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Pension Plan and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

Schedule of Net Benefit Costs

The following table lists components of net periodic pension benefit cost for the years ended December 31, 2020, 2019 and 2018:

(in thousands)			2020						2019						2018
Service Cost–Benefit Earned During the Period			$	6,621					$	5,491					$	6,459
Interest Cost on Projected Benefit Obligation			13,053						14,412						13,452
Expected Return on Assets			(22,021)						(21,297)						(21,199)
Amortization of Prior Service Cost:
From Regulatory Asset			—						5						16
From Other Comprehensive Income1			—						9						—
Amortization of Net Actuarial Loss:
From Regulatory Asset			8,924						4,642						7,135
From Other Comprehensive Income1			220						114						183
Net Periodic Pension Cost2			$	6,797					$	3,376					$	6,046

1Corporate cost included in nonservice cost components of postretirement benefits.

2Allocation of costs:			2020						2019						2018
Service costs included in OTP capital expenditures			$	1,842					$	1,365					$	1,542
Service costs included in electric operation and maintenance expenses			4,621						3,994						4,756
Service costs included in other nonelectric expenses			159						132						161
Nonservice costs capitalized			48						(526)						(99)
Nonservice costs included in nonservice cost components of postretirement benefits			127						(1,589)						(314)

The following table lists components of net periodic pension benefit cost for the years ended December 31, 2020, 2019 and 2018:

(in thousands)			2020						2019						2018
Service Cost–Benefit Earned During the Period			$	179					$	418					$	408
Interest Cost on Projected Benefit Obligation			1,449						1,735						1,589
Amortization of Prior Service Cost:
From Regulatory Asset			—						5						20
From Other Comprehensive Income1			—						17						34
Amortization of Net Actuarial Loss:
From Regulatory Asset			93						124						206
From Other Comprehensive Income1			341						348						722
Net Periodic Pension Cost2			$	2,062					$	2,647					$	2,979

1Amortization of prior service costs and net actuarial losses from other comprehensive income are included in nonservice cost components of postretirement benefits on the face of the Company’s consolidated statements of income.

2Allocation of costs:			2020						2019						2018
Service costs included in electric operation and maintenance expenses			$	—					$	104					$	99
Service costs included in other nonelectric expenses			179						314						309
Nonservice costs included in nonservice cost components of postretirement benefits			1,883						2,229						2,571

The following table lists components of net periodic postretirement benefit cost for the years ended December 31, 2020, 2019 and 2018: 

(in thousands)			2020						2019						2018
Service Cost–Benefit Earned During the Period			$	1,847					$	1,286					$	1,526
Interest Cost on Projected Benefit Obligation			2,393						3,083						2,583
Amortization of Prior Service Cost
From Regulatory Asset			(4,677)						—						—
From Other Comprehensive Income1			(115)						—						—
Amortization of Net Actuarial Loss
From Regulatory Asset			4,206						1,571						1,648
From Other Comprehensive Income1			104						38						42
Net Periodic Postretirement Benefit Cost2			$	3,758					$	5,978					$	5,799
Effect of Medicare Part D Subsidy			$	1,123					$	(179)					$	(470)

1Corporate cost included in nonservice cost components of postretirement benefits.

2Allocation of costs:			2020						2019						2018
Service costs included in OTP capital expenditures			$	514					$	320					$	364
Service costs included in electric operation and maintenance expenses			1,289						935						1,124
Service costs included in other nonelectric expenses			44						31						38
Nonservice costs capitalized			532						1,167						1,020
Nonservice costs included in nonservice cost components of postretirement benefits			1,379						3,525						3,253

Schedule of Assumptions Used in Calculating Net Periodic Benefit Cost

Weighted average assumptions used to determine net periodic pension cost for the years ended December 31, 2020, 2019 and 2018:

			2020						2019						2018
Discount Rate			3.47		%				4.50		%				3.90		%
Long-Term Rate of Return on Plan Assets			6.88		%				7.25		%				7.50		%
Rate of Increase in Future Compensation Level:
Participants to Age 39			4.50		%				4.50		%				4.50		%
Participants Age 40 to Age 49			3.50		%				3.50		%				3.50		%
Participants Age 50 and Older			2.75		%				2.75		%				2.75		%

