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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract] |
Employee Benefit Plans | Employee Benefit Plans Pension and Post-Retirement Medical Plans: Registrant maintains a defined benefit pension plan (the “Pension Plan”) that provides eligible employees (those aged 21 and older, hired before January 1, 2011) monthly benefits upon retirement based on average salaries and length of service. The eligibility requirement to begin receiving these benefits is 5 years of vested service. The normal retirement benefit is equal to 2% of the five highest consecutive years’ average earnings multiplied by the number of years of credited service, up to a maximum of 40 years, reduced by a percentage of primary social security benefits. There is also an early retirement option. Annual contributions are made to the Pension Plan, which comply with the funding requirements of the Employee Retirement Income Security Act (“ERISA”). At December 31, 2013, Registrant had 985 participants in the Pension Plan. In January 2011, the Board of Directors approved an amendment to the Pension Plan, closing the plan to new employees hired after December 31, 2010. Employees hired or rehired after December 31, 2010 are eligible to participate in a defined contribution plan. Registrant's existing 401(k) Investment Incentive Program was amended to include this defined contribution plan. Under this plan, Registrant provides a contribution of 5.25% of eligible pay each pay period into investment vehicles offered by the plan’s trustee. Participants will be fully vested in this plan once the employee attains three years of service. Employees hired before January 1, 2011 continue to participate in and accrue benefits under the terms of the defined benefit plan. For the years ended December 31, 2013 and 2012, Registrant contributed $394,000 and $254,000, respectively, to the defined contribution plan. Registrant also provides post-retirement medical benefits for all active employees hired before February of 1995, through a medical insurance plan. Eligible employees, who retire prior to age 65, and/or their spouses, are able to retain the benefits under the plan for active employees until reaching age 65. Eligible employees upon reaching age 65, and those eligible employees retiring at or after age 65, and/or their spouses, receive coverage through a Medicare supplement insurance policy paid for by Registrant subject to an annual cap limit. Registrant’s post-retirement medical plan does not provide prescription drug benefits to Medicare-eligible employees and is not affected by the Medicare Prescription Drug Improvement and Modernization Act of 2003. In accordance with the accounting guidance for the effects of certain types of regulation, Registrant has established a regulatory asset for its underfunded position in its pension and post-retirement medical plans that is expected to be recovered through rates in future periods. The changes in actuarial gains and losses, prior service costs and transition assets or obligations pertaining to the regulatory asset are recognized as an adjustment to the regulatory asset account as these amounts are recognized as components of net periodic pension costs each year. The following table sets forth the Pension Plan’s and post-retirement medical plan’s funded status and amounts recognized in Registrant’s balance sheets and the components of net pension cost and accrued liability at December 31, 2013 and 2012:
|  | Pension Benefits |  | Post-Retirement Medical Benefits
(dollars in thousands) |  | 2013 |  | 2012 |  | 2013 |  | 2012
Change in Projected Benefit Obligation: |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation at beginning of year |  | $ | 163,230 |  |  | $ | 146,127 |  |  | $ | 12,296 |  |  | $ | 12,448 |
Service cost |  | 6,967 |  |  | 6,675 |  |  | 407 |  |  | 419 |
Interest cost |  | 6,907 |  |  | 6,657 |  |  | 439 |  |  | 534 |
Actuarial loss (gain) |  | (19,918 | ) |  | 7,759 |  |  | (1,340 | ) |  | (657 | )
Benefits/expenses paid |  | (4,506 | ) |  | (3,988 | ) |  | (414 | ) |  | (448 | )
