Retirement Benefits | 12 Months Ended |
Dec. 31, 2013 |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ' |
RETIREMENT BENEFITS | ' |
RETIREMENT BENEFITS |
We offer defined benefit pension and postretirement benefit plans covering our employees. Our employees and retirees, excluding EEI employees and retirees, participated in Ameren’s single-employer pension and other postretirement plans through December 1, 2013, prior to the AER Acquisition. Effective December 2, 2013, our employees and retirees, excluding EEI employees and retirees, participate in Dynegy’s single-employer pension and other postretirement plans. Separately, our EEI employees and retirees participate in EEI’s single-employer pension and other postretirement plans. We consolidate EEI, and therefore, EEI’s plans are reflected in our pension and postretirement balances and disclosures. We use a measurement date of December 31 for our pension and postretirement benefit plans. |
As a result of the AER Acquisition, Ameren retained the pension obligations associated with the current and former employees of Genco and the postretirement benefit obligations associated with the employees of Genco who were eligible to retire at December 2, 2013 with respect to such employees’ participation in Ameren’s single-employer pension and postretirement plans. Effective with the AER Acquisition, Dynegy assumed the postretirement benefit obligation for active union employees of New AER and its subsidiaries not eligible to retire based on the assumption of the collective bargaining agreements in place. Genco retained the pension and other postretirement benefit obligations associated with EEI’s current and former employees. As a result of the AER Acquisition, certain EEI employees were terminated which resulted in a curtailment gain of $26 million which was recorded in Other operations and maintenance in our consolidated statements of operations. |
For our disclosures below, unless otherwise noted, we have reflected the obligations, plan assets, and costs associated with EEI’s pension and postretirement plans. Also reflected is an allocation of our share of obligations, plan assets, and costs associated with our participation in Ameren’s single-employer pension and postretirement plans through December 1, 2013 and Dynegy’s single-employer pension and postretirement plans for the period from December 2, 2013 through December 31, 2013. The allocation of obligations, plan assets, and costs from our participation in Ameren’s and Dynegy’s single-employer pension plan was based on our employees’ share of total pensionable salaries. The allocation of obligations, plan assets, and costs from our participation in Ameren’s and Dynegy’s single-employer postretirement plans was based on the number of our employees. |
The following table presents the funded status of our pension and postretirement benefit plans as of December 31, 2013 and 2012. It also provides the amounts included in accumulated OCI at December 31, 2013 and 2012 that have not been recognized in net periodic benefit costs. These amounts include the funded status of EEI’s pension and postretirement plans as well as an allocation of our share of obligation and plan assets associated with our participation in Ameren’s and Dynegy’s single-employer pension and postretirement plans. |
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| | 2013 | | 2012 | | |
(amounts in millions) | | Pension Benefits | | Postretirement | | Pension Benefits | | Postretirement | | |
Benefits | Benefits | | |
Accumulated benefit obligation at end of year | | $ | 89 | | | N/A | | | $ | 251 | | | N/A | | | |
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Change in benefit obligation: | | | | | | | | | | |
Net benefit obligation at beginning of year | | $ | 251 | | | $ | 93 | | | $ | 239 | | | $ | 150 | | | |
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Transfer of liability from (to) Ameren Services / Medina Valley (a) | | (7 | ) | | (2 | ) | | 13 | | | 2 | | | |
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Transfer of liability to Ameren (b) | | (136 | ) | | (33 | ) | | — | | | — | | | |
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Allocation of liability from Dynegy (c) | | — | | | 4 | | | — | | | — | | | |
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Service cost | | 5 | | | 2 | | | 5 | | | 3 | | | |
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Interest cost | | 10 | | | 3 | | | 10 | | | 6 | | | |
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Plan amendments (d)(e) | | — | | | (4 | ) | | (6 | ) | | (75 | ) | | |
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Participant contributions | | — | | | 1 | | | — | | | 1 | | | |
