0000787250 dpl:OtherRevenuesMember srt:ConsolidationEliminationsMember 2019-01-01 2019-09-30

As filed with the Securities and Exchange Commission on November 8, 2019March 15, 2021

Registration No. 333-______333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

DPL INC.
(Exact Name of Registrant as Specified in Its Charter)
DPL Inc.
(Exact Name of Registrant as Specified in Its Charter)
Ohio493131-1163136
(State or Other Jurisdiction of Incorporation or Organization)(Primary Standard Industrial
Classification Code Number)		(I.R.S. Employer
Identification Number)
Ohio493131-1163136
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
1065 Woodman Drive
Dayton, OH 45432
(937) 259-7215
937-259-7215
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’sRegistrant's Principal Executive Offices)

Judi L. Sobecki, Esq.
General Counsel
DPL Inc.
1065 Woodman Drive
Dayton, OH 45432
(937) 259-7215
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:
Richard D. Truesdell, Jr., Esq.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New YorkNY 10017
(212) 450-4000
i


Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o☐    Accelerated filer o☐
Non-accelerated filer x☑    Smaller reporting company o☐
Emerging growth company o☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross Border Issuer Tender Offer) o

Exchange Act Rule 14d-1(d) (Cross Border Third Party Tender Offer) o
CALCULATION OF REGISTRATION FEE
Title Of Each Class
Of Securities To Be Registered
Amount To Be RegisteredProposed Maximum Offering Price Per Unit(1)Proposed Maximum Aggregate Offering Price(1)
Amount Of
Registration Fee
New 4.125% Senior Notes due 2025$415,000,000100%$415,000,000$45,276.50
CALCULATION OF REGISTRATION FEE
Title Of Each Class
Of Securities To Be Registered
Amount To Be RegisteredProposed Maximum Offering Price Per Unit(1)Proposed Maximum Aggregate Offering Price(1)
Amount Of
Registration Fee
New 4.35% Senior Notes due 2029$400,000,000100%$400,000,000$51,920

(1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

ii

SUBJECT TO COMPLETION, DATED MARCH 15, 2021
PROSPECTUS




SUBJECT TO COMPLETION, DATED NOVEMBER 8, 2019
PROSPECTUS
dplinclogoa23.jpg
DPL Inc.
Offer to Exchange
4.35%4.125% Senior Notes due 20292025
for
New 4.35%4.125% Senior Notes due 20292025


We are offering to exchange up to $400,000,000$415,000,000 of our new registered 4.35%4.125% Senior Notes due 20292025 (the “new notes”) for up to $400,000,000$415,000,000 of our existing unregistered 4.35%4.125% Senior Notes due 20292025 (the “old notes”). The terms of the new notes are identical in all material respects to the terms of the old notes, except that the new notes have been registered under the Securities Act of 1933, as amended (the “Securities Act”), and the transfer restrictions and registration rights relating to the old notes do not apply to the new notes. The new notes will represent the same debt as the old notes and we will issue the new notes under the same indenture.

To exchange your old notes for new notes:

•you are required to make the representations described on page 32 to us; and
•you should read the section called “The Exchange Offer” starting on page 6461 for further information on how to exchange your old notes for new notes.

The exchange offer will expire at 5:00 P.M. New York City time on , 20192021 unless it is extended.
_________________

See “Risk Factors” beginning on page 5 of this prospectus for a discussion of risk factors that should be considered by you prior to tendering your old notes in the exchange offer.
________________

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the exchange offer or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

, 2019



TABLE OF CONTENTS2021
iii

Table of ContentsPage No.
Glossary of Terms
Summary
Risk Factors
Cautionary Note Regarding Forward-Looking Statements
Use of Proceeds
Capitalization
Selected Consolidated Financial and Other Data
Management's Discussion and Analysis of Results of Operations and Financial Condition
BUSINESSBusiness
Description of the Notes
The Exchange Offer
U.S. Federal Income Tax Consequences
Plan of Distribution
Validity of Securities
Experts
Where You Can Find More Information
Index to Financial Statements

We have not authorized anyone to provide you with any information other than that contained in this prospectus or to which we have referred you. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

This prospectus is based on information provided by us and by other sources that we believe are reliable. We cannot assure you that this information is accurate or complete. This prospectus summarizes certain documents and other information and we refer you to them for a more complete understanding of what we discuss in this prospectus. In making an investment decision, you must rely on your own examination of our company and the terms of the offering and the notes, including the merits and risks involved.

We are not making any representation to any purchaser of the notes regarding the legality of an investment in the notes by such purchaser under any legal investment or similar laws or regulations. You should not consider any information in this prospectus to be legal, business or tax advice. You should consult your own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in the notes.

Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

iv

GLOSSARY OF TERMS

The following select terms, abbreviations or acronyms are used in this prospectus:
TermDefinition
2017 ESPDP&L's ESP, approved October 20, 2017, effective November 1, 2017
AEP GenerationAEP Generation Resources Inc., - a subsidiary of American Electric Power Company, Inc. (“AEP”). Columbus Southern Power Company merged into the Ohio Power Company, another subsidiary of AEP, effective December 31, 2011. The Ohio Power generating assets (including jointly-owned units) were transferred into AEP Generation.
AERAESAlternative Energy Rider allows DP&L to recover costs related to meeting the Ohio renewable portfolio standards
AESThe AES Corporation - a global power company, the ultimate parent company of DPL
AES Ohio GenerationAES Ohio Generation, LLC - a wholly-owned subsidiary of DPL that ownsowned and operates aoperated generation facilityfacilities from which it makesmade wholesale sales
AFUDCAllowance for Funds Used During Construction
AMIAdvanced Metering Infrastructure
AOCIAccumulated Other Comprehensive Income
AROAOCLAccumulated Other Comprehensive Loss
AROAsset Retirement Obligation
ASUAccounting Standards Update
CAAU.S. Clean Air Act - the congressional act that directs the USEPA’s regulation of stationary and mobile sources of air pollution to protect air quality and stratospheric ozone
Capacity MarketThe purpose of the capacity market is to enable PJM to obtain sufficient resources to reliably meet the needs of electric customers within the PJM footprint. PJM procures capacity, through a multi-auction structure, on behalf of the load serving entities to satisfy the load obligations. There are four auctions held for each Delivery Year (running from June 1 through May 31). The Base Residual Auction is held three years in advance of the Delivery Year and there is one Incremental Auction held in each of the subsequent three years. AES Ohio Generation's capacity is in the “rest of” RTO area of PJM.
CCEMCCRCustomer Conservation and Energy Management
CCRCoal Combustion Residuals - which consists of bottom ash, fly ash, boiler slag and air pollutionflue gas desulfurization materials generated from burning coal
ConesvilleAES Ohio Generation's interest in Unit 4 at the Conesville EGU which is operated by AEPEGU. Unit 4 was closed in May 2020 and AES Ohio Generation's interest was sold in June 2020.
CPPThe Clean Power Plan - the USEPA's final carbon dioxide emission rules for existing power plants under Clean Air Act Section 111(d)
CRESCompetitive Retail Electric Service
CSAPRCross-State Air Pollution Rule - the USEPA's rule to address interstate air pollution transport to decrease emissions to downwind states
CWADIRU.S. Clean Water Act
Dark spreadA common metric used to estimate returns over fuel costs of coal-fired EGUs
DOEU.S. Department of Energy
DMPDistribution Modernization PlanInvestment Rider - on December 21, 2018, DP&L filed a comprehensive grid modernization plan pursuant to the PUCO Orderinitially established in the ESP 3 and authorized in the DRO to recover certain distribution capital investments placed in service beginning October 1, 2015, for the number of years, and subject to increasing annual revenue limits and other terms, as set forth in the DRO. The annual revenue limit for 2019 was $22.0 million.
DMRDistribution modernizationModernization Rider - established in the ESP 3 as a non-bypassable rider - designed to allow DP&L to modernize and/or maintain its transmission and distribution infrastructure.collect $105.0 million in revenue per year for the first three years of the ESP 3 term
DPLDPL Inc.
DPLERDP&LDPL Energy Resources, Inc., formerly a wholly-owned subsidiary of DPL which sold competitive electric energy and other energy services. DPLER was sold on January 1, 2016 pursuant to an agreement dated December 28, 2015.
DP&LThe Dayton Power and Light Company - the principal subsidiary of DPL and a public utility which sells, transmits and distributes electricity to residential, commercial, industrial and governmental customers in a 6,000 square mile area of West Central Ohio. DP&L is wholly-owned by DPL and also does business as AES Ohio.
DRODistribution Rate Order - the order issued by the PUCO on September 26, 2018 establishing new base distribution rates for DP&L, which became effective October 1, 2018
DthsEBITDADecatherms, unit of heat energy equal to 10 therms. One therm is equal to 100,000 British Thermal Units
Duke EnergyAffiliates of Duke Energy with which DP&L co-owns transmission lines in Ohio (Duke Energy Ohio, Inc.)
DynegyDynegy, Inc., the parent of various subsidiaries that, along with AEP Generation and AES Ohio Generation, co-owns coal-fired EGUs in Ohio
EBITEarnings before interest and taxes
EBITDAEarnings before interest, taxes, depreciation and amortization
EGUElectric Generating Unit
ELG
Steam Electric Power Effluent Limitations Guidelines - guidelines which cover wastewater discharges from power plants operating as utilities
ERACERISAEnvironmental Review Appeals Commission - a commission appointed by the Governor of Ohio to resolve appeals related various Ohio agencies including Ohio EPA, Ohio Department of Agriculture and others
ERISAThe Employee Retirement Income Security Act of 1974
ESPThe Electric Security Plan is- a cost-based plan that a utility may file with the PUCO to establish SSO rates pursuant to Ohio law
FASBESP 1ESP originally approved by PUCO order dated June 24, 2009. After DP&L withdrew its ESP 3 Application, the PUCO approved DP&L's request to revert to rates based on its ESP 1 rate plan effective December 19, 2019. DP&L is currently operating under this ESP 1 plan.
ESP 3DP&L's ESP - which was approved October 20, 2017 and became effective November 1, 2017. This ESP 3 was subsequently withdrawn, and DP&L reverted to its ESP 1 rate plan, effective December 18, 2019.
FASBFinancial Accounting Standards Board
FASCFASB Accounting Standards Codification
FERCFederal Energy Regulatory Commission
First and Refunding MortgageDP&L’s First and Refunding Mortgage, dated October 1, 1935, as amended, with Thethe Bank of New York Mellon as Trustee
FTRFinancial Transmission Rights
GAAPGenerally Accepted Accounting Principles in the United States of America

GLOSSARY OF TERMS (cont.)
TermDefinition
Generation SeparationThe transfer on October 1, 2017, to AES Ohio Generation of the DP&L-owned generating facilities and related liabilities, excluding those of the Beckjord Facility and Hutchings EGU,Coal Stations, pursuant to an asset contribution agreement with a subsidiary that was then merged into AES Ohio Generation
v

GHGGreenhouse gasGLOSSARY OF TERMS (cont.)
kVTermKilovolts, 1,000 voltsDefinition
kWhGHGKilowatt hourGreenhouse gas - air pollutants largely emitted from combustion
LIBORkWhKilowatt hour
LIBORLondon Inter-Bank Offering Rate
Master TrustDP&L established a Master Trust to hold assets that could be used for the benefit of employees participating in employee benefit plans
MATSMercury and Air Toxics Standards - the USEPA’s rules for existing and new power plants under Section 112 of the CAA
MergerThe merger of DPL and Dolphin Sub, Inc., a wholly-owned subsidiary of AES. On November 28, 2011, DPL became a wholly-owned subsidiary of AES.
Miami Valley LightingMiami Valley Lighting, LLC is a wholly-owned subsidiary of DPL established in 1985 to provide street and outdoor lighting services to customers in the Dayton region. Miami Valley Lighting serves businesses, communities and neighborhoods in West Central Ohio with over 70,000 lighting solutions for more than 190 businesses and 180 local governments.
MROMarket Rate Option - a market-based plan that a utility may file with PUCO to establish SSO rates pursuant to Ohio law
MTMMark to Market
MVICMiami Valley Insurance Company is a wholly-owned insurance subsidiary of DPL that provides insurance services to DPL and its subsidiaries
MWMegawatt a unit of power equal to one million watts
MWhMegawatt hour
NAAQSNational Ambient Air Quality Standards - the USEPA’s health and environmental based standards for six specified pollutants, as found in the ambient air
NAVNet asset value
NERCNorth American Electric Reliability Corporation - a not-for-profit international regulatory authority whose mission is to assure the effective and efficient reduction of risks to the reliability and security of the electric grid
Non-bypassableCharges that are assessed to all customers regardless of whom the customer selects as their retail electric generation supplier
NOV
Notice of Violation - an administrative action by EPA or a state agency to address non-compliance with various federal or state anti-pollution laws or regulations
NOX
Nitrogen Oxide - an air pollutant regulated by the NAAQS under the CAA
NPDES
National Pollutant Discharge Elimination System - a permit program for industrial, municipal and other facilities that discharge to surface water
NSROCINew Source Review: a preconstruction permitting program regulating new or significantly modified sources of air pollution
OCIOther Comprehensive Income
Ohio EPAOhio Environmental Protection Agency
OTCOVECOver the counter
OVECOhio Valley Electric Corporation, an electric generating company in which DP&L has a 4.9% interest
Peaker assetsThe generation and related assets for the 586.0 MW Tait combustion turbine and diesel generation facility, the 236.0 MW Montpelier combustion turbine generation facility, the 101.5 MW Yankee combustion turbine generation and solar facility, the 25.0 MW Hutchings combustion turbine generation facility, the 12.0 MW Monument diesel generation facility and the 12.0 MW Sidney diesel generation facility
PJMPJM Interconnection, LLC, an RTO
PRPPRP - A Potentially Responsible Party is considered by the USEPA to be potentially responsible for ground contamination and the USEPA will commonly require PRPs to conduct an investigation to determine the source of contamination and to perform the cleanup before using Superfund money
PUCOPublic Utilities Commission of Ohio
RTORSCRate Stabilization Charge - approved as part of DP&L's ESP 1. After ESP 3 was withdrawn, the PUCO again continued ESP 1, including the RSC, effective December 18, 2019
RTORegional Transmission Organization
SB 221Ohio Senate Bill 221 is an Ohio electric energy bill that requires all Ohio distribution utilities to file either an ESP or MRO. The law also contains, among other things, annual targets relating to advanced energy portfolio standards, renewable energy, demand reduction and energy efficiency standards.
SECSecurities and Exchange Commission
SEETSignificantly Excessive Earnings Test - a test used by the PUCO to determine whether a utility's ESP or MRO produces significantly excessive earnings for the utility
Service CompanyAES US Services, LLC - the shared services affiliate providing accounting, finance and other support services to AES’ U.S. SBU businesses
SIPA State Implementation Plan is a plan for complying with the federal CAA, administered by the USEPA. The SIP consists of narrative, rules, technical documentation and agreements that an individual state will use to clean up polluted areas.
Smart Grid PlanIn December 2018, DP&L filed a comprehensive grid modernization plan
SO2
Sulfur Dioxide - an air pollutant regulated by the NAAQS under the CAA
SSOStandard Service Offer represents- the retail transmission, distribution and generation services offered by a utility through regulated rates, authorized by the PUCO
TCJAThe Tax Cuts and Jobs Act of 2017 signed on December 22, 2017
U.S.United States of America
USDU.S.U. S. dollar
USEPAU. S. Environmental Protection Agency
vi

USFGLOSSARY OF TERMS (cont.)
TermDefinition
USFThe Universal Service Fund (USF) is a statewide program which provides qualified low-income customers in Ohio with income-based bills and energy efficiency education programs
U.S. SBUU. S. Strategic Business Unit, AES’ reporting unit covering the businesses in the United States, including DPL
WPAFBWright-Patterson Air Force Base
vii

SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus before making a decision to exchange your old notes for new notes, including the section entitled “Risk Factors” beginning on page 5 of this prospectus.
Unless otherwise indicated or the context otherwise requires, the terms “DPL,” “we,” “our,” “us,” and “the Company” refer to DPL Inc., including all of its subsidiaries and affiliates, collectively.

Our Company
DPL is a diversified regional energy company incorporated in 1985 under the laws of the StateOhio. All of Ohio in 1985 withDPL’s stock is owned by an AES subsidiary.
DPL has three primary subsidiaries: DP&L, MVIC and Miami Valley Insurance Company (“MVIC”) andLighting. DP&L, which also does business as AES Ohio, Generation, LLC (“AES Ohio Generation”). DP&L is a public utility providing electric transmission and distribution services in West Central Ohio. For additional information, see Note 1 – Overview and Summary of Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements. All of DPL's subsidiaries are wholly-owned. DPL manages its business through one reportable operating segment, the Utility segment. See Note 13 – Business Segments of the Notes to DPL's Consolidated Financial Statements for additional information regarding DPL’s reportable segment. DP&L also manages its business through one reportable operating segment, the Utility segment.
As an electric public utility in Ohio, DP&L provides regulated transmission and distribution services to its customers as well as retail SSO electric service. DP&L's sales reflect the general economic conditions, seasonal weather patterns and the growth of energy efficiency initiatives; however, our distribution revenues were decoupled from weather and energy efficiency variations from January 1, 2019 through December 18, 2019. In the first quarter of 2020, DP&L filed a petition to continue to accrue the impacts of decoupling for recovery through a future rate proceeding, but it is unknown at this time how the PUCO will rule on that petition. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements for further information.
DPL’s other primary subsidiaries are MVIC and Miami Valley Lighting. MVIC is DPL’sour captive insurance company that provides insurance services to DPLDP&L and its subsidiaries. AES Ohio Generation owns an undivided interestour other subsidiaries, and Miami Valley Lighting provides street and outdoor lighting services to customers in a coal-fired generating facility and sells all of its energy and capacity into the wholesale market. Dayton region.
DPL also has a wholly-owned business trust, DPL Capital Trust II, (“Capital Trust II”), formed for the purpose of issuing trust capital securities to investors. All of DPL’s subsidiaries are wholly-owned.
DP&L is a public utility incorporated in 1911 under the laws of Ohio. DP&L offers retail standard service offer (“SSO”) electric service to residential, commercial, industrial and governmental customers in a 6,000 square mile area of West Central Ohio and has the exclusive right to provide distribution and transmission services to more than 524,000 customers in that service area. In addition to does not have any subsidiaries.
DP&L’s electric transmission and distribution businesses, DP&L has a 4.9% interest in OVEC, an electric generating company. OVEC has two electric generating stations located in Cheshire, Ohio and Madison, Indiana with a combined generation capacity of 2,109 megawatts (“MW”). DP&L’s share of this generation capacity is 103 MW.
The principal industries located in DP&L’s service territory include automotive, food processing, paper, plastic, manufacturing and defense. DP&L’s sales reflect general economic and competitive conditions, seasonal weather patterns of the area and the growth of energy efficiency initiatives, however, its distribution revenues have been decoupled from weather and energy efficiency variations beginning January 1, 2019 as a result of the decoupling rider the PUCO approved in the distribution rate order establishing new base distribution rates, which became effective October 1, 2018 (the “DRO”).
DPL strives to achieve stable, long-term growth through efficient operations and strong customer and regulatory relations. More specifically, DPL’s strategy is to utilize the transmission and distribution assets that transfer electricity at the most efficient cost, and to maintain the highest level of customer service and reliability. DPL’s total consolidated revenue and net income for the nine months ended September 30, 2019 were $592.2 million and $61.4 million, respectively. In addition, as of September 30, 2019, DPL had total assets of approximately $1.8 billion. DPL’s business is not dependent on any single customer or group of customers.
DPL’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DPLDP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs or overcollections of riders.
DPL Inc. was incorporated under the laws of the State of Ohio in 1985. DPL’s principal executive office is located at 1065 Woodman Drive, Dayton, Ohio, 45432, and its telephone number is (937) 224-6000.259-7215. DPL’s website address is https://www.dpandl.com. Material contained on DPL’s website is not part of and is not deemed to be a part of this prospectus.
DPL Inc. is a wholly owned indirect subsidiary of The AES Corporation (“AES”). AES is a global power company.company with operations in 15 countries. AES’s executive offices are located at 4300 Wilson Boulevard, Arlington, VA, 22203 and its telephone number is (703) 522-1315.
The names “DPL,” “The Dayton Power & Light Company” and various other names contained herein are DPL owned trademarks, service marks or trade names. The name “AES” is an AES owned trademark, service mark or

trade name. All other trademarks, trade names or service marks appearing herein are owned by their respective holders.
The
1




Summary of the Exchange Offer
Securities OfferedWe are offering up to $400,000,000$415,000,000 aggregate principal amount of new 4.35%4.125% Senior Notes due 20292025 (the “new notes”), which will be registered under the Securities Act.
The Exchange OfferWe are offering to issue the new notes in exchange for a like principal amount of your old notes. We are offering to issue the new notes to satisfy our obligations contained in the registration rights agreement entered into when the old notes were sold in transactions permitted by Rule 144A and Regulation S under the Securities Act and therefore not registered with the SEC. For procedures for tendering, see “The Exchange Offer.”
Tenders, Expiration Date, WithdrawalThe exchange offer will expire at 5:00 P.M. New York City time on 2019________, 2021 unless it is extended. If you decide to exchange your old notes for new notes, you must acknowledge that you are not engaging in, and do not intend to engage in, a distribution of the new notes. If you decide to tender your old notes in the exchange offer, you may withdraw them at any time prior to , 2019.________, 2021. If we decide for any reason not to accept any old notes for exchange, your old notes will be returned to you without expense to you promptly after the exchange offer expires. You may only exchange old notes in denominations of $2,000 and integral multiples of $1,000 in excess thereof.
U.S. Federal Income Tax ConsequencesYour exchange of old notes for new notes in the exchange offer will not result in any income, gain or loss to you for U.S. federal income tax purposes. See “U.S. Federal Income Tax Consequences of the Exchange Offer.”
Use of ProceedsWe will not receive any proceeds from the issuance of the new notes in the exchange offer.
Exchange AgentU.S. Bank National Association is the exchange agent for the exchange offer.
Failure to Tender Your Old NotesIf you fail to tender your old notes in the exchange offer, you will not have any further rights under the registration rights agreement, including any right to require us to register your old notes or to pay you additional interest or liquidated damages. All untendered old notes will continue to be subject to the restrictions on transfer set forth in the old notes and in the indenture. In general, the old notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not currently anticipate that we will register such untendered old notes under the Securities Act and, following this exchange offer, will be under no obligation to do so.

You will be able to resell the new notes without registering them with the SEC if you meet the requirements described below.
•Based on interpretations by the SEC’s staff in no-action letters issued to third parties, we believe that new notes issued in exchange for the old notes in the exchange offer may be offered for resale, resold or

otherwise transferred by you without registering the new notes under the Securities Act or delivering a prospectus, unless you are a broker-dealer receiving securities for your own account, so long as:
▪you are not one of our “affiliates,” which is defined in Rule 405 of the Securities Act;
2

▪you acquire the new notes in the ordinary course of your business;
▪you do not have any arrangement or understanding with any person to participate in the distribution of the new notes; and
▪you are not engaged in, and do not intend to engage in, a distribution of the new notes.
If you are an affiliate of DPL, or you are engaged in, intend to engage in or have any arrangement or understanding with respect to, the distribution of new notes acquired in the exchange offer, you (1) should not rely on our interpretations of the position of the SEC’s staff and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.
If you are a broker-dealer and receive new notes for your own account in the exchange offer and/or in exchange for old notes that were acquired for your own account as a result of market-making or other trading activities:
•you must represent that you do not have any arrangement or understanding with us or any of our affiliates to distribute the new notes;
•you must acknowledge that you will deliver a prospectus in connection with any resale of the new notes you receive from us in the exchange offer; and
•you may use this prospectus, as it may be amended or supplemented from time to time, in connection with the resale of new notes received in exchange for old notes acquired by you as a result of market-making or other trading activities.
For a period of 90 days after the expiration of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any resale described above.

Summary Description of the Notes
The terms of the new notes and the old notes are identical in all material respects, except that the new notes have been registered under the Securities Act, and the transfer restrictions and registration rights relating to the old notes do not apply to the new notes. The new notes will represent the same debt as the old notes and will be governed by the same indenture under which the old notes were issued.

IssuerDPL Inc., an Ohio corporation
Notes Offered$400.0415.0 million aggregate principal amount of 4.35%4.125% Senior Notes due 20292025
MaturityApril 15, 2029July 1, 2025
Interest Payment DatesThe new notes will bear interest at an annual rate equal to 4.35%4.125%. Interest on the notes will be paid on each April 15July 1 and October 15.January 1.
Record DatesThe regular record date for each interest payment date for the notes will be the April 1June 15 or October 1December 15 prior to such interest payment date.
DenominationsMinimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

Ranking
The notes will be DPL’s unsecured and unsubordinated obligations and will rank:
• equal in right of payment with all of DPL’s other senior unsecured debt;
• effectively junior in right of payment to (a) DPL’s secured debt, if any, to the extent of the value of the assets securing such debt and (b) the debt and other liabilities (including trade payables) of DPL’s subsidiaries; and
• senior in right of payment to any of DPL’s subordinated debt (if any).
As of September 30, 2019,December 31, 2020, the carrying value of our indebtedness was $1,362.9$1,493.6 million. At September 30, 2019,December 31, 2020, the indebtedness of DPL’s subsidiaries had a carrying value of approximately $574.2$594.1 million.
3

The indenture under which the new notes will be issued contains no restrictions on the amount of additional unsecured indebtedness that DPL may incur or the amount of indebtedness (whether secured or unsecured) that DPL’s subsidiaries may incur (subject to compliance with the Limitations on Liens covenant in the case of secured debt). There will be no recourse against AES with respect to the notes offered hereby.
Optional Redemption
Prior to January 15, 2029April 1, 2025 (the date that is three months prior to the maturity date), we may redeem some or all of the notes at any time and from time to time at a redemption price, together with accrued and unpaid interest to the date of redemption, equal to the greater of:
• 100% of their principal amount; or
• the sum of the present values of the remaining scheduled payments of principal and interest on the notes, discounted from the redemption date to January 15, 2029April 1, 2025 (the date that is three months prior to the maturity date) on a semiannual basis at the treasury yield plus 3050 basis points.
On or after January 15, 2029April 1, 2025 (the date that is three months prior to the maturity date), we may redeem some or all of the notes at any time and from time to time at a redemption price equal to 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest on the notes to be redeemed to the date of redemption.
See “Description of the Notes-Optional Redemption.”
Change of ControlUpon the occurrence of a change of control triggering event (as described in “Description of the Notes-Repurchase at the Option of Holders”), you may require the repurchase of some or all of your notes at 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the date of repurchase.

Covenants
The indenture governing the notes contains covenants that, among other things, limit our ability and, in the case of restrictions on liens, the ability of our significant subsidiaries to:
• create certain liens on assets and properties; and
• consolidate or merge, or convey, transfer or lease substantially all of our consolidated properties and assets.
These covenants are subject to important exceptions and qualifications, which are described in “Description of the Notes-Covenants.” The indenture does not in any way restrict or prevent DP&L or any other DPL subsidiary from incurring indebtedness (subject to compliance with the Limitation on Liens covenant in the case of secured debt).
Book-Entry FormThe notes will be issued in registered book-entry form represented by one or more global notes to be deposited with or on behalf of The Depository Trust Company, or DTC, or its nominee for the accounts of its direct and indirect participants including Clearstream and Euroclear. Transfers of the notes will be effected only through the facilities of DTC. Beneficial interests in the global notes may not be exchanged for certificated notes except in limited circumstances.
TrusteeU.S. Bank National Association.
Governing LawThe indenture that governs the notes offered hereby and the notes are governed by, and will be construed in accordance with, the laws of the State of New York.
Risk FactorsYou should carefully consider all of the information contained in this prospectus before deciding to tender your old notes in the exchange offer. In particular, we urge you to carefully consider the information set forth under “Risk Factors” herein for a discussion of risks and uncertainties relating to us, our business and the new notes offered hereby.


4

RISK FACTORS

RISK FACTORS
If any of the following risks occur, our business, results of operations or financial condition could be materially adversely affected. You should also read the section captioned “Cautionary Note Regarding Forward-Looking Statements” for a discussion of what types of statements are forward-looking as well as the significance of such statements in the context of this prospectus.
Risks Related to the Exchange Offer
If you choose not to exchange your old notes in the exchange offer, the transfer restrictions currently applicable to your old notes will remain in force and the market price of your old notes could decline.
If you do not exchange your old notes for new notes in the exchange offer, then you will continue to be subject to the transfer restrictions on the old notes as set forth in the offering memorandum distributed in connection with the private offering of the old notes. In general, the old notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement entered into in connection with the private offering of the old notes, we do not intend to register resales of the old notes under the Securities Act. The tender of old notes under the exchange offer will reduce the principal amount of the old notes outstanding, which may have an adverse effect upon, and increase the volatility of, the market price of the old notes due to reduction in liquidity.

You must follow the exchange offer procedures carefully in order to receive the new notes.
If you do not follow the procedures described in this prospectus, you will not receive any new notes. If you want to tender your old notes in exchange for new notes, you will need to contact a DTC participant to complete the book-entry transfer procedures described under “The Exchange Offer,” prior to the expiration date, and you should allow sufficient time to ensure timely completion of these procedures to ensure delivery. No one is under any obligation to give you notification of defects or irregularities with respect to tenders of old notes for exchange. For additional information, see the section captioned “The Exchange Offer” in this prospectus.
There are state securities law restrictions on the resale of the new notes.
In order to comply with the securities laws of certain jurisdictions, the new notes may not be offered or resold by any holder, unless they have been registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and the requirements of such exemption have been satisfied. We currently do not intend to register or qualify the resale of the new notes in any such jurisdictions. However, generally an exemption is available for sales to registered broker-dealers and certain institutional buyers. Other exemptions under applicable state securities laws also may be available.
Risks Related to the Notes
DPL is a holding company and parent of DP&L and other subsidiaries. DPL’s cash flow is dependent on the operating cash flows of DP&L and its other subsidiaries and their ability to pay cash to DPL. DPL’s subsidiaries will not guarantee the notes and will not be restricted under the indenture that will govern the notes.
DPL is a holding company and its investments in its subsidiaries are its primary assets. DPL’s subsidiaries are separate and distinct legal entities and, unless they have expressly guaranteed any of DPL’s indebtedness, have no obligation, contingent or otherwise, to pay any amounts due pursuant to such debt or to make any funds available whether by dividends, fees, loans or other payments. In addition, under certain circumstances, legal, regulatory or contractual restrictions may limit DPL’s ability to obtain cash from its subsidiaries. None of DPL’s subsidiaries are guaranteeing, or are otherwise obligated with respect to, the notes offered hereby.
A significant portion of DPL’s business is conducted by its subsidiary, DP&L. As such, DPL’s cash flow is dependent on the operating cash flows of DP&L and its ability to pay cash to DPL. DP&L’s governing documents contain certain limitations on the ability to declare and pay dividends to DPL while preferred stock is outstanding. Certain of DP&L’s debt agreements also contain limits with respect to the ability of DP&L to loan or advance funds to DPL. In addition, DP&L is regulated by the PUCO that possesses broad oversight powers to ensure that the needs of utility customers are being met. While DPL is not currently aware of any plans to do so, the PUCO could attempt to impose restrictions on the ability of DP&L to pay cash to DPL pursuant to these broad powers. A significant limitation on DP&L’s ability to pay dividends or loan or advance funds to DPL would have a material adverse impact on DPL’s results of operations, financial condition and cash flows, and its ability to make interest and principal payments on the notes and its other indebtedness.
5

Any right DPL has to receive any assets of any of its subsidiaries upon any liquidation, dissolution, winding up, receivership, reorganization, assignment for the benefit of creditors, marshaling of assets and liabilities or any bankruptcy, insolvency or similar proceedings (and the consequent right of the holders of DPL’s indebtedness to participate in the distribution of, or to realize proceeds from, those assets) will be effectively subordinated to the claims of any such subsidiary’s creditors (including trade creditors and holders of debt issued by such subsidiary).
The notes will be effectively subordinated to the liabilities of DPL’s subsidiaries.
DPL’s subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the notes offered hereby or to make any funds available therefor, whether by dividends, fees, loans or other payments. Any right DPL has to receive any assets of any of its subsidiaries upon any liquidation, dissolution, winding up, receivership, reorganization, assignment for the benefit of creditors, marshaling of assets and liabilities or any bankruptcy, insolvency or similar proceedings (and the consequent right of the holders of DPL’s indebtedness to participate in the distribution of, or to realize proceeds from, those assets) will be effectively subordinated to the claims of any such subsidiary’s creditors (including trade creditors and holders of debt issued by such subsidiary). Accordingly, the notes will be effectively subordinated to all liabilities of DPL’s existing or future subsidiaries. At September 30, 2019,December 31, 2020, the indebtedness of DPL’s subsidiaries had a carrying value

of approximately $574.2$594.1 million. The indenture governing the notes will not limit the ability of DPL’s subsidiaries to incur additional indebtedness or other liabilities (subject to the Limitation on Liens covenant in the case of secured debt).
The notes will be effectively subordinated to DPL’s and DP&L’s secured debt.
The notes will be unsecured general obligations of DPL, and therefore will be effectively subordinated to all of the secured debt of DPL, if any, and all of the secured debt of DP&L to the extent of the value of the assets securing such debt. In the event of any distribution or payment of DPL’s assets in any foreclosure, dissolution, winding-up, liquidation or reorganization, or other bankruptcy proceeding, DPL’s secured creditors will have a superior claim to the applicable collateral. On a consolidated basis, the principal amount of DPL’s long-term debt was $1,378.2$1,393.6 million at September 30, 2019,December 31, 2020, consisting of DPL’s unsecured notes, secured term loan, Capital Trust II securities along with DP&L’s first mortgage bonds, tax-exempt first mortgage bonds and the Wright- PattersonWright-Patterson Air Force Base (“WPAFB”) note. The indenture that will govern the notes limits but does not prohibit DPL from incurring secured debt, and there are significant exceptions to this covenant. See “Description of the Notes-Covenants-Limitations on Liens.”
In addition, if DPL defaults under any of its existing or future secured indebtedness, the holders of such indebtedness could declare all of the funds borrowed thereunder, together with accrued interest, immediately due and payable. If DPL is unable to repay such indebtedness, the holders of such indebtedness could foreclose on the pledged assets to the exclusion of the holders of the notes, even if an event of default exists under the indenture governing the notes at such time. In any such event, because the notes will not be secured by any of DPL’s assets, it is possible that there would be no assets remaining from which your claims could be satisfied or, if any assets remained, they might be insufficient to satisfy your claims in full.
DPL may not be able to repurchase the notes upon a change of control.
Upon a “Change of Control Triggering Event” (as defined under “Description of the Notes-Repurchase at the Option of Holders”), DPL will be required to offer to repurchase all outstanding notes at 101% of their principal amount plus accrued and unpaid interest. The source of funds for any such purchase of the notes will be its available cash or cash generated from its subsidiaries’ operations or other sources, including borrowings, issuance of additional debt, sales of assets or sales of equity. The obligations under DPL’s other indebtedness may also be accelerated in such circumstances. DPL may not be able to satisfy its obligations to repurchase the notes upon a Change of Control Triggering Event because it may not have sufficient financial resources to purchase all of the notes that are tendered upon a Change of Control Triggering Event.
It is also possible that the events that constitute a Change of Control Triggering Event may also be events of default under the agreements governing DPL’s other debt. These events may permit such lenders to accelerate the indebtedness outstanding thereunder. If DPL is required to repurchase the notes pursuant to a Change of Control Offer and repay certain amounts outstanding under DPL’s other debt if such indebtedness is accelerated, DPL would probably require third-party financing. DPL cannot be sure that it would be able to obtain third-party financing on acceptable terms, or at all. If DPL’s other debt is not paid, the lenders thereunder may seek to enforce security interests in the collateral securing such indebtedness, thereby limiting DPL’s ability to raise cash to purchase the notes, and reducing the practical benefit of the offer to purchase provisions to the holders of the notes. Any future debt agreements may contain similar provisions.
6

The terms of the indenture governing the notes offered hereby provide only limited protection against significant corporate events and other actions DPL may take that could adversely impact your investment in the notes.
While the indenture governing the notes offered hereby contains terms intended to provide protection to the holders of the notes upon the occurrence of certain events involving significant corporate transactions, such terms are limited and may not be sufficient to protect your investment in the notes.
The definition of the term Change of Control does not cover a variety of transactions (such as acquisitions by DPL or recapitalizations) that could negatively affect the value of your notes. In addition, both a Change of Control and a Rating Event (as defined in “Description of the Notes”) are required for a Change of Control Triggering Event to take place. If DPL were to enter into a significant corporate transaction that would negatively affect the value of the notes but would not constitute a Change of Control Triggering Event, DPL would not be required to offer to

repurchase your notes prior to their maturity. Furthermore, the indenture governing the notes offered hereby will not require DPL to maintain any financial ratios or specific levels of net worth, sales, income, cash flow or liquidity.
Holders of the notes may not be able to determine when a change of control giving rise to their right to have the notes repurchased has occurred following a sale of “substantially all” of DPL’s assets.
One of the circumstances under which a change of control may occur is upon the sale or disposition of all or substantially all of DPL’s assets. There is no precise established definition of the phrase “substantially all” under applicable law, and the interpretation of that phrase will likely depend upon particular facts and circumstances. Accordingly, the ability of a holder of notes to require DPL to repurchase its notes as a result of a sale of less than all of DPL’s assets to another person may be uncertain.
DPL may incur additional indebtedness, which may affect its financial health and its ability to repay the notes.
As of September 30, 2019,December 31, 2020, the carrying value of DPL’s debt was $1,362.9$1,493.6 million and the carrying value of DP&L’s debt was $574.2$594.1 million. Of DP&L’s indebtedness, there was $582.6$565.0 million of first mortgage bonds, tax-exempt first mortgage bonds and a term loan outstandingFirst Mortgage Bonds as of September 30, 2019,December 31, 2020, which are each secured by the pledge of substantially all of the assets of DP&L under the terms of DP&L’s First & Refunding Mortgage. This level of indebtedness and the related security could have important consequences, including the following:
•increase its vulnerability to general adverse economic and industry conditions;
•place it at a competitive disadvantage compared to its competitors that are less leveraged;
•require it to dedicate a substantial portion of its cash flow from operations to make payments on its indebtedness, thereby reducing the availability of its cash flow to fund other corporate purposes;
•limit its flexibility in planning for, or reacting to, changes in its business and the industry in which it operates; and
•limit, along with the financial and other restrictive covenants in its indebtedness, among other things, its ability to borrow additional funds, as needed.
A high level of indebtedness increases the risk that DPL defaults on its debt obligation, including the notes. DPL and/or its subsidiaries expect to incur additional debt in the future, subject to the terms of debt agreements and regulatory approvals. To the extent DPL becomes more leveraged, the risks described above would increase. Further, its actual cash requirements in the future may be greater than expected. Accordingly, its cash flow from operations may not be sufficient to repay at maturity all of the outstanding debt as it becomes due and, in that event, it may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms or at all to refinance its debt, including the notes, as it becomes due.
A court could deem the obligations evidenced by the notes to be a fraudulent conveyance.
The incurrence of the indebtedness under the notes, and any payment of cash dividends and other payments in respect of DPL’s equity interests, are subject to review under relevant federal and state fraudulent transfer or fraudulent conveyance laws in a bankruptcy or reorganization case or lawsuit by or on behalf of DPL’s creditors. Under these laws, if a court were to find at the time the notes were issued that (1) DPL incurred such indebtedness and made such payments with the intent of hindering, delaying or defrauding current or future creditors or (2) DPL received less than reasonably equivalent value or fair consideration for incurring such indebtedness and, in the case of (2) only, one of the following is also true at the time thereof:
•was insolvent or rendered insolvent by reason of such incurrence,
7

•was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital, or
•intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature (as all of the foregoing terms are defined or interpreted under the relevant fraudulent transfer or fraudulent conveyance statutes),
then the court could void or otherwise decline to enforce the notes.

In addition, any payment by DPL pursuant to the notes made at a time DPL is found to be insolvent could be voided and required to be returned to DPL or to a fund for the benefit of DPL’s creditors if such payment is made to an insider within a one-year period prior to a bankruptcy filing or within 90 days for any outside party and such payment would give the creditors more than such creditors would have received in a distribution under Title 11 of the United States Code, as amended (the “Bankruptcy Code”).
The measure of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a company would be considered insolvent if:
•the sum of its debts, including contingent liabilities, was greater than the fair saleablesalable value of all of its assets;
•if the present fair saleablesalable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they became absolute and matured; or
•it could not pay its debts as they became due.
DPL believes that both prior to and after giving effect to this offering it will not be insolvent, will not have unreasonably small capital for its business and will not have incurred debts beyond its ability to pay such debts as they mature. DPL cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with DPL’s conclusions in this regard or, regardless of the standard that a court uses, that the issuance of the notes would not be voided or otherwise enforced.rendered unenforced. If a court voided DPL’s obligations under the notes, holders of the notes would cease to be DPL’s creditors and likely have no source from which to recover amounts due under the notes. In addition, a court could void any payment by DPL pursuant to the notes and require any payment to be returned, or to be paid to a fund for the benefit of DPL’s creditors.
Finally, as a court of equity, the bankruptcy court may subordinate the claims in respect of the notes to the claims of other creditors under the principle of equitable subordination, if the court determines that: (i) the holder of the notes engaged in some type of inequitable conduct to the detriment of other creditors; (ii) such inequitable conduct resulted in injury to other creditors or conferred an unfair advantage upon the holder of the notes; and (iii) equitable subordination is not inconsistent with the provisions of the Bankruptcy Code.
If we file a bankruptcy petition, or if a bankruptcy petition is filed against us, you may receive a lesser amount for your claim under the notes than you would have been entitled to receive under the indenture governing the notes.
If we file a bankruptcy petition under the Bankruptcy Code after the issuance of the notes, or if such a bankruptcy petition is filed against us, your claim against us for the principal amount of your notes may be limited to an amount equal to:
•the original issue price for the notes; and
•the portion of original issue discount that does not constitute “unmatured interest” for purposes of the Bankruptcy Code.
Any original issue discount that was not amortized as of the date of any bankruptcy filing would constitute unmatured interest. Accordingly, under these circumstances, you may receive a lesser amount than you would have been entitled to receive under the terms of the indenture governing the notes, even if sufficient funds are available.
AES beneficially owns all of the issued and outstanding equity of DPL and may take actions that conflict with your interests.
AES beneficially owns all of the issued and outstanding equity interests of DPL. As a result of this equity ownership, AES has the power to direct votes and the election of DPL’s board of directors, as well as transactions involving a potential change of control of DPL. The interests of AES could conflict with your interests as a holder of the notes. For example, if DPL encounters financial difficulties or is unable to pay its debts as they mature, the interests of AES
8

as the beneficial owner of all of DPL’s equity might conflict with your interests as a holder of the notes. AES may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that would enhance the value of their equity position in DPL. Corporate opportunities may arise in the area of potential competitive business activities that may be attractive to DPL as well as to AES or its affiliates, including through

potential acquisitions by AES or its affiliates of competing businesses. Any competition could intensify if an affiliate or subsidiary of AES were to enter into or acquire a business similar to DPL’s business. Further, AES has no obligation to provide DPL, directly or indirectly, with any equity or debt financing.
Credit rating downgrades could adversely affect the trading price of the notes.
The trading price for the notes may be affected by DPL’s credit rating and the credit rating of AES. Credit ratings are continually revised. Any downgrade in DPL’s credit rating or the credit rating of AES could adversely affect the trading price of the notes or the trading markets for the notes to the extent trading markets for the notes develop. Credit ratings are not recommendations to purchase, hold or sell the notes. Additionally, credit ratings may not reflect the potential effect of risks relating to the structure or marketing of the notes.
Any future lowering of DPL’s ratings or the rating of AES likely would make it more difficult or more expensive (if not impossible) for DPL to obtain additional debt financing. If any credit rating initially assigned to the notes is subsequently lowered or withdrawn for any reason, you may not be able to resell your notes withoutother than at a substantial discount.
Risks Related to the BusinessAssociated With Our Operations
We may not always be able to recover our costs to deliver electricity to our retail customers. The costs we can recover and the return on capital we are permitted to earn for certain aspects of our business are regulated and governed by the laws of Ohio and the rules, policies and procedurescurrent outbreak of the PUCO.
In Ohio, retail generation rates are not subject to cost-based regulation, whilenovel coronavirus, or COVID-19, has adversely affected, and it or the future outbreak of any other highly infectious or contagious diseases could materially and adversely affect, our transmission and distribution businesses are still regulated. Even though rate regulation is premisedsystems and other facilities, results of operations, financial condition and cash flows. Further, the spread of the COVID-19 outbreak has caused disruptions in the U.S. and global economy and financial markets and could potentially create widespread business continuity issues of an as yet unknown magnitude and duration.
In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread to over 180 countries, including every state in the United States. On March 11, 2020 the World Health Organization declared COVID-19 a pandemic, and on full recoveryMarch 13, 2020 the United States declared a national emergency with respect to COVID-19.
The outbreak of prudentlyCOVID-19 has impacted global economic activity, caused significant volatility and negative pressure in financial markets and reduced the demand for energy in our service territory. In addition to reduced revenues and lower margins resulting from decreased energy demand within our service territory, we also have incurred costs and a reasonable rate of return on invested capital, there can be no assurance that the PUCO will agree that allexpect to continue to incur expenses relating to COVID-19, including expenses relating to events outside of our costs have been prudently incurred or are recoverable. On May 1, 2008, SB 221, an Ohio electric energy bill, was adopted that requires all Ohio distribution utilities to file either an Electric Security Plan (“ESP”) or Market Rate Option, and established a significantly excessive earnings test for Ohio public utilities that measures a utility’s earnings to determine whether there have been significantly excessive earnings during a given calendar year. There can be no assurance that the regulatory process in which rates are determined will always result in rates that will produce a full or timely recovery of our costs or permitted rates of return. Accordingly, the revenue DP&L receives may or may not match our expenses at any given time.
Changes in or reinterpretations of, or the unexpected applicationcontrol. The global impact of the laws, rules, policiesoutbreak has been rapidly evolving and procedures that setmany countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. In addition to triggering a period of global economic slowdown or govern electric rates, permitted rates of return, rate structures, operation of a competitive bid structure to supply retail generation service to SSO customers, reliability initiatives, capital expenditures and investments and the recovery of these and other costs on a fullglobal recession, COVID-19 or timely basis through rates, power market prices, and the frequency and timing of rate increasesanother pandemic could have a material and adverse effecteffects on our results of operations, financial condition and cash flows.
Our increased costsflows due to, renewable energyamong other factors:
•further decline in customer demand as a result of general decline in business activity;
•further destabilization of the markets and energy efficiency requirements may not be fully recoverabledecline in business activity negatively impacting our customer growth or the future.
Ohio law contains annual targets for energy efficiency which begannumber of customers in 2009 and require increasing energy reductions each year compared to a baseline energy usage, up to 22.3% by 2027. Peak demand reduction targets began in 2009 with increases in required percentages each year, up to 7.75% by 2020. The renewable energy standards have increased our costs and are expected to continue to increase (and could materially increase) these costs. DP&L is entitled to recover costs associated with its renewable energy compliance costs,service territory as well as its energy efficiencyour customers’ ability to pay for our services when due (or at all);
•delay or inability in obtaining regulatory actions and demand response programs. Ifoutcomes that could be material to our business, including for recovery of COVID-19 related expenses and losses such as uncollectible customer amounts and the review and approval of our applications, rates and charges by the PUCO;
•difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the future weglobal financial markets, or deteriorations in credit and financing conditions which could affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis;
•negative impacts on the health of our essential personnel, especially if a significant number of them are unableaffected, and on our operations as a result of implementing stay-at-home, quarantine and other social distancing measures;
9

•a deterioration in our ability to timelyensure business continuity during a disruption, including increased cybersecurity attacks related to the work-from-home environment;
•delays or fully recoverinability to access, transport and deliver materials to our facilities due to restrictions on business operations or other factors affecting us and our third-party suppliers;
•delays or inability to access equipment or the availability of personnel to perform planned and unplanned maintenance, which can, in turn, lead to disruption in operations;
•delays or inability in achieving our financial goals, growth strategy and digital transformation; and
•delays in the implementation of expected rules and regulations.
We will continue to review and modify our plans as conditions change. Despite our efforts to manage and remedy these costs, itimpacts to us, their ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of this outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects.
COVID-19 continues to present material uncertainty which could have a material adverse effect onmaterially and adversely affect our transmission and distribution systems, results of operations, financial condition and cash flows. In addition, if we were found notTo the extent COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this ‘‘Risk Factors’’ section, such as those relating to beour level of indebtedness, our need to generate sufficient cash flows to service our indebtedness and our ability to comply with the covenants contained in compliance with these standards, monetary penalties could apply. These penalties are not permitted to be recovered from customers and significant penalties could have a material adverse effect onthe agreements that govern our results of operations, financial condition and cash flows. The demand reduction and energy efficiency standards by design result in reduced energy and demand that could have a material adverse effect on our results of operations, financial condition and cash flows.indebtedness.
We may be negatively affected by a lack of growth or a decline in the number of customers.
Customer growth is affected by a number of factors outside our control, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity. A lack of growth,

or a decline, in the number of customers in our service territory could have a material adverse effect on our results of operations, financial condition and cash flows and may cause us to fail to fully realize anticipated benefits from investments and expenditures.
We are subject to numerous environmental laws, rules and regulations that require capital expenditures, increase our cost of operations, and may expose us to environmental liabilities.
We are subject to various federal, state, regional and local environmental protection and health and safety laws and regulations governing, among other things, the remediation of retired generation and other facilities, storage, handling, use, disposal and transportation of coal combustion residuals (“CCR”) and other materials, some of which may be defined as hazardous materials, the emission and discharge of hazardous and other materials into the environment; and the health and safety of our employees. Such laws, rules and regulations tend to become stricter over time, and we could also become subject to additional environmental laws, rules and regulations and other requirements in the future. Environmental laws, rules and regulations also require us to comply with inspections and obtain and comply with a wide variety of environmental licenses, permits, inspections and other governmental authorizations. These laws, rules and regulations often require a lengthy and complex process of obtaining and renewing licenses, permits and other governmental authorizations from federal, state and local agencies. If we are not able to timely comply with inspections and obtain, maintain or comply with all environmental laws, rules and regulations, and all licenses, permits and other government authorizations required to operate our business, then our operations could be prevented, delayed or subject to additional costs. A violation of environmental laws, rules, regulations, licenses, permits or other requirements can result in substantial fines, penalties, other sanctions, permit revocation, facility shutdowns, the imposition of stricter environmental standards and controls or other injunctive measures affecting operating assets. In addition, any actual or alleged violation of these laws, rules or regulations, or other requirements may require us to expend significant resources to defend against any such actual or alleged violations. DPL owns an undivided interest in one generating station operated by its co-owner. As a non-controlling owner in this generating station, DPL is responsible for its pro rata share of expenditures for complying with environmental laws, rules, regulations, licenses, permits and other requirements, but has limited control over the compliance measures taken by its co-owner. Under certain environmental laws, we could also be held strictly, jointly and severally responsible for costs relating to contamination at our past or present facilities and at third-party waste disposal sites. We could also be held liable for human exposure to hazardous substances or for other environmental damage.
In particular, we are subject to potentially significant remediation expenses, enforcement initiatives, private-party lawsuits and reputational risk associated with CCR. CCR, which consists of bottom ash, fly ash and air pollution control wastes generated at our current and former coal-fired generation plant sites, is currently handled and/or has been handled in the past in the following ways: placement in onsite CCR ponds; disposal and beneficial use in onsite and offsite permitted, engineered landfills; use in various beneficial use applications, including encapsulated uses and structural fill; and use in permitted offsite mine reclamation. CCR currently remains onsite at several of our facilities, including in CCR ponds. The final CCR rule of the U.S. Environmental Protection Agency (“USEPA”), which became effective in October 2015 and is currently subject to litigation and undergoing revisions by the USEPA, regulates CCR as nonhazardous solid waste and establishes national minimum criteria for existing and new CCR landfills, impoundments and ponds, including location restrictions, design and operating criteria, groundwater monitoring, corrective action and closure requirements and post-closure care. On December 16, 2016, President Obama signed the Water Infrastructure Improvements for the Nation (“WIIN”) Act into law, which includes provisions to implement the CCR rule through a state permitting program, or if the state chooses not to participate, a possible federal permit program. The primary enforcement mechanisms for the CCR rule could be actions commenced by the USEPA, states and private lawsuits. Compliance with the CCR rule, amendments to the federal CCR rule, or other federal, state, or foreign rules or programs addressing CCR may require us to incur substantial costs. In addition, CCR, particularly with respect to its beneficial use and regulation as nonhazardous solid waste, has been the subject of interest from environmental non-governmental organizations and the media. Any of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows.
From time to time we are subject to enforcement and litigation actions for claims of noncompliance with environmental laws, rules and regulations or other environmental requirements. We cannot assure that we will be successful in defending against any claim of noncompliance. Any actual or alleged violation of these laws, rules and regulations and other requirements may require us to expend significant resources to defend against any such actual or alleged violations and expose us to unexpected costs. Our costs and liabilities relating to environmental matters could have a material adverse effect on our results of operations, financial condition and cash flows.

DPL is reliant upon the performance of a co-owner who operates DPL’s remaining co-owned operational electric generating unit (“EGU”).
DPL co-owns an EGU operated by one of its co-owners. Poor operational performance by DPL’s co-owner, misalignment of co-owners’ interests with DPL’s own or lack of control over costs (such as fuel costs) incurred at this station could have an adverse effect on DPL. In addition, any sale of this co-owned EGU by the co-owner to a third party could enhance the risk of a misalignment of interests, lack of cost control and other operational failures.
The use of non-derivative and derivative instruments in the normal course of business could result in losses that could negatively impact our results of operations, financial position and cash flows.
From time to time, we use non-derivative and derivative instruments, such as swaps, options, futures and forwards, to manage financial risks. These trades are affected by a range of factors, including fluctuations in interest rates and optimization opportunities. We have attempted to manage our risk exposure by establishing and enforcing risk limits and risk management policies. Despite our efforts, however, these risk limits and risk management policies may not work as planned and fluctuating prices and other events could adversely affect our results of operations, financial condition and cash flows. In the absence of actively quoted market prices and pricing information from external sources, the valuation of these instruments can involve management’s judgment or the use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of some of these contracts. We could also recognize financial losses as a result of volatility in the market values of these contracts, a counterparty failing to perform or the underlying transactions which the instruments are intended to hedge failing to materialize, which could result in a material adverse effect on our results of operations, financial condition and cash flows.
The Dodd-Frank Act contains significant requirements related to derivatives that, among other things, could reduce the cost effectiveness of entering into derivative transactions.
In July 2010, The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law. The Dodd-Frank Act contains significant requirements relating to derivatives, including, among others, a requirement that certain transactions be cleared on exchanges that would necessitate the posting of cash collateral for these transactions. We are considered an end-user under the Dodd-Frank Act and therefore are exempt from most of the collateral and margining requirements. We are required to report our bilateral derivative contracts, unless our counterparty is a major swap participant or has elected to report on our behalf. Even though we qualify for an exception from these requirements, our counterparties that do not qualify for the exception may pass along any increased costs incurred by them through higher prices and reductions in unsecured credit limits or be unable to enter into certain transactions with us. The occurrence of any of these events could have a material adverse effect on our results of operations, financial condition and cash flows.
Our business is sensitive to weather and seasonal variations.
Weather conditions significantly affect the demand for electric power and, accordingly, our business is affected by variations in general weather conditions and unusually severe weather. As a result of these factors, our operating revenues and associated operating expenses are not generated evenly by month during the year. We forecast electric sales based on the basis of normal weather, which represents a long-term historical average. In addition, severe or unusual weather, such as hurricanesfloods, tornadoes and ice or snow storms,snowstorms, may cause outages and property damage that may require us to incur additional costs that may not be insured or recoverable from customers. While DP&L is permitted to seek recovery of storm damage costs, if DP&L is unable to fully recover such costs in a timely manner, it could have a material adverse effect on our results of operations, financial condition and cash flows.
Our membership in a regional transmission organization presents risks that could have a material adverse effect on our results of operations, financial condition and cash flows.
On October 1, 2004, in compliance with Ohio law, DP&L turned over control of its transmission functions and fully integrated into PJM, an RTO.a regional transmission organization.
The rules governing the various regional power markets may also change from time to time which could affect our costs and revenues and have a material adverse effect on our results of operations, financial condition and cash flows. We may be required to expand our transmission system according to decisions made by PJM rather than our internal planning process. Various proposals and proceedings before the Federal Energy Regulatory Commission (the “FERC”)FERC may cause transmission rates to change from time to time. In addition, PJM has

developed and continues to refine rules associated with the allocation and methodology of assigning costs associated with improved transmission reliability, reduced transmission congestion and firm transmission rights that may have a financial effect on us. We also incur fees and costs to participate in PJM.
SB 221 includes a provision that allows electric utilities to seek and obtain recovery ofNon-market-based RTO-related charges. Therefore, non-market-based costscharges are being recovered from all retail customers through the transmission rider.Transmission Rider. If in the future, however, we are unable to recover all of these costs in a timely manner this could have a material adverse effect on our results of operations, financial condition and cash flows.

10

As members of PJM, DP&L and AES Ohio Generation are also subject to certain additional risks including those associated with the allocation of losses caused by unreimbursed defaults of other participants in PJM markets among PJM members and those associated with complaint cases filed against PJM that may seek refunds of revenues previously earned by PJM members including DP&L and AES Ohio Generation. These amounts could be significant and have a material adverse effect on our results of operations, financial condition and cash flows.
Costs associated with new transmission projects could have a material adverse effect on our results of operations, financial condition and cash flows.
Annually, PJM performs a review of the capital additions required to provide reliable electric transmission services throughout its territory. PJM traditionally allocated the costs of constructing these facilities to those entities that benefited directly from the additions. Over the last several years, however, some of the costs of constructing new large transmission facilities have been “socialized” across PJM without a direct relationship between the costs assigned to and benefits received by particular PJM members. To date, the additional costs charged to DP&L for new large transmission approved projects have not been material. Over time, as more new transmission projects are constructed and if the allocation method is not changed, the annual costs could become material. DP&L is recovering the Ohio retail jurisdictional share of these allocated costs from its retail customers through the Transmission Cost Recovery Rider. To the extent that any costs in the future are material and we are unable to recover them from our customers, such costs could have a material adverse effect on our results of operations, financial condition and cash flows.
If we were found not to be in compliance with the mandatory reliability standards, we could be subject to sanctions, including substantial monetary penalties.
As an owner of a bulk power transmission system, DP&L is subject to mandatory reliability standards promulgated by the North American Electric Reliability Corporation (the “NERC’) and enforced by the FERC. The standards are based on the functions that need to be performed to ensure the bulk power system operates reliably and is guided by reliability and market interface principles. In addition, DP&L is subject to Ohio reliability standards and targets. Compliance with reliability standards may subject us to higher operating costs or increased capital expenditures. Although we expect to recover costs and expenditures from customers through regulated rates, there can be no assurance that the PUCO will approve full recovery in a timely manner. If we were found not to be in compliance with the mandatory reliability standards, we could be subject to sanctions, including substantial monetary penalties, which could have a material adverse effect on our results of operations, financial condition and cash flows.
We rely on access to the financial markets. General economic conditions and disruptions in the financial markets could adversely affect our ability to raise capital on favorable terms, or at all, and cause increases in our interest expense.
From time to time we rely on access to the capital and credit markets as a source of liquidity for capital requirements not satisfied by operating cash flows. These capital and credit markets experience volatility and disruption from time to time and the ability of corporations to raise capital can be negatively affected. Disruptions in the capital and credit markets make it harder and more expensive to raise capital. It is possible that our ability to raise capital on favorable terms, or at all, could be adversely affected by future market conditions, and we may be unable to access adequate funding to refinance our debt as it becomes due or finance capital expenditures. The extent of any impact will depend on several factors, including our operating cash flows, financial condition and prospects, the overall supply and demand in the credit markets, our credit ratings, credit capacity, the cost of financing, the financial condition, performance and prospects of other companies in our industry or with similar financial circumstances and other general economic and business conditions. It may also depend on the performance of credit counterparties and financial institutions with which we do business. Access to funds under our existing financing arrangements is also dependent on the ability of our counterparties to meet their financing

commitments. Our inability to obtain financing on reasonable terms, or at all, with creditworthy counterparties could adversely affect our results of operations, financial condition and cash flows. If our available funding is limited or we are forced to fund our operations at a higher cost, these conditions may require us to curtail our business activities and increase our cost of funding, both of which could reduce our profitability. See Note 7 of the notes to our consolidated financial statements.
Our transmission and distribution system is subject to operational, reliability and capacity risks.
The ongoing reliable performance of our transmission and distribution system is subject to risks due to, among other things, weather damage, intentional or unintentional damage, equipment or process failure, catastrophic events, such as fires and/or explosions, facility outages, labor disputes, accidents or injuries, operator error or inoperability of key infrastructure internal or external to us and events occurring on third party systems that interconnect to and affect our system. The failure of our transmission and distribution system to fully operate and deliver the energy demanded by customers could have a material adverse effect on our results of operations, financial condition and cash flows, and if such failures occur frequently and/or for extended periods of time, could result in adverse regulatory action. In addition, the advent and quick adoption of new products and services that require increased levels of electrical energy cannot be predicted and could result in insufficient transmission and distribution system capacity. Also, as a result of the above risks and other potential risks and hazards associated with transmission and distribution operations, we may from time to time become exposed to significant liabilities for which we may not have adequate insurance coverage. We maintain an amount of insurance protection that we believe is adequate, but there can be no assurance that our insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which we may be subject. Further, any increased costs or adverse changes in the insurance markets may cause delays or inability in maintaining insurance coverage on terms similar to those presently available to us or at all. A successful claim for which we are not fully insured could have a material adverse effect on our results of operations, financial condition and cash flows.
Current and future conditions in the economy may adversely affect our customers, suppliers and other counterparties, which may adversely affect our results of operations, financial condition and cash flows.
Our business, results of operations, financial condition and cash flows have been and will continue to be affected by general economic conditions. Slowing economic growth, credit market conditions, fluctuating consumer and business confidence, fluctuating commodity prices and other challenges currently affecting the general economy, have caused and may continue to cause some of our customers to experience deterioration of their businesses, cash flow shortages and difficulty obtaining financing. As a result, existing customers may reduce their electricity consumption and may not be able to fulfill their payment obligations to us in a normal, timely fashion. In addition, some existing commercial and industrial customers may discontinue their operations. Sustained downturns, recessions or a sluggish economy generally affect the markets in which we operate and negatively influence our energy operations. A contracting, slow or sluggish economy could reduce the demand for energy in areas in which we are doing business. For example, during economic downturns, our commercial and industrial customers may see a decrease in demand for their products, which in turn may lead to a decrease in the amount of energy they require. Furthermore, projects which may result in potential new customers may be delayed until economic conditions improve. Some of our suppliers, customers, other counterparties and others with whom we transact business may also experience financial difficulties, which may impact their ability to fulfill their obligations to us or result in their declaring bankruptcy or similar insolvency-type proceedings.us. For example, our counterparties on forward purchase contracts and financial institutions involved in our credit facility may become unable to fulfill their contractual obligations.obligations to us or result in their declaring bankruptcy or similar insolvency-like proceedings. We may not be able to enter into replacement agreements on terms as favorable as our existing agreements. Reduced demand for our electric services, failure by our customers to timely remit full payment owed
11

to us and supply delays or unavailability could have a material adverse effect on our results of operations, financial condition and cash flows. In particular, the projected economic growth and total employment in DP&L’s service territory are important to the realization of our forecasts for annual energy sales.
The level of our indebtedness, and the security provided for this indebtedness, could adversely affect our financial flexibility, and a material change in market interest rates could adversely affect our results of operations, financial condition and cash flows.
As of September 30, 2019, the carrying value of DPL’s debt was $1,362.9 million and the carrying value of DP&L’s debt was $574.2 million. Of DP&L’s indebtedness, there was $582.6 million of first mortgage bonds, tax-exempt first mortgage bonds and a term loan outstanding as of September 30, 2019, which are each secured by the pledge of substantially all of the assets of DP&L under the terms of DP&L’s First & Refunding Mortgage. This level of indebtedness and related security could have important consequences, including:

increasing our vulnerability to general adverse economic and industry conditions;
requiring us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund other corporate purposes;
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
limiting, along with the financial and other restrictive covenants in our indebtedness, our ability to borrow additional funds, as needed.
If DP&L issues additional debt in the future, we may be subject to the terms of such debt agreements and be required to obtain regulatory approvals. To the extent we increase our leverage, the risks described above would also increase. Further, actual cash requirements in the future may be greater than expected. Accordingly, our cash flows from operations may not be sufficient to repay all of the outstanding debt as it becomes due and, in that event, we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt as it becomes due. For a further discussion of our outstanding debt obligations, see Note 7 of the notes to our consolidated financial statements.
DP&L has variable rate debt that bears interest based on a prevailing rate that is reset based on a market index that can be affected by market demand, supply, market interest rates and other market conditions. We also maintain both cash on deposit and investments in cash equivalents from time to time that could be impacted by interest rate fluctuations. As such, any event which impacts market interest rates could have a material effect on our results of operations, financial condition and cash flows. In addition, rating agencies issue ratings on our credit and our debt that affect our borrowing costs under our financial arrangements and affect our potential pool of investors and funding sources. Credit ratings also govern the collateral provisions of certain of our contracts. If the rating agencies were to downgrade our credit ratings further, our borrowing costs would likely further increase, our potential pool of investors and funding resources could be reduced, and we could be required to post additional collateral under select contracts. These events would likely reduce our liquidity and profitability and could have a material adverse effect on our results of operations, financial condition and cash flows.
Economic conditions relating to the asset performance and interest rates of our pension and postemployment benefit plans could materially and adversely impact our results of operations, financial condition and cash flows.
Pension costs are based upon a number of actuarial assumptions, including an expected long-term rate of return on pension plan assets, level of employer contributions, the expected life span of pension plan beneficiaries and the discount rate used to determine the present value of future pension obligations. Any of these assumptions could prove to be wrong, resulting in a shortfall of our pension and postemployment benefit plan assets compared to obligations under our pension and postemployment benefit plans. Further, the performance of the capital markets affects the values of the assets that are held in trust to satisfy future obligations under our pension and postemployment benefit plans. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below our projected return rates. A decline in the market value of the pension and postemployment benefit plan assets will increase the funding requirements under our pension and postemployment benefit plans if the actual asset returns do not recover these declines in value in the foreseeable future. Future pension funding requirements, and the timing of funding payments, may also be subject to changes in legislation. We are responsible for funding any shortfall of our pension and postemployment benefit plans’ assets compared to obligations under the pension and postemployment benefit plans, and a significant increase in our pension liabilities could materially and adversely impact our results of operations, financial condition and cash flows. We are subject to the Pension Protection Act of 2006, which requires underfunded pension plans to improve their funding ratios within prescribed intervals based on the level of their underfunding. As a result, our required contributions to these plans, at times, have increased and may increase in the future. In addition, our pension and postemployment benefit plan liabilities are sensitive to changes in interest rates. When interest rates decrease, the discounted liabilities increase benefit expense and funding requirements. Further, changes in demographics, including increased numbers of retirements or changes in life expectancy assumptions, may also increase the funding requirements for the obligations related to the pension and other postemployment benefit plans. Declines in market values and increased funding requirements could have a material adverse effect on our results of operations, financial condition and cash flows.

Counterparties providing materials or services may fail to perform their obligations, which could harm our results of operations, financial condition and cash flows.
We enter into transactions with and rely on many counterparties in connection with our business, including for purchased power, for our capital improvements and additions and to provide professional services, such as actuarial calculations, payroll processing and various consulting services. If any of these counterparties fails to perform its obligations to us or becomes unavailable, our business plans may be materially disrupted, we may be forced to discontinue certain operations if a cost-effective alternative is not readily available or we may be forced to enter into alternative arrangements at then-current market prices that may exceed our contractual prices and cause delays. Although our agreements are designed to mitigate the consequences of a potential default by the counterparty, our actual exposure may be greater than relief provided by these mitigation provisions. Any of the foregoing could result in regulatory actions, cost overruns, delays or other losses, any of which (or a combination of which) could have a material adverse effect on our results of operations, financial condition and cash flows.
Further, from time to time our construction program may call for extensive expenditures for capital improvements and additions, including the installation of upgrades, improvements to transmission and distribution facilities, as well as other initiatives. As a result, we may engage contractors and enter into agreements to acquire necessary materials and/or obtain required construction related services. In addition, some contracts may provide for us to assume the risk of price escalation and availability of certain metals and key components. This could force us to enter into alternative arrangements at then-current market prices that may exceed our contractual prices and cause construction delays. It could also subject us to enforcement action by regulatory authorities to the extent that such a contractor failure resulted in a failure by DP&L to comply with requirements or expectations, particularly with regard to the cost of the project. If these events were to occur, we might incur losses or delays in completing construction.
Accidental improprieties and undetected errors in our internal controls and information reporting could result in the disallowance of cost recovery, noncompliant disclosure or incorrect payment processing.
Our internal controls, accounting policies and practices and internal information systems are designed to enable us to capture and process transactions and information in a timely and accurate manner in compliance with GAAP in the United States of America, laws and regulations, taxation requirements and federal securities laws and
12

regulations in order to, among other things, disclose and report financial and other information in connection with the recovery of our costs and with our reporting requirements under federal securities, tax and other laws and regulations and to properly process payments. We have also implemented corporate governance, internal control and accounting policies and procedures in connection with the Sarbanes-Oxley Act of 2002. Our internal controls and policies have been and continue to be closely monitored by management and our boardBoard of directors.Directors. While we believe these controls, policies, practices and systems are adequate to verify data integrity, unanticipated and unauthorized actions of employees, temporary lapses in internal controls due to shortfalls in oversight or resource constraints could lead to improprieties and undetected errors that could result in the disallowance of cost recovery, noncompliant disclosure and reporting or incorrect payment processing. The consequences of these events could have a material adverse effect on our results of operations, financial condition and cash flows.
New accounting standards or changes to existing accounting standards could materially affect how we report our results of operations, financial condition and cash flows.
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The SEC, Financial Accounting Standards Board or other authoritative bodies or governmental entities may issue new pronouncements or new interpretations of existing accounting standards that may require us to change our accounting policies. These changes are beyond our control, can be difficult to predict and could materially affect how we report our results of operations, financial condition and cash flows. We could be required to apply a new or revised standard retroactively, which could adversely affect our financial condition. In addition, in preparing our consolidated financial statements, management is required to make estimates and assumptions. Actual results could differ significantly from those estimates.
We are subject to extensive laws and local, state and federal regulation, as well as litigation and other proceedings that could affect our operations and costs.
As an electric utility, DP&L is subject to extensive regulation at both the federal and state level. For example, at the federal level, DP&L is regulated by the FERC and the NERC and, at the state level, by the PUCO. The regulatory power of the PUCO over us is both comprehensive and typical of the traditional form of regulation

generally imposed by state public utility commissions. We face the risk of unexpected or adverse regulatory action. Regulatory discretion is reasonably broad in Ohio. DP&L is subject to regulation by the PUCO as to our services and facilities, the valuation of property, the construction, purchase, or lease of electric facilities, the classification of accounts, rates of depreciation, the increase or decrease in retail rates and charges, the issuance of securities and incurrence of debt, the acquisition and sale of some public utility properties or securities and certain other matters. As a result of the Energy Policy Act of 2005 and subsequent legislation affecting the electric utility industry, we have been required to comply with rules and regulations in areas including mandatory reliability standards, cybersecurity, transmission expansion and energy efficiency. Complying with the regulatory environment to which we are subject requires us to expend a significant amount of funds and resources. The failure to comply with this regulatory environment could subject us to substantial financial costs and penalties and changes, either forced or voluntary, in the way we operate our business that could have a material adverse effect on our results of operations, financial condition and cash flows.
We may be subject to material litigation, regulatory proceedings, administrative proceedings, audits, settlements, investigations and claims from time to time which may require us to expend significant funds to address. There can be no assurance that the outcome of these matters will not have a material adverse effect on our business, results of operations, financial condition and cash flows. Asbestos and other regulated substances are, and may continue to be, present at our facilities, and we have been named as a defendant in asbestos litigation. The continued presence of asbestos and other regulated substances at these facilities could result in additional litigation being brought against us, which could have a material adverse effect on our results of operations, financial condition and cash flows.
Tax legislation initiatives or challenges to our tax positions could adversely affect our operations and financial condition.
We are subject to the tax laws and regulations of the U.S. federal, state and local governments. From time to time, legislative measures may be enacted that could adversely affect our overall tax positions regarding income or other taxes. There can be no assurance that our effective tax rate or tax payments will not be adversely affected by these legislative measures.
For example, the United States federal government recently enacted tax reform that, among other things, reduces U.S. federal corporate income tax rates, imposes limits on tax deductions for interest expense and changes the rules related to capital expenditure cost recovery. There are a number of uncertainties and ambiguities as to the interpretation and application of many of the provisions of the newly enacted tax reform measure. Given the unpredictability of these possible changes and their potential interdependency, it remains difficult to assess the overall effect such tax changes will have on our earnings and cash flow, and the extent to which such changes could adversely impact our results of operations. As the impacts of the new law are determined, and as yet-to-be-released regulations and other guidance interpreting the new law are issued and finalized, our financial results could be materially impacted.
In addition, U.S. federal, state and local tax laws and regulations are extremely complex and subject to varying interpretations. There can be no assurance that our tax positions will be sustained if challenged by relevant tax authorities and if not sustained, there could be a material adverse effect on our results of operations, financial condition and cash flows.
If we are unable to maintain a qualified and properly motivated workforce, it could have a material adverse effect on our results of operations, financial condition and cash flows.
One of the challenges we face is to retain a skilled, efficient and cost-effective workforce while recruiting new talent to replace losses in knowledge and skills due to resignations, terminations or retirements. This undertaking could require us to make additional financial commitments and incur increased costs. If we are unable to successfully attract and retain an appropriately qualified workforce, it could have a material adverse effect on our results of operations, financial condition and cash flows. In addition, we have employee compensation plans that reward the performance of our employees. We seek to ensure that our compensation plans encourage acceptable levels for risk and high performance through pay mix, performance metrics and timing. We may not be able to successfully train new personnel as current workers with significant knowledge and expertise retire. We also may be unable to staff our business with qualified personnel in the event of significant absenteeism related to a pandemic illness. Excessive risk-taking by our employees to achieve performance targets, thoughthrough mitigated by policies and procedures, could result in events that have a material adverse effect on our results of operations, financial condition and cash flows.


