Ownership of Coal-fired Facilities

12 Months Ended

Dec. 31, 2013

Note 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, 2013, DP&L had $24.0 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 the coal portion of our wholly-owned coal fired Hutchings Station at December 31, 2013, 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	$	2	$	1	$	-	No
Conesville Unit 4		16.5		129		24		-		-	Yes
East Bend Station		31.0		186		12		5		-	Yes
Killen Station		67.0		402		306		9		4	Yes
Miami Fort Units 7 and 8		36.0		368		212		13		1	Yes
Stuart Station		35.0		808		205		12		16	Yes
Zimmer Station		28.1		365		177		25		3	Yes
Transmission (at varying percentages)						41		4		-
Total				2,465	$	979	$	69	$	24

Wholly-owned production unit
Hutchings Station		100.0		-	$	-	$	-	$	-	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.

As part of a settlement with the USEPA regarding Hutchings Station, DP&L signed an Administrative Consent Order and a Consent Agreement and Final Order (CAFO) that was filed on September 26, 2013. Together, these two agreements resolved the opacity and particulate emissions NOV at the Hutchings Station and required that all six coal-fired units at Hutchings cease operating on coal by September 30, 2013, and included 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. We do not believe that any additional accruals are needed related to the Hutchings Station. A related agreement in the form of Administrative Findings and Order, also involving an immaterial penalty, was executed October 4, 2013, with Ohio’s Regional Air Pollution Control Agency, which resolves a separate but related NOV relating to a failed stack test in 2006. These agreements do not affect Hutchings unit 7, a small combustion turbine.

DP&L [Member]

Ownership of Coal-fired Facilities

Note 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, 2013, DP&L had $24.0 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 the coal portion of our wholly-owned coal fired Hutchings Station at December 31, 2013, 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	$	69	$	-	No
Conesville Unit 4		16.5		129		20		-		-	Yes
East Bend Station		31.0		186		-		-		-	Yes
Killen Station		67.0		402		622		303		4	Yes
Miami Fort Units 7 and 8		36.0		368		361		152		1	Yes
Stuart Station		35.0		808		744		307		16	Yes
Zimmer Station		28.1		365		1,098		657		3	Yes
Transmission (at varying percentages)						98		60		-
Total				2,465	$	3,019	$	1,548	$	24

Wholly-owned production unit
Hutchings Station		100.0		-	$	-	$	-	$	-	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.

As part of a settlement with the USEPA regarding Hutchings Station, DP&L signed an Administrative Consent Order and a Consent Agreement and Final Order (CAFO) that was filed on September 26, 2013. Together, these two agreements resolved the opacity and particulate emissions NOV at the Hutchings Station and required that all six coal-fired units at Hutchings cease operating on coal by September 30, 2013, and included 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. We do not believe that any additional accruals are needed related to the Hutchings Station. These agreements do not affect Hutchings unit 7, a small combustion turbine.

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 fair market value different than DP&L’s carrying value. Since DP&L did not apply push down accounting, this valuation did not affect the carrying value of these stations’ valuation at DP&L. In the fourth quarter of 2013, DP&L performed an impairment review of its stations and recorded an impairment of $86.0 million related to two of its stations, Conesville and East Bend. 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 these impairments.