Benefit Plans and Other Postretirement Benefits | 12 Months Ended |
Dec. 31, 2013 |
Compensation and Retirement Disclosure [Abstract] | ' |
Benefit Plans and Other Postretirement Benefits | ' |
Benefit Plans and Other Postretirement Benefits |
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Consistent with the process for rate recovery of pension and postretirement benefits for its employees, NSP-Wisconsin accounts for its participation in, and related costs of, pension and other postretirement benefit plans sponsored by Xcel Energy Inc. as multiple employer plans. NSP-Wisconsin is responsible for its share of cash contributions, plan costs and obligations and is entitled to its share of plan assets; accordingly, NSP-Wisconsin accounts for its pro rata share of these plans, including pension expense and contributions, resulting in accounting consistent with that of a single employer plan exclusively for NSP-Wisconsin employees. |
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Xcel Energy, which includes NSP-Wisconsin, offers various benefit plans to its employees. Approximately 70 percent of employees that receive benefits are represented by several local labor unions under several collective-bargaining agreements. At Dec. 31, 2013, NSP-Wisconsin had 399 bargaining employees covered under a collective-bargaining agreement, which expires at the end of 2016. |
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The plans invest in various instruments which are disclosed under the accounting guidance for fair value measurements which establishes a hierarchical framework for disclosing the observability of the inputs utilized in measuring fair value. The three levels in the hierarchy and examples of each level are as follows: |
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Level 1 — Quoted prices are available in active markets for identical assets as of the reporting date. The types of assets included in Level 1 are highly liquid and actively traded instruments with quoted prices. |
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Level 2 — Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets included in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs. |
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Level 3 — Significant inputs to pricing have little or no observability as of the reporting date. The types of assets included in Level 3 are those with inputs requiring significant management judgment or estimation. |
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Specific valuation methods include the following: |
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Cash equivalents — The fair values of cash equivalents are generally based on cost plus accrued interest; money market funds are measured using quoted net asset values. |
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Insurance contracts — Insurance contract fair values take into consideration the value of the investments in separate accounts of the insurer, which are priced based on observable inputs. |
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Investments in equity securities and other funds — Equity securities are valued using quoted prices in active markets. The fair values for commingled funds, private equity investments and real estate investments are measured using net asset values, which take into consideration the value of underlying fund investments, as well as the other accrued assets and liabilities of a fund, in order to determine a per share market value. The investments in commingled funds may be redeemed for net asset value with proper notice. Proper notice varies by fund and can range from daily with one or two days notice to annually with 90 days notice. Private equity investments require approval of the fund for any unscheduled redemption, and such redemptions may be approved or denied by the fund at its sole discretion. Unscheduled distributions from real estate investments may be redeemed with proper notice, which is typically quarterly with 45-90 days notice; however, withdrawals from real estate investments may be delayed or discounted as a result of fund illiquidity. Based on the plan’s evaluation of its ability to redeem private equity and real estate investments, fair value measurements for private equity and real estate investments have been assigned a Level 3. |
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Investments in debt securities — Fair values for debt securities are determined by a third party pricing service using recent trades and observable spreads from benchmark interest rates for similar securities. |
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Derivative Instruments — Fair values for foreign currency derivatives are determined using pricing models based on the prevailing forward exchange rate of the underlying currencies. The fair values of interest rate derivatives are based on broker quotes that utilize current market interest rate forecasts. |
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Pension Benefits |
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Xcel Energy, which includes NSP-Wisconsin, has several noncontributory, defined benefit pension plans that cover almost all employees. Benefits are based on a combination of years of service, the employee’s average pay and social security benefits. Xcel Energy Inc.’s and NSP-Wisconsin’s policy is to fully fund into an external trust the actuarially determined pension costs recognized for ratemaking and financial reporting purposes, subject to the limitations of applicable employee benefit and tax laws. |
