Business Segments

6 Months Ended

Jun. 30, 2012

Business Segments [Abstract]

Business Segments

14. Business Segments

DPL operates through two segments consisting of the operations of two of its wholly owned subsidiaries, DP&L (Utility segment) and DPLER, including the results of DPLER's wholly owned subsidiary, MC Squared (Competitive Retail segment). 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 sell electricity to residential, commercial, industrial and governmental customers. Electricity for the segment's 24 county service area is primarily generated at eight coal-fired power plants and is distributed to more than 500,000 retail customers who are located in a 6,000 square mile area of West Central Ohio. DP&L also sells electricity to DPLER and any excess energy and capacity is sold into the 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 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. The Competitive Retail segment sells electricity to approximately 70,000 customers currently located throughout Ohio and in Illinois. In February 2011, DPLER purchased MC Squared, a Chicago-based retail electricity supplier, which serves more than 5,900 customers in Northern Illinois. At the end of the second quarter of 2012, MC Squared added approximately 29,000 new customers in Illinois cities as a result of various governmental aggregation agreements. These new customers have not yet been billed and are not included in the customer counts above. Due to increased competition in Ohio, since 2010 we have increased the number of employees and resources assigned to manage the Competitive Retail segment and increased its marketing to customers. The Competitive Retail segment's electric energy used to meet its sales obligations was purchased from DP&L and PJM. 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 within the "Other" column are other businesses that do not meet the GAAP requirements for disclosure as reportable segments as well as certain corporate costs which include 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.

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The following table presents financial information for each of DPL's reportable business segments:

Successor
$ in millions	Utility		Competitive Retail			Other			Adjustments and Eliminations			DPL Consolidated
Three Months Ended June 30, 2012
Revenues from external customers	$	261.7	$	109.9		$	10.4		$	-		$	382.0
Intersegment revenues		84.9		-			0.8			(85.7	)		-
Total revenues		346.6		109.9			11.2			(85.7	)		382.0
Fuel		68.6		-			3.0			-			71.6
Purchased power		69.3		95.5			0.4			(84.9	)		80.3
Amortization of intangibles		-		-			28.6			-			28.6
Gross margin	$	208.7	$	14.4		$	(20.8	)	$	(0.8	)	$	201.5
Depreciation and amortization	$	36.1	$	(0.1	)	$	(6.3	)	$	-		$	29.7
Interest expense		9.4		0.1			23.1			(0.2	)		32.4
Income tax expense (benefit)		15.6		6.5			(13.4	)		-			8.7
Net income (loss)		31.3		1.5			(27.9	)		-			4.9
Cash capital expenditures		56.3		0.1			0.1			-			56.5
Total assets		3,488.5		76.5			2,406.4			-			5,971.4
Predecessor
Three Months Ended June 30, 2011
Revenues from external customers	$	315.9	$	102.0		$	15.4		$	-		$	433.3
Intersegment revenues		81.0		-			1.0			(82.0	)		-
Total revenues		396.9		102.0			16.4			(82.0	)		433.3
Fuel		89.1		-			3.0			-			92.1
Purchased power		104.4		89.5			0.7			(81.0	)		113.6
Gross margin	$	203.4	$	12.5		$	12.7		$	(1.0	)	$	227.6
Depreciation and amortization	$	33.4	$	-		$	1.7		$	-		$	35.1
Interest expense		9.7		0.1			7.9			(0.1	)		17.6
Income tax expense (benefit)		15.5		3.3			(2.5	)		-			16.3
Net income (loss)		30.8		5.7			(3.7	)		(1.1	)		31.7
Cash capital expenditures		48.4		-			-			-			48.4
Year Ended December 31, 2011
Total assets		3,525.7		69.9			2,472.1			-			6,067.7

Successor
$ in millions	Utility		Competitive Retail		Other			Adjustments and Eliminations			DPL Consolidated
Six Months Ended June 30, 2012
Revenues from external customers	$	574.5	$	222.0	$	19.5		$	-		$	816.0
Intersegment revenues		171.7		-		1.7			(173.4	)		-
Total revenues		746.2		222.0		21.2			(173.4	)		816.0
Fuel		164.2		-		4.8			-			169.0
Purchased power		154.2		192.2		0.4			(171.7	)		175.1
Amortization of intangibles		-		-		56.4			-			56.4
Gross margin	$	427.8	$	29.8	$	(40.4	)	$	(1.7	)	$	415.5
Depreciation and amortization	$	70.8	$	0.1	$	(9.8	)	$	-		$	61.1
Interest expense		19.0		0.3		43.1			(0.4	)		62.0
Income tax expense (benefit)		32.9		9.9		(26.4	)		-			16.4
Net income (loss)		69.4		7.5		(50.3	)		-			26.6
Cash capital expenditures		109.5		0.5		0.5			-			110.5
Total assets		3,488.5		76.5		2,406.4			-			5,971.4
Predecessor
Six Months Ended June 30, 2011
Revenues from external customers	$	690.6	$	196.0	$	27.3		$	-		$	913.9
Intersegment revenues		156.1		-		2.0			(158.1	)		-
Total revenues		846.7		196.0		29.3			(158.1	)		913.9
Fuel		187.7		-		4.2			-			191.9
Purchased power		222.2		167.2		1.1			(156.1	)		234.4
Gross margin	$	436.8	$	28.8	$	24.0		$	(2.0	)	$	487.6
Depreciation and amortization	$	66.5	$	0.1	$	3.6		$	-		$	70.2
Interest expense		19.4		0.1		15.1			(0.1	)		34.5
Income tax expense (benefit)		42.5		9.9		(11.3	)		-			41.1
Net income (loss)		83.5		11.8		(18.5	)		(1.6	)		75.2
Cash capital expenditures		90.8		-		0.6			-			91.4
Year Ended December 31, 2011
Total assets		3,525.7		69.9		2,472.1			-			6,067.7