE's pension and other postretirement benefit plans for the years ended December 31, 2012, and 2011, and November 1, 2010 through December 31, 2010, for the Successor and January 1, 2010 through October 31, 2010, for the Predecessor. | | | | Pension Benefits | | Other Postretirement Benefits | | | | | Successor | | | Predecessor | | Successor | | | Predecessor | | | | | 2012 | | 2011 | | 2010 | | | 2010 | | 2012 | | 2011 | | 2010 | | | 2010 | LKE | | | | | | | | | | | | | | | | | | | | | | | | | | | Net periodic defined benefit costs | | | | | | | | | | | | | | | | | | | | | | | | | | | | (credits): | | | | | | | | | | | | | | | | | | | | | | | | | | | Service cost | | $ | 22 | | $ | 24 | | $ | 4 | | | $ | 17 | | $ | 4 | | $ | 4 | | $ | 1 | | | $ | 3 | Interest cost | | | 64 | | | 67 | | | 11 | | | | 54 | | | 9 | | | 10 | | | 1 | | | | 9 | Expected return on plan assets | | | (70) | | | (64) | | | (9) | | | | (45) | | | (4) | | | (3) | | | | | | | (2) | Amortization of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transition obligation | | | | | | | | | | | | | | | | 2 | | | 2 | | | | | | | 1 | | | Prior service cost | | | 5 | | | 5 | | | 1 | | | | 7 | | | 3 | | | 2 | | | | | | | 2 | | | Actuarial (gain) loss | | | 22 | | | 24 | | | 5 | | | | 16 | | | (1) | | | | | | | | | | | Net periodic defined benefit costs | | $ | 43 | | $ | 56 | | $ | 12 | | | $ | 49 | | $ | 13 | | $ | 15 | | $ | 2 | | | $ | 13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other Changes in Plan Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | and Benefit Obligations | | | | | | | | | | | | | | | | | | | | | | | | | | | | Recognized in OCI and | | | | | | | | | | | | | | | | | | | | | | | | | | | | Regulatory Assets/Liabilities - | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross: | | | | | | | | | | | | | | | | | | | | | | | | | | | Current year net (gain) loss | | $ | 96 | | $ | 29 | | $ | (22) | | | $ | 96 | | $ | (11) | | $ | (3) | | $ | (2) | | | $ | 3 | Current year prior service cost | | | | | | 8 | | | | | | | | | | | | | 11 | | | | | | | | Amortization of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transition obligation | | | | | | | | | | | | | | | | (2) | | | (2) | | | | | | | (2) | | | Prior service cost | | | (5) | | | (5) | | | (1) | | | | (7) | | | (3) | | | (2) | | | | | | | (1) | | | Actuarial gain (loss) | | | (22) | | | (24) | | | (5) | | | | (16) | | | 1 | | | | | | | | | | | Total recognized in OCI and | | | | | | | | | | | | | | | | | | | | | | | | | | | | regulatory assets/liabilities | | | 69 | | | 8 | | | (28) | | | | 73 | | | (15) | | | 4 | | | (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total recognized in net periodic | | | | | | | | | | | | | | | | | | | | | | | | | | | | defined benefit costs, OCI and regulatory | | | | | | | | | | | | | | | | | | | | | | | | | | | | assets/liabilities | | $ | 112 | | $ | 64 | | $ | (16) | | | $ | 122 | | $ | (2) | | $ | 19 | | $ | | | | $ | 13 |
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Schedule of Amounts Recognized in Other Comprehensive Income and Regulatory Assets and Liabilities |
For LKE's pension and other postretirement benefits, the amounts recognized in OCI and regulatory assets/liabilities are as follows at December 31, 2012, 2011 and 2010 for the Successor, and at October 31, 2010 for the Predecessor. | | | | Pension Benefits | | Other Postretirement Benefits | | | | | Successor | | | Predecessor | | Successor | | | Predecessor | | | | | 2012 | | 2011 | | 2010 | | | 2010 | | 2012 | | 2011 | | 2010 | | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OCI | | $ | 34 | | $ | 1 | | $ | (8) | | | $ | 32 | | $ | (1) | | $ | 2 | | $ | (1) | | | $ | (1) | | Regulatory assets/liabilities | | | 35 | | | 7 | | | (20) | | | | 41 | | | (14) | | | 2 | | | (1) | | | | 1 | | Total recognized in OCI and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | regulatory assets/liabilities | | $ | 69 | | $ | 8 | | $ | (28) | | | $ | 73 | | $ | (15) | | $ | 4 | | $ | (2) | | | $ | |
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Schedule of Amounts to be Amortized from AOCI and Regulatory Assets/Liabilities in Next Fiscal Year |
The estimated amounts to be amortized from AOCI and regulatory assets/liabilities into net periodic defined benefit costs for LKE in 2013 are as follows. | | | | | Other | | | Pension | | Postretirement | | | Benefits | | Benefits | | | | | | | | Prior service cost | | $ | 5 | | $ | 3 | Actuarial loss | | | 31 | | | (1) | Total | | $ | 36 | | $ | 2 | | | | | | | | Amortization from Balance Sheet: | | | | | | | Regulatory assets/liabilities | | $ | 36 | | $ | 2 | Total | | $ | 36 | | $ | 2 |
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Schedule of Net Periodic Defined Benefit Costs Included in Income Statement |
The following table provides net periodic defined benefit costs charged to operating expense for the years ended December 31, 2012, and 2011, and November 1, 2010 through December 31, 2010, for the Successor and January 1, 2010 through October 31, 2010, for the Predecessor. | | Pension Benefits | | Other Postretirement Benefits | | | Successor | | | Predecessor | | | Successor | | | Predecessor | | | 2012 | | 2011 | | 2010 | | | 2010 | | | 2012 | | 2011 | | 2010 | | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LKE | | $ | 31 | | $ | 40 | | $ | 9 | | | $ | 37 | | | $ | 9 | | $ | 11 | | $ | 2 | | | $ | 9 | LG&E | | | 13 | | | 16 | | | 3 | | | | 12 | | | | 5 | | | 5 | | | 1 | | | | 4 | KU (a) | | | 8 | | | 10 | | | 2 | | | | 8 | | | | 3 | | | 4 | | | 1 | | | | 3 |
