Business Segments

9 Months Ended

Sep. 30, 2013

Business Segments [Abstract]

Business Segments

11.  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 sold to DP&L’s standard service offer customers is primarily generated at eight coal-fired power plants and DP&L distributes power to more than 513,000 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 281,000 customers located throughout Ohio and in Illinois.  This number includes 131,000 customers in Northern Illinois of MC Squared, a Chicago-based retail electricity supplier, which was acquired by DPLER in February 2011.  Due to increased competition in Ohio, 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.  The majority of 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 in the “Other” column in the following tables are other businesses that do not meet the GAAP requirements for disclosure as reportable segments as well as certain corporate costs including 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. 

The following tables present financial information for each of DPL’s reportable business segments:

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the three months ended  September 30, 2013
Revenues from external customers	$	289.3	$	139.7	$	12.2	$	-	$	441.2
Intersegment revenues		123.8		-		1.0		(124.8)		-
Total revenues		413.1		139.7		13.2		(124.8)		441.2
Fuel		96.7		-		2.9		0.1		99.7
Purchased power		110.4		125.6		0.9		(123.8)		113.1
Amortization of intangibles		-		-		1.8		-		1.8
Gross margin	$	206.0	$	14.1	$	7.6	$	(1.1)	$	226.6
Depreciation and amortization	$	35.8	$	0.1	$	(2.0)	$	-	$	33.9
Interest expense		10.4		0.1		20.6		(0.1)		31.0
Income tax expense (benefit)		13.2		1.4		(3.3)		-		11.3
Net income / (loss)		40.9		2.5		(10.2)		-		33.2
Cash capital expenditures	$	28.3	$	-	$	1.0	$	-	$	29.3
At September 30, 2013
Total assets	$	3,837.5	$	102.8	$	565.8	$	-	$	4,506.1

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the three months ended  September 30, 2012
Revenues from external customers	$	313.4	$	145.5	$	12.8	$	-	$	471.7
Intersegment revenues		113.4		-		0.9		(114.3)		-
Total revenues		426.8		145.5		13.7		(114.3)		471.7
Fuel		108.1		-		4.6		-		112.7
Purchased power		79.9		123.4		0.9		(113.5)		90.7
Amortization of intangibles		-		-		24.2		-		24.2
Gross margin	$	238.8	$	22.1	$	(16.0)	$	(0.8)	$	244.1
Depreciation and amortization	$	36.5	$	0.2	$	(3.6)	$	-	$	33.1
Goodwill impairment		-		-		1,850.0		-		1,850.0
Fixed asset impairment		80.8		-		-		(80.8)		-
Interest expense		10.0		0.2		21.0		(0.1)		31.1
Income tax expense (benefit)		6.5		5.9		7.8		-		20.2
Net income / (loss)		(11.2)		10.0		(1,809.7)		-		(1,810.9)
Cash capital expenditures	$	52.2	$	-	$	0.4	$	-	$	52.6
At December 31, 2012
Total assets	$	3,464.2	$	99.2	$	683.9	$	-	$	4,247.3

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the nine months ended  September 30, 2013
Revenues from external customers	$	805.5	$	381.9	$	23.3	$	-	$	1,210.7
Intersegment revenues		336.0		-		3.0		(339.0)		-
Total revenues		1,141.5		381.9		26.3		(339.0)		1,210.7
Fuel		269.6		-		4.2		0.2		274.0
Purchased power		276.7		340.8		1.5		(336.4)		282.6
Amortization of intangibles		-		-		5.3		-		5.3
Gross margin	$	595.2	$	41.1	$	15.3	$	(2.8)	$	648.8
Depreciation and amortization	$	104.5	$	0.4	$	(5.9)	$	-	$	99.0
Interest expense		29.7		0.4		61.5		(0.5)		91.1
Income tax expense (benefit)		29.2		4.3		(12.7)		-		20.8
Net income / (loss)		101.4		7.7		(33.1)		-		76.0
Cash capital expenditures	$	95.1	$	-	$	1.4	$	-	$	96.5
At September 30, 2013
Total assets	$	3,837.5	$	102.8	$	565.8	$	-	$	4,506.1

$ in millions	Utility		Competitive Retail		Other		Adjustments and Eliminations		DPL Consolidated
For the nine months ended  September 30, 2012
Revenues from external customers	$	887.9	$	367.5	$	32.3	$	-	$	1,287.7
Intersegment revenues		285.1		-		2.6		(287.7)		-
Total revenues		1,173.0		367.5		34.9		(287.7)		1,287.7
Fuel		272.3		-		6.7		-		279.0
Purchased power		234.1		315.6		1.3		(285.2)		265.8
Amortization of intangibles		-		-		71.2		-		71.2
Gross margin	$	666.6	$	51.9	$	(44.3)	$	(2.5)	$	671.7
Depreciation and amortization	$	107.3	$	0.3	$	(12.0)	$	-	$	95.6
Goodwill impairment		-		-		1,850.0		-		1,850.0
Fixed asset impairment		80.8		-		-		(80.8)		-
Interest expense		29.0		0.4		64.1		(0.4)		93.1
Income tax expense (benefit)		39.4		15.8		(14.9)		-		40.3
Net income / (loss)		58.3		17.5		(1,853.1)		-		(1,777.3)
Cash capital expenditures	$	161.7	$	0.5	$	0.9	$	-	$	163.1
At December 31, 2012
Total assets	$	3,464.2	$	99.2	$	683.9	$	-	$	4,247.3