Weighted average assumptions used to determine net periodic pension cost for the years ended December 31, 2020, 2019 and 2018: 

			2020						2019						2018
Discount Rate			3.36		%				4.46		%				3.85		%
Rate of Increase in Future Compensation Level			3.50		%				3.40		%				2.92		%

Weighted average assumptions used to determine net periodic postretirement benefit cost for the years ended December 31, 2020, 2019 and 2018: 

			2020						2019						2018
Discount Rate			3.43		%				4.44		%				3.81		%

Schedule of Amounts Recognized in Balance Sheet

The following table presents amounts recognized in the consolidated balance sheets as of December 31, 2020 and 2019: 

(in thousands)			2020						2019
Regulatory Assets:
Unrecognized Prior Service Cost			$	—					$	—
Unrecognized Actuarial Loss			137,500						120,592
Total Regulatory Assets			$	137,500					$	120,592
Accumulated Other Comprehensive Loss:
Unrecognized Prior Service Cost			$	—					$	—
Unrecognized Actuarial (Gain) Loss			128						(82)
Total Accumulated Other Comprehensive Loss			$	128					$	(82)
Noncurrent Liability			$	67,718					$	55,004

The following table presents amounts recognized in the consolidated balance sheets as of December 31, 2020 and 2019: 

(in thousands)			2020						2019
Regulatory Assets:
Unrecognized Prior Service Cost			$	—					$	—
Unrecognized Actuarial Loss			2,681						2,170
Total Regulatory Assets			$	2,681					$	2,170
Projected Benefit Obligation Liability – Net Amount Recognized			$	(47,894)					$	(43,966)
Accumulated Other Comprehensive Loss:
Unrecognized Prior Service Cost			$	1					$	1
Unrecognized Actuarial Loss			12,030						9,170
Total Accumulated Other Comprehensive Loss			$	12,031					$	9,171

The following table presents amounts recognized in the consolidated balance sheets as of December 31, 2020 and 2019: 

(in thousands)			2020						2019
Regulatory Asset:
Unrecognized Prior Service Credit			$	(19,579)					(20,363)
Unrecognized Net Actuarial Loss (Gain)			32,238						$	35,322
Net Regulatory Asset			$	12,659					$	14,959
Projected Benefit Obligation Liability – Net Amount Recognized			$	(70,185)					$	(71,437)
Accumulated Other Comprehensive (Income) Loss:
Unrecognized Prior Service Credit			$	(386)					(501)
Unrecognized Net Actuarial Loss (Gain)			21						184
Accumulated Other Comprehensive (Income) Loss:			$	(365)					$	(317)

Schedule of Net Funded Status

Funded status as of December 31, 2020 and 2019:

(in thousands)			2020						2019
Accumulated Benefit Obligation			$	(385,302)					$	(346,723)
Projected Benefit Obligation			$	(428,396)					$	(384,785)
Fair Value of Plan Assets			360,678						329,781
Funded Status			$	(67,718)					$	(55,004)

Schedule of Changes in Projected Benefit Obligations and Changes in Plan Assets

The following table provides a reconciliation of the changes in the fair value of plan assets and the plan’s benefit obligations for the years ended December 31, 2020 and 2019:

(in thousands)			2020						2019
Reconciliation of Fair Value of Plan Assets:
Fair Value of Plan Assets at January 1			$	329,781					$	269,783
Actual Return on Plan Assets			35,474						52,640
Discretionary Company Contributions			11,200						22,500
Benefit Payments			(15,777)						(15,142)
Fair Value of Plan Assets at December 31			$	360,678					$	329,781
Estimated Asset Return			10.7		%				19.3		%
Reconciliation of Projected Benefit Obligation:
Projected Benefit Obligation at January 1			$	384,785					$	328,442
Service Cost			6,621						5,491
Interest Cost			13,053						14,412
Benefit Payments			(15,777)						(15,142)
Actuarial Loss			39,714						51,582
Projected Benefit Obligation at December 31			$	428,396					$	384,785

