XML 54 R21.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Pension, OPEB and Savings Plans | 12 Months Ended
--- | ---
Dec. 31, 2016
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
Pension, OPEB and Savings Plans | Pension, Other Postretirement Benefits (OPEB) and Savings Plans PSEG sponsors qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria. Eligible employees participate in non-contributory pension and OPEB plans sponsored by PSEG and administered by Services. In addition, represented and nonrepresented employees are eligible for participation in PSEG’s two defined contribution plans described below. PSEG, PSE&G and Power are required to record the under or over funded positions of their defined benefit pension and OPEB plans on their respective balance sheets. Such funding positions of each PSEG company are required to be measured as of the date of its respective year-end Consolidated Balance Sheets. For underfunded plans, the liability is equal to the difference between the plan’s benefit obligation and the fair value of plan assets. For defined benefit pension plans, the benefit obligation is the projected benefit obligation. For OPEB plans, the benefit obligation is the accumulated postretirement benefit obligation. In addition, GAAP requires that the total unrecognized costs for defined benefit pension and OPEB plans be recorded as an after-tax charge to Accumulated Other Comprehensive Income (Loss), a separate component of Stockholders’ Equity. However, for PSE&G, because the amortization of the unrecognized costs is being collected from customers, the accumulated unrecognized costs are recorded as a Regulatory Asset. The unrecognized costs represent actuarial gains or losses and prior service costs which had not been expensed. For PSE&G, the Regulatory Asset is amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations. For Power, the charge to Accumulated Other Comprehensive Income (Loss) is amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations. Effective January 1, 2016, PSEG changed the approach used to measure future service and interest costs for pension benefits. For 2015 and prior, PSEG calculated service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. For 2016 and beyond, PSEG has elected to calculate service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. PSEG believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of the plan obligations. As a change in accounting estimate, this change was reflected prospectively. Pension and OPEB costs, net of amounts capitalized, were reduced by $34 million and $13 million, respectively, as compared to the 2016 amounts that would have been derived from applying PSEG’s 2015 and prior years’ methodology. As of December 31, 2016, PSEG merged its three qualified defined benefit pension plans (excluding Servco plans) into one plan, thereby also merging all of the pension plans’ assets. No changes were made to the benefit formulas, the vesting provisions, or to the employees covered by the plans. Amounts for Servco are not included in any of the following pension and OPEB benefit information for PSEG and its affiliates but rather are separately disclosed later in this note. The following table provides a roll-forward of the changes in the benefit obligation and the fair value of plan assets during each of the two years in the periods ended December 31, 2016 and 2015. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  | Millions |
| Change in Benefit Obligation |  |  |  |  |  |  |  |  |
| Benefit Obligation at Beginning of Year (A) |  | $ | 5,522 |  |  | $ | 5,722 |  |  | $ | 1,612 |  |  | $ | 1,638 |  |
| Service Cost |  | 109 |  |  | 123 |  |  | 17 |  |  | 22 |  |
| Interest Cost |  | 202 |  |  | 234 |  |  | 59 |  |  | 67 |  |
| Actuarial (Gain) Loss (B) |  | 219 |  |  | (289 | ) |  | 127 |  |  | (45 | ) |
| Gross Benefits Paid |  | (282 | ) |  | (268 | ) |  | (57 | ) |  | (70 | ) |
| Plan Amendments |  | 2 |  |  | — |  |  | (4 | ) |  | — |  |
| Benefit Obligation at End of Year (A) |  | $ | 5,772 |  |  | $ | 5,522 |  |  | $ | 1,754 |  |  | $ | 1,612 |  |
| Change in Plan Assets |  |  |  |  |  |  |  |  |
| Fair Value of Assets at Beginning of Year |  | $ | 5,039 |  |  | $ | 5,293 |  |  | $ | 374 |  |  | $ | 361 |  |
| Actual Return on Plan Assets |  | 403 |  |  | (11 | ) |  | 32 |  |  | (1 | ) |
| Employer Contributions |  | 33 |  |  | 25 |  |  | 71 |  |  | 84 |  |
| Gross Benefits Paid |  | (282 | ) |  | (268 | ) |  | (57 | ) |  | (70 | ) |
| Fair Value of Assets at End of Year |  | $ | 5,193 |  |  | $ | 5,039 |  |  | $ | 420 |  |  | $ | 374 |  |
| Funded Status |  |  |  |  |  |  |  |  |
| Funded Status (Plan Assets less Benefit Obligation) |  | $ | (579 | ) |  | $ | (483 | ) |  | $ | (1,334 | ) |  | $ | (1,238 | ) |
| Additional Amounts Recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |
| Noncurrent Assets (included in Other Special Funds) |  | $ | — |  |  | $ | 14 |  |  | $ | — |  |  | $ | — |  |
| Current Accrued Benefit Cost |  | (11 | ) |  | (10 | ) |  | (10 | ) |  | (10 | ) |
| Noncurrent Accrued Benefit Cost |  | (568 | ) |  | (487 | ) |  | (1,324 | ) |  | (1,228 | ) |
| Amounts Recognized |  | $ | (579 | ) |  | $ | (483 | ) |  | $ | (1,334 | ) |  | $ | (1,238 | ) |
| Additional Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Regulated Assets and Deferred Assets (B) |  |  |
| Prior Service Cost |  | $ | (63 | ) |  | $ | (83 | ) |  | $ | (14 | ) |  | $ | (25 | ) |
| Net Actuarial Loss |  | 1,763 |  |  | 1,710 |  |  | 523 |  |  | 438 |  |
| Total |  | $ | 1,700 |  |  | $ | 1,627 |  |  | $ | 509 |  |  | $ | 413 |  |
(A) | Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits.
(B) | Includes $679 million ($398 million, after-tax) and $658 million ($386 million, after-tax) in Accumulated Other Comprehensive Loss related to Pension and OPEB as of December 31, 2016 and 2015, respectively.
The pension benefits table above provides information relating to the funded status of the qualified, nonqualified pension and OPEB plans on an aggregate basis. As of December 31, 2016, PSEG had funded approximately 90% of its projected benefit obligation. This percentage does not include $217 million of assets in the Rabbi Trust as of December 31, 2016 which were used partially to fund the nonqualified pension plans. As of December 31, 2016, the nonqualified pension plans included in the projected benefit obligation in the above table were $161 million. The fair values of the Rabbi Trust assets are included in Other Special Funds on the Consolidated Balance Sheets. Accumulated Benefit Obligation The accumulated benefit obligation for all PSEG’s defined benefit pension plans was $5.6 billion as of December 31, 2016 and $5.4 billion as of December 31, 2015. The following table provides the components of net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014.
|  |  | Pension Benefits Years Ended December 31, |  | Other Benefits Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| Components of Net Periodic Benefit Cost (Credit) |  |  |  |  |  |  |  |  |  |  |  |  |
| Service Cost |  | $ | 109 |  |  | $ | 123 |  |  | $ | 104 |  |  | $ | 17 |  |  | $ | 22 |  |  | 18 |  |
| Interest Cost |  | 202 |  |  | 234 |  |  | 234 |  |  | 59 |  |  | 67 |  |  | 69 |  |
| Expected Return on Plan Assets |  | (394 | ) |  | (414 | ) |  | (399 | ) |  | (31 | ) |  | (31 | ) |  | (26 | ) |
| Amortization of Net |  |  |  |  |  |  |  |  |  |  |  |  |
| Prior Service Credit |  | (19 | ) |  | (19 | ) |  | (18 | ) |  | (14 | ) |  | (14 | ) |  | (14 | ) |
| Actuarial Loss |  | 158 |  |  | 150 |  |  | 56 |  |  | 40 |  |  | 43 |  |  | 23 |  |
| Net Periodic Benefit Cost (Credit) |  | $ | 56 |  |  | $ | 74 |  |  | $ | (23 | ) |  | $ | 71 |  |  | $ | 87 |  |  | $ | 70 |  |
Pension costs and OPEB costs for PSEG, PSE&G and Power are detailed as follows:
|  |  | Pension Benefits Years Ended December 31, |  | Other Benefits Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| PSE&G |  | $ | 29 |  |  | $ | 40 |  |  | $ | (19 | ) |  | $ | 43 |  |  | $ | 55 |  |  | $ | 46 |  |
| Power |  | 16 |  |  | 21 |  |  | (7 | ) |  | 23 |  |  | 27 |  |  | 20 |  |
| Other |  | 11 |  |  | 13 |  |  | 3 |  |  | 5 |  |  | 5 |  |  | 4 |  |
| Total Benefit Cost (Credit) |  | $ | 56 |  |  | $ | 74 |  |  | $ | (23 | ) |  | $ | 71 |  |  | $ | 87 |  |  | $ | 70 |  |
The following table provides the pre-tax changes recognized in Accumulated Other Comprehensive Income (Loss), Regulatory Assets and Deferred Assets:
|  |  | Pension |  | OPEB |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  | Millions |
| Net Actuarial (Gain) Loss in Current Period |  | $ | 211 |  |  | $ | 136 |  |  | $ | 125 |  |  | $ | (14 | ) |
| Amortization of Net Actuarial Gain (Loss) |  | (158 | ) |  | (150 | ) |  | (40 | ) |  | (43 | ) |
| Prior Service Cost (Credit) in current period |  | 1 |  |  | — |  |  | (3 | ) |  | — |  |
| Amortization of Prior Service Credit |  | 19 |  |  | 19 |  |  | 14 |  |  | 14 |  |
| Total |  | $ | 73 |  |  | $ | 5 |  |  | $ | 96 |  |  | $ | (43 | ) |
Amounts that are expected to be amortized from Accumulated Other Comprehensive Loss, Regulatory Assets and Deferred Assets into Net Periodic Benefit Cost in 2017 are as follows:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2017 |  | 2017 |
|  |  | Millions |
| Actuarial (Gain) Loss |  | $ | 97 |  |  | $ | 51 |  |
| Prior Service Cost |  | $ | (18 | ) |  | $ | (11 | ) |
The following assumptions were used to determine the benefit obligations and net periodic benefit costs:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
| Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31 |  |  |
| Discount Rate |  | 4.29 | % |  | 4.54 | % |  | 4.20 | % |  | 4.37 | % |  | 4.58 | % |  | 4.21 | % |
| Rate of Compensation Increase |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |
| Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31 |  |  |
| Discount Rate |  | 4.54 | % |  | 4.20 | % |  | 5.00 | % |  | 4.58 | % |  | 4.21 | % |  | 5.01 | % |
| Service Cost Interest Rate |  | 4.81 | % |  | 4.20 | % |  | 5.00 | % |  | 4.87 | % |  | 4.21 | % |  | 5.01 | % |
| Interest Cost Interest Rate |  | 3.75 | % |  | 4.20 | % |  | 5.00 | % |  | 3.76 | % |  | 4.21 | % |  | 5.01 | % |
| Expected Return on Plan Assets |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |
| Rate of Compensation Increase |  | 3.61 | % |  | 3.61 | % |  | 4.61 | % |  | 3.61 | % |  | 3.61 | % |  | 4.61 | % |
| Assumed Health Care Cost Trend Rates as of December 31 |  |  |  |  |  |  |  |  |
| Administrative Expense |  |  |  |  |  |  |  | 3.00 | % |  | 3.00 | % |  | 3.00 | % |
| Health Care Costs |  |  |  |  |  |  |  |  |  |  |  |  |
| Immediate Rate |  |  |  |  |  |  |  | 7.55 | % |  | 7.75 | % |  | 7.40 | % |
| Ultimate Rate |  |  |  |  |  |  |  | 4.75 | % |  | 4.75 | % |  | 5.00 | % |
| Year Ultimate Rate Reached |  |  |  |  |  |  |  | 2025 |  |  | 2025 |  |  | 2022 |  |
|  |  |  |  |  |  |  |  | Millions |
| Effect of a 1% Increase in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Total of Service Cost and Interest Cost |  |  |  |  |  |  |  | $ | 11 |  |  | $ | 12 |  |  | $ | 13 |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | 191 |  |  | $ | 194 |  |  | $ | 201 |  |
| Effect of a 1% Decrease in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Total of Service Cost and Interest Cost |  |  |  |  |  |  |  | $ | (9 | ) |  | $ | (10 | ) |  | $ | (10 | ) |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | (160 | ) |  | $ | (160 | ) |  | $ | (165 | ) |
Plan Assets The investments of pension and OPEB plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension and OPEB plans are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. Use of the Master Trust permits the commingling of pension plan assets and OPEB plan assets for investment and administrative purposes. Although assets of the plans are commingled in the Master Trust, the Trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. As of December 31, 2016, the pension plan interest and OPEB plan interest in such assets of the Master Trust were approximately 93% and 7%, respectively. The following tables present information about the investments measured at fair value on a recurring basis as of December 31, 2016 and 2015, including the fair value measurements and the levels of inputs used in determining those fair values.
