Business Segments

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Business Segments

Note 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, 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 deliver 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 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 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 September 30, 2015, the Competitive Retail segment sold electricity to approximately 128,000 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 September 30, 2015
Revenues from external customers	$	323.2	$	77.0	$	13.9		$	—		$	414.1
Intersegment revenues	66.0		—		1.5			(67.5		)	—
Total revenues	389.2		77.0		15.4			(67.5		)	414.1
Fuel	69.0		—		2.4			—			71.4
Purchased power	142.5		66.6		3.0			(66.7		)	145.4
Gross margin	$	177.7	$	10.4	$	10.0		$	(0.8	)	$	197.3
Depreciation and amortization	$	34.6	$	0.2	$	—		$	—		$	34.8
Interest expense	6.9		—		22.1			(0.1		)	28.9
Income tax expense (benefit)	0.8		1.6		(2.1		)	—			0.3
Net income / (loss)	15.5		2.6		(9.5		)	—			8.6
Cash capital expenditures	$	27.9	$	0.3	$	0.5		$	—		$	28.7

$ 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 nine months ended September 30, 2015
Revenues from external customers	$	957.6	$	274.5		$	49.4		$	—		$	1,281.5
Intersegment revenues	245.0		—			4.4			(249.4		)	—
Total revenues	1,202.6		274.5			53.8			(249.4		)	1,281.5
Fuel	188.9		—			13.3			—			202.2
Purchased power	452.3		247.0			7.8			(246.9		)	460.2
Gross margin	$	561.4	$	27.5		$	32.7		$	(2.5	)	$	619.1
Depreciation and amortization	$	103.5	$	0.6		$	—		$	—		$	104.1
Interest expense	24.6		0.1			65.8			(0.2		)	90.3
Income tax expense (benefit)	25.0		(2.6		)	(8.9		)	—			13.5
Net income / (loss)	75.9		10.9			(27.8		)	—			59.0
Cash capital expenditures	$	91.2	$	0.6		$	1.7		$	—		$	93.5
at September 30, 2015
Total assets	$	3,239.9	$	44.5		$	1,472.8		$	(1,267.8	)	$	3,489.4

$ 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 December 31, 2014
Total assets	$	3,338.7	$	94.9	$	1,440.1		$	(1,295.9	)	$	3,577.8