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In addition to the qualified pension plans, Xcel Energy maintains a supplemental executive retirement plan (SERP) and a nonqualified pension plan. The SERP is maintained for certain executives that were participants in the plan in 2008, when the SERP was closed to new participants. The nonqualified pension plan provides unfunded, nonqualified benefits for compensation that is in excess of the limits applicable to the qualified pension plans. The total obligations of the SERP and nonqualified plan as of Dec. 31, 2013 and 2012 were $36.5 million and $39.4 million, respectively, of which $0.6 million and $0.6 million, respectively, was attributable to NSP-Wisconsin. In 2013 and 2012, Xcel Energy recognized net benefit cost for financial reporting for the SERP and nonqualified plans of $6.6 million and $15.6 million, respectively, of which amounts attributable to NSP-Wisconsin were immaterial. Benefits for these unfunded plans are paid out of Xcel Energy’s consolidated operating cash flows. |
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Xcel Energy Inc. and NSP-Wisconsin base the investment-return assumption on expected long-term performance for each of the investment types included in the pension asset portfolio and consider the historical returns achieved by the asset portfolio over the past 20-year or longer period, as well as the long-term return levels projected and recommended by investment experts. The pension cost determination assumes a forecasted mix of investment types over the long term. Investment returns in 2013 were below the assumed level of 7.25 percent. Investment returns in 2012 were above the assumed level of 7.50 percent while returns in 2011 were below the assumed level of 8.00 percent. Xcel Energy Inc. and NSP-Wisconsin continually review the pension assumptions. In 2014, NSP-Wisconsin’s expected investment-return assumption is 7.25 percent. |
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The assets are invested in a portfolio according to Xcel Energy Inc.’s and NSP-Wisconsin’s return, liquidity and diversification objectives to provide a source of funding for plan obligations and minimize the necessity of contributions to the plan, within appropriate levels of risk. The principal mechanism for achieving these objectives is the projected allocation of assets to selected asset classes, given the long-term risk, return, and liquidity characteristics of each particular asset class. There were no significant concentrations of risk in any particular industry, index, or entity. Market volatility can impact even well-diversified portfolios and significantly affect the return levels achieved by pension assets in any year. |
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The following table presents the target pension asset allocations for NSP-Wisconsin: |
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| | 2013 | | 2012 | | | | | | | | | | | | | | | | | | |
Domestic and international equity securities | | 31 | % | | 29 | % | | | | | | | | | | | | | | | | | | |
Long-duration fixed income and interest rate swap securities | | 29 | | | 30 | | | | | | | | | | | | | | | | | | | |
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Short-to-intermediate term fixed income securities | | 16 | | | 12 | | | | | | | | | | | | | | | | | | | |
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Alternative investments | | 22 | | | 27 | | | | | | | | | | | | | | | | | | | |
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Cash | | 2 | | | 2 | | | | | | | | | | | | | | | | | | | |
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Total | | 100 | % | | 100 | % | | | | | | | | | | | | | | | | | | |
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The ongoing investment strategy is based on plan-specific investment recommendations that seek to minimize potential investment and interest rate risk as a plan’s funded status increases over time. The investment recommendations result in a greater percentage of long-duration fixed income securities being allocated to specific plans having relatively higher funded status ratios, and a greater percentage of growth assets being allocated to plans having relatively lower funded status ratios. The aggregate projected asset allocation presented in the table above for the master pension trust results from the plan-specific strategies. |
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Pension Plan Assets |
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The following tables present, for each of the fair value hierarchy levels, NSP-Wisconsin’s pension plan assets that are measured at fair value as of Dec. 31, 2013 and 2012: |
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| | Dec. 31, 2013 | | | | | | | | |
(Thousands of Dollars) | | Level 1 | | Level 2 | | Level 3 | | Total | | | | | | | | |
Cash equivalents | | $ | 4,332 | | | $ | — | | | $ | — | | | $ | 4,332 | | | | | | | | | |
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Derivatives | | — | | | 937 | | | — | | | 937 | | | | | | | | | |
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Government securities | | — | | | 6,711 | | | — | | | 6,711 | | | | | | | | | |
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Corporate bonds | | — | | | 24,955 | | | — | | | 24,955 | | | | | | | | | |
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Asset-backed securities | | — | | | 307 | | | — | | | 307 | | | | | | | | | |
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Mortgage-backed securities | | — | | | 684 | | | — | | | 684 | | | | | | | | | |
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Common stock | | 4,533 | | | — | | | — | | | 4,533 | | | | | | | | | |
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Private equity investments | | — | | | — | | | 7,502 | | | 7,502 | | | | | | | | | |
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Commingled funds | | — | | | 84,364 | | | — | | | 84,364 | | | | | | | | | |
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Real estate | | — | | | — | | | 2,299 | | | 2,299 | | | | | | | | | |
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Securities lending collateral obligation and other | | — | | | 311 | | | — | | | 311 | | | | | | | | | |
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Total | | $ | 8,865 | | | $ | 118,269 | | | $ | 9,801 | | | $ | 136,935 | | | | | | | | | |
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| | Dec. 31, 2012 | | | | | | | | |
(Thousands of Dollars) | | Level 1 | | Level 2 | | Level 3 | | Total | | | | | | | | |
Cash equivalents | | $ | 7,956 | | | $ | — | | | $ | — | | | $ | 7,956 | | | | | | | | | |
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Derivatives | | — | | | 390 | | | — | | | 390 | | | | | | | | | |
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Government securities | | — | | | 9,406 | | | — | | | 9,406 | | | | | | | | | |
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Corporate bonds | | — | | | 25,046 | | | — | | | 25,046 | | | | | | | | | |
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Asset-backed securities | | — | | | — | | | 749 | | | 749 | | | | | | | | | |
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Mortgage-backed securities | | — | | | — | | | 2,128 | | | 2,128 | | | | | | | | | |
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Common stock | | 3,977 | | | — | | | — | | | 3,977 | | | | | | | | | |
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Private equity investments | | — | | | — | | | 8,545 | | | 8,545 | | | | | | | | | |
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Commingled funds | | — | | | 76,398 | | | — | | | 76,398 | | | | | | | | | |
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Real estate | | — | | | — | | | 3,472 | | | 3,472 | | | | | | | | | |
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Securities lending collateral obligation and other | | — | | | (1,521 | ) | | — | | | (1,521 | ) | | | | | | | | |
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Total | | $ | 11,933 | | | $ | 109,719 | | | $ | 14,894 | | | $ | 136,546 | | | | | | | | | |
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The following tables present the changes in NSP-Wisconsin’s Level 3 pension plan assets for the years ended Dec. 31, 2013, 2012 and 2011: |
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(Thousands of Dollars) | | Jan. 1, 2013 | | Net Realized | | Net Unrealized | | Purchases, | | Transfer Out | | Dec. 31, 2013 |
Gains (Losses) | Gains (Losses) | Issuances and | of Level 3 (a) |
| | Settlements, Net | |
Asset-backed securities | | $ | 749 | | | $ | — | | | $ | — | | | $ | — | | | $ | (749 | ) | | $ | — | |
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Mortgage-backed securities | | 2,128 | | | — | | | — | | | — | | | (2,128 | ) | | — | |
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Private equity investments | | 8,545 | | | 1,083 | | | (1,960 | ) | | (166 | ) | | — | | | 7,502 | |
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Real estate | | 3,472 | | | (129 | ) | | 247 | | | 450 | | | (1,741 | ) | | 2,299 | |
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Total | | $ | 14,894 | | | $ | 954 | | | $ | (1,713 | ) | | $ | 284 | | | $ | (4,618 | ) | | $ | 9,801 | |
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(a) | Transfers out of Level 3 into Level 2 were principally due to diminished use of unobservable inputs that were previously significant to these fair value measurements and were subsequently sold during 2013. | | | | | | | | | | | | | | | | | | | | | | | |
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(Thousands of Dollars) | | Jan. 1, 2012 | | Net Realized | | Net Unrealized | | Purchases, | | Transfers Out of Level 3 | | Dec. 31, 2012 |
Gains (Losses) | Gains (Losses) | Issuances and |
| | Settlements, Net |
Asset-backed securities | | $ | 1,578 | | | $ | 197 | | | $ | (273 | ) | | $ | (753 | ) | | $ | — | | | $ | 749 | |
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Mortgage-backed securities | | 3,781 | | | 93 | | | (112 | ) | | (1,634 | ) | | — | | | 2,128 | |
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Private equity investments | | 8,440 | | | 945 | | | (1,197 | ) | | 357 | | | — | | | 8,545 | |
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Real estate | | 2,008 | | | 1 | | | 328 | | | 1,135 | | | — | | | 3,472 | |
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Total | | $ | 15,807 | | | $ | 1,236 | | | $ | (1,254 | ) | | $ | (895 | ) | | $ | — | | | $ | 14,894 | |
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(Thousands of Dollars) | | Jan. 1, 2011 | | Net Realized | | Net Unrealized | | Purchases, | | Transfers Out of Level 3 | | Dec. 31, 2011 |
