XML 34 R16.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Employee Benefit Plans | 12 Months Ended
--- | ---
Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract] |
Employee Benefit Plans | Note 7 - Employee Benefit Plans Pension Benefits The Company’s Pension Plan covers all active employees hired prior to April 1, 2007. Employees hired after March 31, 2007 are not eligible to participate in this plan, but can participate in a defined contribution profit sharing plan that provides an annual contribution at the discretion of the Company, based upon a percentage of the participants’ annual paid compensation. In order to be eligible for contribution, the eligible employee must be employed by the Company on December 31st of the year to which the contribution relates. The Company maintains an unfunded supplemental plan for its executive officers. The Accumulated Benefit Obligation for the Company’s Pension Plan at December 31, 2016 and 2015 was $66.8 million and $62.3 million, respectively. Other Benefits The Company’s Other Benefits Plan covers substantially all of its current retired employees. Employees hired after March 31, 2007 are not eligible to participate in this plan. Coverage includes healthcare and life insurance. Accrued retirement benefit costs are recorded each year. Regulatory Treatment of Over/Underfunded Retirement Obligations Because the Company is subject to regulation in the states in which it operates, it is required to maintain its accounts in accordance with the regulatory authority’s rules and guidelines, which may differ from other authoritative accounting pronouncements. In those instances, the Company follows the guidance of ASC 980, Regulated Operations. Based on prior regulatory practice, and in accordance with the guidance in ASC 980, Regulated Operations, the Company records underfunded Pension Plan and Other Benefits Plan obligation costs, which otherwise would be recognized in Other Comprehensive Income under ASC 715, Compensation – Retirement Benefits, as a Regulatory Asset, and expects to recover those costs in rates charged to customers. The Company uses a December 31 measurement date for all of its employee benefit plans. The tables below set forth information relating to the Company’s Pension Plan and Other Benefits Plan for 2016 and 2015.
|  | (Thousands of Dollars)
|  | Pension Plan |  | Other Benefits Plan
|  | December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Change in Projected Benefit Obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 72,542 |  |  | $ | 75,043 |  |  | $ | 46,249 |  |  | $ | 49,578 |
Service Cost |  |  | 2,308 |  |  |  | 2,558 |  |  |  | 1,099 |  |  |  | 1,373 |
Interest Cost |  |  | 3,046 |  |  |  | 2,894 |  |  |  | 1,952 |  |  |  | 1,921 |
Actuarial (Gain) Loss |  |  | 2,810 |  |  |  | (5,915 | ) |  |  | 141 |  |  |  | (6,062 | )
Benefits Paid |  |  | (2,105 | ) |  |  | (2,038 | ) |  |  | (553 | ) |  |  | (561 | )
Ending Balance |  | $ | 78,601 |  |  | $ | 72,542 |  |  | $ | 48,888 |  |  | $ | 46,249 |
|  | (Thousands of Dollars)
|  | Pension Plan |  | Other Benefits Plan
|  | December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Change in Fair Value of Plan Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 52,931 |  |  | $ | 51,623 |  |  | $ | 29,018 |  |  | $ | 27,535 |
Actual Return on Plan Assets |  |  | 4,909 |  |  |  | 11 |  |  |  | 1,591 |  |  |  | 350 |
Employer Contributions |  |  | 3,635 |  |  |  | 3,335 |  |  |  | 1,551 |  |  |  | 1,694 |
Benefits Paid |  |  | (2,105 | ) |  |  | (2,038 | ) |  |  | (553 | ) |  |  | (561 | )
Ending Balance |  | $ | 59,370 |  |  | $ | 52,931 |  |  | $ | 31,607 |  |  | $ | 29,018 |
Funded Status |  | $ | (19,231 | ) |  | $ | (19,611 | ) |  | $ | (17,281 | ) |  | $ | (17,231 | )
|  | (Thousands of Dollars)
|  | Pension Plan |  | Other Benefits Plan
|  | December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Amounts Recognized in the Consolidated Balance Sheets consist of : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current Liability |  |  | 373 |  |  |  | 327 |  |  |  | — |  |  |  | — |
Noncurrent Liability |  |  | 18,858 |  |  |  | 19,284 |  |  |  | 17,281 |  |  |  | 17,231 |
Net Liability Recognized |  | $ | 19,231 |  |  | $ | 19,611 |  |  | $ | 17,281 |  |  | $ | 17,231 |
|  | (Thousands of Dollars)
|  | Pension Plan |  | Other Benefits Plan