|  |  | Recurring Fair Value Measurements as of December 31, 2016 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Cash Equivalents (A) |  | $ | 107 |  |  | $ | 105 |  |  | $ | 2 |  |  | $ | — |  |
| Equities (B) |  |  |  |  |  |  |  |  |  |
| Common Stock |  | 944 |  |  | 944 |  |  | — |  |  | — |  |
| Commingled (C) |  | 1,387 |  |  | 1,247 |  |  | 140 |  |  | — |  |
| Preferred Stock |  | 1 |  |  | 1 |  |  | — |  |  | — |  |
| Bonds (D) |  |  |  |  |  |  |  |  |  |
| US Treasury |  | 441 |  |  | — |  |  | 441 |  |  | — |  |
| Government—Other |  | 263 |  |  | — |  |  | 263 |  |  | — |  |
| Corporate |  | 836 |  |  | — |  |  | 836 |  |  | — |  |
| Subtotal Fair Value |  | $ | 3,979 |  |  | $ | 2,297 |  |  | $ | 1,682 |  |  | $ | — |  |
| Measured at net asset value practical expedient (C) |  |  |  |  |  |  |  |  |
| Commingled—Equities |  | 1,604 |  |  |  |  |  |  |  |
| Private Equity (E) |  | 16 |  |  |  |  |  |  |  |
| Total Fair Value (F) |  | $ | 5,599 |  |  |  |  |  |  |  |  |  |  |
|  |  | Recurring Fair Value Measurements as of December 31, 2015 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Cash Equivalents (A) |  | $ | 96 |  |  | $ | 95 |  |  | $ | 1 |  |  | $ | — |  |
| Equities (B) |  |  |  |  |  |  |  |  |  |
| Common Stock |  | 816 |  |  | 816 |  |  | — |  |  | — |  |
| Commingled (C) |  | 1,463 |  |  | 1,269 |  |  | 194 |  |  | — |  |
| Bonds (D) |  |  |  |  |  |  |  |  |  |
| US Treasury |  | 322 |  |  | — |  |  | 322 |  |  | — |  |
| Government—Other |  | 279 |  |  | — |  |  | 279 |  |  | — |  |
| Corporate |  | 906 |  |  | — |  |  | 906 |  |  | — |  |
| Subtotal Fair Value |  | $ | 3,882 |  |  | $ | 2,180 |  |  | $ | 1,702 |  |  | $ | — |  |
| Measured at net asset value practical expedient (C) |  |  |  |  |  |  |  |  |
| Commingled—Equities |  | 1,504 |  |  |  |  |  |  |  |
| Private Equity (E) |  | 19 |  |  |  |  |  |  |  |
| Total Fair Value (F) |  | $ | 5,405 |  |  |  |  |  |  |  |  |  |  |
(A) | Certain open-ended mutual funds with mainly short-term investments are valued based on unadjusted quoted prices in active market (Level 1). Certain temporary investments are valued using inputs such as time-to-maturity, coupon rate, quality rating and current yield (Level 2).
(B) | Common stocks and preferred stocks are measured using observable data in active markets and considered Level 1. Investments in certain commingled equity funds are measured at their published daily net asset value (NAV) available to investors; if they are redeemable daily without restrictions, they are classified as Level 1 or, if they have restrictions which prevent daily redemptions, they are classified as Level 2.
(C) | In 2016, PSEG re-evaluated the classification, within the fair value hierarchy, of its commingled equity funds. As a result, PSEG determined that certain commingled funds in the amount of $1,698 million at December 31, 2015 should have been classified as Level 2 instead of Level 1, as previously presented for 2015, due to the funds having certain redemption restrictions which prevent daily redemptions at their published price. PSEG has determined that this error is immaterial to its previously filed financial reports and, accordingly, has corrected the error by revising the amounts disclosed for 2015 to report such investments as Level 2. In addition, as part of our implementation of the new accounting guidance on investments measured at fair value using NAV as a practical expedient in 2016, the majority of these same commingled equity funds have been removed from the fair value hierarchy as they are measured at fair value using the NAV per share (or its equivalent) practical expedient. See Note 2. Recent Accounting Standards. These funds do not meet the definition of readily determinable fair value due to limitations in published NAV (last business day of the month) and include certain redemption restrictions ranging from one to fifteen days advance notice prior to redemption days and limitations on withdrawals over 25% of the total fund. The objectives of these funds are mainly tracking the S&P Index or achieving long-term growth through investment in foreign equity securities and the MSCI Emerging Markets Index. As a result of the error correction for the $1,698 million that should have been classified as Level 2 for 2015 and $1,504 million that was removed from the fair value hierarchy as part of the new guidance on NAV practical expedient implementation, $194 million has been reclassified to Level 2 as of December 31, 2015.
(D) | Fixed income securities include mainly investment grade corporate and municipal bonds, US Treasury obligations and Federal Agency asset-backed securities with a wide range of maturities. These investments are valued using an evaluated pricing approach that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads or the most recent quoted for similar securities which are a Level 2 measure.
(E) | Private equity investments include various limited partnerships that invest in operating companies through acquisitions or developing a portfolio of non-US distressed investments. These investments are valued at NAV on an annual basis and have significant redemption restrictions preventing redemption until fund liquidation and limited ability to sell these investments. These investments have been removed from the fair value hierarchy in accordance with the new guidance on NAV practical expedient.
(F) | Excludes net receivable of $14 million and $8 million at December 31, 2016 and 2015, respectively, which consists of interest and dividend, receivables and payables related to pending securities sales and purchases.
The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans as of the measurement date, December 31:
|  |  | As of December 31, |
| Investments |  | 2016 |  | 2015 |
| Equity Securities |  | 70 | % |  | 70 | % |
| Fixed Income Securities |  | 28 |  |  | 28 |  |
| Other Investments |  | 2 |  |  | 2 |  |
| Total Percentage |  | 100 | % |  | 100 | % |
PSEG utilizes forecasted returns, risk, and correlation of all asset classes in order to develop a portfolio designed to produce the maximum return opportunity per unit of risk. PSEG’s latest asset/liability study indicates that a long-term target asset allocation of 70% equities and 30% fixed income is consistent with the funds’ financial objectives. Derivative financial instruments are used by the plans’ investment managers primarily to adjust the fixed income duration of the portfolio and hedge the currency risk component of foreign investments. The expected long-term rate of return on plan assets was 8.0% for 2016 and will be 7.8% for 2017. This expected return was determined based on the study discussed above, including a premium for active management and considered the plans’ historical annualized rate of return since inception, which was 9.3%. Plan Contributions PSEG plans to contribute $14 million into its OPEB plan during 2017. Estimated Future Benefit Payments The following pension benefit and postretirement benefit payments are expected to be paid to plan participants.
| Year |  |  | Pension Benefits |  | Other Benefits |
|  |  |  | Millions |
| 2017 |  |  | $ | 310 |  |  | $ | 82 |  |
| 2018 |  |  | 307 |  |  | 86 |  |
| 2019 |  |  | 319 |  |  | 90 |  |
| 2020 |  |  | 331 |  |  | 94 |  |
| 2021 |  |  | 343 |  |  | 99 |  |
| 2022-2026 |  |  | 1,887 |  |  | 534 |  |
| Total |  |  | $ | 3,497 |  |  | $ | 985 |  |
401(k) Plans PSEG sponsors two 401(k) plans, which are Employee Retirement Income Security Act (ERISA) defined contribution retirement plans. Eligible represented employees of PSEG’s subsidiaries participate in the PSEG Employee Savings Plan (Savings Plan), while eligible non-represented employees of PSEG’s subsidiaries participate in the PSEG Thrift and Tax-Deferred Savings Plan (Thrift Plan). Eligible employees may contribute up to 50% of their compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. PSEG matches 50% of such employee contributions up to 7% of pay for Savings Plan participants and up to 8% of pay for Thrift Plan participants. The amount paid for employer matching contributions to the plans for PSEG, PSE&G and Power are detailed as follows:
|  |  | Thrift Plan and Savings Plan |
|  |  | Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| PSE&G |  | $ | 24 |  |  | $ | 22 |  |  | $ | 20 |  |
| Power |  | 12 |  |  | 12 |  |  | 11 |  |
| Other |  | 5 |  |  | 5 |  |  | 5 |  |
| Total Employer Matching Contributions |  | $ | 41 |  |  | $ | 39 |  |  | $ | 36 |  |
Servco Pension and OPEB At the direction of LIPA, effective January 1, 2014, Servco established benefit plans that provide substantially the same benefits to its employees as those previously provided by National Grid Electric Services LLC (NGES), the predecessor T&D system manager for LIPA. Since the vast majority of Servco’s employees had worked under NGES’ T&D operations services arrangement with LIPA, Servco’s plans provide certain of those employees with pension and OPEB vested credit for prior years’ services earned while working for NGES. The benefit plans cover all employees of Servco for current service. Under the OSA, all of these and any future employee benefit costs are to be funded by LIPA. See Note 4. Variable Interest Entities. These obligations, as well as the offsetting long-term receivable, are separately presented on the Consolidated Balance Sheet of PSEG. The following table provides a roll-forward of the changes in Servco’s benefit obligation and the fair value of its plan assets during the years ended December 31, 2016 and 2015. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  |  |  | Millions |
| Change in Benefit Obligation |  |  |  |  |  |  |  |  |
| Benefit Obligation at Beginning of Year |  | $ | 211 |  |  | $ | 195 |  |  | $ | 375 |  |  | $ | 452 |  |
| Service Cost |  | 24 |  |  | 26 |  |  | 12 |  |  | 17 |  |
| Interest Cost |  | 9 |  |  | 9 |  |  | 17 |  |  | 21 |  |
| Actuarial (Gain) Loss |  | 14 |  |  | (20 | ) |  | 50 |  |  | (114 | ) |
| Gross Benefits Paid |  | (1 | ) |  | — |  |  | (2 | ) |  | (1 | ) |
| Plan Amendments |  | 5 |  |  | 1 |  |  | — |  |  | — |  |
| Benefit Obligation at End of Year (A) |  | $ | 262 |  |  | $ | 211 |  |  | $ | 452 |  |  | $ | 375 |  |
| Change in Plan Assets |  |  |  |  |  |  |  |  |
| Fair Value of Assets at Beginning of Year |  | $ | 97 |  |  | $ | 69 |  |  | $ | — |  |  | $ | — |  |
| Actual Return on Plan Assets |  | 10 |  |  | (2 | ) |  | — |  |  | — |  |
| Employer Contributions |  | 28 |  |  | 30 |  |  | 2 |  |  | 1 |  |
| Gross Benefits Paid |  | (1 | ) |  | — |  |  | (2 | ) |  | (1 | ) |
| Fair Value of Assets at End of Year |  | $ | 134 |  |  | $ | 97 |  |  | $ | — |  |  | $ | — |  |
| Funded Status |  |  |  |  |  |  |  |  |
| Funded Status (Plan Assets less Benefit Obligation) |  | $ | (128 | ) |  | $ | (114 | ) |  | $ | (452 | ) |  | $ | (375 | ) |
| Additional Amounts Recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |
| Accrued Pension Costs of Servco |  | $ | (128 | ) |  | $ | (114 | ) |  | N/A |  |  | N/A |  |
| OPEB Costs of Servco |  | N/A |  |  | N/A |  |  | (452 | ) |  | (375 | ) |
| Amounts Recognized (B) |  | $ | (128 | ) |  | $ | (114 | ) |  | $ | (452 | ) |  | $ | (375 | ) |
(A) | Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits.