(a) KU does not directly sponsor any defined benefit plans. KU was allocated these costs of defined benefit plans sponsored by LKE, based on its participation in those plans, which management believes are reasonable. |
Defined Benefit Plan Assumptions and Impact of One Point Change on Postretirement Plans |
The following table provides the weighted-average assumptions used in the valuation of the benefit obligations at December 31. | | | | | | | | | | | | | | | | | | | Pension Benefits | | Other Postretirement Benefits | | | | | 2012 | | 2011 | | 2012 | | 2011 | LKE | | | | | | | | | | | | | | | Discount rate | | | | 4.24% | | | 5.08% | | | 3.99% | | | 4.78% | | Rate of compensation increase | | | | 4.00% | | | 4.00% | | | 4.00% | | | 4.00% | LG&E | | | | | | | | | | | | | | | Discount rate | | | | 4.20% | | | 5.00% | | | | | | | | Rate of compensation increase | | | | N/A | | | N/A | | | | | | |
The following table provides the weighted-average assumptions used to determine the net periodic defined benefit costs for the years ended December 31, 2012, and 2011, and November 1, 2010 through December 31, 2010, for the Successor and January 1, 2010 through October 31, 2010, for the Predecessor. | | | Pension Benefits | | Other Postretirement Benefits | | | | Successor | | | Predecessor | | Successor | | | Predecessor | | | | 2012 | | 2011 | | 2010 | | | 2010 | | 2012 | | 2011 | | 2010 | | | 2010 | LKE | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount rate | | | 5.09% | | | 5.49% | | | 5.40% | | | | 6.11% | | | 4.78% | | | 5.12% | | | 4.94% | | | | 5.82% | | Rate of compensation increase | | | 4.00% | | | 5.25% | | | 5.25% | | | | 5.25% | | | 4.00% | | | 5.25% | | | 5.25% | | | | 5.25% | | Expected return on plan assets (a) | | | 7.25% | | | 7.25% | | | 7.25% | | | | 7.75% | | | 7.02% | | | 7.16% | | | 7.04% | | | | 7.20% | LG&E | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount rate | | | 5.00% | | | 5.39% | | | 5.28% | | | | 6.08% | | | | | | | | | | | | | | | Rate of compensation increase | | | N/A | | | N/A | | | N/A | | | | N/A | | | | | | | | | | | | | | | Expected return on plan assets (a) | | | 7.25% | | | 7.25% | | | 7.25% | | | | 7.75% | | | | | | | | | | | | | |
(PPL, PPL Energy Supply, LKE and LG&E) (a) The expected long-term rates of return for PPL's, PPL Energy Supply's, LKE's and LG&E's U.S. pension and other postretirement benefits have been developed using a best-estimate of expected returns, volatilities and correlations for each asset class. The best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes. PPL management corroborates these rates with expected long-term rates of return calculated by its independent actuary, who uses a building block approach that begins with a risk-free rate of return with factors being added such as inflation, duration, credit spreads and equity risk. Each plan's specific asset allocation is also considered in developing a reasonable return assumption. The expected long-term rates of return for PPL's U.K. pension plans have been developed by PPL management with assistance from an independent actuary using a best estimate of expected returns, volatilities and correlations for each asset class. The best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes. The following table provides the assumed health care cost trend rates for the years ended December 31, 2012, 2011 and November 1, 2010 through December 31, 2010, for the Successor and January 1, 2010 through October 31, 2010, for the Predecessor. | | | | | Successor | | | Predecessor | | | | | | 2012 | | 2011 | | 2010 | | | 2010 | LKE | | | | | | | | | | | | | | | Health care cost trend rate assumed for next year | | | | | | | | | | | | | | | | | - obligations | | | 8.0% | | | 8.5% | | | 9.0% | | | | 7.8% | | | | - cost | | | 8.5% | | | 9.0% | | | 9.0% | | | | 8.0% | | Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | | | | | | | | | | | | | | | | | - obligations | | | 5.5% | | | 5.5% | | | 5.5% | | | | 4.5% | | | | - cost | | | 5.5% | | | 5.5% | | | 5.5% | | | | 4.5% | | Year that the rate reaches the ultimate trend rate | | | | | | | | | | | | | | | | | - obligations | | | 2019 | | | 2019 | | | 2019 | | | | 2029 | | | | - cost | | | 2019 | | | 2019 | | | 2019 | | | | 2029 |
A one percentage point change in the assumed health care costs trend rate assumption would have had the following effects on the other postretirement benefit plans in 2012: | | | One Percentage Point | | | | Increase | | Decrease | Effect on accumulated postretirement benefit obligation | | | | | | | | PPL | | $ | 7 | | $ | (6) | | LKE | | | 5 | | | (4) |
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Schedule of Funded Status of Defined Benefit Plans |
