Income Taxes

9 Months Ended

Sep. 30, 2020

The following table details the effective tax rates for the three and nine months ended September 30, 2020 and 2019.


	Three months ended		Nine months ended
	September 30,		September 30,
	2020	2019	2020	2019
DPL	55.2%	(35.6)%	71.1%	(9.8)%

DPL’s effective combined state and federal income tax rate for all operations was 55.2% and 71.1% for the three and nine months ended September 30, 2020, respectively. This rate is higher than the combined federal and state statutory rate of 22.3% primarily due to the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of DP&L and the reversal of an uncertain tax position; these benefits were partially offset by an adjustment to the deferred tax balances. For the nine months ended September 30, 2020, DPL’s current period tax benefit was calculated using the limitations prescribed in ASC 740-270-30-28 as DPL's year-to-date pre-tax loss exceeded the amount of the anticipated full-year pre-tax loss.

DPL's income tax expense for the nine months ended September 30, 2019 was calculated using the estimated annual effective income tax rates for 2019 of (10.1)%. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income.

AES files federal and state income tax returns which consolidate DPL and its subsidiaries. Under a tax sharing agreement with AES, DPL is responsible for the income taxes associated with its own taxable income and records the provision for income taxes using a separate return method. Effective with the approval of DP&L's 2017 ESP, through November 21, 2019, DPL was restricted from making tax sharing payments to AES throughout the term of the DMR and amounts that would otherwise have been tax sharing liabilities were converted to deemed capital

contributions. With the November 21, 2019 order from the PUCO that removed the DMR, this requirement was eliminated.

During the nine months ended September 30, 2020, DPL received a payment from AES of $52.0 million against its tax receivable balance as part of a $150.0 million payment from AES. See Note 9 – Shareholder's Deficit for additional information.

Subsidiaries [Member]

Entity Information [Line Items]

Income Taxes

The following table details the effective tax rates for the three and nine months ended September 30, 2020 and 2019.


	Three months ended		Nine months ended
	September 30,		September 30,
	2020	2019	2020	2019
DP&L	16.4%	(19.1)%	4.8%	4.7%

DP&L’s effective combined state and federal income tax rate was 16.4% and 4.8% for the three and nine months ended September 30, 2020, respectively. This is different from the combined federal and state statutory rate of 22.3% primarily due to the net tax benefit related to the reversal of excess deferred taxes and the reversal of an uncertain tax position, which were partially offset by an adjustment to the deferred tax balances.

DP&L's income tax expense for the nine months ended September 30, 2019 was calculated using the estimated annual effective income tax rates for 2019 of 4.5%. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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