(B) | Amounts equal to the accrued pension and OPEB costs of Servco are offset in Long-Term Receivable of VIE on PSEG’s Consolidated Balance Sheets.
Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. The pension-related revenues and costs for 2016, 2015 and 2014 were $28 million, $30 million and $67 million, respectively. Servco has contributed its entire planned contribution amount to its pension plan trusts during 2016. The OPEB-related revenues earned and costs incurred in 2016 was $2 million, and were immaterial 2015 and 2014. The following assumptions were used to determine the benefit obligations of Servco:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
| Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31 |  |  |
| Discount Rate |  | 4.61 | % |  | 4.92 | % |  | 4.50 | % |  | 4.71 | % |  | 4.97 | % |  | 4.60 | % |
| Rate of Compensation Increase |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |
| Assumed Health Care Cost Trend Rates as of December 31 |  |  |  |  |  |  |  |  |
| Administrative Expense |  |  |  |  |  |  |  | 5.00 | % |  | 5.00 | % |  | 5.00 | % |
| Health Care Costs |  |  |  |  |  |  |  |  |  |  |  |  |
| Immediate Rate |  |  |  |  |  |  |  | 7.55 | % |  | 7.55 | % |  | 7.33 | % |
| Ultimate Rate |  |  |  |  |  |  |  | 4.75 | % |  | 4.75 | % |  | 5.00 | % |
| Year Ultimate Rate Reached |  |  |  |  |  |  |  | 2025 |  |  | 2025 |  |  | 2021 |  |
|  |  |  |  |  |  |  |  | Millions |
| Effect of a 1% Increase in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | 97 |  |  | $ | 75 |  |  | $ | 160 |  |
| Effect of a 1% Decrease in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | (75 | ) |  | $ | (60 | ) |  | $ | (106 | ) |
Plan Assets All the investments of Servco’s pension plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. The Actuary maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Actuary to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. The following tables present information about Servco’s investments measured at fair value on a recurring basis as of December 31, 2016 and 2015, including the fair value measurements and the levels of inputs used in determining those fair values.
|  |  | Recurring Fair Value Measurements as of December 31, 2016 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Commingled Equities (A) |  | $ | 96 |  |  | $ | — |  |  | $ | 96 |  |  | $ | — |  |
| Commingled Bonds (A) |  | 38 |  |  | — |  |  | 38 |  |  | — |  |
| Total |  | $ | 134 |  |  | $ | — |  |  | $ | 134 |  |  | $ | — |  |
|  |  | Recurring Fair Value Measurements as of December 31, 2015 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Commingled Equities (A) |  | $ | 68 |  |  | $ | — |  |  | $ | 68 |  |  | $ | — |  |
| Commingled Bonds (A) |  | 29 |  |  | — |  |  | 29 |  |  | — |  |
| Total |  | $ | 97 |  |  | $ | — |  |  | $ | 97 |  |  | $ | — |  |
(A) | Investments in commingled equity and bond funds have a readily determinable fair value as they publish a daily NAV available to investors which is the basis for current transactions and contain certain redemption restrictions requiring advance notice of one to two days for withdrawals (Level 2). In 2016, PSEG re-evaluated the classification, within the fair value hierarchy, of its commingled funds. As a result, PSEG determined that the commingled equity funds should have been classified as Level 2 instead of Level 1, as previously presented for 2015, due to the funds having certain redemption restrictions which prevent daily redemptions at the published price. In addition to the advance notice of one or two days, redemption days may be limited to twice per month for certain funds. PSEG has determined that this error is immaterial to its previously filed financial reports and, accordingly, has corrected the error by revising the amounts disclosed for 2015 to report the commingled equity fund balance of $68 million as of December 31, 2015 as Level 2.
The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans of Servco as of the measurement date, December 31:
|  |  | As of December 31, |
| Investments |  | 2016 |  | 2015 |
| Equity Securities |  | 71 | % |  | 71 | % |
| Fixed Income Securities |  | 29 |  |  | 29 |  |
| Total Percentage |  | 100 | % |  | 100 | % |
Servco utilizes forecasted returns, risk, and correlation of all asset classes in order to develop a portfolio designed to produce the maximum return opportunity per unit of risk. The results from Servco’s latest asset/liability study indicated that a long-term target asset allocation of 70% equities and 30% fixed income is consistent with the funds’ financial objectives. The expected long-term rate of return on plan assets was 7.7% for 2016 and will be 7.6% for 2017. This expected return was determined based on the study discussed above, including a premium for active management. Plan Contributions Servco plans to contribute $35 million into its pension plan during 2017. Estimated Future Benefit Payments The following pension benefit and postretirement benefit payments are expected to be paid to Servco’s plan participants:
| Year |  |  | Pension Benefits |  | Other Benefits |
|  |  |  | Millions |
| 2017 |  |  | $ | 2 |  |  | $ | 4 |  |
| 2018 |  |  | 3 |  |  | 6 |  |
| 2019 |  |  | 5 |  |  | 9 |  |
| 2020 |  |  | 7 |  |  | 11 |  |
| 2021 |  |  | 8 |  |  | 13 |  |
| 2022-2026 |  |  | 76 |  |  | 96 |  |
| Total |  |  | $ | 101 |  |  | $ | 139 |  |
Servco 401(k) Plans Servco sponsors two 401(k) plans, which are defined contribution retirement plans subject to ERISA. Eligible non-represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan I (Thrift Plan I), and eligible represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan II (Thrift Plan II). Participants in the Plans may contribute up to 50% of their eligible compensation to these plans, not to exceed the IRS maximums, including any Catch-Up Contributions for those employees age 50 and above. Servco does not provide an employer match or core contribution for employees in Thrift Plan II. For employees in Thrift Plan I, Servco matches 50% of such employee contributions up to 8% of eligible compensation and provides core contributions (based on years of service and age) to employees who do not participate in Servco’s Retirement Income Plan. The amounts expensed by Servco for employer matching contributions for the years ended December 31, 2016, 2015 and 2014 were $5 million, $4 million and $3 million, respectively, and pursuant to the OSA, Servco recognizes Operating Revenues for the reimbursement of these costs.
PSE&G [Member] |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
Pension, OPEB and Savings Plans | Pension, Other Postretirement Benefits (OPEB) and Savings Plans PSEG sponsors qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria. Eligible employees participate in non-contributory pension and OPEB plans sponsored by PSEG and administered by Services. In addition, represented and nonrepresented employees are eligible for participation in PSEG’s two defined contribution plans described below. PSEG, PSE&G and Power are required to record the under or over funded positions of their defined benefit pension and OPEB plans on their respective balance sheets. Such funding positions of each PSEG company are required to be measured as of the date of its respective year-end Consolidated Balance Sheets. For underfunded plans, the liability is equal to the difference between the plan’s benefit obligation and the fair value of plan assets. For defined benefit pension plans, the benefit obligation is the projected benefit obligation. For OPEB plans, the benefit obligation is the accumulated postretirement benefit obligation. In addition, GAAP requires that the total unrecognized costs for defined benefit pension and OPEB plans be recorded as an after-tax charge to Accumulated Other Comprehensive Income (Loss), a separate component of Stockholders’ Equity. However, for PSE&G, because the amortization of the unrecognized costs is being collected from customers, the accumulated unrecognized costs are recorded as a Regulatory Asset. The unrecognized costs represent actuarial gains or losses and prior service costs which had not been expensed. For PSE&G, the Regulatory Asset is amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations. For Power, the charge to Accumulated Other Comprehensive Income (Loss) is amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations. Effective January 1, 2016, PSEG changed the approach used to measure future service and interest costs for pension benefits. For 2015 and prior, PSEG calculated service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. For 2016 and beyond, PSEG has elected to calculate service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. PSEG believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of the plan obligations. As a change in accounting estimate, this change was reflected prospectively. Pension and OPEB costs, net of amounts capitalized, were reduced by $34 million and $13 million, respectively, as compared to the 2016 amounts that would have been derived from applying PSEG’s 2015 and prior years’ methodology. As of December 31, 2016, PSEG merged its three qualified defined benefit pension plans (excluding Servco plans) into one plan, thereby also merging all of the pension plans’ assets. No changes were made to the benefit formulas, the vesting provisions, or to the employees covered by the plans. Amounts for Servco are not included in any of the following pension and OPEB benefit information for PSEG and its affiliates but rather are separately disclosed later in this note. The following table provides a roll-forward of the changes in the benefit obligation and the fair value of plan assets during each of the two years in the periods ended December 31, 2016 and 2015. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  | Millions |
| Change in Benefit Obligation |  |  |  |  |  |  |  |  |
| Benefit Obligation at Beginning of Year (A) |  | $ | 5,522 |  |  | $ | 5,722 |  |  | $ | 1,612 |  |  | $ | 1,638 |  |
| Service Cost |  | 109 |  |  | 123 |  |  | 17 |  |  | 22 |  |
| Interest Cost |  | 202 |  |  | 234 |  |  | 59 |  |  | 67 |  |
| Actuarial (Gain) Loss (B) |  | 219 |  |  | (289 | ) |  | 127 |  |  | (45 | ) |
| Gross Benefits Paid |  | (282 | ) |  | (268 | ) |  | (57 | ) |  | (70 | ) |
| Plan Amendments |  | 2 |  |  | — |  |  | (4 | ) |  | — |  |
| Benefit Obligation at End of Year (A) |  | $ | 5,772 |  |  | $ | 5,522 |  |  | $ | 1,754 |  |  | $ | 1,612 |  |
| Change in Plan Assets |  |  |  |  |  |  |  |  |
| Fair Value of Assets at Beginning of Year |  | $ | 5,039 |  |  | $ | 5,293 |  |  | $ | 374 |  |  | $ | 361 |  |
| Actual Return on Plan Assets |  | 403 |  |  | (11 | ) |  | 32 |  |  | (1 | ) |
| Employer Contributions |  | 33 |  |  | 25 |  |  | 71 |  |  | 84 |  |
| Gross Benefits Paid |  | (282 | ) |  | (268 | ) |  | (57 | ) |  | (70 | ) |
| Fair Value of Assets at End of Year |  | $ | 5,193 |  |  | $ | 5,039 |  |  | $ | 420 |  |  | $ | 374 |  |
| Funded Status |  |  |  |  |  |  |  |  |
| Funded Status (Plan Assets less Benefit Obligation) |  | $ | (579 | ) |  | $ | (483 | ) |  | $ | (1,334 | ) |  | $ | (1,238 | ) |
| Additional Amounts Recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |
| Noncurrent Assets (included in Other Special Funds) |  | $ | — |  |  | $ | 14 |  |  | $ | — |  |  | $ | — |  |
| Current Accrued Benefit Cost |  | (11 | ) |  | (10 | ) |  | (10 | ) |  | (10 | ) |
| Noncurrent Accrued Benefit Cost |  | (568 | ) |  | (487 | ) |  | (1,324 | ) |  | (1,228 | ) |
| Amounts Recognized |  | $ | (579 | ) |  | $ | (483 | ) |  | $ | (1,334 | ) |  | $ | (1,238 | ) |
| Additional Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Regulated Assets and Deferred Assets (B) |  |  |
| Prior Service Cost |  | $ | (63 | ) |  | $ | (83 | ) |  | $ | (14 | ) |  | $ | (25 | ) |
| Net Actuarial Loss |  | 1,763 |  |  | 1,710 |  |  | 523 |  |  | 438 |  |
| Total |  | $ | 1,700 |  |  | $ | 1,627 |  |  | $ | 509 |  |  | $ | 413 |  |
(A) | Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits.
