Income Taxes

3 Months Ended

Mar. 31, 2020

The following table details the effective tax rates for the three months ended March 31, 2020 and 2019.



	Three months ended
	March 31,
	2020	2019
DPL	(11.8)%	14.3%

Income tax expense for the three months ended March 31, 2020 and 2019 was calculated using the estimated annual effective income tax rates for 2020 and 2019 of (14.9)% and 14.3%, respectively. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income. To the extent that actual pre-tax results for the year differ from the forecasts applied to the most recent interim period, the estimated rates could be materially different from the actual effective tax rates. DPL’s effective combined state and federal income tax rate for all operations was (11.8)% for the three months ended March 31, 2020. This rate is lower than the combined federal and state statutory rate of 22.3% primarily due to the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of DP&L as a percentage of pre-tax book income.

For the three months ended March 31, 2020, DPL’s current period effective tax rate for all operations was not materially different than the estimated annual effective rate when applied to DPL's Income before income tax.

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. Effective with the approval of DP&L's 2017 ESP, through November 21, 2019, DPL was restricted from making tax sharing payments to AES throughout the term of the DMR and amounts that would otherwise have been tax sharing liabilities were converted to deemed capital contributions. With the November 21, 2019 order from the PUCO that removed the DMR, this requirement was eliminated.

THE DAYTON POWER AND LIGHT COMPANY [Member]

Entity Information [Line Items]

Income Taxes

The following table details the effective tax rates for the three months ended March 31, 2020 and 2019.



	Three months ended
	March 31,
	2020	2019
DP&L	9.3%	17.4%

Income tax expense for the three months ended March 31, 2020 and 2019 was calculated using the estimated annual effective income tax rates for 2020 and 2019 of 9.1% and 17.3%, respectively. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income. To the extent that actual pre-tax results for the year differ from the forecasts applied to the most recent interim period, the estimated rates could be materially different from the actual effective tax rates. DP&L’s effective combined state and federal income tax rate was 9.3%. This is lower than the combined federal and state statutory rate of 22.3% primarily due to the net tax benefit related to the reversal of excess deferred taxes as a percentage of pre-tax book income.

For the three months ended March 31, 2020, DP&L’s current period effective tax rate for all operations was not materially different than the estimated annual effective rate.