Business Segments

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Business Segments

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, which included, prior to its sale, DPLER’s wholly owned subsidiary, MC Squared. MC Squared was sold effective April 1, 2015. 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. DP&L generates electricity at five 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. DP&L also sells electricity to DPLER and to other Ohio utilities 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, prior to its sale, 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. As of June 30, 2015, the Competitive Retail segment sold electricity to approximately 133,000 customers located throughout Ohio. On April 1, 2015, DPLER closed on the sale of MC Squared. 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 June 30, 2015
Revenues from external customers	$	283.8	$	75.2		$	13.9		$	—		$	372.9
Intersegment revenues	68.3		—			1.3			(69.6		)	—
Total revenues	352.1		75.2			15.2			(69.6		)	372.9
Fuel	50.6		—			3.8			—			54.4
Purchased power	120.1		68.7			0.6			(68.8		)	120.6
Gross margin	$	181.4	$	6.5		$	10.8		$	(0.8	)	$	197.9
Depreciation and amortization	$	34.2	$	0.1		$	—		$	—		$	34.3
Interest expense	9.0		0.1			21.8			—			30.9
Income tax expense (benefit)	9.4		(5.5		)	(3.4		)	—			0.5
Net income / (loss)	23.9		6.7			(8.9		)	—			21.7
Cash capital expenditures	$	30.2	$	0.1		$	0.8		$	—		$	31.1

$ in millions	Utility		Competitive Retail		Other			Adjustments and Eliminations			DPL Consolidated
For the three months ended June 30, 2014
Revenues from external customers	$	254.0	$	125.2	$	11.0		$	(0.1	)	$	390.1
Intersegment revenues	111.5		—		0.1			(111.6		)	—
Total revenues	365.5		125.2		11.1			(111.7		)	390.1
Fuel	58.6		—		2.2			—			60.8
Purchased power	136.9		111.1		1.3			(110.9		)	138.4
Amortization of intangibles	—		—		0.3			—			0.3
Gross margin	$	170.0	$	14.1	$	7.3		$	(0.8	)	$	190.6
Depreciation and amortization	$	35.3	$	0.2	$	(1.5	)	$	(0.1	)	$	33.9
Interest expense	8.3		0.1		23.6			(0.1		)	31.9
Income tax expense (benefit)	6.0		1.3		(35.3		)	(0.1		)	(28.1		)
Net income / (loss)	13.9		2.6		17.3			—			33.8
Cash capital expenditures	$	25.6	$	—	$	1.2		$	—		$	26.8

$ in millions	Utility		Competitive Retail			Other			Adjustments and Eliminations			DPL Consolidated
For the six months ended June 30, 2015
Revenues from external customers	$	634.4	$	197.5		$	35.5		$	—		$	867.4
Intersegment revenues	179.0		—			2.9			(181.9		)	—
Total revenues	813.4		197.5			38.4			(181.9		)	867.4
Fuel	119.9		—			10.9			—			130.8
Purchased power	309.8		180.4			4.8			(180.2		)	314.8
Gross margin	$	383.7	$	17.1		$	22.7		$	(1.7	)	$	421.8
Depreciation and amortization	$	68.9	$	0.4		$	—		$	—		$	69.3
Interest expense	17.7		0.1			43.7			(0.1		)	61.4
Income tax expense (benefit)	24.2		(4.2		)	(6.8		)	—			13.2
Net income / (loss)	60.4		8.3			(18.3		)	—			50.4
Cash capital expenditures	$	63.3	$	0.3		$	1.2		$	—		$	64.8
at June 30, 2015
Total assets	$	3,377.7	$	49.8		$	1,480.4		$	(1,283.4	)	$	3,624.5

$ in millions	Utility		Competitive Retail		Other			Adjustments and Eliminations			DPL Consolidated
For the six months ended June 30, 2014
Revenues from external customers	$	546.6	$	273.6	$	30.2		$	—		$	850.4
Intersegment revenues	251.0		—		1.1			(252.1		)	—
Total revenues	797.6		273.6		31.3			(252.1		)	850.4
Fuel	142.9		—		7.9			—			150.8
Purchased power	304.9		251.3		6.7			(250.4		)	312.5
Amortization of intangibles	—		—		0.6			—			0.6
Gross margin	$	349.8	$	22.3	$	16.1		$	(1.7	)	$	386.5
Depreciation and amortization	$	71.8	$	0.3	$	(2.9	)	$	—		$	69.2
Goodwill impairment	—		—		135.8			—			135.8
Fixed-asset impairment	—		—		11.5			—			11.5
Interest expense	16.1		0.2		46.7			(0.3		)	62.7
Income tax expense (benefit)	10.0		0.6		60.1			—			70.7
Net income / (loss)	23.3		1.2		(239.7		)	—			(215.2		)
Cash capital expenditures	$	53.0	$	—	$	2.2		$	—		$	55.2
at December 31, 2014
Total assets	$	3,338.7	$	94.9	$	1,440.1		$	(1,295.9	)	$	3,577.8