Projected benefit obligation at end of year |  | $ | 152,680 |  |  | $ | 163,230 |  |  | $ | 11,388 |  |  | $ | 12,296 |
Changes in Plan Assets: |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 107,638 |  |  | $ | 92,910 |  |  | $ | 8,359 |  |  | $ | 7,916 |
Actual return on plan assets |  | 17,846 |  |  | 12,599 |  |  | 1,320 |  |  | 736 |
Employer contributions |  | 6,556 |  |  | 6,117 |  |  | 608 |  |  | 155 |
Benefits/expenses paid |  | (4,506 | ) |  | (3,988 | ) |  | (414 | ) |  | (448 | )
Fair value of plan assets at end of year |  | $ | 127,534 |  |  | $ | 107,638 |  |  | $ | 9,873 |  |  | $ | 8,359 |
Funded Status: |  |  |  |  |  |  |  |  |  |  |  |
Net amount recognized as accrued pension cost |  | $ | (25,146 | ) |  | $ | (55,592 | ) |  | $ | (1,515 | ) |  | $ | (3,937 | )
|  | Pension Benefits |  | Post-Retirement Medical Benefits
(in thousands) |  | 2013 |  | 2012 |  | 2013 |  | 2012
Amounts recognized on the balance sheets: |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Non-current liabilities |  | (25,146 | ) |  | (55,592 | ) |  | (1,515 | ) |  | (3,937 | )
Net amount recognized |  | $ | (25,146 | ) |  | $ | (55,592 | ) |  | $ | (1,515 | ) |  | $ | (3,937 | )
Amounts recognized in regulatory assets consist of: |  |  |  |  |  |  |  |  |  |  |  |
Initial net obligation |  | $ | — |  |  | $ | — |  |  | $ | 417 |  |  | $ | 837 |
Prior service cost (credit) |  | 285 |  |  | 404 |  |  | (433 | ) |  | (633 | )
Net (gain) loss |  | 15,581 |  |  | 48,648 |  |  | (3,159 | ) |  | (889 | )
Regulatory assets (liabilities) |  | 15,866 |  |  | 49,052 |  |  | (3,175 | ) |  | (685 | )
Unfunded accrued pension cost |  | 9,280 |  |  | 6,540 |  |  | 4,690 |  |  | 4,622 |
Net liability recognized |  | $ | 25,146 |  |  | $ | 55,592 |  |  | $ | 1,515 |  |  | $ | 3,937 |
Changes in plan assets and benefit obligations recognized in regulatory assets: |  |  |  |  |  |  |  |  |  |  |  |
Regulatory asset at beginning of year |  | $ | 49,052 |  |  | $ | 50,505 |  |  | $ | (685 | ) |  | $ | 570 |
Net loss (gain) |  | (30,190 | ) |  | 1,700 |  |  | (2,278 | ) |  | (1,036 | )
Amortization of initial net obligation |  | — |  |  | — |  |  | (419 | ) |  | (419 | )
Amortization of prior service (cost) credit |  | (118 | ) |  | (118 | ) |  | 200 |  |  | 200 |
Amortization of net gain (loss) |  | (2,878 | ) |  | (3,035 | ) |  | 7 |  |  | — |
Total change in regulatory asset |  | (33,186 | ) |  | (1,453 | ) |  | (2,490 | ) |  | (1,255 | )
Regulatory asset (liability) at end of year |  | $ | 15,866 |  |  | $ | 49,052 |  |  | $ | (3,175 | ) |  | $ | (685 | )
Net periodic pension costs |  | $ | 9,296 |  |  | $ | 9,945 |  |  | $ | 676 |  |  | $ | 815 |
Change in regulatory asset |  | (33,186 | ) |  | (1,453 | ) |  | (2,490 | ) |  | (1,255 | )
Total recognized in net periodic pension cost and regulatory asset (liability) |  | $ | (23,890 | ) |  | $ | 8,492 |  |  | $ | (1,814 | ) |  | $ | (440 | )
Estimated amounts that will be amortized from regulatory asset over the next fiscal year: |  |  |  |  |  |  |  |  |  |  |  |
Initial net obligation |  | $ | — |  |  | $ | — |  |  | $ | (418 | ) |  | $ | (419 | )
Prior service (cost) credit |  | $ | (118 | ) |  | $ | (118 | ) |  | $ | 200 |  |  | $ | 200 |
Net gain (loss) |  | $ | (29 | ) |  | $ | (2,846 | ) |  | $ | 262 |  |  | $ | — |
Additional year-end information for plans with an accumulated benefit obligation in excess of plan assets: |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation |  | $ | 152,680 |  |  | $ | 163,230 |  |  | $ | 11,388 |  |  | $ | 12,296 |
Accumulated benefit obligation |  | $ | 131,580 |  |  | $ | 138,230 |  |  | N/A |  | N/A
Fair value of plan assets |  | $ | 127,534 |  |  | $ | 107,368 |  |  | $ | 9,873 |  |  | $ | 8,359 |
Weighted-average assumptions used to determine benefit obligations at December 31: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 5.10 | % |  | 4.30 | % |  | 4.65 | % |  | 3.75 | %
Rate of compensation increase |  | 4.00 | % |  | 4.00 | % |  | N/A |  |  | N/A |