We are subject to collective bargaining agreements that could adversely affect our business, results of operations, financial condition and cash flows.
We are subject to collective bargaining agreements with employees who are members of a union. Over half of our employees are represented by a collective bargaining agreement that expires on October 31, 2020.agreement. While we believe that we maintain a satisfactory relationship with our employees, it is possible that labor disruptions affecting some or all of our operations could occur during the period of the collective bargaining agreement or at the expiration of the collective bargaining agreement before a new agreement is negotiated. Work stoppages by, or poor relations or ineffective negotiations with, our employees or other workforce issues could have a material adverse effect on our results of operations, financial condition and cash flows.
The use of non-derivative and derivative instruments in the normal course of business could result in losses that could negatively impact our results of operations, financial position and cash flows.
From time to time, we use non-derivative and derivative instruments, such as swaps, options, futures and forwards, to manage financial risks. These trades are affected by a range of factors, including fluctuations in interest rates and optimization opportunities. We have attempted to manage our risk exposure by establishing and enforcing risk limits and risk management policies. Despite our efforts, however, these risk limits and management policies may not work as planned and fluctuating prices and other events could adversely affect our results of operations, financial condition and cash flows. In the absence of actively quoted market prices and pricing information from external sources, the valuation of these instruments can involve management’s judgment or the use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of some of these contracts. We could also recognize financial losses as a result of volatility in the market values of these contracts, a counterparty failing to perform or the underlying transactions which the instruments are intended to hedge failing to materialize, which could result in a material adverse effect on our results of operations, financial condition and cash flows.
Potential security breaches (including cybersecurity breaches) and terrorism risks could adversely affect our businesses.
We operate in a highly regulated industry that requires the continued operation of sophisticated systems and network infrastructure at our generation stations, fuel storage facilitiestransmission, distribution and transmission and distributionother facilities. We also use various financial, accounting and other systems in our businesses. These systems and facilities are vulnerable to unauthorized access due to hacking, viruses, other cybersecurity attacks and other causes. In particular, given the importance of energy and the electric grid, there is the possibility that our systems and facilities could be targets of terrorism or acts of war. We have implemented measures to help prevent unauthorized access to our systems and facilities, including network
13

and system monitoring, identification and deployment of secure technologies and certain other measures to comply with mandatory regulatory reliability standards. Pursuant to NERC requirements, we have a robust cybersecurity plan in place and are subject to regular audits by an independent auditor approved by the NERC. We routinely test our systems and facilities against these regulatory requirements in order to measure compliance, assess potential security risks and identify areas for improvement. In addition, we provide cybersecurity training for our employees and perform exercises designed to raise employee awareness of cyber risks on a regular basis. To date, cyber-attacks on our business and operations have not had a material impact on our operations or financial results. Despite these efforts, if our systems or facilities were to be breached or disabled, we may be unable to recover them in a timely manner to fulfill critical business functions, including the supply of electric services to our customers, and we could experience decreases in revenues and increases in costs that could have a material adverse effect on our results of operations, financial condition and cash flows.
In the course of our business, we also store and use customer, employee and other personal information and other confidential and sensitive information, including personally identifiable information and personal financial information. If our or our third-party vendors’ systems were to be breached or disabled, sensitive and confidential information and other data could be compromised, which could result in negative publicity, remediation costs and potential litigation, damages, consent orders, injunctions, fines and other relief.
To help mitigate these risks, we maintain insurance coverage against some, but not all, potential losses, including coverage for illegal acts against us. However, insurance may not be adequate to protect us against all costs and liabilities associated with these risks.
Risks Associated With Governmental Regulation and Laws
We may not always be able to recover our costs to deliver electricity to our retail customers. The costs we can recover and the return on capital we are permitted to earn for the most substantial part of our business are regulated and governed by the laws of Ohio and the rules, policies and procedures of the PUCO.
In Ohio, transmission and distribution businesses are regulated. Even though rate regulation is premised on full recovery of prudently incurred costs and a reasonable rate of return on invested capital, there can be no assurance that the PUCO will agree that all of our costs have been prudently incurred or are recoverable. There can be no assurance that the regulatory process in which rates are determined will always result in rates that will produce a full or timely recovery of our costs or permitted rates of return. Accordingly, the revenue DP&L receives may or may not match its expenses at any given time.
Changes in or reinterpretations of, or the unexpected application of the laws, rules, policies and procedures that set or govern electric rates, permitted rates of return, rate structures, operation of a competitive bid structure to supply retail generation service to SSO customers, reliability initiatives, capital expenditures and investments and the recovery of these and other costs on a full or timely basis through rates, power market prices and the frequency and timing of rate increases, could have a material adverse effect on our results of operations, financial condition and cash flows.
Our increased costs due to renewable energy and energy efficiency requirements may not be fully recoverable in the future.
Ohio law contains annual targets for energy efficiency which began in 2009 and require increasing energy reductions each year compared to a baseline energy usage, up to 22.3% by 2027. Peak demand reduction targets began in 2009 with increases in required percentages each year, up to 7.75% by 2020. The renewable energy standards have increased our costs and are expected to continue to increase (and could materially increase) these costs. DP&L is currently entitled to recover costs associated with its renewable energy compliance, as well as its energy efficiency and demand response programs. If, in the future, we are unable to timely or fully recover these costs, it could have a material adverse effect on our results of operations, financial condition and cash flows. In addition, if we were found not to be in compliance with these standards, monetary penalties could apply. These penalties are not permitted to be recovered from customers and significant penalties could have a material adverse effect on our results of operations, financial condition and cash flows. The demand reduction and energy efficiency standards by design result in reduced energy and demand that could have a material adverse effect on our results of operations, financial condition and cash flows.
We are subject to numerous environmental laws, rules and regulations that require capital expenditures, increase our cost of operations and may expose us to environmental liabilities.
We are subject to various federal, state, regional and local environmental protection and health and safety laws and regulations governing, among other things, the remediation of retired generation and other facilities, storage, handling, use, storage, disposal and transportation of coal combustion residuals and other materials, some of which
14

may be defined as hazardous materials, the emission and discharge of hazardous and other materials or items into the environment, such as GHGs; and the health and safety of our employees. Such laws, rules and regulations can become stricter over time, and we could also become subject to additional environmental laws, rules and regulations and other requirements in the future. Environmental laws, rules and regulations also require us to comply with inspections and obtain and comply with a wide variety of environmental licenses, permits, inspections and other governmental authorizations. These laws, rules and regulations often require a lengthy and complex process of obtaining and renewing licenses, permits and other governmental authorizations from federal, state and local agencies. If we are not able to timely comply with inspections and obtain, maintain or comply with all environmental laws, rules and regulations and all licenses, permits and other government authorizations required to operate our business, then our operations could be prevented, delayed or subject to additional costs. A violation of environmental laws, rules, regulations, licenses, permits or other requirements can result in substantial fines, penalties, other sanctions, permit revocation, facility shutdowns, the imposition of stricter environmental standards and controls or other injunctive measures affecting operating assets. In addition, any actual or alleged violation of these laws, rules or regulations and other requirements may require us to expend significant resources to defend against any such actual or alleged violations. DP&L has an ownership interest in OVEC, which operates generating stations. We generally are responsible for our respective pro rata share of expenditures for complying with environmental laws, rules, regulations, licenses, permits and other requirements at this generating station, but have limited control over the compliance measures taken by the operator. Under certain environmental laws, we could also be held strictly, jointly and severally responsible for costs relating to contamination at our past or present facilities and at third-party waste disposal sites. We could also be held liable for human exposure to such hazardous substances or for other environmental damage.
In particular, we are subject to potentially significant remediation expenses, enforcement initiatives, private-party lawsuits and reputational risk associated with CCR, which consists of bottom ash, fly ash, boiler slag and flue gas desulfurization materials generated from burning coal generated at our formerly owned coal-fired generation plant sites. CCR currently remains onsite at OVEC's EGUs, including in CCR ponds. Compliance with the CCR rule, amendments to the federal CCR rule, or other federal, state, or foreign rules or programs addressing CCR may require us to incur substantial costs. In addition, CCR, particularly with respect to its beneficial use and regulation as nonhazardous solid waste, has been the subject of interest from environmental non-governmental organizations and the media. Any of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows.
From time to time we are subject to enforcement and litigation actions for claims of noncompliance with environmental laws, rules and regulations or other environmental requirements. We cannot assure that we will be successful in defending against any claim of noncompliance. Any actual or alleged violation of these laws, rules, regulations and other requirements may require us to expend significant resources to defend against any such actual or alleged violations and expose us to unexpected costs. Our costs and liabilities relating to environmental matters could have a material adverse effect on our results of operations, financial condition and cash flows. See "Business - Environmental Matters" for a more comprehensive discussion of these and other environmental matters impacting us.
If we were found not to be in compliance with the mandatory reliability standards, we could be subject to sanctions, including substantial monetary penalties.
As an owner of a bulk power transmission system, DP&L is subject to mandatory reliability standards promulgated by the NERC and enforced by the FERC. The standards are based on the functions that need to be performed to ensure the bulk power system operates reliably and is guided by reliability and market interface principles. In addition, DP&L is subject to Ohio reliability standards and targets. Compliance with reliability standards may subject us to higher operating costs or increased capital expenditures. Although we expect to recover costs and expenditures from customers through regulated rates, there can be no assurance that the PUCO will approve full recovery in a timely manner. If we were found not to be in compliance with the mandatory reliability standards, we could be subject to sanctions, including substantial monetary penalties, which could have a material adverse effect on our results of operations, financial condition and cash flows.
We are subject to extensive laws and local, state and federal regulation, as well as litigation and other proceedings that could affect our operations and costs.
We are subject to extensive regulation at the federal, state, and local levels. For example, at the federal level, DP&L is regulated by the FERC and the NERC and, at the state level, by the PUCO. The regulatory power of the PUCO over DP&L is both comprehensive and typical of the traditional form of regulation generally imposed by state public utility commissions. We face the risk of unexpected or adverse regulatory action. Regulatory discretion is reasonably broad in Ohio. DP&L is subject to regulation by the PUCO as to our services and facilities, the valuation
15

of property, the construction, purchase, or lease of electric facilities, the classification of accounts, rates of depreciation, the increase or decrease in retail rates and charges, the issuance of securities and incurrence of debt, the acquisition and sale of some public utility properties or securities and certain other matters. As a result of the Energy Policy Act of 2005 and subsequent legislation affecting the electric utility industry, we have been required to comply with rules and regulations in areas including mandatory reliability standards, cybersecurity, transmission expansion and energy efficiency. Complying with the regulatory environment to which we are subject requires us to expend a significant amount of funds and resources. The failure to comply with this regulatory environment could subject us to substantial financial costs and penalties and changes, either forced or voluntary, in the way we operate our business that could have a material adverse effect on our results of operations, financial condition and cash flows.
We are subject to litigation, regulatory proceedings, administrative proceedings, audits, settlements, investigations and claims from time to time that require us to expend significant funds to address. There can be no assurance that the outcome of these matters will not have a material adverse effect on our business, results of operations, financial condition and cash flows. Asbestos and other regulated substances are, and may continue to be, present at our facilities, and we have been named as a defendant in asbestos litigation. The continued presence of asbestos and other regulated substances at these facilities could result in additional litigation being brought against us, which could have a material adverse effect on our results of operations, financial condition and cash flows. See "Business - Competition and Regulation" and "Business - Environmental Matters" for a summary of significant regulatory matters and legal proceedings involving us, as well as Note 11 – Contractual Obligations, Commercial Commitments and Contingencies of Notes to DPL's Consolidated Financial Statements contained elsewhere in this prospectus.
Tax legislation initiatives or challenges to our tax positions could adversely affect our operations and financial condition.
We are subject to the tax laws and regulations of the U.S. federal, state and local governments. From time to time, legislative measures may be enacted that could adversely affect our overall tax positions regarding income or other taxes. There can be no assurance that our effective tax rate or tax payments will not be adversely affected by these legislative measures.
For example, the United States federal government enacted tax reform in 2017 that, among other things, reduces U.S. federal corporate income tax rates, imposes limits on tax deductions for interest expense and changes the rules related to capital expenditure cost recovery. There are a number of uncertainties and ambiguities as to the interpretation and application of many of the provisions of the tax reform measure. Given the unpredictability of these possible changes and their potential interdependency, it remains difficult to assess the overall effect such tax changes will have on our earnings and cash flow, and the extent to which such changes could adversely impact our results of operations. As the impacts of the law are determined, and as yet-to-be-released regulations and other guidance interpreting the new law are issued and finalized, our financial results could be materially impacted.
In addition, U.S. federal, state and local tax laws and regulations are extremely complex and subject to varying interpretations. There can be no assurance that our tax positions will be sustained if challenged by relevant tax authorities and if not sustained, there could be a material adverse effect on our results of operations, financial condition and cash flows.
Risks Related to Our Indebtedness and Financial Condition
The level of our indebtedness, and the security provided for this indebtedness, could adversely affect our financial flexibility, and a material change in market interest rates could adversely affect our results of operations, financial condition and cash flows.
As of December 31, 2020, the carrying value of DPL's debt was $1,493.6 million and the carrying value of DP&L's debt was $594.1 million. Of DP&L's indebtedness, there was $565.0 million of First Mortgage Bonds as of December 31, 2020, which are secured by the pledge of substantially all of the assets of DP&L under the terms of DP&L’s First & Refunding Mortgage. DPL's revolving credit facility is also secured by a pledge of common stock that DPL owns in DP&L. This level of indebtedness and related security could have important consequences, including:
•increasing our vulnerability to general adverse economic and industry conditions;
•requiring us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund other corporate purposes;
•limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
16

•limiting, along with the financial and other restrictive covenants in our indebtedness, our ability to borrow additional funds, as needed.
If DP&L issues additional debt in the future, we will be subject to the terms of such debt agreements and be required to obtain regulatory approvals. To the extent we increase our leverage, the risks described above would also increase. Further, actual cash requirements in the future may be greater than expected. Accordingly, our cash flows from operations may not be sufficient to repay all of the outstanding debt as it becomes due and, in that event, we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt as it becomes due. Additionally, any failure to comply with covenants in the instruments governing our debt could result in an event of default thereunder. For a further discussion of our outstanding debt obligations, see Management’s Discussion and Analysis of Results of Operations and Financial Condition and Note 7 – Long-term debt of Notes to DPL's Consolidated Financial Statements.
DPL and DP&L have variable rate debt that bears interest based on a prevailing rate that is reset based on a market index that can be affected by market demand, supply, market interest rates and other market conditions. We also maintain both cash on deposit and investments in cash equivalents from time to time that could be impacted by interest rate fluctuations. As such, any event which impacts market interest rates could have a material effect on our results of operations, financial condition and cash flows. In addition, rating agencies issue ratings on our credit and our debt that affect our borrowing costs under our financial arrangements and affect our potential pool of investors and funding sources. Credit ratings also govern the collateral provisions of certain of our contracts. If the rating agencies were to downgrade our credit ratings further, our borrowing costs would likely further increase, our potential pool of investors and funding resources could be reduced, and we could be required to post additional collateral under select contracts. These events would likely reduce our liquidity and profitability and could have a material adverse effect on our results of operations, financial condition and cash flows.
We rely on access to the financial markets. General economic conditions and disruptions in the financial markets could adversely affect our ability to raise capital on favorable terms, or at all, and cause increases in our interest expense.
From time to time we rely on access to the capital and credit markets as a source of liquidity for capital requirements not satisfied by operating cash flows. These capital and credit markets experience volatility and disruption from time to time and the ability of corporations to raise capital can be negatively affected. Disruptions in the capital and credit markets make it harder and more expensive to raise capital. Our ability to raise capital on favorable terms, or at all, can be adversely affected by unfavorable market conditions or declines in our creditworthiness, and we may be unable to access adequate funding to refinance our debt as it becomes due or finance capital expenditures. The extent of any impact will depend on several factors, including our operating cash flows, financial condition and prospects, the overall supply and demand in the credit markets, our credit ratings, credit capacity, the cost of financing, the financial condition, performance and prospects of other companies in our industry or with similar financial circumstances and other general economic and business conditions. It may also depend on the performance of credit counterparties and financial institutions with which we do business. Access to funds under our existing financing arrangements is also dependent on the ability of our counterparties to meet their financing commitments and our satisfying conditions to borrowing. Our inability to obtain financing on reasonable terms, or at all, with creditworthy counterparties could adversely affect our results of operations, financial condition and cash flows. If our available funding is limited or we are forced to fund our operations at a higher cost, these conditions may require us to curtail our business activities and increase our cost of funding, both of which would adversely impact our profitability. See Note 7 – Long-term debt of Notes to DPL's Consolidated Financial Statements for information regarding indebtedness.
DPL is a holding company and parent of DP&L and other subsidiaries. DPL’s cash flow is dependent on the operating cash flows of DP&L and DPL’sits other subsidiaries and their ability to pay cash to DPL.
DPL is a holding company with no material assets other than the ownership of its subsidiaries, and accordingly all cash is generated by the operating activities of its subsidiaries, principally DP&L. As such, DPL’s cash flow is largely dependent on the operating cash flows of DP&L and its ability to pay cash to DPL. The impact of the December 2019 ESP and related regulatory proceedings on DP&L's revenues adversely affects DPL. In addition, there are a number of other rate proceedings pending or anticipated that we cannot predict the outcome of, which could adversely affect DPL. See Note 73 – Regulatory Matters of the Notes to DPL’s consolidated financial statements.DPL's Consolidated Financial Statements for descriptions of DP&L's ESP and other regulatory proceedings. In addition, DP&L is regulated by the PUCO, which possesses broad oversight powers to ensure that the needs of utility customers are being met. The PUCO could impose additional restrictions on the ability of DP&L to distribute, loan or advance cash to DPL pursuant to these broad powers. See Note 3 of the Notes to DPL’s consolidated financial statements for more information on the regulatory environment. While DPL does not expect any of the foregoing to significantly affect DP&L’s ability to pay funds to DPL in the near future, aA significant limitation on DP&L’s ability to pay dividends or loan or advance funds to DPL could have a material adverse effect on DPL’s results of operations, financial condition and cash flows. In addition, as a result of any non-compliance with PUCO requirements, the PUCO could impose additional restrictions on DP&L operations that could have a material adverse effect on DPL’s results of operations, financial condition and cash flows.
17

Our ownership by AES subjects us to potential risks that are beyond our control.
All of DP&L’s common stock is owned by us,DPL, and we areDPL is an indirectly wholly owned subsidiary of AES. Due to our relationship with AES, any adverse developments and announcements concerning AES may impair our ability to access the capital markets and to otherwise conduct business. In particular, downgrades in AES’s credit ratings could result in ourDPL’s or DP&L’s credit ratings being downgraded.
Impairment of long-lived assets would negatively affect our consolidated results of operations and net worth.
Long-lived assets are amortized or depreciated over their estimated useful lives. Long-lived assets are evaluated for impairment only when impairment indicators are present. The recoverability assessment of long-lived assets requires making estimates and assumptions to determine fair value, as described above.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes certain “forward-looking statements” that involve many risks and uncertainties. Forward-looking statements express an expectation or belief and contain a projection, plan or assumption with regard to, among other things, our future revenues, income, expenses or capital structure. Such statements of future events or performance are not guarantees of future performance and involve estimates, assumptions and uncertainties. The words “could,” “may,” “predict,” “anticipate,” “would,” “believe,” “estimate,” “expect,” “forecast,” “project,” “objective,” “intend,” “continue,” “should,” “plan,” and similar expressions, or the negatives thereof, are intended to identify forward-looking statements unless the context requires otherwise. These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. We are under no obligation to, and expressly disclaim any obligation to, update or alter the forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.statements:
Important factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following:
•impacts of weather on retail sales;
•growth in our service territory and changes in demand and demographic patterns;
•weather-related damage to our electrical system;
•performance of our suppliers;
•transmission and distribution system reliability and capacity;
•regulatory actions and outcomes, including, but not limited to, the review and approval of our rates and charges by the PUCO;
•federal and state legislation and regulations;
•changes in our credit ratings or the credit ratings of AES;
•fluctuations in the value of pension plan assets, fluctuations in pension plan expenses and our ability to fund defined benefit pension plans;
▪changes in financial or regulatory accounting policies;
▪environmental matters, including costs of compliance with, and liabilities related to, current and future environmental laws and requirements;
▪interest rates and the use of interest rate hedges, inflation rates and other costs of capital;
▪the availability of capital;
▪the ability of subsidiaries to pay dividends or distributions to DPL;
▪level of creditworthiness of counterparties to contracts and transactions;
▪labor strikes or other workforce factors, including the ability to attract and retain key personnel;

▪facility or equipment maintenance, repairs and capital expenditures;
▪significant delays or unanticipated cost increases associated with construction projects;
▪the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material;
▪local economic conditions;
18

▪costs and effects of legal and administrative proceedings, audits, settlements, investigations and claims and the ultimate disposition of litigation;
▪industry restructuring, deregulation and competition;
▪issues related to our participation in PJM, including the cost associated with membership, allocation of costs, costs associated with transmission expansion, the recovery of costs incurred and the risk of default of other PJM participants;
▪changes in tax laws and the effects of our tax strategies;
▪product development, technology changes and changes in prices of products and technologies;
▪cyberattacks and information security breaches;
▪the use of derivative contracts;
▪catastrophic events such as fires, explosions, terrorist acts, acts of war, pandemic events, including the outbreak of COVID-19, or natural disasters such as floods, earthquakes, tornadoes, severe winds, ice or snowstorms, droughts, or other similar occurrences; and
▪the risks and other factors discussed elsewhere in this prospectus.
All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and many are beyond our control. See “Risk Factors” for a more detailed discussion of the foregoing and certain other factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook.

USE OF PROCEEDS

We will not receive any cash proceeds from the issuance of the new notes. The new notes will be exchanged for old notes as described in this prospectus upon our receipt of old notes. We will cancel all of the old notes surrendered in exchange for the new notes.

19

CAPITALIZATION

The following table sets forth a summary of DPL’s consolidated capitalization as of September 30, 2019:December 31, 2020:
This table should be read in conjunction with “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and the consolidated financial statements and related notes included herein.
  
 As of September 30, 2019
 (in millions)
Short-term and current portion of long-term debt$237.6
Long-term debt: 
3.95% first mortgage bonds due 2049425.0
Tax-exempt first mortgage bonds - rates from 2.97% - 3.07% (a) due 2020140.0
4.20% U.S. Government note due 206117.6
Unamortized deferred financing costs(5.7)
Unamortized debt discounts and premiums, net(2.7)
Total long-term debt at DP&L574.2
  
7.25% senior unsecured bonds due 2021380.0
4.35% senior unsecured notes due 2029400.0
8.125% note to DPL Capital Trust II due 2031 (b)15.6
Unamortized deferred financing costs(5.8)
Unamortized debt discounts and premiums, net(1.1)
Total long-term debt1,362.9
Common shareholder's deficit: 
1,500 shares authorized; 1 share issued and outstanding at September 30, 2019—
Other paid-in capital2,373.4
Accumulated other comprehensive income—
Accumulated deficit(2,783.0)
Total common shareholder's deficit(409.6)
Total capitalization$1,190.9

As of December 31, 2020
(in millions)
Outstanding balance on revolving lines of credit$100.0 
Long-term debt:
First Mortgage Bonds due 2049425.0 
First Mortgage Bonds due 2040140.0 
U.S. Government note17.4 
Unamortized deferred financing costs(5.7)
Unamortized debt discounts and premiums, net(2.6)
Total long-term debt at DP&L574.1 
4.125% senior unsecured bonds due 2025415.0 
4.35% senior unsecured notes due 2029400.0 
8.125% note to DPL Capital Trust II due 2031 (a)Range of interest rates for the nine months ended September 30, 2019.15.6 
Unamortized deferred financing costs(10.2)
Unamortized debt discounts and premiums, net(0.9)
Total long-term debt1,393.6 
(b)Common shareholder’s deficit:Note payable to related party.
1,500 shares authorized; 1 share issued and outstanding at December 31, 2020— 
Other paid-in capital2,468.8 
Accumulated other comprehensive income/ (loss)(12.3)
Accumulated deficit(2,740.0)
Total common shareholder’s deficit(283.5)
Total capitalization$1,210.1 

(a)Note payable to related party.

20

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following table below presents our selected historical consolidated financial and other data, for the periods presented, which should be read in conjunction with “Management’sDPL's audited Consolidated Financial Statements and the related Notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations and our consolidated financial statements and related notesFinancial Condition, included herein.
The selected historical consolidated statement of operations data and balance sheet data for each of the years ended December 31, 2020, 2019 and 2018 2017 and 2016 areis derived from our audited consolidated financial statements included herein. The selected historical consolidated statement of operations data and balance sheet data for eachas of the nine months ended September 30,December 31, 2020 and 2019 and 2018 areis derived from our unaudited condensedaudited consolidated financial statements included herein. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessaryFinancial information for periods prior to present fairly the data for the period.those above was derived from our previously filed reports. Our historical results for any prior period are not necessarily indicative of results to be expected for any future period.
Other information that management believes is important in understanding trends in our business is also included in this table.
Years ended December 31,
$ in millions except per share amounts or as indicated20202019201820172016
Total electric sales (millions of kWh)13,918 14,628 15,728 14,679 15,406 
Statements of Operations Data
Revenues$660.5 $743.7 $747.3 $729.0 $815.7 
Operating income$89.1 $154.9 $142.6 $126.5 $175.1 
Income / (loss) from continuing operations$(6.4)$51.8 $36.7 $12.3 $51.3 
Income / (loss) from discontinued operations, net of tax (a)
$5.4 $53.6 $33.4 $(106.9)$(536.5)
Net income / (loss)$(1.0)$105.4 $70.1 $(94.6)$(485.2)
Capital expenditures$157.3 $156.5 $96.1 $110.5 $147.2 
Balance Sheet Data (end of period):
Total assets$2,036.0 $1,935.8 $1,883.1 $2,049.2 $2,419.2 
Long-term debt (b)
$1,393.4 $1,223.3 $1,372.3 $1,700.2 $1,828.7 
Total common shareholder's deficit$(283.5)$(371.9)$(471.7)$(584.3)$(587.6)

(a)Fixed-asset impairments of $3.5 million, $2.8 million, $175.8 million and $859.0 million in 2019, 2018, 2017 and 2016, respectively, have been reclassified to discontinued operations.
(b)Excluded from this line are the current maturities of long-term debt.

21
DPL
  Years ended December 31, Nine months ended September 30,
$ in millions except as indicated 2018 2017 2016 2019 2018
           
Statements of Operations Data          
Revenues $775.9
 $743.9
 $834.2
 $592.2
 $591.5
Fixed-asset impairment $2.8
 $—
 $23.9
 $—
 $—
Operating income $135.5
 $105.2
 $119.0
 $128.4
 $93.7
Income / (loss) from continuing operations $31.2
 $(1.5) $14.8
 $23.0
 $13.7
Income / (loss) from discontinued operations, net of tax $38.9
 $(93.1) $(500.0) $25.8
 $29.2
Net income / (loss) $70.1
 $(94.6) $(485.2) $61.4
 $41.4
Capital expenditures $103.6
 $121.5
 $148.5
 $122.4
 $75.8
           
Other operating data          
Total electric sales (millions of kWh) 15,728
 14,679
 15,406
 11,539
 11,932
           
Balance Sheet Data (end of period):          
Total assets $1,883.1
 $2,049.2
 $2,419.2
 $1,816.3
 $1,785.5
Long-term debt (a)
 $1,372.3
 $1,700.2
 $1,828.7
 $1,223.3
 $1,471.4
Total common shareholder's equity / (deficit) $(471.7) $(584.3) $(587.6) $(409.6) $(509.5)

(a)Excluded from this line are the current maturities of long-term debt.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion and analysis should be read in conjunction with the financial statements and notes thereto included elsewhere in this prospectus. The following discussion contains forward-looking statements. Our actual results may differ materially from the results suggested by these forward-looking statements. Please see “Cautionary Note Regarding Forward LookingForward-Looking Statements” and “Risk Factors”Risk Factors in this prospectus.
Throughout For a list of certain abbreviations or acronyms in this discussion, and analysis,see Glossary of Terms at the terms “we”, “us”, “our” and “ours” are used to refer to both DPL and DP&L, respectively and altogether, unless the context indicates otherwise. Discussions or areasbeginning of this section that apply only to DPL or DP&L will clearly be noted.prospectus.
Business Overview
DPL is a diversified regional energy company incorporated in 1985 under the laws of the StateOhio. All of Ohio in 1985 withDPL’s stock is owned by an AES subsidiary.
DPL has three primary subsidiaries: DP&L, MVIC and Miami Valley Insurance Company (“MVIC”) andLighting. DP&L, which also does business as AES Ohio, Generation, LLC (“AES Ohio Generation”). DP&L is a public utility providing electric transmission and distribution services in West Central Ohio. For additional information, see Note 1 – Overview and Summary of Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements. All of DPL's subsidiaries are wholly-owned. DPL manages its business through one reportable operating segment, the Utility segment. See Note 13 – Business Segments of the Notes to DPL's Consolidated Financial Statements for additional information regarding DPL’s reportable segment. DP&L also manages its business through one reportable operating segment, the Utility segment.
As an electric public utility in Ohio, DP&L provides regulated transmission and distribution services to its customers as well as retail SSO electric service. DP&L's sales reflect the general economic conditions, seasonal weather patterns and the growth of energy efficiency initiatives; however, our distribution revenues were decoupled from weather and energy efficiency variations from January 1, 2019 through December 18, 2019. In the first quarter of 2020, DP&L filed a petition to continue to accrue the impacts of decoupling for recovery through a future rate proceeding, but it is unknown at this time how the PUCO will rule on that petition. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements for further information.
DPL’s other primary subsidiaries are MVIC and Miami Valley Lighting. MVIC is DPL’sour captive insurance company that provides insurance services to DPLDP&L and its subsidiaries. AES Ohio Generation owns an undivided interestour other subsidiaries, and Miami Valley Lighting provides street and outdoor lighting services to customers in a coal-fired generating facility and sells all of its energy and capacity into the wholesale market. Dayton region.
DPL also has a wholly-owned business trust, DPL Capital Trust II, (“Capital Trust II”), formed for the purpose of issuing trust capital securities to investors. All of DPL’s subsidiaries are wholly-owned.
DP&L is a public utility incorporated in 1911 under the laws of Ohio. DP&L offers retail standard service offer (“SSO”) electric service to residential, commercial, industrial and governmental customers in a 6,000 square mile area of West Central Ohio and has the exclusive right to provide distribution and transmission services to more than 524,000 customers in that service area. In addition to does not have any subsidiaries.
DP&L’s electric transmission and distribution businesses, DP&L has a 4.9% interest in OVEC, an electric generating company. OVEC has two electric generating stations located in Cheshire, Ohio and Madison, Indiana with a combined generation capacity of 2,109 megawatts (“MW”). DP&L’s share of this generation capacity is 103 MW.
The principal industries located in DP&L’s service territory include automotive, food processing, paper, plastic, manufacturing and defense. DP&L’s sales reflect general economic and competitive conditions, seasonal weather patterns of the area and the growth of energy efficiency initiatives, however, its distribution revenues have been decoupled from weather and energy efficiency variations beginning January 1, 2019 as a result of the decoupling rider the PUCO approved in the distribution rate order establishing new base distribution rates, which became effective October 1, 2018 (the “DRO”).
DPL strives to achieve stable, long-term growth through efficient operations and strong customer and regulatory relations. More specifically, DPL’s strategy is to utilize the transmission and distribution assets that transfer electricity at the most efficient cost, and to maintain the highest level of customer service and reliability. DPL’s total consolidated revenue and net income for the nine months ended September 30, 2019 were $592.2 million and $61.4 million, respectively. In addition, as of September 30, 2019, DPL had total assets of approximately $1.8 billion. DPL’s business is not dependent on any single customer or group of customers.
DPL’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DPLDP&L applies the accounting standards for regulated operations to DPL’sits electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs or overcollections of riders.
Additional information relating to our risks is contained in “Risk Factors” elsewhere in this prospectus.
The following discussion should be read in conjunction with the accompanying consolidated financial statements and related notes included elsewhere in this prospectus.
Financial Overview
The results of operations for DPL and DP&L are discussed in more detail in the following pages.



RESULTS OF OPERATIONS HIGHLIGHTS – DPL

DPL’s results of operations include the results of its subsidiaries, including the consolidated results of its principal subsidiary DP&L. All material intercompany accounts and transactions have been eliminated in consolidation. A separate specific discussion of the results of operations for DP&L is presented elsewhere in this report.prospectus.

22

  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 2018 2019 2018
Revenues:        
Retail $174.3
 $180.6
 $518.7
 $499.9
Wholesale 9.2
 10.5
 23.4
 41.3
RTO ancillary 11.1
 10.7
 33.0
 32.5
Capacity revenues 2.2
 3.7
 9.2
 10.5
Miscellaneous revenues 2.2
 2.2
 7.9
 7.3
Total revenues 199.0
 207.7
 592.2
 591.5
         
Operating costs and expenses        
Net fuel cost 5.2
 4.6
 13.0
 12.7
Purchased power:        
Purchased power 60.5
 68.1
 176.0
 187.8
RTO charges 5.7
 15.5
 18.3
 48.9
RTO capacity charges 0.3
 —
 0.7
 2.2
Net purchased power cost 66.5
 83.6
 195.0
 238.9
Operation and maintenance 44.2
 37.3
 142.3
 118.3
Depreciation and amortization 17.7
 19.7
 54.1
 58.8
Taxes other than income taxes 20.9
 19.0
 58.5
 54.5
Other, net —
 1.6
 0.9
 14.6
Total operating costs and expenses 154.5
 165.8
 463.8
 497.8
         
Operating income 44.5
 41.9
 128.4
 93.7
         
Other income / (expense), net:        
Interest expense (18.3) (22.6) (63.7) (74.4)
Loss on early extinguishment of debt —
 —
 (44.9) (6.4)
Other income 0.3
 0.5
 3.2
 0.8
Total other expense, net (18.0) (22.1) (105.4) (80.0)
         
Income from continuing operations before income tax (a) $26.5
 $19.8
 $23.0
 $13.7
Statement of Operations Highlights – DPL

(a)For purposes of discussing operating results, we present and discuss Income from continuing operations before income tax. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information that is used by management to make decisions regarding our financial performance.

Years ended December 31,Change 2020 vs. 2019Change 2019 vs. 2018
$ in millions202020192018$%$%
Revenues:
Retail$586.4 $667.3 $656.9 $(80.9)(12)%$10.4 2%
Wholesale10.1 16.2 29.9 (6.1)(38)%(13.7)(46)%
RTO ancillary44.0 43.5 43.1 0.5 1%0.4 1%
Capacity revenues4.2 6.2 7.9 (2.0)(32)%(1.7)(22)%
Miscellaneous revenues15.8 10.5 9.5 5.3 50%1.0 11%
Total revenues660.5 743.7 747.3 (83.2)(11)%(3.6)—%
Operating costs and expenses:
Net fuel cost1.7 2.5 2.5 (0.8)(32)%— —%
Purchased power:
Purchased power200.7 227.9 244.9 (27.2)(12)%(17.0)(7)%
RTO charges29.9 24.0 55.6 5.9 25%(31.6)(57)%
RTO capacity charges— — 2.2 — —%(2.2)(100)%
Net purchased power cost230.6 251.9 302.7 (21.3)(8)%(50.8)(17)%
Operation and maintenance181.6 184.2 138.3 (2.6)(1)%45.9 33%
Depreciation and amortization73.3 72.3 76.2 1.0 1%(3.9)(5)%
Taxes other than income taxes79.4 77.9 73.3 1.5 2%4.6 6%
Loss on asset disposal0.1 — — 0.1 —%— —%
Loss on disposal of business4.7 — 11.7 4.7 —%(11.7)(100)%
Total operating costs and expenses571.4 588.8 604.7 (17.4)(3)%(15.9)(3)%
Operating income89.1 154.9 142.6 (65.8)(42)%12.3 9%
Other expense, net:
Interest expense(71.3)(82.2)(98.0)10.9 (13)%15.8 (16)%
Loss on early extinguishment of debt(31.7)(44.9)(6.5)13.2 (29)%(38.4)591%
Other income2.0 3.7 0.8 (1.7)(46)%2.9 363%
Other expense, net(101.0)(123.4)(103.7)22.4 (18)%(19.7)19%
Income / (loss) from continuing operations before income tax (a)$(11.9)$31.5 $38.9 $(43.4)(138)%$(7.4)(19)%
DPL – Revenues
(a)For purposes of discussing operating results, we present and discuss Income / (loss) from continuing operations before income tax. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information that is used by management to make decisions regarding our financial performance.

The following review of consolidated results of operations compares the results for the year ended December 31, 2020 to the results for the year ended December 31, 2019. As a result of presenting Conesville in Discontinued Operations in the current year, certain DPL variances and discussion included elsewhere in this prospectus have changed. For these variances, see the discussion in DPL’s Utility segment, DP&L’s, Results of Operations included elsewhere in this prospectus, as DPL’s continuing operations now primarily consist of DP&L.
DPL – Revenues
Retail customers, especially residential and commercial customers, consume more electricity duringon warmer and colder weather than they do during mild temperatures.days. Therefore,our retail sales volumedemand is impactedaffected by the number of heating and cooling degree-days occurring during a year. Cooling degree-days typically have a more significant impacteffect than heating degree-days since some residential customers do not use electricity to heat their homes. Because of the impact of the decoupling riderDecoupling Rider (effective January 1, 2019 through December 18, 2019)and because DPL's generation has greatly decreased in recent years due to plant sales and closures,, weather hashad a minimal impact on our 2019 net operating results. Additionally, our retail revenues are affected by regulated rates and riders, including the changes to our ESP, described in Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements included elsewhere in this prospectus.

23

  Three months ended Nine months ended
  September 30, September 30,
  2019 2018 2019 2018
Heating degree-days (a)
 —
 47
 3,206
 3,498
Cooling degree-days (a)
 975
 811
 1,361
 1,262
Heating and Cooling Degree-days (a)

(a)Heating and cooling degree-days are a measure of the relative heating or cooling required for a home or business. The heating degrees in a day are calculated as the degrees that the average actual daily temperature is below 65 degrees Fahrenheit. For example, if the average temperature on March 20th was 40 degrees Fahrenheit, the heating degrees for that day would be the 25-degree difference between 65 degrees and 40 degrees. Similarly, cooling degrees in a day are calculated as the degrees that the average actual daily temperature is above 65 degrees Fahrenheit.


Years ended December 31,
20202019change% change
Actual
Heating degree-days (a)
4,867 4,987 (120)(2)%
Cooling degree-days (a)
1,176 1,318 (142)(11)%
30-year average (b)
Heating-degree days5,444 5,442 
Cooling-degree days995 984 
DPL
(a)'sHeating and cooling degree-days are a measure of the relative heating or cooling required for a home or business. The heating degrees in a day are calculated as the degrees that the average actual daily temperature is below 65 degrees Fahrenheit. For example, if the average temperature on March 20th was 40 degrees Fahrenheit, the heating degrees for that day would be the 25-degree difference between 65 degrees and 40 degrees. Similarly, cooling degrees in a day are calculated as the degrees that the average actual daily temperature is above 65 degrees Fahrenheit.
(b)30-year average is computed from observed degree-days in the Dayton area on a trailing 30-year basis.

DPL's and DP&L's electric sales and billed customers were as follows:
ELECTRIC SALES AND CUSTOMERS (a)
DPL and DP&L
Years ended December 31,
20202019
Retail electric sales (b)
Residential5,330 5,354 
Commercial3,438 3,688 
Industrial3,533 3,735 
Governmental1,148 1,255 
Other19 17 
Total retail electric sales13,468 14,049 
Wholesale electric sales (c)
450 579 
Total electric sales13,918 14,628 
Billed electric customers (end of period)530,670 525,801 

(a)Electric sales are presented in millions of kWh.
ELECTRIC SALES AND CUSTOMERS (a)
  Three months ended Nine months ended
  September 30, September 30,
  2019 2018 2019 2018
Retail electric sales (b)
 3,858
 3,858
 10,731
 10,943
Wholesale electric sales (c)
 369
 310
 808
 989
Total electric sales 4,227
 4,168
 11,539
 11,932
         
Billed electric customers (end of period)     523,915
 523,535
(b)DPL and DP&L retail electric sales represent the total transmission and distribution retail sales for the periods presented. SSO sales were 3,850 million kWh and 3,913 million kWh for the years ended December 31, 2020 and 2019, respectively.

(a)Electric sales are presented in millions of kWh.
(b)
DPL retail electric sales represent the total transmission and distribution retail sales for the periods presented. SSO sales were 1,037 kWh and 2,972 kWh for the three and nine months ended September 30, 2019, respectively, and 1,056 kWh and 2,995 kWh for the three and nine months ended September 30, 2018, respectively.
(c)
Included within DPL wholesale(c)Wholesale electric sales are DP&L's 4.9% share of the generation output of OVEC and the generation output of Conesville.

We sell our share of the generation from Conesville and OVEC into the wholesale market which covers a multi-state area and settles on an hourly basis throughout the year. Factors impacting our wholesale sales volume each houroutput of the year include wholesale market prices; retail demand throughout the entire wholesale market area; availability of our generating plant and non-affiliated generating plants to sell into the wholesale market; contracted wholesale sales and our variable generation costs. Our goal is to make wholesale sales when it is profitable to do so.OVEC.

24

During the three monthsyear ended September 30, 2019, revenueDecember 31, 2020, Revenues decreased $8.7$83.2 million to $199.0$660.5 million compared to $207.7 million in the same period of the prior year, and, during the nine months ended September 30, 2019, revenue increased $0.7 million to $592.2 million compared to $591.5from $743.7 million in the same period of the prior year. These changes were primarily theThis decrease was a result of changes in the components of revenue shown below:of:

 Three months ended Nine months ended

 September 30, September 30,
$ in millions 2019 vs. 2018 2019 vs. 2018
Retail 
  
Rate    
Increase in energy efficiency and USF revenue rate riders $9.7
 $30.1
Increase in base distribution rates due to the DRO 6.3
 21.0
Increase due to the DIR, which was effective with the DRO 5.6
 16.7
Decrease in the TCRR due to lower transmission costs and the impact of DP&L passing back the benefits of the PJM Transmission Enhancement Settlement to customers
 (12.3) (27.3)
Decrease due to energy efficiency lost revenues recorded in the prior year (5.0) (16.7)
Other (2.1) 10.3
Net change in retail rate 2.2
 34.1
     
Volume    
Decrease in volume is primarily due to demand in the prior year. The decoupling rider approved in the DRO became effective January 1, 2019 and is designed to eliminate the impacts of weather and demand on DP&L's residential and commercial customers resulting in less of a demand impact in the current year.
 (8.2) (15.6)
     
Other miscellaneous (0.3) 0.3
Total retail change (6.3) 18.8
  
  
Wholesale    
Decrease for the nine months ended September 30, 2019 is due to lower volumes as DP&L is no longer serving the load of certain other parties through their competitive bid process and lower wholesale prices
 (1.3) (17.9)
  
  
RTO ancillary and capacity revenues    
RTO ancillary and capacity revenues (1.1) (0.8)
  
  
Other    
Miscellaneous revenues —
 0.6
  
  
Net change in revenues $(8.7) $0.7


$ in millions2020 vs. 2019
Retail
Rate
Decrease due to removal of DMR$(95.9)
Decrease in competitive bid revenue rate rider(20.7)
Decrease due to removal of DIR(20.4)
Decrease due to removal of decoupling rider(11.9)
Increase due to reinstatement of RSC rider70.4
Increase in base distribution average rate per retail kWh sold, which goes up as usage declines due to fixed components in distribution rates9.0
Increase due to the deferral of revenue to adjust for the impacts of the TCJA in the prior year5.4
Other2.9
Net change in retail rate(61.2)
Volume
Net decrease in the volume of kWh sold primarily due to unfavorable weather as compared to the prior year and lower demand from commercial and industrial customers due to the impacts of COVID-19, partially offset by higher demand from residential customers due to the impacts of COVID-19(18.7)
Other miscellaneous(1.0)
Total retail change(80.9)
Wholesale
Decrease due to lower wholesale prices and lower volumes at OVEC(6.1)
RTO ancillary and capacity revenues
RTO ancillary and capacity revenues(1.5)
Miscellaneous revenues
Increase due to collections on legacy generation deferral rider5.3
Net change in Revenues$(83.2)

DPL – Net Purchased Power
During the three monthsyear ended September 30, 2019, net purchased powerDecember 31, 2020, Net Purchased Power decreased $17.1 million to $66.5$21.3 million compared to $83.6 million in the same period of the prior year, and, during the nine months ended September 30, 2019, net purchased power decreased $43.9 million to $195.0 million compared to $238.9 million in the same period of the prior year. These changes were primarily theThis decrease was a result of changes in the cost of purchased power shown below.of:
$ in millions2020 vs. 2019
Net purchased power
Purchased power
Rate
Decrease due to pricing in the competitive bid process$(23.6)
Volume
Decrease due to lower retail load served primarily driven by weather(3.6)
Total purchased power change(27.2)
RTO charges
Increase primarily due to higher TCRR rates in the current year5.9
Net change in purchased power$(21.3)

25
  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 vs. 2018 2019 vs. 2018
Net purchased power    
Purchased power    
Rate    
Increase / (decrease) due to pricing in the competitive bid process (1.4) 1.3
Volume    
Lower purchases in the nine months ended September 30, 2019 as DP&L stopped purchasing power to serve the load of certain other parties through their competitive bid process after May of 2018
 (6.2) (13.1)
Total purchased power change (7.6) (11.8)
RTO charges    
Decrease due to lower transmission and congestion charges, including a decrease due to benefits of the PJM Transmission Enhancement Settlement. RTO charges are incurred by DP&L as a member of PJM and primarily include transmission charges within our network, which are incurred and charged to customers in the transmission rider
 (9.8) (30.6)
RTO capacity charges   

Increase / (decrease) due to capacity costs 0.3
 (1.5)
     
Net change in purchased power $(17.1) $(43.9)


DPL –- Operation and Maintenance
During the three and nine monthsyear ended September 30, 2019,December 31, 2020, Operation and Maintenance expense increased $6.9decreased $2.6 million and $24.0 million, respectively, compared to the same periods in the prior year. The main drivers of these changes are as follows:
This decrease was a result of:


Three months ended Nine months ended


September 30, September 30,
$ in millions
2019 vs. 2018 2019 vs. 2018
Increase in alternative energy and energy efficiency programs (a)

$7.4
 $20.0
Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider (a)
 3.1
 9.3
Decrease due to prior year write-off of previously deferred rate case costs no longer deemed probable for recovery —
 (5.3)
Decrease in amortization of previously deferred regulatory costs, including rate case costs, certain transmission costs, and various costs collected under the regulatory compliance rider (a)
 (2.0) (1.7)
Other, net
(1.6) 1.7
Net change in operation and maintenance expense
$6.9
 $24.0

$ in millions2020 vs. 2019
Decrease in alternative energy and energy efficiency programs (a)
$(12.2)
Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider (a)
6.6
Increase in deferred storm costs (a)
3.9
Other, net(0.9)
Net change in Operations and Maintenance expense$(2.6)
(a)    There is a corresponding offset in Revenuesrevenue associated with these programs.program costs resulting in minimal impact to Net income.

DPL – Depreciation and Amortization
During the three and nine months ended September 30, 2019, Depreciation and amortization decreased $2.0 million and $4.7 million respectively, compared to the same periods in the prior year. The decrease was primarily due to lower software amortization and lower depreciation expense recorded at Conesville in 2019.

DPL – Taxes Other Than Income Taxes
During the three and nine monthsyear ended September 30, 2019,December 31, 2020, Taxes other than income taxes increased $1.9$1.5 million and $4.0 million respectively, compared to the same periods in the prior year. The increase for the nine months ended September 30, 2019 was primarily the result of a favorable adjustment recorded in the second quarter of 2018 related to 2017 Ohiofrom higher property taxes due to reflect actual payments madean increase in 2018.assessed values for Ohio properties for 2020.

DPL – Loss on Disposal of Business

DPL – Operating Expenses - Other
During the nine monthsyear ended September 30, 2018, December 31, 2020, DPL recorded other operating expensesa Loss on disposal of $14.6business of $4.7 million primarily due to the loss on the transfer of business interests in the Beckjord facility of $11.7 million and a $2.8 million fixed-asset impairment charge recorded on Conesville.Hutchings Coal Station.

DPL – Interest Expense
During the three and nine monthsyear ended September 30, 2019,December 31, 2020, Interest expense decreased $4.3$10.9 million and $10.7 million respectively, compared to the same periods in the prior year. The decrease was primarily the result of the reduction and refinancing of debt which resulted in lower interest rates at DPL and DP&L in 20182020 and 2019.

DPL – Loss on Early Extinguishment of Debt
During the nine monthsyear ended September 30, 2019,December 31, 2020, DPL recorded a Loss on early extinguishment of debt increased $38.5of $31.7 million comparedprimarily due to the same periodmake-whole premium payment of $30.8 million related to the redemption of the $380.0 million 7.25% Notes due 2021 in the prior year. The increase wasthird quarter of 2020.
During the year ended December 31, 2019, DPL recorded a Loss on early extinguishment of debt of $44.9 million primarily due to the make-whole premium payment of $41.4 million related to the $400.0 million partial redemption of the $780.0 million 7.25% Notes due 2021 in the second quarter of 2019, partially offset by the make-whole premium payment of $5.1 million related to the $101.0 million partial redemption of the 6.75% Senior Notes due 2019 in the second quarter of 2018.2019.

DPL – Income Tax Expense / (Benefit) From Continuing Operations
Income tax expense of $3.1 million during the three months ended September 30, 2018 changed to an Income tax benefit of $9.4decreased $14.8 million during the three months ended September 30,from $(20.3) million in 2019. to $(5.5) million in 2020. The change of $12.5$14.8 million was primarily due to a benefit recorded in the impact ofprior year for the September 26, 2019 PUCO order, which finalized the amount of excess deferred tax balances allocable to DP&L’s utility customers. This change was partially offset by a pre-tax loss in the current year compared to pre-tax income in the prior year.

Income tax expense of $1.5 million during the nine months ended September 30, 2018 changed to an income tax benefit of $12.6 million during the nine months ended September 30, 2019. The change of $14.1 million was primarily due to the impact of the September 26, 2019 PUCO order, which finalized the amount of excess deferred tax balances allocable to DP&L’s utility customers.

DPL – Discontinued Operations
NetDuring the years ended December 31, 2020 and 2019, DPL recorded income from discontinued operations was $(0.5)(net of tax) of $5.4 million and $25.8$53.6 million, for the three and nine months ended September 30, 2019, respectively, compared to $4.3 million and $29.2 million for the three and nine months ended September 30, 2018, respectively. This income relates to the generation components of Miami Fort, Zimmer, Stuart Killen and the Peaker assets,Killen, which were disposed of either by sale or retirementretired in recent years.2018 and sold in 2019, and Conesville, which was retired in May 2020 and sold in June 2020. See Part I, Item 1, Note 1415 – Discontinued Operations in the Notes to DPL's Condensed Consolidated Financial Statements included elsewhere in this prospectus for further discussion.

RESULTS OF OPERATIONS BY SEGMENT -– DPL

DPL has presented the results of operations of Miami Fort Station, Zimmer Station, the Peaker Assets, Stuart Station, and Killen Station as discontinued operations as a group of components for all periods presented. For more information, see Part I, Item 1, Note 14 – Discontinued Operations of Notes to DPL's Condensed Consolidated Financial Statements. As such, AES Ohio Generation only has operating activity coming from its undivided ownership interest in Conesville, which does not meet the thresholds to be a separate reportable operating segment. Therefore, DPL manages its business through one reportable operating segment, the Utility segment. The primary segment performance measure is income / (loss) from continuing operations before income tax as management has concluded that this measure best reflects the underlying business performance of DPL and is the most relevant measure considered in DPL’s internal evaluation of the financial performance of its segment.segments. The Utility segment is discussed further below.below:
26


Utility Segment
The Utility segment is comprised primarily of DP&L’s electric transmission and distribution businesses, which distribute electricity to residential, commercial, industrial and governmental customers. DP&L distributes electricity to more than 524,000531,000 retail customers who are located in a 6,000-square square mile area of West Central Ohio. DP&L’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses recordingand records regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs. The Utility segment includes revenues and costs associated with our investment in OVEC and the historical results of DP&L’s Beckjord Facility,Station, which was closed in 2014 and transferred to a third party in the first quarter of 2018, and

the Hutchings Coal generating facility,Station, which was closed in 2013. These assets did not transfer2013 and transferred to AES Ohio Generation as part of DP&L's Generation Separation on October 1, 2017. Thus, they are grouped within the Utility segment for segment reporting purposes. In addition, regulatory deferrals and collections, which include fuel deferrals in historical periods, are includeda third party in the Utility segment.fourth quarter of 2020.

Included within the “Other” column are other businesses that do not meet the GAAP requirements for disclosure as reportable segments as well as certain corporate costs, which include interest expense and loss on early extinguishment of debt on DPL'sDPL’s long-term debt as well as adjustments related to purchase accounting from the Merger. DPL's undivided interest in Conesville is included within the "Other" column as it does not meet the requirement for disclosure as a reportable operating segment, since the results of operations of the other EGUs are presented as discontinued operations. The accounting policies of the reportable segmentsegments are the same as those described in Note 1 – Overview and Summary of Significant Accounting Policies of our 10-K.Policies. Intersegment sales, costs of sales and expenses are eliminated in consolidation. Certain shared and corporate costs are allocated between "Other" and the Utility reporting segment.

See Part I, Item 1, Note 1113 – Business Segments of Notes to DPL's Condensed Consolidated Financial Statements for additional information regarding DPL’s reportable segment.

The following table presents DPL’s Income / (loss) from continuing operations before income tax by business segment:
Years ended December 31,
$ in millions202020192018
Utility$58.1 $124.3 $104.4 
Other(70.0)(92.8)(65.5)
Income / (loss) from continuing operations before income tax$(11.9)$31.5 $38.9 

  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 2018 2019 2018
Utility $37.7
 $37.5
 $108.8
 $73.9
Other (11.2) (17.7) (85.8) (60.2)
Income from continuing operations before income tax (a) $26.5
 $19.8
 $23.0
 $13.7

(a)For purposes of discussing operating results, we present and discuss Income from continuing operations before income tax. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information that is used by management to make decisions regarding our financial performance.

RESULTS OF OPERATIONS HIGHLIGHTS –Statement of Operations Highlights - DPL – Utility Segment

The results of operations of the Utility segment for DPL are identical in all material respects and for all periods presented to those of DP&LDP&L, ,which are included in Part I, Item 2,this Management's Discussion and Analysis of Financial Condition and Results of Operations (and Financial Condition.

27

RESULTS OF OPERATIONS HIGHLIGHTS – DP&L)
Statement of this Form 10-Q.Operations Highlights – DP&L


Years ended December 31,Change 2020 vs. 2019Change 2019 vs. 2018
$ in millions202020192018$%$%
Revenues:
Retail$586.4 $667.3 $657.9 $(80.9)(12)%$9.4 1%
Wholesale11.0 17.2 29.9 (6.2)(36)%(12.7)(42)%
RTO ancillary44.0 43.5 43.1 0.5 1%0.4 1%
Capacity revenues4.2 6.2 7.8 (2.0)(32)%(1.6)(21)%
Miscellaneous revenues6.5 1.2 — 5.3 442%1.2 —%
Total revenues652.1 735.4 738.7 (83.3)(11)%(3.3)—%
Operating costs and expenses:
Net fuel cost1.6 2.5 2.4 (0.9)(36)%0.1 4%
Purchased power:
Purchased power200.7 227.6 243.5 (26.9)(12)%(15.9)(7)%
RTO charges28.7 23.0 55.6 5.7 25%(32.6)(59)%
RTO capacity charges— — 2.2 — —%(2.2)(100)%
Net purchased power cost229.4 250.6 301.3 (21.2)(8)%(50.7)(17)%
Operation and maintenance181.9 183.0 139.7 (1.1)(1)%43.3 31%
Depreciation and amortization71.8 70.8 74.5 1.0 1%(3.7)(5)%
Taxes other than income taxes79.1 77.7 73.1 1.4 2%4.6 6%
Loss on asset disposal0.1 0.1 0.2 — —%(0.1)(50)%
Loss on disposal of business4.7 — 12.4 4.7 —%(12.4)(100)%
Total operating costs and expenses568.6 584.7 603.6 (16.1)(3)%(18.9)(3)%
Operating income83.5 150.7 135.1 (67.2)(45)%15.6 12%
Other expense, net:
Interest expense(24.3)(26.0)(27.3)1.7 (7)%1.3 (5)%
Loss on early extinguishment of debt— — (0.6)— —%0.6 (100)%
Other expense(1.1)(0.4)(2.8)(0.7)175%2.4 (86)%
Other expense, net(25.4)(26.4)(30.7)1.0 (4)%4.3 (14)%
Income before income tax (a)$58.1 $124.3 $104.4 $(66.2)(53)%$19.9 19%
RESULTS OF OPERATIONS HIGHLIGHTS – DP&L
  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 2018 2019 2018
Revenues:        
Retail $174.3
 $181.0
 $518.7
 $500.7
Wholesale 4.4
 4.9
 12.8
 24.6
RTO ancillary 11.0
 10.8
 32.8
 32.4
Capacity revenues 1.1
 2.0
 5.0
 5.8
Miscellaneous revenues 0.3
 —
 0.9
 —
Total revenues 191.1
 198.7
 570.2
 563.5
         
Operating costs and expenses        
Net fuel cost 0.6
 0.1
 2.0
 1.7
Purchased power:        
Purchased power 60.4
 67.7
 175.7
 186.7
RTO charges 5.5
 15.3
 17.6
 46.8
RTO capacity charges —
 —
 —
 2.2
Net purchased power cost 65.9
 83.0
 193.3
 235.7
Operation and maintenance 42.2
 33.8
 135.2
 105.9
Depreciation and amortization 17.4
 19.1
 52.9
 56.5
Taxes other than income taxes 20.8
 19.0
 58.2
 54.3
Loss / (gain) on asset disposal (0.1) —
 —
 0.1
Loss on disposal of business —
 —
 —
 12.4
Total operating costs and expenses 146.8
 155.0
 441.6
 466.6
         
Operating income 44.3
 43.7
 128.6
 96.9
         
Other income / (expense), net:        
Interest expense (6.1) (5.8) (19.9) (20.5)
Loss on early extinguishment of debt —
 —
 —
 (0.6)
Other income / (expense) (0.5) (0.4) 0.1
 (1.9)
Total other expense, net (6.6) (6.2) (19.8) (23.0)
         
Income before income tax (a) $37.7
 $37.5
 $108.8
 $73.9

(a)For purposes of discussing operating results, we present and discuss Income before income tax. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information used by management to make decisions regarding our financial performance.

DP&L – Revenues
(a)For purposes of discussing operating results, we present and discuss Income before income tax. This format is useful to investors because it allows analysis and comparability of operating trends and includes the same information that is used by management to make decisions regarding our financial performance.

The following review of results of operations compares the results for the year ended December 31, 2020 to the results for the year ended December 31, 2019.
DP&L – Revenues
Retail customers, especially residential and commercial customers, consume more electricity duringon warmer and colder weather than they do during mild temperatures.days. Therefore,our retail sales volumedemand is impactedaffected by the number of heating and cooling degree-days occurring during a year. Cooling degree-days typically have a more significant impacteffect than heating degree-days since some residential customers do not use electricity to heat their homes. Because of the impact of the decoupling riderDecoupling Rider (effective January 1, 2019 through December 18, 2019), weather hashad a minimal impact on our 2019 net operating results.

We sell Additionally, our share of the generation from OVEC into the wholesale market which covers a multi-state arearetail revenues are affected by regulated rates and settles on an hourly basis throughout the year. Factors impacting our wholesale sales volume each hour of the year include wholesale market prices; retail demand throughout the entire wholesale market area; and availability of OVEC generating plants to sell into the wholesale market.


riders.
DP&L's electric sales and billed customers were as follows:
28
ELECTRIC SALES AND CUSTOMERS (a)
  Three months ended Nine months ended
  September 30, September 30,
  2019 2018 2019 2018
Retail electric sales (b)
 3,858
 3,858
 10,731
 10,943
Wholesale electric sales (c)
 151
 156
 421
 608
Total electric sales 4,009
 4,014
 11,152
 11,551
         
Billed electric customers (end of period)     523,915
 523,535

(a)Electric sales are presented in millions of kWh.
(b)
DP&L retail electric sales represent the total transmission and distribution retail sales for the periods presented. SSO sales were 1,037 kWh and 2,972 kWh for the three and nine months ended September 30, 2019, respectively, and 1,056 kWh and 2,995 kWh for the three and nine months ended September 30, 2018, respectively.
(c)
Included within DP&L wholesale electric sales are DP&L's 4.9% share of the generation output of OVEC.

During the three monthsyear ended September 30, 2019, revenueDecember 31, 2020, Revenues decreased $7.6$83.3 million to $191.1$652.1 million compared to $198.7 million in the same period of the prior year, and, during the nine months ended September 30, 2019, revenue increased $6.7 million to $570.2 million compared to $563.5from $735.4 million in the same period of the prior year. These changes were primarily theThis decrease was a result of changes in the components of revenue shown below:of:

 Three months ended Nine months ended

 September 30, September 30,
$ in millions 2019 vs. 2018 2019 vs. 2018
Retail 
 
Rate    
Increase in energy efficiency and USF revenue rate riders $9.7
 $30.1
Increase in base distribution rates due to the DRO 6.3
 21.0
Increase due to the DIR, which was effective with the DRO 5.6
 16.7
Decrease in the TCRR due to lower transmission costs and the impact of DP&L passing back the benefits of the PJM Transmission Enhancement Settlement to customers
 (12.3) (27.3)
Decrease due to energy efficiency lost revenues recorded in the prior year (5.0) (16.7)
Other (2.5) 9.5
Net change in retail rate 1.8
 33.3
     
Volume    
Decrease in volume is primarily due to demand in the prior year. The decoupling rider approved in the DRO became effective January 1, 2019 and is designed to eliminate the impacts of weather and demand on DP&L's residential and commercial customers resulting in less of a demand impact in the current year.
 (8.2) (15.6)
     
Other miscellaneous (0.3) 0.3
Total retail change (6.7) 18.0

 
 
Wholesale 
 
Decrease in volumes due to no longer serving the load of certain other parties through their competitive bid process and lower wholesale prices (0.5) (11.8)

 
 
RTO ancillary and capacity revenues 
 
RTO ancillary and capacity revenues (0.7) (0.4)
     
Other    
Miscellaneous revenues 0.3
 0.9

 
 
Net change in revenues $(7.6) $6.7


$ in millions2020 vs. 2019
Retail
Rate
Decrease due to removal of DMR$(95.9)
Decrease in competitive bid revenue rate rider(20.7)
Decrease due to removal of DIR(20.4)
Decrease due to removal of decoupling rider(11.9)
Increase due to reinstatement of RSC rider70.4
Increase in base distribution average rate per retail kWh sold, which goes up as usage declines due to fixed components in distribution rates9.0
Increase due to the deferral of revenue to adjust for the impacts of the TCJA in the prior year5.4
Other2.9
Net change in retail rate(61.2)
Volume
Net decrease in the volume of kWh sold primarily due to unfavorable weather as compared to the prior year and lower demand from commercial and industrial customers due to the impacts of COVID-19, partially offset by higher demand from residential customers due to the impacts of COVID-19(18.7)
Other miscellaneous(1.0)
Total retail change(80.9)
Wholesale
Decrease due to lower wholesale prices and lower volumes at OVEC(6.2)
RTO ancillary and capacity revenues
Decrease primarily due to lower capacity prices(1.5)
Miscellaneous revenue
Increase due to collections on legacy generation deferral rider5.3
Net change in Revenues$(83.3)

DP&L – Net Purchased Power
During the three monthsyear ended September 30, 2019, net purchased powerDecember 31, 2020, Net Purchased Power decreased $17.1 million to $65.9$21.2 million compared to $83.0 million in the same period of the prior year, and, during the nine months ended September 30, 2019, net purchased power decreased $42.4 million to $193.3 million compared to $235.7 million in the same period of the prior year. These changes were primarily theThis decrease was a result of changes in the cost of purchased power shown below.of:
$ in millions2020 vs. 2019
Net purchased power
Purchased power
Rate
Decrease due to pricing in the competitive bid process$(23.3)
Volume
Decrease due to lower retail load served primarily driven by weather(3.6)
Total purchased power change(26.9)
RTO charges
Increase primarily due to higher TCRR rates in the current year5.7
Net change in purchased power$(21.2)

29

  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 vs. 2018 2019 vs. 2018
Net purchased power    
Purchased power    
Rate    
Increase / (decrease) due to pricing in the competitive bid process $(1.1) $2.0
Volume    
Lower purchases in the nine months ended September 30, 2019 as DP&L stopped purchasing power to serve the load of certain other parties through their competitive bid process after May of 2018
 (6.2) (13.0)
Total purchased power change (7.3) (11.0)
RTO charges    
Decrease due to lower transmission and congestion charges, including a decrease due to benefits of the PJM Transmission Enhancement Settlement. RTO charges are incurred by DP&L as a member of PJM and primarily include transmission charges within our network, which are incurred and charged to customers in the transmission rider
 (9.8) (29.2)
RTO capacity charges    
Decrease due to capacity costs at OVEC —
 (2.2)
     
Net change in purchased power $(17.1) $(42.4)

DP&L – - Operation and Maintenance
During the three and nine monthsyear ended September 30, 2019,December 31, 2020, Operation and Maintenance expense increased $8.4decreased $1.1 million and $29.3 million, respectively, compared to the same periods in the prior year. The main drivers of these changes are as follows:This decrease was a result of:
$ in millions2020 vs. 2019
Decrease in alternative energy and energy efficiency programs (a)
(12.2)
Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider (a)
$6.6
Increase in deferred storm costs (a)
3.9
Other, net0.6
Net change in Operations and Maintenance expense$(1.1)
  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 vs. 2018 2019 vs. 2018
Increase in alternative energy and energy efficiency programs (a)
 $7.4
 $20.0
Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider (a)
 3.1
 9.3
Increase in costs charged from the Service Company for services provided 2.9
 5.3
Decrease due to prior year write-off of previously deferred rate case costs —
 (5.3)
Decrease in amortization of previously deferred regulatory costs, including rate case costs, certain transmission costs, and various costs collected under the regulatory compliance rider (a)
 (2.0) (1.7)
Other, net (3.0) 1.7
Net change in operation and maintenance expense $8.4
 $29.3


(a)There is a corresponding offset in Revenuesrevenue associated with these programs.program costs resulting in minimal impact to Net income.

DP&L – Depreciation and Amortization
During the three and nine months ended September 30, 2019, Depreciation and amortization decreased $1.7 million and $3.6 million, respectively, compared to the same periods in the prior year. The decrease was primarily due to lower software amortization in 2019.

DP&L – Taxes Other Than Income Taxes
During the three and nine monthsyear ended September 30, 2019,December 31, 2020, Taxes other than income taxes increased $1.8$1.4 million and $3.9 million, respectively, compared to the same periods in the prior year. The increase for the nine months ended September 30, 2019 was primarily the result of a favorable adjustment made in 2018 for 2017 Ohiofrom higher property taxes due to reflect actual payments.an increase in assessed values for Ohio properties for 2020.

DP&L – Loss on Disposal of Business
During the nine monthsyear ended September 30, 2018, December 31, 2020, DP&L recorded a lossLoss on disposal of business of $12.4$4.7 million due to the loss on the transfer of business interests in the Beckjord facility.Hutchings Coal Station.
DP&L – Interest Expense
During the year ended December 31, 2020, Interest expense decreased $1.7 million compared to the prior year. The decrease was primarily the result of the refinancing of debt at DP&L in 2020 and 2019.


DP&L – Income Tax Expense / (Benefit)
During the year ended December 31, 2020, Income tax benefit of $0.6 million in 2019 changed to Income tax expense of $6.3$7.0 million during the three months ended September 30, 2018 changed to a benefit of $7.2 million during the three months ended September 30, 2019in 2020 primarily due to the impact of the September 26, 2019 PUCO order, which finalized the amount of excess deferred tax balances allocable to DP&L’s&L's utility customers.

During the nine months ended September 30, 2019, Income tax expense decreased $6.9 million, compared to the same period in the prior year primarily due to the impact of the September 26, 2019 PUCO order, which finalized the amount of excess deferred tax balances allocable to DP&L’s utility customers, This change was partially offset by higher pre-taxtaxable income in the current year as compared to the prior year.
30


KEY TRENDS AND UNCERTAINTIES

Following the issuance of the DRO in September 2018 and the resulting changes to the decoupling rider, we expect thatDecoupling Rider effective January 1, 2019, our financial results will be lesswere not driven by retail demand and weather but will bewere impacted by customer growth within our service territory. However, the Decoupling Rider was removed with the withdrawal of the ESP 3 and approved ESP 1 rates, and weather impacted current results and may again impact future results. See further discussion on these changes in Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements included elsewhere in this prospectus. In addition, DPL's and DP&L's financial results are likely to be driven by other factors including, but not limited to:
•regulatory outcomes;
regulatory outcomes;
•the passage of new legislation, implementation of regulations or other changes in regulation;regulations; and
•timely recovery of transmission and distribution expenditures;expenditures.
COVID-19 Pandemic
The COVID-19 pandemic has impacted global economic activity, including electricity and energy consumption, and caused significant volatility and negative pressure in financial markets. In response to the COVID-19 pandemic, the PUCO issued an emergency order prohibiting electric utilities, including us, from discontinuing electric utility service to customers. This prohibition ended for DP&L on September 1, 2020.
•
with respect to DPL, exiting generation assets currently owned by AES Ohio Generation.
In addition to the impacts to demand within our service territory, we also have incurred and expect to continue to incur expenses relating to COVID-19, and such expenses may include those that relate to events outside of our control. For the year ended December 31, 2020 and into 2021, we experienced impacts from the pandemic and expect to continue to experience impacts during 2021, and any such impacts during that time or in other future periods could have a material adverse effect on our results of operations, financial condition and cash flows. The following discussion highlights our assessment of the impacts of the pandemic on our current financial and operating status, and our financial and operational outlook based on information known as of this filing. Also see "Risk Factors: elsewhere in this prospectus.
Business Continuity - During the COVID-19 pandemic, we are taking a variety of measures to ensure our ability to generate, transmit, distribute and sell electric energy, to ensure the health and safety of our employees, contractors, customers and communities and to provide essential services to the communities in which we operate. We continue to respond to this global crisis through comprehensive measures to protect our employees and others while fulfilling our vital role in providing our customers with electric energy. While stay-at-home restrictions have been lifted in our service territory, most of our management and administrative personnel are able to work remotely, and we have not experienced significant issues affecting our operations or ability to maintain effective internal controls and produce reliable financial information.
Demand - The economic impact of the pandemic started to materialize in Ohio in the second half of March and continued for the remainder of 2020 and into 2021. See Note 14 – Revenue and Note 17 – Risks & Uncertainties of Notes to DPL's Consolidated Financial Statements for further discussion of how the COVID-19 pandemic has impacted our sales demand and a disaggregation of retail revenues by customer class. The declines for commercial and industrial customers were more severe in April and May, and partially recovered starting in June and into the second half of the year as stay-at-home orders were lifted. While we cannot predict the length and magnitude of the pandemic or how it could ultimately impact global or local economic conditions, continuous and/or further declines in future demand would adversely impact our financial results for 2021 and beyond.
Liquidity - We anticipate having sufficient liquidity to make all required payments, including payments for salaries and wages owed to our employees, during the pandemic. We do not foresee a significant impact to our access to capital or our liquidity position as a result of the pandemic. On June 19, 2020, DPL closed a $415.0 million issuance of senior unsecured notes, and the proceeds from this issuance together with cash on hand were used to redeem in-full the remaining balance of $380.0 million of DPL's 7.25% senior unsecured notes. These bonds were redeemed at par plus accrued interest and a make-whole premium of $30.8 million on July 20, 2020. Additionally, on July 31, 2020 DP&L issued $140.0 million of First Mortgage Bonds and used the proceeds to purchase at par value the $140.0 million of outstanding tax-exempt Ohio Air Quality Development Authority Collateralized Pollution Control Revenue Refunding Bonds that had been issued in 2015.
Credit Exposures - We continue to monitor and manage our credit exposures in a prudent manner. During the year ended December 31, 2020 and continuing in 2021, we experienced credit-related impacts from utility customers due to the prohibition of electric utilities, including us, from discontinuing electric utility service to customers through
31

September 1, 2020 and due to the economic impacts of the COVID-19 pandemic. This has resulted in an increase in past due customer receivable balances, and our allowance for credit losses has increased $2.4 million for both DPL and DP&L during the year ended December 31, 2020. During 2020, DP&L implemented and offered additional extended payment plans to customers as a result of the pandemic. If these credit-related impacts from the COVID-19 pandemic continue into 2021 or beyond, further deterioration in our credit exposures and customer collections could result. However, as discussed in Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements included elsewhere in this prospectus, DP&L’s uncollectible expense is deferred for future collection.
Supply Chain - Our supply chain management has remained robust during this challenging time and we continue to closely manage and monitor developments.
Capital Projects - Despite the COVID-19 pandemic, our construction projects have proceeded without material delays.
CARES Act - The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was passed by the U.S. Congress and signed into law on March 27, 2020. While we currently expect a limited impact from this legislation on our business, we have deferred the payment of federal payroll taxes in accordance with the provisions of this act. At December 31, 2020, the total deferral was approximately $2.1 million.
See Note 17 – Risks & Uncertainties of Notes to DPL's Consolidated Financial Statements for more information.
Operational
As part of our announced plan to exit our generation businesses, we closed on a sale of our Peaker assets in March 2018, retired the Stuart and Killen EGUs in May 2018 and closed on the transfer of these facilities to a third party in December 2019, and finally in May 2020 AEP, the operator of the co-owned Conesville EGU, closed Unit 4 in May 2020 and sold this facility in June 2020. For additional information on these events and DPL's previously-owned coal-fired facilities, see Note 15 – Discontinued Operations of Notes to DPL's Consolidated Financial Statements.
Macroeconomic and Political
Reference Rate Reform
In July 2017, the UK Financial Conduct Authority announced that it intends to phase out LIBOR by the end of 2021. In the U.S., the Alternative Reference Rate Committee at the Federal Reserve identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative rate for LIBOR; alternative reference rates in other key markets are under development. On November 30, 2020, the ICE Benchmark Association ("IBA") announced it had begun consultation on its intention to cease publication of two specific LIBOR rates by December 31, 2021, while extending the timeline for the overnight, one-month, three-month, six-month, and 12-month USD LIBOR rates through June 30, 2023. The IBA expects to make separate announcements in this regard following the outcome of the consultation. We maintain financial instruments that use LIBOR as an interest rate benchmark. Although the full impact of the reform remains unknown, we have begun to engage with our counterparties to discuss specific action items to be undertaken in order to prepare for amendments when they become due.
Regulatory Environment
For a comprehensive discussion of the market structure and regulation of DPL and DP&L, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements included elsewhere in this prospectus.
DPL’s, DP&L’sDistribution Rate Case and our other subsidiaries’ facilities and operations are subject to- On November 30, 2020, DP&L filed a wide range of regulations and laws by federal, state and local authorities. As well as imposing continuing compliance obligations, these laws and regulations authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. In the normal course of business, we have investigatory and remedial activities underway at these facilities and operations in an effort to comply, or to determine compliance, with such regulations. We record liabilities for losses that are probable and can be reasonably estimated. In addition to matters discussed or updated herein, our 2018 Form 10-K and Forms 10-Q previously filednew distribution rate case with the SEC during 2019 describe other regulatory matters which have not materially changed since those filings.PUCO. This rate case proposes a revenue increase of $120.8 million.

Ohio Regulatory Proceedings
DMR
Stipulation and Recommendation - On October 20, 2017,23, 2020, DP&L entered into a Stipulation and Recommendation (the Settlement) with the staff of the PUCO approved DP&L’s 2017 ESP.  On January 7, 2019, the Ohio Consumers' Counsel appealed to the Supreme Courtand various customers, and organizations representing customers of Ohio the 2017 ESPDP&L and certain other parties with respect to, the bypassability of the Reconciliation Rider and the exclusion of the DMR from the SEET. That proceeding has been stayedamong other matters, DP&L’s applications pending an appeal in a related case involving another utility.

Pursuant to the 2017 ESP, on January 22, 2019, DP&L filed a request withat the PUCO for a two-year extension(i) approval of DP&L’s plan to modernize its DMR through October 2022,distribution grid (the Smart Grid Plan), (ii) findings that DP&L passed the SEET for 2018 and 2019, and (iii) findings that DP&L’s current ESP 1 satisfies the SEET and the more favorable in the proposed amountaggregate (MFA) regulatory test. The settlement is subject to, and conditioned upon, approval by the PUCO. A hearing was conducted January 11 - 15, 2021 for consideration of $199.0 million for eachthis settlement. If the ultimate outcome is less favorable than the settlement agreement it could have a material adverse effect on our results of the two additional years. The extension request was set at a level expected to reduce debt obligations at both DP&Loperations, financial condition and DPL and to position DP&L to make capital expenditures to maintain and modernize its electric grid. DP&L’s DMP investments are contingent upon the PUCO approving the two-year extension of its DMR.cash flows.

A rehearing process in DP&L's 2017 ESP case, including the DMR, remains pending. On August 1, 2019, DP&L filed a supplemental brief with the PUCO focused on the applicability of a recent court decision involving another Ohio utility’s DMR which is similar to, but not identical to, DP&L’s DMR.

Ohio House Bill 6
On July 23, 2019, - Legislation, such as Senate Bill 346 and House Bill 738, has been introduced in the Governor of Ohio signedGeneral Assembly seeking to repeal Ohio House Bill 6. Ohio House Bill 6, which, among other things, does the following: beginning January 1, 2020, permitted DP&L to defer, recover or credit the net proceeds from selling energy and
•
beginning January 1, 2020, replaces DP&L’s non-bypassable Reconciliation Rider, permitting DP&L to defer, recover or credit the net proceeds from selling energy and capacity received as part of DP&L’s interest in OVEC and its OVEC-related costs through 2023, with a non-bypassable recovery mechanism for recovery of prudently incurred OVEC costs through 2030;
32

capacity received as part of DP&L's interest in OVEC and its OVEC-related costs through a non-bypassable recovery mechanism for recovery of prudently incurred OVEC costs through 2030; eliminates the annual energy efficiency targets for Ohio utilities after 2020; and

allows Ohio utilities to construct customer-sited renewable generation for mercantile customers or groups of mercantile customers, the costs of which may only be recovered from those customers. If Ohio House Bill 6 is repealed without a replacement with comparable provisions, it could have a material adverse effect on our results of operations, financial condition and cash flows.

Regulatory impact of tax reform
On September 26, 2019For more information on the PUCO approved a unanimous stipulation agreeing to return a total of $65.1 million, $83.2 million when including taxes associated with the refunds, to distribution customers.

See Part I, Item 1,above matters, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements included elsewhere in this prospectus.

CAPITAL RESOURCES AND LIQUIDITY
Cash, cash equivalents and restricted cash for DPL and DP&L was $25.5 million and $11.8 million, respectively, at December 31, 2020. At that date, neither DPL nor DP&L had short-term investments. DPL and DP&L had aggregate principal amounts of long-term debt outstanding of $1,413.0 million and $582.4 million, respectively, at December 31, 2020.
We depend on timely and continued access to capital markets to manage our liquidity needs. The inability to raise capital on favorable terms, to refinance existing indebtedness or to fund operations and other commitments during times of political or economic uncertainty could have material adverse effects on our financial condition and results of operations. In addition, changes in the timing of tariff increases or delays in the regulatory determinations as well as unfavorable regulatory outcomes could have a material adverse effect on our results of operations, financial condition and cash flows.
DP&L must first seek approval from the PUCO to issue new stocks, bonds, notes and other evidences of indebtedness. Annually, DP&L must receive authority to issue and assume liability on short-term debt, not to exceed 12 months. DP&L received an order from the PUCO granting authority through December 31, 2021 to, among other things, issue up to $300.0 million in aggregate principal amount of short-term indebtedness. DP&L must also receive authority to issue and assume liability on long-term debt, in excess of 12 months. DP&L last received approval in 2020 to, among other things, issue up to $140.0 million in First Mortgage Bonds. DP&L also has restrictions on the amount of new debt that may be issued due to contractual obligations of AES and by financial covenant restrictions under existing debt obligations. DP&L does not believe such restrictions will be a limiting factor in our ability to issue debt in the ordinary course of prudent business operations.
CASH FLOWS
DPL’s financial condition, liquidity and capital requirements include the consolidated results of its principal subsidiary DP&L. All material intercompany accounts and transactions have been eliminated in consolidation.
Cash Flow Analysis - DPL:
DPLYears ended December 31,
$ in millions202020192018
Net cash provided by operating activities$113.9 $180.3 $205.9 
Net cash provided by / (used in) investing activities(185.7)(222.6)129.9 
Net cash provided by / (used in) financing activities50.3 (22.4)(250.5)
Increase in cash and restricted cash of discontinued operations and held-for-sale businesses— — 1.5 
Net increase / (decrease) in cash, cash equivalents and restricted cash(21.5)(64.7)86.8 
Balance at beginning of year47.0 111.7 24.9 
Cash, cash equivalents and restricted cash at end of year$25.5 $47.0 $111.7 

33

Fiscal year 2020 versus 2019:
DPL – Net cash from operating activities
For the years ended December 31,$ change
$ in millions202020192020 vs. 2019
Net income / (loss)$(1.0)$105.4 $(106.4)
Depreciation and amortization79.3 58.7 20.6 
Deferred income taxes39.8 15.2 24.6 
Fixed-asset impairment— 3.5 (3.5)
Loss on early extinguishment of debt31.7 44.9 (13.2)
Loss / (gain) on disposal and sale of business, net(1.4)(20.1)18.7 
Net income / (loss), adjusted for non-cash items148.4 207.6 (59.2)
Net change in operating assets and liabilities(34.5)(27.3)(7.2)
Net cash provided by operating activities$113.9 $180.3 $(66.4)

The net change in operating assets and liabilities for the year ended December 31, 2020 compared to the year ended December 31, 2019 was driven by the following:
$ in millions$ change
Decrease from deferred regulatory costs, net primarily due to a decrease in regulatory liabilities as we return certain benefits to customers$(31.8)
Decrease from accounts payable primarily due to timing of payments(19.8)
Increase from accrued taxes payable / receivable primarily due to tax payment of $52.0 million from AES, partially offset by an increase in the current tax benefit in the current year29.2 
Increase from inventory primarily due to the closing and sale of Conesville in the current year9.1 
Other6.1 
Net change in cash from changes in operating assets and liabilities$(7.2)

DPL – Net cash from investing activities
During the year ended December 31, 2020, net cash used in investing activities was $185.7 million compared to net cash used in investing activities of $222.6 million for the year ended December 31, 2019. This $36.9 million decrease in cash used primarily relates to a $43.7 million decrease in net payments on the disposal of business interests driven by the payments on the transfer of the retired Stuart and Killen generating facilities in the prior year. In addition, there were $5.1 million of proceeds received from the sale of software in the current year. These decreases in cash used were partially offset by a $13.9 million increase in cost of removal payments.
DPL – Net cash from financing activities
During the year ended December 31, 2020, net cash provided by financing activities was $50.3 million compared to net cash used in financing activities of $(22.4) million for the year ended December 31, 2019. This $72.7 million increase was primarily due to a $160.5 million increase in net issuances of long-term debt ($4.2 million net issuance of long-term debt in 2020 compared to net retirements on long-term debt of $156.3 million in 2019) and a $98.0 million equity contribution in the current year, partially offset by increased net payments on revolving credit facilities of $188.0 million in the current year.
Cash Flow Analysis - DP&L:
DP&LYears ended December 31,
$ in millions202020192018
Net cash provided by operating activities$91.0 $199.9 $195.8 
Net cash used in investing activities(186.5)(170.6)(96.9)
Net cash provided by / (used in) financing activities86.0 (74.2)(38.3)
Net increase / (decrease) in cash, cash equivalents and restricted cash(9.5)(44.9)60.6 
Balance at beginning of year21.3 66.2 5.6 
Cash, cash equivalents and restricted cash at end of year$11.8 $21.3 $66.2 

34

Fiscal year 2020 versus 2019:
DP&L – Net cash from operating activities
For the years ended December 31,$ change
$ in millions202020192020 vs. 2019
Net income$51.1 $124.9 $(73.8)
Depreciation and amortization75.5 74.5 1.0 
Loss on disposal of business4.7 — 4.7 
Other adjustments to Net income3.4 (9.7)13.1 
Net income, adjusted for non-cash items134.7 189.7 (55.0)
Net change in operating assets and liabilities(43.7)10.2 (53.9)
Net cash provided by operating activities$91.0 $199.9 $(108.9)

The net change in operating assets and liabilities for the year ended December 31, 2020 compared to the year ended December 31, 2019 was driven by the following:
$ in millions$ change
Decrease from deferred regulatory costs, net primarily due to a decrease in regulatory liabilities as we return certain benefits to customers$(31.8)
Decrease from accounts receivable due to PJM transmission enhancement settlement collections in the prior year(18.9)
Decrease from accounts payable primarily due to timing of payments(16.9)
Increase from accrued taxes payable / receivable primarily due to higher current portion of income tax expense in the current year compared to the prior year11.7 
Other2.0 
Net change in cash from changes in operating assets and liabilities$(53.9)

DP&L – Net cash from investing activities
During the year ended December 31, 2020, net cash used in investing activities was $186.5 million compared to net cash used in investing activities of $170.6 million for the year ended December 31, 2019. This $15.9 million increase in cash used primarily relates to a $13.9 million increase in cost of removal payments and a $7.0 million payment made on the disposal of business interests in Hutchings Coal Station in the current year, partially offset by a $2.8 million decrease in the purchase of renewable energy credits and a $2.2 million decrease in capital expenditures.
DP&L – Net cash from financing activities
During the year ended December 31, 2020, net cash provided by financing activities was $86.0 million compared to net cash used in financing activities of $(74.2) million during the year ended December 31, 2019. This $160.2 million increase primarily relates to a $150.0 million equity contribution from DPL in the current year, a $52.3 million decrease in return of capital payments to DPL compared to the prior year, and $13.8 million in net retirements on long-term debt in the prior year, partially offset by a $60.0 million increase in net payments on revolving credit facilities in the current year.
Liquidity
We expect our existing sources of liquidity to remain sufficient to meet our anticipated operating needs. Our business is capital intensive, requiring significant resources to fund operating expenses, construction expenditures, scheduled debt maturities and carrying costs, taxes and dividend payments. For 2021 and subsequent years, we expect to satisfy these requirements with cash from operations, funds from debt financing and/or equity capital contributions as our internal liquidity needs and market conditions warrant. We also expect that the borrowing capacity under bank credit facilities will continue to be available to manage working capital requirements during those periods.
35

At December 31, 2020, DPL and DP&L have access to the following revolving credit facilities:
$ in millionsTypeMaturityCommitmentAmounts available as of December 31, 2020
DPLRevolvingJune 2023$110.0 $25.0 
DP&LRevolvingJune 2024175.0 153.9 
$285.0 $178.9 
DPL has a revolving credit facility of $110.0 million, with a $75.0 million letter of credit sublimit and a feature that provides DPL the ability to increase the size of the facility by an additional $50.0 million. This facility is secured by a pledge of common stock that DPL owns in DP&L. The facility expires in June 2023. At December 31, 2020, there was one letter of credit in the aggregate amount of $5.0 million outstanding under this facility and $80.0 million drawn under this facility, with the remaining $25.0 million available to DPL.
DP&L's revolving credit facility has a commitment of $175.0 million, with a $75.0 million letter of credit sublimit and a feature that provides DP&L the ability to increase the size of the facility by an additional $100.0 million. This facility expires June 2024. At December 31, 2020, DP&L had $20.0 million drawn under this facility and had one letter of credit in the amount of $1.1 million outstanding, with the remaining $153.9 million available to DP&L.
Capital Requirements
Capital Additions
ActualProjected
$ in millions201820192020202120222023
DPL$94 $164 $174 $254 $271 $242 
DP&L$91 $162 $170 $252 $268 $238 

Capital projects are subject to continuing review and are revised in light of changes in financial and economic conditions, load forecasts, legislative and regulatory developments and changing environmental laws, rules and regulations, among other factors.
DPL is projecting to spend an estimated $767.0 million in capital projects for the period 2021 through 2023, which includes an estimated $758.0 million for DP&L. DP&L's projection includes expected spending under DP&L's Smart Grid Plan filed with the PUCO in December 2018 and included in the Stipulation and Recommendation entered into on October 23, 2020, as well as new transmission projects. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements for more information.
DP&L is subject to the mandatory reliability standards of NERC and ReliabilityFirst Corporation (RF), one of the six NERC regions, of which DP&L is a member. DP&L anticipates spending approximately $76.0 million within the next five years to reinforce its transmission system to comply with mandatory NERC and FERC Form 715 planning requirements. These anticipated costs are included in the overall capital projections above.
Debt Covenants
For information regarding our long-term debt covenants, see Note 7 – Long-term debt of Notes to DPL's Consolidated Financial Statements.
Debt Ratings
The following table outlines the debt ratings and outlook for DPL and DP&L, along with the effective or affirmed date of each rating.
DPLDP&LOutlookEffective or Affirmed
Fitch Ratings
BB+(a) / BB(b)
BBB+ (c)
NegativeApril 2020
Moody's Investors Service, Inc.
Ba1 (b)
A3 (c)
Negative
DPL - June 2020
DP&L - December 2019
Standard & Poor's Financial Services LLC
BB+ (b)
BBB+ (c)
DevelopingNovember 2020

(a) CondensedRating relates to DPL’s senior secured debt.
(b)Rating relates to DPL's senior unsecured debt.
(c)Rating relates to DP&L’s senior secured debt.
36


Credit Ratings
The following table outlines the credit ratings (issuer/corporate rating) and outlook for each company, along with the effective or affirmed dates of each rating and outlook for DPL and DP&L.
DPLDP&LOutlookEffective or Affirmed
Fitch RatingsBBBBB-NegativeApril 2020
Moody's Investors Service, Inc.Ba1Baa2NegativeDecember 2019
Standard & Poor's Financial Services LLCBB+BB+DevelopingNovember 2020

If the rating agencies reduce our debt or credit ratings, our borrowing costs may increase, our potential pool of investors and funding resources may be reduced and we may be required to post additional collateral under certain contracts. These events may have an adverse effect on our results of operations, financial condition and cash flows. In addition, any such reduction in our debt or credit ratings may adversely affect the trading price of our outstanding debt securities. Non-investment grade companies may experience higher costs to issue new securities.
Off-Balance Sheet Arrangements
DPL – Guarantees
Previously, DPL entered into various agreements with its wholly-owned subsidiary, AES Ohio Generation, providing financial or performance assurance to third parties. These agreements were entered into primarily to support or enhance the creditworthiness otherwise attributed to the subsidiary on a stand-alone basis, thereby facilitating the extension of sufficient credit to accomplish this subsidiary's intended commercial purposes. With the completion of our plan to exit generation, AES Ohio Generation currently does not require such assurances to third parties, and existing guarantees will expire in June, 2021. During the year ended December 31, 2020, DPL did not incur any losses related to the guarantees of these obligations and we believe it is unlikely that DPL would be required to perform or incur any losses in the future associated with any of the above guarantees. At December 31, 2020, DPL had $1.9 million of such guarantees on behalf of AES Ohio Generation. There were no outstanding balances for commercial transactions covered by these guarantees at December 31, 2020 or December 31, 2019.
DP&L owns a 4.9% equity ownership interest in OVEC which is recorded using the cost method of accounting under GAAP. At December 31, 2020, DP&L could be responsible for the repayment of 4.9%, or $62.6 million, of a $1,276.7 million debt obligation comprised of both fixed and variable rate securities with maturities between 2022 and 2040. This would only happen if this electric generation company defaulted on its debt payments. At December 31, 2020, we have no knowledge of such a default.
Commercial Commitments and Contractual Obligations
We enter into various contractual obligations and other commercial commitments that may affect the liquidity of our operations. At December 31, 2020, these include:
Payments due in:
$ in millionsTotalLess than
1 year		2 - 3
years		4 - 5
years		More than
5 years
DPL:
Long-term debt$1,413.0 $0.2 $0.4 $415.4 $997.0 
Interest payments819.1 57.8 115.5 107.0 538.8 
Electricity purchase commitments120.8 86.0 34.8 — — 
Purchase orders and other contractual obligations92.5 87.8 4.7 — — 
Total contractual obligations$2,445.4 $231.8 $155.4 $522.4 $1,535.8 
Payments due in:
$ in millionsTotalLess than
1 year		2 - 3
years		4 - 5
years		More than
5 years
DP&L:
Long-term debt$582.4 $0.2 $0.4 $0.4 $581.4 
Interest payments583.9 22.0 44.0 44.0 473.9 
Electricity purchase commitments120.8 86.0 34.8 — — 
Purchase orders and other contractual obligations90.3 85.6 4.7 — — 
Total contractual obligations$1,377.4 $193.8 $83.9 $44.4 $1,055.3 

37

Long-term debt:
DPL’s Long-term debt at December 31, 2020 consists of DPL’s unsecured notes and Capital Trust II securities, along with DP&L’s First Mortgage Bonds and the WPAFB note. These long-term debt amounts include current maturities but exclude unamortized debt discounts, premiums and fair value adjustments.
DP&L’s Long-term debt at December 31, 2020 consists of its First Mortgage Bonds and the WPAFB note. These long-term debt amounts include current maturities but exclude unamortized debt discounts.
See Note 7 – Long-term debt included in Notes to DPL's Consolidated Financial Statements.
Interest payments:
Interest payments are associated with the long-term debt described above. The interest payments relating to variable-rate debt are projected using the interest rates in effect at December 31, 2020.
Electricity purchase commitments:
DPL enters into long-term contracts for the purchase of electricity. In general, these contracts are subject to variable quantities or prices and are terminable only in limited circumstances.
Purchase orders and other contractual obligations:
At December 31, 2020, DPL and DP&L had various other contractual obligations including contracts to purchase goods and services with various terms and expiration dates. Due to uncertainty regarding the timing and payment of future obligations to the Service Company, and DPL's and DP&L's ability to terminate such obligations upon 90 days' notice, we have excluded such amounts in the contractual obligations table above. This table also does not include regulatory liabilities (see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements) or contingencies (see Note 11 – Contractual Obligations, Commercial Commitments and Contingencies of Notes to DPL's Consolidated Financial Statements). See Note 12 – Related Party Transactions of Notes to DPL's Consolidated Financial Statements for additional information on charges between related parties and amounts due to or from related parties.
Reserve for uncertain tax positions:
Due to the uncertainty regarding the timing of future cash outflows associated with our unrecognized tax benefits of $1.4 million at December 31, 2020, we are unable to make a reliable estimate of the periods of cash settlement with the respective tax authorities and have not included such amounts in the contractual obligations table above.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
DPL’s Consolidated Financial Statements are prepared in accordance with GAAP. In connection with the preparation of these financial statements, our management is required to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosure of contingent liabilities. These assumptions, estimates and judgments are based on our historical experience and assumptions that we believe to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. Our critical accounting estimates are those which require assumptions to be made about matters that are highly uncertain. Our significant accounting policies are described in Note 1 – Overview and Summary of Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements.
Different estimates could have a material effect on our financial results. Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions or circumstances. Historically, however, recorded estimates have not differed materially from actual results. Significant items subject to such judgments include: the carrying value of property, plant and equipment; unbilled revenues; the valuation of allowances for deferred income taxes; regulatory assets and liabilities; reserves recorded for income tax exposures; litigation; contingencies; the valuation of AROs; and assets and liabilities related to employee benefits.
Revenue Recognition (including Unbilled Revenue)
Revenue is primarily earned from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the
38

governmental authorities. At the end of each month, amounts of energy delivered to customers since the date of the last meter reading are estimated and the corresponding unbilled revenue is accrued. In making our estimates of unbilled revenue, we use complex models that consider various factors including known amounts of energy usage by nearly all residential, small commercial and industrial customers; estimated line losses; and estimated customer rates based on prior period billings. Given the use of these models, and that customers are billed on a monthly cycle, we believe it is unlikely that materially different results will occur in future periods when revenue is billed. The effect on 2020 revenues and ending unbilled revenues of a one percentage point change in estimated line losses for the month of December 2020 is immaterial. An allowance for potential credit losses is maintained and amounts are written off when normal collection efforts have been exhausted.
Income Taxes
We are subject to federal and state income taxes. Our income tax provision requires significant judgment and is based on calculations and assumptions that are subject to examination by the U.S. Internal Revenue Service and other tax authorities. We regularly assess the potential outcome of tax examinations when determining the adequacy of our income tax provisions by considering the technical merits of the filing position, case law and results of previous tax examinations. Accounting guidance for uncertainty in income taxes prescribes a more-likely-than-not recognition threshold and measurement requirements for financial statement reporting of our income tax positions. Tax reserves have been established which we believe to be adequate in relation to the potential for additional assessments. Once established, reserves are adjusted only when there is more information available or when an event occurs necessitating a change to the reserves. While we believe that the amount of the tax reserves is reasonable, it is possible that the ultimate outcome of current or future examinations may be materially different than the reserve amounts.
Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities and their respective income tax bases. We establish a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized.
Regulatory Assets and Liabilities
Application of the provisions of GAAP relating to regulatory accounting requires us to reflect the effect of rate regulation in DPL’s Consolidated Financial Statements. For regulated businesses subject to federal or state cost-of-service rate regulation, regulatory practices that assign costs to accounting periods may differ from accounting methods generally applied by non-regulated companies. When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, we defer these costs as Regulatory assets that otherwise would be expensed by non-regulated companies. Likewise, we recognize Regulatory liabilities when it is probable that regulators will require customer refunds through future rates and when revenue is collected from customers for expenses that are not yet incurred. Regulatory assets are amortized into expense and Regulatory liabilities are amortized into income over the recovery period authorized by the regulator.
We evaluate our Regulatory assets to determine whether or not they are probable of recovery through future rates and make various assumptions in our analyses. The expectations of future recovery are generally based on orders issued by regulatory commissions or historical experience, as well as discussions with applicable regulatory authorities. If recovery of a regulatory asset is determined to be less than probable, it will be expensed in the period the assessment is made. We currently believe the recovery of our Regulatory assets is probable. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Pension and Postretirement Benefits
We account for and disclose pension and postemployment benefits in accordance with the provisions of GAAP relating to the accounting for pension and other postemployment plans. These GAAP provisions require the use of assumptions, such as the discount rate for liabilities and long-term rate of return on assets, in determining the obligations, annual cost and funding requirements of the plans. See Note 9 – Benefit Plans of Notes to DPL's Consolidated Financial Statements for more information.
Contingent and Other Obligations
During the conduct of our business, we are subject to a number of federal and state laws and regulations, as well as other factors and conditions that potentially subject us to environmental, litigation, insurance and other risks. We periodically evaluate our exposure to such risks and record estimated liabilities for those matters where a loss is considered probable and reasonably estimable in accordance with GAAP. In recording such estimated liabilities, we may make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities and expenses as they relate to contingent and other obligations. These assumptions and estimates are based on
39

historical experience and assumptions and may be subject to change. We believe such estimates and assumptions are reasonable.
Recently Issued Accounting Pronouncements
A discussion of recently issued accounting pronouncements is in Note 1 – Overview and Summary of Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements and such discussion is incorporated by reference in this Management's Discussion and Analysis of Results of Operations and Financial Condition and made a part hereof.