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Actuarial (gain) loss | | (11 | ) | | (8 | ) | | 3 | | | 15 | | | |
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Curtailments (f) | | — | | | 1 | | | 2 | | | (1 | ) | | |
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Benefits paid | | (22 | ) | | (7 | ) | | (15 | ) | | (8 | ) | | |
Administrative expenses paid | | (1 | ) | | — | | | — | | | — | | | |
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Net benefit obligation at end of year | | 89 | | | 50 | | | 251 | | | 93 | | | |
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Change in plan assets: | | | | | | | | | | |
Fair value of plan assets at beginning of year | | 183 | | | 83 | | | 167 | | | 81 | | | |
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Transfer of assets from Ameren Services / Medina Valley (a) | | (6 | ) | | (1 | ) | | 9 | | | 2 | | | |
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Transfer of assets to Ameren (b) | | (130 | ) | | (21 | ) | | — | | | — | | | |
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Actual return on plan assets | | 36 | | | 12 | | | 11 | | | 7 | | | |
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Employer contributions | | 15 | | | — | | | 11 | | | — | | | |
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Participant contributions | | — | | | 1 | | | — | | | 1 | | | |
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Benefits paid | | (22 | ) | | (7 | ) | | (15 | ) | | (8 | ) | | |
Administrative expenses paid | | (1 | ) | | — | | | — | | | — | | | |
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Fair value of plan assets at end of year | | 75 | | | 67 | | | 183 | | | 83 | | | |
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Funded status | | $ | 14 | | | $ | (17 | ) | | $ | 68 | | | $ | 10 | | | |
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Amounts recognized in the balance sheet consist of: | | | | | | | | | | |
Noncurrent asset (g) | | $ | — | | | $ | (21 | ) | | $ | — | | | $ | (14 | ) | | |
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Current liability | | — | | | — | | | — | | | — | | | |
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Noncurrent liability | | 14 | | | 4 | | | 68 | | | 24 | | | |
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Net liability (asset) recognized | | $ | 14 | | | $ | (17 | ) | | $ | 68 | | | $ | 10 | | | |
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Amounts (pretax) recognized in accumulated OCI consist of: | | | | | | | | | | |
Net actuarial loss | | $ | 17 | | | $ | 44 | | | $ | 73 | | | $ | 59 | | | |
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Prior service cost (credit) | | (3 | ) | | (43 | ) | | (10 | ) | | (62 | ) | | |
Total | | $ | 14 | | | $ | 1 | | | $ | 63 | | | $ | (3 | ) | | |
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_________________________________________ |
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(a) | In October 2013, 52 employees from Genco were transferred to Ameren Services and Medina Valley through an internal reorganization. On December 31, 2012, 74 employees from Ameren Services were transferred to Genco through an internal reorganization. | | | | | | | | | | | | | | | | | |
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(b) | Effective with the AER Acquisition, Ameren retained the portion of Genco’s pension obligations associated with the current and former employees of Genco and the portion of Genco’s postretirement benefit obligations associated with the employees of Genco who were eligible to retire at December 2, 2013 with respect to such employees’ participation in Ameren’s single-employer pension and postretirement plans. | | | | | | | | | | | | | | | | | |
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(c) | Amount represents the allocation of the obligation from our participation in Dynegy’s single-employer plans. | | | | | | | | | | | | | | | | | |
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(d) | Effective with the AER Acquisition, the EEI management postretirement plan was remeasured as a result of a reduction in employees participating in the postretirement plan. This remeasurement reduced the benefit obligation, resulting in the establishment of a prior service credit. | | | | | | | | | | | | | | | | | |
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(e) | In 2012, EEI's pension plan was amended to adjust the calculation of the future benefit obligation for all of its active management employees and certain union-represented employees from a traditional, final pay formula to a cash balance formula. Additionally, in 2012, EEI's management and union-represented postretirement medical benefit plans were amended to adjust for moving to a Medicare Advantage plan. | | | | | | | | | | | | | | | | | |
