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Pension and OPEB | 12 Months Ended
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Dec. 31, 2016
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] |
Components of Pension and Other Postretirement Benefit Plans: | NOTE 14—PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS: Pension: CONSOL Energy has non-contributory defined benefit retirement plans. Effective December 31, 2015, CONSOL Energy's qualified defined benefit retirement plan was frozen. The benefits for these plans are based primarily on years of service and employees' pay. CONSOL Energy's qualified pension plan allows for lump-sum distributions of benefits earned up until December 31, 2005, at the employees' election. On September 30, 2014, the qualified pension plan was remeasured to reflect an announced plan amendment that reduced future accruals of pension benefits as of January 1, 2015. The plan amendment called for a hard freeze of the qualified defined benefit pension plan on January 1, 2015 for employees who were under age 40 or had less than 10 years of service as of September 30, 2014. Employees who were age 40 or over and had at least 10 years of service continued in the defined benefit pension plan unchanged. The modifications to the pension plan resulted in a $21,624 reduction in the pension liability. On August 31, 2015, the qualified pension plan was remeasured to reflect an announced plan amendment that reduced accruals of pension benefits as of January 1, 2016. The plan amendment called for a hard freeze of the qualified defined benefit pension plan on January 1, 2016 for all remaining participants in the plan. The modifications to the pension plan resulted in a $26,352 reduction in the pension liability. The amendment resulted in a remeasurement of the qualified pension plan at August 31, 2015, which increased the pension liability by $17,793. In the third quarter of 2015, CONSOL Energy remeasured its pension plan as a result of the previously discussed plan amendment. In conjunction with this remeasurement, the method used to estimate the service and interest components of net periodic benefit cost for pension was changed. This change was also made to other postretirement benefits in the fourth quarter during the annual remeasurement of that plan. This change, compared to the previous method, resulted in a decrease in the service and interest components for pension cost in the third quarter. Historically, CONSOL Energy estimated these service and interest cost components utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. CONSOL Energy has elected to utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. This change was made to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. This change is immaterial to CONSOL's financial statements. CONSOL Energy has accounted for this change as a change in accounting estimate that is inseparable from a change in accounting principle and, accordingly, accounted for it prospectively. According to the Defined Benefit Plans Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification, if the lump sum distributions made during a plan year, which for CONSOL Energy is January 1 to December 31, exceed the total of the projected service cost and interest cost for the plan year, settlement accounting is required. Lump sum payments exceeded this threshold during the years ended December 31, 2016, 2015, and 2014. Accordingly, CONSOL Energy recognized settlement expense of $22,196, $19,053, and $29,095 for the years ended December 31, 2016, 2015 and 2014 respectively, in Other Costs - Miscellaneous Operating Expense in the Consolidated Statements of Income. The settlement charges resulted in remeasurements of the pension plan during 2016, 2015 and 2014. Other Postretirement Benefit Plans: Certain subsidiaries of CONSOL Energy provide medical and prescription drug benefits to retired employees covered by the Coal Industry Retiree Health Benefit Act of 1992 (the Coal Act). Represented hourly employees are eligible to participate based upon the terms of the National Bituminous Coal Wage Agreement of 2011. On September 30, 2014, the Salaried OPEB plan and Production and Maintenance (P&M) OPEB plans were remeasured to reflect an announced plan amendment that reduced retiree medical