Ownership of Coal-fired Facilities

9 Months Ended

Sep. 30, 2013

4. Ownership of Coal-fired Facilities

DP&L has undivided ownership interests in seven coal-fired electric generating facilities and numerous transmission facilities with certain other Ohio utilities. Certain expenses, primarily fuel costs for the generating units, are allocated to the owners based on the energy taken. 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. At September 30, 2013, DP&L had $18.0 million of construction work in process at such jointly owned facilities. DP&L’s share of the operating cost of such facilities is included within the corresponding line in the Condensed Consolidated 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 Condensed Consolidated Balance Sheets. Each joint owner provides their own financing for their share of the operations and capital expenditures of the jointly owned units and stations.

DP&L’s undivided ownership interest in such facilities as well as our wholly owned coal-fired Hutchings Station at September 30, 2013 is as follows:



	DP&L Share			DPL Carrying value
Jointly owned production units and stations:	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)

Beckjord Unit 6	50.0	207	$	2	$	1	$	-	No
Conesville Unit 4	16.5	129		52		2		-	Yes
East Bend Station	31.0	186		13		4		3	Yes
Killen Station	67.0	402		305		8		2	Yes
Miami Fort Units 7 and 8	36.0	368		212		11		-	Yes
Stuart Station	35.0	808		202		12		11	Yes
Zimmer Station	28.1	365		181		22		2	Yes
Transmission (at varying percentages)		n/a		41		4		-
Total		2,465	$	1,008	$	64	$	18

Wholly owned production station:

Hutchings Station	100.0	-	$	-	$	-	$	-	No

Currently, our coal-fired generation units at Hutchings and Beckjord do not have 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 Beckjord Unit 6, filed its Long-term Forecast Report with the PUCO. The plan indicated that Duke Energy plans to cease production at the Beckjord Station, including our jointly owned Unit 6, in December 2014. This was followed by a notification by the joint owners to PJM, dated April 12, 2012, of a planned June 1, 2015 deactivation of this station. Beckjord Unit 6 was valued at zero at the Merger date.

DP&L has informed PJM that Hutchings Unit 4 was deactivated on June 1, 2013. In addition, DP&L has notified PJM that the remaining coal-fired units at the Hutchings Station will be deactivated on June 1, 2015. The decision to deactivate these remaining coal-fired units has been made in part because these units are not equipped with the advanced environmental control technologies needed to comply with the MATS, and the expected cost of compliance with MATS for these units would exceed the expected return. Additionally, conversion of the coal-fired units to natural gas was investigated, but the cost of investment exceeded the expected return.

As part of a settlement with the USEPA, DP&L signed a Consent Agreement and Final Order (CAFO) that was filed on September 26, 2013. The CAFO resolves the opacity and particulate emissions NOV at the Hutchings Station and requires that all six coal-fired units at Hutchings cease operating on coal by September 30, 2013, and includes an immaterial penalty and the completion of a Supplemental Environmental Project of $0.2 million within one year. The units were disabled for coal operations prior to September 30, 2013. The removal of this capacity has been reflected in the table above.

DPL revalued DP&L’s investment in the above plants at the estimated fair value for each plant at the Merger date.

DP&L [Member]

Ownership of Coal-fired Facilities

4. Ownership of Coal-fired Facilities

DP&L has undivided ownership interests in seven coal-fired electric generating facilities and numerous transmission facilities with certain other Ohio utilities. Certain expenses, primarily fuel costs for the generating units, are allocated to the owners based on the energy taken. 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 September 30, 2013, DP&L had $18.0 million of construction work in process at such jointly owned facilities. DP&L’s share of the operating cost of such facilities is included within the corresponding line in the Condensed Statements of Results of Operations and DP&L’s share of the investment in the facilities is included within Total net property, plant & equipment in the Condensed Balance Sheets. Each joint owner provides their own financing for their share of the operations and capital expenditures of the jointly owned unit or station.

DP&L’s undivided ownership interest in such facilities as well as our wholly owned coal-fired Hutchings Station at September 30, 2013, is as follows:



	DP&L Share			DP&L Carrying value
Jointly owned production units and stations:	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)

Beckjord Unit 6	50.0	207	$	76	$	67	$	-	No
Conesville Unit 4	16.5	129		44		1		-	Yes
East Bend Station	31.0	186		210		139		3	Yes
Killen Station	67.0	402		624		303		2	Yes
Miami Fort Units 7 and 8	36.0	368		361		149		-	Yes
Stuart Station	35.0	808		744		305		11	Yes
Zimmer Station	28.1	365		1,098		652		2	Yes
Transmission (at varying percentages)				97		60		-
Total		2,465	$	3,254	$	1,676	$	18

Wholly owned production station:

Hutchings Station	100.0	-	$	-	$	-	$	-	No

Currently, our coal-fired generation units at Hutchings and Beckjord do not have 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 its Long-term Forecast Report with the PUCO. The plan indicated that Duke Energy plans to cease production at the Beckjord Station, including our jointly owned Unit 6, in December 2014. This was followed by a notification by the joint owners to PJM, dated April 12, 2012, of a planned June 1, 2015 deactivation of this unit.

As part of a settlement with the USEPA, DP&L signed a Consent Agreement and Final Order (CAFO) that was filed on September 26, 2013. The CAFO resolves the opacity and particulate emissions NOV at the Hutchings Station and requires that all six coal-fired units at Hutchings cease operating on coal by September 30, 2013, and include an immaterial penalty and the completion of a Supplemental Environmental Project of $0.2 million within one year. The units were disabled for coal operations prior to September 30, 2013. The removal of this capacity has been reflected in the table above.