(B) | Includes $679 million ($398 million, after-tax) and $658 million ($386 million, after-tax) in Accumulated Other Comprehensive Loss related to Pension and OPEB as of December 31, 2016 and 2015, respectively.
The pension benefits table above provides information relating to the funded status of the qualified, nonqualified pension and OPEB plans on an aggregate basis. As of December 31, 2016, PSEG had funded approximately 90% of its projected benefit obligation. This percentage does not include $217 million of assets in the Rabbi Trust as of December 31, 2016 which were used partially to fund the nonqualified pension plans. As of December 31, 2016, the nonqualified pension plans included in the projected benefit obligation in the above table were $161 million. The fair values of the Rabbi Trust assets are included in Other Special Funds on the Consolidated Balance Sheets. Accumulated Benefit Obligation The accumulated benefit obligation for all PSEG’s defined benefit pension plans was $5.6 billion as of December 31, 2016 and $5.4 billion as of December 31, 2015. The following table provides the components of net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014.
|  |  | Pension Benefits Years Ended December 31, |  | Other Benefits Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| Components of Net Periodic Benefit Cost (Credit) |  |  |  |  |  |  |  |  |  |  |  |  |
| Service Cost |  | $ | 109 |  |  | $ | 123 |  |  | $ | 104 |  |  | $ | 17 |  |  | $ | 22 |  |  | 18 |  |
| Interest Cost |  | 202 |  |  | 234 |  |  | 234 |  |  | 59 |  |  | 67 |  |  | 69 |  |
| Expected Return on Plan Assets |  | (394 | ) |  | (414 | ) |  | (399 | ) |  | (31 | ) |  | (31 | ) |  | (26 | ) |
| Amortization of Net |  |  |  |  |  |  |  |  |  |  |  |  |
| Prior Service Credit |  | (19 | ) |  | (19 | ) |  | (18 | ) |  | (14 | ) |  | (14 | ) |  | (14 | ) |
| Actuarial Loss |  | 158 |  |  | 150 |  |  | 56 |  |  | 40 |  |  | 43 |  |  | 23 |  |
| Net Periodic Benefit Cost (Credit) |  | $ | 56 |  |  | $ | 74 |  |  | $ | (23 | ) |  | $ | 71 |  |  | $ | 87 |  |  | $ | 70 |  |
Pension costs and OPEB costs for PSEG, PSE&G and Power are detailed as follows:
|  |  | Pension Benefits Years Ended December 31, |  | Other Benefits Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| PSE&G |  | $ | 29 |  |  | $ | 40 |  |  | $ | (19 | ) |  | $ | 43 |  |  | $ | 55 |  |  | $ | 46 |  |
| Power |  | 16 |  |  | 21 |  |  | (7 | ) |  | 23 |  |  | 27 |  |  | 20 |  |
| Other |  | 11 |  |  | 13 |  |  | 3 |  |  | 5 |  |  | 5 |  |  | 4 |  |
| Total Benefit Cost (Credit) |  | $ | 56 |  |  | $ | 74 |  |  | $ | (23 | ) |  | $ | 71 |  |  | $ | 87 |  |  | $ | 70 |  |
The following table provides the pre-tax changes recognized in Accumulated Other Comprehensive Income (Loss), Regulatory Assets and Deferred Assets:
|  |  | Pension |  | OPEB |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  | Millions |
| Net Actuarial (Gain) Loss in Current Period |  | $ | 211 |  |  | $ | 136 |  |  | $ | 125 |  |  | $ | (14 | ) |
| Amortization of Net Actuarial Gain (Loss) |  | (158 | ) |  | (150 | ) |  | (40 | ) |  | (43 | ) |
| Prior Service Cost (Credit) in current period |  | 1 |  |  | — |  |  | (3 | ) |  | — |  |
| Amortization of Prior Service Credit |  | 19 |  |  | 19 |  |  | 14 |  |  | 14 |  |
| Total |  | $ | 73 |  |  | $ | 5 |  |  | $ | 96 |  |  | $ | (43 | ) |
Amounts that are expected to be amortized from Accumulated Other Comprehensive Loss, Regulatory Assets and Deferred Assets into Net Periodic Benefit Cost in 2017 are as follows:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2017 |  | 2017 |
|  |  | Millions |
| Actuarial (Gain) Loss |  | $ | 97 |  |  | $ | 51 |  |
| Prior Service Cost |  | $ | (18 | ) |  | $ | (11 | ) |
The following assumptions were used to determine the benefit obligations and net periodic benefit costs:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
| Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31 |  |  |
| Discount Rate |  | 4.29 | % |  | 4.54 | % |  | 4.20 | % |  | 4.37 | % |  | 4.58 | % |  | 4.21 | % |
| Rate of Compensation Increase |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |
| Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31 |  |  |
| Discount Rate |  | 4.54 | % |  | 4.20 | % |  | 5.00 | % |  | 4.58 | % |  | 4.21 | % |  | 5.01 | % |
| Service Cost Interest Rate |  | 4.81 | % |  | 4.20 | % |  | 5.00 | % |  | 4.87 | % |  | 4.21 | % |  | 5.01 | % |
| Interest Cost Interest Rate |  | 3.75 | % |  | 4.20 | % |  | 5.00 | % |  | 3.76 | % |  | 4.21 | % |  | 5.01 | % |
| Expected Return on Plan Assets |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |
| Rate of Compensation Increase |  | 3.61 | % |  | 3.61 | % |  | 4.61 | % |  | 3.61 | % |  | 3.61 | % |  | 4.61 | % |
| Assumed Health Care Cost Trend Rates as of December 31 |  |  |  |  |  |  |  |  |
| Administrative Expense |  |  |  |  |  |  |  | 3.00 | % |  | 3.00 | % |  | 3.00 | % |
| Health Care Costs |  |  |  |  |  |  |  |  |  |  |  |  |
| Immediate Rate |  |  |  |  |  |  |  | 7.55 | % |  | 7.75 | % |  | 7.40 | % |
| Ultimate Rate |  |  |  |  |  |  |  | 4.75 | % |  | 4.75 | % |  | 5.00 | % |
| Year Ultimate Rate Reached |  |  |  |  |  |  |  | 2025 |  |  | 2025 |  |  | 2022 |  |
|  |  |  |  |  |  |  |  | Millions |
| Effect of a 1% Increase in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Total of Service Cost and Interest Cost |  |  |  |  |  |  |  | $ | 11 |  |  | $ | 12 |  |  | $ | 13 |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | 191 |  |  | $ | 194 |  |  | $ | 201 |  |
| Effect of a 1% Decrease in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Total of Service Cost and Interest Cost |  |  |  |  |  |  |  | $ | (9 | ) |  | $ | (10 | ) |  | $ | (10 | ) |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | (160 | ) |  | $ | (160 | ) |  | $ | (165 | ) |
Plan Assets The investments of pension and OPEB plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension and OPEB plans are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. Use of the Master Trust permits the commingling of pension plan assets and OPEB plan assets for investment and administrative purposes. Although assets of the plans are commingled in the Master Trust, the Trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. As of December 31, 2016, the pension plan interest and OPEB plan interest in such assets of the Master Trust were approximately 93% and 7%, respectively. The following tables present information about the investments measured at fair value on a recurring basis as of December 31, 2016 and 2015, including the fair value measurements and the levels of inputs used in determining those fair values.
|  |  | Recurring Fair Value Measurements as of December 31, 2016 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Cash Equivalents (A) |  | $ | 107 |  |  | $ | 105 |  |  | $ | 2 |  |  | $ | — |  |
| Equities (B) |  |  |  |  |  |  |  |  |  |
| Common Stock |  | 944 |  |  | 944 |  |  | — |  |  | — |  |
| Commingled (C) |  | 1,387 |  |  | 1,247 |  |  | 140 |  |  | — |  |
| Preferred Stock |  | 1 |  |  | 1 |  |  | — |  |  | — |  |
| Bonds (D) |  |  |  |  |  |  |  |  |  |
| US Treasury |  | 441 |  |  | — |  |  | 441 |  |  | — |  |
| Government—Other |  | 263 |  |  | — |  |  | 263 |  |  | — |  |
| Corporate |  | 836 |  |  | — |  |  | 836 |  |  | — |  |
| Subtotal Fair Value |  | $ | 3,979 |  |  | $ | 2,297 |  |  | $ | 1,682 |  |  | $ | — |  |
| Measured at net asset value practical expedient (C) |  |  |  |  |  |  |  |  |
| Commingled—Equities |  | 1,604 |  |  |  |  |  |  |  |
| Private Equity (E) |  | 16 |  |  |  |  |  |  |  |
| Total Fair Value (F) |  | $ | 5,599 |  |  |  |  |  |  |  |  |  |  |
|  |  | Recurring Fair Value Measurements as of December 31, 2015 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Cash Equivalents (A) |  | $ | 96 |  |  | $ | 95 |  |  | $ | 1 |  |  | $ | — |  |
| Equities (B) |  |  |  |  |  |  |  |  |  |
| Common Stock |  | 816 |  |  | 816 |  |  | — |  |  | — |  |
| Commingled (C) |  | 1,463 |  |  | 1,269 |  |  | 194 |  |  | — |  |
| Bonds (D) |  |  |  |  |  |  |  |  |  |
| US Treasury |  | 322 |  |  | — |  |  | 322 |  |  | — |  |
| Government—Other |  | 279 |  |  | — |  |  | 279 |  |  | — |  |
| Corporate |  | 906 |  |  | — |  |  | 906 |  |  | — |  |
| Subtotal Fair Value |  | $ | 3,882 |  |  | $ | 2,180 |  |  | $ | 1,702 |  |  | $ | — |  |
| Measured at net asset value practical expedient (C) |  |  |  |  |  |  |  |  |
| Commingled—Equities |  | 1,504 |  |  |  |  |  |  |  |
| Private Equity (E) |  | 19 |  |  |  |  |  |  |  |
| Total Fair Value (F) |  | $ | 5,405 |  |  |  |  |  |  |  |  |  |  |
(A) | Certain open-ended mutual funds with mainly short-term investments are valued based on unadjusted quoted prices in active market (Level 1). Certain temporary investments are valued using inputs such as time-to-maturity, coupon rate, quality rating and current yield (Level 2).