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(f) | Effective with the AER Acquisition, there was a reduction in employees who participated in the EEI management postretirement plan which resulted in a curtailment of the plan. EEI implemented an employee reduction program in 2012, which resulted in a curtailment of its pension and management postretirement benefit plans. | | | | | | | | | | | | | | | | | |
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(g) | The EEI union postretirement plan was over-funded as of December 31, 2013 and 2012 and the EEI management postretirement plan was over-funded as of December 31, 2013, which was included in our balance sheets in “Other assets.” | | | | | | | | | | | | | | | | | |
The following table presents the assumptions used to determine our benefit obligations at December 31, 2013 and 2012: |
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| | Pension Benefits | | Postretirement Benefits | | | | | | |
| | 2013 | | 2012 | | 2013 | | 2012 | | | | | | |
Discount rate at measurement date (a) | | 4.82 | % | | 4 | % | | 4.78 | % | | 4 | % | | | | | | |
Increase in future compensation (a) | | 3.5 | % | | 4.48 | % | | 3.5 | % | | 4.41 | % | | | | | | |
Ameren - Medical cost trend rate (initial) | | N/A | | | N/A | | | N/A | | | 5 | % | | | | | | |
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Ameren - Medical cost trend rate (ultimate) | | N/A | | | N/A | | | N/A | | | 5 | % | | | | | | |
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Ameren - Years to ultimate rate | | N/A | | | N/A | | | N/A | | | 0 | | | | | | | |
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EEI - Medical cost trend rate (initial) | | N/A | | | N/A | | | 7.75 | % | | 7.96 | % | | | | | | |
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EEI - Medical cost trend rate (ultimate) | | N/A | | | N/A | | | 4.5 | % | | 4.5 | % | | | | | | |
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EEI - Years to ultimate rate | | N/A | | | N/A | | | 10 years | | | 15 years | | | | | | | |
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_________________________________________ |
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(a) | A weighted average rate of EEI’s and Dynegy’s pension and postretirement plans at December 31, 2013. A weighted average rate of EEI’s and Ameren’s pension and postretirement plans at December 31, 2012. | | | | | | | | | | | | | | | | | |
Ameren, Dynegy and EEI determine their discount rate assumptions by identifying a theoretical settlement portfolio of high-quality corporate bonds sufficient to provide for their plan's projected benefit payments, pursuant to authoritative accounting guidance on the determination of discount rates used for defined benefit plan obligations. For each plan, a single discount rate is then determined that results in a discounted value of that plan's benefit payments that equates to the market value of the selected bonds. |
Funding |
Pension benefits are based on the employees’ years of service and compensation. The Dynegy, Ameren and EEI pension plans are funded in compliance with income tax regulations and federal funding or regulatory requirements. As a result, we expect to fund EEI’s pension plan at a level equal to the greater of the pension expense or the legally required minimum contribution. In 2014, we expect to make contributions of $4 million to EEI's pension plan. In the aggregate, we expect to make contributions of $15 million to EEI’s pension plan over the next five years. Dynegy will contribute the portion of their pension related to Genco employees. These amounts are estimates and may change based on actual investment performance, changes in interest rates, changes in our assumptions, any pertinent changes in government regulations or any voluntary contributions. |
The following table presents the cash contributions made to our defined benefit retirement plans during 2013, 2012 and 2011: |
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| | Pension Benefits | | | | | | |
(amounts in millions) | | 2013 | | 2012 | | 2011 | | | | | | |
Ameren allocation (a) | | $ | 5 | | | $ | 4 | | | $ | 4 | | | | | | | |
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EEI | | 10 | | | 7 | | | 8 | | | | | | | |
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Total | | $ | 15 | | | $ | 11 | | | $ | 12 | | | | | | | |
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_________________________________________ |
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(a) | Represents an allocation of our share of cash contributions associated with our participation in Ameren’s pension plans. | | | | | | | | | | | | | | | | | |