BUSINESS
DPL is a regional energy company incorporated in 1985 under the laws of Ohio. All of DPL’s stock is owned by an AES subsidiary.
DPL has three primary subsidiaries: DP&L, MVIC and Miami Valley Lighting. DP&L, which also does business as AES Ohio, is a public utility providing electric transmission and distribution services in West Central Ohio. For additional information, see Note 1 – Overview and Summary of Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements. All of DPL's subsidiaries are wholly-owned. DPL manages its business through one reportable operating segment, the Utility segment. See Note 13 – Business Segments of the Notes to DPL's Consolidated Financial Statements for additional information regarding DPL’s reportable segment. DP&L also manages its business through one reportable operating segment, the Utility segment.
As an electric public utility in Ohio, DP&L provides regulated transmission and distribution services to its customers as well as retail SSO electric service. DP&L's sales reflect the general economic conditions, seasonal weather patterns and the growth of energy efficiency initiatives; however, our distribution revenues were decoupled from weather and energy efficiency variations from January 1, 2019 through December 18, 2019. In the first quarter of 2020, DP&L filed a petition to continue to accrue the impacts of decoupling for recovery through a future rate proceeding, but it is unknown at this time how the PUCO will rule on that petition. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements for further information.
DPL’s other primary subsidiaries are MVIC and Miami Valley Lighting. MVIC is our captive insurance company that provides insurance services to DP&L and our other subsidiaries, and Miami Valley Lighting provides street and outdoor lighting services to customers in the Dayton region.
DPL also has a wholly-owned business trust, DPL Capital Trust II, formed for the purpose of issuing trust capital securities to investors.
DP&L does not have any subsidiaries.
DP&L’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs or overcollections of riders.
GENERATING CAPACITY
DPL, through AES Ohio Generation, owned an undivided interest in Conesville. AES Ohio Generation's share of this EGU's capacity was 129 MW. AES Ohio Generation sold all of its energy and capacity into the wholesale market. AEP Generation, the operator of the co-owned Conesville EGU, closed Unit 4 in May 2020, and AES Ohio Generation's interest in this EGU was sold in June 2020. For additional information on this event and DPL's other previously owned EGUs, see Note 15 – Discontinued Operations of Notes to DPL's Consolidated Financial Statements.
DP&L also has a 4.9% interest in OVEC, an electric generating company. OVEC has two electric generating stations located in Cheshire, Ohio and Madison, Indiana with a combined generation capacity of 2,109 MW. DP&L’s share of this generation capacity is 103 MW.
HUMAN CAPITAL MANAGEMENT
DPL's employees are essential to delivering and maintaining reliable service to our customers. DPL and its subsidiaries employed 631 people (512 full-time) at January 31, 2021 all of which were employed by DP&L.
40

Approximately 58% of all DPL employees are under a collective bargaining agreement that expires on October 31, 2023.
Safety
As part of AES, safety is one of our core values. Ensuring safe operations at our facilities, so each person can return home safely, is the cornerstone of our daily activities and decisions. Safety efforts are led globally by the AES Chief Operating Officer and supported by safety committees that operate at the local site level. Hazards in the workplace are actively identified and management tracks incidents so remedial actions can be taken to improve workplace safety.
We work with the Safety Management System (“SMS”), a Global Safety Standard that applies to all AES employees and employees of AES subsidiaries, as well as contractors working in AES facilities and construction projects. The SMS requires continuous safety performance monitoring, risk assessment and performance of periodic integrated environmental, health and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance and drive continuous improvements. The SMS standard is consistent with the OHSAS 18001/ISO 45001 standard. Our safety performance is also measured by both leading and lagging metrics. Our leading safety metrics track safety observations, safety meeting engagement and the reporting of non-injury near misses. Our lagging safety metrics track lost workday cases, severity rate, and recordable incidents. We are committed to excellence in safety and have implemented various programs to increase safety awareness and improve work practices.
In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate. This includes having employees work from home to the extent they were able, while implementing additional safety measures for employees continuing critical on-site work.
Talent
We believe our success depends on our ability to attract, develop and retain key personnel. The skills, experience and industry knowledge of key employees significantly benefit our operations and performance. We have a comprehensive approach to managing our talent and developing our leaders in order to ensure our people have the right skills for today and tomorrow whether that requires us to build new business models or leverage leading technologies.
We emphasize employee development and training. To empower employees, we provide a range of development programs and opportunities, skills, and resources they need to be successful by focusing on experience and exposure as well as formal programs including our AES' ACE Academy for Talent Development, and our Trainee Program.
We believe that our individual differences make us stronger. Our Global Diversity and Inclusion Program is led by the AES Diversity and Inclusion Officer. Governance and standards are guided by the AES Chief Human Resources Officer, with input from members of AES' Executive Leadership Team.
Compensation
Our compensation philosophy emphasizes pay-for-performance. Our incentive plans are designed to reward strong performance, with greater compensation paid when performance exceeds expectations and less compensation paid when performance falls below expectations. We invest significant time and resources to ensure our compensation programs are competitive and reward the performance of our people. Every year, our people who are not part of a collective bargaining agreement are eligible for an annual merit-based salary increase. In addition, individuals are eligible for a salary increase if they receive a significant promotion. For non-collectively bargained employees at certain levels in the organization we offer annual incentives (bonus) and long-term compensation to reinforce the alignment between employees and AES.
SERVICE COMPANY
The Service Company provides services including operations, accounting, legal, human resources, information technology and other corporate services on behalf of companies that are part of the U.S. SBU, including, among other companies, DPL and DP&L. The Service Company allocates the costs for these services based on cost drivers designed to result in fair and equitable allocations. This includes ensuring that the regulated utilities served, including DP&L, are not subsidizing costs incurred for the benefit of other businesses. See Note 12 – Related Party Transactions of Notes to DPL's Consolidated Financial Statements.

41

SEASONALITY
The power delivery business is seasonal, and weather patterns have a material effect on energy demand. In the region we serve, demand for electricity is generally greater in the summer months associated with cooling and in the winter months associated with heating compared to other times of the year. DP&L's sales typically reflect the seasonal weather patterns and the growth of energy efficiency initiatives. However, the impacts of weather, energy efficiency programs and economic changes in customer demand were almost entirely eliminated in 2019 by DP&L’s Decoupling Rider, which was in place from January 1, 2019 until December 18, 2019. DP&L has requested authority from the PUCO to create a regulatory asset for the ongoing revenues that would have been charged in the Decoupling Rider going back to December 18, 2019. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Storm activity can also have an adverse effect on our operating performance. Severe storms often damage transmission and distribution equipment, thereby causing power outages, which reduce revenues and increase repair costs. Partially mitigating this impact is DP&L’s ability to timely recover certain O&M repair costs related to severe storms.
MARKET STRUCTURE
Retail rate regulation
DP&L's distribution service to all retail customers as well as the provisions of its SSO service are regulated by the PUCO. In addition, certain costs are considered to be non-bypassable and are therefore assessed to all DP&L retail customers, under the regulatory authority of the PUCO, regardless of the customer’s retail electric supplier. DP&L's transmission rates are subject to regulation by the FERC under the Federal Power Act.
Ohio law establishes the process for determining SSO and non-bypassable rates charged by public utilities. Regulation of retail rates encompasses the timing of applications, the effective date of rate changes, the cost basis upon which the rates are set and other service-related matters. Ohio law also established the Office of the Ohio Consumers' Counsel, which has the authority to represent residential consumers in state and federal judicial and administrative rate proceedings.
Ohio legislation extends the jurisdiction of the PUCO to the records and accounts of certain public utility holding company systems, including DPL. The legislation extends the PUCO's supervisory powers to a holding company system's general condition and capitalization, among other matters, to the extent that such matters relate to the costs associated with the provision of public utility service. Based on existing PUCO and FERC authorization, regulatory assets and liabilities are recorded on the balance sheets of both DPL and DP&L. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
COMPETITION AND REGULATION
Ohio Retail Rates
DP&L rates for electric service currently remain the lowest among Ohio investor-owned utilities.
ESP 1 established DP&L's framework for providing retail service on a going-forward basis including rate structures, non-bypassable charges and other specific rate recovery true-up rider mechanisms. For more information regarding regulatory matters.DP&L's ESP, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
On September 26, 2018, the PUCO issued the DRO establishing new base distribution rates for DP&L, which became effective October 1, 2018. The DRO approved, without modification, a stipulation and recommendation previously filed by DP&L, along with various intervening parties and the PUCO staff. The DRO established a revenue requirement of $248.0 million for DP&L's electric service base distribution rates. The DRO also provided for a return on equity of 9.999% and a cost of long-term debt of 4.8%.
On November 30, 2020, DP&L filed a new distribution rate case with the PUCO. This rate case proposes a revenue increase of $120.8 million. For more information, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
In December 2018, DP&L filed its Smart Grid Plan with the PUCO proposing to invest $576.0 million in capital projects over the next 10 years. There are eight principal components of DP&L’s Smart Grid Plan: 1) Smart Meters, 2) Self-Healing Grid, 3) Customer Engagement, 4) Enhancing Sustainability and Embracing Innovation. 5) Telecommunications, 6) Physical and Cyber Security, 7) Governance and Analytics and 8) Grid Modernization R&D. On October 23, 2020 DP&L filed a comprehensive settlement (the “Settlement”) with the PUCO that, among other matters, includes resolution of this Smart Grid application. If approved, DP&L plans to implement the plan that will
42

deliver benefits to customers, society as a whole and to DP&L. For more information, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Ohio law and the PUCO rules contain targets relating to renewable energy standards. DP&L is currently in full compliance with renewable energy standards. DP&L recovers the costs of its compliance with Ohio renewable energy standards through a separate rider which is reviewed and audited by the PUCO.
The costs associated with providing high voltage transmission service and wholesale electric sales and ancillary services are subject to FERC jurisdiction. DP&L implemented a formula-based rate for its transmission service, effective May 3, 2020. For more information, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
As a member of PJM, DP&L receives revenues from the RTO related to DP&L’s transmission assets and incurs costs associated with its load obligations for retail customers. Ohio law includes a provision that would allow Ohio electric utilities to seek and obtain a reconcilable rider to recover RTO-related costs and credits. DP&L continues to recover non-market-based transmission and ancillary costs through its nonbypassable Transmission Cost Recovery Rider.
In response to filings made by DP&L and AES Ohio Generation, the FERC approved on May 16, 2017 reactive power rates for the generation facilities that were owned at that time.  In the same order, FERC referred to the FERC’s Office of Enforcement for investigation, an issue regarding DP&L’s reactive power charges under the previously effective rates in light of changes in DP&L’s generation portfolio between cases.   As of the date of this prospectus, DP&L is unable to predict the ultimate outcome of the investigation.  Several other utilities within PJM are also being investigated by FERC’s Office of Enforcement with respect to the same issue of changes in the generation portfolio that occurred in between rate proceedings. For more information, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Ohio Competition
Since January 2001, DP&L’s electric customers have been permitted to choose their retail electric generation supplier. DP&L continues to have the exclusive right to provide delivery service in its state-certified territory and the obligation to procure and provide electricity to SSO customers that do not choose an alternative supplier. The PUCO maintains jurisdiction over DP&L’s delivery of electricity, SSO and other retail electric services.
As part of Ohio’s electric deregulation law, all of the state��s investor-owned utilities were required to join an RTO. DP&L is a member of the PJM RTO. The role of the RTO is to administer a competitive wholesale market for electricity and ensure reliability of the transmission grid. PJM ensures the reliability of the high-voltage electric power system serving more than 65 million people in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. PJM coordinates and directs the operation of the region’s transmission grid, administers the world’s largest competitive wholesale electricity market and plans regional transmission expansion improvements to maintain grid reliability and relieve congestion.
ENVIRONMENTAL MATTERS
DPL’s and DP&L's current and former facilities and operations are and/or were subject to a wide range of federal, state and local environmental laws, rules and regulations. The environmental issues that may affect us are discussed below.
•The federal CAA and state laws and regulations (including SIPs) which require compliance, obtaining permits and reporting as to air emissions;

•Litigation with federal and certain state governments and certain special interest groups regarding whether modifications to or maintenance of certain coal-fired generating stations require additional permitting or pollution control technology, or whether emissions from coal-fired generating stations cause or contribute to global climate changes;
•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities that require or will require substantial reductions in SO2, particulates, mercury, acid gases, NOx and other air emissions;
•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities that require or will require reporting and reductions of GHGs;
43

•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities associated with the federal Clean Water Act, which prohibits the discharge of pollutants into waters of the United States Tax Law Reform
Considering the significant changesexcept pursuant to the U.S. tax system enacted in 2017, the U.S. Treasury Departmentappropriate permits; and Internal Revenue Service have issued numerous regulations. While certain regulations are now final, there are many regulations that are proposed and still others anticipated to be issued in proposed form. The final version of any regulations may vary from the proposed form. When final, these regulations may materially impact our effective tax rate. Certain of the proposed regulations, when final, may have retroactive effect to January 1, 2018 or January 1, 2019.

Environmental Matters
•Solid and hazardous waste laws and regulations, which govern the management and disposal of certain waste.
In addition to imposing continuing compliance obligations, theseenvironmental laws, rules and regulations authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. In the normal course of business, we have investigatory and remedial activities underway at our facilities to comply, or to determine compliance, with such laws, rules and regulations. We record liabilities for loss contingencies related to environmental matters when a loss is probable of occurring and can be reasonably estimated in accordance with the provisions of GAAP. Accordingly, we have immaterial accruals for loss contingencies for environmental matters. We also have severala number of environmental matters for which we have not accrued loss contingencies because the risk of loss is not probable, or a loss cannot be reasonably estimated. We evaluate the potential liability related to environmental matters quarterly and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our results of operations, financial condition andor cash flows. We refer to the discussion in “Item 1. Business - Environmental Matters” in our 2018 Form 10-K for a discussion of certain recent developments in environmental laws and regulations.

We have several pending environmental matters associated with our stations. Some ofpreviously-owned and operated coal-fired generation units. We do not expect these matters couldto have a material adverse effectimpact on our results of operations, financial condition andor cash flows. See Note 11 – Contractual Obligations, Commercial Commitments and Contingencies – "Environmental Matters” of Notes to DPL's Consolidated Financial Statements for more information regarding environmental risks, laws and regulations and legal proceedings to which we are and may be subject to in the future.

Biden Administration Actions Affecting Environmental Regulations
BecauseOn January 20, 2021, President Biden issued an Executive Order (the "EO") titled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” directing agencies to, among other tasks, review regulations issued under the previous administration to determine whether they should be suspended, revoked, or revised. As provided for by the EO, the USEPA submitted a letter to the U.S. Department of DPL’s decisionJustice seeking to retireobtain abeyances or stays of proceedings in pending litigation that seeks review of regulations promulgated during the Trump Administration. The Biden Administration also issued a Memorandum titled “Regulatory Freeze Pending Review” directing agencies to refrain from proposing or issuing any rules until the Biden Administration has reviewed and approved those rules. These actions may have an impact on regulations that may affect our business, financial condition, or results of operations.
We have several pending environmental matters associated with our previously-owned and operated coal-fired generation units. We do not expect these matters to have a material adverse impact on our results of operations, financial condition or cash flows.
Environmental Matters Related to Air Quality
As a result of DPL’s retirement and subsequent sale of its Stuart and Killen generating stations,Stations, the sale of its ownership interest in the Miami Fort and Zimmer generating stationsStations and the planned 2020 retirement of Conesville, followed by the sale of our interest in Conesville and our exiting of our generation business, the following environmental matters, regulations and requirements are now not expected to have a material impact on DPL:
•DPL:
The CAA and the following regulations:regulations
•CSAPR and associated updates;
•MATS and any associated regulatory or judicial processes;
•NAAQS; and
the•CPP or Affordable Clean Energy Rule.(ACE) rule.

Litigation Involving Co-Owned Stations
Additionally, becauseAs a result of a 2008 consent decree entered into with the Sierra Club and approved by the U.S. District Court for the Southern District of Ohio, DPL and the other owners of the Stuart Station were subject to certain specified emission targets related to NOX, SO2 and particulate matter. The consent decree also includes commitments for energy efficiency and renewable energy activities. An amendment to the consent decree was entered into and approved in 2010 to clarify how emissions would be computed during startups. Given that all of the commitments have been met and with the retirement of the Stuart Station, DPL and the other owners submitted a request for
44

termination of the consent decree to the U.S. District Court. On July 14, 2020, the U.S. District Court for the Southern District of Ohio granted the request and terminated the Consent Decree.
Notices of Violation Involving Co-Owned Units
On February 15, 2017, the USEPA issued an NOV alleging violations in opacity at the Stuart Station in 2016. Operations at the Stuart Station have ceased. Given the retirement and sale of the Stuart Station and the fact there has been no recent activity, we do not expect any further material developments regarding this NOV.
Environmental Matters Related to Water Quality, Waste Disposal and Ash Ponds
As a result of DPL’s retirement and subsequent sale of its Stuart and Killen noted above,Stations, the sale of its ownership interest in the Miami Fort and Zimmer Stations and the 2020 retirement of Conesville, followed by the sale of our interest in Conesville and our exiting of our generation business; the following environmental matters, regulations and requirements are now not expected to have a material impact on DPL with respect to either of the twothese generating stations:stations (although certain other requirements related to water quality, waste disposal and ash ponds are discussed further below):
•water intake regulations, including those finalized by the USEPA on May 19, 2014 and2014;
•revised technology-based regulations governing water discharges from steam electric generating facilities, finalized by the USEPA on November 3, 2015.2015 (and revised on October 13, 2020) and commonly referred to as the ELG rules; and
•Clean Water Act Regulation of Water Discharge
On January 7, 2013, the Ohio EPA issued a final NPDES permit to the Stuart Station which included a compliance schedulerules for performing a study to justify an alternate thermal limitation or take undefined measures to meet certain temperature limits. On February 1, 2013, selenium.DP&L appealed various aspects of the final permit to the ERAC. On August 8, 2019, the ERAC dismissed the appeal in response to a Joint Motion to Dismiss.


Notice of Potential Liability for Third Party Disposal Site
In December 2003, DP&L and other parties received notices that the USEPA considered DP&L and other parties PRPs for the Tremont City Landfill site, located near Dayton, Ohio. On October 16, 2019, DP&L received a specialanother notice from the USEPA claiming that USEPA considers DP&L, along with other parties, to be is a PRP for the clean-upportion of hazardous substances at a third-party landfillthe site known as the Tremont City Barrel Site, located near Dayton, Ohio.barrel fill. While a review by DP&L of its records indicates that it did not contribute hazardous materials to the site, DP&L is currently unable to predict the outcome of this matter, if matter. If DP&L were required to contribute to the clean-up of the site, it could have a materialan adverse effect on our business, financial condition or results of operations.

RegulationCapital Requirements
Capital Additions
ActualProjected
$ in millions201820192020202120222023
DPL$94 $164 $174 $254 $271 $242 
DP&L$91 $162 $170 $252 $268 $238 

Capital projects are subject to continuing review and are revised in light of Waste Disposalchanges in financial and economic conditions, load forecasts, legislative and regulatory developments and changing environmental laws, rules and regulations, among other factors.
DPL is projecting to spend an estimated $767.0 million in capital projects for the period 2021 through 2023, which includes an estimated $758.0 million for DP&L. DP&L's projection includes expected spending under DP&L's Smart Grid Plan filed with the PUCO in December 2018 and included in the Stipulation and Recommendation entered into on October 23, 2020, as well as new transmission projects. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements for more information.
DP&L is subject to the mandatory reliability standards of NERC and ReliabilityFirst Corporation (RF), one of the six NERC regions, of which DP&L is a member. DP&L anticipates spending approximately $76.0 million within the next five years to reinforce its transmission system to comply with mandatory NERC and FERC Form 715 planning requirements. These anticipated costs are included in the overall capital projections above.
Debt Covenants
For information regarding our long-term debt covenants, see Note 7 – Long-term debt of Notes to DPL's Consolidated Financial Statements.
Debt Ratings
The USEPA's final CCR rule becamefollowing table outlines the debt ratings and outlook for DPL and DP&L, along with the effective or affirmed date of each rating.
DPLDP&LOutlookEffective or Affirmed
Fitch Ratings
BB+(a) / BB(b)
BBB+ (c)
NegativeApril 2020
Moody's Investors Service, Inc.
Ba1 (b)
A3 (c)
Negative
DPL - June 2020
DP&L - December 2019
Standard & Poor's Financial Services LLC
BB+ (b)
BBB+ (c)
DevelopingNovember 2020

(a)Rating relates to DPL’s senior secured debt.
(b)Rating relates to DPL's senior unsecured debt.
(c)Rating relates to DP&L’s senior secured debt.
36


Credit Ratings
The following table outlines the credit ratings (issuer/corporate rating) and outlook for each company, along with the effective or affirmed dates of each rating and outlook for DPL and DP&L.
DPLDP&LOutlookEffective or Affirmed
Fitch RatingsBBBBB-NegativeApril 2020
Moody's Investors Service, Inc.Ba1Baa2NegativeDecember 2019
Standard & Poor's Financial Services LLCBB+BB+DevelopingNovember 2020

If the rating agencies reduce our debt or credit ratings, our borrowing costs may increase, our potential pool of investors and funding resources may be reduced and we may be required to post additional collateral under certain contracts. These events may have an adverse effect on our results of operations, financial condition and cash flows. In addition, any such reduction in October 2015. Generally,our debt or credit ratings may adversely affect the rule regulates CCR as nonhazardous solid waste and establishes national minimum criteria for existing andtrading price of our outstanding debt securities. Non-investment grade companies may experience higher costs to issue new CCR landfillssecurities.
Off-Balance Sheet Arrangements
DPL – Guarantees
Previously, DPL entered into various agreements with its wholly-owned subsidiary, AES Ohio Generation, providing financial or performance assurance to third parties. These agreements were entered into primarily to support or enhance the creditworthiness otherwise attributed to the subsidiary on a stand-alone basis, thereby facilitating the extension of sufficient credit to accomplish this subsidiary's intended commercial purposes. With the completion of our plan to exit generation, AES Ohio Generation currently does not require such assurances to third parties, and existing guarantees will expire in June, 2021. During the year ended December 31, 2020, DPL did not incur any losses related to the guarantees of these obligations and new CCR ash ponds, including location restrictions, design and operating criteria, groundwater monitoring, corrective action and closure requirements and post-closure care. Onwe believe it is unlikely that DPL would be required to perform or incur any losses in the future associated with any of the above guarantees. At December 16, 2016, President Obama signed into law31, 2020, DPL had $1.9 million of such guarantees on behalf of AES Ohio Generation. There were no outstanding balances for commercial transactions covered by these guarantees at December 31, 2020 or December 31, 2019.
DP&L owns a 4.9% equity ownership interest in OVEC which is recorded using the Water Infrastructure Improvementscost method of accounting under GAAP. At December 31, 2020, DP&L could be responsible for the Nation Act ("WIIN Act")repayment of 4.9%, which includes provisionsor $62.6 million, of a $1,276.7 million debt obligation comprised of both fixed and variable rate securities with maturities between 2022 and 2040. This would only happen if this electric generation company defaulted on its debt payments. At December 31, 2020, we have no knowledge of such a default.
Commercial Commitments and Contractual Obligations
We enter into various contractual obligations and other commercial commitments that may affect the liquidity of our operations. At December 31, 2020, these include:
Payments due in:
$ in millionsTotalLess than
1 year		2 - 3
years		4 - 5
years		More than
5 years
DPL:
Long-term debt$1,413.0 $0.2 $0.4 $415.4 $997.0 
Interest payments819.1 57.8 115.5 107.0 538.8 
Electricity purchase commitments120.8 86.0 34.8 — — 
Purchase orders and other contractual obligations92.5 87.8 4.7 — — 
Total contractual obligations$2,445.4 $231.8 $155.4 $522.4 $1,535.8 
Payments due in:
$ in millionsTotalLess than
1 year		2 - 3
years		4 - 5
years		More than
5 years
DP&L:
Long-term debt$582.4 $0.2 $0.4 $0.4 $581.4 
Interest payments583.9 22.0 44.0 44.0 473.9 
Electricity purchase commitments120.8 86.0 34.8 — — 
Purchase orders and other contractual obligations90.3 85.6 4.7 — — 
Total contractual obligations$1,377.4 $193.8 $83.9 $44.4 $1,055.3 

37

Long-term debt:
DPL’s Long-term debt at December 31, 2020 consists of DPL’s unsecured notes and Capital Trust II securities, along with DP&L’s First Mortgage Bonds and the WPAFB note. These long-term debt amounts include current maturities but exclude unamortized debt discounts, premiums and fair value adjustments.
DP&L’s Long-term debt at December 31, 2020 consists of its First Mortgage Bonds and the WPAFB note. These long-term debt amounts include current maturities but exclude unamortized debt discounts.
See Note 7 – Long-term debt included in Notes to implementDPL's Consolidated Financial Statements.
Interest payments:
Interest payments are associated with the CCR rule through a state permitting program,long-term debt described above. The interest payments relating to variable-rate debt are projected using the interest rates in effect at December 31, 2020.
Electricity purchase commitments:
DPL enters into long-term contracts for the purchase of electricity. In general, these contracts are subject to variable quantities or ifprices and are terminable only in limited circumstances.
Purchase orders and other contractual obligations:
At December 31, 2020, DPL and DP&L had various other contractual obligations including contracts to purchase goods and services with various terms and expiration dates. Due to uncertainty regarding the state chooses nottiming and payment of future obligations to participate, a possible federal permit program. The USEPA has indicated that they will implement a phased approachthe Service Company, and DPL's and DP&L's ability to amending the CCR rule. In July 2018, the USEPA published final CCR rule amendments (Phase One, Part One)terminate such obligations upon 90 days' notice, we have excluded such amounts in the Federal Register. In August 2018, the D.C. Circuit Court issued a decision in certain CCR litigation matters, which may result incontractual obligations table above. This table also does not include regulatory liabilities (see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements) or contingencies (see Note 11 – Contractual Obligations, Commercial Commitments and Contingencies of Notes to DPL's Consolidated Financial Statements). See Note 12 – Related Party Transactions of Notes to DPL's Consolidated Financial Statements for additional revisionsinformation on charges between related parties and amounts due to or from related parties.
Reserve for uncertain tax positions:
Due to the CCR rule.uncertainty regarding the timing of future cash outflows associated with our unrecognized tax benefits of $1.4 million at December 31, 2020, we are unable to make a reliable estimate of the periods of cash settlement with the respective tax authorities and have not included such amounts in the contractual obligations table above.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
DPL’s Consolidated Financial Statements are prepared in accordance with GAAP. In October 2018, some environmental groups filed a petition for review challengingconnection with the USEPA's final CCR rule amendments (Phase One, Part One) which have since been remanded without vacaturpreparation of these financial statements, our management is required to make assumptions, estimates and judgments that affect the USEPA. On August 14, 2019, the USEPA published amendments to the CCR rule relating to the CCR rule’s criteria for determining beneficial usereported amounts of assets, liabilities, revenues, expenses and the regulationrelated disclosure of CCR piles, among other revisions. On November 4, 2019,contingent liabilities. These assumptions, estimates and judgments are based on our historical experience and assumptions that we believe to be reasonable at the USEPA signed additional amendmentstime. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. Our critical accounting estimates are those which require assumptions to the CCR Rule titled “A Holistic Approach To Closure Part A: Deadline To Initiate Closure.” The October 2015 CCR rule, current or proposed amendmentsbe made about matters that are highly uncertain. Our significant accounting policies are described in Note 1 – Overview and Summary of Significant Accounting Policies of Notes to the October 2015 CCR rule, the results of groundwater monitoring data or the outcome of CCR-related litigationDPL's Consolidated Financial Statements.
Different estimates could have a material impacteffect on our business, financial conditionresults. Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions or circumstances. Historically, however, recorded estimates have not differed materially from actual results. Significant items subject to such judgments include: the carrying value of property, plant and equipment; unbilled revenues; the valuation of allowances for deferred income taxes; regulatory assets and liabilities; reserves recorded for income tax exposures; litigation; contingencies; the valuation of AROs; and assets and liabilities related to employee benefits.
Revenue Recognition (including Unbilled Revenue)
Revenue is primarily earned from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the
38

governmental authorities. At the end of each month, amounts of energy delivered to customers since the date of the last meter reading are estimated and the corresponding unbilled revenue is accrued. In making our estimates of unbilled revenue, we use complex models that consider various factors including known amounts of energy usage by nearly all residential, small commercial and industrial customers; estimated line losses; and estimated customer rates based on prior period billings. Given the use of these models, and that customers are billed on a monthly cycle, we believe it is unlikely that materially different results will occur in future periods when revenue is billed. The effect on 2020 revenues and ending unbilled revenues of a one percentage point change in estimated line losses for the month of December 2020 is immaterial. An allowance for potential credit losses is maintained and amounts are written off when normal collection efforts have been exhausted.
Income Taxes
We are subject to federal and state income taxes. Our income tax provision requires significant judgment and is based on calculations and assumptions that are subject to examination by the U.S. Internal Revenue Service and other tax authorities. We regularly assess the potential outcome of tax examinations when determining the adequacy of our income tax provisions by considering the technical merits of the filing position, case law and results of operations.previous tax examinations. Accounting guidance for uncertainty in income taxes prescribes a more-likely-than-not recognition threshold and measurement requirements for financial statement reporting of our income tax positions. Tax reserves have been established which we believe to be adequate in relation to the potential for additional assessments. Once established, reserves are adjusted only when there is more information available or when an event occurs necessitating a change to the reserves. While we believe that the amount of the tax reserves is reasonable, it is possible that the ultimate outcome of current or future examinations may be materially different than the reserve amounts.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities and their respective income tax bases. We establish a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized.
Regulatory Assets and Liabilities
CAPITAL RESOURCES AND LIQUIDITYApplication of the provisions of GAAP relating to regulatory accounting requires us to reflect the effect of rate regulation in DPL’s Consolidated Financial Statements. For regulated businesses subject to federal or state cost-of-service rate regulation, regulatory practices that assign costs to accounting periods may differ from accounting methods generally applied by non-regulated companies. When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, we defer these costs as Regulatory assets that otherwise would be expensed by non-regulated companies. Likewise, we recognize Regulatory liabilities when it is probable that regulators will require customer refunds through future rates and when revenue is collected from customers for expenses that are not yet incurred. Regulatory assets are amortized into expense and Regulatory liabilities are amortized into income over the recovery period authorized by the regulator.
We evaluate our Regulatory assets to determine whether or not they are probable of recovery through future rates and make various assumptions in our analyses. The expectations of future recovery are generally based on orders issued by regulatory commissions or historical experience, as well as discussions with applicable regulatory authorities. If recovery of a regulatory asset is determined to be less than probable, it will be expensed in the period the assessment is made. We currently believe the recovery of our Regulatory assets is probable. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Pension and Postretirement Benefits
We account for and disclose pension and postemployment benefits in accordance with the provisions of GAAP relating to the accounting for pension and other postemployment plans. These GAAP provisions require the use of assumptions, such as the discount rate for liabilities and long-term rate of return on assets, in determining the obligations, annual cost and funding requirements of the plans. See Note 9 – Benefit Plans of Notes to DPL's Consolidated Financial Statements for more information.
Contingent and Other Obligations
During the conduct of our business, we are subject to a number of federal and state laws and regulations, as well as other factors and conditions that potentially subject us to environmental, litigation, insurance and other risks. We periodically evaluate our exposure to such risks and record estimated liabilities for those matters where a loss is considered probable and reasonably estimable in accordance with GAAP. In recording such estimated liabilities, we may make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities and expenses as they relate to contingent and other obligations. These assumptions and estimates are based on
39

historical experience and assumptions and may be subject to change. We believe such estimates and assumptions are reasonable.
Recently Issued Accounting Pronouncements
A discussion of recently issued accounting pronouncements is in Note 1 – Overview and Summary of Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements and such discussion is incorporated by reference in this Management's Discussion and Analysis of Results of Operations and Financial Condition and made a part hereof.

BUSINESS
DPL is a regional energy company incorporated in 1985 under the laws of Ohio. All of DPL’s stock is owned by an AES subsidiary.
DPL has three primary subsidiaries: DP&L, MVIC and Miami Valley Lighting. DP&L, had unrestricted cash which also does business as AES Ohio, is a public utility providing electric transmission and cash equivalentsdistribution services in West Central Ohio. For additional information, see Note 1 – Overview and Summary of $36.8Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements. All of DPL's subsidiaries are wholly-owned. DPL manages its business through one reportable operating segment, the Utility segment. See Note 13 – Business Segments of the Notes to DPL's Consolidated Financial Statements for additional information regarding DPL’s reportable segment. DP&L also manages its business through one reportable operating segment, the Utility segment.
As an electric public utility in Ohio, DP&L provides regulated transmission and distribution services to its customers as well as retail SSO electric service. DP&L's sales reflect the general economic conditions, seasonal weather patterns and the growth of energy efficiency initiatives; however, our distribution revenues were decoupled from weather and energy efficiency variations from January 1, 2019 through December 18, 2019. In the first quarter of 2020, DP&L filed a petition to continue to accrue the impacts of decoupling for recovery through a future rate proceeding, but it is unknown at this time how the PUCO will rule on that petition. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements for further information.
DPL’s other primary subsidiaries are MVIC and Miami Valley Lighting. MVIC is our captive insurance company that provides insurance services to DP&L and our other subsidiaries, and Miami Valley Lighting provides street and outdoor lighting services to customers in the Dayton region.
DPL also has a wholly-owned business trust, DPL Capital Trust II, formed for the purpose of issuing trust capital securities to investors.
DP&L does not have any subsidiaries.
DP&L’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs or overcollections of riders.
GENERATING CAPACITY
DPL, through AES Ohio Generation, owned an undivided interest in Conesville. AES Ohio Generation's share of this EGU's capacity was 129 MW. AES Ohio Generation sold all of its energy and capacity into the wholesale market. AEP Generation, the operator of the co-owned Conesville EGU, closed Unit 4 in May 2020, and AES Ohio Generation's interest in this EGU was sold in June 2020. For additional information on this event and DPL's other previously owned EGUs, see Note 15 – Discontinued Operations of Notes to DPL's Consolidated Financial Statements.
DP&L also has a 4.9% interest in OVEC, an electric generating company. OVEC has two electric generating stations located in Cheshire, Ohio and Madison, Indiana with a combined generation capacity of 2,109 MW. DP&L’s share of this generation capacity is 103 MW.
HUMAN CAPITAL MANAGEMENT
DPL's employees are essential to delivering and maintaining reliable service to our customers. DPL and its subsidiaries employed 631 people (512 full-time) at January 31, 2021 all of which were employed by DP&L.
40

Approximately 58% of all DPL employees are under a collective bargaining agreement that expires on October 31, 2023.
Safety
As part of AES, safety is one of our core values. Ensuring safe operations at our facilities, so each person can return home safely, is the cornerstone of our daily activities and decisions. Safety efforts are led globally by the AES Chief Operating Officer and supported by safety committees that operate at the local site level. Hazards in the workplace are actively identified and management tracks incidents so remedial actions can be taken to improve workplace safety.
We work with the Safety Management System (“SMS”), a Global Safety Standard that applies to all AES employees and employees of AES subsidiaries, as well as contractors working in AES facilities and construction projects. The SMS requires continuous safety performance monitoring, risk assessment and performance of periodic integrated environmental, health and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance and drive continuous improvements. The SMS standard is consistent with the OHSAS 18001/ISO 45001 standard. Our safety performance is also measured by both leading and lagging metrics. Our leading safety metrics track safety observations, safety meeting engagement and the reporting of non-injury near misses. Our lagging safety metrics track lost workday cases, severity rate, and recordable incidents. We are committed to excellence in safety and have implemented various programs to increase safety awareness and improve work practices.
In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate. This includes having employees work from home to the extent they were able, while implementing additional safety measures for employees continuing critical on-site work.
Talent
We believe our success depends on our ability to attract, develop and retain key personnel. The skills, experience and industry knowledge of key employees significantly benefit our operations and performance. We have a comprehensive approach to managing our talent and developing our leaders in order to ensure our people have the right skills for today and tomorrow whether that requires us to build new business models or leverage leading technologies.
We emphasize employee development and training. To empower employees, we provide a range of development programs and opportunities, skills, and resources they need to be successful by focusing on experience and exposure as well as formal programs including our AES' ACE Academy for Talent Development, and our Trainee Program.
We believe that our individual differences make us stronger. Our Global Diversity and Inclusion Program is led by the AES Diversity and Inclusion Officer. Governance and standards are guided by the AES Chief Human Resources Officer, with input from members of AES' Executive Leadership Team.
Compensation
Our compensation philosophy emphasizes pay-for-performance. Our incentive plans are designed to reward strong performance, with greater compensation paid when performance exceeds expectations and less compensation paid when performance falls below expectations. We invest significant time and resources to ensure our compensation programs are competitive and reward the performance of our people. Every year, our people who are not part of a collective bargaining agreement are eligible for an annual merit-based salary increase. In addition, individuals are eligible for a salary increase if they receive a significant promotion. For non-collectively bargained employees at certain levels in the organization we offer annual incentives (bonus) and long-term compensation to reinforce the alignment between employees and AES.
SERVICE COMPANY
The Service Company provides services including operations, accounting, legal, human resources, information technology and other corporate services on behalf of companies that are part of the U.S. SBU, including, among other companies, DPL and DP&L. The Service Company allocates the costs for these services based on cost drivers designed to result in fair and equitable allocations. This includes ensuring that the regulated utilities served, including DP&L, are not subsidizing costs incurred for the benefit of other businesses. See Note 12 – Related Party Transactions of Notes to DPL's Consolidated Financial Statements.

41

SEASONALITY
The power delivery business is seasonal, and weather patterns have a material effect on energy demand. In the region we serve, demand for electricity is generally greater in the summer months associated with cooling and in the winter months associated with heating compared to other times of the year. DP&L's sales typically reflect the seasonal weather patterns and the growth of energy efficiency initiatives. However, the impacts of weather, energy efficiency programs and economic changes in customer demand were almost entirely eliminated in 2019 by DP&L’s Decoupling Rider, which was in place from January 1, 2019 until December 18, 2019. DP&L has requested authority from the PUCO to create a regulatory asset for the ongoing revenues that would have been charged in the Decoupling Rider going back to December 18, 2019. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Storm activity can also have an adverse effect on our operating performance. Severe storms often damage transmission and distribution equipment, thereby causing power outages, which reduce revenues and increase repair costs. Partially mitigating this impact is DP&L’s ability to timely recover certain O&M repair costs related to severe storms.
MARKET STRUCTURE
Retail rate regulation
DP&L's distribution service to all retail customers as well as the provisions of its SSO service are regulated by the PUCO. In addition, certain costs are considered to be non-bypassable and are therefore assessed to all DP&L retail customers, under the regulatory authority of the PUCO, regardless of the customer’s retail electric supplier. DP&L's transmission rates are subject to regulation by the FERC under the Federal Power Act.
Ohio law establishes the process for determining SSO and non-bypassable rates charged by public utilities. Regulation of retail rates encompasses the timing of applications, the effective date of rate changes, the cost basis upon which the rates are set and other service-related matters. Ohio law also established the Office of the Ohio Consumers' Counsel, which has the authority to represent residential consumers in state and federal judicial and administrative rate proceedings.
Ohio legislation extends the jurisdiction of the PUCO to the records and accounts of certain public utility holding company systems, including DPL. The legislation extends the PUCO's supervisory powers to a holding company system's general condition and capitalization, among other matters, to the extent that such matters relate to the costs associated with the provision of public utility service. Based on existing PUCO and FERC authorization, regulatory assets and liabilities are recorded on the balance sheets of both DPL and DP&L. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
COMPETITION AND REGULATION
Ohio Retail Rates
DP&L rates for electric service currently remain the lowest among Ohio investor-owned utilities.
ESP 1 established DP&L's framework for providing retail service on a going-forward basis including rate structures, non-bypassable charges and other specific rate recovery true-up rider mechanisms. For more information regarding DP&L's ESP, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
On September 26, 2018, the PUCO issued the DRO establishing new base distribution rates for DP&L, which became effective October 1, 2018. The DRO approved, without modification, a stipulation and recommendation previously filed by DP&L, along with various intervening parties and the PUCO staff. The DRO established a revenue requirement of $248.0 million for DP&L's electric service base distribution rates. The DRO also provided for a return on equity of 9.999% and $14.4 million, respectively, at September 30, 2019. At that date, neither DPL nor DP&L had short-term investments. DPL and DP&L had aggregate principal amountsa cost of long-term debt outstanding of $1,378.2 million and $582.6 million, respectively.4.8%.

Approximately $139.6 millionOn November 30, 2020, DP&L filed a new distribution rate case with the PUCO. This rate case proposes a revenue increase of DPL's long-term debt, including $139.6 million of DP&L's long-term debt, matures within twelve months of the balance sheet date. From time to time, we may elect to repurchase our outstanding debt through cash purchases, privately negotiated transactions or otherwise when management believes such repurchases are favorable to make. The amounts involved in any such repurchases may be material. See Part I, Item 1,$120.8 million. For more information, see Note 63 – Long-term DebtRegulatory Matters of Notes to DPL's Condensed Consolidated Financial Statements.
In December 2018, DP&L filed its Smart Grid Plan with the PUCO proposing to invest $576.0 million in capital projects over the next 10 years. There are eight principal components of DP&L’s Smart Grid Plan: 1) Smart Meters, 2) Self-Healing Grid, 3) Customer Engagement, 4) Enhancing Sustainability and Embracing Innovation. 5) Telecommunications, 6) Physical and Cyber Security, 7) Governance and Analytics and 8) Grid Modernization R&D. On October 23, 2020 DP&L filed a comprehensive settlement (the “Settlement”) with the PUCO that, among other matters, includes resolution of this Smart Grid application. If approved, DP&L plans to implement the plan that will
42

deliver benefits to customers, society as a whole and to DP&L. For more information, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Ohio law and the PUCO rules contain targets relating to renewable energy standards. DP&L is currently in full compliance with renewable energy standards. DP&L recovers the costs of its compliance with Ohio renewable energy standards through a separate rider which is reviewed and audited by the PUCO.
The costs associated with providing high voltage transmission service and wholesale electric sales and ancillary services are subject to FERC jurisdiction. DP&L implemented a formula-based rate for its transmission service, effective May 3, 2020. For more information, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
As a member of PJM, DP&L receives revenues from the RTO related to DP&L’s transmission assets and incurs costs associated with its load obligations for retail customers. Ohio law includes a provision that would allow Ohio electric utilities to seek and obtain a reconcilable rider to recover RTO-related costs and credits. DP&L continues to recover non-market-based transmission and ancillary costs through its nonbypassable Transmission Cost Recovery Rider.
In response to filings made by DP&L and AES Ohio Generation, the FERC approved on May 16, 2017 reactive power rates for the generation facilities that were owned at that time.  In the same order, FERC referred to the FERC’s Office of Enforcement for investigation, an issue regarding DP&L’s reactive power charges under the previously effective rates in light of changes in DP&L’s generation portfolio between cases.   As of the date of this prospectus, DP&L is unable to predict the ultimate outcome of the investigation.  Several other utilities within PJM are also being investigated by FERC’s Office of Enforcement with respect to the same issue of changes in the generation portfolio that occurred in between rate proceedings. For more information, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Ohio Competition
Since January 2001, DP&L’s electric customers have been permitted to choose their retail electric generation supplier. DP&L continues to have the exclusive right to provide delivery service in its state-certified territory and the obligation to procure and provide electricity to SSO customers that do not choose an alternative supplier. The PUCO maintains jurisdiction over DP&L’s delivery of electricity, SSO and other retail electric services.
As part of Ohio’s electric deregulation law, all of the state��s investor-owned utilities were required to join an RTO. DP&L is a member of the PJM RTO. The role of the RTO is to administer a competitive wholesale market for electricity and ensure reliability of the transmission grid. PJM ensures the reliability of the high-voltage electric power system serving more than 65 million people in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. PJM coordinates and directs the operation of the region’s transmission grid, administers the world’s largest competitive wholesale electricity market and plans regional transmission expansion improvements to maintain grid reliability and relieve congestion.
ENVIRONMENTAL MATTERS
DPL’s and DP&L's current and former facilities and operations are and/or were subject to a wide range of federal, state and local environmental laws, rules and regulations. The environmental issues that may affect us are discussed below.
•The federal CAA and state laws and regulations (including SIPs) which require compliance, obtaining permits and reporting as to air emissions;

•Litigation with federal and certain state governments and certain special interest groups regarding whether modifications to or maintenance of certain coal-fired generating stations require additional permitting or pollution control technology, or whether emissions from coal-fired generating stations cause or contribute to global climate changes;
We depend on timely•Rules and continued accessfuture rules issued by the USEPA, the Ohio EPA or other authorities that require or will require substantial reductions in SO2, particulates, mercury, acid gases, NOx and other air emissions;
•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities that require or will require reporting and reductions of GHGs;
43

•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities associated with the federal Clean Water Act, which prohibits the discharge of pollutants into waters of the United States except pursuant to capital marketsappropriate permits; and
•Solid and hazardous waste laws and regulations, which govern the management and disposal of certain waste.
In addition to manageimposing continuing compliance obligations, environmental laws, rules and regulations authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. In the normal course of business, we have investigatory and remedial activities underway at our liquidity needs. The inabilityfacilities to raise capital on favorable terms, to refinance existing indebtednesscomply, or to fund operationsdetermine compliance, with such laws, rules and other commitments during timesregulations. We record liabilities for loss contingencies related to environmental matters when a loss is probable of politicaloccurring and can be reasonably estimated in accordance with the provisions of GAAP. Accordingly, we have immaterial accruals for loss contingencies for environmental matters. We also have a number of environmental matters for which we have not accrued loss contingencies because the risk of loss is not probable, or economic uncertainty a loss cannot be reasonably estimated. We evaluate the potential liability related to environmental matters quarterly and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our results of operations, financial condition andor cash flows.
In addition, changes in the timing of tariff increases or delays in regulatory determinations could affect the cash flowsWe have several pending environmental matters associated with our previously-owned and operated coal-fired generation units. We do not expect these matters to have a material adverse impact on our results of operations, of our businesses.

Our discussion of DPL’sfinancial condition liquidityor cash flows. See Note 11 – Contractual Obligations, Commercial Commitments and capital requirements includeContingencies – "Environmental Matters” of Notes to DPL's Consolidated Financial Statements for more information regarding environmental risks, laws and regulations and legal proceedings to which we are and may be subject to in the future.
Biden Administration Actions Affecting Environmental Regulations
On January 20, 2021, President Biden issued an Executive Order (the "EO") titled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” directing agencies to, among other tasks, review regulations issued under the previous administration to determine whether they should be suspended, revoked, or revised. As provided for by the EO, the USEPA submitted a letter to the U.S. Department of Justice seeking to obtain abeyances or stays of proceedings in pending litigation that seeks review of regulations promulgated during the Trump Administration. The Biden Administration also issued a Memorandum titled “Regulatory Freeze Pending Review” directing agencies to refrain from proposing or issuing any rules until the Biden Administration has reviewed and approved those rules. These actions may have an impact on regulations that may affect our business, financial condition, or results of its principal subsidiary DP&L.operations.


CASH FLOWS
DPL’sWe have several pending environmental matters associated with our previously-owned and operated coal-fired generation units. We do not expect these matters to have a material adverse impact on our results of operations, financial condition liquidityor cash flows.
Environmental Matters Related to Air Quality
As a result of DPL’s retirement and capital requirements include the consolidated resultssubsequent sale of its principal subsidiary DP&L. All material intercompany accountsStuart and transactions have been eliminated in consolidation.

Cash Flow Analysis - DPL

The following table summarizes the cash flows of DPL:
DPL Nine months ended September 30,
$ in millions 2019 2018
Net cash provided by operating activities $136.3
 $152.9
Net cash provided by / (used in) investing activities (125.9) 157.5
Net cash used in financing activities (67.7) (249.4)
Decrease in cash and restricted cash of discontinued operations and held-for-sale businesses —
 1.5
Net change (57.3) 62.5
Balance at beginning of period 111.7
 24.9
Cash, cash equivalents, and restricted cash at end of period $54.4
 $87.4

DPL – Change in cash flows from operating activities
  Nine months ended September 30, $ change
$ in millions 2019 2018 2019 vs. 2018
Net income $61.4
 $41.4
 $20.0
Depreciation and amortization 34.2
 62.4
 (28.2)
Deferred income taxes (8.7) (17.8) 9.1
Loss on early extinguishment of debt 44.9
 6.4
 38.5
Other adjustments to Net income 5.1
 19.8
 (14.7)
Net income, adjusted for non-cash items 136.9
 112.2
 24.7
Net change in operating assets and liabilities (0.6) 40.7
 (41.3)
Net cash provided by operating activities $136.3
 $152.9
 $(16.6)

The net change in operating assets and liabilities during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was driven by the following:
$ in millions $ Change
Decrease from accrued taxes primarily due to higher current portion of income tax expense in prior year compared to the current year (23.9)
Decrease from inventory primarily due a significant decrease in inventory balances in 2018 due to the closure of the Stuart and Killen plants (17.9)
Decrease from accounts receivable is primarily due to prior year collections of the remaining amounts due from partners in jointly-owned stations (16.4)
Increase from accounts payable is primarily due to timing of payments 12.3
Other 4.6
Net decrease in cash from changes in operating assets and liabilities $(41.3)

DPL – Cash flows from investing activities
Net cash provided by / (used in) investing activities was $(125.9) million for the nine months ended September 30, 2019 compared to $157.5 million for the nine months ended September 30, 2018. The investing activity for the nine months ended September 30, 2019 primarily relates to capital expenditures of $122.4 million, which increased from the prior year mainly due to significant storm restoration efforts in the third quarter of 2019. The investing activity for the nine months ended September 30, 2018 primarily relates to proceeds fromKillen Stations, the sale of businessits ownership interest in the Miami Fort and Zimmer Stations and the 2020 retirement of $234.9 million due toConesville, followed by the sale of our interest in Conesville and our exiting of our generation business, the Peaker assets,following environmental matters, regulations and proceedsrequirements are now not expected to have a material impact on DPL:
•The CAA and the following regulations
•CSAPR and associated updates;
•MATS and any associated regulatory or judicial processes;
•NAAQS; and
•CPP or Affordable Clean Energy (ACE) rule.
Litigation Involving Co-Owned Stations
As a result of $10.6 milliona 2008 consent decree entered into with the Sierra Club and approved by the U.S. District Court for the Southern District of Ohio, DPL and the other owners of the Stuart Station were subject to certain specified emission targets related to NOX, SO2 and particulate matter. The consent decree also includes commitments for energy efficiency and renewable energy activities. An amendment to the June transmission swapconsent decree was entered into and approved in 2010 to clarify how emissions would be computed during startups. Given that all of the commitments have been met and with Dukethe retirement of the Stuart Station, DPL and AEP. This was partially offset by capital expendituresthe other owners submitted a request for
44

termination of $75.8 million and a payment on the disposal of Beckjord of $14.5 million.

DPL – Cash flows from financing activities
Net cash used in financing activities was $(67.7) million forconsent decree to thenine months ended September 30, 2019 compared to $(249.4) million from financing activities U.S. District Court. On July 14, 2020, the U.S. District Court for the nine months ended September 30, 2018. The financingSouthern District of Ohio granted the request and terminated the Consent Decree.
Notices of Violation Involving Co-Owned Units
On February 15, 2017, the USEPA issued an NOV alleging violations in opacity at the Stuart Station in 2016. Operations at the Stuart Station have ceased. Given the retirement and sale of the Stuart Station and the fact there has been no recent activity, we do not expect any further material developments regarding this NOV.
Environmental Matters Related to Water Quality, Waste Disposal and Ash Ponds
As a result of DPL’s retirement and subsequent sale of its Stuart and Killen Stations, the sale of its ownership interest in the Miami Fort and Zimmer Stations and the 2020 retirement of Conesville, followed by the sale of our interest in Conesville and our exiting of our generation business; the following environmental matters, regulations and requirements are now not expected to have a material impact on DPL with respect to these generating stations (although certain other requirements related to water quality, waste disposal and ash ponds are discussed further below):
•water intake regulations, including those finalized by the USEPA on May 19, 2014;
•revised technology-based regulations governing water discharges from steam electric generating facilities, finalized by the USEPA on November 3, 2015 (and revised on October 13, 2020) and commonly referred to as the ELG rules; and
•Clean Water Act rules for selenium.
Notice of Potential Liability for Third Party Disposal Site
In December 2003, DP&L and other parties received notices that the USEPA considered DP&L and other parties PRPs for the nine months ended September 30,Tremont City Landfill site, located near Dayton, Ohio. On October 16, 2019, DP&L received another notice from the USEPA claiming that DP&L is primarily due to debt repayments, including early payment premiums, of $978.0 million, and $9.2 million of payments of deferred financing costs. This was partially offset by debt issuances, net of discount, of $821.7 million, and net revolving credit facility borrowings of $98.0 million. The financing activitya PRP for the nine months ended September 30, 2018 is primarily due to debt repaymentsportion of $239.4 million.


Cash Flow Analysis - the site known as the barrel fill. While a review by DP&L

The following table summarizes the cash flows of DP&L:
DP&L Nine months ended September 30,
$ in millions 2019 2018
Net cash provided by operating activities $138.9
 $113.2
Net cash used in investing activities (124.6) (69.0)
Net cash used in financing activities (48.5) (37.1)
Net change (34.2) 7.1
Balance at beginning of period 66.2
 5.6
Cash, cash equivalents, and restricted cash at end of period $32.0
 $12.7

DP&L – Change in cash flows from operating activities
  Nine months ended September 30, $ change
$ in millions 2019 2018 2019 vs. 2018
Net income $103.7
 $61.9
 $41.8
Depreciation and amortization 52.9
 56.5
 (3.6)
Deferred income taxes (17.2) (7.5) (9.7)
Other adjustments to Net income —
 13.0
 (13.0)
Net income, adjusted for non-cash items 139.4
 123.9
 15.5
Net change in operating assets and liabilities (0.5) (10.7) 10.2
Net cash provided by operating activities $138.9
 $113.2
 $25.7

The net change in operating assets and liabilities during the nine months ended September 30, 2019 comparedits records indicates that it did not contribute hazardous materials to the nine months ended September 30, 2018 was driven bysite, DP&L is currently unable to predict the following:
$ in millions $ Change
Increase from accounts receivable primarily due to higher rates following the DRO $22.2
Decrease from accrued taxes primarily due to higher current portion of income tax expense in prior year compared to the current year (6.9)
Other (5.1)
Net increase in cash from changes in operating assets and liabilities $10.2

outcome of this matter. If DP&L – Cash flows from investing activities
Net cash used in investing activities was $(124.6) million for thenine months ended September 30, 2019 compared were required to $(69.0) million for the nine months ended September 30, 2018. The investing activity for the nine months ended September 30, 2019 primarily represents capital expenditures of $121.1 million, which increased from the prior year mainly due to significant storm restoration efforts in the third quarter of 2019. The investing activity for the nine months ended September 30, 2018 is primarily capital expenditures of $65.0 million and a payment on the disposal of Beckjord of $14.5 million. This was partially offset by proceeds of $10.6 million relatedcontribute to the June transmission swap with Duke and AEP.

DP&L – Cash flows from financing activities
Net cash used in financing activities was $(48.5) million for the nine months ended September 30, 2019 compared to $(37.1) million from financing activities for the nine months ended September 30, 2018. The financing activity for the nine months ended September 30, 2019 is primarily due to returns of capital paid to parent of $90.0 million, debt repayments, including early payment premium, of $436.1 million, and payments of deferred financing costs of $4.6 million. This was partially offset by debt issuances, net of discount, of $422.3 million. The financing activity for the nine months ended September 30, 2018 is primarily related to $63.3 million of debt repayments and returns of capital paid to parent of $43.8 million. This was partially offset by an $80.0 million capital contribution from DPL.

LIQUIDITY
We expect our existing sources of liquidity to remain sufficient to meet our anticipated operating needs. Our business is capital intensive, requiring significant resources to fund operating expenses, construction expenditures, scheduled debt maturities, debt carrying costs and, for DP&L, dividend payments to DPL. In 2019 and subsequent years, we expect to satisfy these requirements with a combination of cash from operations and funds from debt financing as internal liquidity needs and market conditions warrant. We also expect that the borrowing capacity under bank credit facilities will continue to be available to us to manage working capital requirements during these periods.


At September 30, 2019, DP&L and DPL have access to the following revolving credit facilities:
$ in millions Type Maturity Commitment Amounts available as of September 30, 2019
DP&L Revolving June 2024 $175.0
 $113.9
DPL Revolving June 2023 125.0
 75.9
      $300.0
 $189.8

DP&L has an unsecured revolving credit agreement with a syndicated bank group with a borrowing limit of $175.0 million and a $75.0 million letter of credit sublimit, as well as a feature that provides DP&L the ability to increase the sizeclean-up of the facility bysite, it could have an additional $100.0 million. This facility expires in June 2024. At September 30, 2019, there was one letteradverse effect on our business, financial condition or results of credit in the amount of $1.1 million outstanding under this facility, and $60.0 million in borrowings, with the remaining $113.9 million available to DP&L. Fees associated with this letter of credit facility were not material during the nine months ended September 30, 2019 or 2018.operations.

DPL has a revolving credit facility of $125.0 million, with a $75.0 million letter of credit sublimit and a feature that provides DPL the ability to increase the size of the facility by an additional $50.0 million. This facility is secured by a pledge of common stock that DPL owns in DP&L, limited to the amount permitted to be pledged under certain Indentures dated October 3, 2011 and April 17, 2019 between DPL and Wells Fargo Bank, NA and U.S. Bank National Association, respectively, as Trustee. The facility expires in June 2023. At September 30, 2019, there were six letters of credit in the aggregate amount of $11.1 million outstanding and $38.0 million in borrowings, with the remaining $75.9 million available to DPL. Fees associated with this facility were not material during the nine months ended September 30, 2019 or 2018.

Capital Requirements
Capital Additions
ActualProjected
$ in millions201820192020202120222023
DPL$94 $164 $174 $254 $271 $242 
DP&L$91 $162 $170 $252 $268 $238 
Planned construction additions for 2019 relate primarily to new investments in and upgrades to
DP&L’s transmission and distribution system.
Capital projects are subject to continuing review and are revised consideringin light of changes in financial and economic conditions, load forecasts, legislative and regulatory developments and changing environmental requirements,laws, rules and regulations, among other factors.

DPL is projecting to spend an estimated $657.0$767.0 million in capital projects for the period 20192021 through 2021, of2023, which $649.0includes an estimated $758.0 million is projected to be spent by for DP&L. These amounts includeDP&L's projection includes expected spending under DP&L's Distribution Modernization Smart Grid Plan filed with the PUCO in December 2018. On January 22, 2019, DP&L filed a request with the PUCO for a two-year extension of its DMR through October 2022,2018 and included in the proposed amountStipulation and Recommendation entered into on October 23, 2020, as well as new transmission projects. See Note 3 – Regulatory Matters of $199.0 millionNotes to DPL's Consolidated Financial Statements for each of the two additional years. The request was made pursuant to the PUCO’s October 20, 2017 ESP order, which approved the DMR and had the option for more information.
DP&Lto file for a two-year extension. The extension request was set at a level expected to reduce debt obligations at both DP&L and DPL and to position DP&L to make capital expenditures to maintain and modernize its electric grid. To that end, DP&L’s DMP investments are contingent upon the PUCO approving the two-year extension of its DMR.

DP&L is subject to the mandatory reliability standards of NERC and Reliability FirstReliabilityFirst Corporation (RFC)(RF), one of the eightsix NERC regions, of which DP&L is a member. DP&L anticipates spending approximately $221.0$76.0 million within the next five years to reinforce its 138-kVtransmission system to comply with mandatory NERC standards. Our ability to completeand FERC Form 715 planning requirements. These anticipated costs are included in the overall capital projects and the reliability of future service will be affected by our financial condition, the availability of internal funds and the reasonable cost of external funds. We expect to finance our construction additions with a combination of cash on hand, short-term financing, long-term debt and cash flows from operations.projections above.

Debt Covenants
Long-term debt covenants
For information regarding our long-term debt covenants, see Part I, Item 1, Note 67 – Long-term Debtdebt of Notes to DPL's Condensed Consolidated Financial Statements.


Debt and Credit Ratings
The following table presents, as of the filing of this report,outlines the debt ratings and outlook for DPL and DP&L,, along with the effective or affirmed date of each rating.
DPLDPLDP&LDP&LOutlookOutlookEffective or Affirmed
Fitch Ratings
BBBBB+(a) / BBB-BB(b)
A-BBB+ (c)
StableNegativeOctober 2018April 2020
Moody's Investors Service, Inc.
Ba1 (b)
A3 (c)
StableNegative
DPL - June 2020
DP&L - December 2019
Standard & Poor's Financial Services LLC
BBB-BB+ (b)
BBB+ (c)
NegativeDevelopingOctober 2019November 2020

(a)
Rating relates to DPL’s Senior secured debt.
(b)
Rating relates to DPL's Senior unsecured debt.
(c)
Rating relates to DP&L’s Senior secured debt.

(a)Rating relates to DPL’s senior secured debt.
(b)Rating relates to DPL's senior unsecured debt.
(c)Rating relates to DP&L’s senior secured debt.
36


Credit Ratings
The following table presents, as of the filing of this report,outlines the credit ratings (issuer/corporate rating) and outlook for DPL and DP&L,each company, along with the effective or affirmed datedates of each rating.
rating and outlook for DPL and DP&L.
DPLDPLDP&LDP&LOutlookOutlookEffective or Affirmed
Fitch RatingsBBBBB-BBB-BBBNegativeStableOctober 2018April 2020
Moody's Investors Service, Inc.Ba1Ba1Baa2Baa2NegativeStableJuneDecember 2019
Standard & Poor's Financial Services LLCBB+BBB-BB+BBB-DevelopingNegativeOctober 2019November 2020

If the rating agencies were to reduce our debt or credit ratings, our borrowing costs may increase, our potential pool of investors and funding resources may be reduced and we may be required to post additional collateral under selectedcertain contracts. These events couldmay have an adverse effect on our results of operations, financial condition and cash flows. In addition, any such reduction in our debt or credit ratings may adversely affect the trading price of our outstanding debt securities.

 Non-investment grade companies may experience higher costs to issue new securities.
Off-Balance Sheet Arrangements
For informationDPL – Guarantees
Previously, DPL entered into various agreements with its wholly-owned subsidiary, AES Ohio Generation, providing financial or performance assurance to third parties. These agreements were entered into primarily to support or enhance the creditworthiness otherwise attributed to the subsidiary on a stand-alone basis, thereby facilitating the extension of sufficient credit to accomplish this subsidiary's intended commercial purposes. With the completion of our plan to exit generation, AES Ohio Generation currently does not require such assurances to third parties, and existing guarantees will expire in June, 2021. During the year ended December 31, 2020, DPL did not incur any losses related to the guarantees of these obligations and we believe it is unlikely that DPL would be required to perform or incur any losses in the future associated with any of the above guarantees. At December 31, 2020, DPL had $1.9 million of such guarantees on behalf of AES Ohio Generation. There were no outstanding balances for commercial transactions covered by these guarantees at December 31, 2020 or December 31, 2019.
DP&L owns a 4.9% equity ownership interest in OVEC which is recorded using the cost method of accounting under GAAP. At December 31, 2020, DP&L could be responsible for the repayment of 4.9%, or $62.6 million, of a $1,276.7 million debt obligation comprised of both fixed and variable rate securities with maturities between 2022 and 2040. This would only happen if this electric generation company defaulted on its debt payments. At December 31, 2020, we have no knowledge of such a default.
Commercial Commitments and Contractual Obligations
We enter into various contractual obligations and other commercial commitments that may affect the liquidity of our operations. At December 31, 2020, these include:
Payments due in:
$ in millionsTotalLess than
1 year		2 - 3
years		4 - 5
years		More than
5 years
DPL:
Long-term debt$1,413.0 $0.2 $0.4 $415.4 $997.0 
Interest payments819.1 57.8 115.5 107.0 538.8 
Electricity purchase commitments120.8 86.0 34.8 — — 
Purchase orders and other contractual obligations92.5 87.8 4.7 — — 
Total contractual obligations$2,445.4 $231.8 $155.4 $522.4 $1,535.8 
Payments due in:
$ in millionsTotalLess than
1 year		2 - 3
years		4 - 5
years		More than
5 years
DP&L:
Long-term debt$582.4 $0.2 $0.4 $0.4 $581.4 
Interest payments583.9 22.0 44.0 44.0 473.9 
Electricity purchase commitments120.8 86.0 34.8 — — 
Purchase orders and other contractual obligations90.3 85.6 4.7 — — 
Total contractual obligations$1,377.4 $193.8 $83.9 $44.4 $1,055.3 

37

Long-term debt:
DPL’s Long-term debt at December 31, 2020 consists of DPL’s unsecured notes and Capital Trust II securities, along with DP&L’s First Mortgage Bonds and the WPAFB note. These long-term debt amounts include current maturities but exclude unamortized debt discounts, premiums and fair value adjustments.
DP&L’s Long-term debt at December 31, 2020 consists of its First Mortgage Bonds and the WPAFB note. These long-term debt amounts include current maturities but exclude unamortized debt discounts.
See Note 7 – Long-term debt included in Notes to DPL's Consolidated Financial Statements.
Interest payments:
Interest payments are associated with the long-term debt described above. The interest payments relating to variable-rate debt are projected using the interest rates in effect at December 31, 2020.
Electricity purchase commitments:
DPL enters into long-term contracts for the purchase of electricity. In general, these contracts are subject to variable quantities or prices and are terminable only in limited circumstances.
Purchase orders and other contractual obligations:
At December 31, 2020, DPL and DP&L had various other contractual obligations see Part I, Item 1,including contracts to purchase goods and services with various terms and expiration dates. Due to uncertainty regarding the timing and payment of future obligations to the Service Company, and DPL's and DP&L's ability to terminate such obligations upon 90 days' notice, we have excluded such amounts in the contractual obligations table above. This table also does not include regulatory liabilities (see Note 103 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements) or contingencies (see Note 11 – Contractual Obligations, Commercial Commitments and Contingencies of Notes to DPL's Condensed Consolidated Financial Statements.Statements). See Note 12 – Related Party Transactions of Notes to DPL's Consolidated Financial Statements for additional information on charges between related parties and amounts due to or from related parties.
Reserve for uncertain tax positions:
Due to the uncertainty regarding the timing of future cash outflows associated with our unrecognized tax benefits of $1.4 million at December 31, 2020, we are unable to make a reliable estimate of the periods of cash settlement with the respective tax authorities and have not included such amounts in the contractual obligations table above.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

DPL’s Consolidated Financial Statements and DP&L’s Financial Statements are prepared in accordance with GAAP. In connection with the preparation of these financial statements, our management is required to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosure of contingent liabilities. These assumptions, estimates and judgments are based on our historical experience and assumptions that we believe to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. Our critical accounting estimates are those which require assumptions to be made about matters that are highly uncertain. Our significant accounting policies are described in Note 1 -– Overview and Summary of Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements.

Different estimates could have a material effect on our financial results. Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions or circumstances. Historically, however, recorded estimates have not differed materially from actual results. Significant items subject to such judgments include: the carrying value of property, plant and equipment; unbilled revenues; the valuation of allowances for deferred income taxes; regulatory assets and liabilities; reserves recorded for income tax exposures; litigation; contingencies; the valuation of AROs; and assets and liabilities related to employee benefits.

Revenue Recognition (including Unbilled Revenue)
Revenue is primarily earned from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the
38

governmental authorities. At the end of each month, amounts of energy delivered to customers since the date of the last meter reading are estimated and the corresponding unbilled revenue is accrued. In making our estimates of unbilled revenue, we use complex models that consider various factors including known amounts of energy usage by nearly all residential, small commercial and industrial customers; estimated line losses; and estimated customer rates based on prior period billings. Given the use of these models, and that customers are billed on a monthly cycle, we believe it is unlikely that materially different results will occur in future periods when revenue is billed. The effect on 2020 revenues and ending unbilled revenues of a one percentage point change in estimated line losses for the month of December 2020 is immaterial. An allowance for potential credit losses is maintained and amounts are written off when normal collection efforts have been exhausted.


Income Taxes
We are subject to federal and state income taxes. Our income tax provision requires significant judgment and is based on calculations and assumptions that are subject to examination by the U.S. Internal Revenue Service and other tax authorities. We regularly assess the potential outcome of tax examinations when determining the adequacy of our income tax provisions by considering the technical merits of the filing position, case law and results of previous tax examinations. Accounting guidance for uncertainty in income taxes prescribes a more-likely-than-not recognition threshold and measurement requirements for financial statement reporting of our income tax positions. Tax reserves have been established which we believe to be adequate in relation to the potential for additional assessments. Once established, reserves are adjusted only when there is more information available or when an event occurs necessitating a change to the reserves. While we believe that the amount of the tax reserves is reasonable, it is possible that the ultimate outcome of current or future examinations may be materially different than the reserve amounts.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities and their respective income tax bases. We establish a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized.

Regulatory Assets and Liabilities
Application of the provisions of GAAP relating to regulatory accounting requires us to reflect the effect of rate regulation in DPL’s Consolidated Financial Statements and DP&L’s Financial Statements. For regulated businesses subject to federal or state cost-of-service rate regulation, regulatory practices that assign costs to accounting periods may differ from accounting methods generally applied by non-regulated companies. When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, we defer these costs as Regulatory assets that otherwise would be expensed by non-regulated companies. Likewise, we recognize Regulatory liabilities when it is probable that regulators will require customer refunds through future rates and when revenue is collected from customers for expenses that are not yet incurred. Regulatory assets are amortized into expense and Regulatory liabilities are amortized into income over the recovery period authorized by the regulator.

We evaluate our Regulatory assets to determine whether or not they are probable of recovery through future rates and make various assumptions in our analyses. The expectations of future recovery are generally based on orders issued by regulatory commissions or historical experience, as well as discussions with applicable regulatory authorities. If recovery of a regulatory asset is determined to be less than probable, it will be expensed in the period the assessment is made. We currently believe the recovery of our Regulatory assets is probable. See Note 3 -– Regulatory Matters of Notes to DPL's Consolidated Financial Statements.

AROs
In accordance with the provisions of GAAP relating to the accounting for AROs, legal obligations associated with the retirement of long-lived assets are required 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 allocated to expense over the useful life of the asset. These GAAP provisions also require that components of previously recorded depreciation related to the cost of removal of assets upon future retirement, whether legal AROs or not, must be removed from a company’s accumulated depreciation reserve and be reclassified as a regulatory liability. We make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities and expenses as they relate to AROs. These assumptions and estimates are based on historical experience and assumptions that we believe to be reasonable at the time. See Note 4 - Property, Plant and Equipment of Notes to DPL's Consolidated Financial Statements.

Impairments
In accordance with the provisions of GAAP relating to the accounting for impairments, long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset group. Impairment losses on assets held-for-sale are recognized based on the fair value of the disposal group. We determine the fair value of these assets based upon estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. In analyzing the fair value and

recoverability using future cash flows, we make projections based on a number of assumptions and estimates of growth rates, future economic conditions, assignment of discount rates and estimates of terminal values. An impairment loss is recognized if the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows. The measurement of impairment loss is the difference between the carrying amount and fair value of the asset.

Pension and Postretirement Benefits
We account for and disclose pension and postemployment benefits in accordance with the provisions of GAAP relating to the accounting for pension and other postemployment plans. These GAAP provisions require the use of assumptions, such as the discount rate for liabilities and long-term rate of return on assets, in determining the obligations, annual cost and funding requirements of the plans. See Note 9 -– Benefit Plans of Notes to DPL's Consolidated Financial Statements.

Statements for more information.
Contingent and Other Obligations
During the conduct of our business, we are subject to a number of federal and state laws and regulations, as well as other factors and conditions that potentially subject us to environmental, litigation, insurance and other risks. We periodically evaluate our exposure to such risks and record estimated liabilities for those matters where a loss is considered probable and reasonably estimable in accordance with GAAP. In recording such estimated liabilities, we may make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities and expenses as they relate to contingent and other obligations. These assumptions and estimates are based on
39

historical experience and assumptions and may be subject to change. We believe such estimates and assumptions are reasonable.

Recently Issued Accounting Pronouncements
A discussion of recently issued accounting pronouncements is in Note 1 -– Overview and Summary of Significant Accounting Policies of Notes to DPL's Condensed Consolidated Financial Statements and such discussion is incorporated by reference in this Management's Discussion and Analysis of Financial Condition and Results of Operations and Financial Condition and made a part hereof.