and life insurance benefits as of September 30, 2014. Effective September 30, 2014, no retiree medical, prescription drug or life benefits were to be provided to active employees. Salaried and P&M retirees as of September 30, 2014 were to continue in the OPEB plans for a maximum period up to December 31, 2019 and coverage thereafter was eliminated (see below for information on an additional amendment made to these plans in 2015). The Company elected to make cash transition payments totaling approximately $46,282 to the active employees whose retiree medical, prescription drug and life insurance benefits were eliminated by the changes to the OPEB plans. These cash payments are not considered to be post-retirement benefits, and as such, they are not reflected in the actuarial calculations related to the OPEB plans. The amendment to the OPEB plans resulted in a $315,439 reduction in the OPEB liability and a curtailment gain of $35,633. On May 31, 2015, the Salaried OPEB and P&M OPEB plans were remeasured to reflect another plan amendment which eliminated Salaried and P&M OPEB benefits at December 31, 2015. The amendment to the OPEB plans resulted in a $43,598 reduction in the OPEB liability. The amendment also resulted in a remeasurement of the OPEB plan at May 31, 2015, which decreased the liability by $1,070. CONSOL Energy recognized income of $235,541 related to amortization of prior service credit, coupled with recognition of actuarial losses in PA Mining Operations Costs - Operating and Other Costs and Other Costs - Miscellaneous Operating Expense in the Consolidated Statements of Income for the year ended December 31, 2015 as a result of the changes made to the Salaried and P&M OPEB plans. The Company will incur savings from cost containment changes related to pharmacy benefits, which were implemented on January 1, 2017, and increased member responsibility when using out-of-network providers and facilities, which will be implemented on March 27, 2017. These plan amendments resulted in a $28,164 reduction in the OPEB liability during the year ended December 31, 2016. The reconciliation of changes in the benefit obligation, plan assets and funded status of these plans at December 31, 2016 and 2015 is as follows:
|  | Pension Benefits |  | Other Postretirement Benefits
|  | at December 31, |  | at December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Change in benefit obligation: |  |  |  |  |  |  |  |
Benefit obligation at beginning of period |  | $ | 763,407 |  |  | $ | 870,471 |  |  | $ | 671,755 |  |  | $ | 760,959 |
Service cost |  | 1,927 |  |  | 8,653 |  |  | — |  |  | — |
Interest cost |  | 25,491 |  |  | 32,095 |  |  | 24,241 |  |  | 27,238 |
Actuarial loss (gain) |  | 46,962 |  |  | (39,563 | ) |  | 77,640 |  |  | (9,224 | )
Plan amendments |  | — |  |  | — |  |  | (28,164 | ) |  | (43,598 | )
Plan transfer* |  | — |  |  | — |  |  | — |  |  | (5,242 | )
Plan curtailments |  | — |  |  | (26,352 | ) |  | — |  |  | — |
Plan settlements |  | (54,197 | ) |  | (51,497 | ) |  | — |  |  | — |
Participant contributions |  | — |  |  | — |  |  | — |  |  | 1,649 |
Benefits and other payments |  | (35,709 | ) |  | (30,400 | ) |  | (45,387 | ) |  | (60,027 | )
Benefit obligation at end of period |  | $ | 747,881 |  |  | $ | 763,407 |  |  | $ | 700,085 |  |  | $ | 671,755 |
Change in plan assets: |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of period |  | $ | 669,039 |  |  | $ | 751,176 |  |  | $ | — |  |  | $ | — |
Actual return (loss) on plan assets |  | 50,575 |  |  | (9,293 | ) |  | — |  |  | — |
Company contributions |  | 2,726 |  |  | 9,053 |  |  | 45,387 |  |  | 58,378 |
Participant contributions |  | — |  |  | — |  |  | — |  |  | 1,649 |
Benefits and other payments |  | (35,709 | ) |  | (30,400 | ) |  | (45,387 | ) |  | (60,027 | )
Plan settlements |  | (54,197 | ) |  | (51,497 | ) |  | — |  |  | — |
Fair value of plan assets at end of period |  | $ | 632,434 |  |  | $ | 669,039 |  |  | $ | — |  |  | $ | — |
Funded status: |  |  |  |  |  |  |  |
Current liabilities |  | $ | (2,904 | ) |  | $ | (2,772 | ) |  | $ | (40,611 | ) |  | $ | (40,863 | )
Noncurrent liabilities |  | (112,543 | ) |  | (91,596 | ) |  | (659,474 | ) |  | (630,892 | )
Net obligation recognized |  | $ | (115,447 | ) |  | $ | (94,368 | ) |  | $ | (700,085 | ) |  | $ | (671,755 | )