Our current funding policies are to forego further contributions to their postretirement benefit plans, except as necessary to fund benefit payments. Employer contributions to our postretirement plans were less than $1 million for each year ended December 31, 2013, 2012 and 2011. |
Investment Strategy and Policies |
Since we received an allocation, not a specific assignment, of Ameren’s and Dynegy’s single-employer plan assets, the asset related disclosures below focus on EEI’s plan assets, which are all specifically assigned to us and were retained by us after the AER Acquisition. In connection with the AER Acquisition, as of December 2, 2013, Ameren retained all of the plan assets within its single-employer pension and postretirement plans. |
EEI manages plan assets in accordance with the “prudent investor” guidelines contained in ERISA. EEI’s goal is to earn the highest possible return consistent with its tolerance for risk, which is monitored by EEI’s management and board of directors. EEI delegates investment management to specialists in each asset class. As appropriate, EEI provides its investment managers with guidelines that specify allowable and prohibited investment types and regularly monitor manager performance and compliance with investment guidelines. |
The expected return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Projected rates of return for each asset class were estimated after an analysis of historical experience, future expectations, and the volatility of the various asset classes. After considering the target asset allocation for each asset class, EEI adjusted the overall expected rate of return for the portfolio for historical and expected experience of active portfolio management results compared with benchmark returns and for the effect of expenses paid from plan assets. EEI will utilize an expected return on plan assets for its pension plan assets of 6.25% in 2014. EEI will utilize an expected return on plan assets for its postretirement plan assets of 6.50% for EEI union employees and 5.50% for EEI management employees in 2014. |
EEI strives to assemble a portfolio of diversified assets that does not create a significant concentration of risks. EEI’s management develops asset allocation guidelines between asset classes, and it creates diversification through investments in assets that differ by type (equity or debt). The diversification of assets is displayed in the target allocation table below. EEI’s management also routinely rebalances the plan assets to adhere to the diversification goals. The following table presents EEI’s target allocations for 2014 and EEI’s pension and postretirement plans’ asset categories as of December 31, 2013 and 2012. |
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Asset Category | | Target Allocation | | Percentage of Plan Assets at December 31, | | | | | | | | | |
2014 | 2013 | | 2012 | | | | | | | | | |
Pension Plan: | | | | | | | | | | | | | | | |
Equity securities | | 60 | % | | 61 | % | | 59 | % | | | | | | | | | |
Debt securities | | 40 | % | | 39 | % | | 38 | % | | | | | | | | | |
Cash | | — | % | | — | % | | 3 | % | | | | | | | | | |
Total | | 100 | % | | 100 | % | | 100 | % | | | | | | | | | |
Postretirement Plans: | | | | | | | | | | | | | | | |
Equity securities | | 60 | % | | 60 | % | | 62 | % | | | | | | | | | |
Debt securities | | 40 | % | | 38 | % | | 36 | % | | | | | | | | | |
Cash | | — | % | | 2 | % | | 2 | % | | | | | | | | | |
Total | | 100 | % | | 100 | % | | 100 | % | | | | | | | | | |
Fair Value Measurements of Plan Assets |
Investments in the pension and postretirement benefit plans were stated at fair value as of December 31, 2013. The fair value of an asset is the amount that would be received upon sale in an orderly transaction between market participants at the measurement date. Cash and cash equivalents have initial maturities of three months or less and are recorded at cost plus accrued interest. The carrying amounts of cash and cash equivalents approximate fair value because of the short-term nature of these instruments. Investments traded in active markets on national or international securities exchanges are valued at closing prices on the last business day on or before the measurement date. Securities traded in OTC markets are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. |
As described above, a portion of Dynegy’s pension plan assets is allocated to us as of December 31, 2013. The amount of Dynegy pension plan assets allocated to us for financial reporting purposes as of December 31, 2013, was less than $1 million based on pensionable salaries. The following table sets forth, by level within the fair value hierarchy discussed in Note 9—Fair Value Measurements, the EEI pension plan assets measured at fair value as of December 31, 2013: |