The funded status of the LKE plans was as follows. | | | | Pension Benefits | | Other Postretirement Benefits | | | | | 2012 | | 2011 | | 2012 | | 2011 | Change in Benefit Obligation | | | | | | | | | | | | | Benefit Obligation, beginning of period | | $ | 1,306 | | $ | 1,229 | | $ | 214 | | $ | 204 | | | Service cost | | | 22 | | | 24 | | | 4 | | | 4 | | | Interest cost | | | 63 | | | 67 | | | 9 | | | 10 | | | Plan amendments | | | | | | 9 | | | | | | 10 | | | Actuarial loss (gain) | | | 144 | | | 25 | | | (8) | | | (3) | | | Gross benefits paid | | | (48) | | | (48) | | | (11) | | | (12) | | | Federal subsidy | | | | | | | | | 1 | | | 1 | Benefit Obligation, end of period | | | 1,487 | | | 1,306 | | | 209 | | | 214 | | | | | | | | | | | | | | | | Change in Plan Assets | | | | | | | | | | | | | Plan assets at fair value, beginning of period | | | 944 | | | 778 | | | 58 | | | 49 | | | Actual return on plan assets | | | 117 | | | 62 | | | 8 | | | 3 | | | Employer contributions | | | 57 | | | 152 | | | 13 | | | 18 | | | Gross benefits paid | | | (48) | | | (48) | | | (11) | | | (12) | Plan assets at fair value, end of period | | | 1,070 | | | 944 | | | 68 | | | 58 | | | | | | | | | | | | | | | | Funded Status, end of period | | $ | (417) | | $ | (362) | | $ | (141) | | $ | (156) | | | | | | | | | | | | | | | | Amounts recognized in the Balance | | | | | | | | | | | | | | Sheets consist of: | | | | | | | | | | | | | | | Current liability | | $ | (3) | | $ | (3) | | | | | | | | | Noncurrent liability | | | (414) | | | (359) | | $ | (141) | | $ | (156) | Net amount recognized, end of period | | $ | (417) | | $ | (362) | | $ | (141) | | $ | (156) | | | | | | | | | | | | | | | | Amounts recognized in AOCI and | | | | | | | | | | | | | | regulatory assets/liabilities (pre-tax) | | | | | | | | | | | | | | consist of: | | | | | | | | | | | | | Transition obligation | | | | | | | | | | | $ | 2 | Prior service cost | | $ | 28 | | $ | 34 | | $ | 11 | | | 14 | Net actuarial (gain) loss | | | 355 | | | 280 | | | (17) | | | (7) | Total | | $ | 383 | | $ | 314 | | $ | (6) | | $ | 9 | | | | | | | | | | | | | | | | Total accumulated benefit obligation | | | | | | | | | | | | | | for defined benefit pension plans | | $ | 1,319 | | $ | 1,141 | | | | | | |
At December 31, the amounts recognized in AOCI and regulatory assets/liabilities are as follows. | | | Pension Benefits | | Other Postretirement Benefits | | | | 2012 | | 2011 | | 2012 | | 2011 | | | | | | | | | | | | AOCI | | $ | 27 | | $ | (7) | | | | | $ | 1 | | Regulatory assets/liabilities | | | 356 | | | 321 | | $ | (6) | | | 8 | | Total | | $ | 383 | | $ | 314 | | $ | (6) | | $ | 9 |
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Schedules of Asset Allocation of U.S. Pension Trusts Assets |
The asset allocation for the trusts and the target allocation by portfolio, at December 31, are as follows: PPL Services Corporation Master Trust | | | | | | | | | 2012 Target Asset Allocation (a) | | | | Percentage of trust assets | | | Weighted | | | | | | | | | | 2012 (a) | | | 2011 | | | Average | | | PPL Plans | | | LKE Plans | | | | | | | | | | | | | | | | | Growth Portfolio | | | 58% | | | 57% | | | 56% | | | 55% | | | 59% | | Equity securities | | | 31% | | | 31% | | | | | | | | | | | Debt securities (b) | | | 18% | | | 17% | | | | | | | | | | | Alternative investments | | | 9% | | | 9% | | | | | | | | | | Immunizing Portfolio | | | 41% | | | 41% | | | 42% | | | 43% | | | 38% | | Debt securities (b) | | | 40% | | | 40% | | | | | | | | | | | Derivatives | | | 1% | | | 1% | | | | | | | | | | Liquidity Portfolio | | | 1% | | | 2% | | | 2% | | | 2% | | | 3% | Total | | | 100% | | | 100% | | | 100% | | | 100% | | | 100% |
(a) Allocations exclude consideration of cash for the WKE Bargaining Employees' Retirement Plan and a guaranteed annuity contract held by the LG&E and KU Retirement Plan. (b) Includes commingled debt funds, which PPL treats as debt securities for asset allocation purposes. LG&E and KU Energy LLC Pension Trusts | | | | | | | | | | Percentage | | Target Asset | | | | of trust assets | | Allocation | | | 2011 | | 2011 | | | | | | | | | Growth Portfolio | | | 54% | | | 59% | | Equity securities | | | 33% | | | | | Debt securities (a) | | | 21% | | | | Immunizing Portfolio | | | 34% | | | 38% | | Debt securities (a) (b) | | | 34% | | | | Liquidity Portfolio (b) | | | 12% | | | 3% | Total | | | 100% | | | 100% |
(a) Includes commingled debt funds, which LKE treats as debt securities for asset allocation purposes. (b) The asset allocation for this portfolio was not within the established target range due to the transition of assets at the end of 2011 in anticipation of transfer into the PPL Services Corporation Master Trust in January 2012. |
Schedule of Fair Value of Financial Assets for U.S. Pension Plan Assets |
The fair value of net assets in the U.S. pension plan trusts by asset class and level within the fair value hierarchy was: | | | | | December 31, 2012 | | December 31, 2011 | | | | | | | | | Fair Value Measurements Using | | | | | Fair Value Measurements Using | | | | | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | PPL Services Corporation Master Trust | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | $ | 84 | | $ | 84 | | | | | | | | $ | 78 | | $ | 78 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | | 558 | | | 206 | | $ | 352 | | | | | | 371 | | | 247 | | $ | 124 | | | | | | | Small-cap | | | 124 | | | 124 | | | | | | | | | 112 | | | 112 | | | | | | | | | | Commingled debt | | | 676 | | | 56 | | | 620 | | | | | | 458 | | | | | | 458 | | | | | | International | | | 557 | | | 184 | | | 373 | | | | | | 299 | | | 102 | | | 197 | | | | Debt securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Treasury and U.S. government sponsored | | | | | | | | | | | | | | | | | | | | | | | | | | | | agency | | | 704 | | | 634 | | | 70 | | | | | | 515 | | | 443 | | | 72 | | | | | | Residential/commercial backed securities | | | 12 | | | | | | 11 | | $ | 1 | | | 9 | | | | | | 9 | | | | | | Corporate | | | 874 | | | | | | 847 | | | 27 | | | 446 | | | | | | 439 | | $ | 7 | | | Other | | | 24 | | | | | | 23 | | | 1 | | | 10 | | | | | | 10 | | | | | | International | | | 7 | | | | | | 7 | | | | | | 6 | | | | | | 6 | | | | Alternative investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | Commodities | | | 59 | | | | | | 59 | | | | | | | | | | | | | | | | | | Real estate | | | 93 | | | | | | 93 | | | | | | 85 | | | | | | 85 | | | | | | Private equity | | | 75 | | | | | | | | | 75 | | | 45 | | | | | | | | | 45 | | | Hedge funds | | | 125 | | | | | | 125 | | | | | | 92 | | | | | | 92 | | | | Derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps and swaptions | | | 36 | | | | | | 36 | | | | | | 20 | | | | | | 20 | | | | | | Other | | | 2 | | | | | | 2 | | | | | | 5 | | | | | | 5 | | | | Insurance contracts | | | 42 | | | | | | | | | 42 | | | | | | | | | | | | | Receivables | | | 55 | | | 29 | | | 26 | | | | | | 50 | | | 31 | | | 19 | | | | Payables | | | (66) | | | (55) | | | (11) | | | | | | (48) | | | (40) | | | (8) | | | | Total PPL Services Corporation Master Trust assets | | | 4,041 | | | 1,262 | | | 2,633 | | | 146 | | | 2,553 | | | 973 | | | 1,528 | | | 52 | 401(h) account restricted for other | | | | | | | | | | | | | | | | | | | | | | | | | | postretirement benefit obligations | | | (102) | | | (32) | | | (66) | | | (4) | | | (26) | | | (10) | | | (16) | | | | Fair value - PPL Services Corporation Master | | | | | | | | | | | | | | | | | | | | | | | | | | Trust pension assets | | | 3,939 | | | 1,230 | | | 2,567 | | | 142 | | | 2,527 | | | 963 | | | 1,512 | | | 52 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (PPL, LKE and LG&E) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LG&E and KU Energy LLC Pension Trusts | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | | | | | | | | | | | | | 122 | | | 122 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | | | | | | | | | | | | | | 220 | | | | | | 220 | | | | | | | Commingled debt | | | | | | | | | | | | | | | 65 | | | | | | 65 | | | | | | International | | | | | | | | | | | | | | | 106 | | | 44 | | | 62 | | | | Debt securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Treasury | | | | | | | | | | | | | | | 97 | | | 97 | | | | | | | | | Corporate | | | | | | | | | | | | | | | 342 | | | | | | 342 | | | | Derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | | | Total return swaps | | | | | | | | | | | | | | | 4 | | | | | | 4 | | | | Insurance contracts | | | | | | | | | | | | | | | 46 | | | | | | | | | 46 | Total LG&E and KU Energy LLC | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Trusts assets | | | | | | | | | | | | | | | 1,002 | | | 263 | | | 693 | | | 46 | 401(h) account restricted for other | | | | | | | | | | | | | | | | | | | | | | | | | | postretirement benefit obligations | | | | | | | | | | | | | | | (58) | | | (13) | | | (45) | | | | Fair value - LG&E and KU Energy LLC | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Trusts pension assets | | | | | | | | | | | | | | | 944 | | | 250 | | | 648 | | | 46 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value - total U.S. pension plans | | $ | 3,939 | | $ | 1,230 | | $ | 2,567 | | $ | 142 | | $ | 3,471 | | $ | 1,213 | | $ | 2,160 | | $ | 98 |
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Reconciliation of U.S. Pension Trust Assets Classified as Level 3 Included in Earnings |
A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2012 is as follows: | | | | | | Residential/ | | | | | | | | | | | | | | | | | | | | | | commercial | | | | | | | | | | | | | | | | | | | | | backed | | Corporate | | Private | | Insurance | | Other | | | | | | | | | | securities | | debt | | equity | | contracts | | Debt | | Total | | | | | | | | | | | | | | | | | | | | | | | | Balance at beginning of period | | | | | $ | 7 | | $ | 45 | | $ | 46 | | | | | $ | 98 | | Actual return on plan assets | | | | | | | | | | | | | | | | | | | | | | Relating to assets still held | | | | | | | | | | | | | | | | | | | | | | | at the reporting date | | | | | | 1 | | | 10 | | | 3 | | | | | | 14 | | | | Relating to assets sold during the period | | | | | | 2 | | | | | | | | | | | | 2 | | Purchases, sales and settlements | | $ | 1 | | | 21 | | | 20 | | | (7) | | | | | | 35 | | Transfers from level 2 to level 3 | | | | | | | | | | | | | | $ | 1 | | | 1 | | Transfers from level 3 to level 2 | | | | | | (4) | | | | | | | | | | | | (4) | Balance at end of period | | $ | 1 | | $ | 27 | | $ | 75 | | $ | 42 | | $ | 1 | | $ | 146 |
A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2011 is as follows: | | | | | | Residential/ | | | | | | | | | | | | | | | | | | | | | | commercial | | | | | | | | | | | | | | | | | | | | | backed | | Corporate | | Private | | Insurance | | | | | | | | | | | | securities | | debt | | equity | | contracts | | Other | | Total | | | | | | | | | | | | | | | | | | | | | | | | Balance at beginning of period | | | | | $ | 6 | | $ | 10 | | $ | 47 | | | | | $ | 63 | | Actual return on plan assets | | | | | | | | | | | | | | | | | | | | | | Relating to assets still held | | | | | | | | | | | | | | | | | | | | | | | at the reporting date | | | | | | (4) | | | 8 | | | 3 | | | | | | 7 | | Purchases, sales and settlements | | | | | | 5 | | | 27 | | | (4) | | | | | | 28 | Balance at end of period | | | | | $ | 7 | | $ | 45 | | $ | 46 | | | | | $ | 98 |
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Schedules of Target Allocation of U.S. Other Postretirement Benefit Plans VEBA Trust |
The asset allocation for the VEBA trusts and the target allocation, by asset class, at December 31 are detailed below. | | | | | Target Asset | | | | Percentage of plan assets | | Allocation | | | 2012 | | 2011 | | 2012 | Asset Class | | | | | | | | | | U.S. Equity securities | | | 46% | | | 41% | | | 45% | Debt securities (a) | | | 51% | | | 53% | | | 50% | Cash and cash equivalents (b) | | | 3% | | | 6% | | | 5% | | Total | | | 100% | | | 100% | | | 100% |
