Reliant FORM 10-K manual 2003 2002 2001 Post-retirement benefit cost, 2003 2002 Target Actual

The following details the net cost components, all related to continuing operations, and underlying assumptions of post-retirement benefits other than pensions for the years ended December 31:

		2003		2002		2001
Post-retirement benefit cost:
Service cost	$	9	$	10	$	13
Interest cost		40		37		36
Expected return on plan assets		(3)		(3)		(3)
Amortization		(3)		(3)		(5)
Settlements and curtailments		–		(9)		(21)
Net post-retirement benefit cost	$	43	$	32	$	20
Weighted-average assumptions used to determine benefit obligations as at December 31:
Discount rate		6.0%		6.8%		7.0%
Weighted-average assumptions used to determine net post-retirement benefit cost for years ended December 31:
Discount rate		6.8%		7.0%		7.5%
Expected rate of return on plan assets		8.0%		8.0%		8.0%
Weighted-average health care cost trend rate		8.5%		8.0%		7.3%
Weighted-average ultimate health care cost trend rate		4.8%		4.7%		5.1%
Year in which ultimate health care cost trend rate will be achieved		2010		2009		2005

Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A one percentage-point change in assumed health care cost trend rates would have the following effects for the years ended December 31:

		2003		2002		2001
Effect on aggregate of service and interest costs
1% increase	$	5	$	5	$	5
1% decrease	$	(4)	$	(4)	$	(4)
Effect on accumulated post-retirement benefit obligations
1% increase	$	66	$	57	$	56
1% decrease	$	(55)	$	(46)	$	(46)

The target allocation percentages and the year-end percentages based on actual asset balances of the defined benefit plans as of December 31 are as follows:

	2003		2002
	Target	Actual	Target	Actual
Debt instruments	39%	39%	39%	44%
Equity securities	61%	61%	61%	56%

The primary investment objective of the defined benefit plans is to invest in a cost effective manner which will provide sufficient funding for the liabilities of these plans. The defined benefit plans maintain a long-term perspective in regard to investment philosophy and return expectations which are reflective of the fact that the liabilities of the defined benefit plans mature over an extended period of time. The investments have risk characteristics consistent with underlying defined benefit plan demographics and liquidity requirements, and are consistent and compliant with all regulatory standards.

The primary investment performance objective is to obtain competitive rates of return on investments at or above their assigned benchmarks while minimizing risk and volatility by maintaining an appropriately diversified portfolio. The benchmarks selected are industry-standard and widely-accepted indices.

The primary method of managing risk within the portfolio is through diversification among and within asset categories, and through the utilization of a wide array of active and passive investment managers. Broadly, the assets are allocated between debt and equity instruments. Included within the debt instruments are government and corporate fixed income securities, money market securities, mortgage-backed securities and inflation indexed securities. Generally, these debt

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