Property, Plant and Equipment

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Line Items]

The following is a summary of DPL’s Property, plant and equipment with corresponding composite depreciation rates at December 31, 2016 and 2015:



	December 31,
$ in millions	2016		Composite Rate	2015		Composite Rate
Regulated:
Transmission	$	247.3	3.9%	$	239.4	3.9%
Distribution	1,141.1		4.7%	1,085.7		5.0%
General	13.7		7.4%	13.9		7.2%
Non-depreciable	63.5		N/A	62.5		N/A
Total regulated	1,465.6			1,401.5
Unregulated:
Production / Generation	483.2		11.7%	1,413.1		4.2%
Other	17.0		8.0%	16.3		12.1%
Non-depreciable	19.8		N/A	19.8		N/A
Total unregulated	520.0			1,449.2

Total property, plant and equipment in service	$	1,985.6	6.1%	$	2,850.7	4.4%

DP&L and certain other Ohio utilities have undivided ownership interests in five coal-fired electric generating facilities and numerous transmission facilities. Certain expenses, primarily fuel costs for the generating units, are allocated to the owners based on their energy usage. The remaining expenses, investments in fuel inventory, plant materials and operating supplies, and capital additions are allocated to the owners in accordance with their respective ownership interests. At December 31, 2016, DP&L had $41.0 million of construction work in process at such facilities. DP&L’s share of the operations of such facilities is included within the corresponding line in the Statements of Operations, and DP&L’s share of the investment in the facilities is included within Total net property, plant and equipment in the Balance Sheets. Each joint owner provides their own financing for their share of the operations and capital expenditures of the jointly-owned station.

Coal-fired facilities

DP&L’s undivided ownership interest in such facilities at December 31, 2016, is as follows:



	DP&L Share		DPL Carrying Value
	Ownership (%)	Summer Production Capacity (MW)	Gross Plant In Service ($ in millions)		Accumulated Depreciation ($ in millions)		Construction Work in Process ($ in millions)
Jointly-owned production units
Conesville - Unit 4	16.5	129	$	—	$	—	$	—
Killen - Unit 2	67.0	402	34		—		2
Miami Fort - Units 7 and 8	36.0	368	27		—		7
Stuart - Units 1 through 4	35.0	808	24		—		23
Zimmer - Unit 1	28.1	371	7		—		9
Transmission (at varying percentages)			43		10		—
Total		2,078	$	135	$	10	$	41

Each of the above generating units has SCR and FGD equipment installed.

On January 10, 2017, a high pressure feedwater heater shell failed on Unit 1 at the J.M. Stuart station. As the damage assessment process is currently ongoing, we cannot determine the impact to operations or capacity at this time.

AROs

We recognize AROs in accordance with GAAP which requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time those obligations are incurred. Upon initial recognition of a legal liability, costs are capitalized as part of the related long-lived asset and depreciated over the useful life of the related asset. Our legal obligations are associated with the retirement of our long-lived assets, consisting primarily of river intake and discharge structures, coal unloading facilities, loading docks, ice breakers and ash disposal facilities. Our generation AROs are recorded within Other deferred credits on the consolidated balance sheets.

Estimating the amount and timing of future expenditures of this type requires significant judgment. Management routinely updates these estimates as additional information becomes available.

Changes in the Liability for Generation AROs



$ in millions
Balance at December 31, 2014	$	26.9
Calendar 2015
Additions	40.3
Accretion expense	1.9
Settlements	(3.2		)
Balance at December 31, 2015	65.9
Calendar 2016
Additions	70.2
Accretion expense	2.7
Settlements	—
Balance at December 31, 2016	$	138.8

See Note 5 – Fair Value for further discussion on ARO additions.