The following table provides a reconciliation of the changes in the fair value of plan assets and the plan’s projected benefit obligations for the years ended December 31, 2020 and 2019 and a statement of the funded status as of December 31 of both years: 

(in thousands)			2020						2019
Reconciliation of Fair Value of Plan Assets:
Fair Value of Plan Assets at January 1			$	—					$	—
Actual Return on Plan Assets			—						—
Employer Contributions			1,505						1,475
Benefit Payments			(1,505)						(1,475)
Fair Value of Plan Assets at December 31			$	—					$	—
Reconciliation of Projected Benefit Obligation:
Projected Benefit Obligation at January 1			43,966						39,699
Service Cost			179						418
Interest Cost			1,449						1,735
Benefit Payments			(1,505)						(1,475)
Curtailments			—						(1,671)
Actuarial Loss			3,805						5,260
Projected Benefit Obligation at December 31			$	47,894					$	43,966

The following table provides a reconciliation of the changes in the fair value of plan assets and the plan’s projected benefit obligations and accrued postretirement benefit cost for the years ended December 31, 2020 and 2019: 

(in thousands)			2020						2019
Reconciliation of Fair Value of Plan Assets:
Fair Value of Plan Assets at January 1			$	—					$	—
Actual Return on Plan Assets			—						—
Company Contributions			2,662						2,757
Benefit Payments (Net of Medicare Part D Subsidy)			(6,694)						(7,164)
Participant Premium Payments			4,032						4,407
Fair Value of Plan Assets at December 31			$	—					$	—
Reconciliation of Projected Benefit Obligation:
Projected Benefit Obligation at January 1			$	71,437					$	71,561
Service Cost (Net of Medicare Part D Subsidy)			1,847						1,286
Interest Cost (Net of Medicare Part D Subsidy)			2,393						3,083
Benefit Payments (Net of Medicare Part D Subsidy)			(6,694)						(7,164)
Participant Premium Payments			4,032						4,407
Plan Amendments			(3,891)						(20,864)
Actuarial Loss			1,061						19,128
Projected Benefit Obligation at December 31			$	70,185					$	71,437
Reconciliation of Accrued Postretirement Cost:
Accrued Postretirement Cost at January 1			$	(56,795)					$	(53,574)
Expense			(3,758)						(5,978)
Net Company Contribution			2,662						2,757
Accrued Postretirement Cost at December 31			$	(57,891)					$	(56,795)

Defined Benefit Plan, Assumptions

Weighted average assumptions used to determine benefit obligations at December 31, 2020 and 2019:

			2020						2019
Discount Rate			2.78		%				3.47		%
Rate of Increase in Future Compensation Level:
Participants to Age 39			4.50		%				4.50		%
Participants Age 40 to Age 49			3.50		%				3.50		%
Participants Age 50 and Older			2.75		%				2.75		%

Weighted average assumptions used to determine benefit obligations at December 31, 2020 and 2019:

			2020						2019
Discount Rate			2.61		%				3.36		%
Rate of Increase in Future Compensation Level:			3.00		%				3.50		%

Weighted average assumptions used to determine benefit obligations at December 31, 2020 and 2019:

			2020						2019
Discount Rate			2.75		%				3.43		%

Schedule of Measurement Dates

Measurement Dates:			2020						2019
Net Periodic Pension Cost			2020-01-01						2019-01-01
End of Year Benefit Obligations			January 1, 2020 projected to December 31, 2020						January 1, 2019 projected to December 31, 2019
Market Value of Assets			2020-12-31						2019-12-31

Measurement Dates:			2020						2019
Net Periodic Postretirement Benefit Cost			2020-01-01						2019-01-01
End of Year Benefit Obligations			January 1, 2020 projected to December 31, 2020						January 1, 2019 projected to December 31, 2019

Schedule of Expected Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid out from plan assets:

(in thousands)			2021						2022						2023						2024						2025						Years 2026-2030
Benefit Payments			$	16,536					$	17,050					$	17,694					$	18,298					$	18,856					$	100,797