(a) Includes commingled debt funds and debt securities. (b) Includes commingled money market fund. |
Schedule of Fair Value of Financial Assets for U.S. Postretirement Benefits |
The fair value of assets in the U.S. other postretirement benefit plans by asset class and level within the fair value hierarchy was: | | | | | December 31, 2012 | | December 31, 2011 | | | | | | | | | Fair Value Measurement Using | | | | | Fair Value Measurement Using | | | | | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | U.S. Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | $ | 145 | | | | | $ | 145 | | | | | $ | 126 | | | | | $ | 126 | | | | | | Commingled debt | | | 119 | | | | | | 119 | | | | | | 121 | | | | | | 121 | | | | | | Commingled money market funds | | | 13 | | $ | 13 | | | | | | | | | 20 | | | | | | 20 | | | | | | Municipalities | | | 41 | | | | | | 41 | | | | | | 40 | | | | | | 40 | | | | Receivables | | | 1 | | | | | | 1 | | | | | | | | | | | | | | | | Total VEBA trust assets | | | 319 | | | 13 | | | 306 | | | | | | 307 | | | | | | 307 | | | | 401(h) account assets (a) | | | 102 | | | 32 | | | 66 | | $ | 4 | | | 84 | | $ | 23 | | | 61 | | | | Fair value - U.S. other postretirement | | | | | | | | | | | | | | | | | | | | | | | | | | benefit plans | | $ | 421 | | $ | 45 | | $ | 372 | | $ | 4 | | $ | 391 | | $ | 23 | | $ | 368 | | | |
(a) LKE's other postretirement benefit plan was invested primarily in a 401(h) account as disclosed in the PPL Services Corporation Master trust in 2012 and the LG&E and KU Energy LLC Pension Trusts in 2011. |
Schedule of Expected Cash Flows - U.S. Defined Benefit Plans - Expected Payments and Related Federal Subsidy |
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid and the following federal subsidy payments are expected to be received by the separate plan trusts. | | | | | Other Postretirement | | | | | | | | | Expected | | | | | | Benefit | | Federal | | | | Pension | | Payment | | Subsidy | | | | | | | | | | | 2013 | | $ | 55 | | $ | 13 | | $ | 1 | 2014 | | | 55 | | | 13 | | | | 2015 | | | 58 | | | 14 | | | 1 | 2016 | | | 60 | | | 14 | | | | 2017 | | | 65 | | | 14 | | | 1 | 2018 - 2022 | | | 399 | | | 77 | | | 2 |
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Louisville Gas And Electric Co [Member]
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Net Periodic Defined Benefit Costs (Credits) [Line Items] |
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Schedule Of Net Periodic Defined Benefit Costs (Credits) |
The following table provides the components of net periodic defined benefit costs for LG&E's pension benefit plan for the years ended December 31, 2012 and 2011, and November 1, 2010 through December 31, 2010, for the Successor and January 1, 2010 through October 31, 2010, for the Predecessor. | | | | Pension Benefits | | | | | Successor | | | | Predecessor | | | | | 2012 | | 2011 | | 2010 | | | | 2010 | LG&E | | | | | | | | | | | | | | | Net periodic defined benefit costs (credits): | | | | | | | | | | | | | | | Service cost | | $ | 2 | | $ | 2 | | | | | | | $ | 1 | Interest cost | | | 14 | | | 14 | | $ | 2 | | | | | 12 | Expected return on plan assets | | | (19) | | | (18) | | | (3) | | | | | (13) | Amortization of: | | | | | | | | | | | | | | | | | Prior service cost | | | 3 | | | 2 | | | 1 | | | | | 2 | | | Actuarial loss | | | 11 | | | 11 | | | 2 | | | | | 6 | Net periodic defined benefit costs | | $ | 11 | | $ | 11 | | $ | 2 | | | | $ | 8 | | | | | | | | | | | | | | | | | | Other Changes in Plan Assets and Benefit Obligations | | | | | | | | | | | | | | | | Recognized in Regulatory Assets - Gross: | | | | | | | | | | | | | | | Current year net (gain) loss | | $ | 18 | | $ | 15 | | $ | (5) | | | | $ | 18 | Current year prior service cost | | | | | | 9 | | | | | | | | | Amortization of: | | | | | | | | | | | | | | | | | Prior service cost | | | (2) | | | (2) | | | | | | | | (2) | | | Actuarial (loss) | | | (11) | | | (11) | | | (2) | | | | | (6) | Total recognized in regulatory assets | | | 5 | | | 11 | | | (7) | | | | | 10 | | | | | | | | | | | | | | | | | | Total recognized in net periodic defined benefit costs and regulatory assets | | $ | 16 | | $ | 22 | | $ | (5) | | | | $ | 18 |
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Schedule of Amounts to be Amortized from AOCI and Regulatory Assets/Liabilities in Next Fiscal Year |
The estimated amounts to be amortized from regulatory assets into net periodic defined benefit costs for LG&E in 2013 are as follows. | | Pension | | | Benefits | | | | | Prior service cost | | $ | 2 | Actuarial loss | | | 13 | Total | | $ | 15 |
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Schedule of Net Periodic Defined Benefit Costs Included in Income Statement |
The following table provides net periodic defined benefit costs charged to operating expense for the years ended December 31, 2012, and 2011, and November 1, 2010 through December 31, 2010, for the Successor and January 1, 2010 through October 31, 2010, for the Predecessor. | | Pension Benefits | | Other Postretirement Benefits | | | Successor | | | Predecessor | | | Successor | | | Predecessor | | | 2012 | | 2011 | | 2010 | | | 2010 | | | 2012 | | 2011 | | 2010 | | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LKE | | $ | 31 | | $ | 40 | | $ | 9 | | | $ | 37 | | | $ | 9 | | $ | 11 | | $ | 2 | | | $ | 9 | LG&E | | | 13 | | | 16 | | | 3 | | | | 12 | | | | 5 | | | 5 | | | 1 | | | | 4 | KU (a) | | | 8 | | | 10 | | | 2 | | | | 8 | | | | 3 | | | 4 | | | 1 | | | | 3 |