Consistent with decisions from the CPUC and in accordance with regulatory accounting principles, Registrant capitalizes a portion of its pension and other post-retirement costs in the overhead pool included in Utility Plant. The components of net periodic pension and post-retirement benefits cost, before allocation to the overhead pool, for 2013, 2012 and 2011 are as follows:
|  | Pension Benefits |  | Post-Retirement Medical Benefits
(dollars in thousands, except percent) |  | 2013 |  | 2012 |  | 2011 |  | 2013 |  | 2012 |  | 2011
Components of Net Periodic Benefits Cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 6,967 |  |  | $ | 6,675 |  |  | $ | 5,624 |  |  | $ | 407 |  |  | $ | 419 |  |  | $ | 391 |
Interest cost |  | 6,907 |  |  | 6,657 |  |  | 6,524 |  |  | 439 |  |  | 534 |  |  | 549 |
Expected return on plan assets |  | (7,574 | ) |  | (6,540 | ) |  | (6,349 | ) |  | (382 | ) |  | (357 | ) |  | (298 | )
Amortization of transition |  | — |  |  | — |  |  | — |  |  | 419 |  |  | 419 |  |  | 419 |
Amortization of prior service cost (credit) |  | 118 |  |  | 118 |  |  | 118 |  |  | (200 | ) |  | (200 | ) |  | (200 | )
Amortization of actuarial (gain) loss |  | 2,878 |  |  | 3,035 |  |  | 1,242 |  |  | (7 | ) |  | — |  |  | — |
Net periodic pension cost under accounting standards |  | $ | 9,296 |  |  | $ | 9,945 |  |  | $ | 7,159 |  |  | $ | 676 |  |  | $ | 815 |  |  | $ | 861 |
Regulatory adjustment - deferred |  | (1,920 | ) |  | (2,305 | ) |  | (209 | ) |  | — |  |  | — |  |  | — |
Total expense recognized, before allocation to overhead pool |  | $ | 7,376 |  |  | $ | 7,640 |  |  | $ | 6,950 |  |  | $ | 676 |  |  | $ | 815 |  |  | $ | 861 |
Weighted-average assumptions used to determine net periodic cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 4.30 | % |  | 4.65 | % |  | 5.55 | % |  | 3.75 | % |  | 4.45 | % |  | 5.20 | %
Expected long-term return on plan assets |  | 7.00 | % |  | 7.00 | % |  | 7.00 | % |  | * |  |  | * |  |  | * |
Rate of compensation increase |  | 4.00 | % |  | 4.00 | % |  | 4.00 | % |  | N/A |  |  | N/A |  |  | N/A |
*7.0% for union plan, 4.2% for non-union, net of income taxes in 2013, 2012 and 2011. Regulatory Adjustment: As previously discussed in Note 2, the CPUC authorized GSWC to track differences between the forecasted annual pension expenses adopted in rates for its water regions and the general office and the actual annual expense to be recorded by GSWC in accordance with the accounting guidance for pension costs. During the years ended December 31, 2013, 2012 and 2011, GSWC’s actual expense under the accounting standard was greater than the amounts included in customer rates by $1.9 million, $2.3 million and $209,000, respectively. This under-collection has been recorded in the two-way pension balancing account included in regulatory assets. As of December 31, 2013, the pension balancing account totaled $5.1 million included in regulatory assets. Plan Funded Status: Registrant’s pension and post-retirement plans were underfunded at December 31, 2013 and 2012. Registrant’s market related value of plan assets is equal to the fair value of plan assets. Past volatile market conditions have affected the value of GSWC’s trust established to fund its future long-term pension benefits. These benefit plan assets and related obligations are measured annually using a December 31 measurement date. Changes in the plan’s funded status will affect the assets and liabilities recorded on the balance sheet in accordance with accounting guidance on employers’ accounting for defined benefit pension and other post-retirement plans. Due to Registrant’s regulatory recovery treatment, the recognition of the funded status is offset by a regulatory asset pursuant to guidance on accounting for the effects of certain types of regulation. Plan Assets: The assets of the pension and post-retirement medical plans are managed by a third party trustee. The investment policy allocation of the assets in the trust was approved by Registrant’s Administrative Committee (the “Committee”) for the pension and post-retirement medical funds, which has oversight responsibility for all retirement plans. The primary objectives