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(amounts in millions) | | Quoted Prices in | | Significant Other | | Significant Other | | Total | | |
Active Markets for | Observable Inputs | Unobservable | | |
Identified Assets | (Level 2) | Inputs | | |
(Level 1) | | (Level 3) | | |
Cash and cash equivalents | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | |
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Equity securities: | | | | | | | | | | |
U.S. large capitalization | | — | | | 26 | | | — | | | 26 | | | |
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U.S. small capitalization | | — | | | 14 | | | — | | | 14 | | | |
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International | | — | | | 6 | | | — | | | 6 | | | |
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Debt Securities | | — | | | 29 | | | — | | | 29 | | | |
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Total | | $ | — | | | $ | 75 | | | $ | — | | | $ | 75 | | | |
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As described above, a portion of Ameren’s pension plan assets was allocated to us as of December 31, 2012. The amount of Ameren pension plan assets allocated to us for financial reporting purposes as of December 31, 2012, was $117 million based on pensionable salaries. The following table sets forth, by level within the fair value hierarchy discussed in Note 9—Fair Value Measurements, the EEI pension plan assets measured at fair value as of December 31, 2012: |
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(amounts in millions) | | Quoted Prices in | | Significant Other | | Significant Other | | Total | | |
Active Markets for | Observable Inputs | Unobservable | | |
Identified Assets | (Level 2) | Inputs | | |
(Level 1) | | (Level 3) | | |
Cash and cash equivalents | | $ | — | | | $ | 2 | | | $ | — | | | $ | 2 | | | |
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Equity securities: | | | | | | | | | | |
U.S. large capitalization | | — | | | 22 | | | — | | | 22 | | | |
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U.S. small capitalization | | — | | | 12 | | | — | | | 12 | | | |
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International | | — | | | 5 | | | — | | | 5 | | | |
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Debt securities | | — | | | 25 | | | — | | | 25 | | | |
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Total | | $ | — | | | $ | 66 | | | $ | — | | | $ | 66 | | | |
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As described above, a portion of Dynegy’s postretirement plan assets is allocated to us as of December 31, 2013. The amount of Dynegy postretirement plan assets allocated to us for financial reporting purposes as of December 31, 2013 was $1 million based on the number of our non-EEI employees. The following table sets forth, by level within the fair value hierarchy discussed in Note 9—Fair Value Measurements, the EEI postretirement benefit plans assets measured at fair value as of December 31, 2013: |
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(amounts in millions) | | Quoted Prices in | | Significant Other | | Significant Other | | Total | | |
Active Markets for | Observable Inputs | Unobservable | | |
Identified Assets | (Level 2) | Inputs | | |
(Level 1) | | (Level 3) | | |
Cash and cash equivalents | | $ | 1 | | | $ | — | | | $ | — | | | $ | 1 | | | |
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Equity securities: | | | | | | | | | | |
U.S. large capitalization | | 33 | | | — | | | — | | | 33 | | | |
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International | | 8 | | | — | | | — | | | 8 | | | |
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Debt securities: | | | | | | | | | | | |
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U.S. treasury and agency securities | | 13 | | | 1 | | | — | | | 14 | | | |
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Municipal bonds | | — | | | 5 | | | — | | | 5 | | | |
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Corporate bonds | | — | | | 6 | | | — | | | 6 | | | |
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Total | | $ | 55 | | | $ | 12 | | | $ | — | | | $ | 67 | | | |
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As described above, a portion of Ameren’s postretirement plan assets was allocated to us as of December 31, 2012. The amount of Ameren postretirement plan assets allocated to us for financial reporting purposes as of December 31, 2012 was $21 million based on the number of our non-EEI employees. The following table sets forth, by level within the fair value hierarchy discussed in Note 9—Fair Value Measurements, the EEI postretirement benefit plans assets measured at fair value as of December 31, 2012: |
