Property, Plant and Equipment (Notes)

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Line Items]

Property, Plant and Equipment Disclosure [Text Block]

Property, Plant and Equipment

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 March 31, 2017, DP&L had $11.0 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 Condensed Consolidated 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 Condensed Consolidated 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 March 31, 2017, 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	7.0		1.0		1.0
Miami Fort - Units 7 and 8	36.0	368	28.0		1.0		5.0
Stuart - Units 1 through 4	35.0	808	1.0		1.0		—
Zimmer - Unit 1	28.1	371	12.0		1.0		5.0
Transmission (at varying percentages)			43.0		11.0		—
Total		2,078	$	91.0	$	15.0	$	11.0

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 a result, $6.4 million of net book value was written off, resulting in a $3.2 million loss on disposal, net of insurance recoveries. As the damage assessment process is currently ongoing, we cannot determine the impact to operations or capacity at this time.

On March 17, 2017, the Board of Directors of DP&L approved the retirement of the DP&L operated and co-owned Stuart Station coal-fired and diesel-fired generating units and the Killen Station coal-fired generating unit and combustion turbine on or before June 1, 2018, and DP&L agreed with the co-owners of these facilities to proceed with this plan of retirement.

On April 21, 2017, DP&L and AES Ohio Generation entered into an agreement for the sale of DP&L’s undivided interests in Zimmer and Miami Fort, for $50.0 million in cash and the assumption of certain liabilities, including environmental. The purchase price is subject to adjustment at closing based on the amount of certain inventories, pre-paid amounts, employment benefits, insurance premiums, property taxes and other costs. The sale is subject to approval by the FERC and is expected to close in the third quarter of 2017.

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.

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 January 1, 2017	$	138.8
Revisions to cash flow and timing estimates	(4.4		)
Accretion expense	1.1
Settlements	0.1
Balance March 31, 2017	$	135.6

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

Subsidiaries [Member]

Property, Plant and Equipment [Line Items]

Property, Plant and Equipment Disclosure [Text Block]

Property, Plant and Equipment

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 March 31, 2017, DP&L had $11.0 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 Condensed 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 Condensed 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 March 31, 2017, 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	7.0		1.0		1.0
Miami Fort - Units 7 and 8	36.0	368	28.0		1.0		5.0
Stuart - Units 1 through 4	35.0	808	1.0		1.0		—
Zimmer - Unit 1	28.1	371	12.0		1.0		5.0
Transmission (at varying percentages)			99.0		67.0		—
Total		2,078	$	147.0	$	71.0	$	11.0

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

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 January 1, 2017	$	135.2
Revisions to cash flow and timing estimates	(4.4		)
Accretion expense	1.4
Settlements	0.1
Balance March 31, 2017	$	132.3

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