underlying the investment of the pension and post-retirement plan assets are: (i) attempt to maintain a fully funded status with a cushion for unexpected developments, possible future increases in expense levels, and/or a reduction in the expected return on investments; (ii) seek to earn long-term returns that compare favorably to appropriate market indexes, peer group universes and the policy asset allocation index; (iii) seek to provide sufficient liquidity to pay current benefits and expenses; (iv) attempt to limit risk exposure through prudent diversification, and (v) seek to limit costs of administering and managing the plans. The Committee recognizes that risk and volatility are present to some degree with all types of investments. High levels of risk may be avoided through diversification by asset class, style of each investment manager and sector and industry limits. Investment managers are retained to manage a pool of assets and allocate funds in order to achieve an appropriate, diversified and balanced asset mix. The Committee’s strategy balances the requirement to maximize returns using potentially higher return generating assets, such as equity securities, with the need to control the risk of its benefit obligations with less volatile assets, such as fixed income securities. The Committee approves the target asset allocations. Registrant’s pension and post-retirement plan weighted-average asset allocations at December 31, 2013 and 2012, by asset category are as follows:
|  | Pension Benefits |  | Post-Retirement Medical Benefits
Asset Category |  | 2013 |  | 2012 |  | 2013 |  | 2012
Actual Asset Allocations: |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  | 61 | % |  | 60 | % |  | 61 | % |  | 61 | %
Debt securities |  | 37 | % |  | 39 | % |  | 38 | % |  | 38 | %
Cash equivalents |  | 2 | % |  | 1 | % |  | 1 | % |  | 1 | %
Total |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | %
Equity securities did not include AWR’s stock as of December 31, 2013 and 2012.
Target Asset Allocations for 2014: |  | Pension Benefits |  | Post-retirement Medical Benefits
Equity securities |  | 60 | % |  | 60 | %
Debt securities |  | 40 | % |  | 40 | %
Total |  | 100 | % |  | 100 | %
As previously discussed in Note 4, accounting guidance for fair value measurements establishes a framework for measuring fair value and requires fair value measurements to be classified and disclosed in one of three levels. As required by the accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. All equity investments in the pension and post-retirement plans are Level 1 investments in mutual funds. The fixed income category includes corporate bonds and notes. The majority of fixed income investments range in maturities from less than one to twenty years. The fair values of these investments are based on quoted market prices in active markets. The following tables set forth by level, within the fair value hierarchy, the pension and post-retirement plans’ investment assets measured at fair value as of December 31, 2013 and 2012:
|  | Fair Value as of December 31, 2013
(dollars in thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Fair Value of Pension Plan Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 2,096 |  |  | — |  |  | — |  |  | $ | 2,096 |
Fixed income securities |  | 47,627 |  |  | — |  |  | — |  |  | 47,627 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. small cap stocks |  | 6,576 |  |  | — |  |  | — |  |  | 6,576 |
U.S. mid cap stocks |  | 13,119 |  |  | — |  |  | — |  |  | 13,119 |
U.S. large cap stocks |  | 39,280 |  |  | — |  |  | — |  |  | 39,280 |
International funds |  | 12,501 |  |  | — |  |  | — |  |  | 12,501 |
Real estate funds |  | 6,335 |  |  | — |  |  | — |  |  | 6,335 |
Total equity securities |  | 77,811 |  |  | — |  |  | — |  |  | 77,811 |
Total investments measured at fair value |  | $ | 127,534 |  |  | — |  |  | — |  |  | $ | 127,534 |
Fair Value of Post-Retirement Plan Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 142 |  |  | — |  |  | — |  |  | $ | 142 |
Fixed income |  | 3,731 |  |  | — |  |  | — |  |  | 3,731 |