The ESSRP is unfunded and has no assets; contributions are equal to the benefits paid to plan participants. The following benefit payments, which reflect future service, as appropriate, are expected to be paid: 

(in thousands)			2021						2022						2023						2024						2025						Years 2026-2030
Benefit Payments			$	1,575					$	2,049					$	2,723					$	2,707					$	2,645					$	14,348

The following benefit payments, which reflect expected future service, as appropriate, net of participant premium payments, are expected to be paid:

(in thousands)			2021						2022						2023						2024						2025						Years 2026-2030
Benefit Payments			$	2,825					$	2,955					$	3,079					$	3,199					$	3,295					$	16,893

Schedule of Target and Tactical Allocation of Plan Assets

The policy of the Plan is to invest assets in accordance with the allocations shown below:

			Permitted Range
Asset Class / PBO Funded Status			< 85% PBO												>=85% PBO												>=90% PBO												>=95% PBO												>=100% PBO
Equity			39%			—			59%						34%			—			54%						24%			—			44%						14%			—			34%						0%			—			20%
Investment Grade Fixed Income			22%			—			42%						30%			—			50%						40%			—			60%						53%			—			73%						70%			—			100%
Below Investment Grade Fixed Income1			0%			—			15%						0%			—			15%						0%			—			15%						0%			—			10%						0%			—			10%
Other2			5%			—			20%						5%			—			20%						5%			—			20%						0%			—			15%						0%			—			15%
1Includes (but not limited to) High Yield Bond Fund and Emerging Markets Debt funds.
2Other category may include cash, alternatives, and/or other investment strategies that may be classified other than equity or fixed income, such as the Dynamic Asset Allocation fund or the SEI Energy Debt Collective Fund.

Schedule of Weighted Average Asset Allocation

Pension plan asset allocations at December 31, 2020 and 2019, by asset category are as follows:

Asset Allocation			2020						2019
Global MGD Volatility Fund (mixed equities fund)			19.3		%				20.4		%
Large Capitalization Equity Securities			11.8						11.3
International Equity Securities			9.9						9.3
Emerging Markets Equity Fund			4.5						4.2
Small and Mid-Capitalization Equity Securities			4.5						4.1
SEI Dynamic Asset Allocation Fund			3.2						3.1
Equity Securities			53.2						52.4
Fixed-Income Securities and Cash			44.2						44.7
Other – SEI Energy Debt Collective Fund			2.6						2.9
			100.0		%				100.0		%

Schedule of Allocation of Plan Assets

The following table presents the pension fund assets measured at fair value and included in Level 1 of the fair value hierarchy and assets measured using the NAV practical expedient to fair valuation as of December 31, 2020 and 2019:

(in thousands)			2020						2019
Assets in Level 1 of the Fair Value Hierarchy			$	351,458					$	320,241
SEI Energy Debt Collective Fund at NAV			9,220						9,540
Total Assets			$	360,678					$	329,781

Fair Value Measurement Inputs and Valuation Techniques

The following table presents the Company’s pension fund assets measured at fair value and included in Level 1 of the fair value hierarchy as of December 31, 2020 and 2019:

(in thousands)			2020						2019
Global MGD Volatility Fund (mixed equities fund)			$	69,607					$	67,184
Large Capitalization Equity Securities Mutual Fund			42,697						37,357
International Equity Securities Mutual Funds			35,607						30,653
Small and Mid-Capitalization Equity Securities Mutual Fund			16,111						13,447
SEI Dynamic Asset Allocation Mutual Fund			11,729						10,168
Emerging Markets Equity Fund			16,146						13,792
Fixed Income Securities Mutual Funds			159,192						147,639
Cash Management – Money Market Fund			369						1
Total Assets			$	351,458					$	320,241

Schedule of Health Care Cost Trend Rates

Assumed healthcare cost-trend rates as of December 31, 2020 and 2019:

			2020						2019
Healthcare Cost-Trend Rate Assumed for Next Year			6.44		%				6.72		%
Rate to Which the Cost-Trend Rate is Assumed to Decline			4.50		%				4.50		%
Year the Rate Reaches the Ultimate Trend Rate			2038						2038

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