Asset Removal Costs

We continue to record costs of removal for our regulated transmission and distribution assets through our depreciation rates and recover those amounts in rates charged to our customers. There are no known legal AROs associated with these assets. We have recorded $126.5 million and $121.8 million in estimated costs of removal at December 31, 2016 and 2015, respectively, as regulatory liabilities for our transmission and distribution property. These amounts represent the excess of the cumulative removal costs recorded through depreciation rates versus the cumulative removal costs actually incurred. See Note 3 – Regulatory Matters for additional information.

Changes in the Liability for Transmission and Distribution Asset Removal Costs



$ in millions
Balance at December 31, 2014	$	119.3
Calendar 2015
Additions	24.3
Settlements	(21.8		)
Balance at December 31, 2015	121.8
Calendar 2016
Additions	11.7
Settlements	(7.0		)
Balance at December 31, 2016	$	126.5

THE DAYTON POWER AND LIGHT COMPANY [Member]

Property, Plant and Equipment [Line Items]

Property, Plant and Equipment

The following is a summary of DP&L’s Property, plant and equipment with corresponding composite depreciation rates at December 31, 2016 and 2015:



	December 31,
$ in millions	2016		Composite Rate	2015		Composite Rate
Regulated:
Transmission	$	421.1	2.3%	$	413.7	2.3%
Distribution	1,693.5		3.2%	1,639.7		3.3%
General	31.6		3.2%	31.6		3.2%
Non-depreciable	63.5		N/A	62.5		N/A
Total regulated	2,209.7			2,147.5
Unregulated:
Production / Generation	173.9		26.2%	3,009.8		2.1%
Non-depreciable	15.0		N/A	15.0		N/A
Total unregulated	188.9			3,024.8

Total property, plant and equipment in service	$	2,398.6	4.6%	$	5,172.3	2.5%

Coal-fired facilities

DP&L’s undivided ownership interest in such facilities at December 31, 2016, is as follows:



	DP&L Share		DP&L Carrying Value
	Ownership %	Summer Production Capacity (MW)	Gross Plant In Service ($ in millions)		Accumulated Depreciation ($ in millions)		Construction Work in Process ($ in millions)
Jointly-owned production units
Conesville - Unit 4	16.5	129	$	—	$	—	$	—
Killen - Unit 2	67.0	402	34		—		2
Miami Fort - Units 7 and 8	36.0	368	27		—		7
Stuart - Units 1 through 4	35.0	808	24		—		23
Zimmer - Unit 1	28.1	371	7		—		9
Transmission (at varying percentages)			99		66		—
Total		2,078	$	191	$	66	$	41

Each of the above generating units has SCR and FGD equipment installed.

As part of the provisional DPL purchase accounting adjustments related to the Merger, four stations (Beckjord, Conesville, East Bend and Hutchings) had future expected cash flows that, when discounted, produced a fair market value different than DP&L’s carrying value. Since DP&L did not apply push down accounting, this valuation did not affect the carrying value of these stations’ valuation at DP&L. During 2016, DP&L performed an impairment review of its stations and recorded impairment expense of $1,353.5 million related to certain of its stations, including Conesville and Hutchings peaking facilities. See Note 14 – Fixed-asset Impairment for more information on these impairments.

AROs

Estimating the amount and timing of future expenditures of this type requires significant judgment. Management routinely updates these estimates as additional information becomes available.

Changes in the Liability for Generation AROs



$ in millions
Balance at December 31, 2014	$	22.9
Calendar 2015
Additions	40.3
Accretion expense	2.1
Settlements	(3.2		)
Balance at December 31, 2015	62.1
Calendar 2016
Additions	70.2
Accretion expense	2.9
Settlements	—
Balance at December 31, 2016	$	135.2

See Note 5 – Fair Value for further discussion on current year ARO additions.

Asset Removal Costs

Changes in the Liability for Transmission and Distribution Asset Removal Costs



$ in millions
Balance at December 31, 2014	$	119.3
Calendar 2015
Additions	24.3
Settlements	(21.8		)
Balance at December 31, 2015	121.8
Calendar 2016
Additions	11.7
Settlements	(7.0		)
Balance at December 31, 2016	$	126.5