(B) | Common stocks and preferred stocks are measured using observable data in active markets and considered Level 1. Investments in certain commingled equity funds are measured at their published daily net asset value (NAV) available to investors; if they are redeemable daily without restrictions, they are classified as Level 1 or, if they have restrictions which prevent daily redemptions, they are classified as Level 2.
(C) | In 2016, PSEG re-evaluated the classification, within the fair value hierarchy, of its commingled equity funds. As a result, PSEG determined that certain commingled funds in the amount of $1,698 million at December 31, 2015 should have been classified as Level 2 instead of Level 1, as previously presented for 2015, due to the funds having certain redemption restrictions which prevent daily redemptions at their published price. PSEG has determined that this error is immaterial to its previously filed financial reports and, accordingly, has corrected the error by revising the amounts disclosed for 2015 to report such investments as Level 2. In addition, as part of our implementation of the new accounting guidance on investments measured at fair value using NAV as a practical expedient in 2016, the majority of these same commingled equity funds have been removed from the fair value hierarchy as they are measured at fair value using the NAV per share (or its equivalent) practical expedient. See Note 2. Recent Accounting Standards. These funds do not meet the definition of readily determinable fair value due to limitations in published NAV (last business day of the month) and include certain redemption restrictions ranging from one to fifteen days advance notice prior to redemption days and limitations on withdrawals over 25% of the total fund. The objectives of these funds are mainly tracking the S&P Index or achieving long-term growth through investment in foreign equity securities and the MSCI Emerging Markets Index. As a result of the error correction for the $1,698 million that should have been classified as Level 2 for 2015 and $1,504 million that was removed from the fair value hierarchy as part of the new guidance on NAV practical expedient implementation, $194 million has been reclassified to Level 2 as of December 31, 2015.
(D) | Fixed income securities include mainly investment grade corporate and municipal bonds, US Treasury obligations and Federal Agency asset-backed securities with a wide range of maturities. These investments are valued using an evaluated pricing approach that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads or the most recent quoted for similar securities which are a Level 2 measure.
(E) | Private equity investments include various limited partnerships that invest in operating companies through acquisitions or developing a portfolio of non-US distressed investments. These investments are valued at NAV on an annual basis and have significant redemption restrictions preventing redemption until fund liquidation and limited ability to sell these investments. These investments have been removed from the fair value hierarchy in accordance with the new guidance on NAV practical expedient.
(F) | Excludes net receivable of $14 million and $8 million at December 31, 2016 and 2015, respectively, which consists of interest and dividend, receivables and payables related to pending securities sales and purchases.
The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans as of the measurement date, December 31:
|  |  | As of December 31, |
| Investments |  | 2016 |  | 2015 |
| Equity Securities |  | 70 | % |  | 70 | % |
| Fixed Income Securities |  | 28 |  |  | 28 |  |
| Other Investments |  | 2 |  |  | 2 |  |
| Total Percentage |  | 100 | % |  | 100 | % |
PSEG utilizes forecasted returns, risk, and correlation of all asset classes in order to develop a portfolio designed to produce the maximum return opportunity per unit of risk. PSEG’s latest asset/liability study indicates that a long-term target asset allocation of 70% equities and 30% fixed income is consistent with the funds’ financial objectives. Derivative financial instruments are used by the plans’ investment managers primarily to adjust the fixed income duration of the portfolio and hedge the currency risk component of foreign investments. The expected long-term rate of return on plan assets was 8.0% for 2016 and will be 7.8% for 2017. This expected return was determined based on the study discussed above, including a premium for active management and considered the plans’ historical annualized rate of return since inception, which was 9.3%. Plan Contributions PSEG plans to contribute $14 million into its OPEB plan during 2017. Estimated Future Benefit Payments The following pension benefit and postretirement benefit payments are expected to be paid to plan participants.
| Year |  |  | Pension Benefits |  | Other Benefits |
|  |  |  | Millions |
| 2017 |  |  | $ | 310 |  |  | $ | 82 |  |
| 2018 |  |  | 307 |  |  | 86 |  |
| 2019 |  |  | 319 |  |  | 90 |  |
| 2020 |  |  | 331 |  |  | 94 |  |
| 2021 |  |  | 343 |  |  | 99 |  |
| 2022-2026 |  |  | 1,887 |  |  | 534 |  |
| Total |  |  | $ | 3,497 |  |  | $ | 985 |  |
401(k) Plans PSEG sponsors two 401(k) plans, which are Employee Retirement Income Security Act (ERISA) defined contribution retirement plans. Eligible represented employees of PSEG’s subsidiaries participate in the PSEG Employee Savings Plan (Savings Plan), while eligible non-represented employees of PSEG’s subsidiaries participate in the PSEG Thrift and Tax-Deferred Savings Plan (Thrift Plan). Eligible employees may contribute up to 50% of their compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. PSEG matches 50% of such employee contributions up to 7% of pay for Savings Plan participants and up to 8% of pay for Thrift Plan participants. The amount paid for employer matching contributions to the plans for PSEG, PSE&G and Power are detailed as follows:
|  |  | Thrift Plan and Savings Plan |
|  |  | Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| PSE&G |  | $ | 24 |  |  | $ | 22 |  |  | $ | 20 |  |
| Power |  | 12 |  |  | 12 |  |  | 11 |  |
| Other |  | 5 |  |  | 5 |  |  | 5 |  |
| Total Employer Matching Contributions |  | $ | 41 |  |  | $ | 39 |  |  | $ | 36 |  |
Servco Pension and OPEB At the direction of LIPA, effective January 1, 2014, Servco established benefit plans that provide substantially the same benefits to its employees as those previously provided by National Grid Electric Services LLC (NGES), the predecessor T&D system manager for LIPA. Since the vast majority of Servco’s employees had worked under NGES’ T&D operations services arrangement with LIPA, Servco’s plans provide certain of those employees with pension and OPEB vested credit for prior years’ services earned while working for NGES. The benefit plans cover all employees of Servco for current service. Under the OSA, all of these and any future employee benefit costs are to be funded by LIPA. See Note 4. Variable Interest Entities. These obligations, as well as the offsetting long-term receivable, are separately presented on the Consolidated Balance Sheet of PSEG. The following table provides a roll-forward of the changes in Servco’s benefit obligation and the fair value of its plan assets during the years ended December 31, 2016 and 2015. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  |  |  | Millions |
| Change in Benefit Obligation |  |  |  |  |  |  |  |  |
| Benefit Obligation at Beginning of Year |  | $ | 211 |  |  | $ | 195 |  |  | $ | 375 |  |  | $ | 452 |  |
| Service Cost |  | 24 |  |  | 26 |  |  | 12 |  |  | 17 |  |
| Interest Cost |  | 9 |  |  | 9 |  |  | 17 |  |  | 21 |  |
| Actuarial (Gain) Loss |  | 14 |  |  | (20 | ) |  | 50 |  |  | (114 | ) |
| Gross Benefits Paid |  | (1 | ) |  | — |  |  | (2 | ) |  | (1 | ) |
| Plan Amendments |  | 5 |  |  | 1 |  |  | — |  |  | — |  |
| Benefit Obligation at End of Year (A) |  | $ | 262 |  |  | $ | 211 |  |  | $ | 452 |  |  | $ | 375 |  |
| Change in Plan Assets |  |  |  |  |  |  |  |  |
| Fair Value of Assets at Beginning of Year |  | $ | 97 |  |  | $ | 69 |  |  | $ | — |  |  | $ | — |  |
| Actual Return on Plan Assets |  | 10 |  |  | (2 | ) |  | — |  |  | — |  |
| Employer Contributions |  | 28 |  |  | 30 |  |  | 2 |  |  | 1 |  |
| Gross Benefits Paid |  | (1 | ) |  | — |  |  | (2 | ) |  | (1 | ) |
| Fair Value of Assets at End of Year |  | $ | 134 |  |  | $ | 97 |  |  | $ | — |  |  | $ | — |  |
| Funded Status |  |  |  |  |  |  |  |  |
| Funded Status (Plan Assets less Benefit Obligation) |  | $ | (128 | ) |  | $ | (114 | ) |  | $ | (452 | ) |  | $ | (375 | ) |
| Additional Amounts Recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |
| Accrued Pension Costs of Servco |  | $ | (128 | ) |  | $ | (114 | ) |  | N/A |  |  | N/A |  |
| OPEB Costs of Servco |  | N/A |  |  | N/A |  |  | (452 | ) |  | (375 | ) |
| Amounts Recognized (B) |  | $ | (128 | ) |  | $ | (114 | ) |  | $ | (452 | ) |  | $ | (375 | ) |
(A) | Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits.
(B) | Amounts equal to the accrued pension and OPEB costs of Servco are offset in Long-Term Receivable of VIE on PSEG’s Consolidated Balance Sheets.
Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. The pension-related revenues and costs for 2016, 2015 and 2014 were $28 million, $30 million and $67 million, respectively. Servco has contributed its entire planned contribution amount to its pension plan trusts during 2016. The OPEB-related revenues earned and costs incurred in 2016 was $2 million, and were immaterial 2015 and 2014. The following assumptions were used to determine the benefit obligations of Servco:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
| Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31 |  |  |
| Discount Rate |  | 4.61 | % |  | 4.92 | % |  | 4.50 | % |  | 4.71 | % |  | 4.97 | % |  | 4.60 | % |
| Rate of Compensation Increase |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |
| Assumed Health Care Cost Trend Rates as of December 31 |  |  |  |  |  |  |  |  |
| Administrative Expense |  |  |  |  |  |  |  | 5.00 | % |  | 5.00 | % |  | 5.00 | % |
| Health Care Costs |  |  |  |  |  |  |  |  |  |  |  |  |
| Immediate Rate |  |  |  |  |  |  |  | 7.55 | % |  | 7.55 | % |  | 7.33 | % |
| Ultimate Rate |  |  |  |  |  |  |  | 4.75 | % |  | 4.75 | % |  | 5.00 | % |
| Year Ultimate Rate Reached |  |  |  |  |  |  |  | 2025 |  |  | 2025 |  |  | 2021 |  |
|  |  |  |  |  |  |  |  | Millions |
| Effect of a 1% Increase in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | 97 |  |  | $ | 75 |  |  | $ | 160 |  |
| Effect of a 1% Decrease in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | (75 | ) |  | $ | (60 | ) |  | $ | (106 | ) |
Plan Assets All the investments of Servco’s pension plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. The Actuary maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Actuary to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. The following tables present information about Servco’s investments measured at fair value on a recurring basis as of December 31, 2016 and 2015, including the fair value measurements and the levels of inputs used in determining those fair values.
|  |  | Recurring Fair Value Measurements as of December 31, 2016 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Commingled Equities (A) |  | $ | 96 |  |  | $ | — |  |  | $ | 96 |  |  | $ | — |  |
| Commingled Bonds (A) |  | 38 |  |  | — |  |  | 38 |  |  | — |  |
| Total |  | $ | 134 |  |  | $ | — |  |  | $ | 134 |  |  | $ | — |  |
|  |  | Recurring Fair Value Measurements as of December 31, 2015 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Commingled Equities (A) |  | $ | 68 |  |  | $ | — |  |  | $ | 68 |  |  | $ | — |  |
| Commingled Bonds (A) |  | 29 |  |  | — |  |  | 29 |  |  | — |  |
| Total |  | $ | 97 |  |  | $ | — |  |  | $ | 97 |  |  | $ | — |  |
(A) | Investments in commingled equity and bond funds have a readily determinable fair value as they publish a daily NAV available to investors which is the basis for current transactions and contain certain redemption restrictions requiring advance notice of one to two days for withdrawals (Level 2). In 2016, PSEG re-evaluated the classification, within the fair value hierarchy, of its commingled funds. As a result, PSEG determined that the commingled equity funds should have been classified as Level 2 instead of Level 1, as previously presented for 2015, due to the funds having certain redemption restrictions which prevent daily redemptions at the published price. In addition to the advance notice of one or two days, redemption days may be limited to twice per month for certain funds. PSEG has determined that this error is immaterial to its previously filed financial reports and, accordingly, has corrected the error by revising the amounts disclosed for 2015 to report the commingled equity fund balance of $68 million as of December 31, 2015 as Level 2.
