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Benefit Plans (Tables)
 12 Months Ended
Dec. 31, 2019
Pension And Postretirement Benefit Plans' Obligations And Assets
The following tables set forth the changes in our pension plan's obligations and assets recorded on the Consolidated Balance Sheets at December 31, 2019 and 2018. The amounts presented in the following tables for pension obligations include the collective bargaining plan formula, traditional management plan formula and cash balance plan formula and the SERP in the aggregate and have not been adjusted for $1.4 million, $1.8 million and $1.1 million of costs billed to the Service Company for the years ended December 31, 2019, 2018 and 2017, respectively.
$ in millions
 
Years ended December 31,
Change in benefit obligation
 
2019
 
2018
Benefit obligation at January 1
 
$
386.5

 
$
436.9

Service cost
 
3.7

 
6.1

Interest cost
 
14.9

 
13.8

Plan amendments
 
—

 
5.1

Actuarial (gain) / loss
 
42.1

 
(34.6
)
Benefits paid
 
(25.7
)
 
(40.8
)
Benefit obligation at December 31
 
421.5

 
386.5

 
 
 
 
 
Change in plan assets
 
 
 
 
Fair value of plan assets at January 1
 
312.9

 
357.5

Actual return on plan assets
 
57.0

 
(11.7
)
Employer contributions
 
7.8

 
7.9

Benefits paid
 
(25.7
)
 
(40.8
)
Fair value of plan assets at December 31
 
352.0

 
312.9

 
 
 
 
 
Unfunded status of plan
 
$
(69.5
)
 
$
(73.6
)
 
 
 
 
 
 
 
December 31,
Amounts recognized in the Balance sheets
 
2019
 
2018
Current liabilities
 
$
(0.2
)
 
$
(0.4
)
Non-current liabilities
 
(69.3
)
 
(73.2
)
Net liability at end of year
 
$
(69.5
)
 
$
(73.6
)
 
 
 
 
 
Amounts recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax
 
 
 
 
Components:
 
 
 
 
Prior service cost
 
$
7.9

 
$
9.1

Net actuarial loss
 
104.3

 
103.3

Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax
 
$
112.2

 
$
112.4

Recorded as:
 
 
 
 
Regulatory asset
 
$
83.7

 
$
87.2

Accumulated other comprehensive income
 
28.5

 
25.2

Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax
 
$
112.2

 
$
112.4
Schedule of Net Periodic Benefit Cost / (Income)
The net periodic benefit cost of the pension plans was:
 
 
Years ended December 31,
$ in millions
 
2019
 
2018
 
2017
Service cost
 
$
3.7

 
$
6.1

 
$
5.7

Interest cost
 
14.9

 
13.8

 
14.2

Expected return on assets
 
(20.1
)
 
(21.2
)
 
(22.8
)
Plan curtailment (a)
 
—

 
—

 
4.1

Amortization of unrecognized:
 
 
 
 
 
 
Actuarial loss
 
4.2

 
6.4

 
5.3

Prior service cost
 
1.3

 
0.9

 
1.1

Net periodic benefit cost
 
$
4.0

 
$
6.0

 
$
7.6

 
 
 
 
 
 
 
Rates relevant to each year's expense calculations
 
 
 
 
 
 
Discount rate
 
4.35
%
 
3.66
%
 
4.28
%
Expected return on plan assets
 
6.25
%
 
6.25
%
 
6.50
%


(a)    As a result of the decision to retire certain coal-fired plants, we recognized a plan curtailment of $4.1 million in 2017.
Other Changes in Plan Assets and Benefit Obligation Recognized in Accumulated Other Comprehensive Income, Regulatory Assets And Regulatory Liabilities
Other Changes in Plan Assets and Benefit Obligation Recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities
 
 
Years ended December 31,
$ in millions
 
2019
 
2018
 
2017
Net actuarial loss
 
$
5.3

 
$
3.4

 
$
9.1

Plan curtailment (a)
 
—

 
—

 
(4.1
)
Reversal of amortization item:
 
 
 
 
 
 
Net actuarial loss
 
(4.2
)
 
(6.4
)
 
(5.3
)
Prior service cost
 
(1.3
)
 
(0.9
)
 
(1.1
)
Total recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities
 
$
(0.2
)
 
$
(3.9
)
 
$
(1.4
)
 
 
 
 
 
 
 
Total recognized in net periodic benefit cost and Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities
 
$
3.8

 
$
2.1

 
$
6.2



(a)    As a result of the decision to retire certain coal-fired plants, we recognized a plan curtailment of $4.1 million in 2017.
Weighted Average Assumptions Used to Determine Benefit Obligations
The weighted average assumptions used to determine benefit obligations at December 31, 2019, 2018 and 2017 were:
Benefit Obligation Assumptions
 
Pension
 
 
2019
 
2018
 
2017
Discount rate for obligations
 
3.33%
 
4.35%
 
3.66%
Rate of compensation increases
 
3.94%
 
3.94%
 
3.94%
Schedule of Allocation of Plan Assets
The following table summarizes our target pension plan allocation for 2019:
 
