Note 2 – Components of Net Periodic Benefit Cost

Southwest has a noncontributory qualified retirement plan with defined benefits covering substantially all employees and a separate unfunded supplemental retirement plan (“SERP”) which is limited to officers. Southwest also provides postretirement benefits other than pensions (“PBOP”) to its qualified retirees for health care, dental, and life insurance.

Net periodic benefit costs included in the table below are components of an overhead loading process associated with the cost of labor. The overhead process ultimately results in allocation of net periodic benefit costs to the same accounts to which productive labor is charged. As a result, net periodic benefit costs become components of various accounts, primarily operations and maintenance expense, net utility plant, and deferred charges and other assets.


	Qualified Retirement Plan
	Period Ended June 30,
	Three Months				Six Months				Twelve Months
	2013		2012		2013		2012		2013		2012
(Thousands of dollars)
Service cost	$	5,764	$	5,080	$	11,528	$	10,159	$	21,688	$	19,022
Interest cost		9,402		9,566		18,803		19,133		37,936		37,771
Expected return on plan assets		(12,460)		(11,445)		(24,920)		(22,890)		(47,810)		(42,947)
Amortization of net actuarial loss		8,065		5,971		16,131		11,942		28,072		19,116

Net periodic benefit cost	$	10,771	$	9,172	$	21,542	$	18,344	$	39,886	$	32,962


	SERP
	Period Ended June 30,
	Three Months				Six Months				Twelve Months
	2013		2012		2013		2012		2013		2012
(Thousands of dollars)
Service cost	$	93	$	68	$	187	$	137	$	324	$	245
Interest cost		384		407		767		814		1,582		1,697
Amortization of net actuarial loss		243		171		486		342		827		658

Net periodic benefit cost	$	720	$	646	$	1,440	$	1,293	$	2,733	$	2,600


	PBOP
	Period Ended June 30,
	Three Months				Six Months				Twelve Months
	2013		2012		2013		2012		2013		2012
(Thousands of dollars)
Service cost	$	305	$	244	$	610	$	489	$	1,098	$	918
Interest cost		621		637		1,241		1,273		2,515		2,588
Expected return on plan assets		(706)		(601)		(1,412)		(1,202)		(2,614)		(2,391)
Amortization of prior service cost		88		-		177		-		177		-
Amortization of transition obligation		-		216		-		433		434		867
Amortization of net actuarial loss		237		258		473		516		988		811

Net periodic benefit cost	$	545	$	754	$	1,089	$	1,509	$	2,598	$	2,793