Table of Contents EL PASO ELECTRIC COMPANY NOTES TO FINANCIAL STATEMENTS The following are the weighted-average actuarial assumptions used to determine the accrued benefit obligations: (a) Service cost for 2019 and 2018 includes expenses of $181 and $204 thousand, respectively, for administrative and investment expenses paid from plan assets during the year. The changes in benefit obligations and plan assets recognized in other comprehensive income are presented below (in thousands): 105 December 31, 2019 2018 Discount rate at end of year 3.41 % 4.43 % Health care cost trend rates: Initial Pre-65 medical 5.75% 6.00% Post-65 medical 4.50 % 4.50 % Pre-65 drug 6.75% 7.00% Post-65 drug 7.00 % 8.50 % Ultimate 4.50% 4.50% Year ultimate reached (a) 2026 2026 Years Ended December 31, 2019 2018 2017 Service cost (a) $ 2,423 $ 2,795 $ 2,236 Interest cost 2,456 2,252 2,723 Expected return on plan assets (2,120 ) (2,435 ) (1,907 ) Amortization of: Prior service benefit (5,234 ) (6,151 ) (6,151 ) Net gain (2,377) (2,166) (1,678) Net periodic benefit cost $ (4,852 ) $ (5,705 ) $ (4,777 ) Years Ended December 31, 2019 2018 2017 Net gain $ (3,626 ) $ (3,863 ) $ (10,586 ) Amortization of: Prior service benefit 5,234 6,151 6,151 Net gain 2,377 2,166 1,678 Total recognized in other comprehensive income $ 3,985 $ 4,454 $ (2,757 ) (a) Pre-65 medical reaches the ultimate trend rate in 2025. Additionally, the Post-65 medical trend is assumed to be 4.50% for all years into the future. The Company reassesses various actuarial assumptions at least on an annual basis. The discount rate is reviewed and updated at each measurement date. The discount rate used to measure the fiscal year end obligation is based on a segmented spot rate yield curve that matches projected future payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. A 1% increase in the discount rate would decrease the December 31, 2019 accumulated post-retirement benefit obligation by 14.2%. A 1% decrease in the discount rate would increase the December 31, 2019 accumulated post-retirement benefit obligation by 18.4%. Net periodic benefit cost is made up of the components listed below (in thousands):