Amounts recognized in accumulated other comprehensive income consist of: |  |  |  |  |  |  |  |
Net actuarial loss |  | $ | 299,865 |  |  | $ | 288,695 |  |  | $ | 426,392 |  |  | $ | 367,920 |
Prior service credit |  | (1,611 | ) |  | (2,201 | ) |  | (28,164 | ) |  | — |
Net amount recognized (before tax effect) |  | $ | 298,254 |  |  | $ | 286,494 |  |  | $ | 398,228 |  |  | $ | 367,920 |
*The plan transfer relates to the IBNR (incurred but not reported) costs associated with the terminated Salaried and P&M OPEB plans. These costs are now included in Other Accrued Liabilities in the Consolidated Balance Sheets. The components of net periodic benefit costs are as follows:
| Pension Benefits |  | Other Postretirement Benefits
| For the Years Ended December 31, |  | For the Years Ended December 31,
| 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Components of net periodic benefit cost: |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 1,927 |  |  | $ | 8,653 |  |  | $ | 17,187 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,089 |
Interest cost | 25,491 |  |  | 32,095 |  |  | 35,363 |  |  | 24,241 |  |  | 27,238 |  |  | 44,177 |
Expected return on plan assets | (46,674 | ) |  | (51,528 | ) |  | (51,400 | ) |  | — |  |  | — |  |  | — |
Amortization of prior service credits | (590 | ) |  | (666 | ) |  | (1,217 | ) |  | — |  |  | (336,327 | ) |  | (21,163 | )
Recognized net actuarial loss | 9,694 |  |  | 21,519 |  |  | 23,927 |  |  | 19,168 |  |  | 102,875 |  |  | 28,682 |
Curtailment loss (gain) | — |  |  | 5 |  |  | (549 | ) |  | — |  |  | — |  |  | (35,633 | )
Settlement loss (gain) | 22,196 |  |  | 19,053 |  |  | 29,095 |  |  | — |  |  | (8,932 | ) |  | — |
Net periodic benefit cost (credit) | $ | 12,044 |  |  | $ | 29,131 |  |  | $ | 52,406 |  |  | $ | 43,409 |  |  | $ | (215,146 | ) |  | $ | 23,152 |
Amounts included in accumulated other comprehensive loss which are expected to be recognized in 2017 net periodic benefit costs:
|  |  |  | Other
|  | Pension |  | Postretirement
|  | Benefits |  | Benefits
Prior service credit recognition |  | $ | (590 | ) |  | $ | (2,405 | )
Actuarial loss recognition |  | $ | 9,403 |  |  | $ | 23,112 |
CONSOL Energy utilizes a corridor approach to amortize actuarial gains and losses that have been accumulated under the Pension Plan. Cumulative gains and losses that are in excess of 10% of the greater of either the projected benefit obligation (PBO) or the market-related value of plan assets are amortized over the expected remaining future lifetime of all plan participants for the Pension plan. CONSOL Energy also utilizes a corridor approach to amortize actuarial gains and losses that have been accumulated under the OPEB Plan. Cumulative gains and losses that are in excess of 10% of the greater of either the accumulated postretirement benefit obligation (APBO) or the market-related value of plan assets are amortized over the average future remaining lifetime of the current inactive population for the OPEB plan. The following table provides information related to pension plans with an accumulated benefit obligation in excess of plan assets:
|  | As of December 31,
|  | 2016 |  | 2015
Projected benefit obligation |  | $ | 747,881 |  |  | $ | 763,407 |
Accumulated benefit obligation |  | $ | 745,793 |  |  | $ | 761,124 |
Fair value of plan assets |  | $ | 632,434 |  |  | $ | 669,039 |
Assumptions: The weighted-average assumptions used to determine benefit obligations are as follows:
|  | Pension Benefits |  | Other Postretirement Benefits
|  | For the Year Ended |  | For the Year Ended
|  | December 31, |  | December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Discount rate |  | 4.31 | % |  | 4.50 | % |  | 4.22 | % |  | 4.50 | %
Rate of compensation increase |  | 3.90 | % |  | 3.80 | % |  | — |  |  | — |
The discount rates are determined using a Company-specific yield curve model (above-mean) developed with the assistance of an external actuary. The Company-specific yield curve models (above-mean) use a subset of the expanded bond universe to determine the Company-specific discount rate. Bonds used in the yield curve are rated AA by Moody's or Standard & Poor's as of the measurement date. The yield curve models parallel the plans' projected cash flows, and the underlying cash flows of the bonds included in the models exceed the cash flows needed to satisfy the Company plans. The weighted-average assumptions used to determine net periodic benefit costs are as follows:
