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
(Thousands of dollars)	2014			2013			2014			2013			2014			2013
Service cost	$	5,340		$	5,764		$	10,680		$	11,528		$	22,208		$	21,688
Interest cost		10,860			9,402			21,721			18,803			40,525			37,936
Expected return on plan assets		(13,335	)		(12,460	)		(26,671	)		(24,920	)		(51,591	)		(47,810	)
Amortization of net actuarial loss		5,718			8,065			11,436			16,131			27,566			28,072

Net periodic benefit cost	$	8,583		$	10,771		$	17,166		$	21,542		$	38,708		$	39,886


	SERP
	Period Ended June 30,
	Three Months						Six Months						Twelve Months
(Thousands of dollars)	2014			2013			2014			2013			2014			2013
Service cost	$	73		$	93		$	146		$	187		$	332		$	324
Interest cost		436			384			872			767			1,640			1,582
Amortization of net actuarial loss		196			243			392			486			877			827

Net periodic benefit cost	$	705		$	720		$	1,410		$	1,440		$	2,849		$	2,733


	PBOP
	Period Ended June 30,
	Three Months						Six Months						Twelve Months
(Thousands of dollars)	2014			2013			2014			2013			2014			2013
Service cost	$	275		$	305		$	551		$	610		$	1,161		$	1,098
Interest cost		708			621			1,415			1,241			2,656			2,515
Expected return on plan assets		(816	)		(706	)		(1,632	)		(1,412	)		(3,044	)		(2,614	)
Amortization of prior service cost		88			88			177			177			355			177
Amortization of transition obligation		—			—			—			—			—			434
Amortization of net actuarial loss		—			237			—			473			472			988

Net periodic benefit cost	$	255		$	545		$	511		$	1,089		$	1,600		$	2,598