Ownership of Coal-fired Facilities

12 Months Ended

Dec. 31, 2012

5. Ownership of Coal-fired Facilities

DP&L and certain other Ohio utilities have undivided ownership interests in seven coal-fired electric generating facilities and numerous transmission facilities. Certain expenses, primarily fuel costs for the generating units, are allocated to the owners based on their energy usage. The remaining expenses, investments in fuel inventory, plant materials and operating supplies, and capital additions are allocated to the owners in accordance with their respective ownership interests. As of December 31, 2012, DP&L had $36.0 million of construction work in process at such facilities. DP&L’s share of the operating cost of such facilities is included within the corresponding line in the Statements of Results of Operations and DP&L’s share of the investment in the facilities is included within Total net property, plant and equipment in the Balance Sheets. Each joint owner provides their own financing for their share of the operations and capital expenditures of the jointly-owned station.

DP&L’s undivided ownership interest in such facilities as well as our wholly-owned coal fired Hutchings Station at December 31, 2012, is as follows:



	DP&L Share				DP&L Investment (adjusted to fair value as of Merger date)
	Ownership %		Summer Production Capacity (MW)		Gross Plant In Service ($ in millions)		Accumulated Depreciation ($ in millions)		Construction Work in Process ($ in millions)		SCR and FGD Equipment Installed and in Service (Yes/No)
Jointly-owned production units
Beckjord Unit 6		50.0		207	$	-	$	-	$	-	No
Conesville Unit 4		16.5		129		41		3		11	Yes
East Bend Station		31.0		186		8		2		3	Yes
Killen Station		67.0		402		299		-		5	Yes
Miami Fort Units 7 and 8		36.0		368		213		7		3	Yes
Stuart Station		35.0		808		200		6		12	Yes
Zimmer Station		28.1		365		169		12		2	Yes
Transmission (at varying percentages)						39		3		-
Total				2,465	$	969	$	33	$	36

Wholly-owned production unit
Hutchings Station		100.0		365	$	-	$	-	$	-	No

Currently, our coal-fired generation units at Hutchings and Beckjord do not have the SCR and FGD emission-control equipment installed. DP&L owns 100% of the Hutchings Station and has a 50% interest in Beckjord Unit 6. On July 15, 2011, Duke Energy, a co-owner at the Beckjord Unit 6 facility, filed their Long-term Forecast Report with the PUCO. The plan indicated that Duke Energy plans to cease production at the Beckjord Station, including our commonly owned Unit 6, in December 2014. This was followed by a notification by the joint owners of Beckjord Unit 6 to PJM, dated April 12, 2012, of a planned June 1, 2015 deactivation of this unit. Beckjord Unit 6 was valued at zero at the Merger date.

DP&L has informed PJM that Hutchings Unit 4 has incurred damage to a rotor and will be deactivated June 1, 2013. In addition, DP&L has notified PJM that the remaining units at Hutchings will no longer operate after May 2013 and will be deactivated on June 1, 2015. The decision to deactivate these units has been made because these units are not equipped with the advanced environmental control technologies needed to comply with the MACT standard, which was renamed MATS (Mercury Air Toxics Standard) when the final rule was issued on December 16, 2011. Hutchings was valued at zero at the Merger date. We do not believe that any additional accruals are needed related to the Hutchings Station.

DP&L [Member]

Ownership of Coal-fired Facilities

5. Ownership of Coal-fired Facilities

DP&L’s undivided ownership interest in such facilities as well as our wholly-owned coal fired Hutchings Station at December 31, 2012, is as follows:



	DP&L Share				DP&L Investment
	Ownership %		Summer Production Capacity (MW)		Gross Plant In Service ($ in millions)		Accumulated Depreciation ($ in millions)		Construction Work in Process ($ in millions)		SCR and FGD Equipment Installed and in Service (Yes/No)
Jointly-owned production units
Beckjord Unit 6		50.0		207	$	76	$	64	$	-	No
Conesville Unit 4		16.5		129		18		1		11	Yes
East Bend Station		31.0		186		208		136		3	Yes
Killen Station		67.0		402		617		299		5	Yes
Miami Fort Units 7 and 8		36.0		368		363		147		3	Yes
Stuart Station		35.0		808		744		294		12	Yes
Zimmer Station		28.1		365		1,099		642		2	Yes
Transmission (at varying percentages)						96		59		-
Total				2,465	$	3,221	$	1,642	$	36

Wholly-owned production unit
Hutchings Station		100.0		365	$	-	$	-	$	-	No

Currently, our coal-fired electric generation units at Hutchings and Beckjord do not have the SCR and FGD emission-control equipment installed. DP&L owns 100% of the Hutchings Station and has a 50% interest in Beckjord Unit 6. On July 15, 2011, Duke Energy, a co-owner at the Beckjord Unit 6 facility, filed their Long-term Forecast Report with the PUCO. The plan indicated that Duke Energy plans to cease production at the Beckjord Station, including our commonly owned Unit 6, in December 2014. This was followed by a notification by the joint owners of Beckjord Unit 6 to PJM, dated April 12, 2012, of a planned June 1, 2015 deactivation of this unit. We are depreciating Unit 6 through December 2014 and do not believe that any additional accruals or impairment charges are needed as a result of this decision.

DP&L has informed PJM that Hutchings Unit 4 has incurred damage to a rotor and will be deactivated June 1, 2014. In addition, DP&L has notified PJM that the remaining units at Hutchings will no longer operate after May 2013 and will be deactivated on June 1, 2015. The decision to deactivate these units has been made because these units are not equipped with the advanced environmental control technologies needed to comply with the MACT standard, which was renamed MATS (Mercury Air Toxics Standard) when the final rule was issued on December 16, 2011. We do not believe that any additional accruals are needed related to the Hutchings Station.

As part of the provisional DPL purchase accounting adjustments related to the Merger, four stations (Beckjord, Conesville, East Bend and Hutchings) had future expected cash flows that, when discounted, produced a zero fair market value. Since DP&L did not apply push down accounting, this valuation did not affect the book value of these stations’ valuation at DP&L. In the third quarter of 2012, DP&L performed an impairment review of its stations, and recorded an impairment of $80.8 million related to two of the stations, Conesville and Hutchings. See Note 15 for more information on this impairment.