Business Segments

3 Months Ended

Mar. 31, 2014

Business Segments [Abstract]

Business Segments

11.  Business Segments 

DPL operates through two segments; Utility and Competitive Retail.  The Utility segment consists of the operations of DPL’swholly owned subsidiary,  DP&L.  The Competitive Retail segment consists of DPL’swholly owned subsidiaryDPLER, including DPLER’s wholly owned subsidiary, MC Squared.  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 sold to DP&L’s standard service offer customers is primarily generatedat seven coal-fired power plants and DP&L distributes power to more than 516,000 retail customers who are located in a 6,000 square mile area of West Central Ohio.  During 2014, DP&L is required to source 10% of the generation for its standard service offer customers through a competitive bid process.  DP&L also sells electricity to DPLER and any excess energy and capacity is sold into the PJM 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 comprised of the DPLER and MC Squared 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 322,000 customers located throughout Ohio and in Illinois.  This number includes 149,000 customers in Northern Illinois of MC Squared, a Chicago-based retail electricity supplier.  Due to increased competition in Ohio, 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.  The majority of intercompany sales from DP&L to DPLER are based on fixed-price contracts for each DPLER customer; the price approximates market prices for wholesale power at the inception of each customer’s contract.  The Competitive Retail segment has no transmission or generation assets.  The operations of the Competitive Retail segment are not subject to cost-of-service rate regulation by federal or state regulators.

Included in the “Other” column in the following tables are other businesses that do not meet the GAAP requirements for disclosure as reportable segments as well as certain corporate costs including interest expense on DPL’s and DP&L’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:

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the three months ended  March 31, 2014
Revenues from external customers	$	292.6	$	148.4	$	19.2	$	0.1	$	460.3
Intersegment revenues		139.5		-		1.0		(140.5)		-
Total revenues		432.1		148.4		20.2		(140.4)		460.3
Fuel		84.3		-		5.7		-		90.0
Purchased power		168.0		140.2		5.4		(139.5)		174.1
Amortization of intangibles		-		-		0.3		-		0.3
Gross margin	$	179.8	$	8.2	$	8.8	$	(0.9)	$	195.9
Depreciation and amortization	$	36.5	$	0.1	$	(1.4)	$	0.1	$	35.3
Goodwill impairment		-		-		135.8		-		135.8
Fixed-asset impairment		-		-		11.5		-		11.5
Interest expense		7.8		0.1		23.1		(0.2)		30.8
Income tax expense (benefit)		4.0		(0.7)		95.4		0.1		98.8
Net income / (loss)		9.4		(1.4)		(257.0)		-		(249.0)
Cash capital expenditures	$	27.4	$	-	$	1.0	$	-	$	28.4
At March 31, 2014
Total assets	$	3,343.1	$	105.7	$	1,531.8	$	(1,389.3)	$	3,591.3

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the three months ended  March 31, 2013
Revenues from external customers	$	271.8	$	117.3	$	5.5	$	-	$	394.6
Intersegment revenues		104.7		-		0.9		(105.6)		-
Total revenues		376.5		117.3		6.4		(105.6)		394.6
Fuel		88.1		-		0.5		-		88.6
Purchased power		94.1		105.7		0.2		(104.7)		95.3
Amortization of intangibles		-		-		1.8		-		1.8
Gross margin	$	194.3	$	11.6	$	3.9	$	(0.9)	$	208.9
Depreciation and amortization	$	33.6	$	0.1	$	(1.9)	$	-	$	31.8
Interest expense		9.3		0.2		21.2		(0.2)		30.5
Income tax expense (benefit)		9.6		0.9		(4.5)		-		6.0
Net income / (loss)		30.2		1.6		(11.9)		-		19.9
Cash capital expenditures	$	33.6	$	-	$	0.2	$	-	$	33.8
At December 31, 2013
Total assets	$	3,313.1	$	105.0	$	1,675.8	$	(1,372.4)	$	3,721.5