|  | Years Ended December 31,
|  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Components of Net Periodic Benefit Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service Cost |  | $ | 2,308 |  |  | $ | 2,558 |  |  | $ | 1,894 |  |  | $ | 1,099 |  |  | $ | 1,373 |  |  | $ | 1,032 |
Interest Cost |  |  | 3,046 |  |  |  | 2,894 |  |  |  | 2,682 |  |  |  | 1,952 |  |  |  | 1,921 |  |  |  | 1,792 |
Expected Return on Plan Assets |  |  | (4,014 | ) |  |  | (3,919 | ) |  |  | (3,534 | ) |  |  | (2,213 | ) |  |  | (2,107 | ) |  |  | (1,937 | )
Amortization of Net Actuarial Loss |  |  | 1,426 |  |  |  | 1,645 |  |  |  | 416 |  |  |  | 1,773 |  |  |  | 2,261 |  |  |  | 1,413 |
Amortization of Prior Service Cost/(Credit) |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | (1,728 | ) |  |  | (1,728 | ) |  |  | (1,728 | )
Net Periodic Benefit Cost |  | $ | 2,766 |  |  | $ | 3,178 |  |  | $ | 1,460 |  |  | $ | 883 |  |  | $ | 1,720 |  |  | $ | 572 |
Amounts that are expected to be amortized from Regulatory Assets into Net Periodic Benefit Cost in 2017 are as follows:
|  | (Thousands of Dollars)
|  | Pension Plan |  | Other Benefits Plan
Actuarial Loss |  | $ | 1,566 |  |  | $ | 1,781 |
Prior Service Credit |  |  | — |  |  |  | (1,728 | )
The discount rate and compensation increase rate for determining our postretirement benefit plans’ benefit obligations and costs as of December 31, 2016, 2015 and 2014, respectively, are as follows:
|  | Pension Plan |  |  | Other Benefits Plan |
|  | 2016 |  |  | 2015 |  |  | 2014 |  |  | 2016 |  |  | 2015 |  |  | 2014 |
Weighted Average Assumptions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected Return on Plan Assets |  |  | 7.50 | % |  |  | 7.50 | % |  |  | 7.50 | % |  |  | 7.50 | % |  |  | 7.50 | % |  |  | 7.50 | %
Discount Rate for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit Obligation |  |  | 4.06 | % |  |  | 4.26 | % |  |  | 3.91 | % |  |  | 4.06 | % |  |  | 4.26 | % |  |  | 3.91 | %
Benefit Cost |  |  | 4.26 | % |  |  | 3.91 | % |  |  | 4.87 | % |  |  | 4.26 | % |  |  | 3.91 | % |  |  | 4.87 | %
Compensation Increase for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit Obligation |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | %
Benefit Cost |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | %
The compensation increase assumption for the Other Benefits Plan is attributable to life insurance provided to qualifying employees upon their retirement. The insurance coverage will be determined based on the employee’s base compensation as of their retirement date. The Company utilizes the Society of Actuaries’ mortality table (RP 2014) (Mortality Improvement Scale MP2016 for the 2016 valuation). For the 2016 valuation, costs and obligations for our Other Benefits Plan assumed a 9.0% annual rate of increase in the per capita cost of covered healthcare benefits in 2017 with the annual rate of increase declining 1.0% per year for 2018-2020 and 0.5% per year for 2021-2022, resulting in an annual rate of increase in the per capita cost of covered healthcare benefits of 5% by year 2022. A one-percentage point change in assumed healthcare cost trend rates would have the following effects on the Other Benefits Plan:
|  | (Thousands of Dollars) |
|  | 1 Percentage Point |
|  | Increase |  |  | Decrease |
Effect on Current Year’s Service and Interest Cost |  | $ | 673 |  |  | $ | (514 | )
Effect on Projected Benefit Obligation |  | $ | 8,410 |  |  | $ | (6,633 | )
The following benefit payments, which reflect expected future service, are expected to be paid:
|  | (Thousands of Dollars) |
Year |  | Pension Plan |  |  | Other Benefits Plan |
2017 |  | $ | 2,391 |  |  | $ | 1,030 |
2018 |  |  | 2,440 |  |  |  | 1,277 |
2019 |  |  | 2,455 |  |  |  | 1,497 |
2020 |  |  | 2,847 |  |  |  | 1,641 |
2021 |  |  | 3,046 |  |  |  | 1,851 |
2022-2026 |  |  | 22,178 |  |  |  | 11,278 |
Totals |  | $ | 35,357 |  |  | $ | 18,574 |
Benefit Plans Assets The allocation of plan assets at December 31, 2016 and 2015 by asset category is as follows:
|  | Pension Plan |  |  | Other Benefits Plan |
Asset Category |  | 2016 |  |  | 2015 |  |  | Target |  |  | 2016 |  |  | 2015 |  |  | Target |
Equity Securities |  |  | 59.7 | % |  |  | 59.1 | % |  |  | 55 | % |  |  | 54.1 | % |  |  | 50.0 | % |  |  | 43 | %
Debt Securities |  |  | 36.6 | % |  |  | 37.8 | % |  |  | 38 | % |  |  | 43.3 | % |  |  | 47.4 | % |  |  | 50 | %
