Business Segments

9 Months Ended

Sep. 30, 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’s subsidiary, DP&L.  The Competitive Retail segment consists of DPL’s wholly 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 generated at seven coal-fired power plants and DP&L distributes power to more than 515,000 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 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 274,000 customers located throughout Ohio and in Illinois.  This number includes 117,000 customers in Northern Illinois of MC Squared, a Chicago-based retail electricity supplier.  The Competitive Retail segment’s electric energy used to meet its sales obligations was purchased from DP&L.  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 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 September 30, 2014
Revenues from external customers	$	329.3	$	141.3	$	8.6	$	-	$	479.2
Intersegment revenues		125.6		-		3.0		(128.6)		-
Total revenues		454.9		141.3		11.6		(128.6)		479.2
Fuel		84.5		-		0.6		-		85.1
Purchased power		152.4		128.7		0.4		(127.8)		153.7
Amortization of intangibles		-		-		0.3		-		0.3
Gross margin	$	218.0	$	12.6	$	10.3	$	(0.8)	$	240.1
Depreciation and amortization	$	36.4	$	0.3	$	(2.2)	$	-	$	34.5
Interest expense		9.4		0.1		23.8		(0.2)		33.1
Income tax expense (benefit)		13.1		1.5		(55.6)		-		(41.0)
Net income / (loss)		53.2		3.0		42.2		-		98.4
Cash capital expenditures	$	25.6	$	0.5	$	0.3	$	-	$	26.4

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the three months ended September 30, 2013
Revenues from external customers	$	289.3	$	139.7	$	12.2	$	-	$	441.2
Intersegment revenues		123.8		-		1.0		(124.8)		-
Total revenues		413.1		139.7		13.2		(124.8)		441.2
Fuel		96.7		-		2.9		0.1		99.7
Purchased power		110.4		125.6		0.9		(123.8)		113.1
Amortization of intangibles		-		-		1.8		-		1.8
Gross margin	$	206.0	$	14.1	$	7.6	$	(1.1)	$	226.6
Depreciation and amortization	$	35.8	$	0.1	$	(2.0)	$	-	$	33.9
Interest expense		10.4		0.1		20.6		(0.1)		31.0
Income tax expense (benefit)		13.2		1.4		(3.3)		-		11.3
Net income / (loss)		40.9		2.5		(10.2)		-		33.2
Cash capital expenditures	$	28.3	$	-	$	1.0	$	-	$	29.3

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the nine months ended September 30, 2014
Revenues from external customers	$	875.9	$	414.9	$	38.8	$	-	$	1,329.6
Intersegment revenues		376.6		-		4.1		(380.7)		-
Total revenues		1,252.5		414.9		42.9		(380.7)		1,329.6
Fuel		227.4		-		8.5		-		235.9
Purchased power		457.3		380.0		7.1		(378.2)		466.2
Amortization of intangibles		-		-		0.9		-		0.9
Gross margin	$	567.8	$	34.9	$	26.4	$	(2.5)	$	626.6
Depreciation and amortization	$	108.2	$	0.6	$	(5.1)	$	-	$	103.7
Goodwill impairment		-		-		135.8		-		135.8
Fixed-asset impairment		-		-		11.5		-		11.5
Interest expense		25.5		0.3		70.5		(0.5)		95.8
Income tax expense (benefit)		23.1		2.1		4.5		-		29.7
Net income / (loss)		76.5		4.2		(197.5)		-		(116.8)
Cash capital expenditures	$	78.6	$	0.5	$	2.5	$	-	$	81.6
At September 30, 2014
Total assets	$	3,245.3	$	100.3	$	1,536.9	$	(1,339.9)	$	3,542.6

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the nine months ended September 30, 2013
Revenues from external customers	$	805.5	$	381.9	$	23.3	$	-	$	1,210.7
Intersegment revenues		336.0		-		3.0		(339.0)		-
Total revenues		1,141.5		381.9		26.3		(339.0)		1,210.7
Fuel		269.6		-		4.2		0.2		274.0
Purchased power		276.7		340.8		1.5		(336.4)		282.6
Amortization of intangibles		-		-		5.3		-		5.3
Gross margin	$	595.2	$	41.1	$	15.3	$	(2.8)	$	648.8
Depreciation and amortization	$	104.5	$	0.4	$	(5.9)	$	-	$	99.0
Interest expense		29.7		0.4		61.5		(0.5)		91.1
Income tax expense (benefit)		29.2		4.3		(12.7)		-		20.8
Net income / (loss)		101.4		7.7		(33.1)		-		76.0
Cash capital expenditures	$	95.1	$	-	$	1.4	$	-	$	96.5
At December 31, 2013
Total assets	$	3,313.1	$	105.0	$	1,675.8	$	(1,372.4)	$	3,721.5