Benefit Plans and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2020

Benefit Plans and Other Postretirement Benefits [Abstract]

Target Asset Allocations and Plan Assets Measured at Fair Value

or each of the fair value hierarchy levels, SPS’ pension plan assets measured at fair value:

	Dec. 31, 2020 (a)										Dec. 31, 2019 (a)
(Millions of Dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total		Level 1		Level 2		Level 3		Measured at NAV		Total
Cash equivalents	$	31	$	—	$	—	$	—	$	31	$	19	$	—	$	—	$	—	$	19
Commingled funds	211		—		—		160		371		203		—		—		145		348
Debt securities	—		110		1		—		111		—		98		1		—		99
Equity securities	11		—		—		—		11		12		—		—		—		12
Other	2		1		—		—		3		(17)		—		—		(3)		(20)
Total	$	255	$	111	$	1	$	160	$	527	$	217	$	98	$	1	$	142	$	458

(a)See Note 8 for further information on fair value measurement inputs and methods.

For each of the fair value hierarchy levels, SPS’ proportionate allocation of the total postretirement benefit plan assets that were measured at fair value:

	Dec. 31, 2020 (a)										Dec. 31, 2019 (a)
(Millions of Dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total		Level 1		Level 2		Level 3		Measured at NAV		Total
Cash equivalents	$	3	$	—	$	—	$	—	$	3	$	2	$	—	$	—	$	—	$	2
Insurance contracts	—		5		—		—		5		—		5		—		—		5
Commingled funds	7		—		—		7		14		7		—		—		8		15
Debt securities	—		22		—		—		22		—		22		—		—		22
Total	$	10	$	27	$	—	$	7	$	44	$	9	$	27	$	—	$	8	$	44

(a)See Note 8 for further information on fair value measurement inputs and methods.

Target asset allocations:

	Pension Benefits				Postretirement Benefits
	2020		2019		2020		2019
Domestic and international equity securities	35	%	37	%	15	%	15	%
Long-duration fixed income securities	35		30		—		—
Short-to-intermediate fixed income securities	13		14		72		72
Alternative investments	15		17		9		9
Cash	2		2		4		4
Total	100	%	100	%	100	%	100	%

Funded Status of Plans

Funded Status — Benefit obligations for both pension and postretirement plans increased from Dec. 31, 2019 to Dec. 31, 2020, due primarily to decreases in discount rates used in actuarial valuations. Comparisons of the actuarially computed benefit obligation, changes in plan assets and funded status of the pension and postretirement health care plans for SPS are as follows:

	Pension Benefits				Postretirement Benefits
(Millions of Dollars)	2020		2019		2020		2019
Change in Benefit Obligation:
Obligation at Jan. 1	$	519	$	478	$	44	$	42
Service cost	10		9		1		1
Interest cost	18		20		1		2
Plan amendments	—		—		—		—
Actuarial loss (gain)	45		44		(5)		—
Plan participants’ contributions	—		—		1		1
Benefit payments (a)	(30)		(32)		(4)		(2)
Obligation at Dec. 31	$	562	$	519	$	38	$	44
Change in Fair Value of Plan Assets:
Fair value of plan assets at Jan. 1	$	458	$	392	$	44	$	40
Actual return on plan assets	84		80		3		5
Employer contributions	15		18		—		—
Plan participants’ contributions	—		—		1		1
Benefit payments	(30)		(32)		(4)		(2)
Fair value of plan assets at Dec. 31	$	527	$	458	$	44	$	44
Funded status of plans at Dec. 31	$	(35)	$	(61)	$	6	$	—
Amounts recognized in the Balance Sheet at Dec. 31:
Noncurrent assets	—		—		6		—
Noncurrent liabilities	(35)		(61)		—		—
Net amounts recognized	$	(35)	$	(61)	$	6	$	—

(a)Includes approximately $7 million in 2019, of lump-sum benefit payments used in the determination of a settlement charge.

