NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  The following table provides the components of the net periodic benefit costs for the years ended December 31, 2013 and 2012 for the post-retirement and post-employment plans: Year ended December 31 (millions of Canadian dollars) 2013 2012 Current service cost, net of employee contributions  40 30 Interest cost  63 63 Actuarial loss amortization  27 8 Prior service cost amortization  3 3 Net periodic benefit costs  133 104 Charged to results of operations  58 48 Assumptions The measurement of the obligations of the Plans and the costs of providing benefits under the Plans involves various factors, including the  development of valuation assumptions and accounting policy elections. When developing the required assumptions, the Company considers  historical information as well as future expectations. The measurement of benefit obligations and costs is impacted by several assumptions  including the discount rate applied to benefit obligations, the long-term expected rate of return on plan assets, Hydro One’s expected level  of contributions to the Plans, the incidence of mortality, the expected remaining service period of plan participants, the level of compensation  and rate of compensation increases, employee age, length of service, and the anticipated rate of increase of health care costs, among other  factors. The impact of changes in assumptions used to measure the obligations of the Plans is generally recognized over the expected average  remaining service period of the plan participants. In selecting the expected rate of return on plan assets, Hydro One considers historical  economic indicators (including inflation and GDP growth) that impact asset returns, as well as expectations regarding future long-term capital  market performance, weighted by target asset class allocations. In general, equity securities, real estate and private equity investments are  forecasted to have higher returns than fixed income securities. The following weighted average assumptions were used to determine the benefit obligations at December 31, 2013 and 2012: Post-Retirement and Pension Benefits  Post-Employment Benefits  Year ended December 31 2013 2012 2013 2012 Significant assumptions: Weighted average discount rate  4.75% 4.25% 4.75% 4.25% Rate of compensation scale escalation (without merit)  2.50% 2.50% 2.50% 2.50% Rate of cost of living increase  2.00% 2.00% 2.00% 2.00% Rate of increase in health care cost trends 1 – – 4.39% 4.39% 1  6.81% per annum in 2014, grading down to 4.39% per annum in and after 2031 (2012 – 6.91% in 2013, grading down to 4.39% per annum in and after 2031) HYDRO ONE ANNUAL REPORT 2013 81