Business Segments

12 Months Ended

Dec. 31, 2012

Business Segments [Abstract]

Business Segments

18. Business Segments

DPL operates through two segments consisting of the operations of two of its wholly-owned subsidiaries, DP&L (Utility segment)and DPLER (Competitive Retail segment) and DPLER’s wholly-owned subsidiary, MC Squared (Competitive Retail segment).  This is how we view our business and make decisions on how to allocate resources and evaluate performance. 

The Utility segment is comprised of DP&L’s electric generation, transmission and distribution businesses which generate and sell electricity to residential, commercial, industrial and governmental customers.  Electricity for the segment’s 24 county service area is primarily generated at eight coal-fired electric generatingstations and is distributed to more than 513,000 retail customers who are located in a 6,000 square mile area of West Central Ohio.  DP&L also sells electricity to DPLER and any excess energy and capacity is sold into the wholesale market.  DP&L’s transmission and distribution businesses are subject to rate regulation by federal and state regulators while rates for its generation business are deemed competitive under Ohio law.

The Competitive Retail segment is DPLER’s and MC Squared’s competitive retail electric service businesses which sell retail electric energy under contract to residential, commercial, industrial and governmental customers who have selected DPLER or MC Squared as their alternative electric supplier.  The Competitive Retail segment sells electricity to approximately 198,000 customers currently located throughout Ohio and in Illinois.  In February 2011, DPLER purchased MC Squared, a Chicago-based retail electricity supplier, which served approximately 3,157 customers in Northern Illinois.  Due to increased competition in Ohio and Illinois, since 2010 we have increased the number of employees and resources assigned to manage the Competitive Retail segment and increased its marketing to customers. The Competitive Retail segment’s electric energy used to meet its sales obligations was purchased from DP&L and PJM.  During 2010, we implemented a new wholesale agreement between DP&L and DPLER.  Under this agreement, intercompany sales from DP&L to DPLER were based on the market prices for wholesale power.  In periods prior to 2010, DPLER’s purchases from DP&L were transacted at prices that approximated DPLER’s sales prices to its end-use retail customers.  The Competitive Retail segment has no transmission or generation assets.  DP&L started selling physical power to MC Squared during June 2012 and became their sole source of power in September, 2012.  The operations of the Competitive Retail segment are not subject to cost-of-service rate regulation by federal or state regulators.

Included within the “Other” column are other businesses that do not meet the GAAP requirements for disclosure as reportable segments as well as certain corporate costs which include interest expense on DPL’s debt.  

Management evaluates segment performance based on gross margin.  The accounting policies of the reportable segments are the same as those described in Note 1 – Overview and Summary of Significant Accounting Policies.  Intersegment sales and profits are eliminated in consolidation.

The following tables present financial information for each of DPL’s reportable business segments:

Successor
$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
Year ended December 31, 2012
Revenues from external customers	$	1,138.4	$	493.1	$	36.9	$	-	$	1,668.4
Intersegment revenues		393.4		-		3.4		(396.8)		-
Total revenues		1,531.8		493.1		40.3		(396.8)		1,668.4
Fuel		354.9		-		7.0		-		361.9
Purchased power		309.5		424.5		1.5		(393.4)		342.1
Amortization of intangibles		-		-		95.1		-		95.1
Gross margin (a)	$	867.4	$	68.6	$	(63.3)	$	(3.4)	$	869.3
Depreciation and amortization	$	141.3	$	0.4	$	(16.3)	$	-	$	125.4
Goodwill impairment (Note 19)	$	-	$	-	$	1,817.2	$	-	$	1,817.2
Fixed asset impairment	$	80.8	$	-	$	(80.8)	$	-	$	-
Interest expense	$	39.1	$	0.6	$	83.9	$	(0.7)	$	122.9
Income tax expense / (benefit)	$	55.1	$	18.1	$	(25.5)	$	-	$	47.7
Net income / (loss)	$	91.2	$	22.8	$	(1,725.4)	$	(118.4)	$	(1,729.8)
Cash capital expenditures	$	195.5	$	-	$	2.6	$	-	$	198.1
Total assets (end of year)	$	3,464.2	$	99.2	$	683.9	$	-	$	4,247.3

(a)For purposes of discussing operating results, we present and discuss gross margins. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information that is used by management to make decisions regarding our financial performance.