BUSINESS

DPL is a diversified regional energy company incorporated in 1985 under the laws of the StateOhio. All of Ohio in 1985 withDPL’s stock is owned by an AES subsidiary.
DPL has three primary subsidiaries: DP&L, MVIC and Miami Valley Lighting. DP&L, which also does business as AES Ohio, Generation. DP&L is a public utility providing electric transmission and distribution services in West Central Ohio. For additional information, see Note 1 – Overview and Summary of Significant Accounting Policies of Notes to DPL's Consolidated Financial Statements. All of DPL's subsidiaries are wholly-owned. DPL manages its business through one reportable operating segment, the Utility segment. See Note 13 – Business Segments of the Notes to DPL's Consolidated Financial Statements for additional information regarding DPL’s reportable segment. DP&L also manages its business through one reportable operating segment, the Utility segment.
As an electric public utility in Ohio, DP&L provides regulated transmission and distribution services to its customers as well as retail SSO electric service. DP&L's sales reflect the general economic conditions, seasonal weather patterns and the growth of energy efficiency initiatives; however, our distribution revenues were decoupled from weather and energy efficiency variations from January 1, 2019 through December 18, 2019. In the first quarter of 2020, DP&L filed a petition to continue to accrue the impacts of decoupling for recovery through a future rate proceeding, but it is unknown at this time how the PUCO will rule on that petition. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements for further information.
DPL’s other primary subsidiaries are MVIC and Miami Valley Lighting. MVIC is DPL’sour captive insurance company that provides insurance services to DPLDP&L and its subsidiaries. AES Ohio Generation owns an undivided interestour other subsidiaries, and Miami Valley Lighting provides street and outdoor lighting services to customers in a coal-fired generating facility and sells all of its energy and capacity into the wholesale market. Dayton region.
DPL also has a wholly-owned business trust, DPL Capital Trust II, formed for the purpose of issuing trust capital securities to investors. All of DPL’s subsidiaries are wholly-owned.
DP&L is a public utility incorporated in 1911 under the laws of Ohio. DP&L offers retail SSO electric service to residential, commercial, industrial and governmental customers in a 6,000 square mile area of West Central Ohio and has the exclusive right to provide distribution and transmission services to more than 524,000 customers in that service area. In addition to does not have any subsidiaries.
DP&L’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs or overcollections of riders.
GENERATING CAPACITY
DPL, through AES Ohio Generation, owned an undivided interest in Conesville. AES Ohio Generation's share of this EGU's capacity was 129 MW. AES Ohio Generation sold all of its energy and capacity into the wholesale market. AEP Generation, the operator of the co-owned Conesville EGU, closed Unit 4 in May 2020, and AES Ohio Generation's interest in this EGU was sold in June 2020. For additional information on this event and DPL's other previously owned EGUs, see Note 15 – Discontinued Operations of Notes to DPL's Consolidated Financial Statements.
DP&L also has a 4.9% interest in OVEC, an electric generating company. OVEC has two electric generating stations located in Cheshire, Ohio and Madison, Indiana with a combined generation capacity of 2,109 MW. DP&L’s share of this generation capacity is 103 MW.
HUMAN CAPITAL MANAGEMENT
DPL's employees are essential to delivering and maintaining reliable service to our customers. DPL and its subsidiaries employed 631 people (512 full-time) at January 31, 2021 all of which were employed by DP&L.
40

Approximately 58% of all DPL employees are under a collective bargaining agreement that expires on October 31, 2023.
Safety
As part of AES, safety is one of our core values. Ensuring safe operations at our facilities, so each person can return home safely, is the cornerstone of our daily activities and decisions. Safety efforts are led globally by the AES Chief Operating Officer and supported by safety committees that operate at the local site level. Hazards in the workplace are actively identified and management tracks incidents so remedial actions can be taken to improve workplace safety.
We work with the Safety Management System (“SMS”), a Global Safety Standard that applies to all AES employees and employees of AES subsidiaries, as well as contractors working in AES facilities and construction projects. The principal industries locatedSMS requires continuous safety performance monitoring, risk assessment and performance of periodic integrated environmental, health and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance and drive continuous improvements. The SMS standard is consistent with the OHSAS 18001/ISO 45001 standard. Our safety performance is also measured by both leading and lagging metrics. Our leading safety metrics track safety observations, safety meeting engagement and the reporting of non-injury near misses. Our lagging safety metrics track lost workday cases, severity rate, and recordable incidents. We are committed to excellence in DP&L’s service territory include automotive, food processing, paper, plastic, manufacturingsafety and defense. DP&L’s sales reflect general economichave implemented various programs to increase safety awareness and improve work practices.
In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate. This includes having employees work from home to the extent they were able, while implementing additional safety measures for employees continuing critical on-site work.
Talent
We believe our success depends on our ability to attract, develop and retain key personnel. The skills, experience and industry knowledge of key employees significantly benefit our operations and performance. We have a comprehensive approach to managing our talent and developing our leaders in order to ensure our people have the right skills for today and tomorrow whether that requires us to build new business models or leverage leading technologies.
We emphasize employee development and training. To empower employees, we provide a range of development programs and opportunities, skills, and resources they need to be successful by focusing on experience and exposure as well as formal programs including our AES' ACE Academy for Talent Development, and our Trainee Program.
We believe that our individual differences make us stronger. Our Global Diversity and Inclusion Program is led by the AES Diversity and Inclusion Officer. Governance and standards are guided by the AES Chief Human Resources Officer, with input from members of AES' Executive Leadership Team.
Compensation
Our compensation philosophy emphasizes pay-for-performance. Our incentive plans are designed to reward strong performance, with greater compensation paid when performance exceeds expectations and less compensation paid when performance falls below expectations. We invest significant time and resources to ensure our compensation programs are competitive conditions, seasonal weather patternsand reward the performance of our people. Every year, our people who are not part of a collective bargaining agreement are eligible for an annual merit-based salary increase. In addition, individuals are eligible for a salary increase if they receive a significant promotion. For non-collectively bargained employees at certain levels in the organization we offer annual incentives (bonus) and long-term compensation to reinforce the alignment between employees and AES.
SERVICE COMPANY
The Service Company provides services including operations, accounting, legal, human resources, information technology and other corporate services on behalf of companies that are part of the areaU.S. SBU, including, among other companies, DPL and DP&L. The Service Company allocates the growth of energy efficiency initiatives, however, its distribution revenues have been decoupled from weathercosts for these services based on cost drivers designed to result in fair and energy efficiency variations beginning January 1, 2019 as a result ofequitable allocations. This includes ensuring that the decoupling rider the PUCO approved in the DRO.
DPL strives to achieve stable, long-term growth through efficient operations and strong customer and regulatory relations. More specifically, DPL’s strategy is to utilize the transmission and distribution assets that transfer electricity at the most efficient cost, and to maintain the highest level of customer service and reliability. DPL’s total consolidated revenue and net incomeregulated utilities served, including DP&L, are not subsidizing costs incurred for the nine months ended September 30, 2019 were $592.2 million and $61.4 million, respectively. In addition, asbenefit of September 30, 2019, DPL had total assetsother businesses. See Note 12 – Related Party Transactions of approximately $1.8 billion. DPL’s business is not dependent on any single customer or group of customers.Notes to DPL's Consolidated Financial Statements.
DPL’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DPL applies the accounting standards for regulated operations to DPL’s electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates, and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs or overcollections of riders.
Seasonality
41

SEASONALITY
The power delivery business is seasonal, and weather patterns have a material effect on energy demand. In the region we serve, demand for electricity is generally greater in the summer months associated with cooling and in the winter months associated with heating compared to other times of the year. DP&L’s&L's sales typically reflect the seasonal weather patterns and the growth of energy efficiency initiatives, however, afterinitiatives. However, the approvalimpacts of weather, energy efficiency programs and economic changes in customer demand were almost entirely eliminated in 2019 by DP&L’s Decoupling Rider, which was in place from January 1, 2019 until December 18, 2019. DP&L has requested authority from the distribution rate order in 2018, our distributionPUCO to create a regulatory asset for the ongoing revenues that would have been decoupled from weather and energy efficiency variations. Becausecharged in the Decoupling Rider going back to December 18, 2019. See Note 3 – Regulatory Matters of the impact of the new decoupling rider (effective January 1, 2019) and because DP&L’s generation has greatly decreased in recent years dueNotes to plant sales and closures, we expect that weather and other factors influencing demand will have minimal impact on our net operating results going forward.DPL's Consolidated Financial Statements.
Storm activity can also have an adverse effect on our operating performance. Severe storms often damage transmission and distribution equipment, thereby causing power outages, which reduce revenues and increase repair costs. Partially mitigating this impact is DP&L’s ability to timely recover certain O&M repair costs related to severe storms.
Rate Regulation and Government LegislationMARKET STRUCTURE
Retail rate regulation
DP&L’s delivery&L's distribution service to all retail customers as well as the provisions of its SSO service are regulated by the PUCO. In addition, certain costs are considered to be non-bypassable and are therefore assessed to all of DP&L’s&L retail customers, under the regulatory authority of the PUCO, regardless of the customer’s retail electric supplier. DP&L’s&L's transmission rates are subject to regulation by the FERC under the Federal Power Act.

Ohio law establishes the process for determining SSO and non-bypassable rates charged by public utilities. Regulation of retail rates encompasses the timing of applications, the effective date of rate changes, the cost basis upon which the rates are set and other service-related matters. Ohio law also established the Office of the Ohio Consumers’Consumers' Counsel, which has the authority to represent residential consumers in state and federal judicial and administrative rate proceedings.
Ohio legislation extends the jurisdiction of the PUCO to the records and accounts of certain public utility holding company systems, including DPL. The legislation extends the PUCO’sPUCO's supervisory powers to a holding company system’ssystem's general condition and capitalization, among other matters, to the extent that such matters relate to the costs associated with the provision of public utility service. Based on existing PUCO and FERC authorization, regulatory assets and liabilities are recorded on the balance sheets of both DPL and DP&L’s balance sheets.&L. See Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
Competition and RegulationCOMPETITION AND REGULATION
Ohio Matters
Ohio Retail Rates
DP&L filed an amended stipulation to its 2017 rates for electric service currently remain the lowest among Ohio investor-owned utilities.
ESP case on March 13, 2017. The PUCO issued a final decision on October 20, 2017, modifying and adopting the amended stipulation and recommendation. The six-year 2017 ESP establishes1 established DP&L’s&L's framework for providing retail service on a going-forward basis including rate structures, non-bypassable charges and other specific rate recovery true-up rider mechanisms. For more information regarding DP&L's ESP, see Note 3 – Regulatory Matters of Notes to DPL's Consolidated Financial Statements.
On September 26, 2018, the PUCO issued the DRO establishing new base distribution rates for DP&L, which became effective October 1, 2018. The DRO approved, without modification, a stipulation and recommendation previously filed by DP&L, along with various intervening parties and the PUCO staff. The DRO established a revenue requirement of $248.0 million for DP&L’s&L's electric service base distribution rates which reflects an increase to distribution revenues of approximately $29.8 million per year. In addition to the increase in base distribution rates, among other matters, therates. The DRO also providesprovided for a return on equity of 9.999% and a cost of long-term debt of 4.8%.
On November 30, 2020, DP&L filed a new distribution rate case with the PUCO. This rate case proposes a revenue increase of $120.8 million. For more information, regarding DPL’s ESP and DRO, see Note 3 – Regulatory Matters of the Notes to DPL’s consolidated financial statements.DPL's Consolidated Financial Statements.
In December 2018, DP&L filed a Distribution Modernizationits Smart Grid Plan (“DMP”) with the PUCO proposing to invest $576.0 million in capital projects over the next 10 years. There are eight principal components of DP&L’s DMP:Smart Grid Plan: 1) Smart Meters, 2) Self-Healing Grid, 3) Customer Engagement, 4) Enhancing Sustainability and Embracing Innovation. 5) Telecommunications, 6) Physical and Cyber Security, 7) Governance and Analytics and 8) Grid Modernization R&D.
These initiatives will also allow On October 23, 2020 DP&L to be ready to leverage and integrate Distributed Energy Resources into its grid, including demonstrationsfiled a comprehensive settlement (the “Settlement”) with the PUCO that, among other matters, includes resolution of community solar, energy storage, microgrids, as well as Electric Vehicle charging infrastructure.this Smart Grid application. If approved, DP&L willplans to implement a comprehensive grid modernization projectthe plan that will
42

deliver benefits to customers, society as a whole and to the Company.
On January 22, 2019, DP&L filed a request with the PUCO for a two-year extension&L. For more information, see Note 3 – Regulatory Matters of its distribution modernization rider (“DMR”) through October 2022, in the proposed amount of $199.0 million for each of the two additional years. The request was made pursuantNotes to the PUCO’s October 20, 2017 ESP order, which approved the DMR and granted DP&L the option to file for a two-year extension. The extension request was set at a level expected to reduce both DPL and DP&L’s debt obligations and to position DP&L to make capital expenditures to maintain and modernize its electric grid. To that end, DP&L’s DMP investments are contingent upon the PUCO approving the two-year extension of its DMR.
A rehearing process in DP&L's 2017 ESP case, including the DMR, remains pending. On August 1, 2019, DP&L filed a supplemental brief with the PUCO focused on the applicability of a recent court decision involving another Ohio utility’s DMR which is similar to, but not identical to, DP&L’s DMR.DPL's Consolidated Financial Statements.
Ohio law and the PUCO rules contain targets relating to renewable energy peak demand reduction and energy efficiency standards. If any targets are not met, compliance penalties will apply unless the PUCO makes certain findings that would excuse performance. DP&L is currently in full compliance with energy efficiency, peak demand reduction and renewable energy targets. DP&L is required to file an energy efficiency portfolio plan to demonstrate how it plans to meet the standards. On June 15, 2017, DP&L filed an energy efficiency portfolio plan for programs in years

2018 through 2020, which was settled and approved by the PUCO on December 20, 2017. DP&L recovers the costs of its compliance with Ohio energy efficiency and renewable energy standards through a separate ridersrider which areis reviewed and audited by the PUCO.
The ratescosts associated with providing high voltage transmission service and wholesale electric sales and ancillary services are subject to FERC jurisdiction. While DP&L has market-basedimplemented a formula-based rate authority for wholesale electric sales, DP&L would be requiredits transmission service, effective May 3, 2020. For more information, see Note 3 – Regulatory Matters of Notes to file an application at FERC under section 205 of the Federal Power Act, 15 U.S.C. section 824d, to change any of its cost-based transmission or ancillary service rates.DPL's Consolidated Financial Statements.
As a member of PJM, DP&L receives revenues from the RTO related to itsDP&L’s transmission assets and incurs costs associated with its load obligations for retail customers. Ohio law includes a provision that would allow Ohio electric utilities to seek and obtain a reconcilable rider to recover RTO-related costs and credits. DP&L continues to recover non-market-based transmission and ancillary costs through its transmission rider.nonbypassable Transmission Cost Recovery Rider.
In response to filings made by DP&L and AES Ohio Generation, the FERC approved on May 16, 2017 reactive power rates for the generation facilities that were owned at that time.  In the same order, FERC referred to the FERC’s Office of Enforcement for investigation, an issue regarding DP&L’s reactive power charges under the previously effective rates in light of changes in DP&L’s generation portfolio between cases.   As of the date of this prospectus, DP&L is subjectunable to a significantly excessive earnings test (“SEET”) threshold and is requiredpredict the ultimate outcome of the investigation.  Several other utilities within PJM are also being investigated by FERC’s Office of Enforcement with respect to apply general rules for calculating earnings and comparing them to a comparable group to determine whether there were significantly excessive earnings during a given calendar year. In future years, the SEET could have a material effect on resultssame issue of operations, financial condition and cash flows. Seechanges in the generation portfolio that occurred in between rate proceedings. For more information, see Note 3 – Regulatory Matters of the notesNotes to our consolidated financial statements.DPL's Consolidated Financial Statements.
Ohio Competitive Considerations and ProceedingsCompetition
Since January 2001, DP&L’s electric customers have been permitted to choose their retail electric generation supplier. DP&L continues to have the exclusive right to provide delivery service in its state-certified territory and the obligation to procure and provide electricity to SSO customers that do not choose an alternative supplier. The PUCO maintains jurisdiction over DP&L’s delivery of electricity, SSO and other retail electric services.
As part of Ohio’s electric deregulation law, all of the state’sstate��s investor-owned utilities were required to join an RTO. DP&L is a member of the PJM RTO. The role of the RTO is to administer a competitive wholesale market for electricity and ensure reliability of the transmission grid. PJM ensures the reliability of the high-voltage electric power system serving more than 5065 million people in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. PJM coordinates and directs the operation of the region’s transmission grid, administers the world’s largest competitive wholesale electricity market and plans regional transmission expansion improvements to maintain grid reliability and relieve congestion.
Like other electric utilitiesENVIRONMENTAL MATTERS
DPL’s and energy marketers, AES Ohio Generation may sell or purchase electric products in the wholesale market. AES Ohio Generation competes with other generators, power marketers, privatelyDP&L's current and municipally-owned electric utilities and rural electric cooperatives when selling electricity. The ability of AES Ohio Generation to sell this electricity will depend not only on the performance of its generating unit, but also on how AES Ohio Generation’s prices, terms and conditions compare to those of other suppliers.
Ohio House Bill 6
On July 23, 2019, the Governor of Ohio signed Ohio House Bill 6, which, among other things, does the following:
beginning January 1, 2020, replaces DP&L’s non-bypassable Reconciliation Rider, permitting DP&L to defer, recover or credit the net proceeds from selling energy and capacity received as part of DP&L’s interest in OVEC and its OVEC-related costs through 2023, with a non-bypassable recovery mechanism for recovery of prudently incurred OVEC costs through 2030;
eliminates the annual energy efficiency targets for Ohio utilities after 2020;
allows Ohio utilities to construct customer-sited renewable generation for mercantile customers or groups of mercantile customers, the costs of which may only be recovered from those customers.


Environmental Matters
DPL's and DP&L’sformer facilities and operations are and/or were subject to a wide range of federal, state and local environmental laws, rules and regulations. The environmental issues that may affect us include the following. However, as described further below, as a result of DPL’s decision to retire the Stuart and Killen generating stations, the sale of DPL’s ownership interest in the Miami Fort and Zimmer generating stations, the planned 2020 retirement of Conesville, and DP&L transferring its generation assets to AES Ohio Generation in 2017, certain of these environmental regulations and laws are now not expected to have a material impact on us with respect to these generating stations.discussed below.
•The federal Clean Air Act (“CAA”)CAA and state laws and regulations (including state implementation plans)SIPs) which require compliance, obtaining permits and reporting as to air emissions;
•Litigation with federal and certain state governments and certain special interest groups regarding whether modifications to or maintenance of certain coal-fired generating stations require additional permitting or pollution control technology, or whether emissions from coal-fired generating stations cause or contribute to global climate change;changes;
•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities that require or will require substantial reductions in SO2, particulates, mercury, acid gases, NOx and other air emissions;
•
Rules and future rules issued by the USEPA, the Ohio Environmental Protection Agency (the “Ohio EPA”) or other authorities that require or will require substantial reductions in SO2, particulates, mercury, acid gases, NOx, and other air emissions;
Rules and future rules issued by the USEPA, the Ohio EPA or other authorities that require or will require reporting and reductions of GHGs;
43

•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities associated with the federal Clean Water Act, (“CWA”), which prohibits the discharge of pollutants into waters of the United States except pursuant to appropriate permitspermits; and regulates the design and operation of cooling water intake structures for power plants and other industrial facilities; and
•Solid and hazardous waste laws and regulations, which govern the management and disposal of certain waste.
In addition to imposing continuing compliance obligations, theseenvironmental laws, rules and regulations authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. In the normal course of business, we have investigatory and remedial activities underway at our facilities to comply, or to determine compliance, with such laws, rules and regulations. We record liabilities for loss contingencies related to environmental matters when the chance of a loss occurring is probable of occurring and can be reasonably estimated in accordance with the provisions of GAAP. Accordingly, we have immaterial accruals for loss contingencies for environmental matters. We also have a number of environmental matters for which we have not accrued loss contingencies because the risk of loss is not probable, or a loss cannot be reasonably estimated. We evaluate the potential liability related to environmental matters quarterly and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our results of operations, financial condition or cash flows.
We have several pending environmental matters associated with our previously-owned and operated coal-fired generation units. We do not expect these matters to have a material adverse impact on our results of operations, financial condition or cash flows. See Note 11 – Contractual Obligations, Commercial Commitments and Contingencies – "Environmental Matters” of the notesNotes to our consolidated financial statementsDPL's Consolidated Financial Statements for more information regarding environmental risks, laws and regulations and legal proceedings to which we are and may be subject to in the future.
In responseBiden Administration Actions Affecting Environmental Regulations
On January 20, 2021, President Biden issued an Executive Order (the "EO") titled “Protecting Public Health and the Environment and Restoring Science to Executive Orders fromTackle the Climate Crisis” directing agencies to, among other tasks, review regulations issued under the previous administration to determine whether they should be suspended, revoked, or revised. As provided for by the EO, the USEPA submitted a letter to the U.S. President, the USEPA is currently evaluating various existing regulationsDepartment of Justice seeking to be considered for repeal, replacement,obtain abeyances or modification. We cannot predict at this time the likely outcomestays of the USEPA’sproceedings in pending litigation that seeks review of theseregulations promulgated during the Trump Administration. The Biden Administration also issued a Memorandum titled “Regulatory Freeze Pending Review” directing agencies to refrain from proposing or other existing regulations or what impact itissuing any rules until the Biden Administration has reviewed and approved those rules. These actions may have an impact on regulations that may affect our business.business, financial condition, or results of operations.
We have several pending environmental matters associated with our current and previously ownedpreviously-owned and operated coal-fired generation units. Some ofWe do not expect these matters couldto have a material adverse impactsimpact on our results of operations, financial condition or cash flows.

Environmental Matters Related to Air Quality
As a result of DPL’s decision to retire theretirement and subsequent sale of its Stuart and Killen generating stations,Stations, the sale of DPL’sits ownership interest in the Miami Fort and Zimmer generating stations,Stations and the planned 2020 retirement of Conesville, followed by the sale of our interest in Conesville and DP&L transferring itsour exiting of our generation assets to AES Ohio Generation in 2017,business, the following environmental matters, regulations and requirements are now not expected to have a material impact on us:DPL:
•The CAA and the following regulations:regulations
The Cross-State Air Pollution Rule•CSAPR and associated updates;
Mercury and Air Toxic Standards•MATS and any associated regulatory or judicial processes;
National Ambient Air Quality Standards;•NAAQS; and
The Clean Power Plan, the USEPA’s final CO2 emission rules for existing power plants under CAA Section 111(d)•CPP or a potential replacement rule, for example, the Affordable Clean Energy Rule.(ACE) rule.
Litigation Involving Co-Owned Stations
As a result of a 2008 consent decree entered into with the Sierra Club and approved by the U.S. District Court for the Southern District of Ohio, DPL and the other owners of the Stuart generating station areStation were subject to certain specified emission targets related to NOX, SO2 and particulate matter. The consent decree also includes commitments for energy efficiency and renewable energy activities. An amendment to the consent decree was entered into and approved in 2010 to clarify how emissions would be computed during startups. Given that all of the commitments have been met and with the retirement of the Stuart generating station,Station, DPL and the other owners plan to submitsubmitted a request for
44

termination of the consent decree.decree to the U.S. District Court. On July 14, 2020, the U.S. District Court for the Southern District of Ohio granted the request and terminated the Consent Decree.
Notices of Violation Involving Co-Owned Units
In June 2000, the USEPA issued a notice of violation (“NOV”) to the then DP&L-operated Stuart generating station (co-owned by AES Ohio Generation, AEP Generation Resources Inc. (“AEP Generation”) and Dynegy, Inc. for alleged violations of the CAA. The NOV contained allegations consistent with NOVs and complaints that the USEPA had brought against numerous other coal-fired utilities in the Midwest. The NOV indicated the USEPA may: (1) issue an order requiring compliance with the requirements of the Ohio SIP; or (2) bring a civil action seeking injunctive relief and civil penalties of up to $27,500 per day for each violation. To date, neither action has been taken. We cannot predict the outcome of this matter.
On September 9, 2011, DP&L received an NOV from the USEPA with respect to its then co-owned Stuart generating station based on a compliance evaluation inspection conducted by the USEPA and the Ohio EPA in 2009. The notice alleged non-compliance by DP&L with certain provisions of the Resource Conservation and Recovery Act (“RCRA”), the CWA National Pollutant Discharge Elimination System (“NPDES”) permit program and the station’s storm water pollution prevention plan. The notice requested that DP&L respond with the actions it has subsequently taken or plans to take to remedy the USEPA’s findings and ensure that further violations will not occur. Based on its review of the findings, although there can be no assurance, we believe that the notice will not result in any material effect on our results of operations, financial condition or cash flows.
In January 2015, DP&L received NOVs from the USEPA alleging violations in opacity at the Stuart and Killen generating stations in 2014. On February 15, 2017, the USEPA issued an NOV alleging violations in opacity at the Stuart generation stationStation in 2016. Operations at boththe Stuart and KillenStation have ceased. However, we are currently unable to predictGiven the outcome of these matters.
Notices of Violation Involving Wholly-Owned Stations
On November 18, 2009, the USEPA issued an NOV to DP&L for alleged New Source Review, a preconstruction program regulating new or significantly modified sources of air pollution (“NSR”), violationsretirement and sale of the CAA atStuart Station and the Hutchings energy generating unit, which was closed in 2013, relating to capital projects performed in 2001 involving Unit 3 and Unit 6. Wefact there has been no recent activity, we do not believe that the two projects described in the NOV were modifications subject to NSR. We cannot predict the outcome ofexpect any further material developments regarding this matter.

NOV.
Environmental Matters Related to Water Quality, Waste Disposal and Ash Ponds
As a result of DPL’s decision to retire theretirement and subsequent sale of its Stuart and Killen generating stations,Stations, the sale of DPL’sits ownership interest in the Miami Fort and Zimmer generating stations,Stations and the planned 2020 retirement of Conesville, followed by the sale of our interest in Conesville and DP&L transferring itsour exiting of our generation assets to AES Generation in 2017,business; the following environmental matters, regulations and requirements are now not expected to have a material impact on DPL with respect to these generating stations (although(although certain of theseother requirements related to water quality, waste disposal and CCRash ponds are discussed further below):
•water intake regulations, including those finalized by the USEPA on May 19, 2014;
the appeal of the NPDES permit governing the discharge of water from the Stuart generating station;
•revised technology-based regulations governing water discharges from steam electric generating facilities, finalized by the USEPA on November 3, 2015 (and revised on October 13, 2020) and commonly referred to as the Steam Electric Power Effluent Limitations GuidelinesELG rules; and
CWA rules for Selenium.
Clean Water Act-Regulation of Water Discharge
On January 7, 2013, the Ohio EPA issued a final NPDES permit to the Stuart generating station which included a compliance schedule for performing a study to justify an alternate thermal limitation or take undefined measures to meet certain temperature limits. On February 1, 2013, DP&L appealed various aspects of the final permit to the Environmental Review Appeals Commission. On August 8, 2019, the ERAC dismissed the appeal in response to a Joint Motion to Dismiss. As a result of DPL’s decision to retire the Stuart generating station we do not expect this to have a material impact on us.
•Clean Water Act rules for Seleniumselenium.
On July 13, 2016,Notice of Potential Liability for Third Party Disposal Site
In December 2003, DP&L and other parties received notices that the USEPA published the final updated chronic aquatic life criterionconsidered DP&L and other parties PRPs for the pollutant selenium in freshwater per section 304(a)Tremont City Landfill site, located near Dayton, Ohio. On October 16, 2019, DP&L received another notice from the USEPA claiming that DP&L is a PRP for the portion of the CWA. The rule will be implemented after state rulemaking occurs, and requirements will be incorporated into NPDES permits with compliance schedules in some cases. Itsite known as the barrel fill. While a review by DP&L of its records indicates that it did not contribute hazardous materials to the site, DP&L is too early incurrently unable to predict the rulemaking processoutcome of this matter. If DP&L were required to determinecontribute to the impact, if any,clean-up of the site, it could have an adverse effect on our operations,business, financial positioncondition or results of operations.
Regulation of Waste Disposal
In 2002, DP&L and other parties received a special notice that the USEPA considered DP&L to be a potentially responsible party (“PRP”)PRP for the clean-up of hazardous substances at a third-party landfill known as the South Dayton Dump (“Landfill”). Several of the parties voluntarily accepted some of the responsibility for contamination at the Landfill and, in May 2010, three of those parties, Hobart Corporation, Kelsey-Hayes Company and NCR Corporation (“PRP Group”), filed a civil complaint in Ohio federal court (the “District Court”) against DP&L and numerous other defendants, alleging that the defendants contributed to the contamination at the Landfilllandfill and were liable for contribution to the PRP Groupgroup for costs associated with the investigation and remediation of the site.
While DP&L was able to get the initial case dismissed, the PRP Group subsequently, in 2013, entered into an additional Administrative Settlement Agreement and Order on Consent (“ASAOC”) with the USEPA relating to vapor intrusion and again filed suit against DP&L and other defendants. Trial for that issue was scheduled to be held in 2019, but the District Court recently vacated that trial date and it is unknown when it will be rescheduled. Plaintiffs also attempted to addadded an additional ASAOC they entered into in 2016 pertaining to the investigation and remediation of all hazardous substances present in the Landfill-potentiallyLandfill - potentially including undefined areas outside the original dump footprint-tofootprint - to the vapor intrusion trial proceeding. The District Court allowed the claim to be added to the litigation2013 vapor intrusion ASAOC settled in early 2020, but ruled that the 2016 ASAOC could notremains to be adjudicated until after completion of the remedial investigation feasibility study, which is expected to be complete years after the vapor intrusion trial.study. While DP&L is unable to predict the outcome of these matters, if DP&L were required to contribute to the clean-up of the site, it could have a material adverse effect on our business,results of operations, financial condition or results of operations.
On October 16, 2019, DP&L received a special notice that USEPA considers DP&L, along with other parties, to be a PRP for the clean-up of hazardous substances at a third-party landfill known as the Tremont City Barrel Site, located near Dayton, Ohio. While DP&L is unable to predict the outcome of this matter, if DP&L were required to contribute to the clean-up of the site, it could have a material adverse effect on our business, financial condition or results of operations.

and cash flows.
Regulation of CCR
The USEPA's finalOn October 19, 2015, a USEPA rule regulating CCR rule became effective in October 2015. Generally,under the rule regulates CCRResource Conservation and Recovery Act as nonhazardous solid waste and establishes nationalbecame effective (CCR Rule). The rule established nationally applicable minimum criteria for existingthe disposal of CCR in new and new CCRcurrently operating landfills and existing and new CCR ash ponds,surface impoundments, including location restrictions, design and operating criteria, groundwater monitoring, corrective action and closure requirements and post-closure care. The primary enforcement mechanisms under this regulation would be actions commenced by the states and private lawsuits. On December 16, 2016, President Obama signed into law the Water Infrastructure Improvements for the Nation Act ("WIIN Act"), which includes provisions to implement the CCR ruleRule through a state permitting program, or if the state chooses not to participate, a possible federal permit program. The USEPA has indicated that they will implement a phased approach to amending the CCR rule.Rule. On February 20, 2020, the USEPA published a proposed rule to establish a federal CCR permit program that would operate in states without
In July 2018,
45

approved CCR permit programs. On August 28, 2020, the USEPA published final CCR rule amendments (Phase One, Part One) in the Federal Register. In August 2018, the D.C. Circuit Court issued a decision in certain CCR litigation matters, which may result in additional revisions to the CCR Rule. In October 2018, some environmental groups filed a petition for review challenging the USEPA's final CCR rule amendments (Phase One,Rule titled “A Holistic Approach to Closure Part One)A: Deadline to Initiate Closure”, which have since been remanded without vacatur to the USEPA.amends certain regulatory provisions that govern CCR. On August 14, 2019,November 12, 2020, the USEPA published amendments to the CCR rule; the amendment published on August 14, 2019 relatesRule titled “A Holistic Approach to the CCR rule’s criteria for determiningClosure Part B” and indicated that it would address this issue of beneficial use and the regulation of CCR piles, among other revisions. for closure of ash ponds that are subject to forced closure in a separate and future rulemaking. With the sale of our coal-fired generating stations, we expect that the impact of these regulations would be limited to our interest in OVEC.
The CCR rule,Rule, current or proposed amendments to the CCR rule,Rule, the results of groundwater monitoring data or the outcome of CCR-related litigation could have a material impactadverse effect on our business,results of operations, financial condition and cash flows.
Clean Water Act - Regulation of Water Discharge
DP&L and other utilities at times have applied the Nationwide Permit 12 (NWP 12) issued by the U.S. Army Corps of Engineers (Corps) in completing transmission and distribution projects that may involve waters of the U.S. NWP 12 is the nationwide permit for Utility Line Activities, specifically those required for construction and maintenance, provided the activity does not result in the loss of greater than 1/2-acre of waters of the U.S. for each single and complete project.
On April 15, 2020, in a proceeding involving the construction of the Keystone XL pipeline, the U.S. District Court for the District of Montana (Montana District Court) vacated NWP 12 and enjoined its application. On April 27, 2020, the Corps moved for the Montana District Court to stay, pending appeal, those portions of the April 15, 2020 order that vacate NWP 12 and enjoin its application. In the alternative, the Corps asked the Montana District Court to stay its vacatur and injunction as they relate to anything other than the Keystone XL pipeline. On May 11, 2020, following a request from the Corps, the Montana District Court amended its order to vacate NWP 12 only for oil and gas pipeline construction projects, allowing electric utility T&D projects to continue. On May 13, the Corps appealed the Montana District Court decision with the Ninth Circuit Court and requested a stay. On May 28, 2020, the Ninth Circuit denied a motion to stay. On June 16, 2020, the U.S. Solicitor General, on behalf of the U.S. Army Corps of Engineers, filed an application with the U.S. Supreme Court asking the Court to stay the district court order that vacated and enjoined the Corps from issuing authorizations under NWP 12 as it relates to the construction of new oil and gas pipelines. On July 6, 2020, the U.S. Supreme Court stayed the district court order, allowing the use of NWP 12 for oil and gas pipeline projects except for Keystone XL. On January 13, 2021, the U.S. Army Corps of Engineers published a final rulemaking for the reissuance and modification of NWPs, including NWP 12, relating exclusively to the construction of oil or natural gas pipelines and the new NWP 57 for construction of electric or telecommunication utility lines. It is too early to determine whether future outcomes or decisions related to this matter could have a material adverse effect on our results of operations.operations, financial condition and cash flows.

On April 23, 2020, the U.S. Supreme Court issued a decision in the Hawaii Wildlife Fund v. County of Maui case related to whether a Clean Water Act permit is required when pollutants originate from a point source but are conveyed to navigable waters through a nonpoint source such as groundwater. The U.S. Supreme Court held that discharges to groundwater require a permit if the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from the point source into navigable waters. On December 10, 2020, the USEPA published a Notice of Availability of draft guidance memorandum addressing how the Supreme Court’s decision applies to NPDES permits.It is too early to determine whether this decision may have a material adverse effect on our results of operations, financial condition and cash flows.

46

DESCRIPTION OF THE NOTES

In this Description of the Notes, “DPL” refers only to DPL Inc. and any successor obligor on the notes, and not to any of its subsidiaries, and references to the “Company,” “we,” “us,” and “our” refer to DPL. You can find the definitions of certain terms used in this description under “-Certain“—Certain Definitions.”
We issued the notes under an indenture in an aggregate principal amount of $400,000,000$415,000,000 between us and U.S. Bank National Association, as trustee, dated as of April 17, 2019.June 19, 2020. The terms of the notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939 (the “Trust Indenture Act”).
The following is a summary of the material provisions of the indenture and the notes. Because this is a summary, it may not contain all the information that is important to you. You should read the indenture in its entirety because it, not this description, defines your rights as holders of the notes. Copies of the indenture are available as described under “Where You Can Find More Information,” and the indenture is filed as an exhibit to the registration statement of which this prospectus is part.
In exchange for the notes issued on April 17, 2019,June 19, 2020, we are issuing the new notes under the indenture for public resale pursuant to this prospectus. All references to notes below refer to the old notes and/or the new notes unless the context otherwise requires.
Basic Terms of Notes
The notes:
•are senior unsecured obligations of DPL;
•are effectively subordinated to any secured senior obligations of DPL, to the extent of the value of the collateral securing such obligations;
•rank equally with the existing and future unsubordinated and unsecured obligations of DPL;
•are structurally subordinated in right of payment to obligations of the subsidiaries of DPL;
•mature on April 15, 2029;July 1, 2025;
•are issued in an original aggregate principal amount of $400.0$415.0 million; and
•bear interest at 4.35%4.125% per annum, payable semiannually on each April 15July 1 and October 15January 1 to holders of record on the April 1June 15 or October 1December 15 immediately preceding the interest payment date. Interest on the notes accrues from the most recent date to which interest has been paid.
Interest will be computed on the basis of a 360-day year of twelve 30-day months.
Our ability to pay interest on the notes will be dependent upon the receipt of dividends and other distributions from our direct and indirect subsidiaries, including The Dayton Power and Light Company (“DP&L”) in particular. The availability of distributions from our subsidiaries is subject to the satisfaction of various covenants and conditions contained in the applicable subsidiaries’ existing and future financing and governance documents.
The indenture does not limit the amount of debt securities we may issue under the indenture and provides that debt securities may be issued from time to time in one or more series. We may from time to time, without notice to or the consent of the holders of the notes, create and issue additional debt securities (“Additional Notes”) under the indenture governing the notes having the same terms as, and ranking equally with, the notes in all respects (except for the offering price and issue date). Any Additional Notes, together with the notes offered hereby, will constitute a single series of notes under the indenture, and will be treated as a single class for all purposes thereunder, including voting under the indenture; provided that, if the Additional Notes are not fungible with the notes for U.S. federal income tax purposes, the Additional Notes will have a separate CUSIP number.

Optional Redemption
Prior to January 15, 2029 (theApril 1, 2025,(the date that is three months prior to the maturity date), we may redeem the notes at our option, at any time in whole or from time to time in part, on at least 20 days’ prior written notice mailed to the registered holders of the notes, at a redemption price, together with accrued and unpaid interest to the date of redemption, equal to the greater of:
100% of the principal amount of the notes being redeemed; or
•the sum of the present values of the principal amount of the notes to be redeemed and the remaining scheduled payments of interest on the notes from the redemption date to January 15, 2029 (theApril 1, 2025
47

(the date that is three months prior to the maturity date), discounted from their respective scheduled payment dates to the redemption date semiannually, assuming a 360-day year consisting of twelve 30-day months, at a discount rate equal to the Treasury Rate (as defined herein) plus 3050 basis points.
On or after January 15, 2029April 1, 2025 (the date that is three months prior to the maturity date), we may redeem the notes at our option, at any time in whole or from time to time in part, on at least 30 days’ prior written notice mailed to the registered holders of the notes, at a redemption price equal to 100% of the principal amount of the notes being redeemed, together with accrued and unpaid interest to the date of redemption.
For purposes of the foregoing discussion of our right to redeem the notes, the following definitions are applicable:
“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term (as measured from the date of redemption) of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the notes.
“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.
“Quotation Agent” means any Reference Treasury Dealer appointed by us.
“Reference Treasury Dealer” means (i) each of J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC (or their respective affiliates that are Primary Treasury Dealers) and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), we will substitute therefor another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealers selected by us.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.
The redemption price will be calculated by the Quotation Agent and we, the trustee and any paying agent for the notes of that series to be redeemed will be entitled to rely on such calculation. It shall be the Company’s sole obligation to calculate the present value of the payments in connection with a redemption and the trustee shall have no obligation to calculate or verify any such payment amounts.
Notice of redemption must be given not less than 30 days nor more than 60 days prior to the date of redemption. If fewer than all the notes are to be redeemed, selection of notes for redemption will be made by the trustee in any manner the trustee deems fair and appropriate.

Unless we default in payment of the redemption price from and after the redemption date, the notes or portions of them called for redemption will cease to bear interest, and the holders of the notes will have no right in respect to such notes except the right to receive the redemption price for them.
No Other Mandatory Redemption or Sinking Fund
There will be no mandatory redemption or sinking fund payments for the notes.
Repurchase at the Option of Holders
If a Change of Control Triggering Event (as defined herein) occurs, unless we have exercised our right to redeem the notes as described above, holders of all outstanding notes will have the right to require us to repurchase all or any part (no note of a principal amount of $2,000 or less will be repurchased in part) of their notes pursuant to the offer described below (the “Change of Control Offer”) on the terms set forth in the indenture. In the Change of Control Offer, we will be required to offer payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest, if any, on the notes repurchased, to, but excluding, the date of
48

purchase (the “Change of Control Payment”). Within 30 days following any Change of Control Triggering Event, we will be required to send a notice to holders of notes describing the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase the notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures required by the indenture and described in such notice. We must comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the notes, we will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control provisions of the notes by virtue of such conflicts.
On the Change of Control Payment Date, we will be required, to the extent lawful, to:
•accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;
◦deposit with the paying agent, which shall initially be the trustee, an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and
◦deliver or cause to be delivered to the trustee the notes properly accepted.
The definition of Change of Control (defined herein) includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of us and our subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require us to repurchase its notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of us and our subsidiaries taken as a whole to another person may be uncertain.
For purposes of the foregoing discussion of a repurchase at the option of holders, the following definitions are applicable:
“Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries taken as a whole to any person (as such term is used in Section 13(d) of the Exchange Act) other than the Company or one of its subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any person (as such term is used in Section 13(d) of the Exchange Act) other than a Permitted Holder (as defined herein) becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of shares of the Company’s Voting Stock; or (3) the first day on which a majority of the members of the Company’s board of directors are not Continuing Directors of the Company.
“Change of Control Triggering Event” means the occurrence of a Rating Event and a Change of Control.
“Continuing Directors” means, as of any date of determination, any member of the applicable board of directors who (1) was a member of such board of directors on the date of the issuance of the notes; or (2) was nominated for election or elected to such board of directors with the approval of a majority of the Continuing Directors who were

members of such board of directors at the time of such nomination or election (either by vote of the board of directors or by approval of the stockholders, or, if applicable, after receipt of a proxy statement in which such member was named as a nominee for election as a director, without objection to such nomination).
“Permitted Holder” means, at any time, AES and its Affiliates. In addition, any person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of the indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Rating Agencies” means (a) each of Fitch, Moody’s and S&P and (b) if any of Fitch, Moody’s or S&P ceases to rate the notes or fails to make a rating of the notes publicly available for reasons outside of our control, a “nationally recognized statistical rating organization” (within the meaning of Section 3(a)(62) of the Exchange Act) selected by us as a replacement Rating Agency for a former Rating Agency.
“Rating Event” means the rating on the notes is lowered by two of the three Rating Agencies on any day within the period commencing on the earlier of (a) the occurrence of a Change of Control and (b) public notice of the occurrence of a Change of Control or our intention to effect a Change of Control and ending 60 days following the consummation of such Change of Control (which 60-day period will be extended so long as the rating of the notes is under publicly announced consideration for a possible downgrade by any of the Rating Agencies).
49

“Voting Stock” of any specified person means the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.
It shall be the Company’s sole obligation to determine if a Rating Event has occurred and the trustee shall have no obligation to determine or verify if such an event has occurred.
Ranking
Structural Subordination. DPL is a holding company. Substantially all of DPL’s operations are conducted through its subsidiaries. Claims of creditors of DPL’s subsidiaries, including trade creditors, secured creditors and creditors holding debt and guarantees issued by those subsidiaries, and claims of preferred and minority stockholders (if any) of those subsidiaries generally will have priority with respect to the assets and earnings of those subsidiaries over the claims of creditors of DPL, including holders of the notes. The notes will be effectively subordinated in right of payment to creditors (including trade creditors) and preferred and minority stockholders (if any) of DPL’s subsidiaries.
At September 30, 2019,December 31, 2020, DPL’s direct and indirect subsidiaries had approximately $574.2$574.1 million in long-term debt, all of which would be effectively senior to the notes. Moreover, the indenture does not impose any limitation on the incurrence of additional liabilities or the issuance of additional preferred stock or minority interests by subsidiaries of DPL (subject to compliance with the Limitation on Liens covenant in the case of secured debt).
The notes are senior unsecured obligations of DPL and are effectively subordinated to any secured senior obligations of DPL, to the extent of the value of the collateral securing such obligations. The notes rank equally in right of payment with the existing and future unsubordinated and unsecured obligations of DPL and are structurally subordinated to obligations of the subsidiaries of DPL.
Moreover, as a holding company, DPL owns assets primarily through its ownership interests in its subsidiaries. None of its subsidiaries is obligated under the notes and none of its subsidiaries will guarantee the notes. DPL’s principal asset is its ownership interest in DP&L. DP&L is a regulated public utility and is subject to regulation at both the state and federal level. At the state level, it is subject to regulation by the PUCO. At the federal level, it is subject to regulation by FERC. See “Business-Rate Regulation and Government Legislation” and “Business-Competition and Regulation” appearing elsewhere in this prospectus. Regulation by the PUCO and FERC includes regulation with respect to the change of control and transfer or ownership of utility property. Accordingly, if the trustee under the indenture or the holders of the notes institute proceedings against us with respect to the notes, the remedies available to them may be limited and may be subject to the approval by the PUCO and FERC.
Open Market Purchases
DPL may at any time purchase notes in the open market or otherwise at any price. Any such purchased notes will not be resold, except in compliance with applicable requirements or exemptions under the relevant securities laws.

Covenants
Except as otherwise set forth under “-Defeasance“Defeasance and Discharge” below, for so long as any notes remain outstanding or any amount remains unpaid on any of the notes, we will comply with the terms of the covenants set forth below.
Payment of Principal and Interest
We will duly and punctually pay the principal of and interest on the notes in accordance with the terms of the notes and the indenture.
Merger, Consolidation, Sale, Lease or Conveyance
The indenture provides that we may not consolidate or merge with or into (whether or not we are the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our properties or assets in one or more related transactions, to another Person or entity unless (i) we are the surviving entity or the entity or the Person formed by or surviving any such consolidation or merger (if other than us) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is an entity organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than us) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all of our obligations under the notes and the indenture pursuant to a supplemental indenture; and (iii) immediately after such transaction no Default or Event of Default exists.
50

Limitations on Liens
Neither we nor any Significant Subsidiary (as defined herein) may issue, assume or guarantee any Indebtedness secured by a Lien upon any property or assets (other than any cash or cash equivalents) of us or such Significant Subsidiary (including, for the avoidance of doubt, any common stock of DP&L), as applicable, without effectively providing that the outstanding notes (together with, if we so determine, any other indebtedness or obligation then existing or thereafter created ranking equally with the notes) will be secured equally and ratably with (or prior to) such Indebtedness so long as such Indebtedness is so secured.
The foregoing limitation on Liens will not, however, apply to:
(1)
(1) Liens in existence on the date of original issue of the notes;
(2) any Lien created or arising over any property which is acquired, constructed or created by us or any of our Significant Subsidiaries, but only if:
(a) such Lien secures only principal amounts (not exceeding the cost of such acquisition, construction or creation) raised for the purposes of such acquisition, construction or creation, together with any costs, expenses, interest and fees incurred in relation to that property or a guarantee given in respect of that property;
(b) such Lien is created or arises on or before 180 days after the completion of such acquisition, construction or creation; and
(c) such Lien is confined solely to the property so acquired, constructed or created;
(3) (a) rights of financial institutions to offset credit balances in connection with the operation of cash management programs established for our benefit and/or a Significant Subsidiary or in connection with the issuance of letters of credit for our benefit and/or a Significant Subsidiary;
(b) any Lien on accounts receivable securing our Indebtedness and/or a Significant Subsidiary incurred in connection with the financing of such accounts receivable;
(c) any Lien incurred or deposits made in the ordinary course of business, including, but not limited to, (1) any mechanic’s, materialmen’s, carrier’s, workmen’s, vendors’ and other like Liens and (2) any Liens securing amounts in connection with workers’ compensation, unemployment insurance and other types of social security;
(d) any Lien upon specific items of inventory or other goods of us and/or a Significant Subsidiary and the proceeds thereof securing obligations of us and/or a Significant Subsidiary in respect of bankers’ acceptances issued or created for the account of such person to facilitate the purchase, shipment or storage of such inventory or other goods;
(e) any Lien incurred or deposits made securing the performance of tenders, bids, leases, trade contracts (other than for borrowed money), statutory obligations, surety bonds, appeal bonds, government contracts, performance bonds, return-of-money bonds, letters of credit not securing borrowings and other obligations of like nature incurred in the ordinary course of business;
(f) any Lien created by us or a Significant Subsidiary under or in connection with or arising out of a Currency, Interest Rate or Commodity Agreement (as defined herein) or any transactions or arrangements entered into in connection with the hedging or management of risks relating to the electricity or natural gas distribution industry, including a right of set off or right over a margin call account or any form of cash or cash collateral or any similar arrangement for obligations incurred in respect of Currency, Interest Rate or Commodity Agreements;
(g) any Lien arising out of title retention or like provisions in connection with the purchase of goods and equipment in the ordinary course of business; and
(h) any Lien securing reimbursement obligations under letters of credit, guaranties and other forms of credit enhancement given in connection with the purchase of goods and equipment in the ordinary course of business;
(4) Liens in favor of us or a subsidiary of ours;
(5) (a) Liens on any property or assets acquired from an entity which is merged with or into us or a Significant Subsidiary or any Liens on the property or assets of any entity existing at the time such entity becomes a subsidiary of ours and, in either case, is not created in anticipation of the
51

transaction, unless the Lien was created to secure or provide for the payment of any part of the purchase price of that entity;
(b) any Lien on any property or assets existing at the time of its acquisition and which is not created in anticipation of such acquisition, unless the Lien was created to secure or provide for the payment of any part of the purchase price of such property or assets; and
(c) any Lien created or outstanding on or over any asset of any entity which becomes a Significant Subsidiary on or after the date of the issuance of the notes, where the Lien is created prior to the date on which that entity becomes a Significant Subsidiary;
(6) (a) Liens required by any contract, statute or regulation in order to permit us or a Significant Subsidiary to perform any contract or subcontract made by it with or at the request of a governmental entity or any governmental department, agency or instrumentality, or to secure partial, progress, advance or any other payments by us or a Significant Subsidiary to such governmental unit under the provisions of any contract, statute or regulation;
(b) any Lien securing industrial revenue, development, pollution control, solid waste disposal or similar bonds issued by or for our benefit or a Significant Subsidiary, provided that such industrial revenue, development, pollution control or similar bonds do not provide recourse generally to us and/or such Significant Subsidiary; and
(c) any Lien securing taxes or assessments or other applicable governmental charges or levies;
(7) any Lien which arises under any order of attachment, restraint or similar legal process arising in connection with court proceedings and any Lien which secures the reimbursement obligation for any bond obtained in connection with an appeal taken in any court proceeding, so long as the execution or other enforcement of such Lien arising under such legal process is effectively stayed and the claims secured by that Lien are being contested in good faith and, if appropriate, by appropriate legal proceedings, and any Lien in favor of a plaintiff or defendant in any action before a court or tribunal as security for costs and/or expenses;
(8) any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Liens referred to in the foregoing clauses, for amounts not exceeding the principal amount of the notes;
(2)any Lien created or arising over any property which is acquired, constructed or created by us or any of our Significant Subsidiaries, but only if:
(a)such Lien secures only principal amounts (not exceeding the cost of such acquisition, construction or creation) raised for the purposes of such acquisition, construction or creation, together with any costs, expenses, interest and fees incurred in relation to that property or a guarantee given in respect of that property;
(b)such Lien is created or arises on or before 180 days after the completion of such acquisition, construction or creation; and
(c)such Lien is confined solely to the property so acquired, constructed or created;
(3)(a) rights of financial institutions to offset credit balances in connection with the operation of cash management programs established for our benefit and/or a Significant Subsidiary or in connection with the issuance of letters of credit for our benefit and/or a Significant Subsidiary;
(b)any Lien on accounts receivable securing our Indebtedness and/or a Significant Subsidiary incurred in connection with the financing of such accounts receivable;
(c)any Lien incurred or deposits made in the ordinary course of business, including, but not limited to, (1) any mechanic’s, materialmen’s, carrier’s, workmen’s, vendors’ and other like Liens and (2) any Liens securing amounts in connection with workers’ compensation, unemployment insurance and other types of social security;

(d)any Lien upon specific items of inventory or other goods of us and/or a Significant Subsidiary and the proceeds thereof securing obligations of us and/or a Significant Subsidiary in respect of bankers’ acceptances issued or created for the account of such person to facilitate the purchase, shipment or storage of such inventory or other goods;
(e)any Lien incurred or deposits made securing the performance of tenders, bids, leases, trade contracts (other than for borrowed money), statutory obligations, surety bonds, appeal bonds, government contracts, performance bonds, return-of-money bonds, letters of credit not securing borrowings and other obligations of like nature incurred in the ordinary course of business;
(f)any Lien created by us or a Significant Subsidiary under or in connection with or arising out of a Currency, Interest Rate or Commodity Agreement (as defined herein) or any transactions or arrangements entered into in connection with the hedging or management of risks relating to the electricity or natural gas distribution industry, including a right of set off or right over a margin call account or any form of cash or cash collateral or any similar arrangement for obligations incurred in respect of Currency, Interest Rate or Commodity Agreements;
(g)any Lien arising out of title retention or like provisions in connection with the purchase of goods and equipment in the ordinary course of business; and
(h)any Lien securing reimbursement obligations under letters of credit, guaranties and other forms of credit enhancement given in connection with the purchase of goods and equipment in the ordinary course of business;
(4)Liens in favor of us or a subsidiary of ours;
(5)(a) Liens on any property or assets acquired from an entity which is merged with or into us or a Significant Subsidiary or any Liens on the property or assets of any entity existing at the time such entity becomes a subsidiary of ours and, in either case, is not created in anticipation of the transaction, unless the Lien was created to secure or provide for the payment of any part of the purchase price of that entity;
(b)any Lien on any property or assets existing at the time of its acquisition and which is not created in anticipation of such acquisition, unless the Lien was created to secure or provide for the payment of any part of the purchase price of such property or assets; and
(c)any Lien created or outstanding on or over any asset of any entity which becomes a Significant Subsidiary on or after the date of the issuance of the notes, where the Lien is created prior to the date on which that entity becomes a Significant Subsidiary;
(6)(a) Liens required by any contract, statute or regulation in order to permit us or a Significant Subsidiary to perform any contract or subcontract made by it with or at the request of a governmental entity or any governmental department, agency or instrumentality, or to secure partial, progress, advance or any other payments by us or a Significant Subsidiary to such governmental unit under the provisions of any contract, statute or regulation;
(b)any Lien securing industrial revenue, development, pollution control, solid waste disposal or similar bonds issued by or for our benefit or a Significant Subsidiary, provided that such industrial revenue, development, pollution control or similar bonds do not provide recourse generally to us and/or such Significant Subsidiary; and
(c)any Lien securing taxes or assessments or other applicable governmental charges or levies;
(7)any Lien which arises under any order of attachment, restraint or similar legal process arising in connection with court proceedings and any Lien which secures the reimbursement obligation for any bond obtained in connection with an appeal taken in any court proceeding, so long as the execution or other enforcement of such Lien arising under such legal process is effectively stayed and the claims secured by that Lien are being contested in good faith and, if appropriate, by appropriate legal proceedings, and any Lien in favor of a plaintiff or defendant in any action before a court or tribunal as security for costs and/or expenses;
(8)any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Liens referred to in the foregoing clauses, for amounts not exceeding the principal amount of the

Indebtedness secured by the Lien so extended, renewed or replaced, provided that such extension, renewal or replacement Lien is limited to all or a part of the same property or assets that were covered by the Lien extended, renewed or replaced (plus improvements on such property or assets);
(9)any Lien created in connection with Project Finance Debt;
(10)any Lien created by DP&L or its subsidiaries securing Indebtedness of DP&L or its subsidiaries;
(11)any Lien created in connection with the securitization of some or all of the assets of DP&L and the associated issuance of Indebtedness as authorized by applicable state or federal law in connection with the restructuring of jurisdictional electric or gas businesses;
(12)any Lien on stock created in connection with a mandatorily convertible or exchangeable stock or debt financing, provided that any such financing may not be secured by or otherwise involve the creation of a Lien on any capital stock of DP&L or any successor entity to DP&L; and
(13)any Lien under one or more credit facilities for Indebtedness in an aggregate principal amount outstanding at any time not to exceed 10% of Consolidated Net Assets.
(9) any Lien created in connection with Project Finance Debt;
(10) any Lien created by DP&L or its subsidiaries securing Indebtedness of DP&L or its subsidiaries;
(11) any Lien created in connection with the securitization of some or all of the assets of DP&L and the associated issuance of Indebtedness as authorized by applicable state or federal law in connection with the restructuring of jurisdictional electric or gas businesses;
(12) any Lien on stock created in connection with a mandatorily convertible or exchangeable stock or debt financing, provided that any such financing may not be secured by or otherwise involve the creation of a Lien on any capital stock of DP&L or any successor entity to DP&L; and
(13) any Lien under one or more credit facilities for Indebtedness in an aggregate principal amount outstanding at any time not to exceed 10% of Consolidated Net Assets.
Reports and Other Information
At any time that we are not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or do not otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the indenture requires us to deliver (which may be accomplished through the posting on the internet) to the trustee and to holders of the notes, without cost to any holder:
(1)within 90 days after the end of each fiscal year, audited financial statements; and
(2)within 45 days after the end of each of the first three fiscal quarters of each fiscal year, quarterly unaudited financial statements.
(1) within 90 days after the end of each fiscal year, audited financial statements; and
(2) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, quarterly unaudited financial statements.
52


Events of Default
An Event of Default with respect to the notes is defined in the indenture as being:
(1)default for 30 days in the payment of any interest on the notes;
(2)default in the payment of principal of or any premium on, the notes at maturity, upon redemption, upon required purchase, upon acceleration or otherwise;
(3)default in the performance, or breach, of any covenant or obligation in the indenture and continuance of the default or breach for a period of 30 days after written notice specifying the default is given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the notes;
(4)default in the payment of the principal of any bond, debenture, note or other evidence of indebtedness, in each case for money borrowed, issued by us, or in the payment of principal under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for Borrowed Money, of us or any Significant Subsidiary if such Indebtedness for Borrowed Money is not Project Finance Debt and provides for recourse generally to us or any Significant Subsidiary, which default for payment of principal is in an aggregate principal amount exceeding $40 million when such indebtedness becomes due and payable (whether at maturity, upon redemption or acceleration or otherwise), if such default shall continue unremedied or unwaived for more than 30 business days and the time for payment of such amount has not been expressly extended (until such time as such payment default is remedied, cured or waived);
(5)a court having jurisdiction enters a decree or order for:
(1) default for 30 days in the payment of any interest on the notes;
(2) default in the payment of principal of or any premium on, the notes at maturity, upon redemption, upon required purchase, upon acceleration or otherwise;
(3) default in the performance, or breach, of any covenant or obligation in the indenture and continuance of the default or breach for a period of 30 days after written notice specifying the default is given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the notes;
(4) default in the payment of the principal of any bond, debenture, note or other evidence of indebtedness, in each case for money borrowed, issued by us, or in the payment of principal under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for Borrowed Money, of us or any Significant Subsidiary if such Indebtedness for Borrowed Money is not Project Finance Debt and provides for recourse generally to us or any Significant Subsidiary, which default for payment of principal is in an aggregate principal amount exceeding $40 million when such indebtedness becomes due and payable (whether at maturity, upon redemption or acceleration or otherwise), if such default shall continue unremedied or unwaived for more than 30 business days and the time for payment of such amount has not been expressly extended (until such time as such payment default is remedied, cured or waived);
(5) a court having jurisdiction enters a decree or order for:
▪relief in respect of us or any of our Significant Subsidiaries in an involuntary case under any applicable bankruptcy, insolvency, or other similar law now or hereafter in effect; or

▪appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official of us or any of our Significant Subsidiaries or for all or substantially all of the property and assets of us or any of our Significant Subsidiaries; or
▪the winding up or liquidation of our affairs or any of our Significant Subsidiaries;
▪and, in either case, such decree or order remains unstayed and in effect for a period of 60 consecutive days; or
(6) we or any of our Significant Subsidiaries:
▪commences a voluntary case under any applicable bankruptcy, insolvency, or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law;
▪consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official of us or any of our Significant Subsidiaries or for all or substantially all of the property and assets of us or any of our Significant Subsidiaries; or
▪effects any general assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in clause (5) or (6) with respect to us) occurs and continues, then the trustee or the holders of at least 25% in principal amount of the notes then outstanding may, by written notice to us, and the trustee at the request of at least 25% in principal amount of the notes then outstanding will, declare the principal, premium, if any, and accrued interest on the outstanding notes to be immediately due and payable. Upon a declaration of acceleration, the principal, premium, if any, and accrued interest shall be immediately due and payable.
If an Event of Default specified in clause (5) or (6) above occurs with respect to us, the principal, premium, if any, and accrued interest on the notes shall be immediately due and payable, without any declaration or other act on the part of the trustee or any holder.
The holders of at least a majority in principal amount of the notes may, by written notice to us and to the trustee, waive all past defaults with respect to the notes and rescind and annul a declaration of acceleration with respect to the notes and its consequences if:
53

•all existing Events of Default applicable to the notes other than the nonpayment of the principal, premium, if any, and interest on the notes that have become due solely by that declaration of acceleration, have been cured or waived; and
•the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.
No holder of the notes will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture, or for the appointment of a receiver or trustee, or for any other remedy under the indenture, unless:
•such holder has previously given written notice to the trustee of a continuing Event of Default with respect to the notes;
•the holders of not less than 25% in principal amount of the notes shall have made written request to a responsible officer of the trustee to institute proceedings in respect of such Event of Default in its own name as trustee;
•such holder or holders have offered the trustee indemnity satisfactory to the trustee against the costs, expenses and liabilities to be incurred in compliance with such request;
•the trustee, for 60 days after its receipt of such notice, request and offer of indemnity, has failed to institute any such proceeding; and
•no direction inconsistent with such written request has been given to the trustee during such 60-day period by the holders of a majority in principal amount of the outstanding notes.
However, these limitations do not apply to the right of any holder of a note to receive payment of the principal, premium, if any, or interest on, that note or to bring suit for the enforcement of any payment, on or after the due date expressed in the notes, which right shall not be impaired or affected without the consent of the holder.

The indenture requires that certain of our officers certify, on or before a date not more than 120 days after the end of each fiscal year, that to the best of those officers’ knowledge, we have fulfilled all our obligations under the indenture. We are also obligated to notify the trustee of any default or defaults in the performance of any covenants or agreements under the indenture provided, however, that a failure by us to deliver such notice of a default shall not constitute a default under the indenture, if we have remedied such default within any applicable cure period.
No Liability of Directors, Officers, Employees, Incorporators and Stockholders
No director, officer, employee, incorporator, member or stockholder of us, as such, will have any liability for any of our obligations under the notes or the indenture or for any claim based on, in respect of, or by reason of, such obligations. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.
Amendments and Waivers
Amendments Without Consent of Holders. We and the trustee may amend or supplement the indenture or the notes without notice to or the consent of any holder:
(1)to cure any ambiguity, defect or inconsistency in the indenture or the notes;
(2)to comply with “-Merger, Consolidation, Sale, Lease or Conveyance;”
(3)to comply with any requirements of the SEC in connection with the qualification of the indenture under the Trust Indenture Act;
(4)to evidence and provide for the acceptance of appointment hereunder by a successor trustee;
(5)to provide for any guarantee of the notes, to secure the notes or to confirm and evidence the release, termination or discharge of any guarantee of or lien securing the notes when such release, termination or discharge is permitted by the indenture;
(6)to provide for or confirm the issuance of additional notes; or
(7)to make any other change that does not materially and adversely affect the rights of any holder.
(1) to cure any ambiguity, defect or inconsistency in the indenture or the notes;
(2) to comply with “—Merger, Consolidation, Sale, Lease or Conveyance;”
(3) to comply with any requirements of the SEC in connection with the qualification of the indenture under the Trust Indenture Act;
(4) to evidence and provide for the acceptance of appointment hereunder by a successor trustee;
(5) to provide for any guarantee of the notes, to secure the notes or to confirm and evidence the release, termination or discharge of any guarantee of or lien securing the notes when such release, termination or discharge is permitted by the indenture;
(6) to provide for or confirm the issuance of additional notes; or
(7) to make any other change that does not materially and adversely affect the rights of any holder.
Amendments With Consent of Holders. (a) Except as otherwise provided in “-Events“—Events of Default” or paragraph (b), we and the trustee may amend the indenture with the written consent of the holders of a majority in principal amount of the outstanding notes and the holders of a majority in principal amount of the outstanding notes may waive future compliance by us with any provision of the indenture with respect to the notes.
(b)Notwithstanding the provisions of paragraph (a), without the consent of each holder of notes, an amendment or waiver may not:
(1)reduce the principal amount of or change the stated maturity of any installment of principal of the notes;
(2)reduce the rate of or change the stated maturity of any interest payment on the notes;
(3)reduce the amount payable upon the redemption of the notes, in respect of an optional redemption, change the times at which the notes may be redeemed or, once notice of redemption has been given, the time at which they must thereupon be redeemed;
(4)make the notes payable in money other than that stated in the notes;
(5)impair the right of any holder of notes to receive any principal payment or interest payment on such holder’s notes, on or after the stated maturity thereof, or to institute suit for the enforcement of any such payment;
(6)make any change in the percentage of the principal amount of the notes required for amendments or waivers; or
(7)
54

(b) Notwithstanding the provisions of paragraph (a), without the consent of each holder of notes, an amendment or waiver may not:
(1) reduce the principal amount of or change the stated maturity of any installment of principal of the notes;
(2) reduce the rate of or change the stated maturity of any interest payment on the notes;
(3) reduce the amount payable upon the redemption of the notes, in respect of an optional redemption, change the times at which the notes may be redeemed or, once notice of redemption has been given, the time at which they must thereupon be redeemed;
(4) make the notes payable in money other than that stated in the notes;
(5) impair the right of any holder of notes to receive any principal payment or interest payment on such holder’s notes, on or after the stated maturity thereof, or to institute suit for the enforcement of any such payment;
(6) make any change in the percentage of the principal amount of the notes required for amendments or waivers; or
(7) modify or change any provision of the indenture affecting the ranking of the notes in a manner adverse to the holders of the notes.

It is not necessary for holders to approve the particular form of any proposed amendment, supplement or waiver, but is sufficient if their consent approves the substance thereof.
Neither we nor any of our Subsidiaries or Affiliates may, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid or agreed to be paid to all holders of the notes that consent, waive or agree to amend such term or provision within the time period set forth in the solicitation documents relating to the consent, waiver or amendment.
Defeasance and Discharge
The indenture provides that we are deemed to have paid and will be discharged from all obligations in respect of the notes on the 123rd day after the deposit referred to below has been made, and that the provisions of the indenture will no longer be in effect with respect to the notes (except for, among other matters, certain obligations to register the transfer or exchange of the notes, to replace stolen, lost or mutilated notes, to maintain paying agencies and to hold monies for payment in trust) if, among other things,
(1)we have deposited with the trustee, in trust, money and/or U.S. Government Obligations (as defined herein) that, through the payment of interest and principal in respect thereof, will provide money in an amount sufficient to pay the principal, premium, if any, and accrued interest on the notes, on the due date thereof or earlier redemption (irrevocably provided for under arrangements satisfactory to the trustee), as the case may be, in accordance with the terms of the indenture;
(2)we have delivered to the trustee either:
(1) we have deposited with the trustee, in trust, money and/or U.S. Government Obligations (as defined herein) that, through the payment of interest and principal in respect thereof, will provide money in an amount sufficient to pay the principal, premium, if any, and accrued interest on the notes, on the due date thereof or earlier redemption (irrevocably provided for under arrangements satisfactory to the trustee), as the case may be, in accordance with the terms of the indenture;
(2) we have delivered to the trustee either:
▪an opinion of counsel to the effect that beneficial owners of notes will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of our option under this “Defeasance and Discharge” provision and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if the deposit, defeasance and discharge had not occurred, which opinion of counsel must be based upon a ruling of the Internal Revenue Service to the same effect unless there has been a change in applicable federal income tax law or related treasury regulations after the date of the indenture, or
▪a ruling directed to the trustee received from the Internal Revenue Service to the same effect as the aforementioned opinion of counsel;
(3)we have delivered to the trustee an opinion of counsel to the effect that the creation of the defeasance trust does not violate the Investment Company Act of 1940 and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the U.S. Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law;
(4)immediately after giving effect to that deposit on a pro forma basis, no Event of Default has occurred and is continuing on the date of the deposit or during the period ending on the 123rd day after the date of the deposit, and the deposit will not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which we are a party or by which we are bound; and
(5)if at that time any notes are listed on a national securities exchange, we have delivered to the trustee an opinion of counsel to the effect that the notes will not be delisted as a result of a deposit, defeasance and discharge.
(3) we have delivered to the trustee an opinion of counsel to the effect that the creation of the defeasance trust does not violate the Investment Company Act of 1940 and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the U.S. Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law;
(4) immediately after giving effect to that deposit on a pro forma basis, no Event of Default has occurred and is continuing on the date of the deposit or during the period ending on the 123rd day after the date of the
55

deposit, and the deposit will not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which we are a party or by which we are bound; and
(5) if at that time any notes are listed on a national securities exchange, we have delivered to the trustee an opinion of counsel to the effect that the notes will not be delisted as a result of a deposit, defeasance and discharge.
As more fully described in the indenture, the indenture also provides for defeasance of certain covenants.
Notices
For so long as notes in global form are outstanding, notices to be given to holders of the notes will be given to the depositary, in accordance with its applicable policies as in effect from time to time. If notes are issued in definitive form, notices to be given to holders of the notes will be deemed to have been given upon the mailing by first class mail, postage prepaid, of such notices to holders of the notes at their registered addresses as they appear in the register.
Notices will be deemed to have been given on the date of mailing or of publication as aforesaid or, if published on different dates, on the date of the first such publication.

Concerning the Trustee
U.S. Bank National Association acts as the trustee under the indenture.
Except during the continuance of an Event of Default, the trustee need perform only those duties that are specifically set forth in the indenture and no others, and no implied covenants or obligations will be read into the indenture against the trustee. In case an Event of Default has occurred and is continuing, the trustee shall exercise those rights and powers vested in it by the indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. No provision of the indenture requires the trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties or in the exercise of its rights or powers thereunder. The trustee shall be under no obligation to exercise any of the rights or powers vested in it by the indenture at the request or direction of any of the holders pursuant to the indenture, unless such holders shall have offered to the trustee security or indemnity satisfactory to the trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
The indenture and provisions of the Trust Indenture Act incorporated by reference therein contain limitations on the rights of the trustee, should it become a creditor of us, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee is permitted to engage in other transactions with us and our Affiliates; provided that if it acquires any conflicting interest it must either eliminate the conflict within 90 days, apply to the SEC for permission to continue or resign.
Form, Denomination and Registration of Notes
Except as set forth below, the notes will be issued in registered, global form in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The notes will be issued at the closing of this offering only against payment in immediately available funds.
The Global Notes will be deposited upon issuance with the trustee as custodian for DTC and registered in the name of DTC or its nominee, Cede & Co., in each case for credit to an account of a direct or indirect participant in DTC as described below. Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may be exchanged for Notes in certificated form. See “-Exchange“—Exchange of Global Notes for Certificated Notes.”
In addition, transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream), which may change from time to time.
Depository Procedures
The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We and the trustee take no responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss these matters.
56

DTC has advised us that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
(1)
(1) upon deposit of the Global Notes, DTC will credit the accounts of Participants with portions of the principal amount of the Global Notes; and

(2) ownership of these interests in the Global Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes).
(2)ownership of these interests in the Global Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes).
All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems.
The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such persons will be limited to that extent. Because DTC can act only on behalf of the Participants, which in turn act on behalf of the Indirect Participants, the ability of a person having beneficial interests in a Global Note to pledge such interests to persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.
Except as described below, owners of interests in the Global Notes will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or “holders” thereof under the indenture for any purpose.
Payments in respect of the principal of, and interest and premium, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the indenture.
Under the terms of the indenture, we and the trustee will treat the persons in whose names the notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payments and for all other purposes. Consequently, neither we, the trustee, nor any agent of ours or the trustee’s has or will have any responsibility or liability for:
(1)any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or
(2)any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.
(1) any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.
DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of the notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the trustee or us. Neither we nor the trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the notes, and we and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes. Transfers between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.
57

Subject to compliance with any transfer restrictions applicable to the notes described herein, crossmarket transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.

DTC has advised us that it will take any action permitted to be taken by a holder of the notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Notes for legended notes in certificated form, and to distribute such notes to its Participants.
Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither we nor the trustee nor any of our or their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for definitive notes in registered certificated form (“Certificated Notes”) if:
(1)DTC (a) notifies us that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act, and in each case we fail to appoint a successor depositary within 90 days of that notice or becoming aware that DTC is no longer so registered or willing or able to act as a depositary;
(2)we determine not to have the Notes represented by a Global Note and provide written notice thereof to the trustee; or
(3)there shall have occurred and be continuing a Default or Event of Default with respect to the notes and DTC requests such exchange.
(1) DTC (a) notifies us that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act, and in each case we fail to appoint a successor depositary within 90 days of that notice or becoming aware that DTC is no longer so registered or willing or able to act as a depositary;
(2) we determine not to have the Notes represented by a Global Note and provide written notice thereof to the trustee; or
(3) there shall have occurred and be continuing a Default or Event of Default with respect to the notes and DTC requests such exchange.
In all cases, certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be in registered form, registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).
Governing Law
The indenture and the notes are governed by, and construed in accordance with, the laws of the State of New York.
Certain Definitions
Set forth below are certain defined terms used in the indenture. We refer you to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used in this section of the prospectus for which no definition is provided.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
“Capitalized Lease Obligations” means all lease obligations of us and our Subsidiaries which, under GAAP, are or will be required to be capitalized, in each case taken at the amount of the lease obligation accounted for as indebtedness in conformity with those principles.
58

“Consolidated Net Assets” means the aggregate amount of assets (less reserves and other deductible items) after deducting current liabilities, as shown on the consolidated balance sheet of the Company and its subsidiaries contained in its latest audited financial statements and prepared in accordance with GAAP.
“Currency, Interest Rate or Commodity Agreements” means an agreement or transaction involving any currency, interest rate or energy price or volumetric swap, cap or collar arrangement, forward exchange transaction, option, warrant, forward rate agreement, futures contract or other derivative instrument of any kind for the hedging

or management of foreign exchange, interest rate or energy price or volumetric risks, it being understood, for purposes of this definition, that the term “energy” will include, without limitation, coal, gas, oil and electricity.
“Default” means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.
“DTC” means The Depository Trust Company.
“Excluded Subsidiary” means any subsidiary of us:
(1)in respect of which neither we nor any subsidiary of ours (other than another Excluded Subsidiary) has undertaken any legal obligation to give any guarantee for the benefit of the holders of any Indebtedness for Borrowed Money (other than to another member of the Group) other than in respect of any statutory obligation and the subsidiaries of which are all Excluded Subsidiaries; and
(2)which has been designated as such by us by written notice to the trustee; provided that we may give written notice to the trustee at any time that any Excluded Subsidiary is no longer an Excluded Subsidiary whereupon it shall cease to be an Excluded Subsidiary.
(1) in respect of which neither we nor any subsidiary of ours (other than another Excluded Subsidiary) has undertaken any legal obligation to give any guarantee for the benefit of the holders of any Indebtedness for Borrowed Money (other than to another member of the Group) other than in respect of any statutory obligation and the subsidiaries of which are all Excluded Subsidiaries; and
(2) which has been designated as such by us by written notice to the trustee; provided that we may give written notice to the trustee at any time that any Excluded Subsidiary is no longer an Excluded Subsidiary whereupon it shall cease to be an Excluded Subsidiary.
“Fitch” means Fitch Ratings Inc.
“GAAP” means generally accepted accounting principles in the United States as in effect from time to time.
“Group” means DPL and its subsidiaries and “member of the Group” shall be construed accordingly.
“Indebtedness” means, with respect to us or any of our subsidiaries at any date of determination (without duplication):
(1)all Indebtedness for Borrowed Money (excluding any credit which is available but undrawn);
(2)all obligations in respect of letters of credit (including reimbursement obligations with respect to letters of credit);
(3)all obligations to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title to the property or the completion of such services, except trade payables;
(4)all Capitalized Lease Obligations;
(5)all indebtedness of other persons secured by a mortgage, charge, lien, pledge or other security interest on any asset of us or any of our subsidiaries, whether or not such indebtedness is assumed; provided that the amount of such Indebtedness must be the lesser of: (a) the fair market value of such asset at such date of determination and (b) the amount of the secured indebtedness;
(6)all indebtedness of other persons of the types specified in the preceding clauses (1) through (5), to the extent such indebtedness is guaranteed by us or any of our subsidiaries; and
(7)to the extent not otherwise included in this definition, net obligations under Currency, Interest Rate or Commodity Agreements.
(1) all Indebtedness for Borrowed Money (excluding any credit which is available but undrawn);
(2) all obligations in respect of letters of credit (including reimbursement obligations with respect to letters of credit);
(3) all obligations to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title to the property or the completion of such services, except trade payables;
(4) all Capitalized Lease Obligations;
(5) all indebtedness of other persons secured by a mortgage, charge, lien, pledge or other security interest on any asset of us or any of our subsidiaries, whether or not such indebtedness is assumed; provided that the amount of such Indebtedness must be the lesser of: (a) the fair market value of such asset at such date of determination and (b) the amount of the secured indebtedness;
(6) all indebtedness of other persons of the types specified in the preceding clauses (1) through (5), to the extent such indebtedness is guaranteed by us or any of our subsidiaries; and
(7) to the extent not otherwise included in this definition, net obligations under Currency, Interest Rate or Commodity Agreements.
The amount of Indebtedness at any date will be the outstanding balance at such date of all unconditional obligations as described above and, upon the occurrence of the contingency giving rise to the obligation, the maximum liability of any contingent obligations of the types specified in the preceding clauses (1) through (7) at such date; provided that the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP.
“Indebtedness For Borrowed Money” means any indebtedness (whether being principal, premium, interest or other amounts) for:
•money borrowed;
59


•payment obligations under or in respect of any trade acceptance or trade acceptance credit; or
•any notes, bonds, loan stock or other debt securities offered, issued or distributed whether by way of public offer, private placement, acquisition consideration or otherwise and whether issued for cash or in whole or in part for a consideration other than cash;
provided, however, in each case, that such term will exclude:
•any indebtedness relating to any accounts receivable securitizations;
•any Indebtedness of the type permitted to be secured by Liens pursuant to clause (12) under the caption “-Limitations“—Limitations on Liens” described above; and
•any Preferred Securities which are issued and outstanding on the date of original issue of the notes or any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any such existing Preferred Securities, for amounts not exceeding the principal amount or liquidation preference of the Preferred Securities so extended, renewed or replaced.
“Independent Director” shall mean a director of us who, if we are listed on the New York Stock Exchange, meets the standards for independence set forth in the New York Stock Exchange Listing Standards, or if such standards are not applicable to us, who shall at no time be, or have been, a director, officer, stockholder, associate, customer or supplier of, be employed by, or hold or held at any time (directly or indirectly) any beneficial economic interest in us or our Parent or any subsidiary or Affiliate of Parent (excluding such director’s position as such Independent Director of us and any compensation received by such director in such capacity).
“Lien” means any mortgage, lien, pledge, security interest or other encumbrance; provided, however, that the term “Lien” does not mean any easements, rights-of-way, restrictions and other similar encumbrances and encumbrances consisting of zoning restrictions, leases, subleases, restrictions on the use of property or defects in title.
“Moody’s” means Moody’s Investors Service, Inc.
“Parent” shall mean any entity which owns directly or indirectly, 10% or more of the outstanding common shares of us.
“Permitted Debt” means Indebtedness for Borrowed Money issued in connection with a contract or contracts to purchase from us common stock of us, Parent or any Affiliate of Parent (which common stock was not held as an asset of us) for an aggregate amount equal to the aggregate principal amount of such Indebtedness for Borrowed Money.
“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Preferred Securities” means, without duplication, any trust preferred or preferred securities or related debt or guaranties of us or any of our subsidiaries.
“Project Finance Debt” means:
•any Indebtedness to finance or refinance the ownership, acquisition, development, design, engineering, procurement, construction, servicing, management and/or operation of any project or asset which is incurred by an Excluded Subsidiary; and
•any Indebtedness to finance or refinance the ownership, acquisition, development, design, engineering, procurement, construction, servicing, management and/or operation of any project or asset in respect of which the person or persons to whom any such Indebtedness is or may be owed by the relevant borrower (whether or not a member of the Group) has or have no recourse whatsoever to any member of the Group (other than an Excluded Subsidiary) for the repayment of that Indebtedness other than: (i) recourse to such member of the Group for amounts limited to the cash flow or net cash flow (other than historic cash flow or historic net cash flow) from, or ownership interests or other investments in, such project or asset; and/or (ii) recourse to such member of the Group for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any encumbrance given by such member of the Group over such project or asset or the income, cash flow or other proceeds deriving from the project (or given by any shareholder or the like, or other investor in, the borrower or in the owner of such project or asset over its

shares or the like in the capital of, or other investment in, the borrower or in the owner of such project or asset) to secure such Indebtedness, provided that the extent of such recourse to such member of the Group is limited solely to the amount of any recoveries made on any such enforcement; and/or (iii) recourse
60

to such borrower generally, or directly or indirectly to a member of the Group, under any form of assurance, indemnity, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for breach of an obligation (not being a payment obligation or an obligation to procure payment by another or an indemnity in respect of a payment obligation, or any obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the person against which such recourse is available.
“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.
“Significant Subsidiary” means, at any particular time, any subsidiary of ours whose gross assets or gross revenues (having regard to our direct and/or indirect beneficial interest in the shares, or the like, of that subsidiary) represent at least 25% of the consolidated gross assets or, as the case may be, consolidated gross revenues of us.
“Subsidiary” means, with respect to any person, any corporation, association, partnership, limited liability company or other business entity of which 50% or more of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees is at the time owned, directly or indirectly, by (1) such person, (2) such person and one or more subsidiaries of such person or (3) one or more subsidiaries of such person.
“U.S. Government Obligation” means any:
(1)security which is: (a) a direct obligation of the United States for the payment of which the full faith and credit of the United States is pledged or (b) an obligation of a person controlled or supervised by and acting as an agency or instrumentality of the United States the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, which, in the case of clause (a) or (b), is not callable or redeemable at the option of the issuer of the obligation, and
(1) security which is: (a) a direct obligation of the United States for the payment of which the full faith and credit of the United States is pledged or (b) an obligation of a person controlled or supervised by and acting as an agency or instrumentality of the United States the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, which, in the case of clause (a) or (b), is not callable or redeemable at the option of the issuer of the obligation, and
(2) depositary receipt issued by a bank (as defined in the Securities Act) as custodian with respect to any security specified in clause (1) above and held by such bank for the account of the holder of such depositary receipt or with respect to any specific payment of principal of or interest on any such security held by any such bank, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depositary receipt.