Gains (Losses) | Gains (Losses) | Issuances and |
| | Settlements, Net |
Asset-backed securities | | $ | 1,367 | | | $ | 121 | | | $ | (125 | ) | | $ | 215 | | | $ | — | | | $ | 1,578 | |
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Mortgage-backed securities | | 5,984 | | | 55 | | | (295 | ) | | (1,963 | ) | | — | | | 3,781 | |
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Private equity investments | | 6,704 | | | 210 | | | 648 | | | 878 | | | — | | | 8,440 | |
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Real estate | | 3,746 | | | (34 | ) | | 1,002 | | | (2,706 | ) | | — | | | 2,008 | |
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Total | | $ | 17,801 | | | $ | 352 | | | $ | 1,230 | | | $ | (3,576 | ) | | $ | — | | | $ | 15,807 | |
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Benefit Obligations — A comparison of the actuarially computed pension benefit obligation and plan assets for NSP-Wisconsin is presented in the following table: |
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(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Accumulated Benefit Obligation at Dec. 31 | | $ | 153,894 | | | $ | 169,939 | | | | | | | | | | | | | | | | | |
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Change in Projected Benefit Obligation: | | | | | | | | | | | | | | | | | | | | |
Obligation at Jan. 1 | | $ | 179,995 | | | $ | 159,766 | | | | | | | | | | | | | | | | | |
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Service cost | | 5,682 | | | 4,568 | | | | | | | | | | | | | | | | | |
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Interest cost | | 6,924 | | | 7,765 | | | | | | | | | | | | | | | | | |
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Plan amendments | | (1,109 | ) | | 216 | | | | | | | | | | | | | | | | | |
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Actuarial (gain) loss | | (11,097 | ) | | 21,083 | | | | | | | | | | | | | | | | | |
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Benefit payments | | (16,465 | ) | | (13,403 | ) | | | | | | | | | | | | | | | | |
Obligation at Dec. 31 | | $ | 163,930 | | | $ | 179,995 | | | | | | | | | | | | | | | | | |
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(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Change in Fair Value of Plan Assets: | | | | | | | | | | | | | | | | | | | | |
Fair value of plan assets at Jan. 1 | | $ | 136,546 | | | $ | 121,348 | | | | | | | | | | | | | | | | | |
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Actual return on plan assets | | 5,525 | | | 16,079 | | | | | | | | | | | | | | | | | |
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Employer contributions | | 11,329 | | | 12,522 | | | | | | | | | | | | | | | | | |
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Benefit payments | | (16,465 | ) | | (13,403 | ) | | | | | | | | | | | | | | | | |
Fair value of plan assets at Dec. 31 | | $ | 136,935 | | | $ | 136,546 | | | | | | | | | | | | | | | | | |
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(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Funded Status of Plans at Dec. 31: | | | | | | | | | | | | | | | | | | | | |
Funded status (a) | | $ | (26,995 | ) | | $ | (43,449 | ) | | | | | | | | | | | | | | | | |
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(a) | Amounts are recognized in noncurrent liabilities on NSP-Wisconsin’s consolidated balance sheets. | | | | | | | | | | | | | | | | | | | | | | | |
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(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Amounts Not Yet Recognized as Components of Net Periodic Benefit Cost: | | | | | | | | | | | | | | | | | | | | |
Net loss | | $ | 84,773 | | | $ | 99,338 | | | | | | | | | | | | | | | | | |
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Prior service cost | | 778 | | | 2,290 | | | | | | | | | | | | | | | | | |
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Total | | $ | 85,551 | | | $ | 101,628 | | | | | | | | | | | | | | | | | |
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(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
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 | | $ | 7,631 | | | $ | 6,895 | | | | | | | | | | | | | | | | | |
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Noncurrent regulatory assets | | 77,920 | | | 94,733 | | | | | | | | | | | | | | | | | |
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Total | | $ | 85,551 | | | $ | 101,628 | | | | | | | | | | | | | | | | | |
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Measurement date | | Dec. 31, 2013 | | Dec. 31, 2012 | | | | | | | | | | | | | | | | | | | | |
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| | 2013 | | 2012 | | | | | | | | | | | | | | | | | | |
Significant Assumptions Used to Measure Benefit Obligations: | | | | | | | | | | | | | | | | | | | | | | |
Discount rate for year-end valuation | | 4.75 | % | | 4 | % | | | | | | | | | | | | | | | | | | |
Expected average long-term increase in compensation level | | 3.75 | | | 3.75 | | | | | | | | | | | | | | | | | | | |
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Mortality table | | RP 2000 | | | RP 2000 | | | | | | | | | | | | | | | | | | | |
