Property, Plant and Equipment

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Line Items]

Property, Plant and Equipment

Property, Plant and Equipment

The following is a summary of DPL’s Property, plant and equipment with corresponding composite depreciation rates at December 31, 2017 and 2016:

	December 31, 2017			December 31, 2016
$ in millions			Composite Rate			Composite Rate
Regulated:
Transmission	$	242.7	4.0%	$	247.3	3.9%
Distribution	1,197.5		4.9%	1,141.1		4.7%
General	13.7		7.1%	13.7		7.4%
Non-depreciable	64.7		N/A	63.5		N/A
Total regulated	1,518.6			1,465.6
Unregulated:
Production / Generation	10.9		63.2%	483.2		11.7%
Other	19.4		7.0%	17.0		8.0%
Non-depreciable	5.8		N/A	19.8		N/A
Total unregulated	36.1			520.0
Total property, plant and equipment in service	$	1,554.7	5.0%	$	1,985.6	6.1%

Coal-fired facilities

DPL and certain other Ohio utilities have undivided ownership interests in three 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. DPL’s share of the operations of such facilities is included within the corresponding line in the Consolidated Statements of Operations, and DPL’s share of the investment in the facilities is included within Total net property, plant and equipment in the Consolidated Balance Sheets. Each joint owner provides their own financing for their share of the operations and capital expenditures of the jointly-owned station.

DPL’s undivided ownership interest in such facilities at December 31, 2017, is as follows:

	DPL 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	$	0.7	$	0.7	$	1.9
Killen - Unit 2	67.0	402	9.6		8.2		—
Stuart - Units 2 through 4	35.0	606	1.8		1.8		—
Transmission (at varying percentages)			45.6		13.3		—
Total		1,137	$	57.7	$	24.0	$	1.9

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. The unit was retired on October 1, 2017. Accordingly, DPL's202 MWs of capacity associated with Stuart Unit 1 have been removed from the table above.

DPL announced during 2017 that it plans on retiring the co-owned Stuart Station coal-fired and diesel-fired generating units and the co-owned Killen Station coal-fired generating unit and combustion turbine on or before June 1, 2018, and the co-owners of these facilities agreed with this plan of retirement.

On December 8, 2017, AES Ohio Generation completed the sale of the Miami Fort and Zimmer EGUs.

In the fourth quarter of 2017, DPL entered into an agreement to sell its Peaker assets. See Note 17 – Assets and Liabilities Held-For-Sale and Dispositions for more information.

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, 2015	$	65.9
Calendar 2016
Additions	70.2
Accretion expense	2.7
Settlements	—
Balance at December 31, 2016	138.8
Calendar 2017
Additions	0.1
Revisions to cash flow and timing estimates	(6.3		)
Accretion expense	3.7
Settlements	(0.1		)
Reductions due to plants sold or held-for-sale	(5.0		)
Balance at December 31, 2017	$	131.2

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 $132.8 million and $126.5 million in estimated costs of removal at December 31, 2017 and 2016, 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, 2015	$	121.8
Calendar 2016
Additions	11.7
Settlements	(7.0		)
Balance at December 31, 2016	126.5
Calendar 2017
Additions	12.0
Settlements	(5.7		)
Balance at December 31, 2017	$	132.8

THE DAYTON POWER AND LIGHT COMPANY [Member]

Property, Plant and Equipment [Line Items]

Property, Plant and Equipment

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, 2017 and 2016:

	December 31, 2017			December 31, 2016
$ in millions			Composite Rate			Composite Rate
Regulated:
Transmission	$	414.6	2.4%	$	421.1	2.3%
Distribution	1,735.9		3.4%	1,693.5		3.2%
General	31.2		3.1%	31.6		3.2%
Non-depreciable	64.6		N/A	63.5		N/A
Total regulated	2,246.3			2,209.7
Unregulated:
Other	0.2		2.7%	0.3		2.7%
Non-depreciable	0.7		N/A	3.5		N/A
Total unregulated	0.9			3.8
Total property, plant and equipment in service	$	2,247.2	3.4%	$	2,213.5	4.6%

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 at December 31, 2015	$	5.0
Calendar 2016
Additions	2.7
Accretion expense	0.3
Settlements	0.2
Balance at December 31, 2016	8.2
Calendar 2017
Accretion expense	0.1
Settlements	(0.3		)
Balance at December 31, 2017	$	8.0

See Note 5 – Fair Value for further discussion on current year 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 $132.8 million and $126.5 million in estimated costs of removal at December 31, 2017 and 2016, 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, 2015	$	121.8
Calendar 2016
Additions	11.7
Settlements	(7.0		)
Balance at December 31, 2016	126.5
Calendar 2017
Additions	12.0
Settlements	(5.7		)
Balance at December 31, 2017	$	132.8