In the table above, for LG&E, amounts include costs for the specific plans it sponsors and the following allocated costs of defined benefit plans sponsored by LKE, based on its participation in those plans, which management believes are reasonable. | | Pension Benefits | | | Other Postretirement Benefits | | | Successor | | | Predecessor | | | Successor | | | Predecessor | | | 2012 | | 2011 | | 2010 | | | 2010 | | | 2012 | | 2011 | | 2010 | | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LG&E | | $ | 5 | | $ | 7 | | $ | 1 | | | $ | 6 | | | $ | 2 | | $ | 5 | | $ | 1 | | | $ | 4 |
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Defined Benefit Plan Assumptions and Impact of One Point Change on Postretirement Plans |
The following table provides the weighted-average assumptions used in the valuation of the benefit obligations at December 31. | | | | | | | | | | | | | | | | | | | Pension Benefits | | Other Postretirement Benefits | | | | | 2012 | | 2011 | | 2012 | | 2011 | LKE | | | | | | | | | | | | | | | Discount rate | | | | 4.24% | | | 5.08% | | | 3.99% | | | 4.78% | | Rate of compensation increase | | | | 4.00% | | | 4.00% | | | 4.00% | | | 4.00% | LG&E | | | | | | | | | | | | | | | Discount rate | | | | 4.20% | | | 5.00% | | | | | | | | Rate of compensation increase | | | | N/A | | | N/A | | | | | | |
The following table provides the weighted-average assumptions used to determine the net periodic defined benefit costs for the years ended December 31, 2012, and 2011, and November 1, 2010 through December 31, 2010, for the Successor and January 1, 2010 through October 31, 2010, for the Predecessor. | | | Pension Benefits | | Other Postretirement Benefits | | | | Successor | | | Predecessor | | Successor | | | Predecessor | | | | 2012 | | 2011 | | 2010 | | | 2010 | | 2012 | | 2011 | | 2010 | | | 2010 | LKE | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount rate | | | 5.09% | | | 5.49% | | | 5.40% | | | | 6.11% | | | 4.78% | | | 5.12% | | | 4.94% | | | | 5.82% | | Rate of compensation increase | | | 4.00% | | | 5.25% | | | 5.25% | | | | 5.25% | | | 4.00% | | | 5.25% | | | 5.25% | | | | 5.25% | | Expected return on plan assets (a) | | | 7.25% | | | 7.25% | | | 7.25% | | | | 7.75% | | | 7.02% | | | 7.16% | | | 7.04% | | | | 7.20% | LG&E | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount rate | | | 5.00% | | | 5.39% | | | 5.28% | | | | 6.08% | | | | | | | | | | | | | | | Rate of compensation increase | | | N/A | | | N/A | | | N/A | | | | N/A | | | | | | | | | | | | | | | Expected return on plan assets (a) | | | 7.25% | | | 7.25% | | | 7.25% | | | | 7.75% | | | | | | | | | | | | | |
(PPL, PPL Energy Supply, LKE and LG&E) (a) The expected long-term rates of return for PPL's, PPL Energy Supply's, LKE's and LG&E's U.S. pension and other postretirement benefits have been developed using a best-estimate of expected returns, volatilities and correlations for each asset class. The best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes. PPL management corroborates these rates with expected long-term rates of return calculated by its independent actuary, who uses a building block approach that begins with a risk-free rate of return with factors being added such as inflation, duration, credit spreads and equity risk. Each plan's specific asset allocation is also considered in developing a reasonable return assumption. The expected long-term rates of return for PPL's U.K. pension plans have been developed by PPL management with assistance from an independent actuary using a best estimate of expected returns, volatilities and correlations for each asset class. The best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes. |
Schedule of Funded Status of Defined Benefit Plans |
The funded status of the LG&E plan was as follows. | | | | | | | | Pension Benefits | | | | | | | | | 2012 | | 2011 | Change in Benefit Obligation | | | | | | | | | | | Benefit Obligation, beginning of period | | | | | | $ | 298 | | $ | 274 | | | Service cost | | | | | | | 1 | | | 2 | | | Interest cost | | | | | | | 14 | | | 14 | | | Plan amendments | | | | | | | | | | 9 | | | Actuarial loss | | | | | | | 32 | | | 14 | | | Gross benefits paid | | | | | | | (14) | | | (15) | Benefit Obligation, end of period | | | | | | | 331 | | | 298 | | | | | | | | | | | | | | Change in Plan Assets | | | | | | | | | | | Plan assets at fair value, beginning of period | | | | | | | 256 | | | 217 | | | Actual return on plan assets | | | | | | | 32 | | | 16 | | | Employer contributions | | | | | | | 13 | | | 38 | | | Gross benefits paid | | | | | | | (14) | | | (15) | Plan assets at fair value, end of period | | | | | | | 287 | | | 256 | | | | | | | | | | | | | | Funded Status, end of period | | | | | | $ | (44) | | $ | (42) | | | | | | | | | | | | | | Amounts recognized in the Balance Sheets consist of: | | | | | | | | | | | | | Noncurrent liability | | | | | | $ | (44) | | $ | (42) | Net amount recognized, end of period | | | | | | $ | (44) | | $ | (42) | | | | | | | | | | | | | | Amounts recognized in regulatory assets (pre-tax) | | | | | | | | | | | | consist of: | | | | | | | | | | | Prior service cost | | | | | | $ | 17 | | $ | 20 | Net actuarial loss | | | | | | | 123 | | | 115 | Total | | | | | | $ | 140 | | $ | 135 | | | | | | | | | | | | | | Total accumulated benefit obligation for defined benefit pension plan | | | | | | $ | 328 | | $ | 292 |