THE EXCHANGE OFFER

General
We hereby offer to exchange a like principal amount of new notes for any or all outstanding old notes on the terms and subject to the conditions set forth in this prospectus. We often refer to this offer as the “exchange offer.” You may tender some or all of your outstanding old notes pursuant to this exchange offer. As of the date of this prospectus, $400,000,000$415,000,000 aggregate principal amount of the old notes are outstanding. Our obligation to accept old notes for exchange pursuant to the exchange offer is subject to certain conditions set forth hereunder.
Purpose and Effect of the Exchange Offer
In connection with the offering of the old notes, which was consummated on April 17, 2019,June 19, 2020, we entered into a registration rights agreement with the initial purchasers of the old notes, under which we agreed:
(1) to use our reasonable best efforts to cause to be filed a registration statement with respect to an offer to exchange the old notes for a new issue of securities, with terms substantially the same as of the old notes but registered under the Securities Act;
(2) to use our reasonable best efforts to cause the registration statement to be declared effective by the SEC and remain effective until the closing of the exchange offer; and
(3) to use our reasonable best efforts to consummate the exchange offer and issue the new notes within 390 days after the closing of the old notes offering.
The registration rights agreement provides that, if (a) we do not consummate the exchange offer registration on or prior to the date that is 390 days following the issuance of the old notes (the “exchange offer closing deadline”) or (b) we have not caused to become effective a shelf registration statement by the 90th day after such obligation arises (the “shelf effectiveness deadline”) (which in no event, however, shall be earlier than the exchange offer
61

closing deadline), the interest rate for the notes will increase by a rate of 0.25% per annum from the exchange offer closing deadline or the shelf effectiveness deadline, as applicable, during the first 90 day period, and shall further increase by 0.25% per annum beginning on the 91st day following either of the foregoing, until the exchange offer is completed, in the case of an exchange offer, or the shelf registration statement is declared effective. The additional interest rate for the old notes will not at any time exceed 0.50% per annum notwithstanding our failure to meet more than one of these requirements.
The exchange offer is not being made to, nor will we accept tenders for exchange from, holders of old notes in any jurisdiction in which the exchange offer or acceptance of the exchange offer would violate the securities or blue sky laws of that jurisdiction. Furthermore, each holder of old notes that wishes to exchange their old notes for new notes in this exchange offer will be required to make certain representations as set forth herein.
Terms of the Exchange Offer; Period for Tendering Old Notes
This prospectus contains the terms and conditions of the exchange offer. Upon the terms and subject to the conditions included in this prospectus, we will accept for exchange old notes which are properly tendered on or prior to the expiration date, unless you have previously withdrawn them.
•When you tender to us old notes as provided below, our acceptance of the old notes will constitute a binding agreement between you and us upon the terms and subject to the conditions in this prospectus.
•For each $2,000 principal amount of old notes (and $1,000 principal amount of old notes in excess thereof) surrendered to us in the exchange offer, we will give you $2,000 principal amount of new notes (and $1,000 principal amount of new notes in excess thereof). Outstanding notes may only be tendered in denominations of $2,000 and integral multiples of $1,000 in excess thereof.
•We will keep the exchange offer open for not less than 20 business days, or longer if required by applicable law, after the date that we first mail notice of the exchange offer to the holders of the old notes. We are sending this prospectus on or about the date of this prospectus to all of the registered holders of old notes at their addresses listed in the trustee’s security register with respect to the old notes.
•The exchange offer expires at 5:00 P.M., New York City time, on ; provided, however, that we, in our sole discretion, may extend the period of time for which the exchange offer is open. The term

“expiration “expiration date” means or, if extended by us, the latest time and date to which the exchange offer is extended.
•As of the date of this prospectus, $400,000,000$415,000,000 aggregate principal amount of the old notes were outstanding. The exchange offer is not conditioned upon any minimum principal amount of old notes being tendered.
•Our obligation to accept old notes for exchange in the exchange offer is subject to the conditions that we describe in the section called “Conditions to the Exchange Offer” below.
•We expressly reserve the right, at any time, to extend the period of time during which the exchange offer is open, and thereby delay acceptance of any old notes, by giving oral or written notice of an extension to the exchange agent and notice of that extension to the holders as described below. During any extension, all old notes previously tendered will remain subject to the exchange offer unless withdrawal rights are exercised. Any old notes not accepted for exchange for any reason will be returned without expense to the tendering holder promptly following the expiration or termination of the exchange offer.
•We expressly reserve the right to amend or terminate the exchange offer, and not to accept for exchange any old notes that we have not yet accepted for exchange, if any of the conditions of the exchange offer specified below under “Conditions to the Exchange Offer” are not satisfied. In the event of a material change in the exchange offer, including the waiver of a material condition, we will extend the offer period if necessary so that at least five business days remain in the exchange offer following notice of the material change.
•We will give oral or written notice of any extension, amendment, termination or non-acceptance described above to holders of the old notes promptly. If we extend the expiration date, we will give notice by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date. Without limiting the manner in which we may choose to make any public announcement and subject to applicable law, we will have no obligation to publish, advertise or otherwise communicate any public announcement other than by issuing a release to Dow Jones and Company News Agency and/or other similar news service.
62

•Holders of old notes do not have any appraisal or dissenters’ rights in connection with the exchange offer.
•Old notes which are not tendered for exchange or are tendered but not accepted in connection with the exchange offer will remain outstanding and be entitled to the benefits of the indenture, but will not be entitled to any further registration rights under the registration rights agreement.
•We intend to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC thereunder.
Important rules concerning the exchange offer
You should note that:
•All questions as to the validity, form, eligibility, time of receipt and acceptance of old notes tendered for exchange will be determined by us in our sole discretion, which determination shall be final and binding.
•We reserve the absolute right to reject any and all tenders of any particular old notes not properly tendered or to not accept any particular old notes which acceptance might, in our judgment or the judgment of our counsel, be unlawful.
•We also reserve the absolute right to waive any defects or irregularities or conditions of the exchange offer as to any particular old notes either before or after the expiration date, including the right to waive the ineligibility of any holder who seeks to tender old notes in the exchange offer. Unless we agree to waive any defect or irregularity in connection with the tender of old notes for exchange, you must cure any defect or irregularity within any reasonable period of time as we shall determine.
•Our interpretation of the terms and conditions of the exchange offer as to any particular old notes either before or after the expiration date shall be final and binding on all parties.
•Neither DPL Inc., the exchange agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of old notes for exchange, nor shall any of them incur any liability for failure to give any notification.

Procedures for Tendering Old Notes
What to submit and how
If you, as the registered holder of an old note, wish to tender your old notes for exchange in the exchange offer, you must contact a DTC participant to complete the book-entry transfer procedures described below on or prior to the expiration date.
In addition,
(1) a timely confirmation of a book-entry transfer of old notes, if such procedure is available, into the exchange agent’s account at DTC using the procedure for book-entry transfer described below, must be received by the exchange agent prior to the expiration date, or
(2) you must comply with the guaranteed delivery procedures described below.
The method of delivery of notices of guaranteed delivery is at your election and risk. In all cases, sufficient time should be allowed to assure timely delivery.
How to sign your documents
Signatures on a notice of withdrawal, as the case may be, must be guaranteed unless the old notes being surrendered for exchange are tendered for the account of an eligible institution.
If signatures on a notice of withdrawal are required to be guaranteed, the guarantees must be by any of the following eligible institutions:
•a firm which is a member of a registered national securities exchange or a member of the Financial Industry Regulatory Authority, Inc. or
•a commercial bank or trust company having an office or correspondent in the United States.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Once all of the conditions to the exchange offer are satisfied or waived, we will accept, promptly after the expiration date, all old notes properly tendered and will issue the new notes promptly after the expiration of the exchange offer.
63

See “Conditions to the Exchange Offer” below. For purposes of the exchange offer, our giving of oral or written notice of our acceptance to the exchange agent will be considered our acceptance of the exchange offer.
In all cases, we will issue new notes in exchange for old notes that are accepted for exchange only after timely receipt by the exchange agent of a timely book-entry confirmation of transfer of old notes into the exchange agent’s account at DTC using the book-entry transfer procedures described below.
If we do not accept any tendered old notes for any reason included in the terms and conditions of the exchange offer, non-exchanged old notes will be credited to an account maintained with DTC promptly following the expiration or termination of the exchange offer.
Book-Entry Transfer
The exchange agent will make a request to establish an account with respect to the old notes at DTC for purposes of the exchange offer promptly after the date of this prospectus. Any financial institution that is a participant in DTC’s systems may make book-entry delivery of old notes by causing DTC to transfer old notes into the exchange agent’s account in accordance with DTC’s Automated Tender Offer Program procedures for transfer. However, the exchange for the old notes so tendered will only be made after timely confirmation of book-entry transfer of old notes into the exchange agent’s account, and timely receipt by the exchange agent of an agent’s message, transmitted by DTC and received by the exchange agent and forming a part of a book-entry confirmation. The agent’s message must state that DTC has received an express acknowledgment from the participant tendering old notes that are the subject of that book-entry confirmation that the participant has received and agrees to be bound by the terms of the prospectus, and that we may enforce the agreement against that participant. we may enforce the agreement against that participant.

Although delivery of old notes may be effected through book-entry transfer into the exchange agent’s account at DTC, an agent’s message, properly completed and duly executed, with any required signature guarantees, must in any case be delivered to and received by the exchange agent at its address listed under “¯Exchange“Exchange Agent” on or prior to the expiration date.
If your old notes are held through DTC, you must complete a form called “instructions to registered holder and/or book-entry participant,” which will instruct the DTC participant through whom you hold your securities of your intention to tender your old notes or not tender your old notes. Please note that delivery of documents to DTC in accordance with its procedures does not constitute delivery to the exchange agent and we will not be able to accept your tender of notes until the exchange agent receives an agent’s message and a book-entry confirmation from DTC with respect to your notes. A copy of that form is available from the exchange agent.
Guaranteed Delivery Procedures
If you are a registered holder of old notes and you want to tender your old notes but your old notes are not immediately available, or time will not permit an agent’s message or your old notes to reach the exchange agent before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if:
•the tender is made through an eligible institution,
•prior to the expiration date, the exchange agent receives, by facsimile transmission, mail or hand delivery, from that eligible institution a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided by us, stating:
•the name and address of the holder of old notes;
•the amount of old notes tendered;
•the tender is being made by delivering that notice; and
•guaranteeing that within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, a book-entry confirmation will be deposited by that eligible institution with the exchange agent, and
•a book-entry confirmation is received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery.
Withdrawal Rights
You can withdraw your tender of old notes at any time on or prior to the expiration date.
For a withdrawal to be effective, a written notice of withdrawal must be received by the exchange agent at one of the addresses listed below under “Exchange Agent.” Any notice of withdrawal must specify:
64

•the name of the person having tendered the old notes to be withdrawn
•the old notes to be withdrawn
•the principal amount of the old notes to be withdrawn; and
•any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn old notes and otherwise comply with the procedures of that facility.
Please note that all questions as to the validity, form, eligibility and time of receipt of notices of withdrawal will be determined by us, and our determination shall be final and binding on all parties. Any old notes so withdrawn will be considered not to have been validly tendered for exchange for purposes of the exchange offer. If you have properly withdrawn old notes and wish to re-tender them, you may do so by following one of the procedures described under “Procedures for Tendering Old Notes” above at any time on or prior to the expiration date.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the exchange offer, we will not be required to accept for exchange, or to issue new notes in exchange for, any old notes and may terminate or amend the exchange offer, if at any time before the expiration of the exchange offer:

•that acceptance or issuance would violate applicable law or any interpretation of the staff of the SEC; or
•any holder of the old bonds exchanged in the exchange offer has not represented that all new notes to be received by it shall be acquired in the ordinary course of its business and that at the time of the consummation of the exchange offer it shall have no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the new notes and shall have made such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to render the use of Form S-4 or other appropriate form under the Securities Act available.
ThatThe conditions described above are for our sole benefit and may be asserted by us regardless of the circumstances giving rise to that condition. Our failure at any time to exercise the foregoing rights shall not be considered a waiver by us of that right. Our rights described in the prior paragraph are ongoing rights which we may assert at any time and from time to time prior to the expiration of the exchange offer.
In addition, we will not accept for exchange any old notes tendered, and no new notes will be issued in exchange for any old notes, if at that time any stop order shall be threatened or in effect with respect to the exchange offer to which this prospectus relates or the qualification of the indenture under the Trust Indenture Act.
Exchange Agent
U.S. Bank National Association has been appointed as the exchange agent for the exchange offer. Questions and requests for assistance, requests for additional copies of this prospectus and requests for notices of guaranteed delivery should be directed to the exchange agent, addressed as follows:
Deliver To:
By Registered, Regular or Certified Mail or Overnight Delivery:
U.S. Bank National Association
Attn: Corporate Trust-Specialized Finance
111 Fillmore Avenue E
St. Paul, Minnesota 55107
Facsimile Transmissions:
651-466-7367
To Confirm by Email:
cts.specfinance@usbank.com
To Confirm by Telephone or for Information:
800-934-6802
Delivery to an address other than as listed above or transmission of instructions via facsimile other than as listed above does not constitute a valid delivery.
65

Fees and Expenses
The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telephone or in person by our officers, regular employees and affiliates. We will not pay any additional compensation to any of our officers and employees who engage in soliciting tenders. We will not make any payment to brokers, dealers, or others soliciting acceptances of the exchange offer. However, we will pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection with the exchange offer.
The estimated cash expenses to be incurred in connection with the exchange offer, including legal, accounting, SEC filing, printing and exchange agent expenses, will be paid by us and are estimated in the aggregate to be $270,000.

Accounting Treatment
We will record the new notes in our accounting records at the same carrying value as the old notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes upon the consummation of this exchange offer. We will capitalize the expenses of this exchange offer and amortize them over the life of the notes.
Transfer Taxes
Holders who tender their old notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct us to register new notes in the name of, or request that old notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon.
Resale of the New Notes
Under existing interpretations of the staff of the SEC contained in several no-action letters to third parties, the new notes would in general be freely transferable after the exchange offer without further registration under the Securities Act. The relevant no-action letters include the Exxon Capital Holdings Corporation letter, which was made available by the SEC on May 13, 1988, and the Morgan Stanley & Co. Incorporated letter, made available on June 5, 1991.
However, any purchaser of old notes who is an “affiliate” of DPL Inc. or who intends to participate in the exchange offer for the purpose of distributing the new notes
(1) will not be able to rely on the interpretation of the staff of the SEC,
(2) will not be able to tender its old notes in the exchange offer and
(3) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the securities unless that sale or transfer is made using an exemption from those requirements.
In addition, in connection with any resales of new notes, any broker-dealer participating in the exchange offer who acquired securities for its own account as a result of market-making or other trading activities must deliver a prospectus meeting the requirements of the Securities Act. The SEC has taken the position in the Shearman & Sterling no-action letter, which it made available on July 2, 1993, that participating broker-dealers may fulfill their prospectus delivery requirements with respect to the new notes, other than a resale of an unsold allotment from the original sale of the old notes, with the prospectus contained in the exchange offer registration statement. Under the registration rights agreement, we are required to allow participating broker-dealers and other persons, if any, subject to similar prospectus delivery requirements to use this prospectus as it may be amended or supplemented from time to time, in connection with the resale of new notes.
Failure to Exchange
Holders of old notes who do not exchange their old notes for new notes under the exchange offer will remain subject to the restrictions on transfer of such old notes as set forth in the legend printed on the notes as a consequence of the issuance of the old notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws, and otherwise set forth in the confidential offering memorandum distributed in connection with the private offering of the old notes.
Other
Participating in the exchange offer is voluntary, and you should carefully consider whether to accept. You are strongly urged to consult your financial, legal and tax advisors in making your own decision on what action to take.
66



U.S. FEDERAL INCOME TAX CONSEQUENCES

The exchange of old notes for new notes in the exchange offer will not be a taxable event for holders. When a holder exchanges an old note for a new note in the exchange offer, the holder will have the same adjusted tax basis and holding period in the new note as in the old note immediately before the exchange.
Persons considering the exchange of old notes for new notes should consult their own tax advisers concerning the U.S. federal income tax consequences in light of their particular situations as well as any tax consequences arising under the laws of any other taxing jurisdiction.

PLAN OF DISTRIBUTION

Each broker-dealer that receives new notes for its own account in the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of new notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes where old notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 90 days after the expiration date, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any resale of new notes received by it in exchange for old notes.
We will not receive any proceeds from any sale of new notes by broker-dealers.
New notes received by broker-dealers for their own account in the exchange offer may be sold from time to time in one or more transactions:
•in the over-the-counter market;
•in negotiated transactions;
•through the writing of options on the new notes; or
•a combination of those methods of resale,
at market prices prevailing at the time of resale, at prices related to prevailing market prices or negotiated prices.
Any resale may be made:
•directly to purchasers; or
•to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any broker-dealer or the purchasers of any new notes.
Any broker-dealer that resells new notes that were received by it for its own account in the exchange offer and any broker or dealer that participates in a distribution of those new notes may be considered to be an “underwriter” within the meaning of the Securities Act. Any profit on any resale of those new notes and any commission or concessions received by any of those persons may be considered to be underwriting compensation under the Securities Act.
We have agreed to pay all expenses incident to the exchange offer, other than commissions or concessions of any brokers or dealers and will indemnify the holders of the securities, including any broker-dealers, against some liabilities, including liabilities under the Securities Act.Act

VALIDITY OF SECURITIES

Davis Polk & Wardwell LLP will opine for us on whether the new notes are valid and binding obligations of DPL Inc. and will rely on the opinion of Brian Hylander, Assistant General Counsel of DPL Inc., with respect to certain matters under the laws of the State of Ohio.


EXPERTS

The consolidated financial statements of DPL Inc. at December 31, 20182020 and 2017,2019, and for each of the three years in the period ended December 31, 2018,2020, and the related notes and schedule appearing in this registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report
67

thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC, Washington, D.C. 20549, a registration statement on Form S-4 under the Securities Act with respect to our offering of the new notes. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to the company and the new notes, reference is made to the registration statement and the exhibits and any schedules filed therewith. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference. A copy of the registration statement, including exhibits and schedules thereto, is available to the public on the SEC’s website at https://www.sec.gov.
If for any reason we are not required to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended, or we do not otherwise report on an annual or quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, we are still required under the indenture to deliver (which may be accomplished through posting on the internet) to the trustee and to holders of the notes, without any cost to any holder: (1) within 90 days after the end of each fiscal year, audited financial statements and (2) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, quarterly unaudited financial statements. We are also required under the indenture to provide without charge upon the written request of (1) a holder of any notes or (2) a prospective holder of any of the notes who is a “qualified institutional buyer” within the meaning of Rule 144A and is designated by an existing holder of any of the notes with the information with respect to the Company required to be delivered under Rule 144A(d)(f) under the Securities Act to enable resales of the notes to be made pursuant to Rule 144A.
Any such requests should be directed to us at: DPL Inc., 1065 Woodman Drive, Dayton, Ohio 45432, Phone: (937) 259-7215, Attention: Treasurer.
We also maintain an Internet site at https://www.dpandl.com. Our website and the information contained therein or connected thereto shall not be deemed to be a part of this prospectus or the registration statement of which it forms a part.

68


INDEX TO FINANCIAL STATEMENTS
AND SCHEDULES
DPL Inc. Annual Consolidated Financial Statements
December 31, 2018, 20172020, 2019, and 20162018
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income / (Loss)
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholder’s Equity
Notes to Consolidated Financial Statements
Schedule II –- Valuation and Qualifying Accounts
The information required to be submitted in Schedules I, III, IV and V is omitted as not applicable or not required under rules of Regulation S-X.
DPL Inc. Condensed Consolidated Financial Statements
September 30, 2019
Condensed Consolidated Statements of Operations
F-51
Condensed Consolidated Statements of Comprehensive Income
F-52
Condensed Consolidated Balance Sheets
F-53
Condensed Consolidated Statements of Cash Flows
F-54
Condensed Consolidated Statements of Shareholder's Deficit
F-55
Notes to Condensed Consolidated Financial Statements
F-56

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholder and Board of Directors of DPL Inc.

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of DPL Inc. (the Company) as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations, comprehensive income / (loss), cash flows and shareholder’s equitydeficit for each of the three years in the period ended December 31, 2018,2020, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “financial“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20182020 in conformity with U.S. generally accepted accounting principles.

Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Regulatory Accounting
Description of the MatterAs described in Note 3 to the consolidated financial statements, the Company applies the provisions of FASC 980 “Regulated Operations,” which gives recognition to the ratemaking and accounting practices of the PUCO and the FERC. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory assets can also represent performance incentives permitted by the regulator. Regulatory liabilities generally represent obligations to provide refunds or future rate reductions to customers for previous over-collections or the deferral of revenues collected for costs that the Company expects to incur in the future. Accounting for the economics of rate regulation affects multiple financial statement line items, including property, plant, and equipment; regulatory assets and liabilities; operating revenues; and depreciation expense, and related disclosures in the Company’s consolidated financial statements.
Auditing the Company’s regulatory accounting was complex due to significant judgments made by management to support its assertions about the impact of future regulatory orders on the consolidated financial statements. In particular, there is subjectivity involved in assessing the impact of current and future regulatory orders on events that have occurred as of December 31, 2020, judgment required to evaluate the relevance and reliability of audit evidence to support impacted account balances and disclosures, and judgments involved in assessing the probability of recovery in future rates of incurred costs or refunds to customers. These assumptions have a significant effect on the regulatory assets and liabilities and related disclosures.
How We Addressed the Matter in Our AuditTo test the Company’s accounting for regulatory assets and liabilities, our audit procedures included, among others, reviewing relevant regulatory orders, statutes and interpretations; filings made by intervening parties; and other publicly available information, to assess the likelihood of recovery of regulatory assets in future rates or of a refund or future reduction in rates for regulatory liabilities based on precedents for the treatment of similar costs under similar circumstances. We evaluated the Company’s assertions regarding the probability of recovery of regulatory assets or refund or future reduction in rates for regulatory liabilities, to assess the Company’s assertion that amounts are probable of recovery or of a refund or future reduction in rates.


/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2011.

Indianapolis, Indiana
February 26, 201924, 2021


F-3


DPL INC.DPL INC.DPL INC.
Consolidated Statements of OperationsConsolidated Statements of OperationsConsolidated Statements of Operations
 Years ended December 31,Years ended December 31,
$ in millions 2018 2017 2016$ in millions202020192018
Revenues $775.9
 $743.9
 $834.2
Revenues$660.5 $743.7 $747.3 
      
Cost of revenues:      
Operating costs and expensesOperating costs and expenses
Net fuel cost 17.5
 9.0
 17.4
Net fuel cost1.7 2.5 2.5 
Net purchased power cost 305.0
 291.0
 319.1
Net purchased power cost230.6 251.9 302.7 
Total cost of revenues 322.5
 300.0
 336.5
      
Gross margin 453.4
 443.9
 497.7
      
Operating expenses:      
Operation and maintenance 156.8
 186.1
 213.5
Operation and maintenance181.6 184.2 138.3 
Depreciation and amortization 73.1
 76.1
 73.6
Depreciation and amortization73.3 72.3 76.2 
General taxes 73.5
 77.1
 68.4
Fixed-asset impairment 2.8
 —
 23.9
Gain on asset disposal —
 (0.6) (0.7)
Taxes other than income taxesTaxes other than income taxes79.4 77.9 73.3 
Loss on asset disposalLoss on asset disposal0.1 0 0 
Loss on disposal of business (Note 16) 11.7
 —
 —
Loss on disposal of business (Note 16)4.7 0 11.7 
Total operating expenses 317.9
 338.7
 378.7
Total operating costs and expensesTotal operating costs and expenses571.4 588.8 604.7 
      
Operating income 135.5
 105.2
 119.0
Operating income89.1 154.9 142.6 
      
Other income / (expense), net      Other income / (expense), net
Interest expense (98.0) (110.0) (107.4)Interest expense(71.3)(82.2)(98.0)
Charge for early redemption of debt (6.5) (3.3) (3.1)
Loss on early extinguishment of debtLoss on early extinguishment of debt(31.7)(44.9)(6.5)
Other income 0.9
 1.6
 3.9
Other income2.0 3.7 0.8 
Other expense, net (103.6) (111.7) (106.6)Other expense, net(101.0)(123.4)(103.7)
      
Income / (loss) from continuing operations before income tax 31.9
 (6.5) 12.4
Income / (loss) from continuing operations before income tax(11.9)31.5 38.9 
      
Income tax expense / (benefit) from continuing operations 0.7
 (5.0) (2.4)Income tax expense / (benefit) from continuing operations(5.5)(20.3)2.2 
      
Net income / (loss) from continuing operations 31.2
 (1.5) 14.8
Net income / (loss) from continuing operations(6.4)51.8 36.7 
      
Discontinued operations (Note 15)      Discontinued operations (Note 15)
Income / (loss) from discontinued operations before income tax 70.5
 (127.4) (806.4)Income / (loss) from discontinued operations before income tax(0.6)47.6 63.5 
Gain / (loss) from disposal of discontinued operations (1.6) 14.0
 49.2
Gain / (loss) from disposal of discontinued operations6.1 20.1 (1.6)
Income tax expense / (benefit) from discontinued operations 30.0
 (20.3) (257.2)
Net income / (loss) from discontinued operations 38.9
 (93.1) (500.0)
Income tax expense from discontinued operationsIncome tax expense from discontinued operations0.1 14.1 28.5 
Net income from discontinued operationsNet income from discontinued operations5.4 53.6 33.4 
      
Net income / (loss) $70.1
 $(94.6) $(485.2)Net income / (loss)$(1.0)$105.4 $70.1 
See Notes to Consolidated Financial Statements.


DPL INC.
Consolidated Statements of Comprehensive Income / (Loss)
  Years ended December 31,
$ in millions 2018 2017 2016
Net income / (loss) $70.1
 $(94.6) $(485.2)
Equity securities activity:      
Change in fair value of equity securities, net of income tax expense of $0.0, ($0.2) and ($0.1) for each respective period —
 0.5
 0.2
Reclassification to earnings, net of income tax expense of $0.0 for each respective period —
 (0.1) —
Net change in fair value of equity securities —
 0.4
 0.2
Derivative activity:      
Change in derivative fair value, net of income tax benefit / (expense) of $0.1, ($5.3) and ($8.8) for each respective period (0.1) 9.6
 16.1
Reclassification to earnings, net of income tax benefit of $0.4, $0.3 and $0.5 for each respective period (0.8) (0.7) (0.5)
Reclassification of earnings related to discontinued operations, net of income tax benefit / (expense) of ($1.2), $4.1 and $16.2 for each respective period 3.2
 (7.3) (29.2)
Net change in fair value of derivatives 2.3
 1.6
 (13.6)
Pension and postretirement activity:      
Prior service cost for the period, net of income tax benefit of $0.6, $0.4 and $0.0 for each respective period (2.2) (0.7) —
Net gain / (loss) for the period, net of income tax benefit / (expense) of ($0.5), $1.1 and $2.4 for each respective period 1.7
 (1.8) (4.7)
Reclassification to earnings, net of income tax expense of ($0.2), ($0.5) and ($0.6) for each respective period 0.6
 1.0
 1.0
Net change in unfunded pension and postretirement obligations 0.1
 (1.5) (3.7)
       
Other comprehensive income / (loss) 2.4
 0.5
 (17.1)
       
Net comprehensive income / (loss) $72.5
 $(94.1) $(502.3)
See Notes to Consolidated Financial Statements.

DPL INC.
Consolidated Balance Sheets
$ in millions December 31, 2018 December 31, 2017
ASSETS    
Current assets:    
Cash and cash equivalents $90.5
 $24.5
Restricted cash 21.2
 0.4
Accounts receivable, net (Note 2) 90.5
 64.6
Inventories (Note 2) 10.7
 12.7
Taxes applicable to subsequent years 72.6
 71.3
Regulatory assets, current (Note 3) 41.1
 23.9
Other prepayments and current assets 12.9
 12.6
Current assets of discontinued operations and held-for-sale businesses (Note 15) 8.7
 315.6
Total current assets 348.2
 525.6
     
Property, plant and equipment:    
Property, plant and equipment 1,615.6
 1,544.1
Less: Accumulated depreciation and amortization (310.8) (269.1)
  1,304.8
 1,275.0
Construction work in process 32.2
 46.5
Total net property, plant and equipment 1,337.0
 1,321.5
Other non-current assets:    
Regulatory assets, non-current (Note 3) 152.6
 163.2
Intangible assets, net of amortization 18.4
 18.8
Other deferred assets 21.6
 13.8
Non-current assets of discontinued operations and held-for-sale businesses (Note 15) 5.3
 6.3
Total other non-current assets 197.9
 202.1
     
Total Assets $1,883.1
 $2,049.2
     
LIABILITIES AND SHAREHOLDER'S EQUITY    
Current liabilities:    
Current portion - long-term debt (Note 7) $103.6
 $4.6
Short-term debt —
 10.0
Accounts payable 58.1
 48.9
Accrued taxes 76.7
 77.3
Accrued interest 14.3
 16.4
Customer security deposits 21.3
 21.8
Regulatory liabilities, current (Note 3) 34.9
 14.8
Other current liabilities 22.0
 16.2
Current liabilities of discontinued operations and held-for-sale businesses (Note 15) 12.2
 66.9
Total current liabilities 343.1
 276.9
Non-current liabilities:    
Long-term debt (Note 7) 1,372.3
 1,700.2
Deferred taxes (Note 8) 116.1
 113.5
Taxes payable 76.1
 74.8
Regulatory liabilities, non-current (Note 3) 278.3
 221.2
Pension, retiree and other benefits (Note 9) 82.3
 90.3
Asset retirement obligations 9.4
 15.1
Other deferred credits 8.0
 8.5
Non-current liabilities of discontinued operations and held-for-sale businesses (Note 15) 69.2
 133.0
Total non-current liabilities 2,011.7
 2,356.6
     
Commitments and contingencies (Note 11)    
     
Common shareholder's deficit:    
Common stock:    
1,500 shares authorized; 1 share issued and outstanding    
at December 31, 2018 and 2017 —
 —
Other paid-in capital 2,370.5
 2,330.4
Accumulated other comprehensive income 2.2
 0.8
Accumulated deficit (2,844.4) (2,915.5)
Total common shareholder's deficit: (471.7) (584.3)
     
Total Liabilities and Shareholder's Equity $1,883.1
 $2,049.2
See Notes to Consolidated Financial Statements.

DPL INC.
Consolidated Statements of Cash Flows
  Years ended December 31,
$ in millions 2018 2017 2016
Cash flows from operating activities:      
Net income / (loss) $70.1
 $(94.6) $(485.2)
Adjustments to reconcile Net income / (loss) to Net cash from operating activities      
Depreciation and amortization 50.2
 106.9
 132.3
Amortization of deferred financing costs 5.5
 3.6
 5.6
Unrealized (gain) / loss on derivatives (0.2) (1.7) (4.3)
Deferred income taxes (9.1) (22.2) (306.2)
Charge for early redemption of debt 6.5
 3.3
 3.1
Fixed-asset impairment 2.8
 175.8
 859.0
Loss / (Gain) on disposal and sale of business, net 13.3
 (14.0) (49.2)
Loss / (Gain) on asset disposal, net (2.0) 16.1
 (0.1)
Changes in certain assets and liabilities:      
Accounts receivable 45.7
 18.1
 25.6
Inventories 14.8
 7.7
 32.0
Taxes applicable to subsequent years 0.1
 2.3
 0.2
Deferred regulatory costs, net (9.2) (23.7) 4.1
Accounts payable (16.3) (36.3) 15.1
Accrued taxes payable 37.4
 (3.7) 45.1
Accrued interest payable (2.1) (1.3) (3.7)
Pension, retiree and other benefits (3.4) 4.7
 3.0
Insurance and claims costs 1.1
 (2.4) (0.5)
Other 0.7
 (6.9) (8.8)
Net cash provided by operating activities 205.9
 131.7
 267.1
Cash flows from investing activities:      
Capital expenditures (103.6) (121.5) (148.5)
Proceeds from disposal and sale of business 234.9
 70.1
 —
Payments on disposal and sale of business (14.5) —
 —
Proceeds from sale of property 10.6
 0.1
 0.2
Insurance proceeds 3.0
 12.3
 6.3
Other investing activities, net (0.5) (0.3) 0.5
Net cash provided by / (used in) investing activities 129.9
 (39.3) (141.5)
Cash flows from financing activities:      
Payments of deferred financing costs —
 —
 (8.6)
Redemption of preferred stock —
 —
 (23.5)
Retirement of debt (240.5) (159.5) (577.8)
Issuance of long-term debt, net of discount —
 —
 442.8
Borrowings from revolving credit facilities 30.0
 102.5
 15.0
Repayment of borrowings from revolving credit facilities (40.0) (92.5) (15.0)
Other financing activities, net —
 (0.1) —
Net cash used in financing activities (250.5) (149.6) (167.1)
Increase in cash and restricted cash of discontinued operations and held-for-sale businesses 1.5
 27.5
 15.8
Cash, cash equivalents and restricted cash:     .
Net increase / (decrease) in cash, cash equivalents and restricted cash 86.8
 (29.7) (25.7)
Balance at beginning of year 24.9
 54.6
 80.3
Cash, cash equivalents and restricted cash at end of year $111.7
 $24.9
 $54.6
Supplemental cash flow information:      
Interest paid, net of amounts capitalized $93.7
 $105.2
 $103.8
Income taxes (refunded) / paid, net $(1.4) $—
 $0.3
Non-cash financing and investing activities:      
Accruals for capital expenditures $10.4
 $12.9
 $16.2
Non-cash proceeds from sale of business $4.1
 $—
 $—
Non-cash capital contribution (Note 10) $40.0
 $97.1
 $—

See Notes to Consolidated Financial Statements.

F-4


DPL INC.
Consolidated Statements of Shareholder's Equity
  
Common Stock (a)
        
$ in millions Outstanding Shares Amount 
Other
Paid-in
Capital
 Accumulated Other Comprehensive Income / (Loss) Accumulated Deficit Total
Year ended December 31, 2016            
Beginning balance 1
 $—
 $2,237.7
 $17.4
 $(2,335.7) $(80.6)
Net comprehensive loss       (17.1) (485.2) (502.3)
Other (b)
     (4.7)     (4.7)
Ending balance 1
 —
 2,233.0
 0.3
 (2,820.9) (587.6)
Year ended December 31, 2017            
Net comprehensive loss       0.5
 (94.6) (94.1)
Capital contributions (c)
     97.1
     97.1
Other     0.3
     0.3
Ending balance 1
 —
 2,330.4
 0.8
 (2,915.5) (584.3)
Year ended December 31, 2018            
Net comprehensive income       2.4
 70.1
 72.5
Capital contributions (c)
     40.0
     40.0
Other (d)
     0.1
 (1.0) 1.0
 0.1
Ending balance 1
 $—
 $2,370.5
 $2.2
 $(2,844.4) $(471.7)
DPL INC.
Consolidated Statements of Comprehensive Income / (Loss)
Years ended December 31,
$ in millions202020192018
Net income / (loss)$(1.0)$105.4 $70.1 
Derivative activity:
Change in derivative fair value, net of income tax benefit of $0.0, $0.1 and $0.1 for each respective period0 (1.0)(0.1)
Reclassification to earnings, net of income tax expense of $0.2, $0.1 and $0.4 for each respective period(0.9)(1.1)(0.8)
Reclassification of earnings related to discontinued operations, net of income tax benefit of $0.0, $(0.4) and $(1.2) for each respective period0 (0.4)3.2 
Net change in fair value of derivatives(0.9)(2.5)2.3 
Pension and postretirement activity:
Prior service cost for the period, net of income tax benefit of $0.0, $0.0 and $0.6 for each respective period0 (0.1)(2.2)
Net gain / (loss) for the period, net of income tax benefit / (expense) of $2.6, $0.8 and $(0.5) for each respective period(8.8)(3.4)1.7 
Reclassification to earnings, net of income tax benefit of $(0.3), $0.0 and $(0.2) for each respective period1.0 0.2 0.6 
Net change in unfunded pension and postretirement obligations(7.8)(3.3)0.1 
Other comprehensive income / (loss)(8.7)(5.8)2.4 
Net comprehensive income / (loss)$(9.7)$99.6 $72.5 

(a)1,500 shares authorized.
(b)
Includes $5.1 million charged to Other paid-in capital for the redemption of the DP&L preferred shares. See Note 10 – Equity.
(c)
Represents the conversion of a tax sharing payable to AES to contributed capital, as DP&L's 2017 ESP restricts tax sharing payments to AES during the term of the ESP. See Note 8 – Income Taxes.
(d)ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities” was effective as of January 1, 2018. This ASU requires the change in the fair value of equity instruments to be recorded in income rather than in OCI. Equity Instruments were defined to include all mutual funds, regardless of the underlying investments. Therefore, as of January 1, 2018, AOCI of $1.6 million ($1.0 million net of tax) was reversed to Accumulated deficit.

See Notes to Consolidated Financial Statements.
F-5

DPL INC.
Consolidated Balance Sheets
$ in millionsDecember 31, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$25.4 $36.5 
Restricted cash0.1 10.5 
Accounts receivable, net of allowance for credit losses of $2.8 and $0.4, respectively (Note 2)69.7 67.9 
Inventories8.8 10.4 
Taxes applicable to subsequent years78.0 77.5 
Regulatory assets, current (Note 3)27.5 19.7 
Taxes receivable17.9 23.6 
Prepayments and other current assets5.8 7.6 
Current assets of discontinued operations and held-for-sale businesses (Note 15)0 22.3 
Total current assets233.2 276.0 
Property, plant and equipment:
Property, plant & equipment1,839.3 1,701.9 
Less: Accumulated depreciation and amortization(415.7)(362.6)
 1,423.6 1,339.3 
Construction work in process141.7 106.3 
Total net property, plant & equipment1,565.3 1,445.6 
Other non-current assets:
Regulatory assets, non-current (Note 3)193.6 173.8 
Intangible assets, net of amortization19.3 19.3 
Other non-current assets24.6 20.0 
Non-current assets of discontinued operations and held-for-sale businesses (Note 15)0 1.1 
Total other non-current assets237.5 214.2 
Total assets$2,036.0 $1,935.8 
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term and current portion of long-term debt (Note 7)$100.2 $283.8 
Accounts payable84.5 72.6 
Accrued taxes83.0 79.3 
Accrued interest16.0 11.4 
Customer deposits19.4 20.7 
Regulatory liabilities, current (Note 3)18.0 27.9 
Accrued and other current liabilities21.0 21.2 
Current liabilities of discontinued operations and held-for-sale businesses (Note 15)0 9.0 
Total current liabilities342.1 525.9 
Non-current liabilities:
Long-term debt (Note 7)1,393.4 1,223.3 
Deferred income taxes (Note 8)177.2 133.7 
Taxes payable80.4 81.1 
Regulatory liabilities, non-current (Note 3)218.3 243.6 
Accrued pension and other post-retirement benefits (Note 9)93.9 79.9 
Other non-current liabilities14.2 11.8 
Non-current liabilities of discontinued operations and held-for-sale businesses (Note 15)0 8.4 
Total non-current liabilities1,977.4 1,781.8 
Commitments and contingencies (Note 11)00
Common shareholder's deficit:
Common stock:
1,500 shares authorized; 1 share issued and outstanding
at December 31, 2020 and 20190 0 
Other paid-in capital2,468.8 2,370.7 
Accumulated other comprehensive loss(12.3)(3.6)
Accumulated deficit(2,740.0)(2,739.0)
Total common shareholder's deficit:(283.5)(371.9)
Total liabilities and shareholder's deficit:$2,036.0 $1,935.8 

See Notes to Consolidated Financial Statements.
F-6

DPL INC.
Consolidated Statements of Cash Flows
Years ended December 31,
$ in millions202020192018
Cash flows from operating activities:
Net income / (loss)$(1.0)$105.4 $70.1 
Adjustments to reconcile Net income / (loss) to Net cash from operating activities
Depreciation and amortization73.6 53.1 50.2 
Amortization of deferred financing costs5.7 5.6 5.5 
Deferred income taxes39.8 15.2 (9.1)
Loss on early extinguishment of debt31.7 44.9 6.5 
Fixed-asset impairment0 3.5 2.8 
Loss / (gain) on disposal and sale of business, net(1.4)(20.1)13.3 
Changes in certain assets and liabilities:
Accounts receivable, net11.2 10.2 45.7 
Inventories4.9 (4.2)14.8 
Taxes applicable to subsequent years(0.2)(2.8)0.1 
Deferred regulatory costs, net(34.0)(2.2)(9.2)
Accounts payable(10.1)9.7 (16.3)
Accrued taxes payable / receivable8.0 (21.2)37.4 
Accrued interest4.6 (2.9)(2.1)
Accrued pension and other post-retirement benefits(11.8)(8.8)(3.4)
Other non-current liabilities1.5 (14.6)(0.5)
Other(8.6)9.5 0.1 
Net cash provided by operating activities113.9 180.3 205.9 
Cash flows from investing activities:
Capital expenditures(157.3)(156.5)(96.1)
Cost of removal payments(25.5)(11.6)(7.5)
Proceeds from disposal and sale of business interests1.6 0 234.9 
Payments on disposal and sale of business interests(8.9)(51.0)(14.5)
Proceeds from sale of property5.1 0 10.6 
Insurance proceeds0 0 3.0 
Other investing activities, net(0.7)(3.5)(0.5)
Net cash provided by / (used in) investing activities(185.7)(222.6)129.9 
Cash flows from financing activities:
Payments of deferred financing costs(7.8)(9.9)0 
Retirement of debt(550.8)(978.0)(240.5)
Issuance of long-term debt, net of discount555.0 821.7 0 
Borrowings from revolving credit facilities185.0 204.0 30.0 
Repayment of borrowings from revolving credit facilities(229.0)(60.0)(40.0)
Equity contribution from parent98.0 0 0 
Other financing activities, net(0.1)(0.2)0 
Net cash provided by / (used in) financing activities50.3 (22.4)(250.5)
Increase in cash and restricted cash of discontinued operations and held-for-sale businesses0 0 1.5 
Cash, cash equivalents and restricted cash:.
Net increase / (decrease) in cash, cash equivalents and restricted cash(21.5)(64.7)86.8 
Balance at beginning of year47.0 111.7 24.9 
Cash, cash equivalents and restricted cash at end of year$25.5 $47.0 $111.7 
Supplemental cash flow information:   
Interest paid, net of amounts capitalized$67.8 $80.8 $93.7 
Income taxes (refunded) / paid, net$(51.9)$1.8 $(1.4)
Non-cash financing and investing activities:
Accruals for capital expenditures$31.7 $16.9 $10.4 
Non-cash proceeds from sale of business$0 $0 $4.1 
Accruals from sale of business$2.2 $0 $0 
Non-cash capital contribution (Note 10)$0 $0 $40.0 

See Notes to Consolidated Financial Statements.
F-7

DPL INC.
Consolidated Statements of Shareholder's Deficit
Common Stock (a)
$ in millionsOutstanding SharesAmountOther
Paid-in
Capital		Accumulated Other Comprehensive Income / (Loss)Accumulated DeficitTotal
Year ended December 31, 2018
Beginning balance1 $0 $2,330.4 $0.8 $(2,915.5)$(584.3)
Net comprehensive income2.4 70.1 72.5 
Capital contributions (b)
40.0 40.0 
Other (c)
0.1 (1.0)1 0.1 
Ending balance1 0 2,370.5 2.2 (2,844.4)(471.7)
Year ended December 31, 2019
Net comprehensive income(5.8)105.4 99.6 
Other0.2 000.2 
Ending balance1 0 2,370.7 (3.6)(2,739.0)(371.9)
Year ended December 31, 2020
Net comprehensive loss(8.7)(1.0)(9.7)
Equity contribution from parent98.0 98.0 
Other0.1 00.1 
Ending balance1 $0 $2,468.8 $(12.3)$(2,740.0)$(283.5)

(a)1,500 shares authorized.
(b)Represents the conversion of a tax sharing payable to AES to contributed capital, as DP&L's ESP 3 restricted tax sharing payments to AES during the term of the ESP. See Note 8 – Income Taxes.
(c)ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities” was effective as of January 1, 2018. This ASU requires the change in the fair value of equity instruments to be recorded in income rather than in OCI. Equity Instruments were defined to include all mutual funds, regardless of the underlying investments. Therefore, as of January 1, 2018, AOCI of $1.6 million ($1.0 million net of tax) was reversed to Accumulated deficit.

See Notes to Consolidated Financial Statements.
F-8

DPL Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2018, 20172020, 2019 and 2016

2018

Note 1 – Overview and Summary of Significant Accounting Policies

Description of Business
DPL is a diversified regional energy company organized in 1985 under the laws of Ohio. DPL has 1 reportable segment, the Utility segment. See Note 13 – Business Segments for more information relating to our reportable segment. The terms “we”, “us”, “our” and “ours” are used to refer to DPL and its subsidiaries.

On November 28, 2011, DPL was acquired by AES in the Merger and DPL became a wholly-owned subsidiary of AES. Following the merger of DPL and Dolphin Subsidiary II, Inc., DPL became an indirectly wholly-owned subsidiary of AES.

DP&L, DPL's wholly-owned subsidiary,, is a public utility incorporated in 1911 under the laws of Ohio. Beginning in 2001, Ohio law gave consumers the right to choose the electric generation supplier from whom they purchase retail generation service, however transmission and distributiondistribution services are still regulated. DP&L has the exclusive right to provide such service to its approximately525,000 531,000 customers located in West Central Ohio. DP&L provides retail SSO electric service to residential, commercial, industrial and governmental customers in a 6,000 square mile area of West Central Ohio. Since January 2016, DP&L has been sourcing sources all of the generation for its SSO customers through a competitive bid process. Through September 30, 2017, DP&L owned undivided interests inmultiple coal-fired the retired power stations of Beckjord and multiple peaking electric generating facilities as well asHutchings until their transfers in 2018 and 2020, respectively, and currently owns numerous transmission facilities. On October 1, 2017, the DP&L-owned generating facilities, excluding the Beckjord Facility and Hutchings EGU, were transferred to AES Ohio Generation, an affiliate of DP&L and wholly-owned subsidiary of DPL, through an asset contribution agreement to a subsidiary that was merged into AES Ohio Generation. Also, Stuart Station Unit 1 was retired on October 1, 2017. Principal industries located in DP&L’s service territory include automotive, food processing, paper, plastic, manufacturing and defense. DP&L's sales reflect the generalgeneral economic conditions, seasonal weather patterns of the area and the market price of electricity. Through the date of Generation Separation, DP&L sold energy and capacity into the wholesale market.

DPL’s other primary subsidiaries includeare MVIC and AES Ohio Generation.Miami Valley Lighting. MVIC is our captive insurance company that provides insurance services to DPLDP&L and our subsidiaries.other subsidiaries, and Miami Valley Lighting provides street and outdoor lighting services to customers in the Dayton region. In prior periods, AES Ohio Generation owns an undivided interest in Conesville Unit 4. AES Ohio Generation sellswas also a primary subsidiary and sold all of its energy and capacity into the wholesale market. DPL's subsidiaries are wholly-owned.

On December 8, 2017,In 2020, AES Ohio Generation completed the sale of the Miami FortGeneration's only operating asset was an undivided interest in Conesville, which closed in May 2020 and Zimmer stations to subsidiaries of Dynegywas sold in accordance with an asset purchase agreement dated April 21, 2017. In addition, on March 27, 2018, DPL and AES Ohio Generation completed the sale of their Peaker assets to Kimura Power, LLC. Further, on May 31, 2018, DPL and AES Ohio Generation retired the Stuart Station coal-fired and diesel-fired generating units and the Killen Station coal-fired generating unit and combustion turbine, as planned.June 2020. See Note 15 – Discontinued Operations for additional information. DPL's subsidiaries are wholly-owned.

DPL also has a wholly-owned business trust, DPL Capital Trust II, formed for the purpose of issuing trust capital securities to investors.

DP&L’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs or overcollections of riders.

DPL and its subsidiaries employed 659631 people (512 full-time) at January 31, 2019,2021, all of which 647 were employed by DP&L. Approximately 57%58% of all DPL employees are under a collective bargaining agreement.

agreement that expires on October 31, 2023.
Financial Statement Presentation
We prepare Consolidated Financial Statements for DPL. DPL’s Consolidated Financial Statements include the accounts of DPL and its wholly-owned subsidiaries except for DPL Capital Trust II which is not consolidated, consistent with the provisions of GAAP.


AES Ohio Generation's undivided ownership interests in certain coal-fired generating stations are included in the financial statements at amortized cost, net of subsequent impairments. Operating revenues and expenses are included on a pro rata basis in the corresponding lines in the Consolidated Statement of Operations.

Through June 2018, DP&L had undivided ownership interests in numerous transmission facilities. These undivided interests in jointly-owned facilities were accounted for on a pro rata basis in the Consolidated Financial Statements. In June 2018, DP&L closed on a transmission asset transaction with Duke and AEP, where ownership stakes in certain previously co-owned transmission assets were exchanged to eliminate co-ownership. Each previously co-owned transmission asset became wholly-owned by one of DP&L, Duke or AEP after the transaction. See Note 4 – Property, Plant and Equipment for more information.

All material intercompany accounts and transactions are eliminated in consolidation. We have evaluated subsequent events through the date this report is issued.

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

F-9

Use of Management Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the revenues and expenses of the periods reported. Actual results could differ from these estimates. Significant items subject to such estimates and judgments include: the carrying value of Property, plant and equipment; unbilled revenues; the valuation of derivative instruments; the valuation of insurance and claims liabilities; the valuation of allowances for receivables and deferred income taxes; regulatory assets and liabilities; reserves recorded for income tax exposures; litigation; contingencies; the valuation of AROs; and assets and liabilities related to employee benefits.
Cash and Cash Equivalents
Cash and cash equivalents are stated at cost, which approximates fair value. All highly liquid short-term investments with original maturities of three months or less are considered cash equivalents.
Restricted Cash
Restricted cash includes cash which is restricted as to withdrawal or usage. The nature of the restriction includes an agreement related to cash collected under the DMR, which was restricted to pay debt obligations at DPL and DP&L and position DP&L to modernize and/or maintain its transmission and distribution infrastructure.
The following table summarizes cash, cash equivalents and restricted cash amounts reported on the Consolidated Balance Sheets that reconcile to the total of such amounts as shown on the Consolidated Statements of Cash Flows:
December 31,
$ in millions20202019
Cash and cash equivalents$25.4 $36.5 
Restricted cash0.1 10.5 
Cash, Cash Equivalents and Restricted Cash, End of Period$25.5 $47.0 

Allowance for Credit Losses
We establish provisions for uncollectible accounts by using both historical average loss percentages to project future losses and by establishing specific provisions for known credit issues. Amounts are written off when reasonable collections efforts have been exhausted.
Inventories
Inventories are carried at average cost, net of reserves, and include materials and supplies used for utility operations.
Regulatory Accounting
As a regulated utility, DP&L applies the provisions of FASC 980 “Regulated Operations”, which gives recognition to the ratemaking and accounting practices of the PUCO and the FERC. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory assets can also represent performance incentives permitted by the regulator. Regulatory assets have been included as allowable costs for ratemaking purposes, as authorized by the PUCO or established regulatory practices. Regulatory liabilities generally represent obligations to make refunds or future rate reductions to customers for previous over collections or the deferral of revenues collected for costs that DP&L expects to incur in the future.
The deferral of costs (as regulatory assets) is appropriate only when the future recovery of such costs is probable. In assessing probability, we consider such factors as specific orders from the PUCO or FERC, regulatory precedent and the current regulatory environment. To the extent recovery of costs is no longer deemed probable, related regulatory assets would be required to be expensed in current period earnings. Our regulatory assets and liabilities have been created pursuant to a specific order of the PUCO or FERC or established regulatory practices, such as other utilities under the jurisdiction of the PUCO or FERC being granted recovery of similar costs. It is probable, but not certain, that these regulatory assets will be recoverable, subject to PUCO or FERC approval. Regulatory assets and liabilities are classified as current or non-current based on the term in which recovery is expected. See Note 3 – Regulatory Matters for more information.
F-10

Property, Plant and Equipment
New property, plant and equipment additions are stated at cost. For regulated transmission and distribution property, cost includes direct labor and material, allocable overhead expenses and an allowance for funds used during construction (AFUDC). AFUDC represents the cost of borrowed funds and equity used to finance regulated construction projects. Capitalization of AFUDC and interest ceases at either project completion or at the date specified by regulators. AFUDC and capitalized interest was $3.0 million, $3.2 million and $0.5 million in the years ended December 31, 2020, 2019 and 2018, respectively.
For substantially all depreciable property, when a unit of property is retired, the original cost of that property less any salvage value is charged to Accumulated depreciation and amortization, consistent with composite depreciation practices.
Impairment of Long-lived Assets
GAAP requires that we test long-lived assets for impairment when indicators of impairment exist. If an asset is deemed to be impaired, we are required to write down the asset to its fair value with a charge to current earnings. The net book value of our property, plant, and equipment was $1,565.3 million and $1,445.6 million as of December 31, 2020 and 2019, respectively. We do not believe any of these assets are currently impaired. In making this assessment, we consider such factors as: the overall condition and distribution capacity of the assets; the expected ability to recover additional expenditures in the assets; and the anticipated demand and relative pricing of retail electricity in our service territory.
Depreciation
Depreciation expense is calculated using the straight-line method, which allocates the cost of property over its estimated useful life. For DPL’s transmission and distribution assets, straight-line depreciation is applied monthly on an average composite basis using group rates that approximated 3.8% in 2020, 4.0% in 2019 and 4.3% in 2018. Depreciation expense was $70.0 million, $67.9 million and $69.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Intangibles
Intangibles include software, emission allowances and renewable energy credits. Emission allowances are carried on a first-in, first-out (FIFO) basis for purchased emission allowances. Net gains or losses on the sale of excess emission allowances, representing the difference between the sales proceeds and the cost of emission allowances, are recorded as a component of our fuel costs and are reflected in Operating income when realized. Emission allowances are amortized as they are used in our operations on a FIFO basis. Renewable energy credits are carried on a weighted average cost basis and amortized as they are used or retired.
Software is amortized over seven years. Amortization expense was $3.3 million, $4.4 million and $6.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. The estimated amortization expense of this internal-use software over the next five years is $10.7 million ($3.0 million in 2021, $2.2 million in 2022, $2.0 million in 2023, $1.8 million in 2024 and $1.7 million in 2025).
Implementation Costs Related to Software as a Service
DPL has recorded prepayments for implementation costs related to software as a service in support of utility customer services of $4.1 million and these are recorded within Other Non-current Assets on the accompanying Consolidated Balance Sheets as of December 31, 2020.
Debt Issuance Costs
Costs incurred in connection with the issuance of long-term debt are deferred and presented as a direct reduction from the face amount of that debt and amortized over the related financing period using the effective interest method. Debt issuance costs related to a line-of-credit or revolving credit facility are deferred and presented as an asset and amortized over the related financing period. Make-whole payments in connection with early debt retirements are classified as cash flows used in financing activities.
Financial Instruments
Our Master Trust investments in debt and equity financial instruments of publicly traded entities are classified as equity investments. These equity securities are carried at fair value and unrealized gains and losses on these securities are recorded in Other income. As these financial instruments are held to be used for the benefit of employees or former employees participating in employee benefit plans and are not used for general operating purposes, they are classified as non-current in Other non-current assets on the Consolidated Balance Sheets. See
Note 5 – Fair Value for additional information.
F-11

Financial Derivatives
All derivatives are recognized as either assets or liabilities in the balance sheets and are measured at fair value. Changes in the fair value are recorded in earnings unless the derivative is designated as a cash flow hedge of a forecasted transaction or it qualifies for the normal purchases and sales exception.
We have, in the past, used interest rate hedges to manage the interest rate risk of our variable rate debt. We use cash flow hedge accounting when the hedge or a portion of the hedge is deemed to be highly effective, which results in changes in fair value being recorded within accumulated other comprehensive income / (loss), a component of shareholder’s deficit. We have elected not to offset net derivative positions in the financial statements. Accordingly, we do not offset such derivative positions against the fair value of amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral under master netting agreements. See Note 6 – Derivative Instruments and Hedging Activities for additional information.
Insurance and Claims Costs
In addition to insurance obtained from third-party providers, MVIC, a wholly-owned captive subsidiary of DPL, provides insurance coverage solely to us and our subsidiaries for workers’ compensation, general liability and property damage on an ongoing basis. Insurance and claims costs associated with MVIC include estimated liabilities of approximately $3.2 million and $4.5 million at December 31, 2020 and 2019, respectively, within Accrued and other current liabilities on the DPL Consolidated Balance Sheets. DPL has estimated liabilities for medical, life, disability and other reserves for claims costs below certain coverage thresholds of third-party providers of approximately $11.1 million and $3.3 million at December 31, 2020 and 2019, respectively, within Accrued and other current liabilities and Other non-current liabilities on the balance sheets. The estimated liabilities for workers’ compensation, medical, life and disability costs at DPL are actuarially determined using certain assumptions. There is uncertainty associated with these loss estimates, and actual results may differ from the estimates. Modification of these loss estimates based on experience and changed circumstances is reflected in the period in which the estimate is re-evaluated.
Revenue Recognition
Revenues are recognized from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Energy sales to customers are based on the reading of their meters that occurs on a systematic basis throughout the month. We recognize the revenues on our Consolidated Statements of Operations using an accrual method for retail and other energy sales that have not yet been billed, but where electricity has been consumed. This is termed “unbilled revenues” and is a widely recognized and accepted practice for utilities. At the end of each month, unbilled revenues are determined by the estimation of unbilled energy provided to customers since the date of the last meter reading, estimated line losses, the assignment of unbilled energy provided to customer classes and the average rate per customer class.

The power sales and purchases within DP&L’s service territory are reported on a net hourly basis as revenues or purchased power on our Consolidated Statements of Operations. We record expenses when purchased electricity is received and when expenses are incurred. All of the power produced at the generation station is sold to an RTO. We record expenses when purchased electricity is received and when expenses are incurred. For additional information, see Note 14 – Revenue.

Accounting for Taxes Collected from Customers and Remitted to Governmental Authorities
AllowanceDP&L collects certain excise taxes levied by state or local governments from its customers. DP&L’s excise taxes and certain other taxes are accounted for Uncollectible Accounts
We establish provisionson a net basis and recorded as a reduction in revenues in the accompanying Consolidated Statements of Operations. The amounts for uncollectible accounts by using both historical average loss percentages to project future losses and by establishing specific provisions for known credit issues. Amounts are written off when reasonable collections efforts have been exhausted.

Property, Plant and Equipment
We record our ownership share of our undivided interest in our jointly-held station as an asset in property, plant and equipment. New property, plant and equipment additions are stated at cost. For regulated transmission and distribution property, cost includes direct labor and material, allocable overhead expenses and an allowance for funds used during construction (AFUDC). AFUDC represents the cost of borrowed funds and equity used to finance regulated construction projects. For non-regulated property, cost also includes capitalized interest. Capitalization of AFUDC and interest ceases at either project completion or at the date specified by regulators. AFUDC and capitalized interest was $0.5 million, $1.7 million and $2.1 million in the years ended December 31, 2020, 2019 and 2018, 2017were $48.1 million, $50.1 million and 2016,$51.7 million, respectively.


For unregulated generation property, cost includes direct labor and material, allocable overhead expenses and interest capitalized during construction per the provisions of GAAP related to the accounting for capitalized interest.

For substantially all depreciable property, when a unit of property is retired, the original cost of that property less any salvage value is charged to Accumulated depreciation and amortization, consistent with composite depreciation practices.

Property is evaluated for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable.

RepairsCash and MaintenanceCash Equivalents
Costs associatedCash and cash equivalents are stated at cost, which approximates fair value. All highly liquid short-term investments with maintenance activitiesoriginal maturities of three months or less are recognizedconsidered cash equivalents.
Restricted Cash
Restricted cash includes cash which is restricted as to withdrawal or usage. The nature of the restriction includes an agreement related to cash collected under the DMR, which was restricted to pay debt obligations at DPL and DP&L and position DP&L to modernize and/or maintain its transmission and distribution infrastructure.
The following table summarizes cash, cash equivalents and restricted cash amounts reported on the timeConsolidated Balance Sheets that reconcile to the work is performed. These costs, whichtotal of such amounts as shown on the Consolidated Statements of Cash Flows:
December 31,
$ in millions20202019
Cash and cash equivalents$25.4 $36.5 
Restricted cash0.1 10.5 
Cash, Cash Equivalents and Restricted Cash, End of Period$25.5 $47.0 

Allowance for Credit Losses
We establish provisions for uncollectible accounts by using both historical average loss percentages to project future losses and by establishing specific provisions for known credit issues. Amounts are written off when reasonable collections efforts have been exhausted.
Inventories
Inventories are carried at average cost, net of reserves, and include labor, materials and supplies and outside services required to maintain equipment and facilities, are capitalized or expensed based on defined units of property.

Depreciation
Depreciation expense is calculated using the straight-line method, which allocates the cost of property over its estimated useful life. For DPL’s generation, transmission and distribution assets, straight-line depreciation is applied monthly on an average composite basis using group rates that approximated 4.3% in 2018, 5.0% in 2017 and 6.1% in 2016 (including property classified in non-current assets of discontinued operations and held-for-sale businesses in 2017 and 2016). Depreciation expense was $66.5 million, $70.4 million and $67.0 millionused for the years ended December 31, 2018, 2017 and 2016, respectively.

utility operations.
Regulatory Accounting
As a regulated utility, DP&L applies the provisions of FASC 980 “Regulated Operations”, which gives recognition to the ratemaking and accounting practices of the PUCO and the FERC. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory assets can also represent performance incentives permitted by the regulator. Regulatory assets have been included as allowable costs for ratemaking purposes, as authorized by the PUCO or established regulatory practices. Regulatory liabilities generally represent obligations to make refunds or future rate reductions to customers for previous over collections or the deferral of revenues collected for costs that DP&L expects to incur in the future.

The deferral of costs (as regulatory assets) is appropriate only when the future recovery of such costs is probable. In assessing probability, we consider such factors as specific orders from the PUCO or FERC, regulatory precedent and the current regulatory environment. To the extent recovery of costs is no longer deemed probable, related regulatory assets would be required to be expensed in current period earnings. Our regulatory assets and liabilities have been created pursuant to a specific order of the PUCO or FERC or established regulatory practices, such as other utilities under the jurisdiction of the PUCO or FERC being granted recovery of similar costs. It is probable, but not certain, that these regulatory assets will be recoverable, subject to PUCO or FERC approval. Regulatory assets and liabilities are classified as current or non-current based on the term in which recovery is expected. See Note 3 – Regulatory Matters for more information.
F-10

InventoriesProperty, Plant and Equipment
InventoriesNew property, plant and equipment additions are carriedstated at cost. For regulated transmission and distribution property, cost includes direct labor and material, allocable overhead expenses and an allowance for funds used during construction (AFUDC). AFUDC represents the cost of borrowed funds and equity used to finance regulated construction projects. Capitalization of AFUDC and interest ceases at either project completion or at the date specified by regulators. AFUDC and capitalized interest was $3.0 million, $3.2 million and $0.5 million in the years ended December 31, 2020, 2019 and 2018, respectively.
For substantially all depreciable property, when a unit of property is retired, the original cost of that property less any salvage value is charged to Accumulated depreciation and amortization, consistent with composite depreciation practices.
Impairment of Long-lived Assets
GAAP requires that we test long-lived assets for impairment when indicators of impairment exist. If an asset is deemed to be impaired, we are required to write down the asset to its fair value with a charge to current earnings. The net book value of our property, plant, and equipment was $1,565.3 million and $1,445.6 million as of December 31, 2020 and 2019, respectively. We do not believe any of these assets are currently impaired. In making this assessment, we consider such factors as: the overall condition and distribution capacity of the assets; the expected ability to recover additional expenditures in the assets; and the anticipated demand and relative pricing of retail electricity in our service territory.
Depreciation
Depreciation expense is calculated using the straight-line method, which allocates the cost of property over its estimated useful life. For DPL’s transmission and distribution assets, straight-line depreciation is applied monthly on an average cost, net of reserves,composite basis using group rates that approximated 3.8% in 2020, 4.0% in 2019 and include coal, limestone4.3% in 2018. Depreciation expense was $70.0 million, $67.9 million and materials$69.7 million for the years ended December 31, 2020, 2019 and supplies used for utility operations.

2018, respectively.
Intangibles
Intangibles include software, emission allowances and renewable energy credits. Emission allowances are carried on a first-in, first-out (FIFO) basis for purchased emission allowances. Net gains or losses on the sale of excess emission allowances, representing the difference between the sales proceeds and the cost of emission allowances, are recorded as a component of our fuel costs and are reflected in Operating income when realized. Emission allowances are amortized as they are used in our operations on a FIFO basis. Renewable energy credits are carried on a weighted average cost basis and amortized as they are used or retired.

Software is amortized over seven years. years. Amortization expense was $6.6$3.3 million, $5.7$4.4 million and $6.6$6.5 million for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively. The estimated amortization expense of this internal-use software over the next five years is $15.0$10.7 million ($4.2 million in 2019, $3.2 million in 2020, $3.03.0 million in 2021, $2.6$2.2 million in 2022, and $2.0 million in 2023)2023, $1.8 million in 2024 and $1.7 million in 2025).
Implementation Costs Related to Software as a Service

DPL has recorded prepayments for implementation costs related to software as a service in support of utility customer services of $4.1 million and these are recorded within Other Non-current Assets on the accompanying Consolidated Balance Sheets as of December 31, 2020.

Debt Issuance Costs
Income Taxes
Deferred tax assetsCosts incurred in connection with the issuance of long-term debt are deferred and liabilitiespresented as a direct reduction from the face amount of that debt and amortized over the related financing period using the effective interest method. Debt issuance costs related to a line-of-credit or revolving credit facility are recognized fordeferred and presented as an asset and amortized over the future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities, and their respective income tax bases. We establish an allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Our tax positionsrelated financing period. Make-whole payments in connection with early debt retirements are evaluated under a more likely than not recognition threshold and measurement analysis before they are recognized for financial statement reporting. Uncertain tax positions have been classified as noncurrent income tax liabilities unless expected to be paid within one year. Our policy for interest and penalties is to recognize interest and penalties as a component of the provision for income taxescash flows used in the Consolidated Statement of Operations.

Income taxes payable, which are includable in allowable costs for ratemaking purposes in future years, are recorded as regulatory assets or liability with a corresponding deferred tax liability or asset. Investment tax credits that reduced federal income taxes in the years they arose have been deferred and are being amortized to income over the useful lives of the properties in accordance with regulatory treatment. See Note 3 – Regulatory Matters for additional information.

DPL and its subsidiaries file U.S. federal income tax returns as part of the consolidated U.S. income tax return filed by AES. The consolidated tax liability is allocated to each subsidiary based on the separate return method which is specified in our tax allocation agreement and which provides a consistent, systematic and rational approach. See Note 8 – Income Taxes for additional information.

financing activities.
Financial Instruments
Our Master Trust investments in debt and equity financial instruments of publicly traded entities are classified as equity investments. These equity securities are carried at fair value and unrealized gains and losses on these securities are recorded in Other income. As these financial instruments are held to be used for the benefit of employees or former employees participating in employee benefit plans and are not used for general operating purposes, they are classified as non-current in Other deferrednon-current assets on the Consolidated Balance Sheets. See

Note 5 – Fair Value for additional information.
Held-for-sale Businesses
F-11

A business classifiedFinancial Derivatives
All derivatives are recognized as held-for-sale is reflected oneither assets or liabilities in the balance sheetsheets and are measured at fair value. Changes in the lower of its carrying amount or estimated fair value less costare recorded in earnings unless the derivative is designated as a cash flow hedge of a forecasted transaction or it qualifies for the normal purchases and sales exception.
We have, in the past, used interest rate hedges to sell. A loss is recognized ifmanage the carrying amountinterest rate risk of our variable rate debt. We use cash flow hedge accounting when the hedge or a portion of the business exceeds its estimatedhedge is deemed to be highly effective, which results in changes in fair value less costbeing recorded within accumulated other comprehensive income / (loss), a component of shareholder’s deficit. We have elected not to sell. This loss is limited tooffset net derivative positions in the carrying value of long-lived assets until the completion of the sale, at which point, any additional loss is recognized. Iffinancial statements. Accordingly, we do not offset such derivative positions against the fair value of amounts recognized for the business subsequently exceeds the carrying amount while the business is still held-for-sale, any impairment expense previously recognized will be reversed upright to the lower of the previously recognized expensereclaim cash collateral or the subsequent excess.obligation to return cash collateral under master netting agreements. See Note 6 – Derivative Instruments and Hedging Activities for additional information.

Insurance and Claims Costs
AssetsIn addition to insurance obtained from third-party providers, MVIC, a wholly-owned captive subsidiary of DPL, provides insurance coverage solely to us and our subsidiaries for workers’ compensation, general liability and property damage on an ongoing basis. Insurance and claims costs associated with MVIC include estimated liabilities related to a business classified as held-for-saleof approximately $3.2 million and $4.5 million at December 31, 2020 and 2019, respectively, within Accrued and other current liabilities on the DPL Consolidated Balance Sheets. DPL has estimated liabilities for medical, life, disability and other reserves for claims costs below certain coverage thresholds of third-party providers of approximately $11.1 million and $3.3 million at December 31, 2020 and 2019, respectively, within Accrued and other current liabilities and Other non-current liabilities on the balance sheets. The estimated liabilities for workers’ compensation, medical, life and disability costs at DPL are segregated inactuarially determined using certain assumptions. There is uncertainty associated with these loss estimates, and actual results may differ from the current balance sheetestimates. Modification of these loss estimates based on experience and changed circumstances is reflected in the period in which the businessestimate is classified as held-for-sale. Assetsre-evaluated.
Revenue Recognition
Revenues are recognized from retail and liabilitieswholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of held-for-sale businesses are classified as current when they are expectedcontrol of promised goods or services to customers in an amount that reflects the consideration to which we expect to be disposed of within twelve months. Transactions between the business held-for-sale and businesses thatentitled in exchange for those goods or services. Energy sales to customers are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held-for-sale. See Note 15 – Discontinued Operations for further information.

Discontinued Operations
Discontinued operations reporting occurs only when the disposal of a business or a group of assets represents a strategic shift that has (or will have) a major effect on our operations and financial results. We report financial results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Prior period amounts in the statement of operations and balance sheet are retrospectively revised to reflect the businesses determined to be discontinued operations. The cash flows of businesses that are determined to be discontinued operations are included within the relevant categories within operating, investing and financing activitiesbased on the facereading of their meters that occurs on a systematic basis throughout the month. We recognize the revenues on our Consolidated Statements of Cash Flows.

Transactions betweenOperations using an accrual method for retail and other energy sales that have not yet been billed, but where electricity has been consumed. This is termed “unbilled revenues” and is a widely recognized and accepted practice for utilities. At the businessesend of each month, unbilled revenues are determined by the estimation of unbilled energy provided to be discontinued operations and businesses that are expected to continue to exist aftercustomers since the disposal are not eliminated to appropriately reflect the continuing operations and balances held-for-sale. The results of discontinued operations include any gain or loss recognized on closing or adjustmentdate of the carrying amountlast meter reading, estimated line losses, the assignment of unbilled energy provided to fair value. Seecustomer classes and the average rate per customer class. For additional information, see Note 1514 – Discontinued Operations for further information.


Revenue.
Accounting for Taxes Collected from Customers and Remitted to Governmental Authorities
DP&L collects certain excise taxes levied by state or local governments from its customers. DP&L’s excise taxes and certain other taxes are accounted for on a net basis and recorded as a reduction in revenues in the accompanying Consolidated Statements of Operations. The amounts for the years ended December 31, 2020, 2019 and 2018, 2017were $48.1 million, $50.1 million and 2016, were $51.7 million, $49.4 million and $50.9 million, respectively.

Cash and Cash Equivalents
Cash and cash equivalents are stated at cost, which approximates fair value. All highly liquid short-term investments with original maturities of three months or less are considered cash equivalents.

Restricted Cash
Restricted cash includes cash which is restricted as to withdrawal or usage. The nature of the restrictionsrestriction includes restrictions imposed by agreementsan agreement related to deposits held as collateral and cash collected under the DMR, which iswas restricted to pay debt obligations at DPL and DP&L and position DP&L to modernize and/or maintain its transmission and distribution infrastructure.

The following table provides a summary ofsummarizes cash, cash equivalents and restricted cash amounts reported on the Consolidated Balance SheetSheets that reconcile to the total of such amounts as shown on the Consolidated Statements of Cash Flows:
December 31,
$ in millions20202019
Cash and cash equivalents$25.4 $36.5 
Restricted cash0.1 10.5 
Cash, Cash Equivalents and Restricted Cash, End of Period$25.5 $47.0 
$ in millions December 31, 2018 December 31, 2017
Cash and cash equivalents $90.5
 $24.5
Restricted cash 21.2
 0.4
Cash, Cash Equivalents, and Restricted Cash, End of Period $111.7
 $24.9

Allowance for Credit Losses
We establish provisions for uncollectible accounts by using both historical average loss percentages to project future losses and by establishing specific provisions for known credit issues. Amounts are written off when reasonable collections efforts have been exhausted.
Inventories
Inventories are carried at average cost, net of reserves, and include materials and supplies used for utility operations.
Regulatory Accounting
As a regulated utility, DP&L applies the provisions of FASC 980 “Regulated Operations”, which gives recognition to the ratemaking and accounting practices of the PUCO and the FERC. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory assets can also represent performance incentives permitted by the regulator. Regulatory assets have been included as allowable costs for ratemaking purposes, as authorized by the PUCO or established regulatory practices. Regulatory liabilities generally represent obligations to make refunds or future rate reductions to customers for previous over collections or the deferral of revenues collected for costs that DP&L expects to incur in the future.
The deferral of costs (as regulatory assets) is appropriate only when the future recovery of such costs is probable. In assessing probability, we consider such factors as specific orders from the PUCO or FERC, regulatory precedent and the current regulatory environment. To the extent recovery of costs is no longer deemed probable, related regulatory assets would be required to be expensed in current period earnings. Our regulatory assets and liabilities have been created pursuant to a specific order of the PUCO or FERC or established regulatory practices, such as other utilities under the jurisdiction of the PUCO or FERC being granted recovery of similar costs. It is probable, but not certain, that these regulatory assets will be recoverable, subject to PUCO or FERC approval. Regulatory assets and liabilities are classified as current or non-current based on the term in which recovery is expected. See Note 3 – Regulatory Matters for more information.
F-10

Property, Plant and Equipment
New property, plant and equipment additions are stated at cost. For regulated transmission and distribution property, cost includes direct labor and material, allocable overhead expenses and an allowance for funds used during construction (AFUDC). AFUDC represents the cost of borrowed funds and equity used to finance regulated construction projects. Capitalization of AFUDC and interest ceases at either project completion or at the date specified by regulators. AFUDC and capitalized interest was $3.0 million, $3.2 million and $0.5 million in the years ended December 31, 2020, 2019 and 2018, respectively.
For substantially all depreciable property, when a unit of property is retired, the original cost of that property less any salvage value is charged to Accumulated depreciation and amortization, consistent with composite depreciation practices.
Impairment of Long-lived Assets
GAAP requires that we test long-lived assets for impairment when indicators of impairment exist. If an asset is deemed to be impaired, we are required to write down the asset to its fair value with a charge to current earnings. The net book value of our property, plant, and equipment was $1,565.3 million and $1,445.6 million as of December 31, 2020 and 2019, respectively. We do not believe any of these assets are currently impaired. In making this assessment, we consider such factors as: the overall condition and distribution capacity of the assets; the expected ability to recover additional expenditures in the assets; and the anticipated demand and relative pricing of retail electricity in our service territory.
Depreciation
Depreciation expense is calculated using the straight-line method, which allocates the cost of property over its estimated useful life. For DPL’s transmission and distribution assets, straight-line depreciation is applied monthly on an average composite basis using group rates that approximated 3.8% in 2020, 4.0% in 2019 and 4.3% in 2018. Depreciation expense was $70.0 million, $67.9 million and $69.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Intangibles
Intangibles include software, emission allowances and renewable energy credits. Emission allowances are carried on a first-in, first-out (FIFO) basis for purchased emission allowances. Net gains or losses on the sale of excess emission allowances, representing the difference between the sales proceeds and the cost of emission allowances, are recorded as a component of our fuel costs and are reflected in Operating income when realized. Emission allowances are amortized as they are used in our operations on a FIFO basis. Renewable energy credits are carried on a weighted average cost basis and amortized as they are used or retired.
Software is amortized over seven years. Amortization expense was $3.3 million, $4.4 million and $6.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. The estimated amortization expense of this internal-use software over the next five years is $10.7 million ($3.0 million in 2021, $2.2 million in 2022, $2.0 million in 2023, $1.8 million in 2024 and $1.7 million in 2025).
Implementation Costs Related to Software as a Service
DPL has recorded prepayments for implementation costs related to software as a service in support of utility customer services of $4.1 million and these are recorded within Other Non-current Assets on the accompanying Consolidated Balance Sheets as of December 31, 2020.
Debt Issuance Costs
Costs incurred in connection with the issuance of long-term debt are deferred and presented as a direct reduction from the face amount of that debt and amortized over the related financing period using the effective interest method. Debt issuance costs related to a line-of-credit or revolving credit facility are deferred and presented as an asset and amortized over the related financing period. Make-whole payments in connection with early debt retirements are classified as cash flows used in financing activities.
Financial Instruments
Our Master Trust investments in debt and equity financial instruments of publicly traded entities are classified as equity investments. These equity securities are carried at fair value and unrealized gains and losses on these securities are recorded in Other income. As these financial instruments are held to be used for the benefit of employees or former employees participating in employee benefit plans and are not used for general operating purposes, they are classified as non-current in Other non-current assets on the Consolidated Balance Sheets. See
Note 5 – Fair Value for additional information.
F-11

Financial Derivatives
All derivatives are recognized as either assets or liabilities in the balance sheets and are measured at fair value. Changes in the fair value are recorded in earnings unless the derivative is designated as a cash flow hedge of a forecasted transaction or it qualifies for the normal purchases and sales exception.

We usehave, in the past, used interest rate hedges to manage the interest rate risk of our variable rate debt. We use cash flow hedge accounting when the hedge or a portion of the hedge is deemed to be highly effective, which results in changes in fair value being recorded within accumulated other comprehensive income / (loss), a component of shareholder’s equity.deficit. We have elected not to offset net derivative positions in the financial statements. Accordingly, we do not offset such derivative positions against the fair value of amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral under master netting agreements. See Note 6 – Derivative Instruments and Hedging Activities for additional information.

Insurance and Claims Costs
In addition to insurance obtained from third-party providers, MVIC, a wholly-owned captive subsidiary of DPL, provides insurance coverage solely to us and our subsidiaries for workers’ compensation, general liability and property damage on an ongoing basis. Insurance and Claims Costs on DPL’s Consolidated Balance Sheetsclaims costs associated with MVIC include estimated liabilities of approximately $4.1$3.2 million and $3.0$4.5 million at December 31, 20182020 and 2017, respectively. 2019, respectively, within Accrued and other current liabilities on the DPL Consolidated Balance Sheets. DPL has estimated liabilities for medical, life, disability and other reserves for claims costs below certain coverage thresholds of third-party providers of approximately $4.3$11.1 million and $4.4$3.3 million at December 31, 20182020 and 2017,2019, respectively, within OtherAccrued and other current liabilities and Other deferred creditsnon-current liabilities on the balance sheets. The estimated liabilities for workers’ compensation, medical, life and disability costs at DPL are actuarially determined using certain assumptions. There is uncertainty associated with these loss estimates, and actual results may differ from the estimates. Modification of these loss estimates based on experience and changed circumstances is reflected in the period in which the estimate is re-evaluated.

Revenue Recognition
Revenues are recognized from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Energy sales to customers are based on the reading of their meters that occurs on a systematic basis throughout the month. We recognize the revenues on our Consolidated Statements of Operations using an accrual method for retail and other energy sales that have not yet been billed, but where electricity has been consumed. This is termed “unbilled revenues” and is a widely recognized and accepted practice for utilities. At the end of each month, unbilled revenues are determined by the estimation of unbilled energy provided to customers since the date of the last meter reading, estimated line losses, the assignment of unbilled energy provided to customer classes and the average rate per customer class. For additional information, see Note 14 – Revenue.
Accounting for Taxes Collected from Customers and Remitted to Governmental Authorities
DP&L collects certain excise taxes levied by state or local governments from its customers. DP&L’s excise taxes and certain other taxes are accounted for on a net basis and recorded as a reduction in revenues in the accompanying Consolidated Statements of Operations. The amounts for the years ended December 31, 2020, 2019 and 2018, were $48.1 million, $50.1 million and $51.7 million, respectively.
Repairs and Maintenance
Costs associated with maintenance activities are recognized at the time the work is performed. These costs, which include labor, materials and supplies and outside services required to maintain equipment and facilities, are capitalized or expensed based on defined units of property.
Pension and Postretirement Benefits
We recognize in our Consolidated Balance Sheets an asset or liability reflecting the funded status of pension and other postretirement plans with current-year changes from actuarial gains or losses related to our regulated operations, that would otherwise be recognized in AOCI,AOCL, recorded as a regulatory asset as this can be recovered through future rates. Such changes that are not related to our regulated operations are recognized in AOCI.AOCL. All plan assets are recorded at fair value. We follow the measurement date provisions of the accounting guidance, which require a year-end measurement date of plan assets and obligations for all defined benefit plans.
F-12


We account for and disclose pension and postretirement benefits in accordance with the provisions of GAAP relating to the accounting for pension and other postretirement plans. These GAAP provisions require the use of assumptions, such as the discount rate for liabilities and long-term rate of return on assets, in determining the obligations, annual cost and funding requirements of the plans. Consistent with the requirements of FASC 715, we apply a disaggregated discount rate approach for determining service cost and interest cost for our defined benefit pension plans and postretirement plans.

See Note 9 – Benefit Plans for more information.

Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of the existing assets and liabilities and their respective income tax bases. We establish an allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Our tax positions are evaluated under a more likely than not recognition threshold and measurement analysis before they are recognized for financial statement reporting. Uncertain tax positions have been classified as noncurrent income tax liabilities unless expected to be paid within one year. Our policy for interest and penalties is to recognize interest and penalties as a component of the provision for income taxes in the Consolidated Statement of Operations.
Income taxes payable, which are includable in allowable costs for ratemaking purposes in future years, are recorded as regulatory assets or liabilities with a corresponding deferred tax liability or asset. Investment tax credits that reduced federal income taxes in the years they arose have been deferred and are being amortized to income over the useful lives of the properties in accordance with regulatory treatment. See Note 3 – Regulatory Matters for additional information.
DPL and its subsidiaries file U.S. federal income tax returns as part of the consolidated U.S. income tax return filed by AES. The consolidated tax liability is allocated to each subsidiary based on the separate return method which is specified in our tax allocation agreement and which provides a consistent, systematic and rational approach. See Note 8 – Income Taxes for additional information.
Related Party Transactions
In the normal course of business, DPL enters into transactions with related parties. All material intercompany accounts and transactions are eliminated in DPL’s Consolidated Financial Statements.

See Note 12 – Related Party Transactions for more information on Related Party Transactions.

DPL Capital Trust II
DPL has a wholly-owned business trust, DPL Capital Trust II (the Trust), formed for the purpose of issuing trust capital securities to third-party investors. Effective inIn 2003, DPL deconsolidated the Trust upon adoption of the accounting standards related to variable interest entities and currently treats the Trust as an unconsolidated subsidiary. The Trust holds mandatorily redeemable trust capital securities. The investment in the Trust, which amounts to $0.2 million and $0.3$0.2 million at December 31, 20182020 and 2017,2019, respectively, is included in Other deferred assets within Other noncurrent assets. assets on the consolidated balance sheets. DPL also has a note payable to the Trust amounting to $15.6 million and $15.6 million at December 31, 20182020 and 2017,2019, respectively, that was established upon the Trust’s deconsolidation in 2003. See Note 7 – Long-term debt for additional information.

In addition to the obligations under the note payable mentioned above, DPL also agreed to a security obligation which represents a full and unconditional guarantee of payments to the capital security holders of the Trust.
Held-for-sale Businesses
A business classified as held-for-sale is reflected on the balance sheet at the lower of its carrying amount or estimated fair value less cost to sell. A loss is recognized if the carrying amount of the business exceeds its estimated fair value less cost to sell. This loss is limited to the carrying value of long-lived assets until the completion of the sale, at which point, any additional loss is recognized. If the fair value of the business subsequently exceeds the carrying amount while the business is still held-for-sale, any impairment expense previously recognized will be reversed up to the lower of the previously recognized expense or the subsequent excess.
Assets and liabilities related to a business classified as held-for-sale are segregated in the current balance sheet in the period in which the business is classified as held-for-sale. Assets and liabilities of held-for-sale businesses are classified as current when they are expected to be disposed of within twelve months. Transactions between the business held-for-sale and businesses that are expected to continue to exist after the disposal are not eliminated to
F-13


appropriately reflect the continuing operations and balances held-for-sale. See Note 15 – Discontinued Operations for further information.