Successor
$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
November 28, 2011 through December 31, 2011
Revenues from external customers	$	116.2	$	38.2	$	2.5	$	-	$	156.9
Intersegment revenues		27.8		-		0.3		(28.1)		-
Total revenues		144.0		38.2		2.8		(28.1)		156.9
Fuel		34.5		-		1.3		-		35.8
Purchased power		31.0		33.4		-		(27.7)		36.7
Amortization of intangibles		-		-		11.6		-		11.6
Gross margin (a)	$	78.5	$	4.8	$	(10.1)	$	(0.4)	$	72.8
Depreciation and amortization	$	12.7	$	-	$	(1.1)	$	-	$	11.6
Interest expense	$	2.8	$	0.1	$	8.8	$	(0.2)	$	11.5
Income tax expense / (benefit)	$	5.8	$	1.1	$	(6.3)	$	-	$	0.6
Net income / (loss)	$	45.8	$	1.7	$	(53.7)	$	-	$	(6.2)
Cash capital expenditures	$	30.5	$	-	$	-	$	-	$	30.5
Total assets (end of year)	$	3,538.3	$	69.9	$	2,528.0	$	-	$	6,136.2

(a)For purposes of discussing operating results, we present and discuss gross margins. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information that is used by management to make decisions regarding our financial performance.

Predecessor
$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
January 1, 2011 through November 27, 2011
Revenues from external customers	$	1,234.5	$	387.2	$	49.2	$	-	$	1,670.9
Intersegment revenues		299.2		-		3.7		(302.9)		-
Total revenues		1,533.7		387.2		52.9		(302.9)		1,670.9
Fuel		346.1		-		9.7		-		355.8
Purchased power		370.6		330.5		2.7		(299.2)		404.6
Gross margin (a)	$	817.0	$	56.7	$	40.5	$	(3.7)	$	910.5
Depreciation and amortization	$	122.2	$	0.6	$	6.6	$	-	$	129.4
Interest expense	$	35.4	$	0.2	$	23.4	$	(0.3)	$	58.7
Income tax expense / (benefit)	$	98.4	$	16.7	$	(13.1)	$	-	$	102.0
Net income / (loss)	$	147.4	$	24.1	$	(21.0)	$	-	$	150.5
Cash capital expenditures	$	174.0	$	-	$	0.2	$	-	$	174.2

(a)For purposes of discussing operating results, we present and discuss gross margins. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information that is used by management to make decisions regarding our financial performance.

Predecessor
$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
Year ended December 31, 2010
Revenues from external customers	$	1,500.3	$	277.0	$	54.1	$	-	$	1,831.4
Intersegment revenues		238.5		-		4.5		(243.0)		-
Total revenues		1,738.8		277.0		58.6		(243.0)		1,831.4
Fuel		371.9		-		12.0		-		383.9
Purchased power		383.5		238.5		3.9		(238.5)		387.4
Gross margin (a)	$	983.4	$	38.5	$	42.7	$	(4.5)	$	1,060.1
Depreciation and amortization	$	130.7	$	0.2	$	8.5	$	-	$	139.4
Interest expense	$	37.1	$	-	$	33.5	$	-	$	70.6
Income tax expense / (benefit)	$	135.2	$	10.5	$	(2.7)	$	-	$	143.0
Net income / (loss)	$	277.7	$	18.8	$	(3.5)	$	(2.7)	$	290.3
Cash capital expenditures	$	148.2	$	-	$	3.2	$	-	$	151.4
Total assets (end of year)	$	3,475.4	$	35.7	$	302.2	$	-	$	3,813.3

(a)For purposes of discussing operating results, we present and discuss gross margins. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information that is used by management to make decisions regarding our financial performance.