Related Party Transactions

3 Months Ended

Mar. 31, 2016

Related Party Transaction [Line Items]

Related Party Transactions

Note 9 – Related Party Transactions

Service Company

Effective January 1, 2014, 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.

Benefit plans

DPL participates in an agreement with Health and Welfare Benefit Plans LLC, an affiliate of AES, to participate in a group benefits program, including but not limited to, health, dental, vision and life benefits. Health and Welfare Benefit Plans LLC administers the financial aspects of the group insurance program, receives all premium payments from the participating affiliates, and makes all vendor payments.

The following table provides a summary of these transactions:

	Three months ended
	March 31,
$ in millions	2016		2015
Transactions with the Service Company
Charges for services provided	$	11.6	$	9.8
Charges to the Service Company	$	1.2	$	1.3
Transactions with other AES affiliates:
Charges for health, welfare and benefit plans	$	4.1	$	4.0
Transactions with the Service Company:	At March 31, 2016		At December 31, 2015
Net advance to / (payable to) to the Service Company	$	0.8	$	(0.5	)

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 March 31, 2016 and December 31, 2015, respectively, is included in Other deferred assets within Other non-current assets. DPL also has a note payable to the Trust amounting to $15.6 million and $15.6 million at March 31, 2016 and December 31, 2015, respectively, that was established upon the Trust’s deconsolidation in 2003. See Note 5 – 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 $78.9 million and $50.5 million as of March 31, 2016 and December 31, 2015, respectively, which is recorded in Accrued taxes on the accompanying Condensed Consolidated Balance Sheets.

THE DAYTON POWER AND LIGHT COMPANY [Member]

Related Party Transaction [Line Items]

Related Party Transactions

Note 10 – Related Party Transactions

Service Company

Effective January 1, 2014, 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.

Benefit plans

DPL participates in an agreement with Health and Welfare Benefit Plans LLC, an affiliate of AES, to participate in a group benefits program, including but not limited to, health, dental, vision and life benefits. Health and Welfare Benefit Plans LLC administers the financial aspects of the group insurance program, receives all premium payments from the participating affiliates, and makes all vendor payments.

The following table provides a summary of these transactions:

	Three months ended
	March 31,
$ in millions	2016			2015
DP&L revenues:
Sales to DPLER (including MC Squared) (a)	$	—		$	110.7
DP&L Operation & Maintenance Expenses:
Premiums paid for insurance services provided by MVIC (b)	$	(0.9	)	$	(0.8	)
Expense recoveries for services provided to DPLER (c)	$	—		$	0.7
Transactions with the Service Company:
Charges for services provided	$	8.9		$	8.4
Charges to the Service Company	$	1.2		$	1.3
Transactions with other AES affiliates:
Charges for health, welfare and benefit plans	$	4.1		$	3.9
Balances with related parties:	At March 31, 2016			At December 31, 2015
Net advance to / (payable to) to the Service Company	$	0.8		$	(0.5	)
Short-term loan with DPL	$	5.0		$	35.0

(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 upon 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) Prior to the sale of DPLER, in the normal course of business DP&L incurred and recorded expenses on behalf of DPLER. Such expenses included but were not limited to employee-related expenses, accounting, information technology, payroll, legal and other administration expenses. DP&L subsequently charged these expenses to DPLER at DP&L’s cost and credited the expense in which they were initially recorded.

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 payable balance under this agreement of $13.2 million as of March 31, 2016 and a net receivable balance of $1.5 million as of December 31, 2015, which are recorded in Accrued taxes and Other current assets on the accompanying Balance Sheets.

Gain on termination of contract

On January 1, 2016, DPL closed on the sale of DPLER. Also on January 1, 2016, DP&L terminated the contract it had with DPLER for the supply of electricity. The agreement terminating the contract was signed on December 28, 2015 and DP&L received $27.7 million of restricted cash on December 31, 2015 for the early termination of the contract. For the three months ended March 31, 2016, this amount was recorded in Gain on termination of contract in the Condensed Statements of Operations and the cash received was included in Cash flows from operating activities in the Condensed Statements of Cash Flows.