Discontinued Operations
Discontinued operations reporting occurs only when the disposal of a business or a group of assets represents a strategic shift that has (or will have) a major effect on our operations and financial results. We report financial results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Prior period amounts in the statement of operations and balance sheet are retrospectively revised to reflect the businesses determined to be discontinued operations. The cash flows of businesses that are determined to be discontinued operations are included within the relevant categories within operating, investing and financing activities on the face of the Consolidated Statements of Cash Flows.
Transactions between the businesses determined to be discontinued operations and businesses that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held-for-sale. The results of discontinued operations include any gain or loss recognized on closing or adjustment of the carrying amount to fair value. See Note 15 – Discontinued Operations for further information.
New accounting pronouncements adopted in 2018
The following table provides a brief description of recently adoptedrecent accounting pronouncements that had an impact on our consolidated financial statements. Accounting pronouncements not listed below were assessed and determined to be either not applicable or did not have a material impact on our consolidated financial statements.
Accounting StandardDescriptionDate of AdoptionEffect on the financial statements upon adoption
New Accounting Standards Adopted
2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)2016-13, 2018-19, 2019-04, 2019-05, 2019-10, Financial Instruments — Credit Losses (Topic 326): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service ContractMeasurement of Credit Losses on Financial InstrumentsThis standard alignsSee discussion of the accounting for implementation costs incurred for a cloud computing arrangement that is a service with the requirement for capitalizing implementation costs associated with developing or obtaining internal-use software.
Transition method: retrospective or prospective.ASUs below.		OctoberJanuary 1, 20182020.We elected to early-adopt this standard on a prospective basis, effective for fiscal year 2018. The adoption of this standard did not have ahad no material impacteffect on our consolidated financial statements.
2018-14, Compensation— Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20): Disclosure FrameworkThis standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.
Transition method: retrospective.		Early adoption elected, January 1, 2018Impact limited to changes in financial statement disclosures.
2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit CostThis standard changes the presentation of non-service costs associated with defined benefit plans and updates the guidance so that only the service cost component will be eligible for capitalization.
Transition method: retrospective for presentation of non-service cost and prospective for the change in capitalization.		January 1, 2018For the years ended December 31, 2017 and 2016 we reclassified non-service pension costs from Operating expenses to Other expense of $2.2 million and $3.2 million, respectively.
2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)This standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.
Transition method: retrospective.		January 1, 2018For the years ended December 31, 2017 and 2016, we reclassified from "Net cash used in investing activities" to "Net increase / (decrease) in cash, cash equivalents and restricted cash" $27.1 million and ($11.8) million, respectively.
2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
The standard significantly revises an entity’s accounting related to (1) classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosures of financial instruments.
Transition method: modified retrospective. Prospective for equity investments without readily determinable fair value.
January 1, 2018We adopted this standard January 1, 2018. At that date, we transferred $1.6 million ($1.0 million net of tax) of unrealized gains from AOCI to Accumulated Deficit.
2014-09, 2015-14, 2016-08, 2016-10, 2016-12, 2016-20, 2017-10, 2017-13, Revenue from Contracts with Customers (Topic 606)See discussion of the ASU below.January 1, 2018See impact upon adoption of the standard below.

Adoption of FASC Topic 606, "Revenue from Contracts with Customers"326, "Financial Instruments - Credit Losses"
On January 1, 2018,2020, we adopted ASU 2014-09, "Revenue from Contracts with Customers",ASC 326 Financial Instruments - Credit Losses and its subsequent corresponding updates ("FASC 606"ASC 326"). The core principlenew standard updates the impairment model for financial assets measured at amortized cost, known as the Current Expected Credit Loss ("CECL") model. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities are required to use a new forward-looking "expected loss" model that generally results in the earlier recognition of this standard isan allowance for credit losses. For available-for-sale debt securities with unrealized losses, entities measure credit losses as it was done under previous GAAP, except that unrealized losses due to credit-related factors are now recognized as an entity shall recognize revenueallowance on the balance sheet with a corresponding adjustment to depictearnings in the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. income statement.
We applied the modified retrospective method of adoption to those contracts which were not completed asfor ASC 326. Under this transition method, we applied the transition provisions starting at the date of January 1, 2018. Results for reporting periods beginning January 1, 2018 are presented under FASC 606, while prior period amounts were not adjusted and continue to be reportedadoption. The CECL model primarily impacts the calculation of our expected credit losses in accordance with our historic accounting under the previous revenue recognition standard. For contracts that were modified before January 1, 2018, we have not retrospectively restated the contracts for modifications. We instead reflected the aggregate effect of all modifications when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price. We do not expect thegross customer trade accounts receivable. The adoption of ASC 326 and the new revenue standard toapplication of CECL on our trade accounts receivable did not have a material impact toon our net income on an ongoing basis.


There was no cumulative effect to our January 1, 2018 Consolidated Balance Sheet resulting from the adoption of FASC 606.

Financial Statements.
New accounting pronouncements issued but not yet effective - The following table provides a brief description of recent accounting pronouncements that could have a material impact on our consolidated financial statements. Accounting pronouncements not listed below were assessed and determined to be either not applicable or are expected to have no material impact on our consolidated financial statements.
Accounting StandardDescriptionDate of AdoptionEffect on the financial statements upon adoption
New Accounting Standards Issued but Not Yet Effective
2018-02, Income Statement - Reporting Comprehensive Income2020-04, Reference Rate Reform (Topic 220), Reclassification of Certain Tax Effects from AOCIThis amendment allows a reclassification848): Facilitation of the stranded tax effects resulting from the implementationEffects of the Tax Cuts and Jobs Act from AOCI to retained earnings. Because this amendment only relates to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected.Reference Rate Reform on Financial ReportingJanuary 1, 2019. Early adoption is permitted.We do not expect any impact on our consolidated financial statements upon adoption of the standard on January 1, 2019.
2017-12, Derivatives and Hedging (Topic 815): Targeted improvements to Accounting for Hedging Activities
The standard updates the hedge accounting modelprovides optional expedients and exceptions for applying GAAP to expand the abilitycontracts, hedging relationships and other transactions that reference to hedge nonfinancial and financial risk components, reduce complexity, and ease certain documentation and assessment requirements. When facts and circumstances are the same as at the previous quantitative test,LIBOR or another reference rate expected to be discontinued by reference rate reform. This standard is effective for a subsequent quantitative effectiveness test is not required. The standard also eliminates the requirement to separately measure and report hedge ineffectiveness. For cash flow hedges, this means that the entire change in the fair valuelimited period of a hedging instrument will be recorded in other comprehensive income and amounts deferred will be reclassified to earnings in the same income statement line as the hedged item in the period in which it settles.
Transition method: modified retrospective with the cumulative effect adjustment recorded to the opening balance of retained earningstime (March 12, 2020 - December 21, 2022).
Effective for all entities as of the initial application date. Prospective for presentation and disclosures.March 12, 2020 through December 31, 2022.January 1, 2019. Early adoption is permitted.We are currently evaluating the impact of adopting the standard on our consolidated financial statements.
2018-19, 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
The standard updates the impairment model for financial assets measured at amortized cost. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses as it is done today, except that the losses will be recognized as an allowance rather than a reduction in the amortized cost of the securities.
Transition method: various.
January 1, 2020. Early adoption is permitted only as of January 1, 2019.We are currently evaluating the impact of adopting the standard on our consolidated financial statements.
2016-02, 2018-01, 2018-10, 2018-11, 2018-20
Leases (Topic 842)		See discussion of the ASU below.January 1, 2019. Early adoption is permitted.We have adopted the standard on January 1, 2019; see below for the evaluation of the impact of its adoption on our consolidated financial statements.
F-14

Adoption of FASC Topic 842, "Leases"
ASU 2016-02 and its subsequent corresponding updates require lessees to recognize assets and liabilities for most leases but recognize expenses in a manner similar to today’s accounting. For lessors, the guidance modifies the lease classification criteria and the accounting for sales-type and direct financing leases. The guidance also eliminates today’s real estate-specific provisions.

The standard must be adopted using a modified retrospective approach. The FASB has provided an optional transition method, which we have elected, that allows entities to continue to apply the guidance in FASC 840 Leases to the comparative periods presented in the year of adoption. Under this transition method, we will apply the transition provisions starting on January 1, 2019.

We have elected to apply a package of practical expedients that allow lessees and lessors not to reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) whether initial direct costs for any expired or existing leases qualify for capitalization under FASC 842. These three practical expedients must be elected as a package and must be consistently applied to all leases.

We have also elected to apply an optional transition practical expedient for land easements that allows an entity to continue applying its current accounting policy for all land easements that exist before the standard’s effective date that were not previously accounted for under FASC 840.

We established a task force focused on the identification of contracts that would be under the scope of the new standard and on the assessment and measurement of the right-of-use assets and related liabilities. Additionally, the implementation team has been working on the configuration of a lease accounting tool that will support the implementation and the subsequent accounting. The implementation team has also evaluated changes to our business processes, systems and controls to support recognition and disclosure under the new standard.

Under FASC 842, it is expected that fewer contracts will contain a lease. However, due to the elimination of the real estate-specific guidance and changes to certain lessor classification criteria, more leases will qualify as sales-type leases and direct financing leases. Under these two models, a lessor will derecognize the asset and will recognize a lease receivable. According to FASC 842, the lease receivable includes the fair value of the plant after the contract period but does not include any variable payments such as margin on the sale of energy. Therefore, the lease receivable could be significantly different than the carrying amount of the underlying asset at lease commencement. In such circumstances, the difference between the initially recognized lease receivable and the carrying amount of the underlying asset is recognized as a gain/loss at lease commencement.

The adoption of FASC 842 did not have a material impact on our consolidated financial statements.

Note 2 – Supplemental Financial Information
  December 31,
$ in millions 2018 2017
Accounts receivable, net    
Customer receivables $55.8
 $45.2
Unbilled revenue 16.8
 18.0
Due from PJM transmission enhancement settlement (a)
 16.5
 —
Other 2.3
 2.5
Provisions for uncollectible accounts (0.9) (1.1)
Total accounts receivable, net $90.5
 $64.6
     
Inventories, at average cost    
Fuel and limestone $1.9
 $4.1
Materials and supplies 8.3
 8.1
Other 0.5
 0.5
Total inventories, at average cost $10.7
 $12.7

Accounts receivable are as follows at December 31, 2020 and 2019:
December 31,
$ in millions20202019
Accounts receivable, net
Customer receivables$48.5 $45.7 
Unbilled revenue21.6 19.4 
Amounts due from affiliates0.2 0.3 
Due from PJM transmission enhancement settlement (a)
1.7 1.8 
Other0.5 1.1 
Allowance for credit losses(2.8)(0.4)
Total accounts receivable, net$69.7 $67.9 

(a) -    See Note 3 – Regulatory Matters for more information.


The following table is a rollforward of our allowance for credit losses related to the accounts receivable balances for the year ended December 31, 2020:
$ in millionsBeginning Allowance Balance at January 1, 2020Current Period ProvisionWrite-offs Charged Against AllowancesRecoveries CollectedEnding Allowance Balance at December 31, 2020
Allowance for credit losses$0.4 $3.0 $(2.3)$1.7 $2.8 

The allowance for credit losses primarily relates to utility customer receivables, including unbilled amounts. Expected credit loss estimates are developed by disaggregating customers into those with similar credit risk characteristics and using historical credit loss experience. In addition, we also consider how current and future economic conditions would impact collectability, as applicable, including the economic impacts of the COVID-19 pandemic on our receivable balance as of December 31, 2020. Amounts are written off when reasonable collections efforts have been exhausted. On March 12, 2020, the PUCO issued an emergency order prohibiting electric utilities, including us, from discontinuing electric utility service to customers through September 1, 2020 due to the economic impacts of COVID-19. This order along with the economic impacts of COVID-19 has resulted in an increase in past due customer receivable balances, and thus the current period provision and the allowance for credit losses have increased during 2020. See Note 17 – Risks & Uncertainties for additional discussion of the COVID-19 pandemic.
However, as discussed in Note 3 – Regulatory Matters, DP&L’s uncollectible expense is deferred for future collection.
F-15

Accumulated Other Comprehensive Income / (Loss)
The amounts reclassified out of Accumulated Other Comprehensive Income / (Loss) by component during the years ended December 31, 2018, 20172020, 2019 and 20162018 are as follows:
Details about Accumulated Other Comprehensive Income / (Loss) ComponentsAffected line item in the Consolidated Statements of OperationsYears ended December 31,
$ in millions202020192018
Gains and losses on cash flow hedges (Note 6):
Interest expense(1.1)(1.2)(1.2)
Income tax expense0.2 0.1 0.4 
Net of income taxes(0.9)(1.1)(0.8)
Loss from discontinued operations0 0 4.4 
Tax benefit from discontinued operations0 (0.4)(1.2)
Net of income taxes0 (0.4)3.2 
Amortization of defined benefit pension items (Note 9):
Other expense1.3 0.2 0.8 
Income tax benefit(0.3)0 (0.2)
Net of income taxes1.0 0.2 0.6 
Total reclassifications for the period, net of income taxes$0.1 $(1.3)$3.0 
Details about Accumulated Other Comprehensive Income / (Loss) Components Affected line item in the Consolidated Statements of Operations Years ended December 31,
$ in millions   2018 2017 2016
Gains and losses on equity securities (Note 5):      
  Other deductions $—
 $(0.1) $—
  Income tax expense —
 —
 —
  Net of income taxes —
 (0.1) —
         
Gains and losses on cash flow hedges (Note 6):      
  Interest expense (1.2) (1.0) (1.0)
  Income tax benefit 0.4
 0.3
 0.5
  Net of income taxes (0.8) (0.7) (0.5)
         
  Gain / (loss) from discontinued operations 4.4
 (11.4) (45.4)
  Tax benefit / (expense) from discontinued operations (1.2) 4.1
 16.2
  Net of income taxes 3.2
 (7.3) (29.2)
         
Amortization of defined benefit pension items (Note 9):      
  Other income 0.8
 1.5
 1.6
  Income tax expense (0.2) (0.5) (0.6)
  Net of income taxes 0.6
 1.0
 1.0
         
Total reclassifications for the period, net of income taxes $3.0
 $(7.1) $(28.7)


The changes in the components of Accumulated Other Comprehensive Income / (Loss) during the years ended December 31, 20182020 and 20172019 are as follows:
$ in millionsGains / (losses) on cash flow hedgesChange in unfunded pension obligationTotal
Balance at January 1, 2019$17.0 $(14.8)$2.2 
Other comprehensive loss before reclassifications(1.0)(3.5)(4.5)
Amounts reclassified from accumulated other comprehensive income / (loss) to earnings(1.5)0.2 (1.3)
Net current period other comprehensive loss(2.5)(3.3)(5.8)
Balance at December 31, 201914.5 (18.1)(3.6)
Other comprehensive loss before reclassifications0 (8.8)(8.8)
Amounts reclassified from accumulated other comprehensive loss to earnings(0.9)1.0 0.1 
Net current period other comprehensive loss(0.9)(7.8)(8.7)
Balance at December 31, 2020$13.6 $(25.9)$(12.3)
$ in millions Gains / (losses) on equity securities Gains / (losses) on cash flow hedges Change in unfunded pension obligation Total
Balance at December 31, 2016 $0.6
 $13.1
 $(13.4) $0.3
         
Other comprehensive income / (loss) before reclassifications 0.5
 9.6
 (2.5) 7.6
Amounts reclassified from accumulated other comprehensive income / (loss) (0.1) (8.0) 1.0
 (7.1)
Net current period other comprehensive income / (loss) 0.4
 1.6
 (1.5) 0.5
         
Balance at December 31, 2017 1.0
 14.7
 (14.9) 0.8
         
Other comprehensive loss before reclassifications —
 (0.1) (0.5) (0.6)
Amounts reclassified from accumulated other comprehensive income to earnings —
 2.4
 0.6
 3.0
Net current period other comprehensive income —
 2.3
 0.1
 2.4
         
Amounts reclassified from accumulated other comprehensive income to accumulated deficit (a)
 (1.0) —
 —
 (1.0)
         
Balance at December 31, 2018 $—
 $17.0
 $(14.8) $2.2


(a)ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities” was effective as of January 1, 2018. This ASU requires the change in the fair value of equity instruments to be recorded in income rather than in OCI. Equity Instruments were defined to include all mutual funds, regardless of the underlying investments. Therefore, as of January 1, 2018, AOCI of $1.6 million ($1.0 million net of tax) was reversed to Accumulated Deficit.

Note 3 – Regulatory Matters

DP&L ESP and SEET Proceedings
Ohio law requires utilities to file either an ESP or MRO plan to establish SSO rates. From November 1, 2017 through December 18, 2019, DP&L operated pursuant to an approved ESP plan, which was initially approved on October 20, 2017 (ESP 3). On November 21, 2019, the PUCO issued a supplemental order modifying the ESP 3 Stipulation by, among other matters, removing the DMR, which reduced DPL’s annual revenues by $105.0 million beginning November 29, 2019. As a result, DP&L filed a Notice of Withdrawal of its ESP 3 Application and requested to revert to rates based on its ESP 1. On December 18, 2019, the PUCO approved DP&L’s Notice of Withdrawal and reversion to its ESP 1 rate plan. Among other items, the PUCO Order approving the ESP 1 rate
F-16

plan includes:
Reinstating the non-bypassable RSC Rider, which provides annual revenues of approximately $79.0 million;
•Continuation of DP&L’s Transmission Cost Recovery Rider, Storm Rider and the bypassable standard offer energy rate for DP&L’s customers based on competitive bid auctions;
•A placeholder rider to recover grid modernization costs, called the Infrastructure Investment Rider; and
•A requirement to conduct both an ESP v. MRO Test and a prospective SEET no later than April 1, 2020.
Separate from the ESP process, DP&L filed a petition seeking recovery of ongoing OVEC costs through a Legacy Generation Rider and was granted approval effective January 1, 2020.
DP&L filed its ESP v. MRO Test to validate that the ESP is expected to be more favorable in the aggregate than what would be experienced under an MRO, and a prospective SEET, with the PUCO on April 1, 2020. DP&L is also subject to an annual retrospective SEET whereby it must demonstrate its return on equity is not significantly excessive.
On October 23, 2020, DP&L entered into a Stipulation and Recommendation (the Settlement) with the staff of the PUCO and various customers, and organizations representing customers of DP&L and certain other parties with respect to, among other matters, DP&L’s applications pending at the PUCO for (i) approval of DP&L’s plan to modernize its distribution grid (the Smart Grid Plan), (ii) findings that DP&L passed the SEET for 2018 and 2019, and (iii) findings that DP&L’s current ESP 1 satisfies the SEET and the more favorable in the aggregate (MFA) regulatory test. The settlement is subject to, and conditioned upon, approval by the PUCO. A hearing was conducted January 11 - 15, 2021 for consideration of this settlement. The settlement would provide, among other items, for the following:
•Approval of the Smart Grid Plan outlined in the Smart Grid Plan application filed by DP&L with the PUCO, as modified by the terms of the settlement, including, subject to offsetting operational benefits and certain other conditions, a return on and recovery of up to $249.0 million of Smart Grid Plan Phase 1 capital investments and recovery of operational and maintenance expenses through DP&L’s existing Infrastructure Investment Rider for a term of four years, under an aggregate cap of $267.6 million on the amount of such investments and expenses that is recoverable, and an acknowledgement that DP&L may file a subsequent application with the PUCO within three years seeking approvals for Phase 2 of the Smart Grid Plan;
•A commitment by DP&L to invest in a customer information system and supporting technologies during Phase 1 of the Smart Grid Plan, with DP&L recovering a return on and of prudently incurred capital investments and operational and maintenance expenses, including deferred operational and maintenance expense amounts, in a future rate case;
•A determination that DP&L’s ESP 1 satisfies the prospective SEET and the MFA regulatory test;
•A recommendation by parties to the settlement that the PUCO also finds that DP&L satisfies the retrospective SEET for 2018 and 2019;
•A commitment by DP&L to file an application with the PUCO no later than October 1, 2023 for a new electric security plan that does not seek to implement certain non-bypassable charges, including those related to provider of last resort risks, stability, or financial integrity; and
•DP&L shareholder funding, in an aggregate amount of approximately $30.0 million over four years, for certain economic development discounts, incentives, and grants to certain commercial and industrial customers, including hospitals and manufacturers, assistance for low-income customers as well as the residents and businesses of the City of Dayton, and promotion of solar and resiliency development within DP&L’s service territory.
Certain parties which intervened in the ESP proceedings have filed petitions for rehearing of the recent PUCO ESP orders; some of which seek to eliminate DP&L’s RSC from the ESP 1 rates that are currently in place and others seek to re-implement ESP 3, but without the DMR. We are unable to predict the outcomes of these petitions, but if these result in terms that are more adverse than DP&L's current ESP rate plan, it could have a material adverse effect on our results of operations, financial condition and cash flows. The parties signing the above-referenced Settlement have agreed to withdraw their respective petitions if the Settlement is approved by the PUCO without material modification.
Decoupling
On January 23, 2021 DP&L filed with the PUCO requesting approval to defer its decoupling costs consistent with the methodology approved in its Distribution Rate Case. If approved, deferral would be effective December 18, 2019
F-17

and going forward would reduce impacts of weather, energy efficiency programs and economic changes in customer demand.
COVID-19
In response to the PUCO’s COVID-19 emergency orders, DP&L filed an Application on March 23, 2020, requesting waivers of certain rule and tariff requirements and deferral of certain costs and revenues including those related to deposits and reconnection fees, late payment fees, credit card fees; and waived or uncollected amounts associated with putting customers on payment plans. On May 20, 2020, the PUCO approved the application and required DP&L to file a plan outlining the timing and steps it plans to take in an effort to return to normal operations. The authorized deferral of those certain costs and revenues must be offset by COVID-19 related savings. DP&L filed its plan on July 15, 2020 and was approved by the PUCO on August 12, 2020. As a result, DP&L has recorded a $1.2 million regulatory asset as of December 31, 2020. Recovery of these deferrals will be addressed in a future
rate proceeding.
Distribution Rate Order
On September 26, 2018 the PUCO issued the DRO establishing new base distribution rates for DP&L,, which became effective October 1, 2018. The DRO approved, without modification, a stipulation and recommendation

previously filed by DP&L,, along with various intervening parties and the PUCO staff. The DRO established a revenue requirement of $248.0 millionfor DP&L's&L's electric service base distribution rates which reflects an increase to distribution revenues of approximately $29.8 million per year. In addition to the increase in base distribution rates, and among other matters, the DRO provides for$248.0 million.
Distribution Rate Case
On November 30, 2020, DP&L filed a return on equity of 9.999% and a cost of long-term debt of 4.8% and for the following items:

DIR– The DRO authorized DP&L to begin charging a Distribution Investment Rider ("DIR") set initially at $12.2 million annually, effective October 1, 2018. The DIR revenue requirement shall be updated quarterly and will increase as DP&L makes qualified investments in its distribution network, subject to annual revenue limits which increase each year; the revenue limit for 2019 is $22.0 million. The DIR will expire in November 2022 unless DP&L files a basenew distribution rate case on or before October 31, 2022, in whichwith the PUCO. This rate case proposes a revenue increase of $120.8 million per year and incorporates the DIR will expire in November 2023.

Decoupling Rider – The DRO eliminated provisionsinvestments that were planned and approved in the existing decoupling rider which allowed DP&L to recover lost revenues resulting fromlast rate case but not yet included in distribution rates, other distribution investments since September 2015 and investments necessitated by the implementation of energy efficiency programs and replaced it with a revenue requirementtornados that attempts to eliminate the impacts of weather and demandoccurred on DP&L’s revenues from residential and commercial distribution customers beginning January 1,Memorial Day in 2019. As a result, in years with very mild weather and/or decreased demand, DP&L will be able to accrue a regulatory asset for recovery through the rider to normalize the revenues. Conversely, in periods of extreme temperatures or high demand for electricity, DP&L may record a liability for future reimbursement to customers. The riderrate case also includes a one-time $3.7 million revenue requirement based on the increase in the numberproposal for increased tree-trimming expenses and certain customer demand-side management programs and recovery of DP&L’s residentialprior-approved regulatory assets for tree trimming, uncollectible expenses and commercial customers from the rate case test year until September 30, 2018. Such amount was accrued and included in revenues in the third quarter of 2018 and will be collected by DP&L in 2019.expense.

TCJA – The DRO partially resolved the TCJA impacts. The new distribution rates include the impacts of the decrease in current federal income taxes beginning October 1, 2018. The DRO did not designate how much DP&L may owe for any overcollection of taxes from January 1, 2018 through September 30, 2018, nor did it resolve any decrease in future rates related to amortization of excess accumulated deferred income taxes (“ADIT”). The DRO did, however, stipulate that DP&L must refund its customers an amount no less than $4.0 million per year for the first five years of the amortization period unless all balances owed are fully returned within the first five years. For more on the impacts of the TCJA, see below.

Vegetation Management Costs – The DRO authorizes DP&L to defer as a regulatory asset, with no carrying costs, annual expenses for vegetation management performed by third-party vendors. For calendar year 2018 annual expenses which are incremental to the baseline of $10.7 million can be deferred up to a $4.6 million cap. For calendar years 2019 and thereafter, annual expenses in excess of $15.7 million can be deferred up to a $4.6 million annual cap. Annual spending of less than the vegetation management baseline amounts will result in a reduction to the regulatory asset or creation of a regulatory liability. For 2018, DP&L accrued a regulatory asset for the maximum amount of $4.6 million based upon such provisions and spending above the baseline.

In December 2018, DP&L filed a Distribution Modernization Plan (“DMP”) with the PUCO proposing to invest $576.0 million in capital projects over the next 10 years. There are eight principal components of DP&L’s DMP: 1) Smart Meters, 2) Self-Healing Grid, 3) Customer Engagement, 4) Enhancing Sustainability and Embracing Innovation. 5) Telecommunications, 6) Physical and Cyber Security, 7) Governance and Analytics, and 8) Grid Modernization R&D.

ESP Order
On March 13, 2017, DP&L filed an amended stipulation to its 2017 ESP, which was subject to approval by the PUCO. A final decision was issued by the PUCO on October 20, 2017, modifying and adopting the amended stipulation and recommendation. The six-year 2017 ESP establishes DP&L's framework for providing retail service on a going-forward basis including rate structures, non-bypassable charges and other specific rate recovery true-up mechanisms which include, but are not limited to, the following:
•
Bypassable standard offer energy rates for DP&L’s customers based on competitive bid auctions;
•
The establishment of a three year non-bypassable Distribution Modernization Rider (DMR) designed to collect $105.0 million in revenue per year to pay debt obligations at DPL and DP&L and position DP&L to modernize and/or maintain its transmission and distribution infrastructure with an option for DP&L to file for

an extension of the rider for an additional two years in an amount subject to approval by the PUCO. Consistent with that settlement and the PUCO order, on January 22, 2019, DP&L filed a request to extend the DMR for the additional two years at an annual revenue amount of $199.0 million. That request is pending PUCO review;
•
The establishment of a non-bypassable Distribution Investment Rider to recover incremental distribution capital investments, the amount of which was established in the DP&L DRO;
•
A non-bypassable Reconciliation Rider permitting DP&L to defer, recover or credit the net proceeds from selling energy and capacity received as part of DP&L’s investment in OVEC and DP&L's OVEC related costs;
•
Implementation by DP&L of a Smart Grid Rider, Economic Development Rider, Economic Development Fund, Regulatory Compliance Rider and certain other new, or changes to existing, rates, riders and competitive retail market enhancements, with tariffs consistent with the order. These riders became effective November 1, 2017;
•
A commitment to commence a sale process to sell our ownership interests in the Miami Fort, Zimmer and Conesville coal-fired generation plants, with all sales proceeds used to pay debt of DPL and DP&L;
•
Restrictions on DPL making dividend or tax sharing payments and an obligation to convert then existing tax payments owed by DPL to AES into equity investments in DPL. See Note 8 – Income Taxes and Note 10 – Equity for more information on the tax sharing payment restrictions; and
Various other riders and competitive retail market enhancements.

On October 19, 2018 IGS, a retail electricity supplier, filed a Notice of Withdrawal from the amended settlement, citing a material modification by the PUCO's October 2017 order. To address the withdrawal, the PUCO established a new procedural schedule, including a hearing currently scheduled to begin April 1, 2019. Additionally, on January 7, 2019, the Ohio Consumers' Counsel appealed the 2017 ESP Order to the Supreme Court of Ohio. That appeal is pending.

DP&L is subject to a SEET threshold and is required to apply general rules for calculating earnings and comparing them to a comparable group to determine whether there were significantly excessive earnings during a given calendar year. The 2017 ESP maintains DP&L’s return on equity SEET threshold at 12% and provides that DMR amounts are excluded from the SEET calculation. On October 22, 2018, a stipulation was reached agreeing that DP&L did not exceed the SEET threshold for 2016 or 2017. That stipulation is pending PUCO approval. In future years, the SEET could have a material effect on results of operations, financial condition and cash flows.

Impact of Tax Reform
On January 10, 2018 the PUCO initiated a proceeding to consider the impacts of the TCJA to determine the appropriate course of action to pass benefits resulting from the legislation on to ratepayers. The PUCO also directed Ohio utilities to record deferred liabilities for the estimated reduction in federal income tax resulting from the TCJA beginning January 1, 2018. Under the terms of the ESP, DPL will not make tax sharing payments. Under the terms of the stipulation in the distribution rate case mentioned above, DP&L agreed to file filed an application at the PUCO by March 1, 2019 to refund eligible excess accumulated deferred income taxes (ADIT) and any related regulatory liability over a ten-year period.10-year period with a minimum reversal of $4.0 million per year over the first five years. Excess ADIT related to depreciation life and method differences will be returned to customers in accordance with federal tax law and related regulations. DP&L’s rates were set using the new tax rate as a result of the distribution rate case. Consistent with the DRO requirement, DP&L filed an application on March 1, 2019 and subsequently entered into a stipulation to resolve all remaining TCJA items related to its distribution rates. That stipulation was approved by the PUCO on September 26, 2019. In accordance with terms of that stipulation, DP&L will return a total of $65.1 million ($83.2 million when including taxes associated with the refunds). In connection with this stipulation, we reduced our long-term regulatory liability related to deferred income taxes by $23.4 million in 2019. See Note 8 – Income Taxes for additional information.

FERC Proceedings
On May 8, 2018, DP&L filed to adjust its FERC jurisdictional transmission rates to reflect the effects of the decrease in federal income tax rates on the current portion of income tax expense as part of the TCJA, resulting in a decrease of approximately $2.4 million annually. The revised rates are in effect and all DP&L over and undercollections dating back to the March 21st effective date were settled in December 2018.

On November 15, 2018 the FERC issued a Notice of Proposed Rulemaking (NOPR) to address amortization of excess accumulated deferred income taxes resulting from the TCJA and their impact on transmission rates. Such notice requires all public utility transmission providers with stated transmission rates under an Open Access Transmission Tariff (OATT) to determine the amount of excess deferred income taxes caused by the TCJA. TCJA.
On March 3, 2020, DP&L filed an application before the FERC seeking to change its existing stated transmission rates to formula transmission rates that would be updated each calendar year. This filing was approved and made effective as of May 3, 2020, subject to possible refunds if the approved rates were modified. An uncontested settlement was filed December 10, 2020, which if approved, would be a reduction from the proposed rate which would require refunds for transmission services provided and billed after May 3, 2020. This settlement provides for an increase of approximately $7.0 million on an annualized basis from the rates in effect prior to the March 3, 2020 filing that was allowed to go into effect May 3, 2020. Among other things, the settlement establishes new depreciation rates for DP&L’s transmission assets and an authorized return on equity of 9.85%, which would rise to 9.99% if the FERC were to approve in a separate ongoing proceeding a return on equity “adder” to recognize DP&L’s continued membership in PJM. The settlement is unable to predictpending FERC approval which is expected early in the outcomefirst
F-18

quarter of 2021. The NOPR, therefore, was addressed and resolved as part of this notice or the impact it may have on our Consolidated Financial Statementsformula transmission rate proceeding .

PJM Transmission Enhancement Settlement
On May 31, 2018, the FERC issued an Order on Contested Settlement regarding the cost allocation method for existing and new transmission facilities contained in the PJM Interconnection’s OATT. The FERC order approved

the settlement which reduces DP&L’s transmission costs through PJM beginning in August 2018, including credits to reimburse DP&L for amounts overcharged in prior years. DP&L estimates the prior overcharge by PJM to be $41.6$40.8 million,, of which approximately $14.3$32.1 million has been repaid to DP&L through December 31, 20182020 and $16.5$1.7 million is classified as current in "Accounts"Accounts receivable, net" and $10.8$7.0 million is classified as non-current in "Other deferred"Other non-current assets" on the accompanying Consolidated Balance Sheet. All of the transmission charges and credits impacted by this FERC order are items that are included for full recovery in DP&L’s nonbypassable non-bypassable TCRR. Accordingly, DP&L has also established offsetting regulatory liabilities. While this development will have a temporary cash flow benefit to DP&L,, there is no impact to operating income or net income as all credits will be passed to DP&L’s customers through the TCRR, which began in November 2018.

Regulatory Assets and Liabilities
In accordance with FASC 980, we have recognized total regulatory assets of $193.7$221.1 million and $187.1$193.5 million at December 31, 20182020 and 2017,2019, respectively, and total regulatory liabilities of $313.2$236.3 million and $236.0$271.5 million at December 31, 20182020 and 2017,2019, respectively. Regulatory assets and liabilities are classified as current or non-current based on the term in which recovery is expected. See Note 1 – Overview and Summary of Significant Accounting Policies for accounting policies regarding Regulatory Assets and Liabilities.

F-19

The following table presents DPL’s Regulatory assets and liabilities:
  Type of Recovery Amortization Through December 31,
$ in millions   2018 2017
Regulatory assets, current:        
Undercollections to be collected through rate riders A/B
2019 $40.5
 $23.9
Rate case expenses being recovered in base rates B 2019 0.6
 —
Total regulatory assets, current 


 41.1
 23.9
         
Regulatory assets, non-current: 


    
Pension benefits B
Ongoing 87.5
 92.4
Unrecovered OVEC charges C
Undetermined 28.7
 27.8
Fuel costs B
2020 3.3
 9.3
Regulatory compliance costs B
2020 6.1
 9.2
Smart grid and AMI costs B
Undetermined 8.5
 7.3
Unamortized loss on reacquired debt B
Various 6.0
 7.0
Deferred storm costs A
Undetermined 4.7
 2.1
Deferred vegetation management and other A/B Undetermined 7.8
 8.1
Total regulatory assets, non-current 


 152.6
 163.2
  


    
Total regulatory assets 


 $193.7
 $187.1
  


    
Regulatory liabilities, current: 


    
Overcollection of costs to be refunded through rate riders A/B
2019 $34.9
 $14.8
Total regulatory liabilities, current 


 34.9
 14.8
         
Regulatory liabilities, non-current: 


    
Estimated costs of removal - regulated property 

Not Applicable 139.1
 132.8
Deferred income taxes payable through rates 

Various 116.3
 83.4
PJM transmission enhancement settlement A 2025 16.9
 —
Postretirement benefits B
Ongoing 6.0
 5.0
Total regulatory liabilities, non-current 


 278.3
 221.2
  


    
Total regulatory liabilities 


 $313.2
 $236.0


Type of RecoveryAmortization ThroughDecember 31,
$ in millions20202019
Regulatory assets, current:
Undercollections to be collected through rate ridersA/B2021$26.8 $19.1 
Rate case expenses being recovered in base ratesB20210.7 0.6 
Total regulatory assets, current27.5 19.7 
Regulatory assets, non-current:
Pension benefitsBOngoing94.4 83.9 
Unrecovered OVEC chargesCUndetermined28.9 29.1 
Regulatory compliance costsBUndetermined6.3 6.3 
Smart grid and AMI costsBUndetermined8.5 8.5 
Unamortized loss on reacquired debtBVarious7.1 10.0 
Deferred storm costsAUndetermined11.5 5.1 
Deferred vegetation management and otherA/BUndetermined15.7 12.7 
Decoupling deferralCUndetermined13.8 13.8 
Uncollectible deferralCUndetermined7.4 4.4 
Total regulatory assets, non-current193.6 173.8 
Total regulatory assets$221.1 $193.5 
Regulatory liabilities, current:
Overcollection of costs to be refunded through rate ridersA/B2021$18.0 $27.9 
Total regulatory liabilities, current18.0 27.9 
Regulatory liabilities, non-current:
Estimated costs of removal - regulated propertyNot Applicable138.8 143.6 
Deferred income taxes payable through ratesVarious61.2 73.6 
TCJA regulatory liabilityBOngoing7.2 12.9 
PJM transmission enhancement settlementA20257.0 8.9 
Postretirement benefitsBOngoing4.1 4.6 
Total regulatory liabilities, non-current218.3 243.6 
Total regulatory liabilities$236.3 $271.5 
A – Recovery of incurred costs plus rate of return.
B – Recovery of incurred costs without a rate of return.
C – Recovery not yet determined, but recovery is probable of occurring in future rate proceedings.

Current regulatory assets and liabilities primarily represent costs that are being recovered per specific rate order; recovery for the remaining costs is probable, but not certain. DP&L is earning a net return on $5.5 million of this net deferral. These items include undercollection of:costs include: (i) Distribution Modernizationthe Energy Efficiency Rider, revenues, (ii) decoupling rider (see above),the Alternative Energy Rider, (iii) uncollectible riderthe Legacy Generation Resource Rider, (iv) the Economic Development Rider and (iv) energy efficiency rider. It also includesthe (v) Transmission Cost Recovery Rider. Also included are the current portion of the following deferred fuel costs and rate case expense costs which do not earn a return and are described in greater detail below: unbilled fuel,below. Current regulatory compliance rider costs and deferred storm costs. As current liabilities this includesinclude the overcollection of: (i)of competitive bidding energy and auction costs (ii) energy efficiency program costs, (iii) alternative energy rider, (iv) economic development rider, (v)and certain transmission related costs, including the current portion of the PJM transmission enhancement settlement and the TCJA regulatory liability (see above).
DP&L is earning a return on $16.3 million of this net current deferral including: (i) the Energy Efficiency Rider, (ii) the Alternative Energy Rider, (iii) the Legacy Generation Resource Rider, (iv) the Economic Development Rider and (vi) reconciliation rider.


(v) the Transmission Cost Recovery Rider. These regulatory assets are partially offset by the overcollection of competitive bidding energy and auction costs.
Pension benefits represent the qualifying FASC 715 “Compensation - Retirement Benefits” costs of our regulated operations that for ratemaking purposes are deferred for future recovery. We recognize an asset for a plan’s overfunded status or a liability for a plan’s underfunded status, and recognize, as a component of OCI, the changes in the funded status of the plan that arise during the year that are not recognized as a component of net periodic benefit cost. This regulatory asset represents the regulated portion that would otherwise be charged as a loss to OCI. As per PUCO and FERC precedents, these costs are probable of future rate recovery.
F-20

Unrecovered OVEC charges includes the portion of charges from OVEC that were not recoverable through DP&L’s fuel rider Fuel Rider from October 2014 through October 2017. Additionally, it includes net OVEC costs from December 19, 2019 through December 31, 2019. DP&L expects to recover these costs through a future rate proceeding. Beginning on November 1, 2017, suchthrough December 18, 2019, current OVEC costs arewere being recovered through DP&L’s Reconciliation Rider reconciliation rider which was authorized as part of the 2017 ESP.

Fuel costs represent unrecovered fuelESP 3. Beginning January 1, 2020, DP&L began recovering its current net OVEC costs relatedthrough its Legacy Generation Rider, established pursuant to ORC 4928.148.DP&L’s fuel rider from 2010 through 2015 resulting from a declining SSO customer base. DP&L was granted recovery of these costs without a return through the SSO as approved in the 2017 ESP. These costs are being recovered over the three-year period that began November 1, 2017.

Regulatory compliance ridercosts representsrepresent the long-term portion of the regulatory compliance ridercosts which was established by the 2017 ESP to recoverinclude the following costs: (i) Consumer Education Campaign, (ii) Retail Settlement System, (iii) Generation Separation, (iv) Bill Format Redesign, (v) Green Pricing Tariff and (vi) Supplier Consolidated Billing. All of these costs except for Generation Separation earn a return. These costs arewere being recovered over a three-year period.period that began November 1, 2017 through a rider approved in the ESP 3. That rider was eliminated with the approval of the ESP 1 rate plan, so the balance as of December 18, 2019 remains a regulatory asset for future recovery.

Rate case costsexpenses represents costs associated with preparing a distribution rate case. cases. DP&L was granted recovery of these costs for the 2015 case which do not earn a return, as part of the DRO. Recovery of costs for the 2020 case were included in the pending filing.

Smart Grid and AMI costs represent costs incurred as a result of studying and developing distribution system upgrades and implementation of AMI. On October 19, 2010, DP&L elected to withdraw its case pertaining to the Smart Grid and AMI programs. TheIn a PUCO accepted the withdrawal in an order issued on January 5, 2011. The2011, the PUCO also indicated that it expects DP&L to continue to monitor other utilities’ Smart Grid and AMI programs and to explore the potential benefits of investing in Smart Grid and AMI programs and that DP&L will, when appropriate, file new Smart Grid and/or AMI business cases in the future. DP&L requested recovery of theseThese costs as part ofare included in the December 2018 DMP filing with the PUCOOctober 23, 2020 settlement described earlier.above.

Unamortized loss on reacquired debt represents losses on long-term debt reacquired or redeemed in prior periods that have been deferred. These deferred losses are being amortized over the lives of the original issues in accordance with the rules of the FERC and the PUCO.

Deferred storm costs represent the long-term portion of deferred costs for major storms which occurred during 20172018, 2019 and 2018. The 2017 ESP granted 2020. DP&L approval to establish a rider by which to seek recovery of these types of costs with a return. DP&L plans to file petitions seeking recovery of each calendar year of storm costs in the following calendar year. DP&L plans to file petitions seeking recovery of cash calendar year's storm costs in the following calendar year. Recovery of these costs is probable, by 2020, but not certain.

Vegetation management costs represents costs incurred from outside contractors for tree trimming and other vegetation management services. Calculation terms were agreed to in the stipulation approved in the DRO. The terms were an annual baseline of $10.7 million in 2018 and $15.7 million thereafter. Amounts over the baseline will be deferred subject to an annual deferral maximum of $4.6 million. Annual spending less than the vegetation management baseline amount will result in a reduction to the regulatory asset or creation of a regulatory liability. These costs are included in DP&L's pending distribution rate case application.
Decoupling deferral represents the change in the revenue requirement based on a per customer methodology in the stipulation approved in the DRO and includes deferrals through December 18, 2019. These costs were previously recovered through a Decoupling Rider; however, DP&L withdrew its application in the ESP 3 and in doing so, the PUCO ordered on December 18, 2019 in the ESP 1 order, that DP&L no longer has a Decoupling Rider. As described above, DP&L filed a petition seeking authority to record a regulatory asset to accrue revenues that would have otherwise been collected through the Decoupling Rider.
Uncollectible deferral represents deferred uncollectible expense associated with the nonpayment of electric service, less the revenues associated with the bypassable uncollectible portion of the standard offer rate. The DRO established that these costs would be recovered in a rider outside of base rates, thus no uncollectible expense is included in base rates. These costs are included in our pending distribution rate case.
Estimated costs of removal - regulated property reflect an estimate of amounts collected in customer rates for costs that are expected to be incurred in the future to remove existing transmission and distribution property from service when the property is retired.

Deferred income taxes payable through rates represent deferred income tax liabilities recognized from the normalization of flow-through items as the result of taxes previously charged to customers. A deferred income tax asset or liability is created from a difference in income recognition between tax laws and accounting methods. As a regulated utility, DP&L includes in ratemaking the impacts of current income taxes and changes in deferred income tax liabilities or assets. On December 22, 2017, the TCJA was signed, which includes a provision to, among other things, reduce the federal corporate income tax rate to 21%, beginning January 1, 2018. As required by GAAP, on December 31, 2017, DP&L remeasured its deferred income tax assets and liabilities using the new expected tax rate. DP&L believes that the portion of the reduction in the net deferred tax liability which is related to deferred taxes considered in ratemaking will be used in future ratemaking to reduce jurisdictional retail rates. Accordingly, this liability reflects the estimated deferred taxes DP&L expects to return to customers in future periods.
F-21

TCJA regulatory liability represents the long-term portion of both protected and unprotected excess ADIT for both transmission and distribution portions, grossed up to reflect the revenue requirement. As a part of the DRO, DP&L agreed that savings from the TCJA attributable to distribution facilities, including the excess ADIT and the regulatory liability, constitute amounts that will be returned to customers. As a result of the TCJA and subsequent DRO, DP&L entered into a stipulation to resolve all remaining TCJA items related to its distribution rates, including a proposal to return no less than $4.0 million per year for the first five years unless fully returned in the first five years via a tax savings cost rider for the distribution portion of the balance. On September 26, 2019, an order approved the stipulation in its entirety.

PJM Transmission Enhancement Settlement liability represents the Transmission Enhancement Settlement charges for which DP&L is due a refund per FERC Order EL05-121-009 issued on May 31, 2018. The Order states that customers are due a refund for part of these charges which will be received starting August 2018 through 2025. Refunds received will be returned to customers via the transmission cost rider.
Postretirement benefits represent the qualifying FASC 715 “Compensation – Retirement Benefits” gains related to our regulated operations that, for ratemaking purposes, are probable of being reflected in future rates. We recognize an asset for a plan’s overfunded status or a liability for a plan’s underfunded status, and recognize, as a component of OCI, the changes in the funded status of the plan that arise during the year that are not recognized as a component of net periodic benefit cost. This regulatory liability represents the regulated portion that would otherwise be reflected as a gain to OCI.

Note 4 – Property, Plant and Equipment

The following is a summary of DPL’s Property, plant and equipment with corresponding composite depreciation rates at December 31, 20182020 and 2017:2019:
December 31, 2020December 31, 2019
$ in millionsComposite RateComposite Rate
Regulated:
Transmission$273.0 3.2%$235.8 3.9%
Distribution1,453.7 4.0%1,364.2 4.1%
General17.7 7.6%16.5 9.0%
Non-depreciable65.1 N/A61.6 N/A
Total regulated1,809.5 1,678.1 
Unregulated:
Other24.8 4.5%19.0 7.6%
Non-depreciable5.0 N/A4.8 N/A
Total unregulated29.8 23.8 
Total property, plant and equipment in service$1,839.3 3.8%$1,701.9 4.0%
  December 31, 2018 December 31, 2017
$ in millions   Composite Rate   
Composite Rate (a)
Regulated:        
Transmission $223.2
 4.1% $242.7
 4.0%
Distribution 1,289.8
 4.5% 1,197.5
 4.9%
General 13.2
 8.5% 13.7
 7.1%
Non-depreciable 60.4
 N/A 64.7
 N/A
Total regulated 1,586.6
   1,518.6
  
Unregulated:        
Production / Generation —
 N/A 0.2
 N/A
Other 21.2
 6.7% 21.1
 7.0%
Non-depreciable 7.8
 N/A 4.2
 N/A
Total unregulated 29.0
   25.5
  
         
Total property, plant and equipment in service $1,615.6
 4.3% $1,544.1
 5.0%


(a)Composite rates for 2017 include property classified in non-current assets of discontinued operations and held-for-sale businesses.

In June 2018, DP&L closed on a transmission asset transaction with Duke and AEP, where ownership stakes in certain previously co-owned transmission assets were exchanged to eliminate co-ownership. Each previously co-owned transmission asset became wholly-owned by one of DP&L,, Duke or AEP after the transaction. This transaction also resulted in cash proceeds to DP&L of $10.6$10.6 million and no gain or loss was recorded on the transaction.

AROs
We recognizerecognized 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 arewere associated with the retirement of our long-lived assets, consisting primarily of river intake and discharge structures, coal unloading facilities, loading docks, ice breakersasbestos abatement and ash disposal facilities. OurAs of December 31, 2020, our generation AROs related tohave all been settled through the sale of our interest in Conesville the closed Hutchings EGU, and the previously owned Beckjord Facility are recorded within Asset retirement obligations on the consolidated balance sheets. The generation AROs related to our other retired or sold generation facilities are recorded in Non-current liabilities of discontinued operations and held-for-sale businesses on the consolidated balance sheets and are excluded from the table below.Hutchings Coal Station. See Note 1516 – Discontinued OperationsDispositions for additional information.

F-22

Estimating the amount and timing of future expenditures of this type requires significant judgment. ManagementPreviously, management routinely updatesupdated these estimates as additional information becomesbecame available.


Changes in the Liability for AROs
20202019
Balance as of January 1$4.7 $4.7 
Settlements (a)
(4.7)0 
Balance as of December 31$0 $4.7 
$ in millions 
Balance at December 31, 2016$15.0
Calendar 2017 
Revisions to cash flow and timing estimates(0.1)
Accretion expense0.4
Settlements(0.2)
Balance at December 31, 201715.1
Calendar 2018 
Revisions to cash flow and timing estimates(2.6)
Accretion expense0.3
Settlements (a)
(3.4)
Balance at December 31, 2018$9.4


(a)Primarily includes settlement related to transfer of Beckjord Facility. See Note 16 – Dispositions for additional information.

(a)    Settlements related to sale of DP&L's Hutchings Coal Station. See Note 516 – Fair ValueDispositions for further discussionmore information on ARO revisions to cash flow and timing estimates.the sale of the Hutchings Coal Station.

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 $139.1$138.8 million and $132.8$143.6 million in estimated costs of removal at December 31, 20182020 and 2017,2019, 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 Regulatory Liability for Transmission and Distribution Asset Removal Costs
20202019
Balance as of January 1$143.6 $139.1 
Additions15.6 14.8 
Settlements(20.4)(10.3)
Balance as of December 31$138.8 $143.6 
$ in millions 
Balance at December 31, 2016$126.5
Calendar 2017 
Additions12.0
Settlements(5.7)
Balance at December 31, 2017132.8
Calendar 2018 
Additions14.3
Settlements(8.0)
Balance at December 31, 2018$139.1



Note 5 – Fair Value

The fair values of our financial instruments are based on published sources for pricing when possible. We rely on valuation models only when no other method is available to us. The fair value of our financial instruments represents estimates of possible value that may or may not be realized in the future.

The table below presents the fair value and cost of our non-derivative financial instruments at December 31, 20182020 and 2017.2019. See Note 6 – Derivative Instruments and Hedging Activities for the fair values of our derivative instruments.
December 31, 2020December 31, 2019
$ in millionsCostFair ValueCostFair Value
Assets
Money market funds$0.3 $0.3 $0.3 $0.3 
Equity securities2.1 4.5 2.3 4.2 
Debt securities4.0 4.1 4.0 4.1 
Hedge funds0 0 0.1 0.1 
Tangible assets0 0 0.1 0.1 
Total assets$6.4 $8.9 $6.8 $8.8 
Carrying ValueFair ValueCarrying ValueFair Value
Liabilities
Long-term debt$1,393.6 $1,571.6 $1,363.1 $1,404.0 
  December 31, 2018 December 31, 2017
$ in millions Cost Fair Value Cost Fair Value
Assets        
Money market funds $0.4
 $0.4
 $0.3
 $0.3
Equity securities 2.4
 3.5
 2.5
 4.2
Debt securities 4.1
 4.0
 4.3
 4.3
Hedge funds 0.1
 0.1
 0.1
 0.2
Tangible assets 0.1
 0.1
 0.1
 0.1
Total assets $7.1
 $8.1
 $7.3
 $9.1
         
  Carrying Value Fair Value Carrying Value Fair Value
Liabilities        
Long-term debt $1,475.9
 $1,519.6
 $1,704.8
 $1,819.3

F-23


Fair Value Hierarchy
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. These inputs are then categorized as:
•Level 1 (quoted prices in active markets for identical assets or liabilities);
•Level 2 (observable inputs such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active); or
•Level 3 (unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability).

Valuations of assets and liabilities reflect the value of the instrument including the values associated with counterparty risk. We include our own credit risk and our counterparty’s credit risk in our calculation of fair value using global average default rates based on an annual study conducted by a large rating agency.

We did not have any transfers of the fair values of our financial instruments among Level 1, Level 2 or Level 3 of the fair value hierarchy during the years ended December 31, 20182020 and 2017.2019.

Debt
The fair value of debt is based on current public market prices for disclosure purposes only. Unrealized gains or losses are not recognized in the financial statements as debt is presented at the carrying value, net of unamortized premium or discount, in the financial statements. The debt amounts include the current portion payable in the next twelve months and have maturities that range from 20192025 to 2061.

Master Trust Assets
DP&L established a Master Trust to hold assets that could be used for the benefit of employees participating in employee benefit plans and these assets are not used for general operating purposes. ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities” was effective as of January 1, 2018. This ASU requires the change in the fair value of equity instruments to be recorded in income rather than in OCI. Equity Instruments were defined to include all mutual funds, regardless of the underlying investments. Therefore, as of January 1, 2018, AOCI of $1.6$1.6 million ($1.0 million net of tax) was reversed to Accumulated Deficit and all future changes to fair value on the Master Trust Assets will be included in income in the period that the changes occur. These changes to fair value were not material for the year ended December 31, 2018. These assets are primarily comprised of open-ended mutual funds, which are valued using the net asset value per unit. These investments are recorded at fair value within Other deferrednon-current assets on the consolidated balance sheets and classified as available for sale.

Duringequity securities. Gains and losses on these assets were not material during the yearyears ended December 31, 2018, $0.5 million ($0.4 million after tax) of various investments were sold to facilitate the distribution of benefits.2020, 2019 or 2018.
F-24


The fair value of assets and liabilities at December 31, 20182020 and 20172019 and the respective category within the fair value hierarchy for DPL was determined as follows:
$ in millionsFair Value at December 31, 2020 (a)Fair Value at December 31, 2019 (a)
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Master trust assets
Money market funds$0.3 $0 $0 $0.3 $0.3 $0 $0 $0.3 
Equity securities0 4.5 0 4.5 0 4.2 0 4.2 
Debt securities0 4.1 0 4.1 0 4.1 0 4.1 
Hedge funds0 0 0 0 0 0.1 0 0.1 
Tangible assets0 0 0 0 0 0.1 0 0.1 
Total Master trust assets0.3 8.6 0 8.9 0.3 8.5 0 8.8 
Derivative assets
Interest rate hedge0 0 0 0 0 0.1 0 0.1 
Total Derivative assets0 0 0 0 0 0.1 0 0.1 
Total assets$0.3 $8.6 $0 $8.9 $0.3 $8.6 $0 $8.9 
Liabilities
Long-term debt$0 $1,554.2 $17.4 $1,571.6 $0 $1,386.5 $17.5 $1,404.0 
Total liabilities$0 $1,554.2 $17.4 $1,571.6 $0 $1,386.5 $17.5 $1,404.0 
$ in millions Fair Value at December 31, 2018 (a) Fair Value at December 31, 2017 (a)
  Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets                
Master trust assets                
Money market funds $0.4
 $—
 $—
 $0.4
 $0.3
 $—
 $—
 $0.3
Equity securities —
 3.5
 —
 3.5
 —
 4.2
 —
 4.2
Debt securities —
 4.0
 —
 4.0
 —
 4.3
 —
 4.3
Hedge funds —
 0.1
 —
 0.1
 —
 0.2
 —
 0.2
Tangible assets —
 0.1
 —
 0.1
 —
 0.1
 —
 0.1
Total Master trust assets 0.4
 7.7
 —
 8.1
 0.3
 8.8
 —
 9.1
Derivative assets                
Interest rate hedge —
 1.5
 —
 1.5
 —
 1.5
 —
 1.5
Total Derivative assets —
 1.5
 —
 1.5
 —
 1.5
 —
 1.5
                 
Total assets $0.4
 $9.2
 $—
 $9.6
 $0.3
 $10.3
 $—
 $10.6
                 
Liabilities                
Long-term debt $—
 $1,501.9
 $17.7
 $1,519.6
 $—
 $1,801.5
 $17.8
 $1,819.3
                 
Total liabilities $—
 $1,501.9
 $17.7
 $1,519.6
 $—
 $1,801.5
 $17.8
 $1,819.3


(a)Includes credit valuation adjustment

(a)Includes credit valuation adjustment
Our financial instruments are valued using the market approach in the following categories:
•Level 1 inputs are used for money market accounts that are considered cash equivalents. The fair value is determined by reference to quoted market prices and other relevant information generated by market transactions.
•Level 2 inputs are used to value derivatives such as interest rate hedge contracts which are valued using a benchmark interest rate. Other Level 2 assets include open-ended mutual funds in the Master Trust, which are valued using the end of day NAV per unit.
•Level 3 inputs such as certain debt balances are considered a Level 3 input because the notes are not publicly traded. Our long-term debt is fair valued for disclosure purposes only.

All of the inputs to the fair value of our derivative instruments are from quoted market prices.

Our long-term debt is fair valued for disclosure purposes only and most of the fair values are determined using quoted market prices in inactive markets. These fair value inputs are considered Level 2 in the fair value hierarchy. As the Wright-Patterson Air Force Base note is not publicly traded, fair value is assumed to equal carrying value. These fair value inputs are considered Level 3 in the fair value hierarchy as there are no observable inputs. Additional Level 3 disclosures are not presented since our long-term debt is not recorded at fair value.

Non-recurring Fair Value Measurements
We use the cost approach to determine the fair value of our AROs, which are estimated by discounting expected cash outflows to their present value at the initial recording of the liability. Cash outflows are based on the approximate future disposal cost as determined by market information, historical information or other management estimates. These inputs to the fair value of the AROs would be considered Level 3 inputs under the fair value hierarchy. In 2018, DPL recorded a net reduction to its ARO liability for Conesville's ash pond and landfill of $2.6 million to reflect revisions to cash flow and timing estimates. The balance of AROs was $9.4 million and $15.1 million at December 31, 2018 and 2017, respectively, which excludes AROs associated with our discontinued operations. See Note 15 – Discontinued Operations for additional information on AROs associated with our discontinued operations.

When evaluating impairment of long-lived assets, we measure fair value using the applicable fair value measurement guidance. Impairment expense is measured by comparing the fair value at the evaluation date to the carrying amount.


The following table summarizes major categories of assets measured at fair value on a nonrecurring basis during the period and their level within the fair value hierarchy:
  Measurement Carrying Fair Value Gross
$ in millions Date Amount (b) Level 1 Level 2 Level 3 Loss
Long-lived assets (a)
            
    Year ended December 31, 2016
Conesville December 31, 2016 $25.0
 $—
 $—
 $1.1
 23.9

(a)See Note 17 – Fixed-asset Impairments for further information
(b)Carrying amount at date of valuation

The following summarizes the significant unobservable inputs used in the Level 3 measurement on a non-recurring basis during the year ended December 31, 2016:
$ in millions Measurement date Fair value Valuation technique Unobservable input Range (weighted average)
Long-lived assets held and used:
    Year ended December 31, 2016
Conesville December 31, 2016 $1.1
 Discounted cash flow Annual revenue growth -19.3% to 10.9% (0.6%)
        Annual pre-tax operating margin -54.3% to 99.4% (20.2%)
        Weighted-average cost of capital N/A


Note 6 – Derivative Instruments and Hedging Activities

In the normal course of business, DPL enters into various financial instruments, including derivative financial instruments. We use derivatives principally to manage the interest rate risk associated with our long-term debt. The derivatives that we use to economically hedge these risks are governed by our risk management policies for forward and futures contracts. Our net positions are continually assessed within our structured hedging programs to determine whether new or offsetting transactions are required. We monitor and value derivative positions monthly as part of our risk management processes. We use published sources for pricing, when possible, to mark positions to market. All of our derivative instruments are used for risk management purposes and are designated as cash flow hedges if they qualify under FASC 815 for accounting purposes.

AtDPL's interest rate swaps were designated as a cash flow hedge and had a combined notional amount of $140.0 million as of December 31, 2018, DPL's outstanding derivative instruments were as follows:2019. These swaps settled during 2020 when the related debt was repaid.
Commodity 
Accounting Treatment (a)
 Unit 
Purchases
(in thousands)
 
Sales
(in thousands)
 
Net Purchases/ (Sales)
(in thousands)
Interest Rate Swaps Designated USD $140,000.0
 $—
 $140,000.0
F-25


(a)Refers to whether the derivative instruments have been designated as a cash flow hedge.

At December 31, 2017, DPL's outstanding derivative instruments were as follows:
Commodity 
Accounting Treatment (a)
 Unit Purchases
(in thousands)		 Sales
(in thousands)		 Net Purchases/ (Sales)
(in thousands)
FTRs (b)
 Not designated MWh 2.1
 —
 2.1
Natural Gas (b)
 Not designated Dths 3,322.5
 (390.0) 2,932.5
Forward Power Contracts (b)
 Designated MWh 678.5
 (1,667.0) (988.5)
Forward Power Contracts (b)
 Not designated MWh 871.0
 (765.6) 105.4
Interest Rate Swaps Designated USD $200,000.0
 $—
 $200,000.0


(a)Refers to whether the derivative instruments have been designated as a cash flow hedge.
(b)As of December 31, 2017, the related asset and liability balances for these derivative instruments were classified in assets and liabilities of discontinued operations and held-for-sale businesses.

Cash Flow Hedges
As part of our risk management processes, we identify the relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. The fair

values of cash flow hedges determined by current public market prices will continue to fluctuate with changes in market prices up to contract expiration. The effective portion of the hedging transaction is recognized in AOCI and transferred to earnings using specific identification of each contract when the forecasted hedged transaction takes place or when the forecasted hedged transaction is probable of not occurring. The ineffective portion of the cash flow hedge is recognized in earnings in the current period. All risk components were considered to determine the hedge effectiveness of the cash flow hedges. With the adoption of ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted improvements to Accounting for Hedging Activities effective January 1, 2019, we will no longer be required to calculate effectiveness and thus the entire change in the fair value of a hedging instrument will be recorded in other comprehensive income and amounts deferred will be reclassified to earnings in the same income statement line as the hedged item in the period in which it settles.

In prior years, we entered into forward power contracts and forward natural gas contracts to manage commodity price risk exposure related to our generation of electricity. We do not hedge all commodity price risk. We reclassify gains and losses on forward power contracts from AOCI into earnings in those periods in whichAugust 2020, the contracts settle. As of December 31, 2018, we no longer held any positions in forward power contracts or forward natural gas contracts.

We have 2 interest rate swaps to hedge the variable interest on ourthe $140.0 million variable interest rate tax-exempt First Mortgage Bonds.Bonds expired, as the associated debt reached maturity. The interest rate swaps have a combined notional amount of $140.0 million and will settle monthly based on a one-month LIBOR. As of December 31, 2017, the interest rate swaps had a combined notional amount of $200.0 million. On March 29, 2018, we$140.0 million and settled $60.0 million of these interest rate swaps due to the partial repayment of the underlying debt andmonthly based on a gain of $0.8 million was recorded as a reduction to interest expense. Since the swap was partially settled, the remaining swaps were de-designated and then re-designated with a new hypothetical derivative.one-month LIBOR. The AOCIAOCL associated with the remaining swaps will bewas amortized out of AOCIAOCL into interest expense over the remaining life of the underlying debt.
We had previously entered into interest rate derivative contracts to manage interest rate exposure related to anticipated borrowings of fixed-rate debt. These interest rate derivative contracts were settled in 2013 and we continue to amortize amounts out of AOCL into interest expense.
We use the income approach to value the swaps, which consists of forecasting future cash flows based on
contractual notional amounts and applicable and available market data as of the valuation date. The most common market data inputs used in the income approach include volatilities, spot and forward benchmark interest rates (LIBOR). Forward rates with the same tenor as the derivative instrument being valued are generally obtained from published sources, with these forward rates being assessed quarterly at a portfolio-level for reasonableness versus comparable published rates. We reclassify gains and losses on the swaps out of AOCIAOCL and into earnings in those periods in which hedged interest payments occur.

The following tables provide information on gains or losses recognized in AOCIAOCL for the cash flow hedges for the periods indicated:
  Years ended December 31,
  2018 2017 2016
$ in millions (net of tax) Power 
Interest Rate
Hedges
 Power 
Interest Rate
Hedges
 Power 
Interest Rate
Hedges
Beginning accumulated derivative gain / (loss) in AOCI $(2.8) $17.5
 $(4.3) $17.4
 $9.2
 $17.5
             
Net gains / (losses) associated with current period hedging transactions —
 (0.1) 8.8
 0.8
 15.7
 0.4
Net gains / (losses) reclassified to earnings:            
Interest Expense —
 (0.8) —
 (0.7) —
 (0.5)
Income / (loss) from discontinued operations before income tax 3.2
 —
 (7.3) —
 (29.2) —
Ending accumulated derivative gain / (loss) in AOCI $0.4
 $16.6
 $(2.8) $17.5
 $(4.3) $17.4
             
Portion expected to be reclassified to earnings in the next twelve months (a)
 $—
 $(0.8)        
Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months) 0
 20
        

Years ended December 31,
202020192018
$ in millions (net of tax)Interest Rate
Hedge		PowerInterest Rate
Hedge		PowerInterest Rate
Hedge
Beginning accumulated derivative gain in AOCL$14.5 $0.4 $16.6 $(2.8)$17.5 
Net gains / (losses) associated with current period hedging transactions0 0 (1.0)0 (0.1)
Net (gains) / losses reclassified to earnings:
Interest Expense(0.9)0 (1.1)0 (0.8)
(Income) / loss from discontinued operations before income tax0 (0.4)0 3.2 0 
Ending accumulated derivative gain in AOCL$13.6 $0 $14.5 $0.4 $16.6 
Portion expected to be reclassified to earnings in the next twelve months$(0.8)

(a)The actual amounts that we reclassify from AOCI to earnings related to power can differ from the estimate above due to market price changes.


Net gains or losses associated with the ineffective portion of the hedging transactions were immaterial in the periods presented.

Derivatives Not Designated as Hedges
In prior years certain derivative contracts were entered into on a regular basis as part of our risk management program but did not qualify for hedge accounting or the normal purchases and sales exceptions under FASC 815. Accordingly, such contracts were recorded at fair value with changes in the fair value charged or credited to the consolidated statements of operations in the period in which the change occurred. This is commonly referred to as “MTM accounting”. Contracts we entered into as part of our risk management program may have been settled financially, by physical delivery or net settled with the counterparty. We marked to market FTRs, natural gas futures and certain forward power contracts. For the years ended December 31, 2018, 2017, and 2016, all amounts related to such contracts are presented in discontinued operations. As of December 31, 2018, we no longer have any such contracts.

Certain qualifying derivative instruments we previously held were designated as normal purchases or normal sales contracts, as provided under GAAP. Derivative contracts that have been designated as normal purchases or normal sales under GAAP are not subject to MTM accounting treatment and are recognized in the consolidated statements of operations on an accrual basis. For the years ended December 31, 2018, 2017, and 2016, all amounts related to such contracts are presented in discontinued operations. As of December 31, 2018, we no longer have any such contracts.

The following tables show the amount and classification within the Consolidated Statements of Operations or Balance Sheets of the gains and losses on DPL’s derivatives not designated as hedging instruments for the years ended December 31, 2018, 2017 and 2016:
  Year ended December 31, 2018
$ in millions FTRs Power Natural Gas Total
Change in unrealized gain / (loss) $0.3
 $—
 $(0.1) $0.2
Realized gain / (loss) 0.4
 —
 0.3
 0.7
Total $0.7
 $—
 $0.2
 $0.9
         
Recorded in Statement of Operations: gain / (loss)
Income / (loss) from discontinued operations before income tax $0.7
 $—
 $0.2
 $0.9
Total $0.7
 $—
 $0.2
 $0.9


  Year ended December 31, 2017
$ in millions FTRs Power Natural Gas Total
Change in unrealized gain / (loss) $(0.4) $1.9
 $0.1
 $1.6
Realized gain / (loss) 0.8
 (0.7) 1.5
 1.6
Total $0.4
 $1.2
 $1.6
 $3.2
         
Recorded in Statement of Operations: gain / (loss)
Income / (loss) from discontinued operations before income tax $0.4
 $1.2
 $1.6
 $3.2
Total $0.4
 $1.2
 $1.6
 $3.2

  Year ended December 31, 2016
$ in millions FTRs Power Natural Gas Total
Change in unrealized gain / (loss) $0.3
 $4.0
 $—
 $4.3
Realized gain / (loss) (0.6) (7.2) 2.6
 (5.2)
Total $(0.3) $(3.2) $2.6
 $(0.9)
         
Recorded in Statement of Operations: gain / (loss)
Income / (loss) from discontinued operations before income tax $(0.3) $(3.2) $2.6
 $(0.9)
Total $(0.3) $(3.2) $2.6
 $(0.9)


When applicable, DPL has elected not to offset derivative assets and liabilities and not to offset net derivative positions against the right to reclaim cash collateral pledged (an asset) or the obligation to return cash collateral received (a liability) under derivative agreements. As of December 31, 2020 and 2019, DPL did not have any offsetting positions.


The following tables summarize the derivative positions presented in the balance sheet where a right of offset exists under these arrangements and related cash collateral received or pledged; as well astable summarizes the fair value, balance sheet classification and hedging designation of DPL’s derivative instruments. interest rate swaps.
December 31,
$ in millionsHedging DesignationBalance sheet classification20202019
Interest rate swapCash Flow HedgePrepayments and other current assets$0 $0.1 
Fair Values of Derivative Instruments
December 31, 2018
      Gross Amounts Not Offset in the Consolidated Balance Sheets  
$ in millions Hedging Designation 
Gross Fair Value as presented in the Consolidated Balance Sheets (a)
 Financial Instruments with Same Counterparty in Offsetting Position Cash Collateral Net Amount
Assets          
Short-term derivative positions (presented in Other prepayments and current assets)    
Interest Rate Swaps Designated $0.9
 $—
 $—
 $0.9
           
Long-term derivative positions (presented in Other deferred assets)      
Interest Rate Swaps Designated 0.6
 —
 —
 0.6
Total assets   $1.5
 $—
 $—
 $1.5
           


F-26
(a)    Includes credit valuation adjustment.

Fair Values of Derivative Instruments
December 31, 2017
      Gross Amounts Not Offset in the Consolidated Balance Sheets  
$ in millions Hedging Designation 
Gross Fair Value as presented in the Consolidated Balance Sheets (a)
 Financial Instruments with Same Counterparty in Offsetting Position Cash Collateral Net Amount
Assets          
Short-term derivative positions (presented in Current assets of discontinued operations and held-for-sale businesses)      
Forward power contracts Designated $4.9
 $(4.9) $—
 $—
Forward power contracts Not designated 5.3
 (3.7) —
 1.6
FTRs Not designated 0.2
 (0.1) —
 0.1
           
Long-term derivative positions (presented in Other deferred assets)      
Interest rate swaps Designated 1.5
 —
 —
 1.5
           
Long-term derivative positions (presented in Non-current assets of discontinued operations and held-for-sale businesses)      
Forward power contracts Not designated 0.6
 —
 —
 0.6
Total assets   $12.5
 $(8.7) $—
 $3.8
           
Liabilities          
Short-term derivative positions (presented in Current liabilities of discontinued operations and held-for-sale businesses)      
Forward power contracts Designated $9.0
 $(4.9) $(1.4) 2.7
Forward power contracts Not designated 5.9
 (3.7) —
 2.2
Natural gas Not designated 0.1
 (0.1) —
 —
FTRs Not designated 0.3
 —
 —
 0.3
Total liabilities   $15.3
 $(8.7) $(1.4) $5.2


(a)Includes credit valuation adjustment.


Note 7 – Long-term debt
Long-term debt
$ in millionsInterest RateMaturityDecember 31, 2020December 31, 2019
First Mortgage Bonds3.95%2049$425.0 $425.0 
First Mortgage Bonds3.20%2040140.0 — 
Tax-exempt First Mortgage Bonds - rates from: 1.16% - 2.47% (a) and 2.4% - 3.07% (b)20200 140.0 
U.S. Government note4.20%206117.4 17.5 
Unamortized deferred financing costs(5.7)(5.4)
Unamortized debt discounts and premiums, net(2.6)(2.7)
Total long-term debt at subsidiary574.1 574.4 
Senior unsecured bonds7.25%2021— 380.0 
Senior unsecured bonds4.125%2025415.0 0 
Senior unsecured bonds4.35%2029400.0 400.0 
Note to DPL Capital Trust II (c)8.125%203115.6 15.6 
Unamortized deferred financing costs(10.2)(5.9)
Unamortized debt discounts and premiums, net(0.9)(1.0)
Total long-term debt1,393.6 1,363.1 
Less: current portion(0.2)(139.8)
Long-term debt, net of current portion$1,393.4 $1,223.3 
Long-term debt        
$ in millions Interest Rate Maturity December 31, 2018 December 31, 2017
Term loan - rates from: 3.57% - 4.82% (a) and 4.00% - 4.60% (b)   2022 $436.1
 $440.6
Tax-exempt First Mortgage Bonds - rates from: 2.49% - 2.93% (a) and 1.29% - 1.42% (b)   2020 140.0
 200.0
U.S. Government note 4.2% 2061 17.7
 17.8
Unamortized deferred financing costs     (6.3) (9.8)
Unamortized debt discounts and premiums, net     (1.4) (2.0)
Total long-term debt at subsidiary     586.1
 646.6
         
Bank term loan - rates from: 3.02% - 4.10% (a) and 2.67% - 3.02% (b)   2020 —
 70.0
Senior unsecured bonds 6.75% 2019 99.0
 200.0
Senior unsecured bonds 7.25% 2021 780.0
 780.0
Note to DPL Capital Trust II (c) 8.125% 2031 15.6
 15.6
Unamortized deferred financing costs     (4.3) (6.8)
Unamortized debt discounts and premiums, net     (0.5) (0.6)
Total long-term debt     1,475.9
 1,704.8
Less: current portion     (103.6) (4.6)
Long-term debt, net of current portion     $1,372.3
 $1,700.2

(a)    Range of interest rates for the year ended December 31, 2020.
(b)    Range of interest rates for the year ended December 31, 2019.
(c)    Note payable to related party. See Note 12 – Related Party Transactions for additional information.

(a)Range of interest rates for the year ended December 31, 2018.
(b)Range of interest rates for the year ended December 31, 2017.
(c)Note payable to related party. See Note 12 – Related Party Transactions for additional information.

At December 31, 2018,2020, maturities of long-term debt are summarized as follows:
Due during the years ending December 31,
$ in millions
2021$0.2 
20220.2 
20230.2 
20240.2 
2025415.2 
Thereafter997.0 
1,413.0 
Unamortized discounts and premiums, net(3.5)
Deferred financing costs, net(15.9)
Total long-term debt$1,393.6 
Due during the years ending December 31, 
$ in millions 
2019$103.6
2020144.7
2021784.7
2022422.8
20230.2
Thereafter32.4
 1,488.4
Unamortized discounts and premiums, net(1.9)
Deferred financing costs, net(10.6)
Total long-term debt$1,475.9


Premiums or discounts recognized at the Merger date are amortized over the life of the debt using the effective interest method.

Revolving Credit Facilities
At December 31, 2020 and December 31, 2019, the DPL revolving credit facility had outstanding borrowings of $80.0 million and $104.0 million, respectively. At December 31, 2020 and December 31, 2019, the DP&L revolving credit facility had outstanding borrowings of $20.0 million and $40.0 million, respectively.
Significant Transactions
On March 30, 2018, DPLJuly 31, 2020, DP&L issued a Notice of Partial Redemption to the Trustee (U.S. Bank) on the DPL 6.75% Senior Notes due 2019. DPL notified the trustee that it was calling $101.0$140.0 million of First Mortgage Bonds and on August 3, 2020 used the $200.0proceeds to purchase at par value the $140.0 million of outstanding principal amounttax-exempt Ohio Air Quality Development Authority (OAQDA) Collateralized Pollution Control Revenue Refunding Bonds that had been issued in 2015. The new First Mortgage Bonds carry an interest rate of these3.20% and mature on July 31, 2040. The OAQDA Revenue bonds have not been legally cancelled and can be re-issued at the discretion of DP&L at any time. These bonds will be held in trust while we continue to evaluate market conditions and explore suitable long-term financing alternatives.
F-27

On June 1, 2020 DPL amended its secured revolving credit facility. As a result of the amendment, the borrowing limit was reduced from $125.0 million to $110.0 million, the Total Debt to EBITDA covenant was eliminated, the EBITDA to Interest Expense covenant was reduced from 2.25 to 1.00 to 1.70 to 1.00, increasing to 1.75 to 1.00 as of September 30, 2022 and 2.00 to 1.00 as of December 31, 2022, and a trailing-twelve months minimum EBITDA covenant of $125.0 million was added, increasing to $130.0 million as of September 30, 2022 and $150.0 million as of December 31, 2022. Starting with the quarter ended September 30, 2021, the borrowing limit will be reduced by $5.0 million per quarter should DPL’s Total Debt to EBITDA ratio calculated for the period of four consecutive quarters exceed 7.00 to 1.00.
On June 19, 2020 DPL closed a $415.0 million issuance of senior unsecured notes. These notes carry an interest rate of 4.125% and mature on July 1, 2025. Proceeds from the issuance and cash on hand were used to redeem in-full the remaining balance of $380.0 million of DPL's 7.25% senior unsecured notes. These bonds were redeemed at par plus accrued interest and a make-whole premium of $5.1$30.8 million on April 30, 2018July 20, 2020.
On June 19, 2019, DP&L amended and restated its unsecured revolving credit facility. The revolving credit facility has a $175.0 million borrowing limit, with casha $75.0 million letter of credit sublimit, a feature that provides DP&L the ability to increase the size of the facility by an additional $100.0 million, a maturity date of June 2024, and a provision that provides DP&L the option to request up to two one-year extensions of the maturity date.
On June 19, 2019, DPL amended and restated its secured revolving credit facility. The revolving credit facility has a $125.0 million borrowing limit, with a $75.0 million letter of credit sublimit, a feature that provides DPL the ability to increase the size of the facility by an additional $50.0 million, and a maturity date of June 2023.
On June 6, 2019, DP&L closed on hand.

On March 30, 2018, DP&L commenced a redemption$425.0 million issuance of$60.0 million of outstanding tax exempt First Mortgage Bonds due 2020 at par value (plus accrued2049. These new bonds carry an interest rate of 3.95%. The proceeds of this issuance were used to repay in full the outstanding principal of $435.0 million of DP&L's variable rate Term Loan B credit agreement.
On April 17, 2019, DPL closed a $400.0 million issuance of senior unsecured notes. These notes carry an interest rate of 4.35% and unpaid interest).mature on April 15, 2029. Proceeds from the issuance and cash on hand were used to settle a partial redemption for $400.0 million of DPL's 7.25% senior unsecured notes maturing October 15, 2021, as discussed below. After the redemption, the DPL 7.25% senior notes due in 2021 had an outstanding balance of $380.0 million.
On April 8, 2019, DPL issued a Notice of Partial Redemption on the DPL 7.25% Senior Notes due 2021. DPL redeemed $400.0 million of the $780.0 million outstanding principal amount of these notes on May 7, 2019. These bonds were redeemed at par plus accrued interest and a make-whole premium of $41.4 million.
On March 4, 2019, DPL issued a Notice of Full Redemption on the DPL 6.75% Senior Notes due 2019. DPL redeemed the remaining $99.0 million outstanding principal amount of these notes on April 30, 20184, 2019. These bonds were redeemed at par plus accrued interest and a make-whole premium of $1.5 million with cash on hand.

On March 27, 2018, DPL made a $70.0 million prepayment to eliminate the outstanding balance of its bank term loan in full. As of March 31, 2018, the term loan was fully paid off.

On January 3, 2018, DP&L and its lenders amended DP&L's Term Loan B credit agreement. The amendment (a) modified the definition of "applicable rate", from 2.25% per annum to 1.00% per annum - in the case of the Base Rate, and from 3.25% per annum to 2.00% per annum - in the case of the Eurodollar Rate, and (b) included a "call protection" provision which stated that in the event the loan was repriced or any portion of the loans were prepaid, repaid, refinanced, substituted, or replaced on or prior July 3, 2018, such prepayment, acceleration, repayment, refinancing, substitution or replacement would be made at 101% of the principal amount so prepaid, repaid,

refinanced, substituted or replaced. After July 3, 2018 any such transaction would occur at 100% of the principal amount of the then outstanding loans. There were no such transactions prior to July 3, 2018.

Debt Covenants and Restrictions
DPL’s revolving credit agreement and term loan havehas 2 financial covenants. The first financial covenant, a Total Debt tominimum EBITDA, ratio, is calculated at the end of each fiscal quarter by dividing total debt at the end of the current quarter by consolidated EBITDA for the 4four prior fiscal quarters. The ratio in the agreementsquarters, of $125.0 million is notrequired, stepping up to exceed 7.25 to 1.00 for any fiscal quarter ending$130.0 million on September 30, 2015 through2022 and $150.0 million on December 31, 2018; it then steps down to not exceed 7.00 to 1.00 for any fiscal quarter ending January 1, 2019 through June 30, 2019; and it then steps down not to exceed 6.75 to 1.00 for any fiscal quarter ending July 1, 2019 through December 31, 2019; and it then steps down not to exceed 6.50 to 1.00 for any fiscal quarter ending January 1, 2020 and afterward.2022. As of December 31, 2018,2020, this financial covenant was met with a ratio of 5.84 to 1.00.

in compliance.
The second financial covenant is an EBITDA to Interest Expense ratio that is calculated, at the end of each fiscal quarter, by dividing EBITDA for the four4 prior fiscal quarters by the consolidated interest charges for the same period. The ratio, per the agreement, is to be not less than 2.101.70 to 1.00, for any fiscal quarter ending September 30, 2015 through December 31, 2018; it thenand steps up to be not less than 2.251.75 to 1.00 for any fiscal quarter ending January 1, 2019on September 30, 2022 and afterward.2.00 to 1.00 as of December 31, 2022. As of December 31, 2018,2020, this financial covenant was met with a ratio of 2.61 to 1.00.in compliance.

DPL’s secured revolving credit agreement and senior unsecured notes due 2019 also restricts dividend payments from DPL to AES, such that DPL cannot make dividend payments unless at the time of, and/or as a result of the distribution, (i) DPL’s leverage ratio does not exceed 0.67 to 1.00 and DPL’s interest coverage ratio is not less than 2.50 to 1.00 or, if such ratios are not within the parameters, (ii) DPL’s senior long-term debt rating from two of the three major credit rating agencies is at least investment grade. As of December 31, 2018, DPL's senior-long term debt rating was at least investment grade by two of the three major credit rating agencies. However, DPL is also restricted from making dividend and tax sharing payments from DPL to AES per its 2017 ESP. This order restricts dividend payments from DPL to AES during the term of the 2017 ESP and restricts tax sharing payments from DPL to AES during the term of the DMR. On January 22, 2019, DP&L filed a request to extend the DMR for an additional two years. See Note 3 – Regulatory Matters for more information. As a result, as of December 31, 2018, 2020, DPL was prohibited under this order from making a distribution to its shareholder or making a loan to any of its affiliates (other than its subsidiaries).

DP&L’s &L's unsecured revolving credit agreementfacility and Bond Purchase and Covenants Agreement (financing document entered into in connection with the saleissuance of $200.0 million of variable rate tax-exemptDP&L's First Mortgage Bonds, dated as of August 1, 2015) have 2on July 31, 2020) has one financial covenants.covenant. The firstcovenant measures Total Debt to Total Capitalization and is calculated, at the end of each fiscal quarter, by dividing total debt at the end of the quarter by total capitalization at the end of the quarter. DP&L’s Total Debt to Total
F-28

Capitalization ratio shall not be greater than 0.65 to 1.00; except that, the ratio shall be suspended if DP&L’s long-term indebtedness is less than or equal to $750.0 million. Additionally, the ratio shall be suspended any time after separation during which DP&L maintains a rating of BBB- (or in the case of Moody’s Investors Service, Inc. Baa3) or higher with a stable outlook from at least one of Fitch Investors Service Inc., Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. As of December 31, 2018, DP&L's ratings meet those requirements and this ratio is suspended for the quarter ended December 31, 2018.

