Related Party Transactions

12 Months Ended

Dec. 31, 2015

Entity Information [Line Items]

Related Party Transactions

Note 13 – Related Party Transactions

Service Company

In December 2013, an agreement was signed, effective January 1, 2014, whereby the Service Company began providing services including operations, accounting, legal, human resources, information technology and other corporate services on behalf of companies that are part of the U.S. SBU, including, among other companies, DPL and DP&L. The Service Company allocates the costs for these services based on cost drivers designed to result in fair and equitable allocations. This includes ensuring that the regulated utilities served, including DP&L, are not subsidizing costs incurred for the benefit of other businesses.

The following table provides a summary of these transactions:

	For the years ended December 31,
$ in millions	2015			2014
Transactions with the Service Company
Charges for services provided	$	36.0		$	35.8
Charges to the Service Company	$	6.2		$	2.4
Transactions with the Service Company:	At December 31, 2015			At December 31, 2014
Net payable to the Service Company	$	(0.5	)	$	(4.7	)

DPL Capital Trust II

DPL has a wholly-owned business trust, DPL Capital Trust II (the Trust), formed for the purpose of issuing trust capital securities to third-party investors. Effective in 2003, DPL deconsolidated the Trust upon adoption of the accounting standards related to variable interest entities and currently treats the Trust as a nonconsolidated subsidiary. The Trust holds mandatorily redeemable trust capital securities. The investment in the Trust, which amounts to $0.3 million and $0.3 million at December 31, 2015 and 2014, respectively, is included in Other deferred assets within Other noncurrent assets. DPL also has a note payable to the Trust amounting to $15.6 million and $15.6 million at December 31, 2015 and 2014, respectively, that was established upon the Trust’s deconsolidation in 2003. See Note 8 – Debt for additional information.

In addition to the obligations under the note payable mentioned above, DPL also agreed to a security obligation which represents a full and unconditional guarantee of payments to the capital security holders of the Trust.

Income taxes

AES files federal and state income tax returns which consolidate DPL and its subsidiaries. Under a tax sharing agreement with AES, DPL is responsible for the income taxes associated with its own taxable income and records the provision for income taxes using a separate return method. DPL had a net payable balance under this agreement of $50.5 million and $16.1 million as of December 31, 2015 and 2014, respectively, which is recorded in Accrued taxes on the accompanying Consolidated Balance Sheets.

THE DAYTON POWER AND LIGHT COMPANY [Member]

Entity Information [Line Items]

Related Party Transactions

Note 12 – Related Party Transactions

In December 2013, an agreement was signed, effective January 1, 2014, whereby the Service Company began providing services including operations, accounting, legal, human resources, information technology and other corporate services on behalf of companies that are part of the U.S. SBU, including, among other companies, DPL and DP&L. The Service Company allocates the costs for these services based on cost drivers designed to result in fair and equitable allocations. This includes ensuring that the regulated utilities served, including DP&L, are not subsidizing costs incurred for the benefit of other businesses.

The following table provides a summary of these transactions:

	Years ended December 31,
$ in millions	2015			2014			2013
DP&L revenues:
Sales to DPLER (including MC Squared) (a)	$	303.3		$	487.1		$	453.9
DP&L Operation & Maintenance Expenses:
Premiums paid for insurance services provided by MVIC (b)	$	(3.2	)	$	(2.9	)	$	(2.9	)
Expense recoveries for services provided to DPLER (c)	$	2.4		$	2.2		$	5.2
Transactions with the Service Company:
Charges for services provided	$	30.9		$	30.5		$	—
Charges to the Service Company	$	6.1		$	2.3		$	—
Balances with related parties:	At December 31, 2015			At December 31, 2014
Net payable to the Service Company	$	(0.5	)	$	(4.7	)
Short-term loan with DPL Inc.	$	35.0		$	—
Deposits received from DPLER (d)	$	—		$	20.1

(a) DP&L sold power to DPLER and MC Squared to satisfy the electric requirements of their retail customers. The revenue dollars associated with sales to DPLER and MC Squared are recorded as wholesale revenues in DP&L’s Financial Statements. These agreements were terminated on the sale of DPLER on January 1, 2016.

(b) MVIC, a wholly-owned captive insurance subsidiary of DPL, provides insurance coverage to DP&L and other DPL subsidiaries for workers’ compensation, general liability, property damages and directors’ and officers’ liability. These amounts represent insurance premiums paid by DP&L to MVIC.

(c) In the normal course of business DP&L incurs and records expenses on behalf of DPLER. Such expenses include but are not limited to employee-related expenses, accounting, information technology, payroll, legal and other administration expenses. DP&L subsequently charges these expenses to DPLER at DP&L’s cost and credits the expense in which they were initially recorded.

(d) DP&L requires credit assurance from the CRES providers serving customers in its service territory because DP&L is the default energy provider should the CRES provider fail to fulfill its obligations to provide electricity. Due to DPL’s credit downgrade, DP&L required cash collateral from DPLER.

Income taxes

AES files federal and state income tax returns which consolidate DPL and its subsidiaries, including DP&L. Under a tax sharing agreement with DPL, DP&L is responsible for the income taxes associated with its own taxable income and records the provision for income taxes using a separate return method. DP&L had a net receivable balance under this agreement of $1.5 million and $1.0 million as of December 31, 2015 and 2014, respectively, which is recorded in Other current assets on the accompanying Balance Sheets.