 
Long-Term
Mid-Point
Target
Allocation
 
Percentage of plan assets as of December 31,
Asset category (a)
 
 
2019
 
2018
Equity Securities
 
41%
 
40%
 
33%
Debt Securities
 
59%
 
58%
 
58%
Cash and Cash Equivalents
 
—%
 
1%
 
1%
Real Estate
 
—%
 
1%
 
8%
Estimated Future Benefit Payments and Medicare Part D Reimbursements
Benefit payments, which reflect future service, are expected to be paid as follows:
Estimated future benefit payments
 
 
$ in millions due within the following years:
 
Pension
2020
 
$
26.6

2021
 
$
26.3

2022
 
$
26.0

2023
 
$
25.8

2024
 
$
25.4

2025 - 2029
 
$
122.0
Pension [Member]  
Fair Value Measurements for Plan Assets
The fair values of our pension plan assets at December 31, 2019 by asset category are as follows:
$ in millions
 
Market Value at December 31, 2019
 
Quoted prices
in active
markets for
identical assets
 
Significant
observable
inputs
 
Significant
unobservable
inputs
Asset category (f)
 
 
 
(Level 1)
 
(Level 2)
 
(Level 3)
Mutual fund - equities (a)
 
$
142.9

 
$
—

 
$
142.9

 
$
—

Mutual fund - debt (b)
 
115.6

 
—

 
115.6

 
—

Government debt securities (c)
 
89.1

 
—

 
89.1

 
—

Cash and cash equivalents (d)
 
1.9

 
1.9

 
—

 
—

Other investments:
 
 
 
 
 
 
 
 
Core property collective fund (e)
 
2.5

 
—

 
2.5

 
—

Total pension plan assets
 
$
352.0

 
$
1.9

 
$
350.1

 
$
—



(a)
This category includes investments in equity securities of U.S. companies of any market capitalization and other investments (i.e.: futures, swaps, currency forwards) of foreign, emerging markets and seeks to provide long-term total return, which includes capital appreciation and income. The funds are valued using the net asset value method.
(b)
This category includes investments in high quality issues within the U.S. corporate bond markets and global high yield bonds and emerging markets debt denominated in local currency. The funds seek to provide current income and long-term capital preservation along with access to higher yielding, relatively liquid fixed income securities. The funds are valued using the net asset value method.
(c)
This category is comprised of investments U.S. treasury strips, U.S. government agency obligations, and U.S. treasury obligations. The funds seek investment returns over the long term and are valued using the net asset value method.
(d)
This category represents an investment that seeks to maximize current income on cash reserves to the extent consistent with principal preservation and maintenance of liquidity from a portfolio of obligations of the U.S. Government, its agencies or instrumentalities, and related money market instruments. Principal preservation is a primary objective. The fund is valued at cost.
(e)
This category represents a property fund that invests in commercial real estate. The fair value of the fund is valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.
(f)
In 2019, the DP&L plan moved all investments into collective trusts; therefore, the 2019 balances under all asset categories shown above represent investments through collective trusts. The plan has chosen collective trusts for which the underlying investments are mutual funds, common stock. debt securities, or real estate in alignment with the target asset allocation.

Most of our plan assets at December 31, 2018 are measured using quoted, observable prices which are considered Level One inputs in the Fair Value Hierarchy. The Core Property Collective Fund is measured using Level Two inputs that are quoted prices for identical assets in markets that are less active.

The fair values of our pension plan assets at December 31, 2018 by asset category are as follows:
$ in millions
 
Market Value at December 31, 2018
 
Quoted prices
in active
markets for
identical assets
 
Significant
observable
inputs
 
Significant
unobservable
inputs
Asset category (f)
 
 
 
(Level 1)
 
(Level 2)
 
(Level 3)
Mutual funds:
 
 
 
 
 
 
 
 
U.S. equities (a)
 
$
79.3

 
$
79.3

 
$
—

 
$
—

International equities (a)
 
25.9

 
25.9

 
—

 
—

Fixed income (b)
 
143.7

 
143.7

 
—

 
—

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
37.5

 
37.5

 
—

 
—

Cash and cash equivalents:
 
 
 
 
 
 
 
 
Money market funds (c)
 
2.4

 
2.4

 
—

 
—

Other investments:
 
 
 
 
 
 
 
 
Core property collective fund (d)
 
24.1

 
—

 
24.1

 
—

Total pension plan assets
 
$
312.9

 
$
288.8

 
$
24.1

 
$
—



(a)
This category includes investments in equity securities of large, small and medium sized U.S. companies and equity securities of foreign companies including those in developing countries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.
(b)
This category includes investments in investment-grade fixed-income instruments, U.S. dollar-denominated debt securities of emerging market issuers and high yield fixed-income securities that are rated below investment grade. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.
(c)
This category is comprised of investments in U.S. treasury obligations that seek to preserve principal and maintain liquidity while providing current income. The funds are valued at the assets’ amortized cost to maintain a stable per share net asset value.
(d)
This category represents a property fund that invests in commercial real estate. The fair value of the fund is valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.