The second financial covenant measures EBITDA to Interest Expense. The TotalConsolidated EBITDA to Consolidated Interest Charges ratio is calculated, at the end of each fiscal quarter, by dividing consolidated EBITDA for the 4 prior fiscal quarters by the consolidated interest charges for the same period. The ratio, per the agreement, is to be not less than 2.500.67 to 1.00. This financial covenant was met with a ratio of 8.09 to 1.00in compliance as of December 31, 2018.2020.

DP&L doesnot have any meaningful restrictions in its debt financing documents prohibiting dividends to its parent, DPL.As of December 31, 2018, 2020, DP&Land DPL were in compliance with all debt covenants, including the financial covenants described above.

Substantially all property, plant & equipment of DP&L is subject to the lien of the mortgage securing DP&L’s First and Refunding Mortgage. All generation assets were released from the lien of
DP&L's first and refunding mortgage in connection with the completion of Generation Separation on October 1, 2017.


Note 8 – Income Taxes

DPL’s components of income tax expense onfor both continuing and discontinued operations were as follows:
Years ended December 31,
$ in millions202020192018
Components of tax expense / (benefit)
Federal - current$(45.1)$(22.0)$40.0 
State and Local - current(0.1)0.6 0.4 
Total current(45.2)(21.4)40.4 
Federal - deferred38.7 14.1 (9.6)
State and local - deferred1.1 1.1 (0.1)
Total deferred39.8 15.2 (9.7)
Tax expense / (benefit)$(5.4)$(6.2)$30.7 
  Years ended December 31,
$ in millions 2018 2017 2016
Computation of tax expense / (benefit)      
Federal income tax expense / (benefit)(a) $6.7
 $(2.3) $4.3
Increases (decreases) in tax resulting from:      
State income taxes, net of federal effect 0.1
 0.1
 —
Depreciation of flow-through differences (4.6) 1.1
 3.3
Investment tax credit amortized (0.3) (0.3) (0.4)
Deferred tax adjustments —
 (0.7) (9.3)
Accrual (settlement) for open tax years —
 (0.4) 2.0
Other, net (b)
 (1.2) (2.5) (2.3)
Tax expense / (benefit) $0.7
 $(5.0) $(2.4)
       
Components of tax expense / (benefit)      
Federal - current $(17.9) $23.8
 $(3.3)
State and Local - current 0.5
 0.2
 —
Total current (17.4) 24.0
 (3.3)
       
Federal - deferred 18.3
 (28.8) 0.8
State and local - deferred (0.2) (0.2) 0.1
Total deferred 18.1
 (29.0) 0.9
Tax expense / (benefit) $0.7
 $(5.0) $(2.4)


(a)The statutory tax rate of 21% in 2018 and 35% in 2017 and 2016 was applied to pre-tax earnings.
(b)Includes expense / (benefit) of $3.5 million and $(0.9) million in the years ended December 31, 2017 and 2016, respectively, of income tax related to adjustments from prior years. The 2018 and 2017 tax years also include a remeasurement of deferred tax expense related to the recent enactment of the TCJA of a benefit of $(1.2) million and $(0.4) million, respectively.

Effective and Statutory Rate Reconciliation
The following table summarizes a reconciliation of the U.S. statutory federal income tax rate to DPL's effective tax rate, as a percentage of total income from continuing operations before taxes for the years ended December 31, 2018, 20172020, 2019 and 2016:2018:
Years ended December 31,
202020192018
Statutory Federal tax rate21.0 %21.0 %21.0 %
State taxes, net of Federal tax benefit(13.1)%1.4 %0.1 %
AFUDC - equity(23.6)%(0.1)%(0.1)%
Depreciation of flow-through differences94.8 %(28.2)%(4.6)%
Amortization of investment tax credits4.1 %(0.3)%(0.3)%
Deferred tax adjustments0 %0 %15.5 %
Permanent differences0 %0 %0.1 %
Other, net1.2 %(0.1)%(1.2)%
Effective tax rate84.4 %(6.3)%30.5 %
  Years ended December 31,
  2018 2017 2016
Statutory Federal tax rate 21.0 % 35.0 % 35.0 %
State taxes, net of Federal tax benefit 0.4 % (1.5)% 0.2 %
AFUDC - equity (0.1)% 4.9 % (5.0)%
Depreciation of flow-through differences (14.6)% (17.6)% 26.7 %
Amortization of investment tax credits (1.0)% 5.1 % (3.3)%
Deferred tax adjustments — % 11.0 % (75.1)%
Permanent differences — % 4.8 % 2.8 %
Other, net (3.5)% 35.2 % (0.7)%
Effective tax rate 2.2 % 76.9 % (19.4)%


Deferred Income Taxes
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (b) operating loss carryforwards. These items are stated at the enacted tax rates that are expected to be in effect when taxes are actually paid or recovered. Investment tax credits related to utility property have been deferred and are being amortized over the estimated useful lives of the related property.

Components of Deferred Tax Assets and Liabilities
  December 31,
$ in millions 2018 2017
Net non-current assets / (liabilities)    
Depreciation / property basis $(112.0) $(113.4)
Income taxes recoverable 25.0
 11.0
Regulatory assets (15.4) (23.1)
Investment tax credit 0.5
 0.7
Compensation and employee benefits 1.4
 19.0
Intangibles (0.3) (0.4)
Long-term debt (2.1) (0.2)
Other (a)
 (13.2) (7.1)
Net non-current liabilities $(116.1) $(113.5)

F-29

(a)The Other caption includes deferred tax assets of $10.9 million in 2018 and $9.3 million in 2017 related to state and local tax net operating loss carryforwards, net of related valuation allowances of $10.9 million in 2018 and $9.3 million in 2017. These net operating loss carryforwards expire from 2019 to 2037.
The components of our deferred taxes are as follows:
December 31,
$ in millions20202019
Net non-current assets / (liabilities)
Depreciation / property basis$(160.5)$(118.3)
Income taxes recoverable14.4 17.1 
Regulatory assets(21.0)(24.8)
Investment tax credit0.6 0.6 
Compensation and employee benefits(1.7)2.2 
Intangibles(0.4)(0.4)
Long-term debt(1.3)(2.1)
Other (a)
(7.3)(8.0)
Net non-current liabilities$(177.2)$(133.7)

(a)    The Other caption includes deferred tax assets of $39.0 million in 2020 and $29.0 million in 2019 related to state and local tax net operating loss carryforwards, with related valuation allowances of $39.0 million in 2020 and $29.0 million in 2019. These net operating loss carryforwards expire from 2020 to 2037.

U.S. Tax Reform
On December 22, 2017, the U.S. enacted the TCJA. The TCJA significantly changeschanged U.S. corporate income tax law.

In 2017, we recognized the income tax effects of the TCJA in accordance with Staff Accounting Bulletin No. 118 (“SAB 118”) which provides SEC guidance on the application of FASC 740, Income Taxes, in the reporting period in which the TCJA was signed into law. Accordingly, our 2017 financial statements reflected the income tax effects of U.S. tax reform for which the accounting was complete and provisional amounts for those impacts for which the accounting under FASC 740 was incomplete, but a reasonable estimate could be determined.

We completed our calculation of the impact of the TCJA in our income tax provision for the year ended December 31, 2018 in accordance with our understanding of the TCJA and guidance available, as of the date of this filing, and as a result recognized $15.5$15.5 million and $13.7 million of discrete tax expense in the fourth quarter of 2018 and 2017 respectively.2018. Of this total, tax benefits of $1.2$1.2 million and $0.4 million are included in continuing operations in 2018 and 2017, respectively.2018. These amounts result from the remeasurement of certain deferred tax assets and liabilities as the rates changed from 35% to 21%. The most material deferred taxes to be remeasured related to property, plant and equipment. The remeasurements of deferred tax assets and liabilities related to regulated utility property of $17.0 million and $135.2 million at December 31, 2018 and 2017 werewas recorded as a regulatory liabilitiesliability and werewas a non-cash adjustments.adjustment.

Per the terms of the order issued by the PUCO on DP&L's 2017&L's ESP 3, DPL will could not make any tax-sharing payments to AES and AES willwould forgo collection of the payments during the term of the DMR. The agreed uponIn November 2019, the PUCO discontinued the DMR. Consequently, starting in 2020, DPL is no longer subject to this restriction. During the term of the DMR, is three years. With commission approval, the DMR can be extended two additional years allowing for the term to potentially be five years. Both the current and non-current existing tax sharing liabilities with AES were converted into additional equity investment in DPL,, per the requirements of the order. Throughout the termThe ESP 3 also provided that none of the DMR, further accrued tax sharing liabilities will also be convertedthese conversions to additional equity. All parties agreed that the initial conversion and subsequent conversions will notequity would be reversed. During the yearsyear ended December 31, 20182019, we had a current tax benefit and 2017, we converted $40.0there was no conversion of current tax liabilities in 2019.
During the year ended December 31, 2020, DPL received a payment from AES of $52.0 million and $97.1against its tax receivable balance as part of a $150.0 million respectively, of accrued tax sharing liabilities with AES topayment from AES. See Note 10 – Shareholder's Deficit for additional equity investment in DPL in accordance with this requirement.

information.
The following table presents the tax expense / (benefit) related to pensions, postemployment benefits, cash flow hedges and financial instruments that were credited to Accumulated other comprehensive loss.
Years ended December 31,
$ in millions202020192018
Tax expense / (benefit)$(2.6)$(0.5)$0.2 
  Years ended December 31,
$ in millions 2018 2017 2016
Tax expense / (benefit) $0.2
 $0.2
 $(9.6)



Uncertain Tax Positions
We apply the provisions of GAAP relating to the accounting for uncertainty in income taxes. A reconciliation of the beginning and ending amountThe balance of unrecognized tax benefits is as follows:
$ in millions 
Balance at December 31, 2016$3.7
Calendar 2017 
Tax positions taken during prior period—
Lapse of Statute of Limitations(0.2)
Balance at December 31, 20173.5
Calendar 2018 
Tax positions taken during prior period—
Lapse of Statute of Limitations—
Balance at December 31, 2018$3.5


was $1.4 million at December 31, 2020 and $3.5 million at December 31, 2019. There was a decrease of $2.1 million in 2020 due to statute of limitation lapses.
Of the December 31, 20182020 balance of unrecognized tax benefits, $3.5$1.4 million is due to uncertainty in the timing of deductibility. The amount anticipated to result in a net decrease to unrecognized tax benefits within 12 months of December 31, 2020 is estimated to be $0.0 million.

F-30

We recognize interest and penalties related to unrecognized tax benefits in Income tax expense. The amounts accrued and the tax expense / (benefit) recorded were not material for each period presented.

FollowingDPL is a summary of theno longer subject to U.S. or state income tax examinations for tax years through 2011, but is open to examination by major tax jurisdiction:for all subsequent periods.
U.S. Federal – 2011 and forward
State and Local – 2011 and forward

None of the unrecognized tax benefits are expected to significantly increase or decrease within the next twelve months other than those subject to expiring statute of limitations.

Note 9 – Benefit Plans

Defined Contribution Plans
DP&L sponsors two defined contribution plans. One is for non-union employees (the management plan) and one is for collective bargaining employees (the union plan). Both plans are qualified under Section 401 of the Internal Revenue Code.

Certain non-union and union employees become eligible to participate in their respective plan upon date of hire.

Participants may elect to contribute up to 85% of eligible compensation to their plan. Non-union participant contributions are matched 100% on the first 1% of eligible compensation and 50% on the next 5% of eligible compensation and they are fully vested in their employer contributions after two2 years of service. Union participant contributions are matched 150% but are capped at $2,400$2,600 for 20182020 and they are fully vested in their employer contributions after three3 years of service. All participants are fully vested in their own contributions.

We contributed $3.7$3.2 million, $3.1 million and $5.1$3.7 million for the years ended December 31, 2020, 2019 and 2018, 2017 and 2016, respectively.DP&L matching contributions are paid quarterly, in arrears. Therefore, the contributions by year include the fourth quarter matching contribution that is paid in the following year. DP&L also contributes an annual bonus to the accounts of its union participants. This payment is typically made in January of the following year.

Defined Benefit PlansPlans
DP&L sponsors a traditional defined benefit pension plan for most of the employees of DPL and its subsidiaries. For collective bargaining employees, the defined benefits are based on a specific dollar amount per year of service. For all other employees (management employees), the traditional defined benefit pension plan is based primarily on compensation and years of service. As of December 31, 2010, this traditional pension plan formula was closed to new management employees. A participant is 100% vested in all amounts credited to his or her account upon the completion of five-yearsfive vesting years, as defined in The Dayton Power and Light Company Retirement Income Plan, or the participant’s death or disability. If a participant’s employment is terminated, other than by death or disability, prior to such participant becoming 100% vested in his or her account, the account shall be forfeited as of the date of termination. Employees that transferred from DP&L to the Service Company maintain their previous eligibility to participate in the DP&L pension plan.


Almost all management employees beginning employment on or after January 1, 2011 participate in a cash balance pension plan formula. Similar to the traditional pension plan for management employees, the cash balance benefits are based on compensation and years of service. A participant shall become 100% vested in all amounts credited to his or her account upon the completion of three vesting years, as defined in The Dayton Power and Light Company Retirement Income Plan, or the participant’s death or disability. If a participant’s employment is terminated, other than by death or disability, prior to such participant becoming 100% vested in his or her account, the account shall be forfeited as of the date of termination. Vested benefits in the cash balance plan are fully portable upon termination of employment.

In addition, we have a Supplemental Executive Retirement Plan (SERP) for certain retired key executives. The SERP has an immaterial unfunded liability related to agreements for retirement benefits of certain terminated and retired key executives. We also include our net liability to our partners in our co-owned generating plants related to our share of their pension liabilities within Pension, retiree and other benefits on our Consolidated Balance Sheets.

We recognize an asset for a plan’s overfunded status and a liability for a plan’s underfunded status and recognize, as a component of OCI, the changes in the funded status of the plan that arise during the year that are not recognized as a component of net periodic benefit cost. For the transmission and distribution areas of our electric business, these amounts are recorded as regulatory assets and liabilities which represent the regulated portion that would otherwise be charged or credited to AOCI.AOCL. We have historically recorded these costs on the accrual basis, and this is how these costs have been historically recovered through customer rates. This factor, combined with the historical precedents from the PUCO and FERC, make these costs probable of future rate recovery.

F-31

Postretirement Benefits
Qualified employees who retired prior to 1987 and their dependents are eligible for health care and life insurance benefits until their death, while qualified employees who retired after 1987 are eligible for life insurance benefits and partially subsidized health care. The partially subsidized health care is at the election of the employee, who pays the majoritymost of the cost, and is available only from their retirement until they are covered by Medicare. We have funded a portion of the union-eligible benefits using a Voluntary Employee Beneficiary Association Trust. These postretirement health care benefits and the related unfunded obligation of $9.2$9.0 million and $12.7$9.6 million at December 31, 20182020 and 2017,2019, respectively, were not material to the consolidated financial statements in the periods covered by this report.


The following tables set forth the changes in our pension plan'splans' obligations and assets recorded on the Consolidated Balance Sheets at December 31, 20182020 and 2017.2019. 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 $1.8$1.4 million, $1.4 million and $1.1$1.8 million of costs billed to the Service Company for the years ended December 31, 2020, 2019 and 2018, and 2017.respectively.
$ in millionsYears ended December 31,
Change in benefit obligation20202019
Benefit obligation at January 1$421.5 $386.5 
Service cost3.7 3.7 
Interest cost11.8 14.9 
Actuarial loss52.7 42.1 
Benefits paid(40.2)(25.7)
Benefit obligation at December 31449.5 421.5 
Change in plan assets
Fair value of plan assets at January 1352.0 312.9 
Actual return on plan assets45.6 57.0 
Employer contributions7.7 7.8 
Benefits paid(40.2)(25.7)
Fair value of plan assets at December 31365.1 352.0 
Unfunded status of plan$(84.4)$(69.5)
December 31,
Amounts recognized in the Balance sheets20202019
Current liabilities$(0.2)$(0.2)
Non-current liabilities(84.2)(69.3)
Net liability at end of year$(84.4)$(69.5)
Amounts recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax
Components:
Prior service cost$6.9 $7.9 
Net actuarial loss124.0 104.3 
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax$130.9 $112.2 
Recorded as:
Regulatory asset$92.7 $83.7 
Accumulated other comprehensive income38.2 28.5 
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax$130.9 $112.2 
$ in millions Years ended December 31,
Change in benefit obligation 2018 2017
Benefit obligation at January 1 $436.9
 $419.6
Service cost 6.1
 5.7
Interest cost 13.8
 14.2
Plan amendments 5.1
 —
Plan curtailment —
 3.0
Actuarial (gain) / loss (34.6) 28.1
Benefits paid (40.8) (33.7)
Benefit obligation at December 31 386.5
 436.9
     
Change in plan assets    
Fair value of plan assets at January 1 357.5
 341.0
Actual return on plan assets (11.7) 44.8
Employer contributions 7.9
 5.4
Benefits paid (40.8) (33.7)
Fair value of plan assets at December 31 312.9
 357.5
     
Unfunded status of plan $(73.6) $(79.4)
     
  December 31,
Amounts recognized in the Balance sheets 2018 2017
Current liabilities $(0.4) $(0.4)
Non-current liabilities (73.2) (79.0)
Net liability at end of year $(73.6) $(79.4)
     
Amounts recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax    
Components:    
Prior service cost $9.1
 $4.9
Net actuarial loss 103.3
 111.4
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax $112.4
 $116.3
Recorded as:    
Regulatory asset $87.2
 $92.1
Accumulated other comprehensive income 25.2
 24.2
Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities, pre-tax $112.4
 $116.3


The accumulated benefit obligation for our defined benefit pension plans was $378.7$436.4 million and $428.3$414.1 million at December 31, 20182020 and 2017,2019, respectively.
F-32

The net periodic benefit cost of the pension plans was:
Years ended December 31,
$ in millions202020192018
Service cost$3.7 $3.7 $6.1 
Interest cost11.8 14.9 13.8 
Expected return on assets(18.6)(20.1)(21.2)
Amortization of unrecognized:
Actuarial loss1.0 4.2 6.4 
Prior service cost6.1 1.3 0.9 
Net periodic benefit cost$4.0 $4.0 $6.0 
Rates relevant to each year's expense calculations
Discount rate3.33 %4.35 %3.66 %
Expected return on plan assets5.60 %6.25 %6.25 %
  Years ended December 31,
$ in millions 2018 2017 2016
Service cost $6.1
 $5.7
 $5.7
Interest cost 13.8
 14.2
 14.7
Expected return on assets (21.2) (22.8) (22.8)
Plan curtailment (a)
 —
 4.1
 3.8
Amortization of unrecognized:      
Actuarial loss 6.4
 5.3
 4.3
Prior service cost 0.9
 1.1
 1.8
Net periodic benefit cost $6.0
 $7.6
 $7.5
       
Rates relevant to each year's expense calculations      
Discount rate 3.66% 4.28% 4.49%
Expected return on plan assets 6.25% 6.50% 6.50%

(a)    As a result of the decision to retire certain coal-fired plants, we recognized a plan curtailment of $4.1 million and $3.8 million in 2017 and 2016, respectively.


Other Changes in Plan Assets and Benefit Obligation Recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities
Years ended December 31,
$ in millions202020192018
Net actuarial loss$25.8 $5.3 $3.4 
Plan curtailment (a)
0 0 0 
Reversal of amortization item:
Net actuarial loss(1.0)(4.2)(6.4)
Prior service cost(6.1)(1.3)(0.9)
Total recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities$18.7 $(0.2)$(3.9)
Total recognized in net periodic benefit cost and Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities$22.7 $3.8 $2.1 
  Years ended December 31,
$ in millions 2018 2017 2016
Net actuarial loss $3.4
 $9.1
 $20.9
Plan curtailment (a)
 —
 (4.1) (3.8)
Reversal of amortization item:      
Net actuarial loss (6.4) (5.3) (4.3)
Prior service cost (0.9) (1.1) (1.8)
Total recognized in Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities $(3.9) $(1.4) $11.0
       
Total recognized in net periodic benefit cost and Accumulated Other Comprehensive Income, Regulatory Assets and Regulatory Liabilities $2.1
 $6.2
 $18.5

(a)    As a result of the decision to retire certain coal-fired plants, we recognized a plan curtailment of $4.1 million and $3.8 million in 2017 and 2016, respectively.

Significant Gains and Losses Related to Changes in the Benefit Obligation
The actuarial gain of $34.6 million decreased the benefit obligation for the year ended December 31, 2018 and an actuarial loss of $28.1$52.7 million increased the benefit obligation for the year ended December 31, 2017.2020 and an actuarial loss of $42.1 million increased the benefit obligation for the year ended December 31, 2019. The actuarial gain in 2018 was primarily due to an increase in the discount rate, while the actuarial loss in 20172020 and 2019 was primarily due to a decrease in the discount rate.

Assumptions
Our expected return on plan asset assumptions, used to determine benefit obligations, are based on historical long-term rates of return on investments, which use the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, as well as asset diversification and portfolio rebalancing, are evaluated when long-term capital market assumptions are determined. Peer data and historical returns are reviewed to verify reasonableness and appropriateness.

At December 31, 2018,2020, we are maintainingdecreasing our long-term rate of return assumption of 6.25%to 4.55% for pension plan assets. The rate of return represents our long-term assumptions based on our long-term portfolio mix. Also, at December 31, 2018,2020, we have increaseddecreased our assumed discount rate to 4.35%2.44% from 3.66%3.33% for pension expense to reflect current duration-based yield curve discount rates. A 1 percent increase in the rate of return assumption for pension would result in a decrease in 20192021 pension expense of approximately $3.2$3.3 million. A 1 percent decrease in the rate of return assumption for pension would result in an increase in 20192021 pension expense of approximately $3.2$3.3 million. A 25-basis point increase in the discount rate for pension would result in a decrease of approximately $0.1$0.4 million to 20192021 pension expense. A 25-basis point decrease in the discount rate for pension would result in an increase of approximately $0.4$0.5 million to 20192021 pension expense.

In determining the discount rate to use for valuing liabilities, we used a market yield curve on high-quality fixed income investments as of December 31, 2018.2020. We project the expected benefit payments under the plan based on participant data and based on certain assumptions concerning mortality, retirement rates, termination rates, etc. The expected benefit payments for each year are then discounted back to the measurement date using the appropriate spot rate for each half-year from the yield curve, thereby obtaining a present value of all expected future benefit
F-33

payments using the yield curve. Finally, an equivalent single discount rate is determined which produces a present value equal to the present value determined using the full yield curve.

Consistent with the requirements of FASC 715, we apply a disaggregated discount rate approach for determining service cost and interest cost for our defined benefit pension plans and postretirement plans.

In future periods, differences in the actual return on pension plan assets and assumed return, or changes in the discount rate, will affect the timing of contributions, if any, to the plans.

The weighted average assumptions used to determine benefit obligations at December 31, 2018, 20172020, 2019 and 20162018 were:
Benefit Obligation AssumptionsPension
202020192018
Discount rate for obligations2.44%3.33%4.35%
Rate of compensation increases3.21%3.94%3.94%
Benefit Obligation Assumptions Pension
  2018 2017 2016
Discount rate for obligations 4.35% 3.66% 4.28%
Rate of compensation increases 3.94% 3.94% 3.94%



Pension Plan Assets
Plan assets are invested in multiple asset classes using a total return investment approach whereby a mix of equity securities, debt securitiesde-risking framework designed to manage the Plan's funded status volatility and other investments are used to preserve asset values, diversify risk and achieve our target investment return benchmark.minimize future cash contributions. Investment strategies and asset allocations are based on careful consideration of plan liabilities,intended to allocate additional assets to the plan'sfixed income asset class should the Plan's funded status improve and our financial condition.is therefore broadly described as the Dynamic De-risking Strategy. Investment performance and asset allocation are measured and monitored on an ongoing basis.

Plan assets are managed in a balanced portfolio comprised of two major components: an equity portionreturn seeking assets and a fixed income portion.liability hedging assets. The expected role of plan equity investmentsreturn seeking assets is to maximize the long-term real growthprovide additional return with associated higher levels of plan assets,risk, while the role of liability hedging assets is to correlate the interest rate of the fixed income investments is to generate current income, provide for more stable periodic returns and provide some protection against a prolonged decline inwith that of the market value of plan equity investments.Plan's liabilities.

Long-term strategic asset allocation guidelines, as well as short-term tacticalStrategic asset allocation guidelines are determined by a Risk/Advisory Committee and approved by a Fiduciary Committee. These allocations consider the plan’s long-term objectives. The long-term target allocations for plan assets are 24%40% – 52%50% for equity securitiesreturn seeking assets and 47%50% – 65%60% for fixed income securities. Equity securitiesliability hedging assets. Return seeking assets include U.S. and international equity, while fixed income securitiesliability hedging assets include long-duration and high-yield bond funds and emerging market debt funds.

The investment approach is to move the Plan to a more de-risked position, if and when the overall funded status of the Plan improves, by periodically rebalancing the allocation of the Plan's investments in growth assets and liability hedging assets in accordance with the committee's glide path. This strategy requires the daily monitoring of the Plan's ratio of assets to liabilities in order to determine whether approved trigger points have been met, requiring the rebalancing of the assets.
Tactically, the committees, on a short-term basis, will make asset allocations that are outside the long-term allocation guidelines. The short-term allocation positions are likely to not exceed one-year in duration. In addition to the equity and fixed income investments, the short-term allocation may also include a relatively small allocation to alternative investments. The plan currently has a small target allocation in a core property fund.

Most of ourAll plan assets at December 31, 2020 are measuredcommon collective trusts. With the exception of the cash and cash equivalents, the collective trusts are valued using quoted, observable prices whichthe net asset value method and are consideredcategorized as Level One inputs2 in the Fair Value Hierarchy.fair value hierarchy. The Core Property Collective Fund is measured using Level Two inputs thatunderlying investments are quoted prices for identical assetsmutual funds, common stock. or debt securities, in markets that are less active.

alignment with the target asset allocation.
The following table summarizes our target pension plan allocation for 2018:2020:
Long-Term
Mid-Point
Target
Allocation		Percentage of plan assets as of December 31,
Asset category (a)
20202019
Equity Securities41%42%40%
Debt Securities59%57%58%
Cash and Cash Equivalents0%1%1%
Real Estate0%0%1%
  
Long-Term
Mid-Point
Target
Allocation
 Percentage of plan assets as of December 31,
Asset category  2018 2017
Equity Securities 38% 33% 35%
Debt Securities 56% 58% 55%
Cash and Cash Equivalents —% 1% —%
Real Estate 6% 8% 10%

F-34

The fair values of our pension plan assets at December 31, 20182020 by asset category are as follows:
$ in millionsMarket Value at December 31, 2020Quoted prices
in active
markets for
identical assets		Significant
observable
inputs		Significant
unobservable
inputs
Asset category(Level 1)(Level 2)(Level 3)
Mutual fund - equities (a)
$153.8 $0 $153.8 $0 
Mutual fund - debt (b)
144.6 0 144.6 0 
Government debt securities (c)
64.8 0 64.8 0 
Cash and cash equivalents (d)
1.9 1.9 0 0 
Total pension plan assets$365.1 $1.9 $363.2 $0 
Fair Value Measurements for Pension Plan Assets at December 31, 2018
$ in millions Market Value at December 31, 2018 
Quoted prices
in active
markets for
identical assets
 
Significant
observable
inputs
 
Significant
unobservable
inputs
Asset category   (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.
(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 municipalities, and related money market instruments. Principal preservation is a primary objective. The fund is valued at cost.

(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.

The fair values of our pension plan assets at December 31, 20172019 by asset category are as follows:
$ in millionsMarket Value at December 31, 2019Quoted prices
in active
markets for
identical assets		Significant
observable
inputs		Significant
unobservable
inputs
Asset category(Level 1)(Level 2)(Level 3)
Mutual fund - equities (a)
$142.9 $0 $142.9 $0 
Mutual fund - debt (b)
115.6 0 115.6 0 
Government debt securities (c)
89.1 0 89.1 0 
Cash and cash equivalents (d)
1.9 1.9 0 0 
Other investments:
Core property collective fund (e)
2.5 0 2.5 0 
Total pension plan assets$352.0 $1.9 $350.1 $0 
Fair Value Measurements for Pension Plan Assets at December 31, 2017
$ in millions Market Value at December 31, 2017 
Quoted prices
in active
markets for
identical assets
 
Significant
observable
inputs
 
Significant
unobservable
inputs
Asset category   (Level 1) (Level 2) (Level 3)
Mutual funds:        
U.S. equities (a)
 $78.2
 $78.2
 $—
 $—
International equities (a)
 46.3
 46.3
 —
 —
Fixed income (b)
 163.3
 163.3
 —
 —
Fixed income securities:        
U.S. Treasury securities 33.5
 33.5
 —
 —
Other investments: (c)
        
Core property collective fund 36.2
 —
 36.2
 —
Total pension plan assets $357.5
 $321.3
 $36.2
 $—


(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.
(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)
(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 municipalities, 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.


Pension Funding
We generally fund pension plan benefits as accrued in accordance with the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and, in addition, make voluntary contributions from time to time. We contributed $7.5 million to the pension plan in the year ended December 31, 2018 and $5.0 million to the pension plan in each of the years ended December 31, 20172020, 2019 and 2016.

2018.
We expect to make contributions of $0.4$0.2 million to our SERP in 20192021 to cover benefit payments. We also expect to make contributions of $7.5$9.8 million to our pension plan during 2019.2021.

F-35

Funding for the qualified Defined Benefit Pension Plan is based upon actuarially determined contributions that consider the amount deductible for income tax purposes and the minimum contribution required under ERISA, as amended by the Pension Protection Act of 2006, as well as targeted funding levels necessary to meet certain thresholds.

From an ERISA funding perspective, DP&L’s funded target liability percentage was estimated to be 101%. In addition, DP&L must also contribute the normal service cost earned by active participants during the plan year. The funding of normal cost is expected to be approximately $5.4$5.3 million in 2019,2021, which includes $1.9$2.0 million for plan expenses. Each year thereafter, if the plan’s underfunding increases to more than the present value of the remaining annual installments, the excess is separately amortized over seven years.DP&L’s funding policy for the pension plans is to contribute annually no less than the minimum required by applicable law, and no more than the maximum amount that can be deducted for federal income tax purposes.


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
2021$26.4 
2022$26.0 
2023$25.7 
2024$25.3 
2025$24.7 
2026 - 2030$118.1 
Estimated future benefit payments  
$ in millions due within the following years: Pension
2019 $26.7
2020 $26.5
2021 $26.3
2022 $26.0
2023 $25.9
2024 - 2028 $125.1


Note 10 – Equity

Redeemable Preferred Stock of SubsidiaryShareholder's Deficit
On October 13, 2016 (the "Redemption Date"), DPL's subsidiary, DP&L redeemed all of its issued and outstanding preferred stock, consisting of the following series: Preferred Stock, 3.75% Series A, Cumulative (the “Series A Stock”); Preferred Stock, 3.75% Series B, Cumulative (the “Series B Stock”); and Preferred Stock, 3.90% Series C, Cumulative (the “Series C Stock” and, together with the Series A Stock and the Series B Stock, the “Preferred Stock”). On the Redemption Date, the Preferred Stock of each series was redeemed at the following prices as specified in DP&L’s Amended and Restated Articles of Incorporation, plus, in each case an amount equal to all accrued dividends payable with respect to such Preferred Stock to the Redemption Date: a price of $102.50 per share for the Series A Stock, a price of $103.00 per share for the Series B Stock, and a price of $101.00 per share for the Series C Stock. Dividends on the Preferred Stock ceased to accrue on the Redemption Date. Upon redemption, the Preferred Stock was no longer outstanding, and all rights of the holders thereof as shareholders of DP&L, except the right to payment of the redemption price, ceased to exist. The difference between the carrying value of the Redeemable Preferred Stock of Subsidiary and the redemption amount was charged to Other paid-in capital.

Dividend Restrictions
DPL’s Amended Articles of Incorporation (the Articles) contain provisions which state that DPL may not make a distribution to its shareholder or make a loan to any of its affiliates (other than its subsidiaries), unless: (a) there exists no Event of Default (as defined in the Articles) and no such Event of Default would result from the making of the distribution or loan; and either (b)(i) at the time of, and/or as a result of, the distribution or loan, DPL’s leverage ratio does not exceed 0.67 to 1.00 and DPL’s interest coverage ratio is not less than 2.50 to 1.00 or, (b)(ii) if such ratios are not within the parameters, DPL’s senior long-term debt rating from one of the three major credit rating agencies is at least investment grade. Further, the restrictions on the payment of distributions to a shareholder and the making of loans to its affiliates (other than subsidiaries) cease to be in effect if the three major credit rating agencies confirm that a lowering of DPL’s senior long-term debt rating below investment grade by the credit rating agencies would not occur without these restrictions. DPL is also restricted from making dividend and tax sharing payments from DPL to AES per its 2017 ESP. This order restricts dividend payments from DPL to AES during the term of the ESP and restricts tax sharing payments from DPL to AES during the term of the DMR.restrictions.

Common Stock
Effective on the Merger date, DPL's Amended Articles of Incorporation provided for 1,500 authorized common shares, of which 1 share is outstanding at December 31, 2018.

As described above,DPL’s Amended Articles of Incorporation contain restrictions on DPL’s ability to make dividends, distributions and affiliate loans (other than to its subsidiaries), including restrictions on making such dividends, distributions and loans if certain financial ratios exceed specified levels and DPL’s senior long-term debt rating from a rating agency is below investment grade. As of December 31, 2018, DPL’s leverage ratio was at 1.47 to 1.00 and DPL’s senior long-term debt rating from a major credit rating agency was below investment grade.2020, DPL did not meet these requirements. As a result, as of December 31, 2018, 2020, DPL was prohibited under its Articles of Incorporation from making a distribution to its shareholder or making a loan to any of its affiliates (other than its subsidiaries).

Common Stock
Effective on the Merger date, DPL's Amended Articles of Incorporation provided for 1,500 authorized common shares, of which 1 share is outstanding at December 31, 2020.
DP&L has 50,000,000 authorized common shares, of which 41,172,173 are outstanding at December 31, 2018.2020. All common shares are held by DP&L’s parent, DPL.

DPL.
Capital Contributions from AES
In DP&L's approved six-year 2017 ESP 3, the PUCO imposed restrictions on DPL making dividend payments to its parent company, AES, during the term of the ESP, as well as on making tax-sharing payments to AES during the

term of the DMR. The PUCO also required that existing tax payments owed by DPL to AES, and similar tax payments that accrue during the term of the DMR, be converted into equity investments in DPL. With the November 21, 2019 order from the PUCO that removed the DMR and the subsequent approval of DP&L's ESP 1 rate plan, these requirements were eliminated. See Note 3 – Regulatory Matters for additional information on changes to DP&L's ESP and the removal of the DMR.
F-36
DPL.

As such,For the year ended December 31, 2020, DPL received $150.0 million in a cash contribution from AES, agreedwhich DPL then used to make non-cash capital contributionsa $150.0 million equity contribution to DP&L. The contribution at DPL represented an equity contribution of 97.1$98.0 million and waivea payment of $52.0 million against its tax receivable. The proceeds from the amount owedequity contribution at DP&L will primarily be used for funding needs to it by support DP&L's capital expenditure program, mainly new investments in and upgrades to DP&L’s transmission and distribution system.
For the year ended December 31, 2019, DPL related to tax-sharing payments forhad a current tax liabilities through December 31, 2017. benefit so there was no conversion of current tax liabilities.
For the year ended December 31, 2018, AES made capital contributions of 40.0$40.0 million by converting the amount owed to it by DPL related to tax-sharing payments for current tax liabilities. See Note 8 – Income Taxes for additional information.


Note 11 – Contractual Obligations, Commercial Commitments and Contingencies

Guarantees
In the normal course of business, Previously, DPL enters entered into various agreements with its wholly-owned subsidiary, AES Ohio Generation, providing financial or performance assurance to third parties. These agreements arewere entered into primarily to support or enhance the creditworthiness otherwise attributed to thisthe subsidiary on a stand-alone basis, thereby facilitating the extension of sufficient credit to accomplish this subsidiary's intended commercial purposes.

At December 31, 2018, DPL had $23.6 million With the completion of guarantees on behalf ofour plan to exit generation, AES Ohio Generation currently does not require such assurances to third parties, for future financial or performance assurance under such agreements. The guarantee arrangements entered into by DPL with these third parties cover present and future obligations of AES Ohio Generation to such beneficiaries and are terminable at any time by DPL upon written notice toexisting guarantees will expire in June, 2021. During the beneficiaries. We had no outstanding balance of obligations for commercial transactions covered by these guarantees atyear ended December 31, 2018. The carrying amount of obligations for commercial transactions covered by these guarantees and recorded in our Consolidated Balance Sheets was $0.9 million at December 31, 2017.

To date, 2020, DPL has did not incurredincur any losses related to the guarantees of these guaranteesobligations and we believe it is remoteunlikely that DPL would be required to perform or incur any losses in the future associated with any of the above guarantees.

 At December 31, 2020, DPL had $1.9 million of such guarantees on behalf of AES Ohio Generation. There were no outstanding balances for commercial transactions covered by these guarantees at December 31, 2020 or December 31, 2019.
Equity Ownership Interest
DP&L has a 4.9% equity ownership interest in OVEC which is recorded using the cost method of accounting under GAAP. At December 31, 2018, 2020, DP&L could be responsible for the repayment of 4.9%, or $68.1$62.6 million, of a $1,389.6$1,276.7 million debt obligation comprised of both fixed and variable rate securities with maturities between 20192022 and 2040. OVEC could also seek additional contributions from us to avoid a default in the event that other OVEC members defaulted on their respective OVEC obligations. One of the other OVEC members with a 4.85% interest in OVEC,had filed for bankruptcy protection and the bankruptcy court had approved that member's rejection of the OVEC arrangement and its related obligations on July 31, 2018. We do not expect these eventsobligations. Subsequent to have a material impact on our financial condition, results of operations or cash flows.

that decision, another entity has assumed that member's ownership interest and all related liabilities.
Contractual Obligations and Commercial Commitments
We enter into various contractual obligations and other commercial commitments that may affect the liquidity of our operations. At December 31, 2018,2020, these include:
  Payments due in:
$ in millions Total 
Less than
1 year
 
2 - 3
years
 
4 - 5
years
 
More than
5 years
Electricity purchase commitments $209.4
 $139.5
 $69.9
 $—
 $—
Purchase orders and other contractual obligations $40.2
 $11.4
 $14.8
 $14.0
 $—


Payments due in:
$ in millionsTotalLess than
1 year		2 - 3
years		4 - 5
years		More than
5 years
Electricity purchase commitments$120.8 $86.0 $34.8 $— $— 
Purchase orders and other contractual obligations$92.5 $87.8 $4.7 $— $— 
Electricity purchase commitments:
DPLDP&L enters into long-term contracts for the purchase of electricity. In general, these contracts are subject to variable quantities or prices and are terminable only in limited circumstances.

Purchase orders and other contractual obligations:
At December 31, 2018, 2020, DPL had various other contractual obligations including non-cancelable contracts to purchase goods and services with various terms and expiration dates. Due to uncertainty regarding the timing and payment of future obligations to the Service Company, and DPL's ability to terminate such obligations upon 90 days' notice, we have excluded such amounts in the contractual obligations table aboveabove. This table also does not include regulatory liabilities (see Note 3 – Regulatory Matters) or contingencies (see below). See Note 12 – Related Party
F-37



Transactions for additional information on charges between related parties and amounts due to or from related parties.
Contingencies
In the normal course of business, we are subject to various lawsuits, actions, proceedings, claims and other matters asserted under laws and regulations. We believe the amounts provided in our Consolidated Financial Statements, as prescribed by GAAP, are adequate in light ofconsidering the probable and estimable contingencies. However, there can be no assurances that the actual amounts required to satisfy alleged liabilities from various legal proceedings, claims, tax examinations and other matters, including the matters discussed below, and to comply with applicable laws and regulations, will not exceed the amounts reflected in our Consolidated Financial Statements. As such, costs, if any, that may be incurred in excess of those amounts provided as of December 31, 2018,2020, cannot be reasonably determined.

Environmental Matters
DPL’sfacilities and operations are subject to a wide range of federal, state and local environmental laws, rules and regulations. The environmental issues that may affect us include the following. However, as described further below, as a result of
•DPL’s retirement of its Stuart and Killen generating stations, the sale of its ownership interest in the Miami Fort and Zimmer generating stations, the planned 2020 retirement of Conesville and our exiting of our generation business, certain of these environmental regulations and laws are now not expected to have a material impact on DPL with respect to these generating stations.
The federal CAA and state laws and regulations (including SIPs) which require compliance, obtaining permits and reporting as to air emissions;
•Litigation with federal and certain state governments and certain special interest groups regarding whether modifications to or maintenance of certain coal-fired generating stations require additional permitting or pollution control technology, or whether emissions from coal-fired generating stations cause or contribute to global climate changes;
•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities that require or will require substantial reductions in SO2, particulates, mercury, acid gases, NOx and other air emissions;
•
Rules and future rules issued by the USEPA, the Ohio EPA or other authorities that require or will require substantial reductions in SO2, particulates, mercury, acid gases, NOx, and other air emissions.
Rules and future rules issued by the USEPA, the Ohio EPA or other authorities that require or will require reporting and reductions of GHGs;
•Rules and future rules issued by the USEPA, the Ohio EPA or other authorities associated with the federal Clean Water Act, which prohibits the discharge of pollutants into waters of the United States except pursuant to appropriate permits; and
•Solid and hazardous waste laws and regulations, which govern the management and disposal of certain waste. The majorityMost of the solid waste created from the combustion of coal and fossil fuels is fly ash and other coal combustion by-products.

In addition to imposing continuing compliance obligations, theseenvironmental laws, rules and regulations authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. In the normal course of business, we have investigatory and remedial activities underway at our facilities to comply, or to determine compliance, with such laws, rules and regulations. We record liabilities for loss contingencies related to environmental matters when a loss is probable of occurring and can be reasonably estimated in accordance with the provisions of GAAP. Accordingly, we have immaterial accruals for loss contingencies for environmental matters. We also have a number of environmental matters for which we have not accrued loss contingencies because the risk of loss is not probable, or a loss cannot be reasonably estimated. We evaluate the potential liability related to environmental matters quarterly and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our results of operations, financial condition or cash flows.

We have several pending environmental matters associated with our current and previously ownedpreviously-owned and operated coal-fired generation units. Some ofWe do not expect these matters couldto have a material adverse impactsimpact on our results of operations, financial condition or cash flows.

Note 12 – Related Party Transactions

Service Company
The Service Company allocates the costs for services provided based on cost drivers designed to result in fair and equitable allocations. This includes ensuring that the regulated utilities served, including DP&L,, are not subsidizing costs incurred for the benefit of other businesses.
F-38



Benefit Plans
DPL participates in an agreement with Health and Welfare Benefit Plans LLC, an affiliate of AES, to participate in a group benefits program, including but not limited to, health, dental, vision and life benefits. Health and Welfare Benefit Plans LLC administers the financial aspects of the group insurance program, receives all premium payments from the participating affiliates, and makes all vendor payments.

Long-term Compensation Plan
During 2020, 2019 and 2018, 2017 and 2016, manysome of DPL’s non-union employees received benefits under the AES Long-term Compensation Plan, a deferred compensation program. This type of plan is a common employee retention tool used in our industry. Benefits under this plan are granted in the form of performance units payable in cash and AES restricted stock units. Restricted stock units vest ratably over a three-year period. The performance units payable in cash vest at the end of the three-year performance period and are subject to certain AES performance criteria. Total deferred compensation expense recorded during 2020, 2019 and 2018 2017was $0.1 million, $0.0 million and 2016 was $0.4 million, $0.4 million and $0.5 million, respectively, and was included in “Other Operating Expenses”“Operation and maintenance” on DPL’s Consolidated Statements of Operations. The value of these benefits is being recognized over the 36-month vesting period and a portion is recorded as miscellaneous deferred credits with the remainder recorded as “Paid“Paid in capital” on DPL’s Consolidated Balance Sheets in accordance with FASC 718 “Compensation - Stock Compensation.”

The following table provides a summary of our related party transactions:
Years ended December 31,
$ in millions202020192018
Transactions with the Service Company
Charges for services provided$38.8 $33.8 $41.0 
Charges to the Service Company$4.2 $3.6 $4.9 
Transactions with other AES affiliates:
Payments for health, welfare and benefit plans$10.7 $11.2 $7.9 
Consulting and other services$0.8 $0.7 $2.0 
Balances with related parties:At December 31, 2020At December 31, 2019
Net payable to the Service Company$(14.8)$(11.0)
Net receivable from / (payable to) AES and other AES affiliates (a)$(1.7)$2.0 
  Years ended December 31,
$ in millions 2018 2017 2016
Transactions with the Service Company      
Charges for services provided $41.0
 $46.5
 $42.8
Charges to the Service Company $4.9
 $4.2
 $4.6
Transactions with other AES affiliates:      
Payments for health, welfare and benefit plans $7.9
 $15.4
 $9.6
Consulting services $2.0
 $—
 $—
       
Balances with related parties: At December 31, 2018 At December 31, 2017  
Net payable to the Service Company $(4.8) $(3.9)  
Net payable to other AES affiliates $(0.5) $(0.6)  


(a)The December 31, 2019 net receivable amount includes a $5.1 million receivable balance with AES related to the sale of software previously recorded on AES Ohio Generation during the year ended December 31. 2019. There was no gain or loss recorded on the transaction. These $5.1 million of proceeds on the sale were received in 2020.
DPL Capital Trust II
DPL has a wholly-owned business trust, DPL Capital Trust II (the Trust), formed for the purpose of issuing trust capital securities to third-party investors. Effective in 2003, DPL deconsolidated the Trust upon adoption of the accounting standards related to variable interest entities and currently treats the Trust as a nonconsolidated subsidiary. The Trust holds mandatorily redeemable trust capital securities. The investment in the Trust, which amounted to $0.2 million and $0.3$0.2 million at December 31, 20182020 and 2017,2019, respectively, is included in Other deferred assets within Other noncurrentnon-current assets. DPL also has a note payable to the Trust amounting to $15.6 million and $15.6 million at December 31, 20182020 and 2017,2019, respectively, that was established upon the Trust’s deconsolidation in 2003. See Note 7 – Long-term debt for additional information.

In addition to the obligations under the note payable mentioned above, DPL also agreed to a security obligation which represents a full and unconditional guarantee of payments to the capital security holders of the Trust.

Income Taxes
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 3, through November 21, 2019, DPL is 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 are consideredwere converted to deemed capital contributions. With the November 21, 2019 order from the PUCO that removed the DMR, this requirement was eliminated. See Note 8 – Income Taxes for more information.


F-39

Note 13 – Business Segments

Beginning with the second quarter of 2018, DPL has presented the results of operations of Miami Fort Station, Zimmer Station, the Peaker Assets, Stuart Station and Killen Station as discontinued operations as a group of components for all periods presented. For more information, see Note 15 – Discontinued Operations of Notes to DPL's Consolidated Financial Statements. AES Ohio Generation now only has operating activity coming from its

undivided ownership interest in Conesville, which does not meet the threshold to be a separate reportable operating segment. Because of this, DPL now manages its business through only 1 reportable operating segment, the Utility segment. The primary segment performance measure is income / (loss) from continuing operations before income tax as management has concluded that this measure best reflects the underlying business performance of DPL and is the most relevant measure considered in DPL’s internal evaluation of the financial performance of its segments. The Utility segment is discussed further below:

Utility Segment
The Utility segment is comprised primarily of DP&L’s electric transmission and distribution businesses, which distribute electricity to residential, commercial, industrial and governmental customers. DP&L distributes electricity to more than 525,000531,000 retail customers who are located in a 6,000 square mile area of West Central Ohio. DP&L’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs. The Utility segment includes revenues and costs associated with our investment in OVEC and the historical results of DP&L’s Beckjord Facility,Station, which was closed in 2014 and transferred to a third party in the first quarter of 2018, and the Hutchings EGU,Coal Station, which was closed in 2013. These assets did not transfer2013 and transferred to AES Ohio Generation as part of DP&L's Generation Separation on October 1, 2017. Thus, they are grouped within the Utility segment for segment reporting purposes. In addition, regulatory deferrals and collections, which include fuel deferrals in historical periods, are includeda third party in the Utility segment.fourth quarter of 2020.

Included within the “Other” column are other businesses that do not meet the GAAP requirements for disclosure as reportable segments as well as certain corporate costs, which include interest expense and loss on early extinguishment of debt on DPL’s long-term debt andas well as adjustments related to purchase accounting from the Merger.DPL's undivided interest in Conesville is now included within the "Other" column as it no longer meets the requirement for disclosure as a reportable operating segment, since the results of operations of the other generation plants are now presented as discontinued operations. 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, costs of sales and profitsexpenses are eliminated in consolidation. Certain shared and corporate costs are allocated amongbetween "Other" and the Utility reporting segments.segment.


The following tables present financial information for DPL’s reportable business segment:
$ in millionsUtilityOtherAdjustments and EliminationsDPL Consolidated
Year ended December 31, 2020
Revenues from external customers$651.2 $9.3 $0 $660.5 
Intersegment revenues0.9 3.6 (4.5)0 
Total revenues$652.1 $12.9 $(4.5)$660.5 
Depreciation and amortization$71.8 $1.5 $0 $73.3 
Interest expense$24.3 $47.0 $0 $71.3 
Loss on early extinguishment of debt$0 $31.7 $0 $31.7 
Income / (loss) from continuing operations before income tax$58.1 $(70.0)$0 $(11.9)
Cash capital expenditures$153.3 $4.0 $0 $157.3 
$ in millionsUtilityOtherAdjustments and Eliminations
DPL Consolidated
Year ended December 31, 2019
Revenues from external customers$734.3 $9.4 $0 $743.7 
Intersegment revenues1.1 3.2 (4.3)0 
Total revenues$735.4 $12.6 $(4.3)$743.7 
Depreciation and amortization$70.8 $1.5 $0 $72.3 
Interest expense$26.0 $56.2 $0 $82.2 
Loss on early extinguishment of debt$0 $44.9 $0 $44.9 
Income / (loss) from continuing operations before income tax$124.3 $(92.8)$0 $31.5��
Cash capital expenditures$155.5 $1.0 $0 $156.5 
$ in millions Utility 
Other (a)
 Adjustments and Eliminations DPL Consolidated
Year ended December 31, 2018
Revenues from external customers $737.8
 $38.1
 $—
 $775.9
Intersegment revenues 0.9
 2.9
 (3.8) —
Total revenues $738.7
 $41.0
 $(3.8) $775.9
         
Depreciation and amortization $74.5
 $(1.4) $—
 $73.1
Fixed-asset impairment $—
 $2.8
 $—
 $2.8
Interest expense $27.3
 $70.7
 $—
 $98.0
Income / (loss) from continuing operations before income tax $104.4
 $(72.5) $—
 $31.9
         
Cash capital expenditures $93.1
 $10.5
 $—
 $103.6
         
Total assets (end of year) $1,819.6
 $545.9
 $(482.4) $1,883.1
F-40

$ in millionsUtility
Other (a)
Adjustments and Eliminations
DPL Consolidated
Year ended December 31, 2018
Revenues from external customers$737.8 $9.5 $0 $747.3 
Intersegment revenues0.9 2.9 (3.8)0 
Total revenues$738.7 $12.4 $(3.8)$747.3 
Depreciation and amortization$74.5 $1.7 $0 $76.2 
Interest expense$27.3 $70.7 $0 $98.0 
Loss on early extinguishment of debt$0.6 $5.9 $0 $6.5 
Income / (loss) from continuing operations before income tax$104.4 $(65.5)$0 $38.9 
Cash capital expenditures$85.6 $10.5 $0 $96.1 


(a)    "Other" includes Cash capital expenditures related to assets of discontinued operations and held-for-sale businesses for the year ended December 31, 2018.
Total AssetsDecember 31, 2020December 31, 2019December 31, 2018
Utility$2,014.7 $1,883.2 $1,819.6 
All Other (a)
21.3 52.6 63.5 
DPL Consolidated
$2,036.0 $1,935.8 $1,883.1 

$ in millions Utility 
Other (a)
 Adjustments and Eliminations 
DPL Consolidated
Year ended December 31, 2017
Revenues from external customers $718.9
 $25.0
 $—
 $743.9
Intersegment revenues 1.1
 4.4
 (5.5) —
Total revenues $720.0
 $29.4
 $(5.5) $743.9
         
Depreciation and amortization $75.3
 $0.8
 $—
 $76.1
Interest expense $30.5
 $79.5
 $—
 $110.0
Income / (loss) from continuing operations before income tax $88.5
 $(95.0) $—
 $(6.5)
         
Cash capital expenditures $85.6
 $35.9
 $—
 $121.5
         
Total assets (end of year) $1,695.9
 $736.5
 $(383.2) $2,049.2


(a)    "All Other" includes Total assets related to the assets of discontinued operations and held-for-sale businesses and Eliminations as of December 31, 2020, 2019 and 2018. "All Other" Total assets as of December 31, 2020 is primarily cash on hand from debt issuances.
$ in millions Utility 
Other (a)
 Adjustments and Eliminations 
DPL Consolidated
Year ended December 31, 2016
Revenues from external customers $806.7
 $27.5
 $—
 $834.2
Intersegment revenues 1.3
 5.7
 (7.0) —
Total revenues $808.0
 $33.2
 $(7.0) $834.2
         
Depreciation and amortization $71.0
 $2.6
 $—
 $73.6
Fixed-asset impairment $—
 $23.9
 $—
 $23.9
Interest expense $25.4
 $82.3
 $(0.3) $107.4
Income / (loss) from continuing operations before income tax $143.0
 $(130.6) $—
 $12.4
         
Cash capital expenditures $83.4
 $65.1
 $—
 $148.5
         
Total assets (end of year) $1,710.5
 $1,145.9
 $(437.2) $2,419.2


(a)"Other" includes Cash capital expenditures and Total assets related to the assets of discontinued operations and held-for-sale businesses for all periods presented.

Note 14 – Revenue

Revenue is primarily earned from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities.

Retail Revenues revenue – DP&L energy sales to utility customers are based on the reading of meters at the customer's location that occurs on a systematic basis throughout the month. DP&L sells electricity directly to end-users, such as homes and businesses, and bills customers directly. Performance obligations for retail revenues are satisfied over time as energy is delivered and the same method is used to measure progress, and thus the performance obligation meets the criteria to be considered a series. This includes both the promise to transfer energy and other distribution and/or transmission services.

In exchange for the exclusive right to sell or distribute electricity in our service area, DP&L is subject to rate regulation by federal and state regulators. This regulation sets the framework for the prices (“tariffs”) that DP&L is allowed to charge customers for electricity. Since tariffs are approved by the regulator, the price that DP&L has the right to bill corresponds directly with the value to the customer of DP&L's performance completed in each period. Therefore, revenue under these contracts is recognized using an output method measured by the MWhs delivered each month at the approved tariff.

In cases where a customer chooses to receive generation services from a CRES provider, the price for generation services is negotiated between the customer and the CRES provider, and DP&L only serves as a billing agent if requested by the CRES provider. As such, DP&L recognizes the consolidated billing arrangement with the CRES provider on a net basis, thereby recording no revenue for the generation component. Retail revenue from these customers would only be related to transmission and distribution charges.


Wholesale Revenuesrevenue – All of the power produced from DPL's ownership interest in Conesville and DP&L's share of the power produced at OVEC is sold to PJM and these revenues are classified as Wholesale revenues.

In PJM, the promise to sell energy as wholesale revenue is separately identifiable from participation in the capacity market and the two products can be transacted independently of one another. Therefore, wholesale revenues are a
F-41

separate contract with a single performance obligation. Revenue is recorded based on the quantities (MWh) delivered in each hour during each month at the spot price, making the contract effectively “month-to-month”.

RTO Revenues ancillary revenue – Compensation for use of DP&L’s transmission assets and compensation for various ancillary services are classified as RTO ancillary revenues. As DP&L owns and operates transmission lines in southwest Ohio within PJM, demand charges collected from network customers by PJM are then allocated to the appropriate transmission owners (i.e. DP&L)&L) and recognized as transmission revenues. Additionally, as an owner of generation and transmission assets within PJM, DPL is compensated for various ancillary services; such as reactive supply, regulation services, scheduling reserves, operating reserves, spinning/synchronized reserves as well as congestion credits that are provided to PJM via these assets.

Transmission revenues have a single performance obligation, as transmission services represent a distinct service. Additionally, as the performance obligation is satisfied over time and the same method is used to measure progress, the performance obligation meets the criteria to be considered a series. The price that DP&L,, as the transmission operator, has the right to bill (received as a credit from PJM) corresponds directly with the value to the customer of performance completed in each period, as the price paid is the allocation of the tariff rate (as approved by the regulator) charged to network participants.

Ancillary serviceCapacity revenue – DP&L records its share of OVEC capacity revenues haveas Capacity revenues. The capacity price is set through a singlecompetitive auction process established by PJM. Depending on the availability and performance obligation, as they represent a distinct service. Additionally, as the performance obligation is satisfied over time and the same method is used to measure progress, the performance obligation meets the criteria to be considered a series. The price that DPL has the right to bill corresponds directly with the value to the customer of performance completed in each period as the price paid is at the market price or allocation of the tariff rate (which was approved by the regulator) charged to network participants.

RTO Capacity Revenues – Compensation received from PJM for making installed generation capacity available to satisfy system integrity and reliability requirements is classified as RTO capacity revenues. Capacity, which is a stand-ready obligation to deliver energy when called upon by the RTO, is measured using MWs. If plant availability exceeds a contractual target, weOVEC units, there may receive abe additional performance bonus payment, or if the plant availability falls below a guaranteed minimum target, we may incur a non-availability penalty. Such bonuses or penalties, represent a form of variable consideration and are estimated andwhich would be recognized whenonly if it isbecomes probable that theresuch bonus or penalties will not be a significant reversal and therefore the transaction price is recognized on an output basis based on the MWs.

incurred.
RTO capacity revenues have a single performance obligation, as capacity is a distinct good. Additionally, as the performance obligation is satisfied over time and the same method is used to measure progress, the performance obligation meets the criteria to be considered a series. The capacity price is set through a competitive auction process established by PJM.


DPL's revenue from contracts with customers was $743.8$645.0 million, $720.6 million and $715.2 million for the yearyears ended December 31, 2018.2020, 2019 and 2018, respectively. The following table presents our revenue from contracts with customers and other revenue by segment for the yearyears ended December 31, 2020, 2019 and 2018:
$ in millionsUtilityOtherAdjustments and EliminationsTotal
Year ended December 31, 2020
Retail revenue
Retail revenue from contracts with customers
Residential revenue$362.3 $0 $0 $362.3 
Commercial revenue114.6 0 0 114.6 
Industrial revenue51.2 0 0 51.2 
Governmental revenue36.6 0 0 36.6 
Other (a)12.7 0 0 12.7 
Total retail revenue from contracts with customers577.4 0 0 577.4 
Other retail revenue (b)9.0 0 0 9.0 
Wholesale revenue
Wholesale revenue from contracts with customers11.0 0 (0.9)10.1 
RTO ancillary revenue44.0 0 0 44.0 
Capacity revenue4.2 0 0 4.2 
Miscellaneous revenue
Miscellaneous revenue from contracts with customers (c)0 9.3 0 9.3 
Miscellaneous revenue6.5 3.6 (3.6)6.5 
Total revenues$652.1 $12.9 $(4.5)$660.5 

F-42

$ in millions Utility Other Adjustments and Eliminations Total
  Year ended December 31, 2018
Retail Revenue        
Retail revenue from contracts with customers $625.8
 $—
 $(1.0) $624.8
Other retail revenues (a)
 32.1
 —
 —
 32.1
Wholesale Revenue        
Wholesale revenue from contracts with customers 29.9
 22.1
 —
 52.0
RTO revenue 43.1
 0.1
 —
 43.2
RTO capacity revenues 7.8
 6.6
 —
 14.4
Other revenues from contracts with customers (b)
 —
 9.4
 —
 9.4
Other revenues —
 2.8
 (2.8) —
Total revenues $738.7
 $41.0
 $(3.8) $775.9
$ in millionsUtilityOtherAdjustments and EliminationsTotal
Year ended December 31, 2019
Retail revenue
Retail revenue from contracts with customers
Residential revenue$403.5 $0 $0 $403.5 
Commercial revenue130.3 0 0 130.3 
Industrial revenue55.3 0 0 55.3 
Governmental revenue42.4 0 0 42.4 
Other (a)13.8 0 0 13.8 
Total retail revenue from contracts with customers645.3 0 0 645.3 
Other retail revenue (b)22.0 0 0 22.0 
Wholesale revenue
Wholesale revenue from contracts with customers17.2 0 (1.0)16.2 
RTO ancillary revenue43.5 0 0 43.5 
Capacity revenue6.2 0 0 6.2 
Miscellaneous revenue
Miscellaneous revenue from contracts with customers (c)0 9.4 0 9.4 
Miscellaneous revenue1.2 3.2 (3.3)1.1 
Total revenues$735.4 $12.6 $(4.3)$743.7 

(a)Other retail revenue primarily includes alternative revenue programs not accounted for under FASC 606.
(b)Other revenues from contracts with customers primarily includes revenues for various services provided by Miami Valley Lighting.
$ in millionsUtilityOtherAdjustments and EliminationsTotal
Year ended December 31, 2018
Retail revenue
Retail revenue from contracts with customers
Residential revenue$404.0 $0 $0 $404.0 
Commercial revenue118.9 0 0 118.9 
Industrial revenue48.9 0 0 48.9 
Governmental revenue40.8 0 (1.0)39.8 
Other (a)13.2 0 0 13.2 
Total retail revenue from contracts with customers625.8 0 (1.0)624.8 
Other retail revenue (b)32.1 0 0 32.1 
Wholesale revenue
Wholesale revenue from contracts with customers29.9 0 0 29.9 
RTO ancillary revenue43.1 0 0 43.1 
Capacity revenue7.8 0.1 0 7.9 
Miscellaneous revenue
Miscellaneous revenue from contracts with customers (c)0 9.5 0 9.5 
Miscellaneous revenue0 2.8 (2.8)0 
Total revenues$738.7 $12.4 $(3.8)$747.3 

(a)    "Other" primarily includes Wright-Patterson Air Force Base revenues, billing service fees from CRES providers and other miscellaneous retail revenues from contracts with customers.
(b)    Other retail revenue primarily includes alternative revenue programs not accounted for under FASC 606.
(c)    Miscellaneous revenue from contracts with customers primarily includes revenues for various services provided by Miami Valley Lighting.

The balances of receivables from contracts with customers were     $72.6$70.1 million and $63.0$65.1 million as of December 31, 20182020 and January 1, 2018,2019, respectively. Payment terms for all receivables from contracts with customers are typically within 30 days.

We have elected to apply the optional disclosure exemptions under FASC 606. Therefore, we have no disclosures pertaining to revenue expected to be recognized in any future year related to remaining performance obligations, as we exclude contracts with an original length of one year or less, contracts for which we recognize revenue based on the amount we have the right to invoice for services performed, and variable consideration allocated entirely to a
F-43

wholly unsatisfied performance obligation when the consideration relates specifically to our efforts to satisfy the performance obligation and depicts the amount to which we expect to be entitled for DPL.
DPL.

Note 15 – Discontinued Operations

Conesville - In May 2020, AEP, the operator of the formerly co-owned Conesville EGU, retired Conesville Unit 4 as planned. On December 8, 2017, June 5, 2020, DPL and AES Ohio Generation, together with AEP, completed the sale transactiontransfer of their entire undivided interestinterests in the Miami Fort Station andretired Unit 4, including the Zimmer Station, which resulted inassociated environmental liabilities, to an unaffiliated third-party purchaser. As a result, DPL recognized a gain on salethe transfer of $14.0$4.5 million for the year ended December 31, 2017. On March 27, 2018, 2020. For the transaction, DPL and will make quarterly cash expenditures, totaling $4.0 million, through July 2022, of which $1.8 million has been paid through December 31, 2020. The transfer of Conesville Unit 4 was the last step in DPL's plan to exit its AES Ohio Generation completed the sale transaction of the Peaker assets to Kimura Power, LLC, which resulted in a loss on sale of $1.9 million for the year ended December 31, 2018. Further, onbusiness operations.
Stuart and Killen – On May 31, 2018, DPL and AES Ohio Generation retired the Stuart Station coal-fired and diesel-fired generating units and the Killen Station coal-fired generating unit and combustion turbine, as planned. Consequently,On December 20, 2019, DPL and AES Ohio Generation, together with AES Ohio Generation's joint owners in the second quarterretired Stuart and Killen generating facilities, completed the transfer of the retired generating facilities, including the associated environmental liabilities, to an unaffiliated third-party purchaser. As a result, DPL made cash expenditures of $51.0 million and recognized a gain on the transfer of $20.0 million for the year ended December 31, 2019.
Peaker Assets – On March 27, 2018, DPL and AES Ohio Generation completed the sale transaction of the Peaker assets, which resulted in net proceeds of $234.9 million and a loss on sale of $1.9 million for the year ended December 31, 2018.
DPL determined that the transfers of Conesville, Stuart and Killen along with the sales of the Peaker Assets in 2018 and Miami Fort and Zimmer in 2017 constitute the disposal of a group of components, which, as a whole, represent a strategic shift to exit its AES Ohio Generation business. As such, the disposal of this group of components as a whole represents a strategic shift by us to exit generation, and, as such, qualifies to be presented as discontinued operations. Therefore, the results of operations, assets and financial position forliabilities of this group of components were reported as such in the Consolidated Statements of Operations and Consolidated Balance Sheets for all periods presented.

Previously, on January 1, 2016,
DPL closed on the sale of DPLER, its competitive retail business. The sale agreement was signed on December 28, 2015, and DPL received $75.5 million of restricted cash on December 31, 2015 for the sale. DPL recorded a gain on this transaction of $49.2 million in the first quarter of 2016. The gain included the impact of DPLER’s liability to DP&L that transferred with the sale on January 1, 2016. As such, the results of operations of DPLER were also reported as discontinued operations in the Consolidated Statements of Operations for the year ended December 31, 2016.


The following table summarizes the major categories of assets and liabilities at the dates indicated:
$ in millions December 31, 2018 December 31, 2017
Restricted cash $—
 $1.5
Accounts receivable, net 4.0
 37.9
Inventories —
 19.4
Taxes applicable to subsequent years 2.3
 7.4
Other prepayments and current assets 2.4
 17.4
Property, plant & equipment, net —
 232.2
Intangible assets, net 5.3
 5.5
Other deferred assets —
 0.6
Total assets of the disposal group classified as assets of discontinued operations and held-for-sale businesses in the balance sheets $14.0
 $321.9
     
Accounts payable $3.9
 $25.1
Accrued taxes 3.1
 6.3
Other current liabilities 5.2
 30.0
Long-term debt (a)
 —
 0.3
Deferred taxes (b)
 (39.8) (2.3)
Taxes payable 2.3
 7.4
Pension, retiree and other benefits 9.7
 10.6
Asset retirement obligations 90.4
 116.6
Other deferred credits 6.6
 5.9
Total liabilities of the disposal group classified as liabilities of discontinued operations and held-for-sale businesses in the balance sheets $81.4
 $199.9

(a)$ in millionsLong-term debt relatesDecember 31, 2019
Accounts receivable, net$18.0 
Inventories3.7 
Taxes applicable to capital leases.subsequent years0.3 
Prepayments and other current assets0.3 
Intangible assets, net of amortization0.1 
Other non-current assets1.0 
Total assets of the disposal group classified as assets of discontinued operations and held-for-sale businesses in the balance sheets$23.4 
(b)Accounts payable$5.6 
Accrued taxes0.3 
Accrued and other current liabilities3.1 
Deferred income taxes represent the tax asset position(a)
(6.5)
Taxes payable0.3 
Asset retirement obligations8.3 
Other non-current liabilities6.3 
Total liabilities of the disposal group classified as liabilities of discontinued group of components, which were netted with liabilities on operations and held-for-sale businesses in the balance sheetsDPL$ prior to classification as discontinued operations.17.4 

(a)Deferred income taxes represent the tax asset position of the discontinued group of components, which were netted with liabilities on DPL prior to classification as discontinued operations.

F-44

The following table summarizes the revenues, cost of revenues, operating andcosts, other expenses and income tax of discontinued operations for the periods indicated:
Years ended December 31,
$ in millions202020192018
Revenues$24.2 $70.9 $187.3 
Operating costs and other expenses(24.8)(19.8)(121.0)
Fixed-asset impairment0 (3.5)(2.8)
Income / (loss) from discontinued operations(0.6)47.6 63.5 
Gain / (loss) from disposal of discontinued operations6.1 20.1 (1.6)
Income tax expense from discontinued operations0.1 14.1 28.5 
Net income from discontinued operations$5.4 $53.6 $33.4 
  Years ended December 31,
$ in millions 2018 2017 2016
Revenues $158.6
 $492.9
 $593.0
Cost of revenues (74.3) (249.5) (349.6)
Operating and other expenses (13.8) (195.0) (214.6)
Fixed-asset impairment —
 (175.8) (835.2)
Income / (loss) from discontinued operations 70.5
 (127.4) (806.4)
Gain / (loss) from disposal of discontinued operations (1.6) 14.0
 49.2
Income tax expense / (benefit) from discontinued operations 30.0
 (20.3) (257.2)
Net income / (loss) from discontinued operations $38.9
 $(93.1) $(500.0)


Cash flows related to discontinued operations are included in our Consolidated Statements of Cash Flows. Cash flows from operating activities for discontinued operations were $(6.8)$3.2 million, $126.8$21.3 million and $92.3$35.0 million for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively. Cash flows from investing activities for discontinued operations were $233.8$4.9 million, $51.8$(51.0) million and $(56.8)$233.6 million for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively.

Joint Owners' Agreement for Stuart and Killen
The PUCO authorized DP&LPursuant to maintain long-term debtthe Joint Owners' Agreements for Stuart and Killen entered into in December 2019, existing assets and liabilities between the joint owners were settled and resulted in a credit to DPL's operating costs and other expenses of $750.0 million or 75% of its rate base, whichever is greater, until January 1, 2018, or to file an application to explain why it would not achieve those metrics. Accordingly, $750.0 million of debt and the pro rata interest expense associated with that debt were allocated to continuing operations. All remaining interest expense is included in the discontinued operations above. The interest expense included in discontinued operations was $0.2 million and $0.5$19.4 million for the yearsyear ended December 31, 2017 and 2016, respectively.

2019 in the table above.
AROs of Discontinued Operations
DPL's Prior to the transfer of the retired Stuart and Killen generating facilities, continue to carrythe facilities carried ARO liabilities consisting primarily of river intake and discharge structures, coal unloading facilities, landfills and ash disposal facilities. In the first quarter of 2019 and the fourth quarter of 2018, DPL reduced the ARO liability related to the Stuart and Killen ash ponds and landfills by $27.6$22.5 million and $27.6 million, respectively, based on updated internal analyses that reduced estimated closure costs associated with these ash ponds and landfills. The remaining ARO liability related to Stuart and Killen iswas included in the AROs in the total liabilities of the disposal

group classified as liabilities of discontinued operations and held-for-sale businesses in the balance sheets as of December 31, 20182019 sale described above. As these plants arewere no longer in service, the reductionreductions to the ARO liability was alsowere recorded as a creditcredits to depreciation and amortization expense in the same amount.amounts. The creditcredits to depreciation and amortization expense isare included in operating costs and other expenses of discontinued operations for the yearyears ended December 31, 2019 and 2018 in the table above.

Note 16 – Dispositions

Beckjord FacilityHutchings Coal Station – On February 26, 2018, December 3, 2020, DP&L and transferred its co-owners of the retired Beckjord Facility agreed to transfer their interests in the retired FacilityHutchings Coal Station to a third party, including theirits obligations to remediate the FacilityStation and its site, and the transfer occurred on that same date. As a result, DPL recognized a loss on the transfer of $11.7$4.7 million and made cash expenditures of $14.5$7.0 million, inclusive of cash expenditures for the transfer charges. DPL agreed to pay an additional $2.3 million by December 1, 2021 for the transfer. The Beckjord FacilityHutchings Coal Station was retired in 2014,2013, and, as such, the income / (loss) from continuing operations before income tax related to the Beckjord FacilityHutchings Coal Station was immaterial for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, excluding the loss on transfer noted above. Prior to the transfer, the Beckjord FacilityHutchings Coal Station was included in the Utility segment.

Note 17 – Fixed-asset impairments

During the fourth quarter of 2016, we tested the recoverability of our long-lived coal-fired generation assets. Lower forward dark spreads and capacity prices, along with the indicators at the other coal-fired facilities, collectively, resulted in an indicator of impairment for the Conesville asset group. We performed a long-lived asset impairment analysis for the Conesville asset group and determined that its carrying amount was not recoverable. The Conesville coal-fired facility asset group was determined to have a fair value of $1.1 million using the income approach. As a result, DPL recognized a total pre-tax asset impairment expense of $23.9 million.

During the year ended December 31, 2018, DPL recognized a total pre-tax asset impairment expense of $2.8 million for the Conesville asset group, as it was determined that additional amounts capitalized in 2018 were not recoverable.


Schedule II
DPL Inc.
VALUATION AND QUALIFYING ACCOUNTS
For each of the three years ended December 31, 2018
$ in thousands
Description 
Balance at
Beginning
of Period
 Additions 
Deductions (a)
 
Balance at
End of Period
Year ended December 31, 2018        
Deducted from accounts receivable -        
Provision for uncollectible accounts $1,053
 $3,411
 $3,574
 $890
Deducted from deferred tax assets -        
Valuation allowance for deferred tax assets (b)
 $36,328
 $1,539
 $8,794
 $29,073
Year ended December 31, 2017        
Deducted from accounts receivable -        
Provision for uncollectible accounts $1,159
 $3,141
 $3,247
 $1,053
Deducted from deferred tax assets -        
Valuation allowance for deferred tax assets (b)
 $38,266
 $4,383
 $6,321
 $36,328
Year ended December 31, 2016        
Deducted from accounts receivable -        
Provision for uncollectible accounts $835
 $4,113
 $3,789
 $1,159
Deducted from deferred tax assets -        
Valuation allowance for deferred tax assets (b)
 $39,874
 $—
 $1,608
 $38,266
(a)    Amounts written off, net of recoveries of accounts previously written off
(b)
Balances and activity for valuation allowances for deferred tax assets includes that of amounts presented within both the "Deferred taxes" line and the "Non-current liabilities of discontinued operations and held-for-sale businesses" line on DPL’s Consolidated Balance Sheets.


DPL INC.
Condensed Consolidated Statements of Operations
(Unaudited)
  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 2018 2019 2018
Revenues $199.0
 $207.7
 $592.2
 $591.5
         
Operating costs and expenses        
Net fuel cost 5.2
 4.6
 13.0
 12.7
Net purchased power cost 66.5
 83.6
 195.0
 238.9
Operation and maintenance 44.2
 37.3
 142.3
 118.3
Depreciation and amortization 17.7
 19.7
 54.1
 58.8
Taxes other than income taxes 20.9
 19.0
 58.5
 54.5
Other, net (Note 2) —
 1.6
 0.9
 14.6
Total operating costs and expenses 154.5
 165.8
 463.8
 497.8
         
Operating income 44.5
 41.9
 128.4
 93.7
         
Other income / (expense), net:        
Interest expense (18.3) (22.6) (63.7) (74.4)
Loss on early extinguishment of debt —
 —
 (44.9) (6.4)
Other income 0.3
 0.5
 3.2
 0.8
Total other expense, net (18.0) (22.1) (105.4) (80.0)
         
Income from continuing operations before income tax 26.5
 19.8
 23.0
 13.7
         
Income tax expense / (benefit) from continuing operations (9.4) 3.1
 (12.6) 1.5
         
Net income from continuing operations 35.9
 16.7
 35.6
 12.2
         
Discontinued operations (Note 14):        
Income / (loss) from discontinued operations before income tax (0.4) 5.0
 32.8
 36.7
Gain / (loss) from disposal of discontinued operations —
 0.3
 0.1
 (1.6)
Income tax expense from discontinued operations 0.1
 1.0
 7.1
 5.9
Net income / (loss) from discontinued operations (0.5) 4.3
 25.8
 29.2
         
Net income $35.4
 $21.0
 $61.4
 $41.4
See Notes to Condensed Consolidated Financial Statements.


DPL INC.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 2018 2019 2018
Net income $35.4
 $21.0
 $61.4
 $41.4
Derivative activity:        
Change in derivative fair value, net of income tax (expense) / benefit of $(0.1), $0.0, $0.1 and $(0.2) for each respective period (0.2) 0.1
 (1.0) 0.4
Reclassification to earnings, net of income tax (benefit) / expense of $(0.1), $0.1, $0.0 and $0.3 for each respective period (0.4) (0.2) (0.9) (0.6)
Reclassification of earnings related to discontinued operations, net of income tax benefit of $(0.4), $0.0, $(0.4) and $(1.5) for each respective period (0.4) —
 (0.4) 2.8
Total change in fair value of derivatives (1.0) (0.1) (2.3) 2.6
Pension and postretirement activity:        
Reclassification to earnings, net of income tax benefit of $(0.1), $(0.1), $(0.1) and $(0.1) for each respective period —
 0.1
 0.1
 0.4
Total change in unfunded pension and postretirement obligations —
 0.1
 0.1
 0.4
         
Other comprehensive income / (loss) (1.0) —
 (2.2) 3.0
         
Net comprehensive income $34.4
 $21.0
 $59.2
 $44.4
See Notes to Condensed Consolidated Financial Statements.


DPL INC.
Condensed Consolidated Balance Sheets
(Unaudited)
$ in millions September 30, 2019 December 31, 2018
ASSETS    
Current assets:    
Cash and cash equivalents $36.8
 $90.5
Restricted cash 17.6
 21.2
Accounts receivable, net (Note 2) 69.8
 90.5
Inventories (Note 2) 13.0
 10.7
Taxes applicable to subsequent years 18.2
 72.6
Regulatory assets, current 40.2
 41.1
Prepayments and other current assets 9.3
 12.9
Current assets of discontinued operations and held-for-sale businesses 8.3
 8.7
Total current assets 213.2
 348.2
     
Property, plant & equipment:    
Property, plant & equipment 1,664.2
 1,615.6
Less: Accumulated depreciation and amortization (350.3) (310.8)
  1,313.9
 1,304.8
Construction work in process 94.5
 32.2
Total net property, plant & equipment 1,408.4
 1,337.0
     
Other non-current assets:    
Regulatory assets, non-current 154.7
 152.6
Intangible assets, net of amortization 19.3
 18.4
Other non-current assets 20.5
 21.6
Non-current assets of discontinued operations and held-for-sale businesses 0.2
 5.3
Total other non-current assets 194.7
 197.9
     
Total assets $1,816.3
 $1,883.1
     
LIABILITIES AND SHAREHOLDER'S DEFICIT    
Current liabilities:    
Short-term and current portion of long-term debt (Note 6) $237.6
 $103.6
Accounts payable 52.9
 58.1
Accrued taxes 78.5
 76.7
Accrued interest 27.2
 14.3
Customer deposits 20.3
 21.3
Regulatory liabilities, current 36.5
 34.9
Accrued and other current liabilities 21.4
 22.0
Current liabilities of discontinued operations and held-for-sale businesses 9.9
 12.2
Total current liabilities 484.3
 343.1
     
Non-current liabilities:    
Long-term debt (Note 6) 1,223.3
 1,372.3
Deferred income taxes 119.0
 116.1
Taxes payable 3.7
 76.1
Regulatory liabilities, non-current 252.3
 278.3
Accrued pension and other post-retirement benefits 73.9
 82.3
Asset retirement obligations 9.5
 9.4
Other non-current liabilities 7.5
 8.0
Non-current liabilities of discontinued operations and held-for-sale businesses 52.4
 69.2
Total non-current liabilities 1,741.6
 2,011.7
     
Commitments and contingencies (Note 10) 

 

     
Common shareholder's deficit    
Common stock:    
1,500 shares authorized; 1 share issued and outstanding at September 30, 2019 and December 31, 2018 —
 —
Other paid-in capital 2,373.4
 2,370.5
Accumulated other comprehensive income —
 2.2
Accumulated deficit (2,783.0) (2,844.4)
Total common shareholder's deficit (409.6) (471.7)
     
Total liabilities and shareholder's deficit $1,816.3
 $1,883.1
See Notes to Condensed Consolidated Financial Statements.


DPL INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  Nine months ended September 30,
$ in millions 2019 2018
Cash flows from operating activities:    
Net income $61.4
 $41.4
Adjustments to reconcile net income to net cash from operating activities:    
Depreciation and amortization 34.2
 62.4
Amortization of deferred financing costs 4.3
 4.4
Loss on early extinguishment of debt 44.9
 6.4
Deferred income taxes (8.7) (17.8)
Fixed-asset impairment —
 2.8
Loss / (gain) on disposal and sale of business, net (0.1) 13.2
Loss / (gain) on asset disposal, net 0.9
 (0.6)
Changes in certain assets and liabilities:    
Accounts receivable, net 18.0
 34.4
Inventories (3.2) 14.7
Taxes applicable to subsequent years 56.2
 57.7
Deferred regulatory costs, net 2.9
 (4.1)
Accounts payable (5.1) (17.4)
Accrued taxes (71.0) (47.1)
Accrued interest 12.9
 13.4
Accrued pension and other post-retirement benefits (9.3) (4.0)
Other (2.0) (6.9)
Net cash provided by operating activities 136.3
 152.9
Cash flows from investing activities:    
Capital expenditures (122.4) (75.8)
Proceeds from disposal and sale of business —
 234.9
Payments on disposal and sale of business —
 (14.5)
Proceeds from sale of property —
 10.6
Insurance proceeds —
 2.8
Purchase of renewable energy credits (3.6) —
Other investing activities, net 0.1
 (0.5)
Net cash provided by / (used in) investing activities (125.9) 157.5
Cash flows from financing activities:    
Payments of deferred financing costs (9.2) —
Issuance of long-term debt, net of discount 821.7
 —
Retirement of long-term debt, including early payment premium (978.0) (239.4)
Borrowings from revolving credit facilities 133.0
 30.0
Repayment of borrowings from revolving credit facilities (35.0) (40.0)
Other financing activities, net (0.2) —
Net cash used in financing activities (67.7) (249.4)
Decrease in cash and restricted cash of discontinued operations and held-for-sale businesses —
 1.5
Cash, cash equivalents, and restricted cash:    
Net change (57.3) 62.5
Balance at beginning of period 111.7
 24.9
Cash, cash equivalents, and restricted cash at end of period $54.4
 $87.4
Supplemental cash flow information:    
Interest paid, net of amounts capitalized $47.1
 $55.2
Income taxes paid / (refunded), net $1.3
 $(2.0)
Non-cash financing and investing activities:    
Accruals for capital expenditures $2.3
 $7.6
Non-cash proceeds from sale of business $—
 $4.1
Non-cash capital contribution (Note 9) $2.7
 $30.2
See Notes to Condensed Consolidated Financial Statements.