Allocations to LG&E resulted in liabilities at December 31 as follows. | | 2012 | | 2011 | | | | | | | | Funded status of the pension plans | | $ | 58 | | $ | 53 | Other postretirement benefits | | | 81 | | | 87 |
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Schedules of Asset Allocation of U.S. Pension Trusts Assets |
The asset allocation for the trusts and the target allocation by portfolio, at December 31, are as follows: PPL Services Corporation Master Trust | | | | | | | | | 2012 Target Asset Allocation (a) | | | | Percentage of trust assets | | | Weighted | | | | | | | | | | 2012 (a) | | | 2011 | | | Average | | | PPL Plans | | | LKE Plans | | | | | | | | | | | | | | | | | Growth Portfolio | | | 58% | | | 57% | | | 56% | | | 55% | | | 59% | | Equity securities | | | 31% | | | 31% | | | | | | | | | | | Debt securities (b) | | | 18% | | | 17% | | | | | | | | | | | Alternative investments | | | 9% | | | 9% | | | | | | | | | | Immunizing Portfolio | | | 41% | | | 41% | | | 42% | | | 43% | | | 38% | | Debt securities (b) | | | 40% | | | 40% | | | | | | | | | | | Derivatives | | | 1% | | | 1% | | | | | | | | | | Liquidity Portfolio | | | 1% | | | 2% | | | 2% | | | 2% | | | 3% | Total | | | 100% | | | 100% | | | 100% | | | 100% | | | 100% |
(a) Allocations exclude consideration of cash for the WKE Bargaining Employees' Retirement Plan and a guaranteed annuity contract held by the LG&E and KU Retirement Plan. (b) Includes commingled debt funds, which PPL treats as debt securities for asset allocation purposes. LG&E and KU Energy LLC Pension Trusts | | | | | | | | | | Percentage | | Target Asset | | | | of trust assets | | Allocation | | | 2011 | | 2011 | | | | | | | | | Growth Portfolio | | | 54% | | | 59% | | Equity securities | | | 33% | | | | | Debt securities (a) | | | 21% | | | | Immunizing Portfolio | | | 34% | | | 38% | | Debt securities (a) (b) | | | 34% | | | | Liquidity Portfolio (b) | | | 12% | | | 3% | Total | | | 100% | | | 100% |
(a) Includes commingled debt funds, which LKE treats as debt securities for asset allocation purposes. (b) The asset allocation for this portfolio was not within the established target range due to the transition of assets at the end of 2011 in anticipation of transfer into the PPL Services Corporation Master Trust in January 2012. |
Schedule of Fair Value of Financial Assets for U.S. Pension Plan Assets |
The fair value of net assets in the U.S. pension plan trusts by asset class and level within the fair value hierarchy was: | | | | | December 31, 2012 | | December 31, 2011 | | | | | | | | | Fair Value Measurements Using | | | | | Fair Value Measurements Using | | | | | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | PPL Services Corporation Master Trust | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | $ | 84 | | $ | 84 | | | | | | | | $ | 78 | | $ | 78 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | | 558 | | | 206 | | $ | 352 | | | | | | 371 | | | 247 | | $ | 124 | | | | | | | Small-cap | | | 124 | | | 124 | | | | | | | | | 112 | | | 112 | | | | | | | | | | Commingled debt | | | 676 | | | 56 | | | 620 | | | | | | 458 | | | | | | 458 | | | | | | International | | | 557 | | | 184 | | | 373 | | | | | | 299 | | | 102 | | | 197 | | | | Debt securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Treasury and U.S. government sponsored | | | | | | | | | | | | | | | | | | | | | | | | | | | | agency | | | 704 | | | 634 | | | 70 | | | | | | 515 | | | 443 | | | 72 | | | | | | Residential/commercial backed securities | | | 12 | | | | | | 11 | | $ | 1 | | | 9 | | | | | | 9 | | | | | | Corporate | | | 874 | | | | | | 847 | | | 27 | | | 446 | | | | | | 439 | | $ | 7 | | | Other | | | 24 | | | | | | 23 | | | 1 | | | 10 | | | | | | 10 | | | | | | International | | | 7 | | | | | | 7 | | | | | | 6 | | | | | | 6 | | | | Alternative investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | Commodities | | | 59 | | | | | | 59 | | | | | | | | | | | | | | | | | | Real estate | | | 93 | | | | | | 93 | | | | | | 85 | | | | | | 85 | | | | | | Private equity | | | 75 | | | | | | | | | 75 | | | 45 | | | | | | | | | 45 | | | Hedge funds | | | 125 | | | | | | 125 | | | | | | 92 | | | | | | 92 | | | | Derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps and swaptions | | | 36 | | | | | | 36 | | | | | | 20 | | | | | | 20 | | | | | | Other | | | 2 | | | | | | 2 | | | | | | 5 | | | | | | 5 | | | | Insurance contracts | | | 42 | | | | | | | | | 42 | | | | | | | | | | | | | Receivables | | | 55 | | | 29 | | | 26 | | | | | | 50 | | | 31 | | | 19 | | | | Payables | | | (66) | | | (55) | | | (11) | | | | | | (48) | | | (40) | | | (8) | | | | Total PPL Services Corporation Master Trust assets | | | 4,041 | | | 1,262 | | | 2,633 | | | 146 | | | 2,553 | | | 973 | | | 1,528 | | | 52 | 401(h) account restricted for other | | | | | | | | | | | | | | | | | | | | | | | | | | postretirement benefit obligations | | | (102) | | | (32) | | | (66) | | | (4) | | | (26) | | | (10) | | | (16) | | | | Fair value - PPL Services Corporation Master | | | | | | | | | | | | | | | | | | | | | | | | | | Trust pension assets | | | 3,939 | | | 1,230 | | | 2,567 | | | 142 | | | 2,527 | | | 963 | | | 1,512 | | | 52 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (PPL, LKE and LG&E) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LG&E and KU Energy LLC Pension Trusts | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | | | | | | | | | | | | | 122 | | | 122 | | | | | | | Equity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Large-cap | | | | | | | | | | | | | | | 220 | | | | | | 220 | | | | | | | Commingled debt | | | | | | | | | | | | | | | 65 | | | | | | 65 | | | | | | International | | | | | | | | | | | | | | | 106 | | | 44 | | | 62 | | | | Debt securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Treasury | | | | | | | | | | | | | | | 97 | | | 97 | | | | | | | | | Corporate | | | | | | | | | | | | | | | 342 | | | | | | 342 | | | | Derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | | | Total return swaps | | | | | | | | | | | | | | | 4 | | | | | | 4 | | | | Insurance contracts | | | | | | | | | | | | | | | 46 | | | | | | | | | 46 | Total LG&E and KU Energy LLC | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Trusts assets | | | | | | | | | | | | | | | 1,002 | | | 263 | | | 693 | | | 46 | 401(h) account restricted for other | | | | | | | | | | | | | | | | | | | | | | | | | | postretirement benefit obligations | | | | | | | | | | | | | | | (58) | | | (13) | | | (45) | | | | Fair value - LG&E and KU Energy LLC | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Trusts pension assets | | | | | | | | | | | | | | | 944 | | | 250 | | | 648 | | | 46 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value - total U.S. pension plans | | $ | 3,939 | | $ | 1,230 | | $ | 2,567 | | $ | 142 | | $ | 3,471 | | $ | 1,213 | | $ | 2,160 | | $ | 98 |
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Reconciliation of U.S. Pension Trust Assets Classified as Level 3 Included in Earnings |
A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2012 is as follows: | | | | | | Residential/ | | | | | | | | | | | | | | | | | | | | | | commercial | | | | | | | | | | | | | | | | | | | | | backed | | Corporate | | Private | | Insurance | | Other | | | | | | | | | | securities | | debt | | equity | | contracts | | Debt | | Total | | | | | | | | | | | | | | | | | | | | | | | | Balance at beginning of period | | | | | $ | 7 | | $ | 45 | | $ | 46 | | | | | $ | 98 | | Actual return on plan assets | | | | | | | | | | | | | | | | | | | | | | Relating to assets still held | | | | | | | | | | | | | | | | | | | | | | | at the reporting date | | | | | | 1 | | | 10 | | | 3 | | | | | | 14 | | | | Relating to assets sold during the period | | | | | | 2 | | | | | | | | | | | | 2 | | Purchases, sales and settlements | | $ | 1 | | | 21 | | | 20 | | | (7) | | | | | | 35 | | Transfers from level 2 to level 3 | | | | | | | | | | | | | | $ | 1 | | | 1 | | Transfers from level 3 to level 2 | | | | | | (4) | | | | | | | | | | | | (4) | Balance at end of period | | $ | 1 | | $ | 27 | | $ | 75 | | $ | 42 | | $ | 1 | | $ | 146 |
A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2011 is as follows: | | | | | | Residential/ | | | | | | | | | | | | | | | | | | | | | | commercial | | | | | | | | | | | | | | | | | | | | | backed | | Corporate | | Private | | Insurance | | | | | | | | | | | | securities | | debt | | equity | | contracts | | Other | | Total | | | | | | | | | | | | | | | | | | | | | | | | Balance at beginning of period | | | | | $ | 6 | | $ | 10 | | $ | 47 | | | | | $ | 63 | | Actual return on plan assets | | | | | | | | | | | | | | | | | | | | | | Relating to assets still held | | | | | | | | | | | | | | | | | | | | | | | at the reporting date | | | | | | (4) | | | 8 | | | 3 | | | | | | 7 | | Purchases, sales and settlements | | | | | | 5 | | | 27 | | | (4) | | | | | | 28 | Balance at end of period | | | | | $ | 7 | | $ | 45 | | $ | 46 | | | | | $ | 98 |
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Schedule of Expected Cash Flows - U.S. Defined Benefit Plans - Expected Payments and Related Federal Subsidy |
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the separate plan trust. | | | Pension | | | | | 2013 | | $ | 15 | 2014 | | | 15 | 2015 | | | 15 | 2016 | | | 16 | 2017 | | | 16 | 2018 - 2022 | | | 95 |
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Kentucky Utilities Co [Member]
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Net Periodic Defined Benefit Costs (Credits) [Line Items] |
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Schedule of Net Periodic Defined Benefit Costs Included in Income Statement |
The following table provides net periodic defined benefit costs charged to operating expense for the years ended December 31, 2012, and 2011, and November 1, 2010 through December 31, 2010, for the Successor and January 1, 2010 through October 31, 2010, for the Predecessor. | | Pension Benefits | | Other Postretirement Benefits | | | Successor | | | Predecessor | | | Successor | | | Predecessor | | | 2012 | | 2011 | | 2010 | | | 2010 | | | 2012 | | 2011 | | 2010 | | | 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LKE | | $ | 31 | | $ | 40 | | $ | 9 | | | $ | 37 | | | $ | 9 | | $ | 11 | | $ | 2 | | | $ | 9 | LG&E | | | 13 | | | 16 | | | 3 | | | | 12 | | | | 5 | | | 5 | | | 1 | | | | 4 | KU (a) | | | 8 | | | 10 | | | 2 | | | | 8 | | | | 3 | | | 4 | | | 1 | | | | 3 |
(a) KU does not directly sponsor any defined benefit plans. KU was allocated these costs of defined benefit plans sponsored by LKE, based on its participation in those plans, which management believes are reasonable. |
Schedule of Funded Status of Defined Benefit Plans |
Allocations to KU resulted in liabilities at December 31 as follows. | | 2012 | | 2011 | | | | | | | | Funded status of the pension plans | | $ | 104 | | $ | 83 | Other postretirement benefits | | | 53 | | | 62 |
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