Income Taxes

9 Months Ended

Sep. 30, 2023

Entity Information [Line Items]

Income Taxes

INCOME TAXES

DPL’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective combined state and federal income tax rates were 19.9% and 13.3% for the three and nine months ended September 30, 2023, respectively, compared to 17.2% and 67.7% for the three and nine months ended September 30, 2022, respectively. The year-to-date rate is different from the combined federal and state statutory rate of 22.4% primarily due to the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of AES Ohio as a percentage of pre-tax book income or loss. As a result of the PUCO decision in AES Ohio's most recent distribution rate case in December of 2022, AES Ohio began to amortize a deferred tax shortage arising from net municipal apportioned tax rate increase. This new amortization, when combined with the ongoing amortization of the Tax Cut and Jobs Act (TCJA), results in a net tax benefit lowering the Company’s effective tax rate.

DPL's income tax expense for the nine months ended September 30, 2023 was calculated using the estimated annual effective income tax rate for 2023 of 13.2% on ordinary income. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income or loss.

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.

Subsidiaries [Member]

Entity Information [Line Items]

Income Taxes

INCOME TAXES

AES Ohio's provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective combined state and federal income tax rates were 20.9% and 17.6% for the three and nine months ended September 30, 2023, compared to 35.3% and (24.8)% for the three and nine months ended September 30, 2022, respectively. The year-to-date rate is different from the combined federal and state statutory rate of 22.4% primarily due to the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of AES Ohio as a percentage of pre-tax book income or loss. As a result of the PUCO decision in AES Ohio's most recent distribution rate case in December of 2022, AES Ohio began to amortize a deferred tax shortage arising from net municipal apportioned tax rate increase. This new amortization, when combined with the ongoing amortization of the Tax Cut and Jobs Act (TCJA), results in a net tax benefit lowering the Company’s effective tax rate.

AES files federal and state income tax returns, which consolidate AES Ohio. Under a tax sharing agreement with DPL, AES Ohio is responsible for the income taxes associated with its own taxable income and records the provision for income taxes using a separate return method.