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(amounts in millions) | | Quoted Prices in | | Significant Other | | Significant Other | | Total | | |
Active Markets for | Observable Inputs | Unobservable | | |
Identified Assets | (Level 2) | Inputs | | |
(Level 1) | | (Level 3) | | |
Cash and cash equivalents | | $ | — | | | $ | 1 | | | $ | — | | | $ | 1 | | | |
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Equity securities: | | | | | | | | | | |
U.S. large capitalization | | 32 | | | — | | | — | | | 32 | | | |
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International | | 7 | | | — | | | — | | | 7 | | | |
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Debt securities: | | | | | | | | | | |
U.S. treasury and agency securities | | — | | | 11 | | | — | | | 11 | | | |
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Municipal bonds | | — | | | 5 | | | — | | | 5 | | | |
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Corporate bonds | | — | | | 6 | | | — | | | 6 | | | |
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Total | | $ | 39 | | | $ | 23 | | | $ | — | | | $ | 62 | | | |
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Net Periodic Benefit Cost |
The following table presents the components of our net periodic benefit cost of the EEI pension and postretirement benefit plans and an allocation of net periodic benefit costs from our participation in Ameren’s and Dynegy’s pension and postretirement benefit plans during 2013, 2012 and 2011: |
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(amounts in millions) | | Pension Benefits | | Postretirement Benefits | | | | | | | | | | |
2013 | | | | | | | | | | | | | | |
Service cost | | $ | 5 | | | $ | 2 | | | | | | | | | | | |
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Interest cost | | 10 | | | 3 | | | | | | | | | | | |
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Expected return on plan assets | | (13 | ) | | (5 | ) | | | | | | | | | | |
Amortization of: | | | | | | | | | | | | | | |
Prior service cost | | (1 | ) | | (8 | ) | | | | | | | | | | |
Actuarial loss | | 6 | | | 5 | | | | | | | | | | | |
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Settlements | | 1 | | | — | | | | | | | | | | | |
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Curtailment gain (a) | | — | | | (26 | ) | | | | | | | | | | |
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Net periodic benefit cost | | $ | 8 | | | $ | (29 | ) | | | | | | | | | | |
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2012 | | | | | | | | | | | | | | |
Service cost | | $ | 5 | | | $ | 3 | | | | | | | | | | | |
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Interest cost | | 10 | | | 6 | | | | | | | | | | | |
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Expected return on plan assets | | (13 | ) | | (6 | ) | | | | | | | | | | |
Amortization of: | | | | | | | | | | | | | | |
Prior service cost | | (1 | ) | | (3 | ) | | | | | | | | | | |
Actuarial loss | | 6 | | | 4 | | | | | | | | | | | |
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Curtailment loss (b) | | 2 | | | — | | | | | | | | | | | |
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Net periodic benefit cost | | $ | 9 | | | $ | 4 | | | | | | | | | | | |
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2011 | | | | | | | | | | | | | | |
Service cost | | $ | 6 | | | $ | 3 | | | | | | | | | | | |
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Interest cost | | 11 | | | 6 | | | | | | | | | | | |
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Expected return on plan assets | | (13 | ) | | (6 | ) | | | | | | | | | | |
Amortization of: | | | | | | | | | | | | | | |
Prior service cost | | — | | | (3 | ) | | | | | | | | | | |
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Actuarial loss | | 3 | | | 2 | | | | | | | | | | | |
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Net periodic benefit cost | | $ | 7 | | | $ | 2 | | | | | | | | | | | |
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_________________________________________ |
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(a) | Represents EEI’s management postretirement benefit plans’ curtailment gain recognized due to a reduction of employees as a result of the AER Acquisition. | | | | | | | | | | | | | | | | | |
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(b) | Represents EEI’s pension and management postretirement benefit plans’ curtailment loss recognized as a result of its 2012 employee reduction program. | | | | | | | | | | | | | | | | | |
