Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DPL previously used derivative financial instruments primarily to manage the interest rate risk associated with our long-term debt. The derivative instruments were used for risk management purposes and were designated as cash flow hedges if they qualified under FASC 815 for accounting purposes.

In August 2020, the two interest rate swaps to hedge the variable interest on the $140.0 million variable interest rate tax-exempt First Mortgage Bonds expired, as the associated debt reached maturity. The interest rate swaps had a combined notional amount of $140.0 million and settled monthly based on a one-month LIBOR. The AOCL associated with the swaps was amortized out of AOCL into interest expense over the life of the underlying debt.

We also had previously entered into interest rate derivative contracts to manage interest rate exposure related to anticipated borrowings of fixed-rate debt. These interest rate derivative contracts were settled in 2013 and we continue to amortize amounts out of AOCL into interest expense.

The following tables provide information on gains or losses recognized in AOCL for the cash flow hedges for the periods indicated:

	Years ended December 31,
	2022		2021		2020
$ in millions (net of tax)	Interest Rate Hedge		Interest Rate Hedge		Interest Rate Hedge
Beginning accumulated derivative gain in AOCL	$	12.8	$	13.6	$	14.5
Net gains reclassified to earnings:
Interest expense	(0.8)		(0.8)		(0.9)
Ending accumulated derivative gain in AOCL	$	12.0	$	12.8	$	13.6
Portion expected to be reclassified to earnings in the next twelve months	$	(0.8)