The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans of Servco as of the measurement date, December 31:
|  |  | As of December 31, |
| Investments |  | 2016 |  | 2015 |
| Equity Securities |  | 71 | % |  | 71 | % |
| Fixed Income Securities |  | 29 |  |  | 29 |  |
| Total Percentage |  | 100 | % |  | 100 | % |
Servco utilizes forecasted returns, risk, and correlation of all asset classes in order to develop a portfolio designed to produce the maximum return opportunity per unit of risk. The results from Servco’s latest asset/liability study indicated that a long-term target asset allocation of 70% equities and 30% fixed income is consistent with the funds’ financial objectives. The expected long-term rate of return on plan assets was 7.7% for 2016 and will be 7.6% for 2017. This expected return was determined based on the study discussed above, including a premium for active management. Plan Contributions Servco plans to contribute $35 million into its pension plan during 2017. Estimated Future Benefit Payments The following pension benefit and postretirement benefit payments are expected to be paid to Servco’s plan participants:
| Year |  |  | Pension Benefits |  | Other Benefits |
|  |  |  | Millions |
| 2017 |  |  | $ | 2 |  |  | $ | 4 |  |
| 2018 |  |  | 3 |  |  | 6 |  |
| 2019 |  |  | 5 |  |  | 9 |  |
| 2020 |  |  | 7 |  |  | 11 |  |
| 2021 |  |  | 8 |  |  | 13 |  |
| 2022-2026 |  |  | 76 |  |  | 96 |  |
| Total |  |  | $ | 101 |  |  | $ | 139 |  |
Servco 401(k) Plans Servco sponsors two 401(k) plans, which are defined contribution retirement plans subject to ERISA. Eligible non-represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan I (Thrift Plan I), and eligible represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan II (Thrift Plan II). Participants in the Plans may contribute up to 50% of their eligible compensation to these plans, not to exceed the IRS maximums, including any Catch-Up Contributions for those employees age 50 and above. Servco does not provide an employer match or core contribution for employees in Thrift Plan II. For employees in Thrift Plan I, Servco matches 50% of such employee contributions up to 8% of eligible compensation and provides core contributions (based on years of service and age) to employees who do not participate in Servco’s Retirement Income Plan. The amounts expensed by Servco for employer matching contributions for the years ended December 31, 2016, 2015 and 2014 were $5 million, $4 million and $3 million, respectively, and pursuant to the OSA, Servco recognizes Operating Revenues for the reimbursement of these costs.
Power [Member] |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
Pension, OPEB and Savings Plans | Pension, Other Postretirement Benefits (OPEB) and Savings Plans PSEG sponsors qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria. Eligible employees participate in non-contributory pension and OPEB plans sponsored by PSEG and administered by Services. In addition, represented and nonrepresented employees are eligible for participation in PSEG’s two defined contribution plans described below. PSEG, PSE&G and Power are required to record the under or over funded positions of their defined benefit pension and OPEB plans on their respective balance sheets. Such funding positions of each PSEG company are required to be measured as of the date of its respective year-end Consolidated Balance Sheets. For underfunded plans, the liability is equal to the difference between the plan’s benefit obligation and the fair value of plan assets. For defined benefit pension plans, the benefit obligation is the projected benefit obligation. For OPEB plans, the benefit obligation is the accumulated postretirement benefit obligation. In addition, GAAP requires that the total unrecognized costs for defined benefit pension and OPEB plans be recorded as an after-tax charge to Accumulated Other Comprehensive Income (Loss), a separate component of Stockholders’ Equity. However, for PSE&G, because the amortization of the unrecognized costs is being collected from customers, the accumulated unrecognized costs are recorded as a Regulatory Asset. The unrecognized costs represent actuarial gains or losses and prior service costs which had not been expensed. For PSE&G, the Regulatory Asset is amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations. For Power, the charge to Accumulated Other Comprehensive Income (Loss) is amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations. Effective January 1, 2016, PSEG changed the approach used to measure future service and interest costs for pension benefits. For 2015 and prior, PSEG calculated service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. For 2016 and beyond, PSEG has elected to calculate service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. PSEG believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of the plan obligations. As a change in accounting estimate, this change was reflected prospectively. Pension and OPEB costs, net of amounts capitalized, were reduced by $34 million and $13 million, respectively, as compared to the 2016 amounts that would have been derived from applying PSEG’s 2015 and prior years’ methodology. As of December 31, 2016, PSEG merged its three qualified defined benefit pension plans (excluding Servco plans) into one plan, thereby also merging all of the pension plans’ assets. No changes were made to the benefit formulas, the vesting provisions, or to the employees covered by the plans. Amounts for Servco are not included in any of the following pension and OPEB benefit information for PSEG and its affiliates but rather are separately disclosed later in this note. The following table provides a roll-forward of the changes in the benefit obligation and the fair value of plan assets during each of the two years in the periods ended December 31, 2016 and 2015. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  | Millions |
| Change in Benefit Obligation |  |  |  |  |  |  |  |  |
| Benefit Obligation at Beginning of Year (A) |  | $ | 5,522 |  |  | $ | 5,722 |  |  | $ | 1,612 |  |  | $ | 1,638 |  |
| Service Cost |  | 109 |  |  | 123 |  |  | 17 |  |  | 22 |  |
| Interest Cost |  | 202 |  |  | 234 |  |  | 59 |  |  | 67 |  |
| Actuarial (Gain) Loss (B) |  | 219 |  |  | (289 | ) |  | 127 |  |  | (45 | ) |
| Gross Benefits Paid |  | (282 | ) |  | (268 | ) |  | (57 | ) |  | (70 | ) |
| Plan Amendments |  | 2 |  |  | — |  |  | (4 | ) |  | — |  |
| Benefit Obligation at End of Year (A) |  | $ | 5,772 |  |  | $ | 5,522 |  |  | $ | 1,754 |  |  | $ | 1,612 |  |
| Change in Plan Assets |  |  |  |  |  |  |  |  |
| Fair Value of Assets at Beginning of Year |  | $ | 5,039 |  |  | $ | 5,293 |  |  | $ | 374 |  |  | $ | 361 |  |
| Actual Return on Plan Assets |  | 403 |  |  | (11 | ) |  | 32 |  |  | (1 | ) |
| Employer Contributions |  | 33 |  |  | 25 |  |  | 71 |  |  | 84 |  |
| Gross Benefits Paid |  | (282 | ) |  | (268 | ) |  | (57 | ) |  | (70 | ) |
| Fair Value of Assets at End of Year |  | $ | 5,193 |  |  | $ | 5,039 |  |  | $ | 420 |  |  | $ | 374 |  |
| Funded Status |  |  |  |  |  |  |  |  |
| Funded Status (Plan Assets less Benefit Obligation) |  | $ | (579 | ) |  | $ | (483 | ) |  | $ | (1,334 | ) |  | $ | (1,238 | ) |
| Additional Amounts Recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |
| Noncurrent Assets (included in Other Special Funds) |  | $ | — |  |  | $ | 14 |  |  | $ | — |  |  | $ | — |  |
| Current Accrued Benefit Cost |  | (11 | ) |  | (10 | ) |  | (10 | ) |  | (10 | ) |
| Noncurrent Accrued Benefit Cost |  | (568 | ) |  | (487 | ) |  | (1,324 | ) |  | (1,228 | ) |
| Amounts Recognized |  | $ | (579 | ) |  | $ | (483 | ) |  | $ | (1,334 | ) |  | $ | (1,238 | ) |
| Additional Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Regulated Assets and Deferred Assets (B) |  |  |
| Prior Service Cost |  | $ | (63 | ) |  | $ | (83 | ) |  | $ | (14 | ) |  | $ | (25 | ) |
| Net Actuarial Loss |  | 1,763 |  |  | 1,710 |  |  | 523 |  |  | 438 |  |
| Total |  | $ | 1,700 |  |  | $ | 1,627 |  |  | $ | 509 |  |  | $ | 413 |  |
(A) | Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits.
(B) | Includes $679 million ($398 million, after-tax) and $658 million ($386 million, after-tax) in Accumulated Other Comprehensive Loss related to Pension and OPEB as of December 31, 2016 and 2015, respectively.
The pension benefits table above provides information relating to the funded status of the qualified, nonqualified pension and OPEB plans on an aggregate basis. As of December 31, 2016, PSEG had funded approximately 90% of its projected benefit obligation. This percentage does not include $217 million of assets in the Rabbi Trust as of December 31, 2016 which were used partially to fund the nonqualified pension plans. As of December 31, 2016, the nonqualified pension plans included in the projected benefit obligation in the above table were $161 million. The fair values of the Rabbi Trust assets are included in Other Special Funds on the Consolidated Balance Sheets. Accumulated Benefit Obligation The accumulated benefit obligation for all PSEG’s defined benefit pension plans was $5.6 billion as of December 31, 2016 and $5.4 billion as of December 31, 2015. The following table provides the components of net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014.