DPL INC.
Condensed Consolidated Statements of Shareholder's Deficit
(Unaudited)
  
Common Stock (a)
        
$ in millions Outstanding Shares Amount Other
Paid-in
Capital		 Accumulated Other Comprehensive Income Accumulated Deficit Total
Balance, January 1, 2018 1
 $—
 $2,330.4
 $0.8
 $(2,915.5) $(584.3)
Net comprehensive income       3.3
 16.9
 20.2
Capital contributions (b)
     44.6
     44.6
Other (c)
     


 (1.0) 1.0
 —
Balance, March 31, 2018 1
 —
 2,375.0
 3.1
 (2,897.6) (519.5)
Net comprehensive income       (0.3) 3.5
 3.2
Capital contributions (b)
     (17.9)     (17.9)
Other     0.1
   

 0.1
Balance, June 30, 2018 1
 —
 2,357.2
 2.8
 (2,894.1) (534.1)
Net comprehensive income       —
 21.0
 21.0
Capital contributions (b)
     3.5
     3.5
Other     0.1
     0.1
Balance, September 30, 2018 1
 $—
 $2,360.8
 $2.8
 $(2,873.1) $(509.5)

(a)1,500 shares authorized.
(b)
Represents the conversion of a tax sharing payable to AES to contributed capital, as DP&L's 2017 ESP restricts tax sharing payments to AES during the term of the ESP. See Note 9 – Shareholder's Deficit.
(c)ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities” was effective as of January 1, 2018. This ASU requires the change in the fair value of equity instruments to be recorded in income rather than in Other Comprehensive Income. Equity Instruments were defined to include all mutual funds, regardless of the underlying investments. Therefore, as of January 1, 2018, AOCI of $1.6 million ($1.0 million net of tax) was reversed to Accumulated deficit.

  
Common Stock (a)
        
$ in millions Outstanding Shares Amount Other
Paid-in
Capital		 Accumulated Other Comprehensive Income / (Loss) Accumulated Deficit Total
Balance, January 1, 2019 1
 $—
 $2,370.5
 $2.2
 $(2,844.4) $(471.7)
Net comprehensive income       (0.4) 42.1
 41.7
Capital contributions (b)
     1.5
     1.5
Other     0.1
     0.1
Balance, March 31, 2019 1
 —
 2,372.1
 1.8
 (2,802.3) (428.4)
Net comprehensive loss       (0.8) (16.1) (16.9)
Capital contributions (b)
     (1.5)     (1.5)
Balance, June 30, 2019 1
 —
 2,370.6
 1.0
 (2,818.4) (446.8)
Net comprehensive income       (1.0) 35.4
 34.4
Capital contributions (b)
     2.7
     2.7
Other     0.1
     0.1
Balance, September 30, 2019 1
 $—
 $2,373.4
 $—
 $(2,783.0) $(409.6)

(a)1,500 shares authorized.
(b)
Represents the conversion of a tax sharing payable to AES to contributed capital, as DP&L's 2017 ESP restricts tax sharing payments to AES during the term of the ESP. See Note 9 – Shareholder's Deficit.

See Notes to Condensed Consolidated Financial Statements.


DPL Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – Overview and Summary of Significant Accounting Policies

Description of Business
DPL is a regional energy company organized in 1985 under the laws of Ohio. DPL has 1 reportable segment: the Utility segment. See Note 11 – Business Segments for more information relating to this reportable segment. The terms “we,” “us,” “our” and “ours” are used to refer to DPL and its subsidiaries.

DPL is an indirectly wholly-owned subsidiary of AES.

DP&L, a wholly-owned subsidiary of DPL, is a public utility incorporated in 1911 under the laws of Ohio. Beginning in 2001, Ohio law gave Ohio consumers the right to choose the electric generation supplier from whom they purchase retail generation service; however, retail transmission and distribution services are still regulated. DP&L has the exclusive right to provide such transmission and distribution services to approximately 524,000 customers located in West Central Ohio. Additionally, DP&L provides retail SSO electric service to residential, commercial, industrial and governmental customers in a 6,000-square mile area of West Central Ohio. Principal industries located in DP&L’s service territory include automotive, food processing, paper, plastic, health care, data management, manufacturing and defense. Following the issuance of the DRO in September 2018 and the resulting changes to the decoupling rider effective January 1, 2019, DP&L's distribution sales are primarily impacted by customer growth within our service territory. DP&L sells its proportional share of energy and capacity from its investment in OVEC into the wholesale market.

DPL’s other primary subsidiaries include MVIC and AES Ohio Generation. MVIC is our captive insurance company that provides insurance services to DPL and our other subsidiaries. AES Ohio Generation's only operating asset is an undivided interest in Conesville. AES Ohio Generation sells all of its energy and capacity into the wholesale market. DPL's subsidiaries are all wholly-owned.

DPL also has a wholly-owned business trust, DPL Capital Trust II, formed for the purpose of issuing trust capital securities to investors.

DP&L’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses and records regulatory assets when incurred costs are expected to be recovered in future customer rates, and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs.

DPL and its subsidiaries employed 653 people as of September 30, 2019, of which 642 were employed by DP&L. Approximately 57% of all DPL employees are under a collective bargaining agreement, which expires October 31, 2020.

Financial Statement Presentation
DPL’s Condensed Consolidated Financial Statements include the accounts of DPL and its wholly-owned subsidiaries except for DPL Capital Trust II, which is not consolidated, consistent with the provisions of GAAP. As of September 30, 2019, AES Ohio Generation has an undivided ownership interest in 1 coal-fired generating facility, which is included in the financial statements at a carrying value of 0 as it has been fully impaired. Operating revenues and expenses of this facility are included on a pro rata basis in the corresponding lines in the Condensed Consolidated Statements of Operations.

Certain immaterial amounts from prior periods have been reclassified to conform to the current period presentation.

All material intercompany accounts and transactions are eliminated in consolidation. We have evaluated subsequent events through the date this report is issued.

These financial statements have been prepared in accordance with GAAP for interim financial statements, the instructions of Form 10-Q and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been omitted from this interim

report. Therefore, our interim financial statements in this report should be read along with the annual financial statements included in our Form 10-K for the fiscal year ended December 31, 2018.

In the opinion of our management, the Condensed Consolidated Financial Statements presented in this report contain all adjustments necessary to fairly state our financial position as of September 30, 2019; our results of operations for the three and nine months ended September 30, 2019 and 2018, our cash flows for the nine months ended September 30, 2019 and 2018 and the changes in our equity for the three and nine months ended September 30, 2019 and 2018. Unless otherwise noted, all adjustments are normal and recurring in nature. Due to various factors, interim results for the three and nine months ended September 30, 2019 may not be indicative of our results that will be realized for the full year ending December 31, 2019.

The preparation of financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the revenues and expenses of the periods reported. Actual results could differ from these estimates. Significant items subject to such estimates and judgments include: recognition of revenue including unbilled revenues, the carrying value of property, plant and equipment; the valuation of derivative instruments; the valuation of insurance and claims liabilities; the valuation of allowances for receivables and deferred income taxes; regulatory assets and liabilities; liabilities recorded for income tax exposures; litigation; contingencies; the valuation of AROs; and assets and liabilities related to employee benefits.

Cash, Cash Equivalents, and Restricted Cash
The following table provides a summary of cash, cash equivalents, and restricted cash amounts reported on the Condensed Consolidated Balance Sheet that reconcile to the total of such amounts as shown on the Condensed Consolidated Statements of Cash Flows:
$ in millions September 30, 2019 December 31, 2018
Cash and cash equivalents $36.8
 $90.5
Restricted cash 17.6
 21.2
Cash, Cash Equivalents, and Restricted Cash, End of Period $54.4
 $111.7


Accounting for Taxes Collected from Customers and Remitted to Governmental Authorities
DP&L collects certain excise taxes levied by state or local governments from its customers. These taxes are accounted for on a net basis and not included in revenue. The amounts of such taxes collected for the three months ended September 30, 2019 and 2018 were $13.0 million and $13.8 million, respectively. The amounts of such taxes collected for the nine months ended September 30, 2019 and 2018 were $37.3 million and $39.2 million, respectively.

New accounting pronouncements adopted in 2019 – The following table provides a brief description of recently adopted accounting pronouncements that had an impact on our consolidated financial statements. Accounting pronouncements not listed below were assessed and determined to be either not applicable or did not have a material impact on our consolidated financial statements.
ASU Number and NameDescriptionDate of AdoptionEffect on the financial statements upon adoption
2018-02, Income Statement — Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from AOCIThis amendment allows a reclassification of the stranded tax effects resulting from the implementation of the Tax Cuts and Jobs Act from AOCI to retained earnings at the election of the filer. Because this amendment only relates to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected.January 1, 2019We have not elected to reclassify any amounts to retained earnings. Our accounting policy for releasing the income tax effects from AOCI occurs on a portfolio basis.

ASU Number and NameDescriptionDate of AdoptionEffect on the financial statements upon adoption
2017-12, Derivatives and Hedging (Topic 815): Targeted improvements to Accounting for Hedging ActivitiesThe standard updates the hedge accounting model to expand the ability to hedge nonfinancial and financial risk components, reduce complexity, and ease certain documentation and assessment requirements. When facts and circumstances are the same as at the previous quantitative test, a subsequent quantitative effectiveness test is not required. The standard also eliminates the requirement to separately measure and report hedge ineffectiveness. For cash flow hedges, this means that the entire change in the fair value of a hedging instrument will be recorded in other comprehensive income and amounts deferred will be reclassified to earnings in the same income statement line as the hedged item.

Transition method: modified retrospective with the cumulative effect adjustment recorded to the opening balance of retained earnings as of the initial application date. Prospective for presentation and disclosures.		January 1, 2019The adoption of this standard had no material impact on our condensed consolidated financial statements.
2016-02, 2018-01, 2018-10, 2018-11 Leases (Topic 842)
See "Adoption of FASC Topic 842, Leases" below.
January 1, 2019See impact upon adoption of the standard below.

Adoption of FASC Topic 842, "Leases"
On January 1, 2019, we adopted ASU 2016-02 Leases and its subsequent corresponding updates (“FASC 842”). Under this standard, lessees are required to recognize assets and liabilities for most leases and recognize expenses in a manner similar to the current accounting method. For lessors, the guidance modifies the lease classification criteria and the accounting for sales-type and direct financing leases. The guidance eliminates current real estate-specific provisions.

Under FASC 842, it is expected that fewer contracts will contain a lease. However, due to the elimination of the real estate-specific guidance and changes to certain lessor classification criteria, more leases will qualify as sales-type leases and direct financing leases. Under these two models, a lessor will derecognize the asset and will recognize a net investment in a lease. According to FASC 842, the net investment in the lease includes the fair value of the plant after the contract period but does not include variable payments such as margin on the sale of energy. Therefore, the net investment in the lease could be significantly different than the carrying amount of the underlying asset at lease commencement. In such circumstances, the difference between the initially recognized net investment in the lease and the carrying amount of the underlying asset is recognized as a gain/loss at lease commencement.

During the course of adopting FASC 842, we applied various practical expedients including:

The package of practical expedients (applied to all leases) that allowed lessees and lessors not to reassess:
a.whether any expired or existing contracts are or contain leases,
b.lease classification for any expired or existing leases, and
c.whether initial direct costs for any expired or existing leases qualify for capitalization under FASC 842.

The transition practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements, and

The transition practical expedient for lessees that allowed businesses to not separate lease and non-lease components. We applied the practical expedient to all classes of underlying assets when valuing right-of-use assets and lease liabilities. Contracts where we are the lessor were separated between the lease and non-lease components.

We applied the modified retrospective method of adoption and elected to continue to apply the guidance in FASC 840 Leases to the comparative periods presented in the year of adoption. Under this transition method, we applied the transition provisions starting at the date of adoption.

The adoption of FASC 842 did not have a material impact on our Condensed Consolidated Financial Statements.


New Accounting Pronouncements Issued But Not Yet Effective – The following table provides a brief description of recent accounting pronouncements that could have a material impact on our consolidated financial statements. Accounting pronouncements not listed below were assessed and determined to be either not applicable or are expected to have no material impact on our consolidated financial statements.
ASU Number and NameDescriptionDate of AdoptionEffect on the financial statements upon adoption
2016-13, 2019-04, 2019-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial InstrumentsSee discussion of the ASU below.January 1, 2020We will adopt the standard on January 1, 2020; see below for the evaluation of the impact of the adoption on the condensed consolidated financial statements.

ASU 2016-13 and its subsequent corresponding updates will update the impairment model for financial assets measured at amortized cost. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses as it is done today, except that the losses will be recognized as an allowance rather than a reduction in the amortized cost of the securities. There are various transition methods available upon adoption.

We are currently evaluating the impact of adopting the standard on our condensed consolidated financial statements; however, it is expected that the new current expected credit loss model will primarily impact the calculation of expected credit losses on $70.2 million in gross trade accounts receivable.

Note 2 – Supplemental Financial Information

Accounts receivable and Inventories are as follows at September 30, 2019 and December 31, 2018:
  September 30, December 31,
$ in millions 2019 2018
Accounts receivable, net:    
Customer receivables $51.1
 $55.8
Unbilled revenue 15.2
 16.8
Amounts due from affiliates 0.2
 —
Due from PJM transmission enhancement settlement 2.4
 16.5
Other 1.3
 2.3
Provision for uncollectible accounts (0.4) (0.9)
Total accounts receivable, net $69.8
 $90.5
     
Inventories, at average cost:    
Fuel and limestone $3.0
 $1.9
Materials and supplies 10.0
 8.3
Other —
 0.5
Total inventories, at average cost $13.0
 $10.7



Accumulated Other Comprehensive Income / (Loss)
The amounts reclassified out of Accumulated Other Comprehensive Income / (Loss) by component during the three and nine months ended September 30, 2019 and 2018 are as follows:
Details about Accumulated Other Comprehensive Income / (Loss) components Affected line item in the Condensed Consolidated Statements of Operations Three months ended Nine months ended
    September 30, September 30,
$ in millions   2019 2018 2019 2018
Gains and losses on cash flow hedges (Note 5):        
  Interest expense $(0.3) $(0.3) $(0.9) $(0.9)
  Income tax benefit / (expense) (0.1) 0.1
 —
 0.3
  Net of income taxes (0.4) (0.2) (0.9) (0.6)
           
  Loss from discontinued operations —
 —
 —
 4.3
  Income tax benefit from discontinued operations (0.4) —
 (0.4) (1.5)
  Net of income taxes (0.4) —
 (0.4) 2.8
           
Amortization of defined benefit pension items (Note 8):        
  Other expense 0.1
 0.2
 0.2
 0.5
  Income tax benefit (0.1) (0.1) (0.1) (0.1)
  Net of income taxes —
 0.1
 0.1
 0.4
           
Total reclassifications for the period, net of income taxes $(0.8) $(0.1) $(1.2) $2.6


The changes in the components of Accumulated Other Comprehensive Income / (Loss) during the nine months ended September 30, 2019 are as follows:
$ in millions Gains / (losses) on cash flow hedges Change in unfunded pension and postretirement benefit obligation Total
Balance at January 1, 2019 $17.0
 $(14.8) $2.2
       
Other comprehensive loss before reclassifications (1.0) —
 (1.0)
Amounts reclassified from AOCI to earnings (1.3) 0.1
 (1.2)
Net current period other comprehensive income / (loss) (2.3) 0.1
 (2.2)
       
Balance at September 30, 2019 $14.7
 $(14.7) $—


Operating expenses - other
Operating expenses - other generally includes gains or losses on asset sales or dispositions, insurance recoveries, gains or losses on the sale of businesses and other expense or income from miscellaneous transactions. The components of Operating expenses - other are summarized as follows:
  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 2018 2019 2018
Loss on disposal and sale of businesses $—
 $—
 $—
 $11.7
Fixed-asset impairment —
 1.6
 —
 2.8
Other —
 —
 0.9
 0.1
Net other expense / (income) $—
 $1.6
 $0.9
 $14.6


Note 3 – Regulatory Matters

DMR
On October 20, 2017, the PUCO approved DP&L’s 2017 ESP.  On January 7, 2019, the Ohio Consumers' Counsel appealed to the Supreme Court of Ohio the 2017 ESP with respect to the bypassability of the Reconciliation Rider and the exclusion of the DMR from the SEET. That proceeding has been stayed pending an appeal in a related case involving another utility.

Pursuant to the 2017 ESP, on January 22, 2019, DP&L filed a request with the PUCO for a two-year extension of its DMR through October 2022, in the proposed amount of $199.0 million for each of the two additional years. The extension request was set at a level expected to reduce debt obligations at both DP&L and DPL and to position

DP&L to make capital expenditures to maintain and modernize its electric grid. DP&L’s DMP investments are contingent upon the PUCO approving the two-year extension of its DMR.

A rehearing process in DP&L's 2017 ESP case, including the DMR, remains pending. On August 1, 2019, DP&L filed a supplemental brief with the PUCO focused on the applicability of a recent court decision involving another Ohio utility’s DMR which is similar to, but not identical to, DP&L’s DMR.

Ohio House Bill 6
On July 23, 2019, the Governor of Ohio signed Ohio House Bill 6, which, among other things, does the following:
•
beginning January 1, 2020, replaces DP&L’s non-bypassable Reconciliation Rider, permitting DP&L to defer, recover or credit the net proceeds from selling energy and capacity received as part of DP&L’s interest in OVEC and its OVEC-related costs through 2023, with a non-bypassable recovery mechanism for recovery of prudently incurred OVEC costs through 2030;
eliminates the annual energy efficiency targets for Ohio utilities after 2020; and
allows Ohio utilities to construct customer-sited renewable generation for mercantile customers or groups of mercantile customers, the costs of which may only be recovered from those customers.

Regulatory impact of tax reform
On January 10, 2018, the PUCO initiated a proceeding to consider the impacts of the TCJA to determine the appropriate course of action to pass benefits resulting from the legislation on to ratepayers. The PUCO also directed Ohio utilities to record deferred liabilities for the estimated reduction in federal income tax resulting from the TCJA beginning January 1, 2018. Beginning October 1, 2018, the new distribution rates approved in the DRO include the impacts of the decrease in current federal income taxes as a result of the TCJA. Under the terms of the stipulation approved in the DRO, DP&L agreed to file an application at the PUCO to refund eligible excess accumulated deferred income taxes and any related regulatory liability over a ten-year period. DP&L made such a filing on March 1, 2019. DP&L negotiated a unanimous stipulation with the parties in the proceeding, agreeing to return a total of $65.1 million, $83.2 million when including taxes associated with the refunds. This stipulation was approved by the PUCO on September 26, 2019. See Note 7 – Income Taxes for additional information. In connection with this stipulation, we reduced our long-term regulatory liability related to deferred income taxes by $23.4 million.

Note 4 – Fair Value

The fair value of current financial assets and liabilities, debt service reserves and other deposits approximate their reported carrying amounts. The estimated fair values of our assets and liabilities have been determined using available market information. By virtue of these amounts being estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For further information on our valuation techniques and policies, see Note 5—Fair Value in Item 8.—Financial Statements and Supplementary Data of our Form 10-K.

The following table presents the fair value, carrying value and cost of our non-derivative instruments at September 30, 2019 and December 31, 2018. Further information about the fair value of our derivative instruments can be found in Note 5 – Derivative Instruments and Hedging Activities.
  September 30, 2019 December 31, 2018
$ in millions Cost Fair Value Cost Fair Value
Assets        
Money market funds $0.2
 $0.2
 $0.4
 $0.4
Equity securities 2.3
 3.9
 2.4
 3.5
Debt securities 4.1
 4.1
 4.1
 4.0
Hedge funds 0.1
 0.1
 0.1
 0.1
Tangible assets 0.1
 0.1
 0.1
 0.1
Total Assets $6.8
 $8.4
 $7.1
 $8.1
         
  Carrying Value Fair Value Carrying Value Fair Value
Liabilities        
Long-term debt $1,362.9
 $1,451.3
 $1,475.9
 $1,519.6



These financial instruments are not subject to master netting agreements or collateral requirements and as such are presented in the Condensed Consolidated Balance Sheet at their gross fair value, except for Long-term debt, which is presented at amortized carrying value.

We did not have any transfers of the fair values of our financial instruments between Level 1, Level 2 or Level 3 of the fair value hierarchy during the nine months ended September 30, 2019 or 2018.

Master Trust Assets
DP&L established a Master Trust to hold assets that could be used for the benefit of employees participating in employee benefit plans and these assets are not used for general operating purposes. On January 1, 2018, AOCI of $1.6 million ($1.0 million net of tax) was reversed to Accumulated Deficit and all future changes to fair value on the Master Trust Assets will be included in income in the period that the changes occur. Changes to fair value were not material for the nine months ended September 30, 2019 or 2018. These assets are primarily comprised of open-ended mutual funds, which are valued using the net asset value per unit. These investments are recorded at fair value within Other deferred assets on the Condensed Consolidated Balance Sheets and classified as available for sale.

Long-term debt
The fair value of debt is based on current public market prices for disclosure purposes only. Unrealized gains or losses are not recognized in the financial statements as long-term debt is presented at carrying value, net of unamortized premium or discount and unamortized deferred financing costs in the financial statements. The long-term debt amounts include the current portion payable in the next twelve months and have maturities that range from 2020 to 2061.

The fair value of assets and liabilities at September 30, 2019 and December 31, 2018 and the respective category within the fair value hierarchy for DPL is as follows:
$ in millions Fair value at September 30, 2019 (a) Fair value at December 31, 2018 (a)
  Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets                
Master Trust assets                
Money market funds $0.2
 $—
 $—
 $0.2
 $0.4
 $—
 $—
 $0.4
Equity securities —
 3.9
 —
 3.9
 —
 3.5
 —
 3.5
Debt securities —
 4.1
 —
 4.1
 —
 4.0
 —
 4.0
Hedge funds —
 0.1
 —
 0.1
 —
 0.1
 —
 0.1
Tangible assets —
 0.1
 —
 0.1
 —
 0.1
 —
 0.1
Total Master Trust assets 0.2
 8.2
 —
 8.4
 0.4
 7.7
 —
 8.1
Derivative assets                
Interest rate hedges —
 0.2
 —
 0.2
 —
 1.5
 —
 1.5
Total Derivative assets —
 0.2
 —
 0.2
 —
 1.5
 —
 1.5
                 
Total Assets $0.2
 $8.4
 $—
 $8.6
 $0.4
 $9.2
 $—
 $9.6
                 
Liabilities                
Long-term debt $—
 $1,433.7
 $17.6
 $1,451.3
 $—
 $1,501.9
 $17.7
 $1,519.6
        

       

Total Liabilities $—
 $1,433.7
 $17.6
 $1,451.3
 $—
 $1,501.9
 $17.7
 $1,519.6

(a)Includes credit valuation adjustment

Our financial instruments are valued using the market approach in the following categories:

Level 1 inputs are used for money market accounts that are considered cash equivalents. The fair value is determined by reference to quoted market prices and other relevant information generated by market transactions.
Level 2 inputs are used to value derivatives such as interest rate hedge contracts which are valued using a benchmark interest rate. Other Level 2 assets include open-ended mutual funds in the Master Trust, which are valued using the end of day NAV per unit.
Level 3 inputs such as certain debt balances are considered a Level 3 input because the notes are not publicly traded. Our long-term debt is fair valued for disclosure purposes only.


All of the inputs to the fair value of our derivative instruments are from quoted market prices.

Our long-term debt is fair valued for disclosure purposes only and most of the fair values are determined using quoted market prices in inactive markets. These fair value inputs are considered Level 2 in the fair value hierarchy. As the Wright-Patterson Air Force Base note is not publicly traded, fair value is assumed to equal carrying value. These fair value inputs are considered Level 3 in the fair value hierarchy as there are no observable inputs. Additional Level 3 disclosures are not presented since our long-term debt is not recorded at fair value.

Note 5 – Derivative Instruments and Hedging Activities

In the normal course of business, DPL enters into interest rate hedges to manage the interest rate risk of our variable rate debt. All of our derivative instruments are used for risk management purposes and are designated as cash flow hedges if they qualify under FASC 815 for accounting purposes. In prior periods, we have used commodity derivatives principally to manage the risk of changes in market prices for commodities.

Cash Flow Hedges
As part of our risk management processes, we identify the relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. The fair values of cash flow hedges determined by current public market prices will continue to fluctuate with changes in market prices up to contract expiration. With the adoption of ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted improvements to Accounting for Hedging Activities effective January 1, 2019, we will no longer be required to calculate effectiveness and thus the entire change in the fair value of a hedging instrument will be recorded in other comprehensive income and amounts deferred will be reclassified to earnings in the same income statement line as the hedged item in the period in which it settles.

As of September 30, 2019, we have 2 interest rate swaps to hedge the variable interest on our $140.0 million variable interest rate tax-exempt First Mortgage Bonds. The interest rate swaps have a combined notional amount of $140.0 million and settle monthly based on a one-month LIBOR. On March 29, 2018, we settled $60.0 million of these interest rate swaps due to the partial repayment of the underlying debt and a gain of $0.8 million was recorded as a reduction to interest expense. Since the swap was partially settled, the remaining swaps were de-designated and then re-designated with a new hypothetical derivative. The AOCI associated with the remaining swaps will be amortized out of AOCI into interest expense over the remaining life of the underlying debt.

We had previously entered into interest rate derivative contracts to manage interest rate exposure related to anticipated borrowings of fixed-rate debt. These interest rate derivative contracts were settled in 2013 and we continue to amortize amounts out of AOCI into interest expense.


The following tables provide information concerning gains or losses recognized in AOCI for the cash flow hedges for the three and nine months ended September 30, 2019 and 2018:
  Three months ended Three months ended
  September 30, 2019 September 30, 2018
    Interest   Interest
$ in millions (net of tax) Power Rate Hedge Power Rate Hedge
Beginning accumulated derivative gains in AOCI $0.4
 $15.3
 $—
 $17.4
Net gains / (losses) associated with current period hedging transactions —
 (0.2) —
 0.1
Net gains reclassified to earnings        
Interest expense —
 (0.4) —
 (0.2)
(Income) / loss from discontinued operations (0.4) —
 —
 —
Ending accumulated derivative gains in AOCI $—
 $14.7
 $—
 $17.3
         
         
  Nine months ended Nine months ended
  September 30, 2019 September 30, 2018
    Interest   Interest
$ in millions (net of tax) Power Rate Hedge Power Rate Hedge
Beginning accumulated derivative gains / (losses) in AOCI $0.4
 $16.6
 $(2.8) $17.5
Net gains / (losses) associated with current period hedging transactions —
 (1.0) —
 0.4
Net (gains) / losses reclassified to earnings        
Interest expense —
 (0.9) —
 (0.6)
(Income) / loss from discontinued operations (0.4) —
 2.8
 —
Ending accumulated derivative gains in AOCI $—
 $14.7
 $—
 $17.3
         
Portion expected to be reclassified to earnings in the next twelve months 


 $(1.2)    
Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months) 


 11
    

Net gains or losses associated with the ineffective portion of the hedging transactions were immaterial in the prior year period presented.

Financial Statement Effect
DPL has elected not to offset derivative assets and liabilities and not to offset net derivative positions against the right to reclaim cash collateral pledged (an asset) or the obligation to return cash collateral received (a liability) under derivative agreements. The fair value derivative position of DPL's interest rate swaps are as follows:
Fair Values of Derivative Instruments
at September 30, 2019
      Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets  
$ in millions Hedging Designation 
Gross Fair Value as presented in the Condensed Consolidated Balance Sheets (a)
 Financial Instruments with Same Counterparty in Offsetting Position Cash Collateral Net Fair Value
Assets          
Short-term derivative positions (presented in Prepayments and other current assets)
Interest rate swap Designated $0.2
 $—
 $—
 $0.2
Total assets   $0.2
 $—
 $—
 $0.2

(a)    Includes credit valuation adjustment.

Fair Values of Derivative Instruments
at December 31, 2018
      Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets  
$ in millions Hedging Designation 
Gross Fair Value as presented in the Condensed Consolidated Balance Sheets (a)
 Financial Instruments with Same Counterparty in Offsetting Position Cash Collateral Net Fair Value
Assets          
Short-term derivative positions (presented in Prepayments and other current assets)
Interest rate swaps Designated $0.9
 $—
 $—
 $0.9
           
Long-term derivative positions (presented in Other non-current assets)
Interest rate swaps Designated 0.6
 —
 —
 0.6
Total assets   $1.5
 $—
 $—
 $1.5

(a)    Includes credit valuation adjustment.

Any prior year ineffectiveness on the interest rate hedges and the monthly settlement of the interest rate hedges is recorded in interest expense within the Condensed Consolidated Statements of Operations.

Note 6 – Long-term Debt

The following table summarizes DPL's long-term debt.
  Interest   September 30, December 31,
$ in millions Rate Maturity 2019 2018
Term loan - rates from 4.50% - 4.53% (a) and 4.01% - 4.60% (b)   2022 $—
 $436.1
First Mortgage Bonds 3.95% 2049 425.0
 —
Tax-exempt First Mortgage Bonds - rates from 2.97% - 3.07% (a) and 1.52% - 1.92% (b)   2020 140.0
 140.0
U.S. Government note 4.20% 2061 17.6
 17.7
Unamortized deferred financing costs     (5.7) (6.3)
Unamortized debt discounts and premiums, net     (2.7) (1.4)
Total long-term debt at DP&L
     574.2
 586.1
         
Senior unsecured bonds 6.75% 2019 —
 99.0
Senior unsecured bonds 7.25% 2021 380.0
 780.0
Senior unsecured notes 4.35% 2029 400.0
 —
Note to DPL Capital Trust II (c) 8.125% 2031 15.6
 15.6
Unamortized deferred financing costs     (5.8) (4.3)
Unamortized debt discounts and premiums, net     (1.1) (0.5)
Total long-term debt     1,362.9
 1,475.9
Less: current portion     (139.6) (103.6)
Long-term debt, net of current portion     $1,223.3
 $1,372.3

(a)Range of interest rates for the nine months ended September 30, 2019.
(b)Range of interest rates for the year ended December 31, 2018.
(c)Note payable to related party.

Deferred financing costs are amortized over the remaining life of the debt using the effective interest method. Premiums or discounts on long-term debt are amortized over the remaining life of the debt using the effective interest method.

Line of credit
At September 30, 2019 and December 31, 2018, DPL had outstanding borrowings on its line of credit of $38.0 million and $0.0 million, respectively. At September 30, 2019 and December 31, 2018, DP&L had outstanding borrowings on its line of credit of $60.0 million and $0.0 million, respectively.

Significant transactions
On June 19, 2019, DP&L amended and restated its unsecured revolving credit facility. The revolving credit facility has a $175.0 million borrowing limit, with a $75.0 million letter of credit sublimit, a feature that provides DP&L the

ability to increase the size of the facility by an additional $100.0 million, a maturity date of June 2024, and a provision that provides DP&L the option to request up to two one-year extensions of the maturity date.

On June 6, 2019, DP&L closed on a $425.0 million issuance of First Mortgage Bonds due 2049. These new bonds carry an interest rate of 3.95%. The proceeds of this issuance were used to repay in full the outstanding principal of $435.0 million of DP&L's variable rate Term Loan B credit agreement.

On June 19, 2019, DPL amended and restated its secured revolving credit facility. The revolving credit facility has a $125.0 million borrowing limit, with a $75.0 million letter of credit sublimit, a feature that provides DPL the ability to increase the size of the facility by an additional $50.0 million, and a maturity date of June 2023.

On April 17, 2019, DPL closed a $400.0 million issuance of senior unsecured notes. These notes carry an interest rate of 4.35% and mature on April 15, 2029. Proceeds from the issuance and cash on hand were used to settle a partial redemption for $400.0 million of DPL's 7.25% senior unsecured notes maturing October 15, 2021, as discussed below. After the redemption, the DPL 7.25% senior notes due in 2021 have an outstanding balance of $380.0 million.

On April 8, 2019, DPL issued a Notice of Partial Redemption to the Trustee (Wells Fargo Bank N.A.) on the DPL 7.25% Senior Notes due 2021. DPL redeemed $400.0 million of the $780.0 million outstanding principal amount of these notes on May 7, 2019. These bonds were redeemed at par plus accrued interest and a make-whole premium of $41.4 million.

On March 4, 2019, DPL issued a Notice of Full Redemption to the Trustee (U.S. Bank) on the DPL 6.75% Senior Notes due 2019. DPL redeemed the remaining $99.0 million outstanding principal amount of these notes on April 4, 2019. These bonds were redeemed at par plus accrued interest and a make-whole premium of $1.5 million with cash on hand.

On March 30, 2018, DPL issued a Notice of Partial Redemption to the Trustee (U.S. Bank) on the DPL 6.75% Senior Notes due 2019. DPL redeemed $101.0 million of the $200.0 million outstanding principal amount of these notes at par plus accrued interest and a make-whole premium of $5.1 million on April 30, 2018 with cash on hand.

On March 30, 2018, DP&L commenced a redemption of $60.0 million of outstanding tax exempt First Mortgage Bonds due 2020 at par value (plus accrued and unpaid interest). These bonds were redeemed at par plus accrued interest on April 30, 2018 with cash on hand.

On March 27, 2018, DPL made a $70.0 million prepayment to eliminate the outstanding balance of its bank term loan in full. As of March 31, 2018, the term loan was fully paid off.

Long-term debt covenants and restrictions
DPL’s revolving credit agreement has 2 financial covenants. The first financial covenant, a Total Debt to EBITDA ratio, is calculated at the end of each fiscal quarter by dividing total debt at the end of the current quarter by consolidated EBITDA for the 4 prior fiscal quarters. The ratio in the agreement is not to exceed 7.00 to 1.00. As of September 30, 2019, this financial covenant was met with a ratio of 5.68 to 1.00.

The second financial covenant is an EBITDA to Interest Expense ratio that is calculated, at the end of each fiscal quarter, by dividing EBITDA for the 4 prior fiscal quarters by the consolidated interest charges for the same period. The ratio, per the agreement, is to be not less than 2.25 to 1.00. As of September 30, 2019, this financial covenant was met with a ratio of 2.99 to 1.00.

DPL’s secured revolving credit agreement also restricts dividend payments from DPL to AES, such that DPL cannot make dividend payments unless at the time of, and/or as a result of the distribution, (i) DPL’s leverage ratio does not exceed 0.67 to 1.00 and DPL’s interest coverage ratio is not less than 2.50 to 1.00 or, if such ratios are not within the parameters, (ii) DPL’s senior long-term debt rating from two of the three major credit rating agencies is at least investment grade. DPL is also restricted from making dividend and tax sharing payments from DPL to AES per its 2017 ESP. This order restricts dividend payments from DPL to AES during the term of the 2017 ESP and restricts tax sharing payments from DPL to AES during the term of the DMR.

DP&L’s Bond Purchase and Covenants Agreement (financing document entered into in connection with the sale of $200.0 million of variable rate tax-exempt First Mortgage Bonds, dated as of August 1, 2015) has 2 financial

covenants. The first measures Total Debt to Total Capitalization and is calculated, at the end of each fiscal quarter, by dividing total debt at the end of the quarter by total capitalization at the end of the quarter. DP&L’s Total Debt to Total Capitalization ratio shall not be greater than0.65 to 1.00. Except that, after Generation Separation and the twelve-month period following (October 1, 2017 to September 30, 2018) the ratio shall be a) increased to 0.75 to 1.00 or b) suspended if DP&L’s long-term indebtedness is less than or equal to $750.0 million. Additionally, this covenant shall be suspended any time after separation during which DP&L maintains a rating of BBB- (or in the case of Moody’s Investors Service, Inc. Baa3) or higher with a stable outlook from at least one of Fitch Investors Service Inc., Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. The Total Debt to Capitalization covenant is calculated as the sum of DP&L’s current and long-term portion of debt, divided by the total of DP&L’s net worth and total debt. As of September 30, 2019, DP&L's ratings meet those requirements and this covenant is suspended for the quarter ended September 30, 2019.

The second financial covenant measures EBITDA to Interest Expense. The TotalConsolidated EBITDA to Consolidated Interest Charges ratio is calculated, at the end of each fiscal quarter, by dividing consolidated EBITDA for the 4 prior fiscal quarters by the consolidated interest charges for the same period. The ratio, per the agreement, is to be not less than 2.50 to 1.00. This financial covenant was met with a ratio of 9.36 to 1.00 as of September 30, 2019.

DP&L's unsecured revolving credit facility has one financial covenant. The covenant measures Total Debt to Total Capitalization and is calculated, at the end of each fiscal quarter, by dividing total debt at the end of the quarter by total capitalization at the end of the quarter. DP&L’s Total Debt to Total Capitalization ratio shall not be greater than 0.67 to 1.00. This financial covenant was met with a ratio of 0.58 to 1.00 as of September 30, 2019.

As of September 30, 2019, DPL and DP&L were in compliance with all debt covenants, including the financial covenants described above.

DP&L does not have any meaningful restrictions in its debt financing documents prohibiting dividends to its parent, DPL.

Substantially all property, plant & equipment of DP&L is subject to the lien of the mortgage securing DP&L’s First and Refunding Mortgage.

Note 7 – Income Taxes

The following table details the effective tax rates for the three and nine months ended September 30, 2019 and 2018.
  Three months ended Nine months ended
  September 30, September 30,
  2019 2018 2019 2018
DPL (35.6)% 16.3% (9.8)% 15.2%


Income tax expense for the nine months ended September 30, 2019 and 2018 was calculated using the estimated annual effective income tax rates for 2019 and 2018 of (10.1)% and 16.8%, respectively. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income. To the extent that actual pre-tax results for the year differ from the forecasts applied to the most recent interim period, the estimated rates could be materially different from the actual effective tax rates. DPL’s effective combined state and federal income tax rate for all operations was (35.6)% and (9.8)% for the three and nine months ended September 30, 2019, respectively. These rates are lower than the combined federal and state statutory rate of 21.6% primarily due to the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of DP&L and the impact of the September 26, 2019PUCO order which finalized the amount of excess deferred tax balances allocable to DP&L’s utility customers.

For the nine months ended September 30, 2019, DPL’s current period effective tax rate for all operations was not materially different than the estimated annual effective rate.

Per the terms of DP&L's 2017 ESP, DPL will not make any tax-sharing payments to AES and AES will forgo collection of the payments during the term of the DMR. As such, during the nine months ended September 30, 2019

and 2018, DPL converted $2.7 million and $30.2 million, respectively, of accrued tax sharing liabilities with AES to additional equity investment in DPL.

Note 8 – Benefit Plans

DP&L sponsors a defined benefit pension plan for the majority of its employees.

We generally fund pension plan benefits as accrued in accordance with the minimum funding requirements of ERISA and, in addition, make voluntary contributions from time to time. There were $7.5 million in employer contributions during each of the nine months ended September 30, 2019 and 2018.

The amounts presented in the following tables for pension include the collective bargaining plan formula, the traditional management plan formula, the cash balance plan formula and the SERP, in the aggregate. The pension costs below have not been adjusted for amounts billed to the Service Company for former DP&L employees who are now employed by the Service Company that are still participants in the DP&L plan.

The net periodic benefit cost of the pension benefit plans for the three and nine months ended September 30, 2019 and 2018 was:
  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 2018 2019 2018
Service cost $0.9
 $1.5
 $2.7
 $4.5
Interest cost 3.7
 3.4
 11.2
 10.3
Expected return on plan assets (5.0) (5.3) (15.0) (15.9)
Amortization of unrecognized:        
Prior service cost 0.3
 0.3
 0.9
 0.8
Actuarial loss 1.1
 1.6
 3.2
 4.8
Net periodic benefit cost $1.0
 $1.5
 $3.0
 $4.5


In addition, DP&L provides postretirement health care and life insurance benefits to certain retired employees, their spouses and eligible dependents. We have funded a portion of the union-eligible benefits using a Voluntary Employee Beneficiary Association Trust. These postretirement health care benefits and the related unfunded obligation of $9.0 million at September 30, 2019 and $9.2 million at December 31, 2018 were not material to the financial statements in the periods covered by this report.

Note 9 – Shareholder's Deficit

Capital Contributions from AES
DP&L's approved six-year 2017 ESP restricts DPL from making dividend payments to its parent company, AES, during the term of the ESP, as well as from making tax-sharing payments to AES during the term of the DMR. The 2017 ESP also requires that existing tax payments owed by DPL to AES, and similar tax payments that accrue during the term of the DMR, be converted into equity investments in DPL.

For the nine months ended September 30, 2019 and 2018, AES made capital contributions of $2.7 million and $30.2 million, respectively, by converting the amount owed to it by DPL related to tax-sharing payments for current tax liabilities.

Note 10 – Contractual Obligations, Commercial Commitments and Contingencies

Guarantees
In the normal course of business, DPL enters into various agreements with its wholly-owned subsidiary, AES Ohio Generation, providing financial or performance assurance to third parties. These agreements are entered into primarily to support or enhance the creditworthiness otherwise attributed to this subsidiary on a stand-alone basis, thereby facilitating the extension of sufficient credit to accomplish this subsidiary's intended commercial purposes.

At September 30, 2019, DPL had $21.0 million of guarantees on behalf of AES Ohio Generation to third parties for future financial or performance assurance under such agreements. The guarantee arrangements entered into by DPL with these third parties cover select present and future obligations of AES Ohio Generation to such beneficiaries and are terminable by DPL upon written notice to the beneficiaries within a certain time. At

September 30, 2019 and December 31, 2018, we had no outstanding balance of obligations covered by these guarantees.

To date, DPL has not incurred any losses related to the guarantees of AES Ohio Generation’s obligations and we believe it is unlikely that DPL would be required to perform or incur any losses in the future associated with any of the above guarantees.

Equity Ownership Interest
DP&L has a 4.9% equity ownership interest in OVEC, which is recorded using the cost method of accounting under GAAP. DP&L, along with several non-affiliated energy companies party to an OVEC arrangement, receive and pay for OVEC capacity and energy and are responsible for OVEC debt obligations and other fixed costs in proportion to their power participation ratios under the arrangement which, for DP&L, is the same as its equity ownership interest. At September 30, 2019, DP&L could be responsible for the repayment of 4.9%, or $67.2 million, of $1,371.3 million OVEC debt obligations if they came due, comprised of both fixed and variable rate securities with maturities from 2022 to 2040. OVEC could also seek additional contributions from DP&L to avoid a default in the event that other OVEC members defaulted on their respective OVEC obligations. One of the other OVEC members, with a 4.85% interest in OVEC, filed for bankruptcy protection and the bankruptcy court approved that member's rejection of the OVEC arrangement and its related obligations on July 31, 2018. We do not expect these events to have a material impact on our financial condition, results of operations or cash flows.

Contingencies
In the normal course of business, we are subject to various lawsuits, actions, proceedings, claims and other matters asserted under various laws and regulations. We believe the amounts provided in our Condensed Consolidated Financial Statements, as prescribed by GAAP, are adequate considering the probable and estimable contingencies. However, there can be no assurances that the actual amounts required to satisfy alleged liabilities from various legal proceedings, claims, tax examinations and other matters discussed below, and to comply with applicable laws and regulations, will not exceed the amounts reflected in our Condensed Consolidated Financial Statements. As such, costs, if any, that may be incurred in excess of those amounts provided as of September 30, 2019, cannot be reasonably determined.

Environmental Matters
DPL’s and DP&L’s facilities and operations are subject to a wide range of federal, state and local environmental regulations and laws. The environmental issues that may affect us include:

The federal CAA and state laws and regulations (including State Implementation Plans) which require compliance, obtaining permits and reporting as to air emissions;
Litigation with federal and certain state governments and certain special interest groups;
Rules and future rules issued by the USEPA, the Ohio EPA or other authorities associated with the federal Clean Water Act, which prohibits the discharge of pollutants into waters of the United States except pursuant to appropriate permits; and
Solid and hazardous waste laws and regulations, which govern the management and disposal of certain waste. The majority of solid waste created from the combustion of coal and fossil fuels consists of fly ash and other coal combustion by-products.

In addition to imposing continuing compliance obligations, these laws and regulations authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. In the normal course of business, we have investigatory and remedial activities underway at our facilities to comply, or to determine compliance, with such regulations. We record liabilities for loss contingencies related to environmental matters when a loss is probable of occurring and can be reasonably estimated in accordance with the provisions of GAAP. Accordingly, we have immaterial accruals for loss contingencies for environmental matters. We also have several environmental matters for which we have not accrued loss contingencies because the risk of loss is not probable, or a loss cannot be reasonably estimated. We evaluate the potential liability related to environmental matters quarterly and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material adverse effect on our results of operations, financial condition and cash flows.


We have several pending environmental matters associated with our current and previously owned coal-fired generation units. Some of these matters could have a material adverse effect on our results of operations, financial condition and cash flows.

Note 11 – Business Segments

DPL has presented the results of operations of Miami Fort Station, Zimmer Station, the Peaker Assets, Stuart Station, and Killen Station as discontinued operations as a group of components for all periods presented. For more information, see Note 14 – Discontinued Operations of Notes to DPL's Condensed Consolidated Financial Statements. As such, AES Ohio Generation only has operating activity coming from its undivided ownership interest in Conesville, which does not meet the thresholds to be a separate reportable operating segment. Therefore, DPL manages its business through 1 reportable operating segment, the Utility segment. The primary segment performance measure is income / (loss) from continuing operations before income tax as management has concluded that this measure best reflects the underlying business performance of DPL and is the most relevant measure considered in DPL’s internal evaluation of the financial performance of its segment. The Utility segment is discussed further below.

Utility Segment
The Utility segment is comprised of DP&L’s electric transmission and distribution businesses, which distribute electricity to residential, commercial, industrial and governmental customers. DP&L distributes electricity to more than 524,000 retail customers located in a 6,000-square mile area of West Central Ohio. DP&L’s electric transmission and distribution businesses are subject to rate regulation by federal and state regulators. Accordingly, DP&L applies the accounting standards for regulated operations to its electric transmission and distribution businesses recording regulatory assets when incurred costs are expected to be recovered in future customer rates and regulatory liabilities when current cost recoveries in customer rates relate to expected future costs. The Utility segment includes revenues and costs associated with our investment in OVEC and the historical results of DP&L’s Beckjord Facility, which was closed in 2014 and transferred to a third party in the first quarter of 2018, and Hutchings Coal generating facility, which was closed in 2013. These assets did not transfer to AES Ohio Generation as part of DP&L's Generation Separation on October 1, 2017. Thus, they are grouped within the Utility segment for segment reporting purposes. In addition, regulatory deferrals and collections, which include fuel deferrals in historical periods, are included in the Utility segment.

Included within the “Other” column are other businesses that do not meet the GAAP requirements for disclosure as reportable segments as well as certain corporate costs, which include interest expense and loss on early extinguishment of debt on DPL's long-term debt as well as adjustments related to purchase accounting from the Merger. DPL's undivided interest in Conesville is included within the "Other" column as it does not meet the requirement for disclosure as a reportable operating segment, since the results of operations of the other EGUs are presented as discontinued operations. The accounting policies of the reportable segment are the same as those described in Note 1 – Overview and Summary of Significant Accounting Policies of our 10-K. Intersegment sales, costs of sales and expenses are eliminated in consolidation. Certain shared and corporate costs are allocated between "Other" and the Utility reporting segment.


The following tables present financial information for DPL’s Utility reportable business segment:
$ in millions Utility Other Adjustments and Eliminations DPL Consolidated
Three months ended September 30, 2019
Revenues from external customers $190.9
 $8.1
 $—
 $199.0
Intersegment revenues 0.2
 0.8
 (1.0) —
Total revenues $191.1
 $8.9
 $(1.0) $199.0
         
Depreciation and amortization $17.4
 $0.3
 $—
 $17.7
Interest expense $6.1
 $12.2
 $—
 $18.3
Income / (loss) from continuing operations before income tax $37.7
 $(11.2) $—
 $26.5
         
Cash capital expenditures $58.9
 $0.1
 $—
 $59.0
         
$ in millions Utility 
Other (a)
 Adjustments and Eliminations DPL Consolidated
Three Months Ended September 30, 2018
Revenues from external customers $198.5
 $9.2
 $—
 $207.7
Intersegment revenues 0.2
 0.7
 (0.9) —
Total revenues $198.7
 $9.9
 $(0.9) $207.7
         
Depreciation and amortization $19.1
 $0.6
 $—
 $19.7
Interest expense $5.8
 $16.8
 $—
 $22.6
Income / (loss) from continuing operations before income tax $37.5
 $(17.7) $—
 $19.8
         
Cash capital expenditures $20.5
 $4.6
 $—
 $25.1
         
$ in millions Utility Other Adjustments and Eliminations DPL Consolidated
Nine months ended September 30, 2019
Revenues from external customers $569.4
 $22.8
 $—
 $592.2
Intersegment revenues 0.8
 2.4
 (3.2) —
Total revenues $570.2
 $25.2
 $(3.2) $592.2
         
Depreciation and amortization $52.9
 $1.2
 $—
 $54.1
Interest expense $19.9
 $43.8
 $—
 $63.7
Loss on early extinguishment of debt $—
 $44.9
 $—
 $44.9
Income / (loss) from continuing operations before income tax $108.8
 $(85.8) $—
 $23.0
         
Cash capital expenditures $121.1
 $1.3
 $—
 $122.4
         
$ in millions Utility 
Other (a)
 Adjustments and Eliminations DPL Consolidated
Nine months ended September 30, 2018
Revenues from external customers $562.9
 $28.6
 $—
 $591.5
Intersegment revenues 0.6
 2.1
 (2.7) —
Total revenues $563.5
 $30.7
 $(2.7) $591.5
         
Depreciation and amortization $56.5
 $2.3
 $—
 $58.8
Interest expense $20.5
 $53.9
 $—
 $74.4
Income / (loss) from continuing operations before income tax $73.9
 $(60.2) $—
 $13.7
         
Cash capital expenditures $65.0
 $10.8
 $—
 $75.8

(a)"Other" includes Cash capital expenditures related to assets of discontinued operations and held-for-sale businesses for the three and nine months ended September 30, 2018.


Total Assets September 30, 2019 December 31, 2018
Utility $1,779.4
 $1,819.6
All Other (a)
 36.9
 63.5
DPL Consolidated $1,816.3
 $1,883.1

(a)"All Other" includes Total assets related to the assets of discontinued operations and held-for-sale businesses and Eliminations for all periods presented.

Note 12 – Revenue

Revenue is primarily earned from retail and wholesale electricity sales and electricity transmission and distribution delivery services. Revenue is recognized upon transfer of control to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities. For further discussion of our Retail, Wholesale, RTO ancillary, and Capacity revenues, see Note 14 — Revenue in Item 8.—Financial Statements and Supplementary Data of our Form 10-K.

DPL's revenue from contracts with customers was $195.0 million and $195.1 million for the three months ended September 30, 2019 and 2018, respectively, and $576.5 million and $560.1 million for the nine months ended September 30, 2019 and 2018, respectively.


The following table presents our revenue from contracts with customers and other revenue by segment for the three and nine months ended September 30, 2019 and 2018:
$ in millions Utility Other Adjustments and Eliminations Total
  Three Months Ended September 30, 2019
Retail revenue        
Retail revenue from contracts with customers $170.5
 $—
 $—
 $170.5
Other retail revenue (a)
 3.8
 —
 —
 3.8
Wholesale revenue        
Wholesale revenue from contracts with customers 4.4
 5.0
 (0.2) 9.2
RTO ancillary revenue 11.0
 0.1
 —
 11.1
Capacity revenue 1.1
 1.1
 —
 2.2
Miscellaneous revenue from contracts with customers (b)
 —
 2.0
 —
 2.0
Miscellaneous revenue 0.3
 0.7
 (0.8) 0.2
Total revenues $191.1
 $8.9
 $(1.0) $199.0
         
  Three Months Ended September 30, 2018
Retail revenue        
Retail revenue from contracts with customers $168.4
 $—
 $(0.4) $168.0
Other retail revenue (a)
 12.6
 —
 —
 12.6
Wholesale revenue        
Wholesale revenue from contracts with customers 4.9
 5.6
 —
 10.5
RTO ancillary revenue 10.8
 (0.1) —
 10.7
Capacity revenue 2.0
 1.7
 —
 3.7
Miscellaneous revenue from contracts with customers (b)
 —
 2.2
 —
 2.2
Miscellaneous revenue —
 0.5
 (0.5) —
Total revenues $198.7
 $9.9
 $(0.9) $207.7
         
  Nine months ended September 30, 2019
Retail revenue        
Retail revenue from contracts with customers $503.8
 $—
 $—
 $503.8
Other retail revenue (a)
 14.9
 —
 —
 14.9
Wholesale revenue        
Wholesale revenue from contracts with customers 12.8
 11.4
 (0.8) 23.4
RTO ancillary revenue 32.8
 0.2
 —
 33.0
Capacity revenue 5.0
 4.2
 —
 9.2
Miscellaneous revenue from contracts with customers (b)
 —
 7.1
 —
 7.1
Miscellaneous revenue 0.9
 2.3
 (2.4) 0.8
Total revenues $570.2
 $25.2
 $(3.2) $592.2
         
  Nine months ended September 30, 2018
Retail revenue        
Retail revenue from contracts with customers $469.3
 $—
 $(0.8) $468.5
Other retail revenue (a)
 31.4
 —
 —
 31.4
Wholesale revenue        
Wholesale revenue from contracts with customers 24.6
 16.7
 —
 41.3
RTO ancillary revenue 32.4
 0.1
 —
 32.5
Capacity revenue 5.8
 4.7
 —
 10.5
Miscellaneous revenue from contracts with customers (b)
 —
 7.3
 —
 7.3
Miscellaneous revenue —
 1.9
 (1.9) —
Total revenues $563.5
 $30.7
 $(2.7) $591.5

(a)Other retail revenue primarily includes alternative revenue programs not accounted for under FASC 606.
(b)Miscellaneous revenue from contracts with customers primarily includes revenues for various services provided by Miami Valley Lighting.

The balances of receivables from contracts with customers were $66.3 million and $72.6 million as of September 30, 2019 and December 31, 2018, respectively. Payment terms for all receivables from contracts with customers are typically within 30 days.

Note 13 – Dispositions

Beckjord FacilityStation – On February 26, 2018, DP&L and its co-owners of the retired Beckjord FacilityStation agreed to transfer their interests in the retired FacilityStation to a third party, including their obligations to remediate the FacilityStation and its site,

and the transfer occurred on that same date. As a result, DPL recognized a loss on the transfer of $11.7 million and made cash expenditures of $14.5 million, inclusive of cash expenditures for the transfer charges. The Beckjord FacilityStation was retired in 2014, and, as such, the income / (loss) from continuing operations before income tax related to the Beckjord FacilityStation was immaterial for the three and nine monthsyear ended September 30,December 31, 2018, excluding the loss on transfer noted above. Prior to the transfer, the Beckjord FacilityStation was included in the Utility segment.

F-45

Note 1417 – Discontinued Operations

Risks & Uncertainties

COVID-19 Pandemic
The COVID-19 pandemic has severely impacted global economic activity, including electricity and energy consumption, and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and social distancing measures as well as restricting travel. The State of Ohio has implemented, among other things, stay-at-home and other social distancing measures to slow the spread of the virus, which has impacted energy demand within our service territory, though the stay-at-home restrictions have now been lifted in our service territory. On December 8, 2017, DPL March 12, 2020, the PUCO also issued an emergency order prohibiting electric utilities, including us, from discontinuing electric utility service to customers. This prohibition ended for DP&L on September 1, 2020. We are taking a variety of measures in response to the spread of COVID-19 to ensure our ability to transmit, distribute and AESsell electric energy, ensure the health and safety of our employees, contractors, customers and communities and provide essential services to the communities in which we operate. In addition to the impacts to demand within our service territory, we also have incurred and expect to continue to incur expenses relating to COVID-19, and such expenses may include those that relate to events outside of our control.
As the economic impact of the COVID-19 pandemic started to materialize in Ohio Generation completed the sale of their entire undivided interest in the Miami Fort Stationsecond half of March 2020 and continued for the Zimmer Station. On March 27, 2018, duration of 2020, the COVID-19 pandemic primarily impacted our retail sales demand as shown by the changes in weather-normalized volumes of kWh sold compared to the weather-normalized volumes for the same periods in 2019:
For the three month periods endedFor the year ended
Customer classMarch 31, 2020June 30, 2020September 30, 2020December 31, 2020December 31, 2020
Commercial(3.2)%(11.0)%(2.3)%(5.0)%(5.3)%
Industrial(1.5)%(19.9)%0.9%1.1%(5.0)%
Residential0.3%8.5%11.0%(0.9)%4.2%

DPL
As noted above, we also have incurred, and AES Ohio Generation completedexpect to continue to incur, expenses relating to COVID-19; however, see Note 3 – Regulatory Matters for a discussion of regulatory measures, which partially mitigate the saleimpact of these expenses. The ultimate magnitude and duration of the Peaker assets to Kimura Power, LLC,COVID-19 pandemic is unknown at this time and this transaction resulted in a lossmay have material and adverse effects on sale of $1.9 million for the nine months ended September 30, 2018. Further, on May 31, 2018, DPL and AES Ohio Generation retired the Stuart Station coal-fired and diesel-fired generating units and the Killen Station coal-fired generating unit and combustion turbine as planned.

Consequently, we determined that the disposal of this group of components, as a whole, represents a strategic shift to exit generation, and, as such, qualifies to be presented as discontinued operations. Therefore, theour results of operations, assetsfinancial condition and liabilities of this group of components were reported as suchcash flows in the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets for all periods presented.future periods.

The following table summarizes the major categories of assets and liabilities at the dates indicated:
$ in millions September 30, 2019 December 31, 2018
Accounts receivable, net $6.8
 $4.0
Taxes applicable to subsequent years 0.6
 2.3
Prepayments and other current assets 0.9
 2.4
Intangible assets, net of amortization 0.2
 5.3
Total assets of the disposal group classified as assets of discontinued operations and held-for-sale businesses in the balance sheets $8.5
 $14.0
     
Accounts payable $4.3
 $3.9
Accrued taxes 2.4
 3.1
Accrued and other current liabilities 3.2
 5.2
Deferred income taxes (a)
 (33.2) (39.8)
Taxes payable —
 2.3
Accrued pension and other post-retirement benefits —
 9.7
Asset retirement obligations 70.4
 90.4
Other non-current liabilities 15.2
 6.6
Total liabilities of the disposal group classified as liabilities of discontinued operations and held-for-sale businesses in the balance sheets $62.3
 $81.4

(a)
Deferred income taxes represent the tax asset position of the discontinued group of components, which were netted with liabilities on DPL prior to classification as discontinued operations.

The following table summarizes the revenues, operating costs, other expenses and income tax of discontinued operations for the periods indicated:
  Three months ended Nine months ended
  September 30, September 30,
$ in millions 2019 2018 2019 2018
Revenues $10.1
 $15.6
 $41.0
 $141.8
Operating costs and other expenses (10.5) (10.6) (8.2) (105.1)
Income from discontinued operations (0.4) 5.0
 32.8
 36.7
Gain / (loss) from disposal of discontinued operations —
 0.3
 0.1
 (1.6)
Income tax expense from discontinued operations 0.1
 1.0
 7.1
 5.9
Net income from discontinued operations $(0.5) $4.3
 $25.8
 $29.2


F-46
Cash flows related to discontinued operations are included in our Condensed Consolidated Statements
Table of Cash Flows. Cash flows from operating activities for discontinued operations were $(0.5) million and $(7.2) million for the three months ended September 30, 2019 and 2018, respectively, and $12.4 million and $37.2 million for the nine months ended September 30, 2019 and 2018, respectively. Cash flows from investing activities for discontinued operations were $233.8 million for the nine months ended September 30, 2018. There were no cash flows fromContents

Schedule II
investing activities for the three and nine months ended September 30, 2019 or for the three months ended September 30, 2018.

AROs of Discontinued Operations
DPL Inc.
VALUATION AND QUALIFYING ACCOUNTS
For each of the three years in the period ended December 31, 2020
$ in millions
DescriptionBalance at
Beginning
of Period		AdditionsDeductions -
Net Write-offs		Balance at
End of Period
Year ended December 31, 2020
Deducted from accounts receivable -
Provision for uncollectible accounts$0.4 $3.0 $0.6 $2.8 
Deducted from deferred tax assets -
Valuation allowance for deferred tax assets (a)
$29.0 $11.0 $1.0 $39.0 
Year ended December 31, 2019
Deducted from accounts receivable -
Provision for uncollectible accounts$0.9 $3.0 $3.5 $0.4 
Deducted from deferred tax assets -
Valuation allowance for deferred tax assets (a)
$29.9 $2.2 $3.1 $29.0 
Year ended December 31, 2018
Deducted from accounts receivable -
Provision for uncollectible accounts$1.1 $3.4 $3.6 $0.9 
Deducted from deferred tax assets -
Valuation allowance for deferred tax assets (a)
$36.3 $1.7 $8.1 $29.9 
DPL's
(a)    Balances and activity for valuation allowances for deferred tax assets include amounts presented within both the retired Stuart"Deferred income taxes" line and Killen generating facilities continue to carry ARO liabilities consisting primarily of river intake and discharge structures, coal unloading facilities, landfills and ash disposal facilities. In the first quarter of 2019, DPL reduced the ARO liability related to the Stuart and Killen ash ponds and landfills by a combined $22.5 million based on updated internal analyses that reduced estimated closure costs associated with these ash ponds and landfills. The remaining ARO liability related to Stuart and Killen is included in the Asset retirement obligations balance in the total liabilities of the disposal group classified as"Non-current liabilities of discontinued operations and held-for-sale businesses in the balance sheets asbusinesses" line on DPL’s Consolidated Balance Sheets.
F-47
Table of September 30, 2019 above. As these plants are no longer in service, the reduction to the ARO liability was also recorded as a credit to depreciation and amortization expense in the same amount. The credit to depreciation and amortization expense is included in operating costs and other expenses of discontinued operations for the nine months ended September 30, 2019 in the table above.Contents






dplinclogoa24.jpg

DPL INC.


Offer to Exchange
4.35%
4.125% Senior Notes due 20292025

for

New 4.35%4.125% Senior Notes due 20292025


Until , 2021, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters with respect to their unsold allotments or subscriptions.


PROSPECTUS

, 20192021



Table of Contents
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.
Article VIII of the Amended Regulations of DPL Inc. (the “Company”), as amended through November 28, 2011 provides for indemnification of directors, officers, employees or agents of the Company, or individuals who serve at the request of the Company in such capacities for other entities, against any and all expenses, judgments, fines and settlements incurred by them in connection with claims and/or litigation arising out of their service. Article VIII provides that indemnification shall be available to the full extent permitted by law including, without limitation, Section 1701.13(E) of the Ohio Revised Code. The Code of Regulations further provides that the indemnification rights set forth in Article VIII are not exclusive of any rights to which those seeking indemnification may be entitled under the Company’s Amended Articles of Incorporation or Code of Regulations or any agreement, vote of shareholders or disinterested directors, or otherwise. The Company’s Amended Articles of Incorporation and Code of Regulations are exhibits to this registration statement.
Section 1701.13(E) of the Ohio Revised Code provides as follows:
(E) (1) A corporation may indemnify or agree to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, other than an action by or in the right of the corporation, by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, against expenses, including attorney’s fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit, or proceeding, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if the person had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, the person had reasonable cause to believe that the person’s conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action or suit by or in the right of the corporation to procure a judgment in its favor, by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, against expenses, including attorney’s fees, actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is adjudged to be liable for negligence or misconduct in the performance of the person’s duty to the corporation unless, and only to the extent that, the court of common pleas or the court in which such action or suit was brought determines, upon application, that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court of common pleas or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted against a director is pursuant to section 1701.95 of the Revised Code.

(3) To the extent that a director, trustee, officer, employee, member, manager, or agent has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in division (E)(1) or (2) of this section, or in defense of any claim, issue, or matter in the action, suit, or proceeding, the person shall be indemnified against expenses, including attorney’s fees, actually and reasonably incurred by the person in connection with the action, suit, or proceeding.
(4) Any indemnification under division (E)(1) or (2) of this section, unless ordered by a court, shall be made by the corporation only as authorized in the specific case, upon a determination that indemnification of the director, trustee, officer, employee, member, manager, or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in division (E)(1) or (2) of this section. Such determination shall be made as follows:
II-1
Table of Contents
(a) By a majority vote of a quorum consisting of directors of the indemnifying corporation who were not and are not parties to or threatened with the action, suit, or proceeding referred to in division (E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4)(a) of this section is not obtainable or if a majority vote of a quorum of disinterested directors so directs, in a written opinion by independent legal counsel other than an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the corporation or any person to be indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which the action, suit, or proceeding referred to in division (E)(1) or (2) of this section was brought.
Any determination made by the disinterested directors under division (E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this section shall be promptly communicated to the person who threatened or brought the action or suit by or in the right of the corporation under division (E)(2) of this section, and, within ten days after receipt of that notification, the person shall have the right to petition the court of common pleas or the court in which the action or suit was brought to review the reasonableness of that determination.
(5) (a) Unless at the time of a director’s act or omission that is the subject of an action, suit, or proceeding referred to in division (E)(1) or (2) of this section, the articles or the regulations of a corporation state, by specific reference to this division, that the provisions of this division do not apply to the corporation and unless the only liability asserted against a director in an action, suit, or proceeding referred to in division (E)(1) or (2) of this section is pursuant to section 1701.95 of the Revised Code, expenses, including attorney’s fees, incurred by a director in defending the action, suit, or proceeding shall be paid by the corporation as they are incurred, in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director in which the director agrees to do both of the following:
(i) Repay that amount if it is proved by clear and convincing evidence in a court of competent jurisdiction that the director’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the corporation or undertaken with reckless disregard for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the action, suit, or proceeding.
(b) Expenses, including attorney’s fees, incurred by a director, trustee, officer, employee, member, manager, or agent in defending any action, suit, or proceeding referred to in division (E)(1) or (2) of this section, may be paid by the corporation as they are incurred, in advance of the final disposition of the action, suit, or proceeding, as authorized by the directors in the specific case, upon receipt of an undertaking by or on behalf of the director, trustee, officer, employee, member, manager, or agent to repay that amount, if it ultimately is determined that the person is not entitled to be indemnified by the corporation.
(6) The indemnification or advancement of expenses authorized by this section shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification or advancement of expenses under the articles, the regulations, any agreement, a vote of shareholders or disinterested directors, or otherwise, both as to action in their official capacities and as to action in another capacity while holding their offices or positions, and shall continue as to a person who has ceased to be a director, trustee, officer,

employee, member, manager, or agent and shall inure to the benefit of the heirs, executors, and administrators of that person. A right to indemnification or to advancement of expenses arising under a provision of the articles or the regulations shall not be eliminated or impaired by an amendment to that provision after the occurrence of the act or omission that becomes the subject of the civil, criminal, administrative, or investigative action, suit, or proceeding for which the indemnification or advancement of expenses is sought, unless the provision in effect at the time of that act or omission explicitly authorizes that elimination or impairment after the act or omission has occurred.
(7) A corporation may purchase and maintain insurance or furnish similar protection, including, but not limited to, trust funds, letters of credit, or self-insurance, on behalf of or for any person who is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, against any liability asserted against the person and incurred by the person in any such capacity, or arising out of the person’s status as such, whether or not the corporation would have the power to indemnify the person against that liability under this section. Insurance may be purchased from or maintained with a person in which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to division (E)(1) or (2) of this section does not limit the payment of expenses as they are incurred, indemnification, insurance, or other protection that may be provided pursuant to divisions (E)(5), (6), and (7) of this section. Divisions (E)(1) and (2) of this section do not create any obligation to repay or return payments made by the corporation pursuant to division (E)(5), (6), or (7).
(9) As used in division (E) of this section, “corporation” includes all constituent entities in a consolidation or merger and the new or surviving corporation, so that any person who is or was a director, officer, employee, trustee, member, manager, or agent of such a constituent entity, or is or was serving at the request of such constituent entity as a
II-2
Table of Contents
director, trustee, officer, employee, member, manager, or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, shall stand in the same position under this section with respect to the new or surviving corporation as the person would if the person had served the new or surviving corporation in the same capacity.
The Company maintains standard policies of insurance under which coverage is provided to its directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act, and to the Company with respect to payments which may be made by the Company to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.
The Registration Rights Agreement filed as Exhibit 4(t) to this Registration Statement provides for indemnification of directors and officers of DPL Inc. by the initial purchasers against certain liabilities.

II-3

Table of Contents
Item 21.21 – Exhibits

DPL exhibits are incorporated by reference as described unless otherwise filed as set forth herein.

The exhibits filed as part of DPL’s Annual Report on Form 10-K, updated through our most recent 10-Q, are:
Exhibit

Number
ExhibitLocation
2(a)Agreement and Plan of Merger, dated as of April 19, 2011, by and among DPL Inc., The AES Corporation and Dolphin Sub, Inc.
Exhibit 2.1 to Report on Form 8-K filed April 20, 2011 (File No. 1-9052)
2(b)Asset Purchase Agreement dated April 21, 2017, by and among Dynegy Zimmer, LLC, Dynegy Miami Fort, LLC, AES Ohio
2(c)2(b)Asset Contribution Agreement, dated as of September 28, 2017, by and between The Dayton Power and Light Company and AES Ohio Merger Sub, LLC
Exhibit 2.1 to Report on Form 8-K filed on October 2, 2017 (File No. 1-2385)
2(d)Agreement and Plan of Merger, dated as of September 28, 2017, by and between AES Ohio Merger Sub, LLC and AES Ohio Generation, LLC
Exhibit 2.2 to Report on Form 8-K filed on October 2, 2017 (File No. 1-2385)
2(e)Asset Purchase Agreement, dated as of December 15, 2017, by and among AES Ohio Generation, LLC, DPL Inc., Kimura Power, LLC and Rockland Power Partners III, LP
3(a)Amended Articles of Incorporation of DPL Inc., as amended through January 6, 2012
3(b)Amended Regulations of DPL Inc., as amended through November 28, 2011
4(a)Composite Indenture dated as of October 1, 1935, between The Dayton Power and Light Company and Irving Trust Company, Trustee with all amendments through the Twenty-Ninth Supplemental Indenture
4(b)Forty-First Supplemental Indenture dated as of February 1, 1999, between The Dayton Power and Light Company and The Bank of New York, Trustee
Exhibit 4.4 to Registration Statement No. 333-183556
4(c)Forty-Second Supplemental Indenture dated as of September 1, 2003, between The Dayton Power and Light Company and The Bank of New York, Trustee
4(d)Forty-Third Supplemental Indenture dated as of August 1, 2005, between The Dayton Power and Light Company and The Bank of New York, Trustee
4(e)Indenture dated as of August 31, 2001 between DPL Inc. and The Bank of New York, Trustee
4(f)First Supplemental Indenture dated as of August 31, 2001 between DPL Inc. and The Bank of New York, as Trustee
4(g)Amended and Restated Trust Agreement dated as of August 31, 2001 among DPL Inc., The Bank of New York, The Bank of New York (Delaware), the administrative trustees named therein and several Holders as defined therein
4(h)Loan Agreement, dated as of September 1, 2006, by and between Ohio Air Quality Development Authority and The Dayton Power and Light Company
Exhibit 4.1 to Report on Form 8-K filed September 19, 2006 (File No. 1-2385)
4(i)Indenture dated October 3, 2011, between Dolphin Subsidiary II, Inc. and Wells Fargo Bank, National Association
4(j)4(i)Supplemental Indenture dated as of November 28, 2011, between DPL Inc. and Wells Fargo Bank, National Association
4(k)4(j)Indenture dated October 6, 2014, between DPL Inc. and U.S. Bank National Association.
Exhibit 4.1 to Report on Form 8-K filed October 10, 2014 (File No. 1-9052)
4(l)Loan Agreement dated August 1, 2015, between the Ohio Air Quality Development Authority and The Dayton Power and Light Company, relating to the 2015 Series A bonds
4(m)4(k)Loan Agreement dated August 1, 2015, between the Ohio Air Quality Development Authority and The Dayton Power and Light Company, relating to the 2015 Series B bonds
4(n)4(l)Forty-Eighth Supplemental Indenture dated as of August 1, 2015 between The Bank of New York Mellon, Trustee and The Dayton Power and Light Company


4(m)
Exhibit
Number
ExhibitLocation
4(o)Forty-Ninth Supplemental Indenture dated as of August 1, 2015 between The Bank of New York Mellon, Trustee and The Dayton Power and Light Company
4(p)4(n)Bond Purchase and Covenants Agreement dated as of August 1, 2015, among The Dayton Power and Light Company, SunTrust Bank, as Administrative Agent and the several lenders from time to time party thereto
4(q)4(o)Amendment dated February 21, 2017 to Bond Purchase and Covenants Agreement by and among The Dayton Power and Light Company, SunTrust Bank, as Administrative Agent and several lenders from time to time party thereto, dated as of August 1, 2015
4(r)4(p)Fiftieth Supplemental Indenture dated as of August 1, 2016, by and between The Dayton Power and Light Company and The Bank of New York Mellon, Trustee
4(s)4(q)Fifty-First Supplemental Indenture between The Bank of New York Mellon, as Trustee, and The Dayton Power and Light Company
4(t)4(r)Registration Rights Agreement dated April 17, 2019 between DPL Inc. and J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC
5(a)4(s)Indenture dated April 17, 2019 between DPL Inc. and U.S. Bank National Association, as Trustee
4(t)Fifty-Second Supplemental Indenture between The Bank of New York Mellon, as Trustee, and The Dayton Power and Light Company
4(u)Registration Rights Agreement dated June 6, 2019 between The Dayton Power and Light Company and BofA Securities, Inc. and J.P. Morgan Securities LLC
4(v)Indenture, dated June 19, 2020, by and between DPL Inc. and U.S. Bank National Association.
4(w)Registration Rights Agreement, dated June 19, 2020, by and between DPL Inc. and J.P. Morgan Securities LLC, as representative of the initial purchasers.
4(x)53rd Supplemental Indenture, dated July 1, 2020, between The Dayton Power and Light Company and The Bank of New York Mellon.
II-4
Table of Contents
Exhibit
Number		ExhibitLocation
5.1Opinion of Davis Polk & Wardwell LLP with respect to the new notes
5(b)5.2Opinion of Brian Hylander, Assistant General Counsel of DPL Inc.
10(a)Credit Agreement dated as of July 31, 2015, among DPL Inc., U.S. Bank National Association, as Administrative Agent, Collateral Agent, Swing Line Lender and an L/C Issuer, PNC Bank, National Association, as Syndication Agent and an L/C Issuer, Bank of America, N.A., as Documentation Agent and an L/C Issuer, and the other lenders party to the Credit Agreement
Exhibit 10.1 to Report on Form 8-K filed August 6, 2015 (File No. 1-9052)
10(b)First Amendment dated as of December 15, 2017, to Credit Agreement by and among DPL Inc., U.S. Bank National Association, as Administrative Agent, Collateral Agent, Swing Line Lender and an L/C Issuer, PNC Bank, National Association, as Syndication Agent and an L/C Issuer, Bank of America, N.A., as Documentation Agent and an L/C Issuer, and the other lenders party to the Credit Agreement, dated as of July 31, 2015
Exhibit 10(b) to Report on Form 10-K filed February 26, 2018 (File No. 1-9052)
10(c)Guaranty Agreement dated as of July 31, 2015, between DPL Energy, LLC and U.S. Bank National Association, as Administrative Agent
Exhibit 10.2 to Report on Form 8-K filed August 6, 2015 (File No. 1-9052)
10(d)Pledge Agreement dated as of July 31, 2015, between DPL Inc. and U.S. Bank National Association, as Collateral Agent
Exhibit 10.3 to Report on Form 8-K filed August 6, 2015 (File No. 1-9052)
10(e)Open-end Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, dated as of July 31, 2015, made by DPL Energy LLC to U.S. Bank National Association, as Collateral Agent and Mortgagee
Exhibit 10.4 to Report on Form 8-K filed August 6, 2015 (File No. 1-9052)
10(f)Credit Agreement dated as of July 31, 2015, among The Dayton Power and Light Company, PNC Bank, National Association, as Administrative Agent, Swing Line Lender and an L/C Issuer, Fifth Third Bank, as Syndication Agent and an L/C Issuer, Bank of America, N.A., as Documentation Agent and an L/C Issuer, and the other lenders party to the Credit Agreement
Exhibit 10.5 to Report on Form 8-K filed August 6, 2015 (File No. 1-2385)
10(g)Amendment dated as of February 21, 2017 to Credit Agreement by and among The Dayton Power and Light Company, PNC Bank, National Association, as Administrative Agent, Swing Line Lender and an L/C Issuer, Fifth Third Bank, as Syndication Agent and an L/C Issuer, Bank of America, N.A., as Documentation Agent and an L/C Issuer, and the other lenders party to the Credit Agreement, dated as of July 31, 2015
Exhibit 10.F to Report Filed on Form 10-K for the year ended December 31, 2016 (File No. 1-2385)
10(h)Open-End Leasehold Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing from DPL Energy, LLC to U.S. Bank National Association, dated as of October 29, 2015
Exhibit 10(a) to Report on Form 10-Q for the quarter ended September 30, 2015 (File No. 1-9052)
10(i)First Modification to Open-End Leasehold Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing between AES Ohio Generation, LLC and U.S. Bank National Association, dated as of October 1, 2017
Exhibit 10(i) to Report on Form 10-K filed February 26, 2018 (File No. 1-9052)


Exhibit
Number
ExhibitLocation
10(j)Credit Agreement dated August 24, 2016, among The Dayton Power and Light Company, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, Morgan Stanley Senior Funding, Inc., as a lender and BMO Capital Markets Corp., Fifth Third Securities, The Huntington National Bank, PNC Capital Markets LLC, RBC Capital Markets, LLC, Regions Capital Markets, a division of Regions Bank, and SunTrust Robinson Humphrey, Inc., as managing agents
Exhibit 4.1 to Report on Form 8-K filed August 30, 2016 (File No. 1-2385)
10(k)Amendment to Credit Agreement dated as of January 3, 2018, among The Dayton Power and Light Company, JPMorgan Chase Bank, N.A., as Administrative Agent and certain of the lenders party thereto
Exhibit 4.1 to Report on Form 8-K filed January 5, 2018 (File No. 1-2385)
10(l)Pledge and Security Agreement dated as of August 24, 2016, between The Dayton Power and Light Company and JPMorgan Chase Bank, N.A., as collateral agent
Exhibit 4.2 to Report on Form 8-K filed August 30, 2016 (File No. 1-2385)
10(m)Stipulation and Recommendation dated January 30, 2017
Exhibit 10.1 to Report on Form 8-K filed February 3, 2017 (File No. 1-2385)
10(n)Amended Stipulation and Recommendation dated March 13, 2017
Exhibit 10.1 to Report on Form 8-K filed March 14, 2017 (File No. 1-2385)
10(o)Amended and Restated Credit Agreement, dated as of June 19, 2019, among DPL Inc., each lender from time to time party thereto, U.S. Bank National Association, as Administrative Agent, Collateral Agent, Swing Line Lender and an L/C Issuer, PNC Bank, National Association, as Syndication Agent and an L/C Issuer, and Fifth Third Bank, BMO Harris Bank, N.A., SunTrust Bank and The Huntington National Bank, as Documentation Agents.
10(p)10(b)Amended and Restated Pledge Agreement, dated as of June 19, 2019, between DPL Inc. and U.S. Bank National Association, as Collateral Agent.
10(q)10(c)Amended and Restated Credit Agreement, dated as of June 19, 2019, among The Dayton Power and Light Company, each lender from time to time party thereto, PNC Bank, National Association, as Administrative Agent, Swing Line Lender and an L/C Issuer, U.S. Bank National Association, as Syndication Agent and an L/C Issuer, and Fifth Third Bank, BMO Harris Bank, N.A., SunTrust Bank and The Huntington National Bank, as Documentation Agents.
21.110(d)Amendment to the Amended and Restated Credit Agreement, dated as of June 1, 2020, among DPL, U.S. Bank, National Association, as administrative agent, and each of the lenders party thereto.
10(e)Stipulation and Recommendation dated October 23, 2020.
21.1List of Significant Subsidiaries of DPL Inc.
23.1Consent of Davis Polk & Wardwell LLPIncluded in Exhibit 5.1
23.2Consent of Brian Hylander, Assistant General Counsel of DPL Inc.Included in Exhibit 5.2
23.3Consent of Independent Registered Accounting Firm, Ernst & Young LLP
24.1Powers of AttorneyIncluded on signature page to registration statement
25.1Statement of Eligibility of U.S. Bank National Association, as Trustee, on Form T-1
99.1Form of Notice of Guaranteed Delivery
99.2Form of Letter to Clients
99.3Form of Letter to Brokers
99.4Form of Instructions to Registered Holder and/or Book-Entry Transfer Participant from Owner
101.INSXBRL InstanceFurnished herewith as Exhibit 101.INS
101.SCHXBRL Taxonomy Extension SchemaFurnished herewith as Exhibit 101.SCH
101.CALXBRL Taxonomy Extension Calculation LinkbaseFurnished herewith as Exhibit 101.CAL
101.DEFXBRL Taxonomy Extension Definition LinkbaseFurnished herewith as Exhibit 101.DEF
101.LABXBRL Taxonomy Extension Label LinkbaseFurnished herewith as Exhibit 101.LAB
101.PREXBRL Taxonomy Extension Presentation LinkbaseFurnished herewith as Exhibit 101.PRE

Exhibits referencing File No. 1-9052 have been filed by DPL Inc. and those referencing File No. 1-2385 have been filed by The Dayton Power and Light Company.



Item 22. - Undertakings

(a)    The undersigned hereby undertakes:
(1)To file during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)
(1) To file during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities
II-5
Table of Contents
offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, superseded or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)    Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
(2)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, superseded or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5)That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the


opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(c)
(c)    The undersigned hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
(d)The undersigned hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.


(d)    The undersigned hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
II-6


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 as amended, DPL Inc. has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Indianapolis, State of Indiana, on November 8, 2019.March 15, 2021.

DPL Inc.
March 15, 2021DPL Inc.
By:/s/ Gustavo Garavaglia
Gustavo Garavaglia
Vice President & Chief Financial Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gustavo Garavaglia and Judi L. Sobecki, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power to act separately and full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or his or her or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the datesdate indicated.
/s/ Kenneth J. ZagzebskiDirectorMarch 15, 2021
Kenneth J. Zagzebski
/s/ KennethBarry J. ZagzebskiBentleyDirectorMarch 15, 2021
Barry J. Bentley
/s/ Lisa KruegerDirector and Executive ChairmanNovember 8, 2019March 15, 2021
Kenneth J. ZagzebskiLisa Krueger
/s/ Michelle A. DreyerDirectorNovember 8, 2019March 15, 2021
Michelle A. Dreyer
/s/ Lisa KruegerKristina LundDirector,November 8, 2019
Lisa Krueger
/s/ Barry J. BentleyDirector and Interim President and Chief Executive OfficerNovember 8, 2019March 15, 2021
Barry J. BentleyKristina Lund(principal executive officer)
/s/ Gustavo GaravagliaVice President & Chief Financial OfficerNovember 8, 2019March 15, 2021
Gustavo Garavaglia(principal financial officer)
/s/ Karin M. NyhuisControllerNovember 8, 2019March 15, 2021
Karin M. Nyhuis(principal accounting officer)

II-7