|  | Pension Benefits at |  | Other Postretirement Benefits at
|  | December 31, |  | December 31,
|  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Discount rate |  | 4.52 | % |  | 4.07 | % |  | 4.87 | % |  | 4.50 | % |  | 4.03 | % |  | 4.88 | %
Expected long-term return on plan assets |  | 7.25 | % |  | 7.75 | % |  | 7.75 | % |  | — |  |  | — |  |  | — |
Rate of compensation increase |  | 3.80 | % |  | 3.80 | % |  | 4.21 | % |  | — |  |  | — |  |  | — |
The long-term rate of return is the sum of the portion of total assets in each asset class held multiplied by the expected return for that class, adjusted for expected expenses to be paid from the assets. The expected return for each class is determined using the plan asset allocation at the measurement date and a distribution of compound average returns over a twenty year time horizon. The model uses asset class returns, variances and correlation assumptions to produce the expected return for each portfolio. The return assumptions used forward-looking gross returns influenced by the current Treasury yield curve. These returns recognize current bond yields, corporate bond spreads and equity risk premiums based on current market conditions. The assumed health care cost trend rates are as follows:
|  | At December 31,
|  | 2016 |  | 2015 |  | 2014
Health care cost trend rate for next year |  | 6.31 | % |  | 6.49 | % |  | 6.03 | %
Rate to which the cost trend is assumed to decline (ultimate trend rate) |  | 4.50 | % |  | 4.50 | % |  | 4.50 | %
Year that the rate reaches ultimate trend rate |  | 2038 |  |  | 2038 |  |  | 2026 |
Assumed health care cost trend rates have a significant effect on the amounts reported for the medical plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:
|  | 1 Percentage |  | 1 Percentage
|  | Point Increase |  | Point Decrease
Effect on total of service and interest cost components |  | $ | 3,659 |  |  | $ | (3,053 | )
Effect on accumulated postretirement benefit obligation |  | $ | 84,381 |  |  | $ | (71,751 | )
Plan Assets: The Company’s overall investment strategy is to meet current and future benefit payment needs through diversification across asset classes, fund strategies and fund managers to achieve an optimal balance between risk and return and between income and growth of assets through capital appreciation. Consistent with the objectives of the Trust and in consideration of the Trust’s current funded status and the current level of market interest rates, the Retirement Board has approved an asset allocation strategy that will change over time in response to future improvements in the Trust’s funded status and/or changes in market interest rates. Such changes in asset allocation strategy are intended to allocate additional assets to the fixed income asset class should the Trust’s funded status improve. In this framework, the current target allocation for plan assets are 26% U.S. equity securities, 16.5% non-U.S. equity securities, 7.5% global equity securities and 50% fixed income. Both the equity and fixed income portfolios are comprised of both active and passive investment strategies. The Trust is primarily invested in Mercer Common Collective Trusts. Equity securities consist of investments in large and mid/small cap companies with non-U.S. equities being derived from both developed and emerging markets. Fixed income securities consist of U.S. as well as international instruments, including emerging markets. The core domestic fixed income portfolios invest in government, corporate, asset-backed securities and mortgage-backed obligations. The average quality of the fixed income portfolio must be rated at least “investment grade” by nationally recognized rating agencies. Within the fixed income asset class, investments are invested primarily across various strategies such that its overall profile strongly correlates with the interest rate sensitivity of the Trust’s liabilities in order to reduce the volatility resulting from the risk of changes in interest rates and the impact of such changes on the Trust’s overall financial status. Derivatives, interest rate swaps, options and futures are