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Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2019
Retirement Benefits [Abstract] |
Other Postretirement Benefits | Other Postretirement Benefits The Utilities and Con Edison Transmission currently have contributory comprehensive hospital, medical and prescription drug programs for eligible retirees, their dependents and surviving spouses. CECONY also has a contributory life insurance program for bargaining unit employees and provides basic life insurance benefits up to a specified maximum at no cost to certain retired management employees. O&R has a non-contributory life insurance program for retirees. Certain employees of the Clean Energy Businesses and Con Edison Transmission are eligible to receive benefits under these programs. Total Periodic Benefit Cost The components of the Companies’ total periodic postretirement benefit costs for 2019, 2018 and 2017 were as follows:
| Con Edison | CECONY
(Millions of Dollars) | 2019 | 2018 | 2017 | 2019 | 2018 | 2017
Service cost | $18 | $20 | $20 | $13 | $14 | $13
Interest cost on accumulated other postretirement benefit obligation | 44 | 42 | 46 | 36 | 34 | 38
Expected return on plan assets | (66) | (73) | (69) | (54) | (63) | (61)
Recognition of net actuarial loss/(gain) | (9) | 8 | 2 | (10) | 3 | (3)
Recognition of prior service credit | (2) | (6) | (17) | (2) | (2) | (11)
TOTAL PERIODIC POSTRETIREMENT BENEFIT CREDIT | $(15) | $(9) | $(18) | $(17) | $(14) | $(24)
Cost capitalized | (7) | (8) | 8 | (5) | (6) | 10
Reconciliation to rate level | 12 | 8 | (4) | 7 | 9 | (2)
Total credit recognized | $(10) | $(9) | ($14) | $(15) | $(11) | ($16)
For information about the adoption of ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” see Note E. Funded Status The funded status of the programs at December 31, 2019, 2018 and 2017 were as follows:
| Con Edison | CECONY
(Millions of Dollars) | 2019 | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |
CHANGE IN BENEFIT OBLIGATION |  |  |  |  |  |
Benefit obligation at beginning of year | $1,114 | $1,219 | $1,198 | $913 | $985 | $1,007
Service cost | 18 | 20 | 20 | 13 | 14 | 13
Interest cost on accumulated postretirement benefit obligation | 44 | 42 | 46 | 36 | 34 | 38
Amendments | (14) | — |  | — |  | — |  | — |  | — |
Net actuarial loss/(gain) | 264 | (70) | 53 | 252 | (32) | 16
Benefits paid and administrative expenses, net of subsidies | (110) | (135) | (134) | (100) | (125) | (124)
Participant contributions | 41 | 38 | 36 | 40 | 37 | 35
BENEFIT OBLIGATION AT END OF YEAR | $1,357 | $1,114 | $1,219 | $1,154 | $913 | $985
CHANGE IN PLAN ASSETS |  |  |  |  |  |
Fair value of plan assets at beginning of year | $885 | $1,039 | $975 | $759 | $893 | $851
Actual return on plan assets | 198 | (66) | 150 | 165 | (54) | 130
Employer contributions | 7 | 6 | 17 | 6 | 6 | 8
Employer group waiver plan subsidies | 23 | 34 | 34 | 22 | 32 | 30
Participant contributions | 40 | 37 | 35 | 40 | 37 | 35
Benefits paid | (127) | (165) | (172) | (120) | (155) | (161)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR | $1,026 | $885 | $1,039 | $872 | $759 | $893
FUNDED STATUS | $(331) | $(229) | $(180) | $(282) | $(154) | $(92)
Unrecognized net loss/(gain) | $155 | $14 | $(47) | $149 | $(2) | $(85)
Unrecognized prior service costs | (19) | (8) | (14) | (3) | (5) | (7)
The increase in the other postretirement benefits liability at Con Edison and CECONY of $102 million and $128 million, respectively, compared with December 31, 2018, was primarily due to an increase in the plans' projected benefit obligation as a result of an increase in net actuarial loss, partially offset by an increase in plan assets as a result of the actual return on plan assets. For Con Edison, this increased liability corresponds with an increase to regulatory assets of $134 million for unrecognized net losses and unrecognized prior service costs associated with the Utilities consistent with the accounting rules for