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Cash Flows — Cash funding requirements can be impacted by changes to actuarial assumptions, actual asset levels and other calculations prescribed by the funding requirements of income tax and other pension-related regulations. These regulations did not require cash funding for 2008 through 2010 for Xcel Energy’s pension plans. Required contributions were made in 2011, 2012 and 2013 to meet minimum funding requirements. |
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The following are the pension funding contributions, both voluntary and required, made by Xcel Energy for 2011 through January 2014: |
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• | In January 2014, contributions of $130.0 million were made across three of Xcel Energy’s pension plans, of which $8.0 million was attributable to NSP-Wisconsin; | | | | | | | | | | | | | | | | | | | | | | | |
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• | In 2013, contributions of $192.4 million were made across four of Xcel Energy’s pension plans, of which $11.3 million was attributable to NSP-Wisconsin; | | | | | | | | | | | | | | | | | | | | | | | |
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• | In 2012, contributions of $198.1 million were made across four of Xcel Energy’s pension plans, of which $12.5 million was attributable to NSP-Wisconsin; | | | | | | | | | | | | | | | | | | | | | | | |
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• | In 2011, contributions of $137.3 million were made across three of Xcel Energy’s pension plans, of which $6.4 million was attributable to NSP-Wisconsin; | | | | | | | | | | | | | | | | | | | | | | | |
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• | For future years, Xcel Energy and NSP-Wisconsin anticipate contributions will be made as necessary. | | | | | | | | | | | | | | | | | | | | | | | |
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Plan Amendments — Xcel Energy, which includes NSP-Wisconsin, amended the plan in 2013 resulting in a decrease of the projected benefit obligation due to fully insuring the long-term disability benefit for NSP bargaining participants. This decrease was partially offset by an increase to the projected benefit obligation resulting from a change in the discount rate basis for lump sum conversion of annuities for participants in the Xcel Energy Pension Plan. In 2012, the plan was amended to allow a one time transfer of a portion of qualifying obligations from the nonqualified pension plan into the qualified pension plans. Xcel Energy and NSP-Wisconsin also modified the benefit formula for nonbargaining new hires beginning in 2012 to a reduced benefit level. |
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Benefit Costs — The components of NSP-Wisconsin’s net periodic pension cost were: |
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(Thousands of Dollars) | | 2013 | | 2012 | | 2011 | | | | | | | | | | | | |
Service cost | | $ | 5,682 | | | $ | 4,568 | | | $ | 4,271 | | | | | | | | | | | | | |
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Interest cost | | 6,924 | | | 7,765 | | | 8,031 | | | | | | | | | | | | | |
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Expected return on plan assets | | (9,995 | ) | | (10,489 | ) | | (11,484 | ) | | | | | | | | | | | | |
Amortization of prior service cost | | 417 | | | 1,771 | | | 1,895 | | | | | | | | | | | | | |
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Amortization of net loss | | 7,924 | | | 6,004 | | | 4,070 | | | | | | | | | | | | | |
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Net periodic pension cost | | $ | 10,952 | | | $ | 9,619 | | | $ | 6,783 | | | | | | | | | | | | | |
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| | 2013 | | 2012 | | 2011 | | | | | | | | | | | | | | | |
Significant Assumptions Used to Measure Costs: | | | | | | | | | | | | | | | | | | | | | |
Discount rate | | 4 | % | | 5 | % | | 5.5 | % | | | | | | | | | | | | | | | |
Expected average long-term increase in compensation level | | 3.75 | | | 4 | | | 4 | | | | | | | | | | | | | | | | |
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Expected average long-term rate of return on assets | | 7.25 | | | 7.5 | | | 8 | | | | | | | | | | | | | | | | |
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In addition to the benefit costs in the table above, for the pension plans sponsored by Xcel Energy, Inc., costs are allocated to NSP-Wisconsin based on Xcel Energy Services Inc. employees’ labor costs. Amounts allocated to NSP-Wisconsin were $2.2 million, $1.8 million and $1.3 million in 2013, 2012 and 2011, respectively. Pension costs include an expected return impact for the current year that may differ from actual investment performance in the plan. The return assumption used for 2014 pension cost calculations is 7.25 percent. The cost calculation uses a market-related valuation of pension assets. Xcel Energy, including NSP-Wisconsin, uses a calculated value method to determine the market-related value of the plan assets. The market-related value begins with the fair market value of assets as of the beginning of the year. The market-related value is determined by adjusting the fair market value of assets to reflect the investment gains and losses (the difference between the actual investment return and the expected investment return on the market-related value) during each of the previous five years at the rate of 20 percent per year. As these differences between actual investment returns and the expected investment returns are incorporated into the market-related value, the differences are recognized over the expected average remaining years of service for active employees. |
