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Retirement benefits - HECO | 6 Months Ended
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Jun. 30, 2011
Retirement benefits |
5 · Retirement benefits Retirement benefit plan changes. On March 11, 2011, the utilities’ union members ratified a new benefit agreement, which included changes to retirement benefits. Changes to retirement benefits for HEI and utility employees commencing employment after April 30, 2011 include a reduction of benefits provided through the defined benefit plan (the Retirement Plan for Employees of Hawaiian Electric Industries, Inc. and Participating Subsidiaries) and the addition of a 50% match by the applicable employer on the first 6% of employee deferrals through the defined contribution plan (under the Hawaiian Electric Industries Retirement Savings Plan (HEIRSP)). In addition, new eligibility rules and contribution levels applicable to existing and new HEI and utility employees were adopted for postretirement welfare benefits. In general, defined pension benefits are based on the employees’ years of service and compensation. Defined benefit plans. For the six months of 2011, HEI contributed $0.5 million (unconsolidated) to its retirement benefit plans, compared to $0.4 million in the first six months of 2010. HEI’s current estimate of contributions to its retirement benefit plans in 2011 is $2 million (unconsolidated), compared to $1 million in 2010. In addition, HEI expects to pay directly $1 million (unconsolidated) of benefits in 2011, comparable to 2010. For a discussion of HECO’s 2011 estimated contributions to the retirement benefit plans, see Note 4, “Retirement benefits,” of HECO’s Notes to Consolidated Financial Statements. The components of net periodic benefit cost for consolidated HEI were as follows:
|  | Three months ended June 30 |  | Six months ended June 30 |
|  | Pension benefits |  | Other benefits |  | Pension benefits |  | Other benefits |
(in thousands) |  | 2011 |  | 2010 |  | 2011 |  | 2010 |  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Service cost |  | $ | 8,824 |  | $ | 7,095 |  | $ | 1,173 |  | $ | 1,168 |  | $ | 17,741 |  | $ | 14,048 |  | $ | 2,440 |  | $ | 2,291 |
Interest cost |  | 16,271 |  | 16,093 |  | 2,417 |  | 2,652 |  | 32,580 |  | 32,133 |  | 4,878 |  | 5,336 |
Expected return on plan assets |  | (17,172 | ) | (17,221 | ) | (2,657 | ) | (2,766 | ) | (34,273 | ) | (34,415 | ) | (5,305 | ) | (5,518 | )
Amortization of unrecognized transition obligation |  | — |  | — |  | — |  | — |  | 1 |  | 1 |  | — |  | — |
Amortization of prior service gain |  | (97 | ) | (97 | ) | (309 | ) | (52 | ) | (194 | ) | (194 | ) | (533 | ) | (104 | )
Recognized actuarial loss (gain) |  | 4,314 |  | 1,791 |  | 40 |  | (2 | ) | 8,719 |  | 3,507 |  | 55 |  | (3 | )
Net periodic benefit cost |  | 12,140 |  | 7,661 |  | 664 |  | 1,000 |  | 24,574 |  | 15,080 |  | 1,535 |  | 2,002 |
Impact of PUC D&Os |  | (556 | ) | 2,020 |  | 1,734 |  | 1,333 |  | (2,100 | ) | 5,028 |  | 2,752 |  | 2,621 |
Net periodic benefit cost (adjusted for impact of PUC D&Os) |  | $ | 11,584 |  | $ | 9,681 |  | $ | 2,398 |  | $ | 2,333 |  | $ | 22,474 |  | $ | 20,108 |  | $ | 4,287 |  | $ | 4,623 |
Consolidated HEI recorded retirement benefits expense of $20 million and $19 million in the first six months of 2011 and 2010, respectively, and charged the remaining amounts primarily to electric utility plant. Defined contribution plans. For the first six months of 2011 and 2010, ASB’s expense for its employees participating in the ASB 401(k) Plan was $1.7 million and $1.9 million, respectively. For the first six months of both 2011 and 2010, ASB’s cash contributions to the plan were $2.8 million. For the first six months of 2011, the Company’s expense for matching contributions under the HEIRSP was immaterial.