regulated operations, a credit to OCI of $6 million (net of taxes) for the unrecognized net losses and a debit to OCI of $1 million (net of taxes) for the unrecognized prior service costs associated with the Clean Energy Businesses, Con Edison Transmission, and RECO. For CECONY, the increase in liability corresponds with an increase to regulatory assets of $153 million for unrecognized net losses and the unrecognized prior service costs associated with the company consistent with the accounting rules for regulated operations, and also immaterial changes to OCI for the unrecognized net losses and the unrecognized prior service costs associated with eligible employees of the Clean Energy Businesses and Con Edison Transmission who previously worked for CECONY. A portion of the unrecognized net losses and prior service costs for the other postretirement benefits, equal to $27 million and $(3) million, respectively, will be recognized from accumulated OCI and the regulatory asset into net periodic benefit cost over the next year for Con Edison. Included in these amounts are $22 million and $(2) million, respectively, for CECONY. Assumptions The actuarial assumptions were as follows:
| 2019 |  | 2018 |  | 2017 |
Weighted-average assumptions used to determine benefit obligations at December 31: |  |  |
Discount Rate |  |  |
CECONY | 3.10 | % | 4.15 | % | 3.55 | %
O&R | 3.35 | % | 4.30 | % | 3.70 | %
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31: |  |  |
Discount Rate |  |  |
CECONY | 4.15 | % | 3.55 | % | 4.00 | %
O&R | 4.30 | % | 3.70 | % | 4.20 | %
Expected Return on Plan Assets | 6.80 | % | 7.50 | % | 7.50 | %
Refer to Note E for descriptions of the basis for determining the expected return on assets, investment policies and strategies and the assumed discount rate. The health care cost trend rate used to determine net periodic benefit cost for the years ended December 31, 2019, 2018 and 2017 was 5.40 percent, 5.60 percent and 5.80 percent, respectively, which is assumed to decrease gradually to 4.50 percent by 2024 and remain at that level thereafter. The health care cost trend rate used to determine benefit obligations as of December 31, 2019, 2018 and 2017 was 5.20 percent, 5.40 percent and 5.60 percent, respectively, which is assumed to decrease gradually to 4.50 percent by 2024 and remain at that level thereafter. A one-percentage point change in the assumed health care cost trend rate would have the following effects at December 31, 2019:
| Con Edison | CECONY
| One-Percentage-Point
(Millions of Dollars) | Increase | Decrease |  | Increase | Decrease
Effect on accumulated other postretirement benefit obligation | $60 | $(17) | $33 | $3
Effect on service cost and interest cost components for 2019 | 1 | — |  | (1) | 2
Expected Benefit Payments Based on current assumptions, the Companies expect to make the following benefit payments over the next ten years, net of receipt of governmental subsidies and participant contributions:
(Millions of Dollars) | 2020 | 2021 | 2022 | 2023 | 2024 | 2025-2029
Con Edison | $96 | $95 | $93 | $92 | $91 | $422
CECONY | 87 | 85 | 83 | 82 | 80 | 368
Expected Contributions Based on estimates as of December 31, 2019, Con Edison and CECONY expect to make a contribution of $6 million (substantially all of which is to be made by CECONY) to the other postretirement benefit plans in 2020. The Companies’ policy is to fund the total periodic benefit cost of the plans to the extent tax deductible. Plan Assets The asset allocations for CECONY’s other postretirement benefit plans at the end of 2019, 2018 and 2017, and the target allocation for 2020 are as follows:
| Target Allocation Range |  | Plan Assets at December 31,
Asset Category | 2020 |  | 2019 |  |  | 2018 |  |  | 2017 |
Equity Securities | 42%-80% |  | 54 | % |  | 52 | % |  | 60 | %
Debt Securities | 20%-58% |  | 46 | % |  | 48 | % |  | 40 | %
Total | 100% |  | 100 | % |  | 100 | % |  | 100 | %