U.S. equity securities (large cap stocks) |  | 6,000 |  |  | — |  |  | — |  |  | 6,000 |
Total investments measured at fair value |  | $ | 9,873 |  |  | — |  |  | — |  |  | $ | 9,873 |
|  | Fair Value as of December 31, 2012
(dollars in thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Fair Value of Pension Plan Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 1,721 |  |  | — |  |  | — |  |  | $ | 1,721 |
Fixed income securities |  | 41,590 |  |  | — |  |  | — |  |  | 41,590 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. small cap stocks |  | 5,396 |  |  | — |  |  | — |  |  | 5,396 |
U.S. mid cap stocks |  | 10,722 |  |  | — |  |  | — |  |  | 10,722 |
U.S. large cap stocks |  | 31,966 |  |  | — |  |  | — |  |  | 31,966 |
International funds |  | 10,797 |  |  | — |  |  | — |  |  | 10,797 |
Real estate funds |  | 5,446 |  |  | — |  |  | — |  |  | 5,446 |
Total equity securities |  | 64,327 |  |  | — |  |  | — |  |  | 64,327 |
Total investments measured at fair value |  | $ | 107,638 |  |  | — |  |  | — |  |  | $ | 107,638 |
Fair Value of Post-Retirement Plan Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 65 |  |  | — |  |  | — |  |  | $ | 65 |
Fixed income |  | 3,192 |  |  | — |  |  | — |  |  | 3,192 |
U.S. equity securities (large cap stocks) |  | 5,102 |  |  | — |  |  | — |  |  | 5,102 |
Total investments measured at fair value |  | $ | 8,359 |  |  | — |  |  | — |  |  | $ | 8,359 |
Plan Contributions: During 2013, Registrant contributed $6.6 million and $608,000 to its pension and post-retirement medical plans, respectively. Registrant currently expects to contribute at least $6.3 million to its pension in 2014. Registrant’s policy is to fund the plans annually at a level which is deductible for income tax purposes and is consistent with amounts recovered in customer rates. Benefit Payments: Registrant’s estimated future benefit payments at December 31, 2013 for the next five years and thereafter are as follows (in thousands):
| Pension Benefits |  | Post-Retirement Medical Benefits
2014 | $ | 4,971 |  |  | $ | 483 |
2015 | 5,447 |  |  | 558 |
2016 | 5,929 |  |  | 630 |
2017 | 6,513 |  |  | 713 |
2018 | 7,094 |  |  | 814 |
Thereafter | 45,594 |  |  | 5,057 |
Total | $ | 75,548 |  |  | $ | 8,255 |
Assumptions: Certain actuarial assumptions, such as the discount rate, long-term rate of return on plan assets and the healthcare cost trend rate have a significant effect on the amounts reported for net periodic benefit cost as well as the related benefit obligation amounts. Discount Rate — The assumed discount rate for pension and post-retirement medical plans reflects the market rates for high-quality corporate bonds currently available. Registrant’s discount rates were determined by considering the average of pension yield curves constructed of a large population of high quality corporate bonds. The resulting discount rate reflects the matching of plan liability cash flows to the yield curves. Expected Long-Term Rate of Return on Assets — The long-term rate of return on plan assets represents an estimate of long-term returns on an investment portfolio consisting of a mixture of equities, fixed income and other investments. To develop the expected long-term rate of return on assets assumption for the pension plan, Registrant considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. Registrant’s policy is to fund the medical benefit trusts based on actuarially determined amounts as allowed in rates approved by the CPUC. Registrant has invested the funds in the post-retirement trusts that will achieve a desired return and minimize amounts necessary to recover through rates. The mix is expected to provide for a return on assets similar to the Pension Plan and to achieve Registrant’s targeted allocation. This resulted in the selection of the 7.0% long-term rate of return on assets assumption for the union plan and 4.20% (net of income taxes) for the non-union plan portion of the post retirement plan. Healthcare Cost Trend Rate — A sliding scale for assumed health care cost increases was used for the periods presented. In 2013, health care cost increases started at 7.8% grading down to 6.3% in 10 years for those under age 65, and at 7.0% grading down to 5.7% in 10 years for those 65 and over. In 2012, health care cost increases started at 8.0% grading down to 7.2% in 10 years for those under age 65, and at 7.0% grading down to 5.8% in 10 years for those 65 and over. In 2011, health care cost increases started at 8.0% grading down to 6.5% in 10 years for those under age 65, and at 7.0% grading down to 5.8% in 10 years for those 65 and over. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects on the post-retirement medical plan:
(dollars in thousands) |  | 1-Percentage-Point Increase |  | 1-Percentage-Point Decrease
Effect on total of service and interest cost components |  | $ | 99 |  |  | $ | (85 | )
Effect on post-retirement benefit obligation |  | $ | 1,243 |  |  | $ | (1,083 | )
Supplemental Executive Retirement Plan: Registrant has a supplemental executive retirement plan (“SERP”) that provides additional retirement benefits to certain key employees and officers of Registrant by making up benefits, which are limited by Sections 415 and 401(a)(17) of the Internal Revenue Code of 1986, as amended, and certain additional benefits. The Board of Directors approved the establishment of a Rabbi Trust created for the SERP Plan. Assets in a Rabbi Trust can be subject to the claims of creditors; therefore, they are not considered as an asset for purposes of computing the SERP’s funded status. As of December 31, 2013, the balance in the Rabbi Trust totaled $6.8 million and is included in Registrant’s other property and investments. All equity investments in the Rabbi Trust are Level 1 investments in mutual funds. The fixed income category includes corporate bonds and notes. The fair values of these investments are based on quoted market prices in active markets. The following tables set forth by level, within the fair value hierarchy, the Rabbi Trust investment assets measured at fair value as of December 31, 2013 and 2012.
|  | Fair Value as of December 31, 2013
(dollars in thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Fair Value of Assets held in Rabbi Trust: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 27 |  |  | — |  |  | — |  |  | $ | 27 |
Fixed income securities |  | 2,587 |  |  | — |  |  | — |  |  | 2,587 |
Equity securities |  | 4,202 |  |  | — |  |  | — |  |  | 4,202 |
Total investments measured at fair value |  | $ | 6,816 |  |  | — |  |  | — |  |  | $ | 6,816 |
|  | Fair Value as of December 31, 2012
(dollars in thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Fair Value of Assets held in Rabbi Trust: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 116 |  |  | — |  |  | — |  |  | $ | 116 |
Fixed income securities |  | 1,878 |  |  | — |  |  | — |  |  | 1,878 |
Equity securities |  | 2,822 |  |  | — |  |  | — |  |  | 2,822 |
Total investments measured at fair value |  | $ | 4,816 |  |  | — |  |  | — |  |  | $ | 4,816 |
The following provides a reconciliation of benefit obligations, funded status of the SERP, as well as a summary of significant estimates at December 31, 2013 and 2012:
(dollars in thousands) |  | 2013 |  | 2012
Change in Benefit Obligation: |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 12,406 |  |  | $ | 10,604 |
Service cost |  | 803 |  |  | 731 |
Interest cost |  | 514 |  |  | 488 |
Actuarial (gain) loss |  | (1,198 | ) |  | 803 |
Benefits paid |  | (229 | ) |  | (220 | )
Benefit obligation at end of year |  | $ | 12,296 |  |  | $ | 12,406 |
Changes in Plan Assets: |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | — |  |  | — |
Fair value of plan assets at end of year |  | — |  |  | — |
Funded Status: |  |  |  |  |  |
Net amount recognized as accrued cost |  | $ | (12,296 | ) |  | $ | (12,406 | )
(in thousands) |  | 2013 |  | 2012
Amounts recognized on the balance sheets: |  |  |  |  |  |
Current liabilities |  | $ | (230 | ) |  | $ | (317 | )
Non-current liabilities |  | (12,066 | ) |  | (12,089 | )
Net amount recognized |  | $ | (12,296 | ) |  | $ | (12,406 | )
Amounts recognized in regulatory assets consist of: |  |  |  |  |  |