In addition to the above net periodic benefit cost for pension benefits, we were allocated $1 million, $2 million and $1 million in net periodic benefit costs from Ameren Services employees doing work on our behalf during the period from January 1 through December 1, 2013 and the years ended December 31, 2012 and 2011, respectively. We were also allocated less than $1 million, $1 million and $1 million in net periodic benefit costs for postretirement benefits from Ameren Services employees doing work on our behalf during the period from January 1 through December 1, 2013 and the years ended December 31, 2012 and 2011, respectively. |
The estimated amounts that will be amortized from accumulated OCI into net periodic benefit cost in 2014 are as follows: |
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(amounts in millions) | | Pension Benefits (a) | | Postretirement Benefits (a) | | | | | | | | | | |
Prior service cost (credit) | | $ | — | | | $ | (4 | ) | | | | | | | | | | |
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Net actuarial loss | | 1 | | | 3 | | | | | | | | | | | |
| | | | | | | | | |
Total | | $ | 1 | | | $ | (1 | ) | | | | | | | | | | |
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_________________________________________ |
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(a) | Includes only amounts for EEI’s plans. | | | | | | | | | | | | | | | | | |
The amortization of prior service cost is determined using a straight line amortization of the cost over the average remaining service period of employees expected to receive benefits under the Plan. |
The expected pension and postretirement benefit payments for expected future service, as of December 31, 2013, are as follows: |
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(amounts in millions) | | Pension Benefits (a) | | Postretirement Benefits (a) | | | | | | | | | | |
2014 | | $ | 14 | | | $ | 3 | | | | | | | | | | | |
| | | | | | | | | |
2015 | | $ | 6 | | | $ | 3 | | | | | | | | | | | |
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2016 | | $ | 7 | | | $ | 3 | | | | | | | | | | | |
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2017 | | $ | 7 | | | $ | 3 | | | | | | | | | | | |
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2018 | | $ | 7 | | | $ | 3 | | | | | | | | | | | |
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2019 - 2023 | | $ | 32 | | | $ | 14 | | | | | | | | | | | |
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_________________________________________ |
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(a) | Includes only amounts for EEI’s plans. | | | | | | | | | | | | | | | | | |
The following table presents the assumptions used to determine net periodic benefit cost for our pension and postretirement benefit plans for the years ended December 31, 2013, 2012 and 2011: |
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| | Pension Benefits | | Postretirement Benefits |
| | 2013 | | 2012 | | 2011 | | 2013 | | 2012 | | 2011 |
Discount rate (a) | | (b) | | | 4.36 | % | | 5.33 | % | | (c) | | | 4.29 | % | | 5.39 | % |
|
Expected return on plan assets (a) | | 7.65 | % | | 7.84 | % | | 8 | % | | 7.59 | % | | 7.87 | % | | 7.93 | % |
Increase in future compensation (a) | | (d) | | | 3.7 | % | | 3.7 | % | | (e) | | | 3.86 | % | | 3.83 | % |
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Ameren - Medical cost trend rate (initial) | | N/A | | | N/A | | | N/A | | | 5 | % | | 5.5 | % | | 6 | % |
|
Ameren - Medical cost trend rate (ultimate) | | N/A | | | N/A | | | N/A | | | 5 | % | | 5 | % | | 5 | % |
|
Ameren - Years to ultimate rate | | N/A | | | N/A | | | N/A | | | 0 | | | 1 year | | | 2 years | |
|
EEI - Medical cost trend rate (initial) | | N/A | | | N/A | | | N/A | | | (f) | | | 8.3 | % | | 8.65 | % |
|
EEI - Medical cost trend rate (ultimate) | | N/A | | | N/A | | | N/A | | | 4.5 | % | | 4.5 | % | | 4.5 | % |
|
EEI - Years to ultimate rate | | N/A | | | N/A | | | N/A | | | (g) | | | 15 years | | | 16 years | |
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_________________________________________ |
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(a) | A weighted average rate of EEI’s and Ameren’s pension and postretirement plans. | | | | | | | | | | | | | | | | | |
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(b) | The discount rate used for EEI’s pension plan was 4.00% and 4.67% for the period from January 1, 2013 through December 1, 2013 and the period from December 2, 2013 through December 31, 2013, respectively. The discount rate used for Ameren’s pension plans was 4.00% for the period from January 1, 2013 through December 1, 2013. | | | | | | | | | | | | | | | | | |