permitted investments for the purpose of reducing risk and to extend the duration of the overall fixed income portfolio; however, they may not be used for speculative purposes. All or a portion of the assets may be invested in mutual funds or other commingled vehicles so long as the pooled investment funds have an adequate asset base relative to their asset class; are invested in a diversified manner; and have management and/or oversight by an Investment Advisor registered with the SEC. The Retirement Board, as appointed by the CONSOL Energy Board of Directors, reviews the investment program on an ongoing basis including asset performance, current trends and developments in capital markets, changes in Trust liabilities and ongoing appropriateness of the overall investment policy. In May 2015, the FASB issued an Accounting Standards Update that removes the requirement to categorize within the fair value hierarchy investments for which fair values are estimated using the net asset value practical expedient provided by Accounting Standards Codification 820, Fair Value Measurement. This new guidance is effective for public entities for fiscal years beginning after December 15, 2015. In accordance with this Update, certain investments in 2016 and 2015 that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified as Level 1, 2 or 3 in the below fair value hierarchy but are included in the total. The fair values of plan assets at December 31, 2016 and 2015 by asset category are as follows:
|  | Fair Value Measurements at December 31, 2016 |  | Fair Value Measurements at December 31, 2015
|  |  |  | Quoted |  |  |  |  |  |  |  | Quoted |  |  |  |
|  |  |  | Prices in |  |  |  |  |  |  |  | Prices in |  |  |  |
|  |  |  | Active |  |  |  |  |  |  |  | Active |  |  |  |
|  |  |  | Markets for |  | Significant |  | Significant |  |  |  | Markets for |  | Significant |  | Significant
|  |  |  | Identical |  | Observable |  | Unobservable |  |  |  | Identical |  | Observable |  | Unobservable
|  |  |  | Assets |  | Inputs |  | Inputs |  |  |  | Assets |  | Inputs |  | Inputs
|  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
Asset Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash/Accrued Income |  | $ | 639 |  |  | $ | 639 |  |  | $ | — |  |  | $ | — |  |  | $ | 631 |  |  | $ | 631 |  |  | $ | — |  |  | $ | — |
US Equities (a) |  | 11 |  |  | 11 |  |  | — |  |  | — |  |  | 10 |  |  | 10 |  |  | — |  |  | — |
Mercer Common Collective Trusts (b) |  | 631,784 |  |  | — |  |  | — |  |  | — |  |  | 668,398 |  |  | — |  |  | — |  |  | — |
Total |  | $ | 632,434 |  |  | $ | 650 |  |  | $ | — |  |  | $ | — |  |  | $ | 669,039 |  |  | $ | 641 |  |  | $ | — |  |  | $ | — |
__________
(a) | This category includes investments in US common stocks and corporate debt.
(b) | 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 but are included in the total.
There are no investments in CONSOL Energy stock held by these plans at December 31, 2016 or 2015. There are no assets in the other postretirement benefit plans at December 31, 2016 or 2015. Cash Flows: If necessary, CONSOL Energy intends to contribute to the pension trust using prudent funding methods. However, the Company does not expect to contribute to the pension plan trust in 2017. Pension benefit payments are primarily funded from the trust. CONSOL Energy expects to pay benefits of $2,904 from the non-qualified pension plan in 2017. CONSOL Energy does not expect to contribute to the other postemployment plan in 2017 and intends to pay benefit claims as they are due. The following benefit payments, reflecting expected future service, are expected to be paid:
|  |  |  | Other
|  | Pension |  | Postretirement
|  | Benefits |  | Benefits
2017 |  | $ | 47,374 |  |  | $ | 40,611 |
2018 |  | $ | 47,100 |  |  | $ | 43,829 |
2019 |  | $ | 46,211 |  |  | $ | 43,932 |
2020 |  | $ | 45,773 |  |  | $ | 44,136 |
2021 |  | $ | 44,206 |  |  | $ | 44,233 |
Year 2022-2026 |  | $ | 223,745 |  |  | $ | 215,248 |

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- 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=49170332&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=58740216&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=6414199&loc=d3e39622-114963 + Details
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