Prior service cost |  | $ | 314 |  |  | $ | 475 |
Net loss |  | 2,172 |  |  | 3,709 |
Regulatory assets |  | 2,486 |  |  | 4,184 |
Unfunded accrued cost |  | 9,810 |  |  | 8,222 |
Net liability recognized |  | $ | 12,296 |  |  | $ | 12,406 |
Changes in plan assets and benefit obligations recognized in regulatory assets consist of: |  |  |  |  |  |
Regulatory asset at beginning of year |  | $ | 4,184 |  |  | $ | 3,848 |
Net (gain) loss |  | (1,199 | ) |  | 805 |
Amortization of prior service credit |  | (161 | ) |  | (161 | )
Amortization of net loss |  | (338 | ) |  | (308 | )
Total change in regulatory asset |  | (1,698 | ) |  | 336 |
Regulatory asset at end of year |  | $ | 2,486 |  |  | $ | 4,184 |
Net periodic pension cost |  | $ | 1,817 |  |  | $ | 1,687 |
Change in regulatory asset |  | (1,698 | ) |  | 336 |
Total recognized in net periodic pension and net income |  | $ | 119 |  |  | $ | 2,023 |
Estimated amounts that will be amortized from regulatory asset over the next fiscal year: |  |  |  |  |  |
Initial net asset (obligation) |  | — |  |  | — |
Prior service cost |  | $ | (161 | ) |  | $ | (161 | )
Net loss |  | (139 | ) |  | (339 | )
Additional year-end information for plans with an accumulated benefit obligation in excess of plan assets: |  |  |  |  |  |
Projected benefit obligation |  | $ | 12,296 |  |  | $ | 12,406 |
Accumulated benefit obligation |  | 10,116 |  |  | 9,601 |
Fair value of plan assets |  | — |  |  | — |
Weighted-average assumptions used to determine benefit obligations: |  |  |  |  |  |
Discount rate |  | 5.05 | % |  | 4.20 | %
Rate of compensation increase |  | 4.00 | % |  | 4.00 | %
The components of SERP expense, before allocation to the overhead pool, for 2013, 2012 and 2011 are as follows:
(dollars in thousands, except percent) |  | 2013 |  | 2012 |  | 2011
Components of Net Periodic Benefits Cost: |  |  |  |  |  |  |  |  |
Service cost |  | $ | 803 |  |  | $ | 731 |  |  | $ | 600 |
Interest cost |  | 514 |  |  | 488 |  |  | 464 |
Amortization of prior service cost |  | 161 |  |  | 161 |  |  | 161 |
Amortization of net loss |  | 339 |  |  | 307 |  |  | 134 |
Net periodic pension cost |  | $ | 1,817 |  |  | $ | 1,687 |  |  | $ | 1,359 |
Weighted-average assumptions used to determine net periodic cost: |  |  |  |  |  |  |  |  |
Discount rate |  | 4.20 | % |  | 4.65 | % |  | 5.55 | %
Rate of compensation increase |  | 4.00 | % |  | 4.00 | % |  | 4.00 | %
Benefit Payments: Registrant’s estimated future benefit payments for the SERP at December 31, 2013 for the next ten years are as follows (in thousands):
2014 | $ | 230 |
2015 | 383 |
2016 | 394 |
2017 | 466 |
2018 | 570 |
Thereafter | 4,115 |
Total | $ | 6,158 |
401(k) Investment Incentive Program: Registrant has a 401(k) Investment Incentive Program under which employees may invest a percentage of their pay, up to a maximum investment prescribed by law, in an investment program managed by an outside investment manager. Registrant’s cash contributions to the 401(k) are based upon a percentage of individual employee contributions and totaled $1.9 million for each of the years ended December 31, 2013, 2012 and 2011. In 2011, this program was amended to incorporate the defined contribution plan previously discussed. Affordable Care Act: In 2010, the Patient Protection and Affordable Care Act ("Affordable Care Act") was passed and was to become effective in 2014. In July 2013, compliance with the employer mandate and certain reporting requirements under the Affordable Care Act were delayed until 2015. Registrant’s health care plan meets the current requirements of the Affordable Care Act for the majority of its employees. Registrant is evaluating alternatives to address those employees for which the plan may not currently meet the requirements. Registrant continues to assess the impact of the Affordable Care Act on its health care benefit costs, but does not expect it to have a material impact in the near future on the Registrant's consolidated financial position, results of operations or cash flows.

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