Hawaiian Electric Company, Inc. and Subsidiaries |
Retirement benefits |
4 · Retirement benefits Retirement benefit plan changes. See “Retirement benefit plan changes” in Note 5 of HEI’s Notes to Consolidated Financial Statements. Defined benefit plans. For the first six months of 2011, HECO and its subsidiaries contributed $37 million to their retirement benefit plans, compared to $16 million in the first six months of 2010. HECO and its subsidiaries’ current estimate of contributions to their retirement benefit plans in 2011 is $73 million, compared to contributions of $31 million in 2010. The increase in expected 2011 contributions over 2010 contributions is driven by the minimum funding requirements under the Pension Protection Act of 2006, which were impacted by the following three factors: (1) the credit balance available to apply toward satisfaction of the minimum funding requirements was fully depleted in 2010 leaving no credit balance to be applied to 2011, (2) under the Pension Protection Act of 2006, the requirement was to fund 96% of target liability in 2010, which increased to 100% for 2011 and future years, and (3) lower interest rates. HECO and its subsidiaries expect to pay directly $1 million of benefits in 2011, comparable to 2010. The components of net periodic benefit cost were as follows:
|  | Three months ended June 30 |  | Six months ended June 30 |
|  | Pension benefits |  | Other benefits |  | Pension benefits |  | Other benefits |
(in thousands) |  | 2011 |  | 2010 |  | 2011 |  | 2010 |  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Service cost |  | $ | 8,474 |  | $ | 6,772 |  | $ | 1,129 |  | $ | 1,131 |  | $ | 17,039 |  | $ | 13,382 |  | $ | 2,352 |  | $ | 2,219 |
Interest cost |  | 14,803 |  | 14,658 |  | 2,340 |  | 2,571 |  | 29,652 |  | 29,237 |  | 4,724 |  | 5,167 |
Expected return on plan assets |  | (15,352 | ) | (15,353 | ) | (2,618 | ) | (2,728 | ) | (30,636 | ) | (30,677 | ) | (5,226 | ) | (5,443 | )
Amortization of unrecognized transition obligation |  | — |  | — |  | (2 | ) | (2 | ) | — |  | — |  | (4 | ) | (4 | )
Amortization of prior service gain |  | (187 | ) | (187 | ) | (312 | ) | (56 | ) | (374 | ) | (374 | ) | (539 | ) | (111 | )
Recognized actuarial loss |  | 4,016 |  | 1,767 |  | 37 |  | 1 |  | 8,136 |  | 3,452 |  | 55 |  | 4 |
Net periodic benefit cost |  | 11,754 |  | 7,657 |  | 574 |  | 917 |  | 23,817 |  | 15,020 |  | 1,362 |  | 1,832 |
Impact of PUC D&Os |  | (556 | ) | 2,020 |  | 1,734 |  | 1,333 |  | (2,100 | ) | 5,028 |  | 2,752 |  | 2,621 |
Net periodic benefit cost (adjusted for impact of PUC D&Os) |  | $ | 11,198 |  | $ | 9,677 |  | $ | 2,308 |  | $ | 2,250 |  | $ | 21,717 |  | $ | 20,048 |  | $ | 4,114 |  | $ | 4,453 |
HECO and its subsidiaries recorded retirement benefits expense of $19 million for each of the first six months of 2011 and 2010. The electric utilities charged a portion of the net periodic benefit cost to plant. Defined contribution plan. For the first six months of 2011, the utilities’ expense for matching contributions under the HEIRSP was immaterial.

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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 -URI http://asc.fasb.org/topic&trid=2235017 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 87 -Paragraph 264 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 158 -Paragraph 7, 21, 22 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph b -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Staff Position (FSP) -Number FAS106-2 -Paragraph 20, 21, 22 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Implementation Guide (Q and A) -Number FAS88 -Paragraph 63 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5, 6, 7, 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 8 -Subparagraph m -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph q -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 106 -Paragraph 518 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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