|
Defined Contribution Plans |
|
Xcel Energy, which includes NSP-Wisconsin, maintains 401(k) and other defined contribution plans that cover substantially all employees. The expense to these plans for NSP-Wisconsin was approximately $1.3 million in 2013, $1.2 million in 2012 and $1.1 million in 2011. |
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Postretirement Health Care Benefits |
|
Xcel Energy, which includes NSP-Wisconsin, has a contributory health and welfare benefit plan that provides health care and death benefits to certain Xcel Energy retirees. The former NSP, which includes NSP-Wisconsin, discontinued contributing toward health care benefits for nonbargaining employees retiring after 1998 and for bargaining employees who retired after 1999. |
|
In 1993, Xcel Energy Inc. and NSP-Wisconsin adopted accounting guidance regarding other non-pension postretirement benefits and elected to amortize the unrecognized APBO on a straight-line basis over 20 years. |
|
Regulatory agencies for nearly all retail and wholesale utility customers have allowed rate recovery of accrued postretirement benefit costs. |
|
Plan Assets — Certain state agencies that regulate Xcel Energy Inc.’s utility subsidiaries also have issued guidelines related to the funding of postretirement benefit costs. Also, a portion of the assets contributed on behalf of nonbargaining retirees has been funded into a sub-account of the Xcel Energy pension plans. These assets are invested in a manner consistent with the investment strategy for the pension plan. |
|
Xcel Energy Inc. and NSP-Wisconsin base investment-return assumptions for the postretirement health care fund assets on expected long-term performance for each of the investment types included in the asset portfolio. The assets are invested in a portfolio according to Xcel Energy Inc.’s and NSP-Wisconsin’s return, liquidity and diversification objectives to provide a source of funding for plan obligations and minimize the necessity of contributions to the plan, within appropriate levels of risk. The principal mechanism for achieving these objectives is the projected allocation of assets to selected asset classes, given the long-term risk, return, correlation and liquidity characteristics of each particular asset class. There were no significant concentrations of risk in any particular industry, index, or entity. Investment-return volatility is not considered to be a material factor in postretirement health care costs. |
|
The following tables present, for each of the fair value hierarchy levels, NSP-Wisconsin’s postretirement benefit plan assets that are measured at fair value as of Dec. 31, 2013 and 2012: |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Dec. 31, 2013 | | | | | | | | |
(Thousands of Dollars) | | Level 1 | | Level 2 | | Level 3 | | Total | | | | | | | | |
Cash equivalents | | $ | 31 | | | $ | — | | | $ | — | | | $ | 31 | | | | | | | | | |
| | | | | | | |
Derivatives | | — | | | (2 | ) | | — | | | (2 | ) | | | | | | | | |
| | | | | | | |
Government securities | | — | | | 89 | | | — | | | 89 | | | | | | | | | |
| | | | | | | |
Insurance contracts | | — | | | 80 | | | — | | | 80 | | | | | | | | | |
| | | | | | | |
Corporate bonds | | — | | | 79 | | | — | | | 79 | | | | | | | | | |
| | | | | | | |
Asset-backed securities | | — | | | 5 | | | — | | | 5 | | | | | | | | | |
| | | | | | | |
Mortgage-backed securities | | — | | | 37 | | | — | | | 37 | | | | | | | | | |
| | | | | | | |
Commingled funds | | — | | | 452 | | | — | | | 452 | | | | | | | | | |
| | | | | | | |
Other | | — | | | (25 | ) | | — | | | (25 | ) | | | | | | | | |
| | | | | | | |
Total | | $ | 31 | | | $ | 715 | | | $ | — | | | $ | 746 | | | | | | | | | |
| | | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Dec. 31, 2012 | | | | | | | | |
(Thousands of Dollars) | | Level 1 | | Level 2 | | Level 3 | | Total | | | | | | | | |
Cash equivalents | | $ | 123 | | | $ | — | | | $ | — | | | $ | 123 | | | | | | | | | |
| | | | | | | |
Government securities | | — | | | 99 | | | — | | | 99 | | | | | | | | | |
| | | | | | | |
Insurance contracts | | — | | | 67 | | | — | | | 67 | | | | | | | | | |
| | | | | | | |
Corporate bonds | | — | | | 59 | | | — | | | 59 | | | | | | | | | |
| | | | | | | |
Asset-backed securities | | — | | | — | | | 1 | | | 1 | | | | | | | | | |
| | | | | | | |
Mortgage-backed securities | | — | | | — | | | 54 | | | 54 | | | | | | | | | |
| | | | | | | |
Commingled funds | | — | | | 307 | | | — | | | 307 | | | | | | | | | |
| | | | | | | |
Other | | — | | | (63 | ) | | — | | | (63 | ) | | | | | | | | |
| | | | | | | |
Total | | $ | 123 | | | $ | 469 | | | $ | 55 | | | $ | 647 | | | | | | | | | |
| | | | | | | |
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The following tables present the changes in NSP-Wisconsin’s Level 3 postretirement benefit plan assets for the years ended Dec. 31, 2013, 2012 and 2011: |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | Jan. 1, 2013 | | Net Realized | | Net Unrealized | | Purchases, | | Transfers Out of Level 3 (a) | | Dec. 31, 2013 |
Gains (Losses) | Gains (Losses) | Issuances and |
| | Settlements, Net |
Asset-backed securities | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | (1 | ) | | $ | — | |
|
Mortgage-backed securities | | 54 | | | — | | | — | | | — | | | (54 | ) | | — | |
|