|  |  | Pension Benefits Years Ended December 31, |  | Other Benefits Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| Components of Net Periodic Benefit Cost (Credit) |  |  |  |  |  |  |  |  |  |  |  |  |
| Service Cost |  | $ | 109 |  |  | $ | 123 |  |  | $ | 104 |  |  | $ | 17 |  |  | $ | 22 |  |  | 18 |  |
| Interest Cost |  | 202 |  |  | 234 |  |  | 234 |  |  | 59 |  |  | 67 |  |  | 69 |  |
| Expected Return on Plan Assets |  | (394 | ) |  | (414 | ) |  | (399 | ) |  | (31 | ) |  | (31 | ) |  | (26 | ) |
| Amortization of Net |  |  |  |  |  |  |  |  |  |  |  |  |
| Prior Service Credit |  | (19 | ) |  | (19 | ) |  | (18 | ) |  | (14 | ) |  | (14 | ) |  | (14 | ) |
| Actuarial Loss |  | 158 |  |  | 150 |  |  | 56 |  |  | 40 |  |  | 43 |  |  | 23 |  |
| Net Periodic Benefit Cost (Credit) |  | $ | 56 |  |  | $ | 74 |  |  | $ | (23 | ) |  | $ | 71 |  |  | $ | 87 |  |  | $ | 70 |  |
Pension costs and OPEB costs for PSEG, PSE&G and Power are detailed as follows:
|  |  | Pension Benefits Years Ended December 31, |  | Other Benefits Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| PSE&G |  | $ | 29 |  |  | $ | 40 |  |  | $ | (19 | ) |  | $ | 43 |  |  | $ | 55 |  |  | $ | 46 |  |
| Power |  | 16 |  |  | 21 |  |  | (7 | ) |  | 23 |  |  | 27 |  |  | 20 |  |
| Other |  | 11 |  |  | 13 |  |  | 3 |  |  | 5 |  |  | 5 |  |  | 4 |  |
| Total Benefit Cost (Credit) |  | $ | 56 |  |  | $ | 74 |  |  | $ | (23 | ) |  | $ | 71 |  |  | $ | 87 |  |  | $ | 70 |  |
The following table provides the pre-tax changes recognized in Accumulated Other Comprehensive Income (Loss), Regulatory Assets and Deferred Assets:
|  |  | Pension |  | OPEB |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  | Millions |
| Net Actuarial (Gain) Loss in Current Period |  | $ | 211 |  |  | $ | 136 |  |  | $ | 125 |  |  | $ | (14 | ) |
| Amortization of Net Actuarial Gain (Loss) |  | (158 | ) |  | (150 | ) |  | (40 | ) |  | (43 | ) |
| Prior Service Cost (Credit) in current period |  | 1 |  |  | — |  |  | (3 | ) |  | — |  |
| Amortization of Prior Service Credit |  | 19 |  |  | 19 |  |  | 14 |  |  | 14 |  |
| Total |  | $ | 73 |  |  | $ | 5 |  |  | $ | 96 |  |  | $ | (43 | ) |
Amounts that are expected to be amortized from Accumulated Other Comprehensive Loss, Regulatory Assets and Deferred Assets into Net Periodic Benefit Cost in 2017 are as follows:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2017 |  | 2017 |
|  |  | Millions |
| Actuarial (Gain) Loss |  | $ | 97 |  |  | $ | 51 |  |
| Prior Service Cost |  | $ | (18 | ) |  | $ | (11 | ) |
The following assumptions were used to determine the benefit obligations and net periodic benefit costs:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
| Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31 |  |  |
| Discount Rate |  | 4.29 | % |  | 4.54 | % |  | 4.20 | % |  | 4.37 | % |  | 4.58 | % |  | 4.21 | % |
| Rate of Compensation Increase |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |  | 3.61 | % |
| Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31 |  |  |
| Discount Rate |  | 4.54 | % |  | 4.20 | % |  | 5.00 | % |  | 4.58 | % |  | 4.21 | % |  | 5.01 | % |
| Service Cost Interest Rate |  | 4.81 | % |  | 4.20 | % |  | 5.00 | % |  | 4.87 | % |  | 4.21 | % |  | 5.01 | % |
| Interest Cost Interest Rate |  | 3.75 | % |  | 4.20 | % |  | 5.00 | % |  | 3.76 | % |  | 4.21 | % |  | 5.01 | % |
| Expected Return on Plan Assets |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |
| Rate of Compensation Increase |  | 3.61 | % |  | 3.61 | % |  | 4.61 | % |  | 3.61 | % |  | 3.61 | % |  | 4.61 | % |
| Assumed Health Care Cost Trend Rates as of December 31 |  |  |  |  |  |  |  |  |
| Administrative Expense |  |  |  |  |  |  |  | 3.00 | % |  | 3.00 | % |  | 3.00 | % |
| Health Care Costs |  |  |  |  |  |  |  |  |  |  |  |  |
| Immediate Rate |  |  |  |  |  |  |  | 7.55 | % |  | 7.75 | % |  | 7.40 | % |
| Ultimate Rate |  |  |  |  |  |  |  | 4.75 | % |  | 4.75 | % |  | 5.00 | % |
| Year Ultimate Rate Reached |  |  |  |  |  |  |  | 2025 |  |  | 2025 |  |  | 2022 |  |
|  |  |  |  |  |  |  |  | Millions |
| Effect of a 1% Increase in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Total of Service Cost and Interest Cost |  |  |  |  |  |  |  | $ | 11 |  |  | $ | 12 |  |  | $ | 13 |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | 191 |  |  | $ | 194 |  |  | $ | 201 |  |
| Effect of a 1% Decrease in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Total of Service Cost and Interest Cost |  |  |  |  |  |  |  | $ | (9 | ) |  | $ | (10 | ) |  | $ | (10 | ) |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | (160 | ) |  | $ | (160 | ) |  | $ | (165 | ) |
Plan Assets The investments of pension and OPEB plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension and OPEB plans are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. Use of the Master Trust permits the commingling of pension plan assets and OPEB plan assets for investment and administrative purposes. Although assets of the plans are commingled in the Master Trust, the Trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. As of December 31, 2016, the pension plan interest and OPEB plan interest in such assets of the Master Trust were approximately 93% and 7%, respectively. The following tables present information about the investments measured at fair value on a recurring basis as of December 31, 2016 and 2015, including the fair value measurements and the levels of inputs used in determining those fair values.
|  |  | Recurring Fair Value Measurements as of December 31, 2016 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Cash Equivalents (A) |  | $ | 107 |  |  | $ | 105 |  |  | $ | 2 |  |  | $ | — |  |
| Equities (B) |  |  |  |  |  |  |  |  |  |
| Common Stock |  | 944 |  |  | 944 |  |  | — |  |  | — |  |
| Commingled (C) |  | 1,387 |  |  | 1,247 |  |  | 140 |  |  | — |  |
| Preferred Stock |  | 1 |  |  | 1 |  |  | — |  |  | — |  |
| Bonds (D) |  |  |  |  |  |  |  |  |  |
| US Treasury |  | 441 |  |  | — |  |  | 441 |  |  | — |  |
| Government—Other |  | 263 |  |  | — |  |  | 263 |  |  | — |  |
| Corporate |  | 836 |  |  | — |  |  | 836 |  |  | — |  |
| Subtotal Fair Value |  | $ | 3,979 |  |  | $ | 2,297 |  |  | $ | 1,682 |  |  | $ | — |  |
| Measured at net asset value practical expedient (C) |  |  |  |  |  |  |  |  |
| Commingled—Equities |  | 1,604 |  |  |  |  |  |  |  |
| Private Equity (E) |  | 16 |  |  |  |  |  |  |  |
| Total Fair Value (F) |  | $ | 5,599 |  |  |  |  |  |  |  |  |  |  |
|  |  | Recurring Fair Value Measurements as of December 31, 2015 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Cash Equivalents (A) |  | $ | 96 |  |  | $ | 95 |  |  | $ | 1 |  |  | $ | — |  |
| Equities (B) |  |  |  |  |  |  |  |  |  |
| Common Stock |  | 816 |  |  | 816 |  |  | — |  |  | — |  |
| Commingled (C) |  | 1,463 |  |  | 1,269 |  |  | 194 |  |  | — |  |
| Bonds (D) |  |  |  |  |  |  |  |  |  |
| US Treasury |  | 322 |  |  | — |  |  | 322 |  |  | — |  |
| Government—Other |  | 279 |  |  | — |  |  | 279 |  |  | — |  |
| Corporate |  | 906 |  |  | — |  |  | 906 |  |  | — |  |
| Subtotal Fair Value |  | $ | 3,882 |  |  | $ | 2,180 |  |  | $ | 1,702 |  |  | $ | — |  |
| Measured at net asset value practical expedient (C) |  |  |  |  |  |  |  |  |
| Commingled—Equities |  | 1,504 |  |  |  |  |  |  |  |
| Private Equity (E) |  | 19 |  |  |  |  |  |  |  |
| Total Fair Value (F) |  | $ | 5,405 |  |  |  |  |  |  |  |  |  |  |
(A) | Certain open-ended mutual funds with mainly short-term investments are valued based on unadjusted quoted prices in active market (Level 1). Certain temporary investments are valued using inputs such as time-to-maturity, coupon rate, quality rating and current yield (Level 2).
(B) | Common stocks and preferred stocks are measured using observable data in active markets and considered Level 1. Investments in certain commingled equity funds are measured at their published daily net asset value (NAV) available to investors; if they are redeemable daily without restrictions, they are classified as Level 1 or, if they have restrictions which prevent daily redemptions, they are classified as Level 2.
(C) | In 2016, PSEG re-evaluated the classification, within the fair value hierarchy, of its commingled equity funds. As a result, PSEG determined that certain commingled funds in the amount of $1,698 million at December 31, 2015 should have been classified as Level 2 instead of Level 1, as previously presented for 2015, due to the funds having certain redemption restrictions which prevent daily redemptions at their published price. PSEG has determined that this error is immaterial to its previously filed financial reports and, accordingly, has corrected the error by revising the amounts disclosed for 2015 to report such investments as Level 2. In addition, as part of our implementation of the new accounting guidance on investments measured at fair value using NAV as a practical expedient in 2016, the majority of these same commingled equity funds have been removed from the fair value hierarchy as they are measured at fair value using the NAV per share (or its equivalent) practical expedient. See Note 2. Recent Accounting Standards. These funds do not meet the definition of readily determinable fair value due to limitations in published NAV (last business day of the month) and include certain redemption restrictions ranging from one to fifteen days advance notice prior to redemption days and limitations on withdrawals over 25% of the total fund. The objectives of these funds are mainly tracking the S&P Index or achieving long-term growth through investment in foreign equity securities and the MSCI Emerging Markets Index. As a result of the error correction for the $1,698 million that should have been classified as Level 2 for 2015 and $1,504 million that was removed from the fair value hierarchy as part of the new guidance on NAV practical expedient implementation, $194 million has been reclassified to Level 2 as of December 31, 2015.
(D) | Fixed income securities include mainly investment grade corporate and municipal bonds, US Treasury obligations and Federal Agency asset-backed securities with a wide range of maturities. These investments are valued using an evaluated pricing approach that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads or the most recent quoted for similar securities which are a Level 2 measure.
(E) | Private equity investments include various limited partnerships that invest in operating companies through acquisitions or developing a portfolio of non-US distressed investments. These investments are valued at NAV on an annual basis and have significant redemption restrictions preventing redemption until fund liquidation and limited ability to sell these investments. These investments have been removed from the fair value hierarchy in accordance with the new guidance on NAV practical expedient.
(F) | Excludes net receivable of $14 million and $8 million at December 31, 2016 and 2015, respectively, which consists of interest and dividend, receivables and payables related to pending securities sales and purchases.
The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans as of the measurement date, December 31:
|  |  | As of December 31, |
| Investments |  | 2016 |  | 2015 |
| Equity Securities |  | 70 | % |  | 70 | % |
| Fixed Income Securities |  | 28 |  |  | 28 |  |
| Other Investments |  | 2 |  |  | 2 |  |
| Total Percentage |  | 100 | % |  | 100 | % |
PSEG utilizes forecasted returns, risk, and correlation of all asset classes in order to develop a portfolio designed to produce the maximum return opportunity per unit of risk. PSEG’s latest asset/liability study indicates that a long-term target asset allocation of 70% equities and 30% fixed income is consistent with the funds’ financial objectives. Derivative financial instruments are used by the plans’ investment managers primarily to adjust the fixed income duration of the portfolio and hedge the currency risk component of foreign investments. The expected long-term rate of return on plan assets was 8.0% for 2016 and will be 7.8% for 2017. This expected return was determined based on the study discussed above, including a premium for active management and considered the plans’ historical annualized rate of return since inception, which was 9.3%. Plan Contributions PSEG plans to contribute $14 million into its OPEB plan during 2017. Estimated Future Benefit Payments The following pension benefit and postretirement benefit payments are expected to be paid to plan participants.
| Year |  |  | Pension Benefits |  | Other Benefits |
|  |  |  | Millions |
| 2017 |  |  | $ | 310 |  |  | $ | 82 |  |
| 2018 |  |  | 307 |  |  | 86 |  |
| 2019 |  |  | 319 |  |  | 90 |  |
| 2020 |  |  | 331 |  |  | 94 |  |
| 2021 |  |  | 343 |  |  | 99 |  |
| 2022-2026 |  |  | 1,887 |  |  | 534 |  |
| Total |  |  | $ | 3,497 |  |  | $ | 985 |  |
401(k) Plans PSEG sponsors two 401(k) plans, which are Employee Retirement Income Security Act (ERISA) defined contribution retirement plans. Eligible represented employees of PSEG’s subsidiaries participate in the PSEG Employee Savings Plan (Savings Plan), while eligible non-represented employees of PSEG’s subsidiaries participate in the PSEG Thrift and Tax-Deferred Savings Plan (Thrift Plan). Eligible employees may contribute up to 50% of their compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. PSEG matches 50% of such employee contributions up to 7% of pay for Savings Plan participants and up to 8% of pay for Thrift Plan participants. The amount paid for employer matching contributions to the plans for PSEG, PSE&G and Power are detailed as follows:
|  |  | Thrift Plan and Savings Plan |
|  |  | Years Ended December 31, |
|  |  | 2016 |  | 2015 |  | 2014 |
|  |  | Millions |
| PSE&G |  | $ | 24 |  |  | $ | 22 |  |  | $ | 20 |  |
| Power |  | 12 |  |  | 12 |  |  | 11 |  |
| Other |  | 5 |  |  | 5 |  |  | 5 |  |
| Total Employer Matching Contributions |  | $ | 41 |  |  | $ | 39 |  |  | $ | 36 |  |
Servco Pension and OPEB At the direction of LIPA, effective January 1, 2014, Servco established benefit plans that provide substantially the same benefits to its employees as those previously provided by National Grid Electric Services LLC (NGES), the predecessor T&D system manager for LIPA. Since the vast majority of Servco’s employees had worked under NGES’ T&D operations services arrangement with LIPA, Servco’s plans provide certain of those employees with pension and OPEB vested credit for prior years’ services earned while working for NGES. The benefit plans cover all employees of Servco for current service. Under the OSA, all of these and any future employee benefit costs are to be funded by LIPA. See Note 4. Variable Interest Entities. These obligations, as well as the offsetting long-term receivable, are separately presented on the Consolidated Balance Sheet of PSEG. The following table provides a roll-forward of the changes in Servco’s benefit obligation and the fair value of its plan assets during the years ended December 31, 2016 and 2015. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  |  |  |  | Millions |
| Change in Benefit Obligation |  |  |  |  |  |  |  |  |
| Benefit Obligation at Beginning of Year |  | $ | 211 |  |  | $ | 195 |  |  | $ | 375 |  |  | $ | 452 |  |
| Service Cost |  | 24 |  |  | 26 |  |  | 12 |  |  | 17 |  |
| Interest Cost |  | 9 |  |  | 9 |  |  | 17 |  |  | 21 |  |
| Actuarial (Gain) Loss |  | 14 |  |  | (20 | ) |  | 50 |  |  | (114 | ) |
| Gross Benefits Paid |  | (1 | ) |  | — |  |  | (2 | ) |  | (1 | ) |
| Plan Amendments |  | 5 |  |  | 1 |  |  | — |  |  | — |  |
| Benefit Obligation at End of Year (A) |  | $ | 262 |  |  | $ | 211 |  |  | $ | 452 |  |  | $ | 375 |  |
| Change in Plan Assets |  |  |  |  |  |  |  |  |
| Fair Value of Assets at Beginning of Year |  | $ | 97 |  |  | $ | 69 |  |  | $ | — |  |  | $ | — |  |
| Actual Return on Plan Assets |  | 10 |  |  | (2 | ) |  | — |  |  | — |  |
| Employer Contributions |  | 28 |  |  | 30 |  |  | 2 |  |  | 1 |  |
| Gross Benefits Paid |  | (1 | ) |  | — |  |  | (2 | ) |  | (1 | ) |
| Fair Value of Assets at End of Year |  | $ | 134 |  |  | $ | 97 |  |  | $ | — |  |  | $ | — |  |
| Funded Status |  |  |  |  |  |  |  |  |
| Funded Status (Plan Assets less Benefit Obligation) |  | $ | (128 | ) |  | $ | (114 | ) |  | $ | (452 | ) |  | $ | (375 | ) |
| Additional Amounts Recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |
| Accrued Pension Costs of Servco |  | $ | (128 | ) |  | $ | (114 | ) |  | N/A |  |  | N/A |  |
| OPEB Costs of Servco |  | N/A |  |  | N/A |  |  | (452 | ) |  | (375 | ) |
| Amounts Recognized (B) |  | $ | (128 | ) |  | $ | (114 | ) |  | $ | (452 | ) |  | $ | (375 | ) |
(A) | Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits.
(B) | Amounts equal to the accrued pension and OPEB costs of Servco are offset in Long-Term Receivable of VIE on PSEG’s Consolidated Balance Sheets.
Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. The pension-related revenues and costs for 2016, 2015 and 2014 were $28 million, $30 million and $67 million, respectively. Servco has contributed its entire planned contribution amount to its pension plan trusts during 2016. The OPEB-related revenues earned and costs incurred in 2016 was $2 million, and were immaterial 2015 and 2014. The following assumptions were used to determine the benefit obligations of Servco:
|  |  | Pension Benefits |  | Other Benefits |
|  |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
| Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31 |  |  |
| Discount Rate |  | 4.61 | % |  | 4.92 | % |  | 4.50 | % |  | 4.71 | % |  | 4.97 | % |  | 4.60 | % |
| Rate of Compensation Increase |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.25 | % |
| Assumed Health Care Cost Trend Rates as of December 31 |  |  |  |  |  |  |  |  |
| Administrative Expense |  |  |  |  |  |  |  | 5.00 | % |  | 5.00 | % |  | 5.00 | % |
| Health Care Costs |  |  |  |  |  |  |  |  |  |  |  |  |
| Immediate Rate |  |  |  |  |  |  |  | 7.55 | % |  | 7.55 | % |  | 7.33 | % |
| Ultimate Rate |  |  |  |  |  |  |  | 4.75 | % |  | 4.75 | % |  | 5.00 | % |
| Year Ultimate Rate Reached |  |  |  |  |  |  |  | 2025 |  |  | 2025 |  |  | 2021 |  |
|  |  |  |  |  |  |  |  | Millions |
| Effect of a 1% Increase in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | 97 |  |  | $ | 75 |  |  | $ | 160 |  |
| Effect of a 1% Decrease in the Assumed Rate of Increase in Health Care Benefit Costs |  |  |
| Postretirement Benefit Obligation |  |  |  |  |  |  |  | $ | (75 | ) |  | $ | (60 | ) |  | $ | (106 | ) |
Plan Assets All the investments of Servco’s pension plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. The Actuary maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Actuary to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. The following tables present information about Servco’s investments measured at fair value on a recurring basis as of December 31, 2016 and 2015, including the fair value measurements and the levels of inputs used in determining those fair values.
|  |  | Recurring Fair Value Measurements as of December 31, 2016 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Commingled Equities (A) |  | $ | 96 |  |  | $ | — |  |  | $ | 96 |  |  | $ | — |  |
| Commingled Bonds (A) |  | 38 |  |  | — |  |  | 38 |  |  | — |  |
| Total |  | $ | 134 |  |  | $ | — |  |  | $ | 134 |  |  | $ | — |  |
|  |  | Recurring Fair Value Measurements as of December 31, 2015 |
|  |  |  |  | Quoted Market Prices for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs |
| Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  | Millions |
| Commingled Equities (A) |  | $ | 68 |  |  | $ | — |  |  | $ | 68 |  |  | $ | — |  |
| Commingled Bonds (A) |  | 29 |  |  | — |  |  | 29 |  |  | — |  |
| Total |  | $ | 97 |  |  | $ | — |  |  | $ | 97 |  |  | $ | — |  |
(A) | Investments in commingled equity and bond funds have a readily determinable fair value as they publish a daily NAV available to investors which is the basis for current transactions and contain certain redemption restrictions requiring advance notice of one to two days for withdrawals (Level 2). In 2016, PSEG re-evaluated the classification, within the fair value hierarchy, of its commingled funds. As a result, PSEG determined that the commingled equity funds should have been classified as Level 2 instead of Level 1, as previously presented for 2015, due to the funds having certain redemption restrictions which prevent daily redemptions at the published price. In addition to the advance notice of one or two days, redemption days may be limited to twice per month for certain funds. PSEG has determined that this error is immaterial to its previously filed financial reports and, accordingly, has corrected the error by revising the amounts disclosed for 2015 to report the commingled equity fund balance of $68 million as of December 31, 2015 as Level 2.
The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans of Servco as of the measurement date, December 31:
|  |  | As of December 31, |
| Investments |  | 2016 |  | 2015 |
| Equity Securities |  | 71 | % |  | 71 | % |
| Fixed Income Securities |  | 29 |  |  | 29 |  |
| Total Percentage |  | 100 | % |  | 100 | % |
Servco utilizes forecasted returns, risk, and correlation of all asset classes in order to develop a portfolio designed to produce the maximum return opportunity per unit of risk. The results from Servco’s latest asset/liability study indicated that a long-term target asset allocation of 70% equities and 30% fixed income is consistent with the funds’ financial objectives. The expected long-term rate of return on plan assets was 7.7% for 2016 and will be 7.6% for 2017. This expected return was determined based on the study discussed above, including a premium for active management. Plan Contributions Servco plans to contribute $35 million into its pension plan during 2017. Estimated Future Benefit Payments The following pension benefit and postretirement benefit payments are expected to be paid to Servco’s plan participants:
| Year |  |  | Pension Benefits |  | Other Benefits |
|  |  |  | Millions |
| 2017 |  |  | $ | 2 |  |  | $ | 4 |  |
| 2018 |  |  | 3 |  |  | 6 |  |
| 2019 |  |  | 5 |  |  | 9 |  |
| 2020 |  |  | 7 |  |  | 11 |  |
| 2021 |  |  | 8 |  |  | 13 |  |
| 2022-2026 |  |  | 76 |  |  | 96 |  |
| Total |  |  | $ | 101 |  |  | $ | 139 |  |
Servco 401(k) Plans Servco sponsors two 401(k) plans, which are defined contribution retirement plans subject to ERISA. Eligible non-represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan I (Thrift Plan I), and eligible represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan II (Thrift Plan II). Participants in the Plans may contribute up to 50% of their eligible compensation to these plans, not to exceed the IRS maximums, including any Catch-Up Contributions for those employees age 50 and above. Servco does not provide an employer match or core contribution for employees in Thrift Plan II. For employees in Thrift Plan I, Servco matches 50% of such employee contributions up to 8% of eligible compensation and provides core contributions (based on years of service and age) to employees who do not participate in Servco’s Retirement Income Plan. The amounts expensed by Servco for employer matching contributions for the years ended December 31, 2016, 2015 and 2014 were $5 million, $4 million and $3 million, respectively, and pursuant to the OSA, Servco recognizes Operating Revenues for the reimbursement of these costs.

X
- Definition Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table. + References No definition available. + Details
Name: | us-gaap_DefinedBenefitPlansAndOtherPostretirementBenefitPlansTableTextBlockLineItems
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 80 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=65877416&loc=SL14450702-114947 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65897934&loc=d3e2410-114920 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 60 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6414203&loc=d3e39675-114964 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 70 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=49170846&loc=d3e28014-114942 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 60 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66047640&loc=d3e39622-114963 + Details
Name: | us-gaap_PensionAndOtherPostretirementBenefitsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | dei_LegalEntityAxis=pseg_PseAndGMember
Namespace Prefix: |
Data Type: | na
Balance Type: |
Period Type: |

X
- Details
Name: | dei_LegalEntityAxis=pseg_PowerMember
Namespace Prefix: |
Data Type: | na
Balance Type: |
Period Type: |