Cash |  |  | 1.0 | % |  |  | 1.3 | % |  |  | 2 | % |  |  | 2.6 | % |  |  | 2.4 | % |  |  | 2 | %
Real Estate/Commodities |  |  | 2.7 | % |  |  | 1.8 | % |  |  | 5 | % |  |  | 0.0 | % |  |  | 0.2 | % |  |  | 5 | %
Total |  |  | 100.0 | % |  |  | 100.0 | % |  |  |  |  |  |  | 100.0 | % |  |  | 100.0 | % |  |  |  |
Two outside investment firms each manage a portion of the Pension Plan asset portfolio. One of those investment firms also manages the Other Benefits Plan asset portfolio. Quarterly meetings are held between the Company’s Pension Committee of the Board of Directors and the investment managers to review their performance and asset allocation. If the actual asset allocation is outside the targeted range, the Pension Committee reviews current market conditions and advice provided by the investment managers to determine the appropriateness of rebalancing the portfolio. The objective of the Company is to maximize the long-term return on retirement plan assets, relative to a reasonable level of risk, maintain a diversified investment portfolio and maintain compliance with the Employee Retirement Income Security Act of 1974. The expected long-term rate of return is based on the various asset categories in which plan assets are invested and the current expectations and historical performance for these categories. Equity securities include Middlesex common stock in the amounts of $0.8 million (1.4% of total Pension Plan assets) and $1.0 million (2.0 % of total Pension Plan assets) as of December 31, 2016 and 2015, respectively. Fair Value Measurements Accounting guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:
| · | Level 1 – Inputs to the valuation methodology are unadjusted quoted market prices for identical assets or liabilities in accessible active markets.
| · | Level 2 – Inputs to the valuation methodology that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. If the asset or liability has a specified contractual term, the Level 2 input must be observable for substantially the full term of the asset or liability.
| · | Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
Certain investments in cash and cash equivalents, equity securities, and commodities are valued based on quoted market prices in active markets and are classified as Level 1 investments. Certain investments in cash and cash equivalents, equity securities and fixed income securities are valued using prices received from pricing vendors that utilize observable inputs and are therefore classified as Level 2 investments. The following tables present Middlesex’s Pension Plan assets measured and recorded at fair value within the fair value hierarchy:
|  | (Thousands of Dollars)
|  | As of December 31, 2016
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Mutual Funds |  | $ | 49,439 |  |  | $ | — |  |  | $ | — |  |  | $ | 49,439 |
Money Market Funds |  |  | 648 |  |  |  | — |  |  |  | — |  |  |  | 648 |
Common Equity Securities |  |  | 9,283 |  |  |  | — |  |  |  | — |  |  |  | 9,283 |
Total Investments |  | $ | 59,370 |  |  | $ | — |  |  | $ | — |  |  | $ | 59,370 |
|  | (Thousands of Dollars)
|  | As of December 31, 2015
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Mutual Funds |  | $ | 43,623 |  |  | $ | — |  |  | $ | — |  |  | $ | 43,623 |
Money Market Funds |  |  | 652 |  |  |  | — |  |  |  | — |  |  |  | 652 |
Common Equity Securities |  |  | 8,656 |  |  |  | — |  |  |  | — |  |  |  | 8,656 |
Total Investments |  | $ | 52,931 |  |  | $ | — |  |  | $ | — |  |  | $ | 52,931 |
The following tables present Middlesex’s Other Benefits Plan assets measured and recorded at fair value within the fair value hierarchy:
|  | (Thousands of Dollars)
|  | As of December 31, 2016
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Mutual Funds |  | $ | 17,096 |  |  | $ | — |  |  | $ | — |  |  | $ | 17,096 |
Money Market Funds |  |  | 826 |  |  |  | — |  |  |  | — |  |  |  | 826 |
Preferred Equity Securities |  |  | 108 |  |  |  | — |  |  |  | — |  |  |  | 108 |
Agency/US/State/Municipal Debt |  |  | — |  |  |  | 13,577 |  |  |  | — |  |  |  | 13,577 |
Total Investments |  | $ | 18,030 |  |  | $ | 13,577 |  |  | $ | — |  |  | $ | 31,607 |
|  | (Thousands of Dollars)
|  | As of December 31, 2015
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Mutual Funds |  | $ | 14,572 |  |  | $ | — |  |  | $ | — |  |  | $ | 14,572 |