Total | | $ | 55 | | | $ | — | | | $ | — | | | $ | — | | | $ | (55 | ) | | $ | — | |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
(a) | Transfers out of Level 3 into Level 2 were principally due to diminished use of unobservable inputs that were previously significant to these fair value measurements and were subsequently sold during 2013. | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | Jan. 1, 2012 | | Net Realized | | Net Unrealized | | Purchases, | | Transfers Out of Level 3 | | Dec. 31, 2012 |
Gains (Losses) | Gains (Losses) | Issuances and |
| | Settlements, Net |
Asset-backed securities | | $ | 14 | | | $ | — | | | $ | 3 | | | $ | (16 | ) | | $ | — | | | $ | 1 | |
|
Mortgage-backed securities | | 48 | | | (1 | ) | | 6 | | | 1 | | | — | | | 54 | |
|
Total | | $ | 62 | | | $ | (1 | ) | | $ | 9 | | | $ | (15 | ) | | $ | — | | | $ | 55 | |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | Jan. 1, 2011 | | Net Realized | | Net Unrealized | | Purchases, | | Transfers Out of Level 3 | | Dec. 31, 2011 |
Gains (Losses) | Gains (Losses) | Issuances and |
| | Settlements, Net |
Asset-backed securities | | $ | 6 | | | $ | — | | | $ | (2 | ) | | $ | 10 | | | $ | — | | | $ | 14 | |
|
Mortgage-backed securities | | 45 | | | (3 | ) | | 6 | | | — | | | — | | | 48 | |
|
Total | | $ | 51 | | | $ | (3 | ) | | $ | 4 | | | $ | 10 | | | $ | — | | | $ | 62 | |
|
|
Benefit Obligations — A comparison of the actuarially computed benefit obligation and plan assets for NSP-Wisconsin is presented in the following table: |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Change in Projected Benefit Obligation: | | | | | | | | | | | | | | | | | | | | |
Obligation at Jan. 1 | | $ | 19,432 | | | $ | 22,127 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Service cost | | 25 | | | 20 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Interest cost | | 760 | | | 1,075 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Medicare subsidy reimbursements | | 31 | | | 189 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Plan amendments | | — | | | (3,440 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Plan participants’ contributions | | 621 | | | 893 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Actuarial (gain) loss | | (1,724 | ) | | 1,486 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Benefit payments | | (1,992 | ) | | (2,918 | ) | | | | | | | | | | | | | | | | |
Obligation at Dec. 31 | | $ | 17,153 | | | $ | 19,432 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Change in Fair Value of Plan Assets: | | | | | | | | | | | | | | | | | | | | |
Fair value of plan assets at Jan. 1 | | $ | 647 | | | $ | 746 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Actual return on plan assets | | (13 | ) | | 3 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Plan participants’ contributions | | 621 | | | 893 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Employer contributions | | 1,483 | | | 1,923 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Benefit payments | | (1,992 | ) | | (2,918 | ) | | | | | | | | | | | | | | | | |
Fair value of plan assets at Dec. 31 | | $ | 746 | | | $ | 647 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Funded Status of Plans at Dec. 31: | | | | | | | | | | | | | | | | | | | | |
Funded status | | $ | (16,407 | ) | | $ | (18,785 | ) | | | | | | | | | | | | | | | | |
Current liabilities | | (718 | ) | | (943 | ) | | | | | | | | | | | | | | | | |
Noncurrent liabilities | | (15,689 | ) | | (17,842 | ) | | | | | | | | | | | | | | | | |
Net postretirement amounts recognized on consolidated balance sheets | | $ | (16,407 | ) | | $ | (18,785 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Amounts Not Yet Recognized as Components of Net Periodic Cost: | | | | | | | | | | | | | | | | | | | | |
Net loss | | $ | 11,098 | | | $ | 13,730 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Prior service credit | | (3,187 | ) | | (3,538 | ) | | | | | | | | | | | | | | | | |
Transition obligation | | — | | | 1 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total | | $ | 7,911 | | | $ | 10,193 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
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 | | $ | 570 | | | $ | 433 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Noncurrent regulatory assets | | 7,341 | | | 9,760 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total | | $ | 7,911 | | | $ | 10,193 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Measurement date | | Dec. 31, 2013 | | Dec. 31, 2012 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2012 | | | | | | | | | | | | | | | | | | |
Significant Assumptions Used to Measure Benefit Obligations: | | | | | | | | | | | | | | | | | | | | | | |
Discount rate for year-end valuation | | 4.82 | % | | 4.1 | % | | | | | | | | | | | | | | | | | | |
Mortality table | | RP 2000 | | | RP 2000 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Health care costs trend rate — initial | | 7 | % | | 7.5 | % | | | | | | | | | | | | | | | | | | |
|
Effective Jan. 1, 2014, the initial medical trend rate was decreased from 7.5 percent to 7.0 percent. The ultimate trend assumption remained at 4.5 percent. The period until the ultimate rate is reached is five years. Xcel Energy Inc. and NSP-Wisconsin base the medical trend assumption on the long-term cost inflation expected in the health care market, considering the levels projected and recommended by industry experts, as well as recent actual medical cost increases experienced by the retiree medical plan. |