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(c) | The discount rate used for EEI’s postretirement plans was 4.00% for both EEI union and management employees for the period from January 1, 2013 through December 1, 2013 and 4.00% for EEI union employees and 4.75% for EEI management employees for the period from December 2, 2013 through December 31, 2013, respectively. The discount rate used for Ameren’s postretirement plans was 4.00% for the period from January 1, 2013 through December 1, 2013. | | | | | | | | | | | | | | | | | |
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(d) | The average rate of compensation increase used for EEI’s pension plan was 5.97% and 3.50% for the period from January 1, 2013 through December 1, 2013 and the period from December 2, 2013 through December 31, 2013, respectively. The average rate of compensation increase used for Ameren’s pension plans was 3.50% for the period from January 1, 2013 through December 1, 2013. | | | | | | | | | | | | | | | | | |
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(e) | The average rate of compensation increase used for EEI’s postretirement plans was 6.35% for EEI union employees and 3.81% for EEI management employees for the period from January 1, 2013 through December 1, 2013 and 6.35% for EEI union employees and 3.50% for EEI management employees and the period from December 2, 2013 through December 31, 2013, respectively. The average rate of compensation increase used for Ameren’s postretirement plans was 3.50% for the period from January 1, 2013 through December 1, 2013. | | | | | | | | | | | | | | | | | |
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(f) | The initial medical cost trend rate used for EEI’s postretirement plans was 7.96% for both EEI union and management employees for the period from January 1, 2013 through December 1, 2013 and 7.96% for EEI union employees and 7.75% for EEI management employees for the period from December 2, 2013 through December 31, 2013, respectively. | | | | | | | | | | | | | | | | | |
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(g) | The years to ultimate trend rate used for EEI’s postretirement plans was 14 years for both EEI union and management employees for the period from January 1, 2013 through December 1, 2013 and 14 years for EEI union employees and 10 years for EEI management employees for the period from December 2, 2013 through December 31, 2013, respectively. | | | | | | | | | | | | | | | | | |
The table below reflects the sensitivity to potential changes in key assumptions: |
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| | Pension Benefits (a) | | Postretirement Benefits (a) | | | | | | |
(amounts in millions) | | Service Cost | | Projected | | Service Cost | | Postretirement | | | | | | |
and Interest | Benefit | and Interest | Benefit | | | | | | |
Cost | Obligation | Cost | Obligation | | | | | | |
1.00% increase in annual medical trend | | N/A | | N/A | | $ | 1 | | | $ | 5 | | | | | | | |
| | | | | |
1.00% decrease in annual medical trend | | N/A | | N/A | | $ | — | | | $ | (4 | ) | | | | | | |
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_________________________________________ |
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(a) | Includes amounts for EEI’s plans and our participation in Dynegy’s plans. | | | | | | | | | | | | | | | | | |
Other |
Ameren sponsored a 401(k) plan for eligible employees. The Ameren 401(k) plan covered all eligible employees, including our employees, prior to December 2, 2013, the date of the AER Acquisition. Effective December 2, 2013, our employees, excluding the EEI employees, participate in the Dynegy Inc. 401(k) Plan. Prior to December 31, 2013, the EEI Bargaining Unit 401(k) Plan covered all eligible EEI union employees and the EEI Management 401(k) Plan covered all eligible EEI management employees. Effective January 1, 2014, these plan benefits were frozen. Contributions stopped as of that date and EEI participants became eligible to participate in the Dynegy Inc. 401(k) Plan. These 401(k) plans allowed employees to contribute a portion of their compensation in accordance with specific guidelines. The plan sponsor matched a percentage of the employee contributions up to certain limits. Our portion of the matching contribution to the Ameren 401(k) plan was $1 million, $1 million and $2 million for the period from January 1 through December 1, 2013 and the years ended December 31, 2012 and 2011, respectively. The matching contribution to the EEI 401(k) plans was $1 million for the years ended December 31, 2013, 2012 and 2011, respectively. |