	Pension Benefits				Postretirement Benefits
Significant Assumptions Used to Measure Benefit Obligations:	2020		2019		2020		2019
Discount rate for year-end valuation	2.71	%	3.49	%	2.65	%	3.47	%
Expected average long-term increase in compensation level	3.75	%	3.75	%	N/A		N/A
Mortality table	Pri-2012		Pri-2012		Pri-2012		Pri-2012
Health care costs trend rate — initial: Pre-65	N/A		N/A		5.50	%	6.00	%
Health care costs trend rate — initial: Post-65	N/A		N/A		5.00	%	5.10	%
Ultimate trend assumption — initial: Pre-65	N/A		N/A		4.50	%	4.50	%
Ultimate trend assumption — initial: Post-65	N/A		N/A		4.50	%	4.50	%
Years until ultimate trend is reached	N/A		N/A		5		3

Accumulated benefit obligation for the pension plan was $519 million and $481 million as of Dec. 31, 2020 and 2019, respectively.

Net Periodic Benefit Cost (Credit) — Net periodic benefit cost (credit), other than the service cost component, is included in other income in the statements of income.

Components of net periodic benefit cost (credit) and amounts recognized in other comprehensive income and regulatory assets and liabilities:

Components of Net Periodic Benefit Costs

	Pension Benefits									Postretirement Benefits
(Millions of Dollars)	2020			2019			2018			2020			2019			2018
Service cost	$	10		$	9		$	10		$	1		$	1		$	1
Interest cost	18			20			18			1			2			2
Expected return on plan assets	(29)			(28)			(28)			(2)			(2)			(3)
Amortization of prior service credit	—			—			—			—			(1)			—
Amortization of net loss	12			11			14			—			—			—
Settlement charge (a)	—			2			3			—			—			—
Net periodic pension cost	11			14			17			—			—			—
Effects of regulation	2			1			(2)			—			—			—
Net benefit cost recognized for financial reporting	$	13		$	15		$	15		$	—		$	—		$	—
Significant Assumptions Used to Measure Costs:
Discount rate	3.49		%	4.31		%	3.63		%	3.47		%	4.32		%	3.62		%
Expected average long-term increase in compensation level	3.75			3.75			3.75			—			—			—
Expected average long-term rate of return on assets	6.78			6.78			6.78			4.50			5.30			5.80

(a)A settlement charge is required when the amount of all lump-sum distributions during the year is greater than the sum of the service and interest cost components of the annual net periodic pension cost. In 2019 and 2018, as a result of lump-sum distributions during each plan year, SPS recorded a total pension settlement charge of $2 million and $3 million, respectively. A total of $1 million of that amount was recorded in the income statement in 2019 and 2018, respectively. There were no settlement charges recorded to the qualified pension plans in 2020.

Projected Benefit Payments for the Pension and Postretirement Benefit Plans

Projected Benefit Payments

SPS’ projected benefit payments:

(Millions of Dollars)	Projected Pension Benefit Payments		Gross Projected Postretirement Health Care Benefit Payments		Expected Medicare Part D Subsidies		Net Projected Postretirement Health Care Benefit Payments
2021	$	32	$	3	$	—	$	3
2022	31		3		—		3
2023	31		3		—		3
2024	31		3		—		3
2025	31		3		—		3
2026-2030	152		12		—		12

Other Postretirement Benefits Plan [Member]

Benefit Plans and Other Postretirement Benefits [Abstract]

Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost

	Pension Benefits				Postretirement Benefits
(Millions of Dollars)	2020		2019		2020		2019
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost:
Net loss	$	186	$	210	$	(18)	$	(12)
Prior service credit	(1)		(1)		(1)		(1)
Total	$	185	$	209	$	(19)	$	(13)
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost Have Been Recorded as Follows Based Upon Expected Recovery in Rates:
Current regulatory assets	$	11	$	11	$	—	$	—
Noncurrent regulatory assets	174		198		—		—
Current regulatory liabilities	—		—		(1)		(1)
Noncurrent regulatory liabilities	—		—		(18)		(12)
Total	$	185	$	209	$	(19)	$	(13)

Measurement date Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2019