Money Markey Funds |  |  | 688 |  |  |  | — |  |  |  | — |  |  |  | 688 |
Preferred Equity Securities |  |  | 224 |  |  |  | — |  |  |  | — |  |  |  | 224 |
Agency/US/State/Municipal Debt |  |  | — |  |  |  | 13,534 |  |  |  | — |  |  |  | 13,534 |
Total Investments |  | $ | 15,484 |  |  | $ | 13,534 |  |  | $ | — |  |  | $ | 29,018 |
Benefit Plans Contributions For the Pension Plan, Middlesex made total cash contributions of $3.6 million in 2016 and expects to make approximately $3.3 million of cash contributions in 2017. For the Other Benefits Plan, Middlesex made total cash contributions of $1.6 million in 2016 and expects to make approximately $1.6 million of cash contributions in 2017. 401(k) Plan The Company maintains a 401(k) defined contribution plan, which covers substantially all employees with more than 1,000 hours of service. Under the terms of the Plan, the Company matches 100% of a participant’s contributions, which do not exceed 1% of a participant’s compensation, plus 50% of a participant’s contributions exceeding 1%, but not more than 6%. The Company’s matching contribution was $0.6 million for each of the years ended December 31, 2016, 2015 and 2014. For those employees hired after March 31, 2007, and still actively employed on December 31, 2016, the Company approved, and will fund, a discretionary contribution of $0.4 million which was based on 5.0% of eligible 2016 compensation. For the years ended December 31, 2015 and 2014, the Company made discretionary contributions of $0.4 million and $0.3 million, respectively, for qualifying employees. Stock-Based Compensation The Company has a stock compensation plan for certain management employees (the 2008 Restricted Stock Plan). The Company maintains an escrow account for 0.1 million shares of the Company's common stock for the 2008 Restricted Stock Plan. Shares issued in connection with the 2008 Restricted Stock Plan are subject to forfeiture by the employee in the event of termination of employment within five years of the award other than as a result of normal retirement, death, disability or change in control. The maximum number of shares authorized for grant under the 2008 Restricted Stock Plan is 0.3 million shares, for which 0.1 million remain as unissued shares. The Company recognizes compensation expense at fair value for the 2008 Restricted Stock Plan awards in accordance with ASC 718, Compensation – Stock Compensation. Compensation expense is determined by the market value of the stock on the date of the award and is being amortized over a five-year period. The following table presents information on the 2008 Restricted Stock Plan:
|  | Shares (thousands) |  | Unearned Compensation (thousands) |  | Weighted Average Grant Price
Balance, January 1, 2014 |  |  | 117 |  |  | $ | 1,216 |  |  |  |  |
Granted |  |  | 33 |  |  |  | 711 |  |  | $ | 21.46 |
Vested |  |  | (22 | ) |  |  | — |  |  |  |  |
Forfeited |  |  | (1 | ) |  |  | (10 | ) |  |  |  |
Amortization of Compensation Expense |  |  | — |  |  |  | (434 | ) |  |  |  |
Balance, December 31, 2014 |  |  | 127 |  |  | $ | 1,483 |  |  |  |  |
Granted |  |  | 33 |  |  |  | 741 |  |  | $ | 22.65 |
Vested |  |  | (12 | ) |  |  | — |  |  |  |  |
Forfeited |  |  | — |  |  |  | — |  |  |  |  |
Amortization of Compensation Expense |  |  | — |  |  |  | (528 | ) |  |  |  |
Balance, December 31, 2015 |  |  | 148 |  |  | $ | 1,696 |  |  |  |  |
Granted |  |  | 24 |  |  |  | 750 |  |  | $ | 30.85 |
Vested |  |  | (25 | ) |  |  | — |  |  |  |  |
Forfeited |  |  | — |  |  |  | — |  |  |  |  |
Amortization of Compensation Expense |  |  | — |  |  |  | (682 | ) |  |  |  |
Balance, December 31, 2016 |  |  | 147 |  |  | $ | 1,764 |  |  |  |  |
The fair value of vested restricted shares was $0.9 million and $0.3 million as of December 31, 2016 and 2015, respectively.

X
- References No definition available. + Details
Name: | us-gaap_CompensationAndRetirementDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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=65877416&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=65897934&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=66047640&loc=d3e39622-114963 + Details
Name: | us-gaap_PensionAndOtherPostretirementBenefitsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration