Property, Plant and Equipment

12 Months Ended

Dec. 31, 2018

THE DAYTON POWER AND LIGHT COMPANY [Member]

Property, Plant and Equipment [Line Items]

Property, Plant and Equipment

The following is a summary of DP&L’s Property, plant and equipment with corresponding composite depreciation rates at December 31, 2018 and 2017:

	December 31, 2018			December 31, 2017
$ in millions			Composite Rate			Composite Rate (a)
Regulated:
Transmission	$	386.7	2.4%	$	414.6	2.4%
Distribution	1,796.4		3.2%	1,735.9		3.4%
General	30.9		3.6%	31.2		3.1%
Non-depreciable	60.4		N/A	64.6		N/A
Total regulated	2,274.4			2,246.3
Unregulated:
Other	—		N/A	0.2		2.7%
Non-depreciable	—		N/A	0.7		N/A
Total unregulated	—			0.9
Total property, plant and equipment in service	$	2,274.4	3.0%	$	2,247.2	3.4%

In June 2018, DP&L closed on a transmission asset transaction with Duke and AEP, where ownership stakes in certain previously co-owned transmission assets were exchanged to eliminate co-ownership. Each previously co-owned transmission asset became wholly-owned by one of DP&L, Duke or AEP after the transaction. This transaction also resulted in cash proceeds to DP&L of $10.6 million.

AROs

We recognize AROs in accordance with GAAP which requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time those obligations are incurred. Upon initial recognition of a legal liability, costs are capitalized as part of the related long-lived asset and depreciated over the useful life of the related asset. The DP&L AROs are for our retired Hutchings EGU and relate primarily to asbestos removal.

Estimating the amount and timing of future expenditures of this type requires significant judgment. Management routinely updates these estimates as additional information becomes available.

Changes in the Liability for Generation AROs

$ in millions
Balance at December 31, 2016	$	8.2
Calendar 2017
Accretion expense	0.1
Settlements	(0.3		)
Balance at December 31, 2017	8.0
Calendar 2018
Settlements (a)	(3.3		)
Balance at December 31, 2018	$	4.7

(a) Primarily includes settlement related to transfer of Beckjord Facility. See Note 15 – Dispositions for additional information.

See Note 5 – Fair Value for further discussion on ARO fair value measurements.

Asset Removal Costs

We continue to record costs of removal for our regulated transmission and distribution assets through our depreciation rates and recover those amounts in rates charged to our customers. There are no known legal AROs associated with these assets. We have recorded $139.1 million and $132.8 million in estimated costs of removal at

December 31, 2018 and 2017, respectively, as regulatory liabilities for our transmission and distribution property. These amounts represent the excess of the cumulative removal costs recorded through depreciation rates versus the cumulative removal costs actually incurred. See Note 3 – Regulatory Matters for additional information.

Changes in the Liability for Transmission and Distribution Asset Removal Costs

$ in millions
Balance at December 31, 2016	$	126.5
Calendar 2017
Additions	12.0
Settlements	(5.7		)
Balance at December 31, 2017	132.8
Calendar 2018
Additions	14.3
Settlements	(8.0		)
Balance at December 31, 2018	$	139.1