Con Edison has established postretirement health and life insurance benefit plan trusts for the investment of assets to be used for the exclusive purpose of providing other postretirement benefits to participants and beneficiaries. Refer to Note E for a discussion of Con Edison’s investment policy for its benefit plans. The fair values of the plans' assets at December 31, 2019 by asset category as defined by the accounting rules for fair value measurements (see Note P) are as follows:
(Millions of Dollars) | Level 1 |  |  | Level 2 |  | Total
Equity (a) |  | $— |  |  | $404 |  | $404
Other Fixed Income Debt (b) | — |  |  | 331 |  | 331
Cash and Cash Equivalents (c) | — |  |  | 23 |  | 23
Total investments |  | $— |  |  | $758 |  | $758
Funds for retiree health benefits (d) | 110 |  |  | 98 |  | 208
Investments (including funds for retiree health benefits) |  | $110 |  |  | $856 |  | $966
Funds for retiree health benefits measured at net asset value (d)(e) |  |  |  |  | 42
Pending activities (f) |  |  |  |  | 18
Total fair value of plan net assets |  |  |  |  | $1,026
(a) | Equity includes a passively managed commingled index fund benchmarked to the MSCI All Country World Index.
(b) | Other Fixed Income Debt includes a passively managed commingled index fund benchmarked to the Bloomberg Barclays U.S. Long Credit Index and an active separately managed fund indexed to the Bloomberg Barclays U.S. Long Credit Index.
(c) | Cash and Cash Equivalents include short-term investments and money markets.
(d) | The Companies set aside funds for retiree health benefits through a separate account within the pension trust, as permitted under Section 401(h) of the Internal Revenue Code of 1986, as amended. In accordance with the Code, the plan’s investments in the 401(h) account may not be used for, or diverted to, any purpose other than providing health benefits for retirees. The net assets held in the 401(h) account are calculated based on a pro-rata percentage allocation of the net assets in the pension plan. The related obligations for health benefits are not included in the pension plan’s obligations and are included in the Companies’ other postretirement benefit obligation. See Note E.
(e) | In accordance with ASU 2015-07, Fair Value Measurements (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
(f) | Pending activities include security purchases and sales that have not settled, interest and dividends that have not been received, and reflects adjustments for available estimates at year-end.
The fair values of the plans' assets at December 31, 2018 by asset category (see Note P) are as follows:
(Millions of Dollars) | Level 1 |  |  | Level 2 |  | Total
Equity (a) |  | $— |  |  | $322 |  | $322
Other Fixed Income Debt (b) | — |  |  | 289 |  | 289
Cash and Cash Equivalents (c) | — |  |  | 14 |  | 14
Total investments |  | $— |  |  | $625 |  | $625
Funds for retiree health benefits (d) | 118 |  |  | 86 |  | 204
Investments (including funds for retiree health benefits) |  | $118 |  |  | $711 |  | $829
Funds for retiree health benefits measured at net asset value (d)(e) |  |  |  |  | 33
Pending activities (f) |  |  |  |  | 23
Total fair value of plan net assets |  |  |  |  | $885
(a) - (f) Reference is made to footnotes (a) through (f) in the above table of other postretirement benefit plan assets at December 31, 2019 by asset category.

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- Definition The entire disclosure for postemployment benefits, which may include supplemental unemployment benefits, obligations recognized for all types of benefits provided to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement. Disclosure may also include discussion that an obligation for postemployment benefits is not accrued in accordance with regulation only because the amount cannot be reasonably estimated. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI http://asc.fasb.org/topic&trid=2197446 + Details
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