|
A one-percent change in the assumed health care cost trend rate would have the following effects on NSP-Wisconsin: |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | One-Percentage Point | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | Increase | | Decrease | | | | | | | | | | | | | | | | |
APBO | | $ | 1,773 | | | $ | (1,486 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Service and interest components | | 78 | | | (61 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
Cash Flows — The postretirement health care plans have no funding requirements under income tax and other retirement-related regulations other than fulfilling benefit payment obligations, when claims are presented and approved under the plans. Additional cash funding requirements are prescribed by certain state and federal rate regulatory authorities, as discussed previously. Xcel Energy, which includes NSP-Wisconsin, contributed $17.6 million, $47.1 million and $49.0 million during 2013, 2012 and 2011, respectively, of which $1.5 million, $1.9 million and $2.4 million were attributable to NSP-Wisconsin. Xcel Energy expects to contribute approximately $13.3 million during 2014, of which $1.5 million is attributable to NSP-Wisconsin. |
|
Plan Amendments — The 2012 decrease of the projected Xcel Energy and NSP-Wisconsin postretirement health and welfare benefit obligation for plan amendments is due to the expected transition of certain participant groups to an external plan administrator. |
|
Benefit Costs — The components of NSP-Wisconsin’s net periodic postretirement benefit cost were: |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | 2013 | | 2012 | | 2011 | | | | | | | | | | | | |
Service cost | | $ | 25 | | | $ | 20 | | | $ | 17 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Interest cost | | 760 | | | 1,075 | | | 1,144 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Expected return on plan assets | | (42 | ) | | (50 | ) | | (74 | ) | | | | | | | | | | | | |
Amortization of transition obligation | | 1 | | | 171 | | | 171 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Amortization of prior service credit | | (351 | ) | | (14 | ) | | (14 | ) | | | | | | | | | | | | |
Amortization of net loss | | 963 | | | 486 | | | 366 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Net periodic postretirement benefit cost | | $ | 1,356 | | | $ | 1,688 | | | $ | 1,610 | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2012 | | 2011 | | | | | | | | | | | | | | | |
Significant Assumptions Used to Measure Costs: | | | | | | | | | | | | | | | | | | | | | |
Discount rate | | 4.1 | % | | 5 | % | | 5.5 | % | | | | | | | | | | | | | | | |
Expected average long-term rate of return on assets | | 7.11 | | | 6.75 | | | 7.5 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
In addition to the benefit costs in the table above, for the postretirement health care plans sponsored by Xcel Energy, Inc., costs are allocated to NSP-Wisconsin based on Xcel Energy Services Inc. employees’ labor costs. |
|
Projected Benefit Payments |
|
The following table lists NSP-Wisconsin’s projected benefit payments for the pension and postretirement benefit plans: |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | Projected Pension | | Gross Projected | | Expected Medicare | | Net Projected | | | | | | | | |
Benefit Payments | Postretirement | Part D Subsidies | Postretirement | | | | | | | | |
| Health Care | | Health Care | | | | | | | | |
| Benefit Payments | | Benefit Payments | | | | | | | | |
2014 | | $ | 21,677 | | | $ | 1,491 | | | $ | 27 | | | $ | 1,464 | | | | | | | | | |
| | | | | | | |
2015 | | 14,257 | | | 1,459 | | | 25 | | | 1,434 | | | | | | | | | |
| | | | | | | |
2016 | | 13,420 | | | 1,444 | | | 24 | | | 1,420 | | | | | | | | | |
| | | | | | | |
2017 | | 13,851 | | | 1,384 | | | 20 | | | 1,364 | | | | | | | | | |
| | | | | | | |
2018 | | 12,983 | | | 1,357 | | | 18 | | | 1,339 | | | | | | | | | |
| | | | | | | |
2019-2023 | | 64,935 | | | 6,229 | | | 82 | | | 6,147 | | | | | | | | | |
| | | | | | | |
|
Multiemployer Plans |
|
NSP-Wisconsin contributes to several union multiemployer pension plans, none of which are individually significant. These plans provide pension benefits to certain union employees, including electrical workers and other construction and facilities workers who may perform services for more than one employer during a given period and do not participate in the NSP-Wisconsin sponsored pension plans. Contributing to these types of plans creates risk that differs from providing benefits under NSP-Wisconsin sponsored plans, in that if another participating employer ceases to contribute to a multiemployer plan, additional unfunded obligations may need to be funded over time by remaining participating employers. |
|
Contributions to multiemployer plans were as follows for the years ended Dec. 31, 2013, 2012 and 2011. There were no significant changes to the nature or magnitude of the participation of NSP-Wisconsin in multiemployer plans for the years presented: |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(Thousands of Dollars) | | 2013 | | 2012 | | 2011 | | | | | | | | | | | | |
Multiemployer plan contributions: | | | | | | | | | | | | | | | | | | |
Pension | | $ | 130 | | | $ | 163 | | | $ | 169 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | | $ | 130 | | | $ | 163 | | | $ | 169 | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |