UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

DPL Inc.

(an Ohio corporation)

Commission File Number 1-9052

1065 Woodman Drive

Dayton, Ohio 45432

937-259-7215

IRS Employer Identification No. 31-1163136

THE DAYTON POWER AND LIGHT COMPANY

(an Ohio corporation)

Commission File Number 1-2385

1065 Woodman Drive

Dayton, Ohio 45432

937-259-7215

IRS Employer Identification No. 31-0258470

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

N/A

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

DPL Inc.

Yes

☑

☐

The Dayton Power and Light Company

Yes

☑

☐

DPL Inc. and The Dayton Power and Light Company were voluntary filers until their March 6, 2020 Registration Statements on Form S-4/A filed with the Securities and Exchange Commission were declared effective on March 12, 2020. DPL Inc. and The Dayton Power and Light Company have filed all applicable reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.

Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

DPL Inc.

Yes

☑

☐

The Dayton Power and Light Company

Yes

☑

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large
accelerated
Filer

Accelerated
Filer

Non-accelerated Filer

Smaller
reporting
company

Emerging growth company

DPL Inc.

☐

☑

☐

Large
accelerated
Filer

Accelerated
Filer

Non-accelerated Filer

Smaller
reporting
company

Emerging growth company

The Dayton Power and Light Company

☐

☑

☐

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 13(a) of the Exchange Act.


DPL Inc.			o
The Dayton Power and Light Company			o

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

DPL Inc.

Yes

☐

☑

The Dayton Power and Light Company

Yes

☐

☑

All of the outstanding common stock of DPL Inc. is indirectly owned by The AES Corporation. All of the outstanding common stock of The Dayton Power and Light Company is owned by DPL Inc.

As of ~~August~~November 5, 2020, each registrant had the following shares of common stock outstanding:

Registrant

Description

Shares Outstanding

DPL Inc.

Common Stock, no par value

The Dayton Power and Light Company

Common Stock, $0.01 par value

41,172,173

This combined Form 10-Q is separately filed by DPL Inc. and The Dayton Power and Light Company. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to a registrant other than itself.

DPL Inc. and The Dayton Power and Light Company

Quarter Ended ~~June~~September 30, 2020


	Table of Contents	Page No.
Glossary of Terms			4
Forward-Looking Statements			5
Part I Financial Information
Item 1	Financial Statements – DPL Inc. and The Dayton Power and Light Company (Unaudited)
	DPL Inc.
	Condensed Consolidated Statements of Operations	9
	Condensed Consolidated Statements of Comprehensive Income / (Loss)	10
	Condensed Consolidated Balance Sheets	11
	Condensed Consolidated Statements of Cash Flows	12
	Condensed Consolidated Statements of Shareholder's Deficit	13
	Notes to Condensed Consolidated Financial Statements	14
	Note 1 – Overview and Summary of Significant Accounting Policies	14
	Note 2 – Supplemental Financial Information	16
	Note 3 – Regulatory Matters	17
	Note 4 – Fair Value	1819
	Note 5 – Derivative Instruments and Hedging Activities	20
	Note 6 – Long-term Debt	2122
	Note 7 – Income Taxes	2223
	Note 8 – Benefit Plans	2324
	Note 9 – Shareholder's Deficit	2324
	Note 10 – Contractual Obligations, Commercial Commitments and Contingencies	2425
	Note 11 – Business Segments	2526
	Note 12 – Revenue	2728
	Note 13 – Discontinued Operations	2930
	Note 14 – Risks and Uncertainties	3031


	The Dayton Power and Light Company
	Condensed Statements of Operations	3234
	Condensed Statements of Comprehensive Income	3335
	Condensed Balance Sheets	3436
	Condensed Statements of Cash Flows	3537
	Condensed Statements of Shareholder's Equity	3638
	Notes to Condensed Financial Statements	3739
	Note 1 – Overview and Summary of Significant Accounting Policies	3739
	Note 2 – Supplemental Financial Information	3941
	Note 3 – Regulatory Matters	4042
	Note 4 – Fair Value	4143
	Note 5 – Derivative Instruments and Hedging Activities	4345
	Note 6 – Long-term Debt	4446
	Note 7 – Income Taxes	4547
	Note 8 – Benefit Plans	4547
	Note 9 – Shareholder's Equity	4648
	Note 10 – Contractual Obligations, Commercial Commitments and Contingencies	4649
	Note 11 – Revenue	4750
	Note 12 – Risks and Uncertainties


Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	4952
Item 3	Quantitative and Qualitative Disclosures about Market Risk	6772
Item 4	Controls and Procedures	6772

Part II Other Information
Item 1	Legal Proceedings	6872
Item 1A	Risk Factors	6873
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	7074
Item 3	Defaults Upon Senior Securities	7074
Item 4	Mine Safety Disclosures	7074
Item 5	Other Information	7074
Item 6	Exhibits	7175
	Signatures	7276

Table of Contents

GLOSSARY OF TERMS

The following terms are used in this Form 10-Q:


Term			Definition
2017 ESP			DP&L's ESP - approved October 20, 2017, effective November 1, 2017
AES			The AES Corporation - a global power company and the ultimate parent company of DPL
AES Ohio Generation			AES Ohio Generation, LLC - a wholly-owned subsidiary of DPL, which previously operated EGUs and made wholesale sales
AOCI			Accumulated Other Comprehensive Income
AOCL			Accumulated Other Comprehensive Loss
ARO			Asset Retirement Obligation
ASU			Accounting Standards Update
CAA			U.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
CCR			Coal Combustion Residuals
Conesville			AES Ohio Generation's interest in Unit 4 at the Conesville EGU. This was sold on June 5, 2020.
COVID-19			The disease caused by the novel coronavirus that resulted in a global pandemic in 2020.
CSAPR			Cross-State Air Pollution Rule - the USEPA's rule to address interstate air pollution transport to decrease emissions to downwind states
~~Distribution Modernization Plan~~			~~Distribution Modernization Plan - on December 21, 2018, DP&L filed a comprehensive grid modernization plan pursuant to the PUCO Order in the ESP~~
DMR			Distribution Modernization Rider - established in the ESP as a non-bypassable rider to collect $105.0 million in revenue per year for the first three years of the ESP term
DPL			DPL Inc.
DP&L			The Dayton Power and Light Company - the principal subsidiary of DPL and a public utility that delivers electricity to residential, commercial, industrial and governmental customers in a 6,000-square mile area of West Central Ohio
DRO			Distribution 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
EBITDA			Earnings before interest, taxes, depreciation and amortization. EBITDA also excludes the Fixed-asset impairment
EGU			Electric Generating Unit
ERISA			The Employee Retirement Income Security Act of 1974
ESP			The Electric Security Plan - a plan that a utility must file with the PUCO to establish SSO rates pursuant to Ohio law
ESP 1			ESP originally approved by PUCO order dated June 24, 2009. After DP&L withdrew its 2017 ESP 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.
FASB			Financial Accounting Standards Board
FASC			FASB Accounting Standards Codification
FERC			Federal Energy Regulatory Commission
Form 10-K			DPL’s and DP&L’s combined Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed on February 27, 2020
First and Refunding Mortgage			DP&L’s First and Refunding Mortgage, dated October 1, 1935, as amended, with the Bank of New York Mellon as Trustee
GAAP			Generally Accepted Accounting Principles in the United States of America
Generation Separation			The transfer on October 1, 2017 to AES Ohio Generation of the DP&L-owned generating facilities and related liabilities pursuant to an asset contribution agreement with a subsidiary that was then merged into AES Ohio Generation
kV			~~Kilovolt, 1,000 volts~~
kWh			Kilowatt-hours - a measure of electrical energy equivalent to a power consumption of 1,000 watts for 1 hour
LIBOR			London Inter-Bank Offering Rate
Master Trust			DP&L established a Master Trust to hold assets that could be used for the benefit of employees participating in employee benefit plans
MATS			Mercury and Air Toxics Standards - the USEPA’s rules for existing and new power plants under Section 112 of the CAA
Merger			The 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 Lighting			Miami 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.
MRO			Market Rate Option - a market-based plan that a utility may file with PUCO to establish SSO rates pursuant to Ohio law

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GLOSSARY OF TERMS (cont.)

Term			Definition
MVIC			Miami Valley Insurance Company is a wholly-owned insurance subsidiary of DPL that provides insurance services to DPL and its subsidiaries ~~and, in some cases, insurance services to partner companies related to the jointly-owned facility operated by AES Ohio Generation~~
MW			Megawatt, a unit of power equal to one million watts
NAAQS			National Ambient Air Quality Standards - the USEPA’s health and environmental based standards for six specified pollutants, as found in the ambient air
NERC			North 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
Ohio EPA			Ohio Environmental Protection Agency
OVEC			Ohio Valley Electric Corporation - an electric generating company in which DP&L holds a 4.9% equity interest
Peaker assets			The 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 that were sold on March 27, 2018
PJM			PJM Interconnection, LLC, an RTO
PUCO			Public Utilities Commission of Ohio
RSC			The Rate Stabilization Charge is a non-bypassable rider intended to compensate DP&L for providing stabilized rates to customers.
RTO			Regional Transmission Organization - an entity that is independent from all generation and power marketing interests and has exclusive responsibility for grid operations, short-term reliability, and transmission service within a region
SEC			U.S. Securities and Exchange Commission
SERP			Supplemental Executive Retirement Plan
Service Company			AES US Services, LLC - the shared services affiliate providing accounting, finance, and other support services to AES’ U.S. SBU businesses
SSO			Standard Service Offer represents the regulated rates, authorized by the PUCO, charged to DP&L retail customers that take retail generation service from DP&L within DP&L’s service territory
T&D			Transmission and distribution
TCJA			The Tax Cuts and Jobs Act of 2017, signed on December 22, 2017
U.S.			United States of America
USEPA			U.S. Environmental Protection Agency
USF			The Universal Service Fund is a statewide program which provides qualified low-income customers in Ohio with income-based bills and energy efficiency education programs
U.S. SBU			U.S. and Utilities Strategic Business Unit, AES’ reporting unit covering the businesses in the United States, including DPL
Utility segment			DPL's Utility segment is made up of DP&L’s electric transmission and distribution businesses, which distribute electricity to residential, commercial, industrial and governmental customers

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Matters discussed in this report that relate to events or developments that are expected to occur in the future, including management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters constitute forward-looking statements. Forward-looking statements are based on management’s beliefs, assumptions and expectations of future economic performance, considering the information currently available to management. These statements are not statements of historical fact and are typically identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will” and similar expressions. Such forward-looking statements are subject to risks and uncertainties and investors are cautioned that outcomes and results may vary materially from those projected due to various factors beyond our control, including but not limited to:

•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;

Table of Contents

•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;

•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 in this report and other DPL and DP&L filings with the SEC.

Forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. 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.

All of the above factors are difficult to predict, contain uncertainties that may materially affect actual results, and many are beyond our control. See Item 1A - Risk Factors to Part I in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in such report and in our Quarterly ~~Report~~Reports on Form 10-Q for the ~~quarter~~quarters ended March 31, and June 30, 2020 and this Quarterly Report on Form 10-Q 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. These risks may also be specifically described in our Quarterly Reports on Form 10-Q in Part II - Item 1A, Current Reports on Form 8-K and other documents that we may file from time to time with the SEC.

Our SEC filings are available to the public from the SEC’s website at www.sec.gov.

COMPANY WEBSITES

DP&L’s public internet site is www.dpandl.com. The information on this website is not incorporated by reference into this report.

Table of Contents


Part I – Financial Information

This report includes the combined filing of DPL and DP&L. Throughout this report, 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 areas of this report that apply only to DPL or DP&L will be clearly noted in the applicable section.


Item 1 – Financial Statements

Table of Contents

FINANCIAL STATEMENTS

DPL INC.

Table of Contents


DPL INC.	DPL INC.																	DPL INC.
Condensed Consolidated Statements of Operations	Condensed Consolidated Statements of Operations																	Condensed Consolidated Statements of Operations
(Unaudited)	(Unaudited)																	(Unaudited)
		Three months ended						Six months ended							Three months ended				Nine months ended
		June 30,						June 30,							September 30,				September 30,
$ in millions	$ in millions	2020		2019		2020		2019		$ in millions	2020		2019		2020		2019
Revenues	Revenues	$	155.1	$	179.6	$	326.3	$	383.6	Revenues	$	178.8	$	192.9	$	505.1	$	576.5

Operating costs and expenses	Operating costs and expenses									Operating costs and expenses
Net fuel cost	Net fuel cost	0.3		0.5		0.9		1.4		Net fuel cost	0.4		0.6		1.3		2.0
Net purchased power cost	Net purchased power cost	49.2		54.2		112.0		127.9		Net purchased power cost	66.0		66.3		178.0		194.2

Operation and maintenance	Operation and maintenance	43.7		45.8		90.8		94.4		Operation and maintenance	47.9		42.5		138.7		136.9
Depreciation and amortization	Depreciation and amortization	18.5		17.9		36.2		36.3		Depreciation and amortization	18.6		17.7		54.8		54.0
Taxes other than income taxes	Taxes other than income taxes	21.0		18.0		41.9		37.5		Taxes other than income taxes	17.7		20.8		59.6		58.3

Other, net	Other, net	0.1		—		—		—		Other, net	0.1		0		0.1		0

Total operating costs and expenses	Total operating costs and expenses	132.8		136.4		281.8		297.5		Total operating costs and expenses	150.7		147.9		432.5		445.4

Operating income	Operating income	22.3		43.2		44.5		86.1		Operating income	28.1		45.0		72.6		131.1

Other income / (expense), net:	Other income / (expense), net:									Other income / (expense), net:
Interest expense	Interest expense	(19.4)		(21.7)		(38.3)		(45.4)		Interest expense	(17.1)		(18.3)		(55.4)		(63.7)
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—		(44.9)		—		(44.9)		Loss on early extinguishment of debt	(31.7)		0		(31.7)		(44.9)
Other income / (expense)		0.8		1.3		(0.1)		2.8
Other income										Other income	1.0		0.4		0.9		3.2
Total other expense, net	Total other expense, net	(18.6)		(65.3)		(38.4)		(87.5)		Total other expense, net	(47.8)		(17.9)		(86.2)		(105.4)

Income / (loss) from continuing operations before income tax	Income / (loss) from continuing operations before income tax	3.7		(22.1)		6.1		(1.4)		Income / (loss) from continuing operations before income tax	(19.7)		27.1		(13.6)		25.7

Income tax expense / (benefit) from continuing operations		2.8		(3.6)		2.7		(2.7)
Income tax benefit from continuing operations										Income tax benefit from continuing operations	(10.4)		(9.1)		(7.7)		(11.8)

Net income / (loss) from continuing operations	Net income / (loss) from continuing operations	0.9		(18.5)		3.4		1.3		Net income / (loss) from continuing operations	(9.3)		36.2		(5.9)		37.5

Discontinued operations (Note 13):	Discontinued operations (Note 13):									Discontinued operations (Note 13):
Income / (loss) from discontinued operations before income tax	Income / (loss) from discontinued operations before income tax	(1.2)		2.8		(2.0)		31.1		Income / (loss) from discontinued operations before income tax	1.4		(1.0)		(0.6)		30.1
Gain from disposal of discontinued operations	Gain from disposal of discontinued operations	4.5		—		4.5		0.1		Gain from disposal of discontinued operations	0		0		4.5		0.1
Income tax expense from discontinued operations		0.7		0.4		0.5		6.5
Net income from discontinued operations		2.6		2.4		2.0		24.7
Income tax expense / (benefit) from discontinued operations										Income tax expense / (benefit) from discontinued operations	0.3		(0.2)		0.8		6.3
Net income / (loss) from discontinued operations										Net income / (loss) from discontinued operations	1.1		(0.8)		3.1		23.9

Net income / (loss)	Net income / (loss)	$	3.5	$	(16.1)	$	5.4	$	26.0	Net income / (loss)	$	(8.2)	$	35.4	$	(2.8)	$	61.4

See Notes to Condensed Consolidated Financial Statements.

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DPL INC.	DPL INC.																	DPL INC.
Condensed Consolidated Statements of Comprehensive Income / (Loss)	Condensed Consolidated Statements of Comprehensive Income / (Loss)																	Condensed Consolidated Statements of Comprehensive Income / (Loss)
(Unaudited)	(Unaudited)																	(Unaudited)

		Three months ended						Six months ended							Three months ended				Nine months ended
		June 30,						June 30,							September 30,				September 30,
$ in millions	$ in millions	2020		2019		2020		2019		$ in millions	2020		2019		2020		2019
Net income / (loss)	Net income / (loss)	$	3.5	$	(16.1)	$	5.4	$	26.0	Net income / (loss)	$	(8.2)	$	35.4	$	(2.8)	$	61.4
Derivative activity:	Derivative activity:									Derivative activity:
Change in derivative fair value, net of income tax benefit of $0.0, $0.1, $0.0 and $0.2 for each respective period		0.2		(0.5)		(0.1)		(0.8)
Reclassification to earnings, net of income tax expense of $0.0, $0.0, $0.1 and $0.1 for each respective period		(0.2)		(0.3)		(0.5)		(0.5)

Change in derivative fair value, net of income tax (expense) / benefit of $0.0, $(0.1), $0.0 and $0.1 for each respective period										Change in derivative fair value, net of income tax (expense) / benefit of $0.0, $(0.1), $0.0 and $0.1 for each respective period	0.1		(0.2)		0		(1.0)
Reclassification to earnings, net of income tax (benefit) / expense of $0.0, $(0.1), $0.1 and $0.0 for each respective period										Reclassification to earnings, net of income tax (benefit) / expense of $0.0, $(0.1), $0.1 and $0.0 for each respective period	(0.3)		(0.4)		(0.8)		(0.9)
Reclassification of earnings related to discontinued operations, net of income tax benefit of $0.0, $(0.4), $0.0 and $(0.4) for each respective period										Reclassification of earnings related to discontinued operations, net of income tax benefit of $0.0, $(0.4), $0.0 and $(0.4) for each respective period	0		(0.4)		0		(0.4)
Total derivative activity	Total derivative activity	—		(0.8)		(0.6)		(1.3)		Total derivative activity	(0.2)		(1.0)		(0.8)		(2.3)
Pension and postretirement activity:	Pension and postretirement activity:									Pension and postretirement activity:
Reclassification to earnings, net of income tax benefit of $(0.1), $0.0, $(0.1) and $0.0 for each respective period		0.2		—		0.5		0.1
Reclassification to earnings, net of income tax benefit of $0.0, $(0.1), $(0.1) and $(0.1) for each respective period										Reclassification to earnings, net of income tax benefit of $0.0, $(0.1), $(0.1) and $(0.1) for each respective period	0.3		0		0.8		0.1
Total change in unfunded pension and postretirement obligations	Total change in unfunded pension and postretirement obligations	0.2		—		0.5		0.1		Total change in unfunded pension and postretirement obligations	0.3		0		0.8		0.1

Other comprehensive income / (loss)	Other comprehensive income / (loss)	0.2		(0.8)		(0.1)		(1.2)		Other comprehensive income / (loss)	0.1		(1.0)		0		(2.2)

Net comprehensive income / (loss)	Net comprehensive income / (loss)	$	3.7	$	(16.9)	$	5.3	$	24.8	Net comprehensive income / (loss)	$	(8.1)	$	34.4	$	(2.8)	$	59.2

See Notes to Condensed Consolidated Financial Statements.

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DPL INC.	DPL INC.									DPL INC.
Condensed Consolidated Balance Sheets	Condensed Consolidated Balance Sheets									Condensed Consolidated Balance Sheets
(Unaudited)	(Unaudited)									(Unaudited)
$ in millions	$ in millions	June 30, 2020		December 31, 2019		$ in millions	September 30, 2020		December 31, 2019
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	412.2	$	36.5	Cash and cash equivalents	$	43.5	$	36.5
Restricted cash	Restricted cash	0.1		10.5		Restricted cash	0.1		10.5
Accounts receivable, net of allowance for credit losses of $3.0 and $0.4, respectively (Note 2)		61.8		67.9
Accounts receivable, net of allowance for credit losses of $3.2 and $0.4, respectively (Note 2)						Accounts receivable, net of allowance for credit losses of $3.2 and $0.4, respectively (Note 2)	68.2		67.9
Inventories (Note 2)	Inventories (Note 2)	9.1		10.4		Inventories (Note 2)	8.2		10.4
Taxes applicable to subsequent years	Taxes applicable to subsequent years	40.9		77.5		Taxes applicable to subsequent years	20.0		77.5
Regulatory assets, current	Regulatory assets, current	21.7		19.7		Regulatory assets, current	20.9		19.7
Taxes receivable	Taxes receivable	5.7		23.6		Taxes receivable	11.6		23.6
Prepayments and other current assets	Prepayments and other current assets	5.9		7.6		Prepayments and other current assets	5.4		7.6
Current assets of discontinued operations and held-for-sale businesses	Current assets of discontinued operations and held-for-sale businesses	—		22.3		Current assets of discontinued operations and held-for-sale businesses	0		22.3
Total current assets	Total current assets	557.4		276.0		Total current assets	177.9		276.0

Property, plant & equipment:	Property, plant & equipment:					Property, plant & equipment:
Property, plant & equipment	Property, plant & equipment	1,774.2		1,701.9		Property, plant & equipment	1,805.9		1,701.9
Less: Accumulated depreciation and amortization	Less: Accumulated depreciation and amortization	(385.0)		(362.6)		Less: Accumulated depreciation and amortization	(402.8)		(362.6)
		1,389.2		1,339.3			1,403.1		1,339.3
Construction work in process	Construction work in process	96.5		106.3		Construction work in process	112.0		106.3
Total net property, plant & equipment	Total net property, plant & equipment	1,485.7		1,445.6		Total net property, plant & equipment	1,515.1		1,445.6

Other non-current assets:	Other non-current assets:					Other non-current assets:
Regulatory assets, non-current	Regulatory assets, non-current	176.9		173.8		Regulatory assets, non-current	177.0		173.8
Intangible assets, net of amortization	Intangible assets, net of amortization	18.2		19.3		Intangible assets, net of amortization	17.8		19.3
Other non-current assets	Other non-current assets	19.2		20.0		Other non-current assets	19.7		20.0
Non-current assets of discontinued operations and held-for-sale businesses	Non-current assets of discontinued operations and held-for-sale businesses	—		1.1		Non-current assets of discontinued operations and held-for-sale businesses	0		1.1
Total other non-current assets	Total other non-current assets	214.3		214.2		Total other non-current assets	214.5		214.2

Total assets	Total assets	$	2,257.4	$	1,935.8	Total assets	$	1,907.5	$	1,935.8

LIABILITIES AND SHAREHOLDER'S DEFICIT	LIABILITIES AND SHAREHOLDER'S DEFICIT					LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:	Current liabilities:					Current liabilities:
Short-term and current portion of long-term debt (Note 6)	Short-term and current portion of long-term debt (Note 6)	$	379.2	$	283.8	Short-term and current portion of long-term debt (Note 6)	$	90.2	$	283.8
Accounts payable	Accounts payable	62.9		72.6		Accounts payable	54.8		72.6
Accrued taxes	Accrued taxes	87.1		79.3		Accrued taxes	83.3		79.3
Accrued interest	Accrued interest	11.7		11.4		Accrued interest	18.8		11.4
Customer deposits	Customer deposits	19.3		20.7		Customer deposits	18.7		20.7
Regulatory liabilities, current	Regulatory liabilities, current	17.3		27.9		Regulatory liabilities, current	19.8		27.9

Accrued and other current liabilities	Accrued and other current liabilities	22.6		21.2		Accrued and other current liabilities	21.6		21.2
Current liabilities of discontinued operations and held-for-sale businesses	Current liabilities of discontinued operations and held-for-sale businesses	—		9.0		Current liabilities of discontinued operations and held-for-sale businesses	0		9.0
Total current liabilities	Total current liabilities	600.1		525.9		Total current liabilities	307.2		525.9

Non-current liabilities:	Non-current liabilities:					Non-current liabilities:
Long-term debt (Note 6)	Long-term debt (Note 6)	1,392.8		1,223.3		Long-term debt (Note 6)	1,392.9		1,223.3
Deferred income taxes	Deferred income taxes	172.9		133.7		Deferred income taxes	173.4		133.7
Taxes payable	Taxes payable	43.1		81.1		Taxes payable	2.9		81.1
Regulatory liabilities, non-current	Regulatory liabilities, non-current	227.5		243.6		Regulatory liabilities, non-current	220.5		243.6
Accrued pension and other post-retirement benefits	Accrued pension and other post-retirement benefits	70.5		79.9		Accrued pension and other post-retirement benefits	69.0		79.9

Other non-current liabilities	Other non-current liabilities	19.1		11.8		Other non-current liabilities	18.2		11.8
Non-current liabilities of discontinued operations and held-for-sale businesses	Non-current liabilities of discontinued operations and held-for-sale businesses	—		8.4		Non-current liabilities of discontinued operations and held-for-sale businesses	0		8.4
Total non-current liabilities	Total non-current liabilities	1,925.9		1,781.8		Total non-current liabilities	1,876.9		1,781.8

Commitments and contingencies (Note 10)	Commitments and contingencies (Note 10)					Commitments and contingencies (Note 10)

Common shareholder's deficit	Common shareholder's deficit					Common shareholder's deficit
Common stock:	Common stock:					Common stock:
1,500 shares authorized; 1 share issued and outstanding	1,500 shares authorized; 1 share issued and outstanding	—		—		1,500 shares authorized; 1 share issued and outstanding	0		0
Other paid-in capital	Other paid-in capital	2,468.7		2,370.7		Other paid-in capital	2,468.8		2,370.7
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3.7)		(3.6)		Accumulated other comprehensive loss	(3.6)		(3.6)
Accumulated deficit	Accumulated deficit	(2,733.6)		(2,739.0)		Accumulated deficit	(2,741.8)		(2,739.0)
Total common shareholder's deficit	Total common shareholder's deficit	(268.6)		(371.9)		Total common shareholder's deficit	(276.6)		(371.9)

Total liabilities and shareholder's deficit	Total liabilities and shareholder's deficit	$	2,257.4	$	1,935.8	Total liabilities and shareholder's deficit	$	1,907.5	$	1,935.8

See Notes to Condensed Consolidated Financial Statements.

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DPL INC.	DPL INC.									DPL INC.
Condensed Consolidated Statements of Cash Flows	Condensed Consolidated Statements of Cash Flows									Condensed Consolidated Statements of Cash Flows
(Unaudited)	(Unaudited)									(Unaudited)
		Six months ended June 30,							Nine months ended September 30,
$ in millions	$ in millions	2020		2019		$ in millions	2020		2019
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income		$	5.4	$	26.0
Adjustments to reconcile net income to net cash from operating activities:
Net income / (loss)						Net income / (loss)	$	(2.8)	$	61.4
Adjustments to reconcile net income / (loss) to net cash from operating activities:						Adjustments to reconcile net income / (loss) to net cash from operating activities:
Depreciation and amortization	Depreciation and amortization	36.4		13.9		Depreciation and amortization	55.1		34.2

Amortization of deferred financing costs and debt discounts						Amortization of deferred financing costs and debt discounts	4.4		4.3
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—		44.9		Loss on early extinguishment of debt	31.7		44.9
Deferred income taxes	Deferred income taxes	33.5		8.6		Deferred income taxes	32.3		(8.7)

Gain on disposal and sale of business, net	Gain on disposal and sale of business, net	(4.5)		(0.1)		Gain on disposal and sale of business, net	(4.5)		(0.1)
Loss on asset disposal, net		0.2		0.9

Changes in certain assets and liabilities:	Changes in certain assets and liabilities:					Changes in certain assets and liabilities:
Accounts receivable, net	Accounts receivable, net	19.1		24.7		Accounts receivable, net	12.7		18.0
Inventories	Inventories	4.7		(4.0)		Inventories	5.5		(3.2)

Taxes applicable to subsequent years	Taxes applicable to subsequent years	36.8		37.5		Taxes applicable to subsequent years	57.8		56.2
Deferred regulatory costs, net	Deferred regulatory costs, net	(19.5)		(6.7)		Deferred regulatory costs, net	(17.1)		2.9
Accounts payable	Accounts payable	(10.1)		7.8		Accounts payable	(24.6)		(5.1)
Accrued taxes payable / receivable	Accrued taxes payable / receivable	(13.0)		(41.7)		Accrued taxes payable / receivable	(63.0)		(71.0)
Accrued interest	Accrued interest	0.3		(2.4)		Accrued interest	7.4		12.9

Accrued pension and other post-retirement benefits	Accrued pension and other post-retirement benefits	(9.3)		(8.7)		Accrued pension and other post-retirement benefits	(10.8)		(9.3)
Other	Other	2.8		(1.7)		Other	(2.4)		(1.1)
Net cash provided by operating activities	Net cash provided by operating activities	82.8		99.0		Net cash provided by operating activities	81.7		136.3
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(84.0)		(63.4)		Capital expenditures	(128.7)		(122.4)

Payments on disposal and sale of business	Payments on disposal and sale of business	(0.6)		—		Payments on disposal and sale of business	(1.0)		0
Proceeds from sale of assets ^(a)	Proceeds from sale of assets ^(a)	5.1		—		Proceeds from sale of assets (a)	5.1		0

Other investing activities, net	Other investing activities, net	(0.8)		(3.2)		Other investing activities, net	(0.8)		(3.5)
Net cash used in investing activities	Net cash used in investing activities	(80.3)		(66.6)		Net cash used in investing activities	(125.4)		(125.9)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Payments of deferred financing costs	Payments of deferred financing costs	(6.1)		(8.1)		Payments of deferred financing costs	(7.8)		(9.2)
Issuance of long-term debt, net of discount	Issuance of long-term debt, net of discount	415.0		821.7		Issuance of long-term debt, net of discount	555.0		821.7
Retirement of long-term debt, including early payment premium	Retirement of long-term debt, including early payment premium	—		(978.0)		Retirement of long-term debt, including early payment premium	(550.8)		(978.0)
Borrowings from revolving credit facilities	Borrowings from revolving credit facilities	75.0		73.0		Borrowings from revolving credit facilities	165.0		133.0
Repayment of borrowings from revolving credit facilities	Repayment of borrowings from revolving credit facilities	(219.0)		(10.0)		Repayment of borrowings from revolving credit facilities	(219.0)		(35.0)
Equity contribution from parent	Equity contribution from parent	98.0		—		Equity contribution from parent	98.0		0
Other financing activities, net	Other financing activities, net	(0.1)		(0.1)		Other financing activities, net	(0.1)		(0.2)
Net cash provided by / (used in) financing activities	Net cash provided by / (used in) financing activities	362.8		(101.5)		Net cash provided by / (used in) financing activities	40.3		(67.7)

Cash, cash equivalents, and restricted cash:	Cash, cash equivalents, and restricted cash:					Cash, cash equivalents, and restricted cash:
Net change	Net change	365.3		(69.1)		Net change	(3.4)		(57.3)
Balance at beginning of period	Balance at beginning of period	47.0		111.7		Balance at beginning of period	47.0		111.7
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	412.3	$	42.6	Cash, cash equivalents, and restricted cash at end of period	$	43.6	$	54.4
Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Interest paid, net of amounts capitalized	Interest paid, net of amounts capitalized	$	41.1	$	45.3	Interest paid, net of amounts capitalized	$	49.7	$	47.1
Income taxes paid / (refunded), net	Income taxes paid / (refunded), net	$	(52.0)	$	0.9	Income taxes paid / (refunded), net	$	(51.9)	$	1.3
Non-cash financing and investing activities:	Non-cash financing and investing activities:					Non-cash financing and investing activities:
Accruals for capital expenditures	Accruals for capital expenditures	$	10.1	$	20.5	Accruals for capital expenditures	$	16.5	$	2.3
Accruals from sale of business	Accruals from sale of business	$	3.4	$	—	Accruals from sale of business	$	3.0	$	0

Non-cash capital contribution (Note 9)						Non-cash capital contribution (Note 9)	$	0	$	2.7

(a) Proceeds from sale of assets include $5.1 million of proceeds received from AES during the ~~six~~nine months ended ~~June~~September 30, 2020 related to the 2019 sale of software previously recorded on AES Ohio Generation. There was no gain or loss recorded on the transaction.

See Notes to Condensed Consolidated Financial Statements.

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DPL INC.

Condensed Consolidated Statements of Shareholder's Deficit

(Unaudited)


		Common Stock ^(a)													Common Stock (a)
$ in millions	$ in millions	Outstanding Shares	Amount		Other Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total		$ in millions	Outstanding Shares	Amount		Other Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
Balance, January 1, 2020	Balance, January 1, 2020	1	$	—	$	2,370.7	$	(3.6)	$	(2,739.0)	$	(371.9)	Balance, January 1, 2020	1	$	0	$	2,370.7	$	(3.6)	$	(2,739.0)	$	(371.9)
Net comprehensive income	Net comprehensive income						(0.3)		1.9		1.6		Net comprehensive income						(0.3)		1.9		1.6

Balance, March 31, 2020	Balance, March 31, 2020	1	—		2,370.7		(3.9)		(2,737.1)		(370.3)		Balance, March 31, 2020	1	0		2,370.7		(3.9)		(2,737.1)		(370.3)
Net comprehensive income	Net comprehensive income						0.2		3.5		3.7		Net comprehensive income						0.2		3.5		3.7
Capital contributions from parent	Capital contributions from parent				98.0						98.0		Capital contributions from parent				98.0						98.0

Balance, June 30, 2020	Balance, June 30, 2020	1	$	—	$	2,468.7	$	(3.7)	$	(2,733.6)	$	(268.6)	Balance, June 30, 2020	1	0		2,468.7		(3.7)		(2,733.6)		(268.6)
Net comprehensive loss													Net comprehensive loss						0.1		(8.2)		(8.1)

Other													Other				0.1						0.1
Balance, September 30, 2020													Balance, September 30, 2020	1	$	0	$	2,468.8	$	(3.6)	$	(2,741.8)	$	(276.6)

(a) 1,500 shares authorized.


		Common Stock ^(a)													Common Stock (a)
$ in millions	$ in millions	Outstanding Shares	Amount		Other Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total		$ in millions	Outstanding Shares	Amount		Other Paid-in Capital		Accumulated Other Comprehensive Income / (Loss)		Accumulated Deficit		Total
Balance, January 1, 2019	Balance, January 1, 2019	1	$	—	$	2,370.5	$	2.2	$	(2,844.4)	$	(471.7)	Balance, January 1, 2019	1	$	0	$	2,370.5	$	2.2	$	(2,844.4)	$	(471.7)
Net comprehensive income	Net comprehensive income						(0.4)		42.1		41.7		Net comprehensive income						(0.4)		42.1		41.7
Capital contributions ^(b)	Capital contributions ^(b)				1.5						1.5		Capital contributions (b)				1.5						1.5
Other	Other				0.1						0.1		Other				0.1						0.1
Balance, March 31, 2019	Balance, March 31, 2019	1	—		2,372.1		1.8		(2,802.3)		(428.4)		Balance, March 31, 2019	1	0		2,372.1		1.8		(2,802.3)		(428.4)
Net comprehensive loss	Net comprehensive loss						(0.8)		(16.1)		(16.9)		Net comprehensive loss						(0.8)		(16.1)		(16.9)
Capital contributions ^(b)	Capital contributions ^(b)				(1.5)						(1.5)		Capital contributions (b)				(1.5)						(1.5)

Balance, June 30, 2019	Balance, June 30, 2019	1	$	—	$	2,370.6	$	1.0	$	(2,818.4)	$	(446.8)	Balance, June 30, 2019	1	0		2,370.6		1.0		(2,818.4)		(446.8)

Net comprehensive income													Net comprehensive income						(1.0)		35.4		34.4
Capital contributions (b)													Capital contributions (b)				2.7						2.7
Other													Other				0.1						0.1
Balance, September 30, 2019													Balance, September 30, 2019	1	$	0	$	2,373.4	$	0	$	(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 restricted tax sharing payments to AES during the term of the ESP. See Note 9 – Shareholder's Deficit.

See Notes to Condensed Consolidated Financial Statements.

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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 ~~528,000~~530,000 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. 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 largely offset in 2019 by DP&L’s Decoupling Rider, which was in place from January 1, 2019 until December 18, 2019. See Note 3 – Regulatory Matters for more information. DP&L sells its proportional share of energy and capacity from its investment in OVEC into the wholesale market.

DPL’s other primary subsidiary is MVIC. MVIC is our captive insurance company that provides insurance services to DP&L and our other subsidiaries. In prior periods, AES Ohio Generation was also a primary subsidiary. In 2020, AES Ohio Generation's only operating asset was an undivided interest in Conesville, which was sold in June 2020. See Note 13 – Discontinued Operations for more information. 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 ~~644~~631 people as of ~~June~~September 30, 2020, of which ~~643~~630 were employed by DP&L. Approximately ~~58%~~59% of all DPL employees are under a collective bargaining agreement, which ~~expires~~expired October 31, 2020. On October 29, 2020, DP&L reached a tentative agreement with the union. The ratification vote is set for November 9, 2020. The parties currently plan to work under the terms of the expired agreement until a new agreement is ratified.

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.

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, 2019.

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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 ~~June~~September 30, 2020; our results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, our cash flows for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 and the changes in our equity for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019. Unless otherwise noted, all adjustments are normal and recurring in nature. Due to various factors, interim results for the three and ~~six~~nine months ended ~~June~~September 30, 2020 may not be indicative of our results that will be realized for the full year ending December 31, 2020.

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 credit losses 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 Sheets that reconcile to the total of such amounts as shown on the Condensed Consolidated Statements of Cash Flows:


$ in millions	$ in millions	June 30, 2020		December 31, 2019		$ in millions	September 30, 2020		December 31, 2019
Cash and cash equivalents	Cash and cash equivalents	$	412.2	$	36.5	Cash and cash equivalents	$	43.5	$	36.5
Restricted cash	Restricted cash	0.1		10.5		Restricted cash	0.1		10.5
Cash, Cash Equivalents, and Restricted Cash, End of Period	Cash, Cash Equivalents, and Restricted Cash, End of Period	$	412.3	$	47.0	Cash, Cash Equivalents, and Restricted Cash, End of Period	$	43.6	$	47.0

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 ~~June~~September 30, 2020 and 2019 were ~~$10.9~~$13.4 million and ~~$10.4~~$13.0 million, respectively. The amounts of such taxes collected for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 were ~~$23.3~~$36.7 million and ~~$24.3~~$37.3 million, respectively.

New accounting pronouncements adopted in 2020 – 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 Name	Description	Date of Adoption	Effect on the financial statements upon adoption
2016-13, 2018-19, 2019-04, 2019-05, 2019-10, 2019-11, 2020-02, 2020-03 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	See discussion of the ASU below.	January 1, 2020	See impact upon adoption of the standard below.

On January 1, 2020, we adopted ASC 326 Financial Instruments - Credit Losses and its subsequent corresponding updates ("ASC 326"). The new 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 an 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 allowance on the balance sheet with a corresponding adjustment to earnings in the income statement.

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We applied the modified retrospective method of adoption for ASC 326. Under this transition method, we applied the transition provisions starting at the date of adoption. The new current expected credit loss model primarily impacts the calculation of expected credit losses on our trade accounts receivable. The adoption of ASC 326 and application

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of CECL on our trade accounts receivable 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 Name	Description	Date of Adoption	Effect on the financial statements upon adoption
2020-04, Reference Rate Form (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	The standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference to LIBOR or another reference rate expected to be discontinued by reference rate reform. This standard is effective for a limited period of time (March 12, 2020 - December 21, 2022).	Effective for all entities March 12, 2020 - December 31, 2022	We are currently evaluating the impact of adopting the standard on our condensed consolidated financial statements.
~~2019-12, Income Taxes (Topic 740): Simplifying the Accounting For Income Taxes~~	The standard removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. Transition method: various	~~January 1, 2021. Early adoption is permitted.~~	~~We are currently evaluating the impact of adopting the standard on our condensed consolidated financial statements.~~

Note 2 – Supplemental Financial Information

Accounts receivable are as follows at ~~June~~September 30, 2020 and December 31, 2019:


		June 30,		December 31,			September 30,		December 31,
$ in millions	$ in millions	2020		2019		$ in millions	2020		2019
Accounts receivable, net:	Accounts receivable, net:					Accounts receivable, net:
Customer receivables	Customer receivables	$	41.4	$	45.7	Customer receivables	$	52.2	$	45.7
Unbilled revenue	Unbilled revenue	19.9		19.4		Unbilled revenue	15.1		19.4
Amounts due from affiliates	Amounts due from affiliates	0.2		0.3		Amounts due from affiliates	0.2		0.3
Due from PJM transmission enhancement settlement	Due from PJM transmission enhancement settlement	1.8		1.8		Due from PJM transmission enhancement settlement	1.8		1.8
Other	Other	1.5		1.1		Other	2.1		1.1
Allowance for credit losses	Allowance for credit losses	(3.0)		(0.4)		Allowance for credit losses	(3.2)		(0.4)
Total accounts receivable, net	Total accounts receivable, net	$	61.8	$	67.9	Total accounts receivable, net	$	68.2	$	67.9

The following table is a rollforward of our allowance for credit losses related to the accounts receivable balances for the ~~six~~nine months ended ~~June~~September 30, 2020:


$ in millions	$ in millions	Beginning Allowance Balance at January 1, 2020		Current Period Provision		Write-offs Charged Against Allowances		Recoveries Collected		Ending Allowance Balance at June 30, 2020		$ in millions	Beginning Allowance Balance at January 1, 2020		Current Period Provision		Write-offs Charged Against Allowances		Recoveries Collected		Ending Allowance Balance at September 30, 2020
Allowance for credit losses	Allowance for credit losses	$	0.4	$	2.6	$	(2.9)	$	2.9	$	3.0	Allowance for credit losses	$	0.4	$	2.7	$	(3.5)	$	3.6	$	3.2

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 are expected to impact collectability, as applicable, including the economic impacts of the COVID-19 pandemic on our receivable balance as of ~~June~~September 30, 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.~~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 ~~the second quarter of~~ 2020. See Note 14 – Risks and Uncertainties for additional discussion of the COVID-19 pandemic.

Inventories consist of materials and supplies at ~~June~~September 30, 2020 and December 31, 2019.

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Accumulated other comprehensive loss

The amounts reclassified out of Accumulated Other Comprehensive ~~Income / (Loss)~~Loss by component during the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 are as follows:


Details about Accumulated Other Comprehensive Income / (Loss) components		Affected line item in the Condensed Consolidated Statements of Operations	Three months ended						Six months ended
Details about Accumulated Other Comprehensive Loss components											Details about Accumulated Other Comprehensive Loss components			Affected line item in the Condensed Consolidated Statements of Operations		Three months ended				Nine months ended
			June 30,						June 30,											September 30,				September 30,
$ in millions	$ in millions		2020		2019		2020		2019		$ in millions					2020		2019		2020		2019

Gains and losses on cash flow hedges (Note 5):	Gains and losses on cash flow hedges (Note 5):														Gains and losses on cash flow hedges (Note 5):
		Interest expense	$	(0.2)	$	(0.3)	$	(0.6)	$	(0.6)				Interest expense		$	(0.3)	$	(0.3)	$	(0.9)	$	(0.9)
		Income tax expense	—		—		0.1		0.1					Income tax expense / (benefit)		0		(0.1)		0.1		0
		Net of income taxes	(0.2)		(0.3)		(0.5)		(0.5)					Net of income taxes		(0.3)		(0.4)		(0.8)		(0.9)

														Income tax benefit from discontinued operations		0		(0.4)		0		(0.4)

Amortization of defined benefit pension items (Note 8):	Amortization of defined benefit pension items (Note 8):														Amortization of defined benefit pension items (Note 8):
		Other expense	0.3		—		0.6		0.1					Other expense		0.3		0.1		0.9		0.2
		Income tax benefit	(0.1)		—		(0.1)		—					Income tax benefit		0		(0.1)		(0.1)		(0.1)
		Net of income taxes	0.2		—		0.5		0.1					Net of income taxes		0.3		0		0.8		0.1

Total reclassifications for the period, net of income taxes	Total reclassifications for the period, net of income taxes				$	—	$	(0.3)	$	—		$	(0.4)		Total reclassifications for the period, net of income taxes			$	0	$	(0.8)	$	0	$	(1.2)

The changes in the components of Accumulated Other Comprehensive Loss during the ~~six~~nine months ended ~~June~~September 30, 2020 are as follows:


$ in millions	$ in millions	Gains / (losses) on cash flow hedges		Change in unfunded pension and postretirement benefit obligations		Total		$ in millions	Gains / (losses) on cash flow hedges		Change in unfunded pension and postretirement benefit obligations		Total
Balance at January 1, 2020	Balance at January 1, 2020	$	14.5	$	(18.1)	$	(3.6)	Balance at January 1, 2020	$	14.5	$	(18.1)	$	(3.6)

Other comprehensive loss before reclassifications		(0.1)		—		(0.1)
Amounts reclassified from AOCI to earnings		(0.5)		0.5		—

Other comprehensive income / (loss) before reclassifications								Other comprehensive income / (loss) before reclassifications	0		0		0
Amounts reclassified from AOCL to earnings								Amounts reclassified from AOCL to earnings	(0.8)		0.8		0
Net current period other comprehensive income / (loss)	Net current period other comprehensive income / (loss)	(0.6)		0.5		(0.1)		Net current period other comprehensive income / (loss)	(0.8)		0.8		0

Balance at June 30, 2020		$	13.9	$	(17.6)	$	(3.7)
Balance at September 30, 2020								Balance at September 30, 2020	$	13.7	$	(17.3)	$	(3.6)

Note 3 – Regulatory Matters

~~DP&L~~ ESP ~~Orders~~v. MRO 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 ESP 3, and as a result DP&L filed a Notice of Withdrawal of its ESP 3 Application and requested to revert to the ESP rates that were in effect prior to ESP 3. The Notice of Withdrawal was approved by the PUCO on December 18, 2019. The PUCO order required, among other things, DP&L to conduct both an 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, which were filed with the PUCO on April 1, 2020. ~~A comment period was set for July 2020 and an evidentiary hearing regarding this matter is scheduled for October 2020 (if needed) with a final ruling expected in early 2021.~~ DP&L is also subject to an annual retrospective SEET. ~~The ultimate outcome~~

On October 23, 2020, DP&L entered into a Stipulation and Recommendation (settlement) with the staff of the ~~ESP v. MRO~~PUCO and ~~SEET proceedings could have a material adverse effect on~~various customers, and organizations representing customers of DP&L and certain other parties with respect to, among other matters, DP&L’s ~~results~~applications pending at the PUCO for (i) approval of ~~operations,~~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 has been set for January 11, 2021 for consideration of this settlement. The settlement would provide, among other items, for the following:

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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 ~~condition~~integrity; and ~~cash flows.~~

•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 the 2017 ESP, 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, 2020 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 and going forward would reduce impacts of weather, energy efficiency programs and economic changes in customer demand.

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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 ~~is awaiting approval~~was approved by the ~~PUCO.~~PUCO on August 12, 2020. As a result, DP&L has recorded a

$0.8 million regulatory asset as of September 30, 2020. Recovery of these deferrals will be addressed in a future

rate proceeding.

FERC Proceedings

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. On March 3, 2020, DP&L filed an application before the FERC to change its transmission rate from a stated rate to a formula rate, which was accepted by the FERC and made effective as of May 3, 2020, subject to further proceeding and potential refunds. The formula rate includes adjustments to flow back over time the excess deferred income taxes caused by the TCJA. The NOPR, therefore, no longer applies to DP~~&L.~~&L. The rate changes will increase revenues by approximately $4.1 million through the end of 2020 as of the effective date, subject to refund based on final approved rates.

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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 ~~June~~September 30, 2020 and December 31, 2019. Further information about the fair value of our derivative instruments can be found in Note 5 – Derivative Instruments and Hedging Activities.


		June 30, 2020						December 31, 2019							September 30, 2020				December 31, 2019
$ in millions	$ in millions	Cost		Fair Value		Cost		Fair Value		$ in millions	Cost		Fair Value		Cost		Fair Value
Assets	Assets									Assets
Money market funds	Money market funds	$	0.1	$	0.1	$	0.3	$	0.3	Money market funds	$	0.2	$	0.2	$	0.3	$	0.3
Equity securities	Equity securities	2.1		3.7		2.3		4.2		Equity securities	2.1		3.9		2.3		4.2
Debt securities	Debt securities	4.1		4.1		4.0		4.1		Debt securities	4.0		4.1		4.0		4.1
Hedge funds	Hedge funds	—		—		0.1		0.1		Hedge funds	0		0		0.1		0.1

Tangible assets	Tangible assets	—		—		0.1		0.1		Tangible assets	0		0		0.1		0.1
Total Assets	Total Assets	$	6.3	$	7.9	$	6.8	$	8.8	Total Assets	$	6.3	$	8.2	$	6.8	$	8.8

		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities	Liabilities									Liabilities
Long-term debt	Long-term debt	$	1,772.0	$	1,844.5	$	1,363.1	$	1,404.0	Long-term debt	$	1,393.1	$	1,499.4	$	1,363.1	$	1,404.0

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 ~~six~~nine months ended ~~June~~September 30, 2020 or 2019.

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. These assets are primarily

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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 equity investments. We recorded net unrealized gains / (losses) of ~~$0.8~~$0.3 million and ~~$0.2~~$(0.1) million during the three months ended ~~June~~September 30, 2020 and 2019, respectively, and ~~$(0.3)~~$0.0 million and ~~$0.7~~$0.6 million during the during the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively. These amounts are included in "Other income" in our Condensed Consolidated Statements of Operations.

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.

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The fair value of assets and liabilities at ~~June~~September 30, 2020 and December 31, 2019 and the respective category within the fair value hierarchy for DPL is as follows:


$ in millions	$ in millions	Fair value at June 30, 2020 (a)														Fair value at December 31, 2019 (a)														$ in millions	Fair value at September 30, 2020 (a)				Fair value at December 31, 2019 (a)
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	Assets																	Assets
Master Trust assets	Master Trust assets																	Master Trust assets
Money market funds	Money market funds	$	0.1	$	—	$	—	$	0.1	$	0.3	$	—	$	—	$	0.3	Money market funds	$	0.2	$	0	$	0	$	0.2	$	0.3	$	0	$	0	$	0.3
Equity securities	Equity securities	—		3.7		—		3.7		—		4.2		—		4.2		Equity securities	0		3.9		0		3.9		0		4.2		0		4.2
Debt securities	Debt securities	—		4.1		—		4.1		—		4.1		—		4.1		Debt securities	0		4.1		0		4.1		0		4.1		0		4.1
Hedge funds	Hedge funds	—		—		—		—		—		0.1		—		0.1		Hedge funds	0		0		0		0		0		0.1		0		0.1

Tangible assets	Tangible assets	—		—		—		—		—		0.1		—		0.1		Tangible assets	0		0		0		0		0		0.1		0		0.1
Total Master Trust assets	Total Master Trust assets	0.1		7.8		—		7.9		0.3		8.5		—		8.8		Total Master Trust assets	0.2		8.0		0		8.2		0.3		8.5		0		8.8
Derivative assets	Derivative assets																	Derivative assets
Interest rate hedges	Interest rate hedges	—		—		—		—		—		0.1		—		0.1		Interest rate hedges	0		0		0		0		0		0.1		0		0.1
Total Derivative assets	Total Derivative assets	—		—		—		—		—		0.1		—		0.1		Total Derivative assets	0		0		0		0		0		0.1		0		0.1

Total Assets	Total Assets	$	0.1	$	7.8	$	—	$	7.9	$	0.3	$	8.6	$	—	$	8.9	Total Assets	$	0.2	$	8.0	$	0	$	8.2	$	0.3	$	8.6	$	0	$	8.9

Liabilities	Liabilities																	Liabilities
Derivative liabilities
Interest rate hedges		$	—	$	0.1	$	—	$	0.1	$	—	$	—	$	—	$	—

Long-term debt	Long-term debt	—		1,827.1		17.4		1,844.5		—		1,386.5		17.5		1,404.0		Long-term debt	$	0	$	1,482.0	$	17.4	$	1,499.4	$	0	$	1,386.5	$	17.5	$	1,404.0


Total Liabilities	Total Liabilities	$	—	$	1,827.2	$	17.4	$	1,844.6	$	—	$	1,386.5	$	17.5	$	1,404.0	Total Liabilities	$	0	$	1,482.0	$	17.4	$	1,499.4	$	0	$	1,386.5	$	17.5	$	1,404.0

(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, the 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.

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Note 5 – 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 ofFor further information on our derivative ~~instruments are used for risk management purposes~~ and ~~are designated as cash flow hedges if they qualify under FASC 815 for~~hedge accounting ~~purposes.~~policies, See Note 1 – Overview and Summary of Significant Accounting Policies – Financial Derivatives and Note 6 - Derivative Instruments and Hedging Activities of Item 8 – Financial Statements and Supplementary Data in our Form 10-K.

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 are no longer required to calculate effectiveness and thus the entire change in the fair value of a hedging instrument is 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 June 30,~~In August 2020, ~~we have~~the 2 interest rate swaps to hedge the variable interest on ~~our~~the $140.0 million variable interest rate tax-exempt First Mortgage ~~Bonds.~~Bonds expired, as the associated debt reached maturity. The interest rate swaps ~~have~~had a combined notional amount of $140.0 million and ~~settle~~settled monthly based on a one-month LIBOR. The AOCL associated with the swaps ~~will be~~was amortized out of AOCL 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~~AOCL into interest expense.

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The following tables provide information concerning gains or losses recognized in AOCL for the cash flow hedges for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019:

Three months ended
June 30, 2020 June 30, 2019
Interest Interest
$ in millions (net of tax) Rate Hedge Rate Hedge Power
Beginning accumulated derivative gains in AOCL $ 13.9 $ 16.1 $ 0.4
Net gains / (losses) associated with current period hedging transactions 0.2 (0.5) —
Net gains reclassified to earnings
Interest expense (0.2) (0.3) —
Ending accumulated derivative gains in AOCL $ 13.9 $ 15.3 $ 0.4
Six months ended
June 30, 2020 June 30, 2019
Interest Interest
$ in millions (net of tax) Rate Hedge Rate Hedge Power
Beginning accumulated derivative gains in AOCL $ 14.5 $ 16.6 $ 0.4
Net losses associated with current period hedging transactions (0.1) (0.8) —
Net gains reclassified to earnings
Interest expense (0.5) (0.5) —
Ending accumulated derivative gains in AOCL $ 13.9 $ 15.3 $ 0.4
Portion expected to be reclassified to earnings in the next twelve months $ (1.1)
Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months) 2

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	Three months ended
	September 30, 2020		September 30, 2019
	Interest		Interest
$ in millions (net of tax)	Rate Hedge		Rate Hedge		Power
Beginning accumulated derivative gains in AOCL	$	13.9	$	15.3	$	0.4
Net gains / (losses) associated with current period hedging transactions	0.1		(0.2)		0
Net gains reclassified to earnings
Interest expense	(0.3)		(0.4)		0
Income from discontinued operations	0		0		(0.4)
Ending accumulated derivative gains in AOCL	$	13.7	$	14.7	$	0


	Nine months ended
	September 30, 2020		September 30, 2019
	Interest		Interest
$ in millions (net of tax)	Rate Hedge		Rate Hedge		Power
Beginning accumulated derivative gains in AOCL	$	14.5	$	16.6	$	0.4
Net losses associated with current period hedging transactions	0		(1.0)		0
Net gains reclassified to earnings
Interest expense	(0.8)		(0.9)		0
Income from discontinued operations	0		0		(0.4)
Ending accumulated derivative gains in AOCL	$	13.7	$	14.7	$	0

Portion expected to be reclassified to earnings in the next twelve months	$	(0.1)
Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months)	0

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:

~~$ in millions (net of tax)~~

~~Hedging Designation~~

~~Balance sheet classification~~

~~June 30, 2020~~

~~December 31, 2019~~

~~Interest rate swap~~

~~Cash Flow Hedge~~

~~Prepayments and other current assets~~

—

~~0.1~~

~~Interest rate swap~~

~~Cash Flow Hedge~~

~~Accrued and other current liabilities~~

~~0.1~~

—

$ in millions (net of tax)

Hedging Designation

Balance sheet classification

September 30, 2020

December 31, 2019

Interest rate swap

Cash Flow Hedge

Prepayments and other current assets

0.1

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Note 6 – Long-term Debt

The following table summarizes DPL's long-term debt.


		Interest		June 30,		December 31,			Interest		September 30,		December 31,
$ in millions	$ in millions	Rate	Maturity	2020		2019		$ in millions	Rate	Maturity	2020		2019
First Mortgage Bonds								First Mortgage Bonds	3.95%	2049	$	425.0	$	425.0
First Mortgage Bonds	First Mortgage Bonds	3.95%	2049	$	425.0	$	425.0	First Mortgage Bonds	3.20%	2040	140.0		—
Tax-exempt First Mortgage Bonds - rates from 2.40% - 2.93% (a) and 1.15% - 2.47% (b)	Tax-exempt First Mortgage Bonds - rates from 2.40% - 2.93% (a) and 1.15% - 2.47% (b)		2020	140.0		140.0		Tax-exempt First Mortgage Bonds - rates from 2.40% - 2.93% (a) and 1.15% - 2.47% (b)		2020	—		140.0
U.S. Government note	U.S. Government note	4.20%	2061	17.4		17.5		U.S. Government note	4.20%	2061	17.4		17.5
Unamortized deferred financing costs	Unamortized deferred financing costs			(5.5)		(5.4)		Unamortized deferred financing costs			(5.7)		(5.4)
Unamortized debt discounts and premiums, net	Unamortized debt discounts and premiums, net			(2.6)		(2.7)		Unamortized debt discounts and premiums, net			(2.6)		(2.7)
Total long-term debt at DP&L	Total long-term debt at DP&L			574.3		574.4		Total long-term debt at DP&L			574.1		574.4

Senior unsecured bonds	Senior unsecured bonds	7.25%	2021	380.0		380.0		Senior unsecured bonds	7.25%	2021	—		380.0
Senior unsecured bonds	Senior unsecured bonds	4.13%	2025	415.0		—		Senior unsecured bonds	4.125%	2025	415.0		—
Senior unsecured bonds	Senior unsecured bonds	4.35%	2029	400.0		400.0		Senior unsecured bonds	4.35%	2029	400.0		400.0
Note to DPL Capital Trust II (c)	Note to DPL Capital Trust II (c)	8.125%	2031	15.6		15.6		Note to DPL Capital Trust II (c)	8.125%	2031	15.6		15.6
Unamortized deferred financing costs	Unamortized deferred financing costs			(11.9)		(5.9)		Unamortized deferred financing costs			(10.6)		(5.9)
Unamortized debt discounts and premiums, net	Unamortized debt discounts and premiums, net			(1.0)		(1.0)		Unamortized debt discounts and premiums, net			(1.0)		(1.0)
Total long-term debt	Total long-term debt			1,772.0		1,363.1		Total long-term debt			1,393.1		1,363.1
Less: current portion	Less: current portion			(379.2)		(139.8)		Less: current portion			(0.2)		(139.8)
Long-term debt, net of current portion	Long-term debt, net of current portion			$	1,392.8	$	1,223.3	Long-term debt, net of current portion			$	1,392.9	$	1,223.3

(a)Range of interest rates for the ~~six~~nine months ended ~~June~~September 30, 2020.

(b)Range of interest rates for the year ended December 31, 2019.

(c)Note payable to related party.

Lines of credit

At ~~June~~September 30, 2020 and December 31, 2019, DPL had outstanding borrowings on its line of credit of ~~$0.0~~$90.0 million and $104.0 million, respectively. At ~~June~~September 30, 2020 and December 31, 2019, DP&L had outstanding borrowings on its line of credit of $0.0 million and $40.0 million, respectively.

Significant transactions

On July 31, 2020, DP&L issued $140.0 million of taxable First Mortgage Bonds and on August 3, 2020 used the proceeds to purchase at par value the $140.0 million of outstanding tax-exempt Ohio Air Quality Development Authority (OAQDA) Collateralized Pollution Control Revenue Refunding Bonds that had been issued in 2015. The new taxable First Mortgage Bonds carry an interest rate of 3.20% and mature on July 31, 2040. ~~As a result~~The OAQDA Revenue bonds have not been legally cancelled and can be re-issued at the discretion of ~~this refinancing,~~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. Accordingly, at September 30, 2020, the $140.0 million ~~tax-exempt First Mortgage Bonds~~variable rate OAQDA Revenue bonds are ~~presented~~not treated as ~~long-term debt as of June 30, 2020.~~being outstanding in the Condensed Consolidated Balance Sheet.

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 $30.8 million on July 20, 2020.

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

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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.

Long-term debt covenants and restrictions

DPL’s revolving credit agreement has 2 financial covenants. The first financial covenant, a minimum EBITDA, calculated at the end of each fiscal quarter for the four prior fiscal quarters, of $125.0 million is required, stepping up

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to $130.0 million on September 30, 2022 and $150.0 million on December 31, 2022. As of ~~June~~September 30, 2020, this financial covenant was 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 4 prior fiscal quarters by the consolidated interest charges for the same period. The ratio, per the agreement, is to be not less than 1.70 to 1.00, and steps up to 1.75 to 1.00 on September 30, 2022 and 2.00 to 1.00 as of December 31, 2022. As of ~~June~~September 30, 2020, this financial covenant was met with a ratio of ~~2.75~~2.72 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. As a result, as of ~~June~~September 30, 2020, DPL was prohibited from making a distribution to its shareholder or making a loan to any of its affiliates (other than its subsidiaries).

DP&L's unsecured revolving credit facility and Bond Purchase Agreement (financing document entered into in connection with the issuance of DP&L's First Mortgage Bonds, on July 31, 2020) 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 0.48 to 1.00 as of ~~June~~September 30, 2020.

As of ~~June~~September 30, 2020, 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 ~~six~~nine months ended ~~June~~September 30, 2020 and 2019.

Three months ended Six months ended
June 30, June 30,
2020 2019 2020 2019
DPL 50.0% 16.6% 37.2% 12.8%


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

Income tax expense for the six months ended June 30, 2020 and 2019 was calculated using the estimated annual effective income tax rates for 2020 and 2019 of 71.1% and 12.3%, 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 ~~50.0%~~55.2% and ~~37.2%~~71.1% for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. This rate is higher than the combined federal and state statutory rate of 22.3% primarily due to the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of DP&L and the reversal of an uncertain tax position; these benefits were partially offset by an adjustment to ~~our~~the deferred tax balances. For the nine months ended September 30, 2020, DPL’s current period tax benefit was calculated using the limitations prescribed in ASC 740-270-30-28 as DPL's year-to-date pre-tax loss exceeded the amount of the anticipated full-year pre-tax loss.

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~~For~~ income tax expense for the ~~six~~nine months ended ~~June~~September 30, ~~2020,~~ ~~DPL’s~~ ~~current period effective tax rate for all operations~~2019 was ~~different than~~calculated using the estimated annual effective ~~rate when applied to~~ ~~DPL's~~ ~~Income before~~ income tax ~~due to~~rates for 2019 of (10.1)%. Management estimates the ~~impact~~annual effective tax rate based on its forecast of ~~discrete items mentioned above as well as the~~annual pre-tax ~~income recorded on the sale of Conesville.~~income.

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

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

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

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 ~~six-month~~nine-month periods ended ~~June~~September 30, 2020 and 2019.

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 ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 was:


		Three months ended						Six months ended							Three months ended				Nine months ended
		June 30,						June 30,							September 30,				September 30,
$ in millions	$ in millions	2020		2019		2020		2019		$ in millions	2020		2019		2020		2019
Service cost	Service cost	$	1.0	$	0.9	$	1.9	$	1.8	Service cost	$	0.9	$	0.9	$	2.8	$	2.7
Interest cost	Interest cost	2.9		3.8		5.9		7.5		Interest cost	2.9		3.7		8.8		11.2
Expected return on plan assets	Expected return on plan assets	(4.7)		(5.0)		(9.4)		(10.0)		Expected return on plan assets	(4.6)		(5.0)		(14.0)		(15.0)
Amortization of unrecognized:	Amortization of unrecognized:									Amortization of unrecognized:
Prior service cost	Prior service cost	0.2		0.3		0.5		0.6		Prior service cost	0.3		0.3		0.8		0.9
Actuarial loss	Actuarial loss	1.6		1.0		3.1		2.1		Actuarial loss	1.5		1.1		4.6		3.2
Net periodic benefit cost	Net periodic benefit cost	$	1.0	$	1.0	$	2.0	$	2.0	Net periodic benefit cost	$	1.0	$	1.0	$	3.0	$	3.0

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 ~~$9.6~~$9.1 million at ~~June~~September 30, 2020 and $9.6 million at December 31, 2019 were not material to the financial statements in the periods covered by this report.

Note 9 – Shareholder's Deficit

Capital Contributions from AES

In DP&L's six-year 2017 ESP, 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 in Item 8. — Financial Statements and Supplementary Data of our Form 10-K for additional information on changes to DP&L's ESP and the removal of the DMR.

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For the ~~six~~nine months ended ~~June~~September 30, 2019, AES made a capital contribution of $2.7 million by converting the amount owed to it by DPL ~~had a~~related to tax-sharing payments for current tax ~~benefit. Consequently, there was no conversion of current tax liabilities to AES capital contributions for the six months ended June 30, 2019.~~liabilities.

During the ~~six~~nine months ended ~~June~~September 30, 2020, DPL received $150.0 million in a cash contribution from AES, which DPL then used to make a $150.0 million capital contribution to DP&L. The contribution at DPL represented an equity capital contribution of $98.0 million and a payment of $52.0 million against its tax receivable. The proceeds from the capital contribution at DP&L will primarily be used for funding needs to support DP&L's capital expenditure program, mainly new investments in and upgrades to DP&L’s transmission and distribution system.

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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 ~~June~~September 30, 2020, DPL had ~~$11.9~~$1.9 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 ~~June~~September 30, 2020 and December 31, 2019, 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 ~~June~~September 30, 2020, DP&L could be responsible for the repayment of 4.9%, or ~~$64.0~~$63.4 million, of ~~$1,306.0~~$1,294.3 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 had filed for bankruptcy protection and the bankruptcy court had approved that member's rejection of the OVEC arrangement and its related obligations. Subsequent to that decision, another entity has assumed that member's ownership interest and all related liabilities.

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 ~~June~~September 30, 2020, cannot be reasonably determined.

Environmental Matters

DPL’s and DP&L’s current and previously-owned 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;

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•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.

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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 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 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 528,000~~approximately 530,000 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 DP&L’s Hutchings Coal generating facility, which was closed in 2013. This facility did not transfer to AES Ohio Generation as part of DP&L's Generation Separation on October 1, 2017. Thus, it is grouped within the Utility segment for segment reporting purposes. In addition, regulatory deferrals and collections, which include collections and amortization of fuel deferrals from 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. 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.

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The following tables present financial information for DPL’s Utility reportable business segment:


$ in millions	$ in millions	Utility		Other		Adjustments and Eliminations		DPL Consolidated		$ in millions	Utility		Other		Adjustments and Eliminations		DPL Consolidated
Three months ended June 30, 2020
Three months ended September 30, 2020										Three months ended September 30, 2020
Revenues from external customers										Revenues from external customers	$	176.8	$	2.0	$	0	$	178.8
Intersegment revenues										Intersegment revenues	0.2		1.0		(1.2)		0
Total revenues										Total revenues	$	177.0	$	3.0	$	(1.2)	$	178.8

Depreciation and amortization										Depreciation and amortization	$	18.2	$	0.4	$	0	$	18.6

Interest expense										Interest expense	$	5.9	$	11.2	$	0	$	17.1
Loss on early extinguishment of debt										Loss on early extinguishment of debt	$	0	$	31.7	$	0	$	31.7
Income / (loss) from continuing operations before income tax										Income / (loss) from continuing operations before income tax	$	21.3	$	(41.0)	$	0	$	(19.7)

Capital expenditures										Capital expenditures	$	44.6	$	0.1	$	0	$	44.7

$ in millions										$ in millions	Utility		Other		Adjustments and Eliminations		DPL Consolidated
Three Months Ended September 30, 2019										Three Months Ended September 30, 2019
Revenues from external customers	Revenues from external customers	$	152.8	$	2.3	$	—	$	155.1	Revenues from external customers	$	190.9	$	2.0	$	0	$	192.9
Intersegment revenues	Intersegment revenues	0.3		0.9		(1.2)		—		Intersegment revenues	0.2		0.8		(1.0)		0
Total revenues	Total revenues	$	153.1	$	3.2	$	(1.2)	$	155.1	Total revenues	$	191.1	$	2.8	$	(1.0)	$	192.9

Depreciation and amortization	Depreciation and amortization	$	18.2	$	0.3	$	—	$	18.5	Depreciation and amortization	$	17.4	$	0.3	$	0	$	17.7

Interest expense	Interest expense	$	6.4	$	13.0			$	19.4	Interest expense	$	6.1	$	12.2	$	0	$	18.3

Income / (loss) from continuing operations before income tax	Income / (loss) from continuing operations before income tax	$	15.5	$	(11.8)	$	—	$	3.7	Income / (loss) from continuing operations before income tax	$	37.7	$	(10.6)	$	0	$	27.1

Capital expenditures	Capital expenditures	$	36.8	$	2.6	$	—	$	39.4	Capital expenditures	$	58.9	$	0.1	$	0	$	59.0

$ in millions	$ in millions	Utility		Other ^(a)		Adjustments and Eliminations		DPL Consolidated		$ in millions	Utility		Other		Adjustments and Eliminations		DPL Consolidated
Three Months Ended June 30, 2019
Nine months ended September 30, 2020										Nine months ended September 30, 2020
Revenues from external customers	Revenues from external customers	$	177.4	$	2.2	$	—	$	179.6	Revenues from external customers	$	498.4	$	6.7	$	0	$	505.1
Intersegment revenues	Intersegment revenues	0.3		0.8		(1.1)		—		Intersegment revenues	0.7		2.7		(3.4)		0
Total revenues	Total revenues	$	177.7	$	3.0	$	(1.1)	$	179.6	Total revenues	$	499.1	$	9.4	$	(3.4)	$	505.1

Depreciation and amortization	Depreciation and amortization	$	17.5	$	0.4	$	—	$	17.9	Depreciation and amortization	$	53.7	$	1.1	$	0	$	54.8

Interest expense	Interest expense	$	6.7	$	15.0	$	—	$	21.7	Interest expense	$	18.5	$	36.9	$	0	$	55.4
Loss on early extinguishment of debt	Loss on early extinguishment of debt	$	—	$	44.9	$	—	$	44.9	Loss on early extinguishment of debt	$	0	$	31.7	$	0	$	31.7
Income / (loss) from continuing operations before income tax	Income / (loss) from continuing operations before income tax	$	36.0	$	(58.1)	$	—	$	(22.1)	Income / (loss) from continuing operations before income tax	$	49.7	$	(63.3)	$	0	$	(13.6)

Capital expenditures	Capital expenditures	$	28.5	$	0.6	$	—	$	29.1	Capital expenditures	$	125.1	$	3.6	$	0	$	128.7

$ in millions	$ in millions	Utility		Other		Adjustments and Eliminations		DPL Consolidated		$ in millions	Utility		Other		Adjustments and Eliminations		DPL Consolidated
Six months ended June 30, 2020
Revenues from external customers		$	321.6	$	4.7	$	—	$	326.3
Intersegment revenues		0.5		1.7		(2.2)		—
Total revenues		$	322.1	$	6.4	$	(2.2)	$	326.3

Depreciation and amortization		$	35.5	$	0.7	$	—	$	36.2

Interest expense		$	12.6	$	25.7			$	38.3

Income / (loss) from continuing operations before income tax		$	28.4	$	(22.3)	$	—	$	6.1

Capital expenditures		$	80.5	$	3.5	$	—	$	84.0

$ in millions		Utility		Other		Adjustments and Eliminations		DPL Consolidated
Six months ended June 30, 2019
Nine months ended September 30, 2019										Nine months ended September 30, 2019
Revenues from external customers	Revenues from external customers	$	378.5	$	5.1	$	—	$	383.6	Revenues from external customers	$	569.4	$	7.1	$	0	$	576.5
Intersegment revenues	Intersegment revenues	0.6		1.6		(2.2)		—		Intersegment revenues	0.8		2.4		(3.2)		0
Total revenues	Total revenues	$	379.1	$	6.7	$	(2.2)	$	383.6	Total revenues	$	570.2	$	9.5	$	(3.2)	$	576.5

Depreciation and amortization	Depreciation and amortization	$	35.5	$	0.8	$	—	$	36.3	Depreciation and amortization	$	52.9	$	1.1	$	0	$	54.0

Interest expense	Interest expense	$	13.8	$	31.6	$	—	$	45.4	Interest expense	$	19.9	$	43.8	$	0	$	63.7
Loss on early extinguishment of debt	Loss on early extinguishment of debt	$	—	$	44.9	$	—	$	44.9	Loss on early extinguishment of debt	$	0	$	44.9	$	0	$	44.9
Income / (loss) from continuing operations before income tax	Income / (loss) from continuing operations before income tax	$	71.1	$	(72.5)	$	—	$	(1.4)	Income / (loss) from continuing operations before income tax	$	108.8	$	(83.1)	$	0	$	25.7

Capital expenditures	Capital expenditures	$	62.2	$	1.2	$	—	$	63.4	Capital expenditures	$	121.1	$	1.3	$	0	$	122.4

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Total Assets	Total Assets	June 30, 2020		December 31, 2019		Total Assets	September 30, 2020		December 31, 2019
Utility	Utility	$	1,933.1	$	1,883.2	Utility	$	1,890.5	$	1,883.2
All Other ^(a)	All Other ^(a)	324.3		52.6		All Other (a)	17.0		52.6
DPL Consolidated	DPL Consolidated	$	2,257.4	$	1,935.8	DPL Consolidated	$	1,907.5	$	1,935.8

(a) "All Other" includes Total assets related to the assets of discontinued operations and held-for-sale businesses and Eliminations for all periods presented. "All Other" Total assets at June 30, 2020 is primarily cash on hand from debt issuances.

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 ~~$148.3~~$177.0 million and ~~$168.6~~$188.9 million for the three months ended ~~June~~September 30, 2020 and 2019, respectively, and ~~$315.3~~$492.3 million and ~~$371.9~~$560.8 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively.

The following table presents our revenue from contracts with customers and other revenue by segment for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019:


$ in millions	$ in millions	Utility		Other		Adjustments and Eliminations		Total		$ in millions	Utility		Other		Adjustments and Eliminations		Total
		Three Months Ended June 30, 2020															Three Months Ended September 30, 2020
Retail revenue	Retail revenue									Retail revenue
Retail revenue from contracts with customers	Retail revenue from contracts with customers									Retail revenue from contracts with customers
Residential revenue	Residential revenue	$	83.7	$	—	$	—	$	83.7	Residential revenue	$	99.3	$	0	$	0	$	99.3
Commercial revenue	Commercial revenue	26.5		—		—		26.5		Commercial revenue	32.2		0		0		32.2
Industrial revenue	Industrial revenue	11.9		—		—		11.9		Industrial revenue	14.5		0		0		14.5
Governmental revenue	Governmental revenue	8.6		—		—		8.6		Governmental revenue	9.9		0		0		9.9
Other ^(a)	Other ^(a)	2.6		—		—		2.6		Other (a)	3.7		0		0		3.7
Total retail revenue from contracts with customers	Total retail revenue from contracts with customers	133.3		—		—		133.3		Total retail revenue from contracts with customers	159.6		0		0		159.6
Other retail revenue ^(b)	Other retail revenue ^(b)	5.4		—		—		5.4		Other retail revenue (b)	0.1		0		0		0.1
Wholesale revenue	Wholesale revenue									Wholesale revenue
Wholesale revenue from contracts with customers	Wholesale revenue from contracts with customers	1.8		—		(0.3)		1.5		Wholesale revenue from contracts with customers	3.2		0		(0.2)		3.0
RTO ancillary revenue	RTO ancillary revenue	10.1		0.1		—		10.2		RTO ancillary revenue	11.5		(0.1)		0		11.4
Capacity revenue	Capacity revenue	1.1		—		—		1.1		Capacity revenue	0.9		0		0		0.9
Miscellaneous revenue	Miscellaneous revenue									Miscellaneous revenue
Miscellaneous revenue from contracts with customers ^(c)	Miscellaneous revenue from contracts with customers ^(c)	—		2.2		—		2.2		Miscellaneous revenue from contracts with customers (c)	0		2.1		0		2.1
Other miscellaneous revenue	Other miscellaneous revenue	1.4		0.9		(0.9)		1.4		Other miscellaneous revenue	1.7		1.0		(1.0)		1.7
Total revenues	Total revenues	$	153.1	$	3.2	$	(1.2)	$	155.1	Total revenues	$	177.0	$	3.0	$	(1.2)	$	178.8

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$ in millions	$ in millions	Utility		Other		Adjustments and Eliminations		Total		$ in millions	Utility		Other		Adjustments and Eliminations		Total

		Three Months Ended June 30, 2019
Retail revenue
Retail revenue from contracts with customers
Residential revenue		$	87.4	$	—	$	—	$	87.4
Commercial revenue		33.8		—		—		33.8
Industrial revenue		15.4		—		—		15.4
Governmental revenue		10.9		—		0.3		11.2
Other ^(a)		3.1		—		—		3.1
Total retail revenue from contracts with customers		150.6		—		0.3		150.9
Other retail revenue ^(b)		10.4		—		—		10.4
Wholesale revenue
Wholesale revenue from contracts with customers		3.4		—		(0.6)		2.8
RTO ancillary revenue		10.9		—		—		10.9
Capacity revenue		1.8		—		—		1.8
Miscellaneous revenue
Miscellaneous revenue from contracts with customers ^(c)		—		2.2		—		2.2
Other miscellaneous revenue		0.6		0.8		(0.8)		0.6
Total revenues		$	177.7	$	3.0	$	(1.1)	$	179.6

		Six months ended June 30, 2020															Three Months Ended September 30, 2019
Retail revenue	Retail revenue									Retail revenue
Retail revenue from contracts with customers	Retail revenue from contracts with customers									Retail revenue from contracts with customers
Residential revenue	Residential revenue	$	180.6	$	—	$	—	$	180.6	Residential revenue	$	107.5	$	0	$	0	$	107.5
Commercial revenue	Commercial revenue	55.4		—		—		55.4		Commercial revenue	34.8		0		0		34.8
Industrial revenue	Industrial revenue	23.7		—		—		23.7		Industrial revenue	13.7		0		0		13.7
Governmental revenue	Governmental revenue	17.8		—		—		17.8		Governmental revenue	11.4		0		0		11.4
Other ^(a)	Other ^(a)	6.0		—		—		6.0		Other (a)	3.1		0		0		3.1
Total retail revenue from contracts with customers	Total retail revenue from contracts with customers	283.5		—		—		283.5		Total retail revenue from contracts with customers	170.5		0		0		170.5
Other retail revenue ^(b)	Other retail revenue ^(b)	8.7		—		—		8.7		Other retail revenue (b)	3.8		0		0		3.8
Wholesale revenue	Wholesale revenue									Wholesale revenue
Wholesale revenue from contracts with customers	Wholesale revenue from contracts with customers	4.5		—		(0.5)		4.0		Wholesale revenue from contracts with customers	4.4		0		(0.2)		4.2
RTO ancillary revenue	RTO ancillary revenue	20.8		0.1		—		20.9		RTO ancillary revenue	11.0		0.1		0		11.1
Capacity revenue	Capacity revenue	2.3		—		—		2.3		Capacity revenue	1.1		0		0		1.1
Miscellaneous revenue	Miscellaneous revenue									Miscellaneous revenue
Miscellaneous revenue from contracts with customers ^(c)	Miscellaneous revenue from contracts with customers ^(c)	—		4.6		—		4.6		Miscellaneous revenue from contracts with customers (c)	0		2.0		0		2.0
Other miscellaneous revenue	Other miscellaneous revenue	2.3		1.7		(1.7)		2.3		Other miscellaneous revenue	0.3		0.7		(0.8)		0.2
Total revenues	Total revenues	$	322.1	$	6.4	$	(2.2)	$	326.3	Total revenues	$	191.1	$	2.8	$	(1.0)	$	192.9

		Six months ended June 30, 2019

											Nine months ended September 30, 2020
Retail revenue	Retail revenue									Retail revenue
Retail revenue from contracts with customers	Retail revenue from contracts with customers									Retail revenue from contracts with customers
Residential revenue	Residential revenue	$	206.4	$	—	$	—	$	206.4	Residential revenue	$	279.9	$	0	$	0	$	279.9
Commercial revenue	Commercial revenue	68.9		—		—		68.9		Commercial revenue	87.6		0		0		87.6
Industrial revenue	Industrial revenue	29.8		—		—		29.8		Industrial revenue	38.2		0		0		38.2
Governmental revenue	Governmental revenue	21.9		—		—		21.9		Governmental revenue	27.7		0		0		27.7
Other ^(a)	Other ^(a)	6.3		—		—		6.3		Other (a)	9.7		0		0		9.7
Total retail revenue from contracts with customers	Total retail revenue from contracts with customers	333.3		—		—		333.3		Total retail revenue from contracts with customers	443.1		0		0		443.1
Other retail revenue ^(b)	Other retail revenue ^(b)	11.1		—		—		11.1		Other retail revenue (b)	8.8		0		0		8.8
Wholesale revenue	Wholesale revenue									Wholesale revenue
Wholesale revenue from contracts with customers	Wholesale revenue from contracts with customers	8.4		—		(0.6)		7.8		Wholesale revenue from contracts with customers	7.7		0		(0.7)		7.0
RTO ancillary revenue	RTO ancillary revenue	21.8		—		—		21.8		RTO ancillary revenue	32.3		0		0		32.3
Capacity revenue	Capacity revenue	3.9		—		—		3.9		Capacity revenue	3.2		0		0		3.2
Miscellaneous revenue	Miscellaneous revenue									Miscellaneous revenue
Miscellaneous revenue from contracts with customers ^(c)	Miscellaneous revenue from contracts with customers ^(c)	—		5.1		—		5.1		Miscellaneous revenue from contracts with customers (c)	0		6.7		0		6.7
Other miscellaneous revenue	Other miscellaneous revenue	0.6		1.6		(1.6)		0.6		Other miscellaneous revenue	4.0		2.7		(2.7)		4.0
Total revenues	Total revenues	$	379.1	$	6.7	$	(2.2)	$	383.6	Total revenues	$	499.1	$	9.4	$	(3.4)	$	505.1

											Nine months ended September 30, 2019
Retail revenue										Retail revenue
Retail revenue from contracts with customers										Retail revenue from contracts with customers
Residential revenue										Residential revenue	$	313.9	$	0	$	0	$	313.9
Commercial revenue										Commercial revenue	103.7		0		0		103.7
Industrial revenue										Industrial revenue	43.5		0		0		43.5
Governmental revenue										Governmental revenue	33.3		0		0		33.3
Other (a)										Other (a)	9.4		0		0		9.4
Total retail revenue from contracts with customers										Total retail revenue from contracts with customers	503.8		0		0		503.8
Other retail revenue (b)										Other retail revenue (b)	14.9		0		0		14.9
Wholesale revenue										Wholesale revenue
Wholesale revenue from contracts with customers										Wholesale revenue from contracts with customers	12.8		0		(0.8)		12.0
RTO ancillary revenue										RTO ancillary revenue	32.8		0.1		0		32.9
Capacity revenue										Capacity revenue	5.0		0		0		5.0
Miscellaneous revenue										Miscellaneous revenue
Miscellaneous revenue from contracts with customers (c)										Miscellaneous revenue from contracts with customers (c)	0		7.1		0		7.1
Other miscellaneous revenue										Other miscellaneous revenue	0.9		2.3		(2.4)		0.8
Total revenues										Total revenues	$	570.2	$	9.5	$	(3.2)	$	576.5

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(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 ~~$61.3~~$67.3 million and $65.1 million as of ~~June~~September 30, 2020 and December 31, 2019, respectively. Payment terms for all receivables from contracts with customers are typically within 30 ~~days.~~days, though during the third quarter of 2020 DP&L implemented and offered extended payment plans to customers as a result of the pandemic.

Note 13 – Discontinued Operations

Conesville - In May 2020, AEP, the operator of the formerly co-owned Conesville EGU, retired Conesville Unit 4 as planned. On J~~une~~June 5, 2020, DPL and AES Ohio Generation, together with AEP, completed the transfer of their interests in the retired Unit 4, including the associated environmental liabilities, to an unaffiliated third-party purchaser. As a result, DPL ~~made cash expenditures of $0.6 million and~~ recognized a gain on the transfer of $4.5 million for the ~~three and six~~nine months ended ~~June~~September 30, 2020. For the transaction, DPL will make ~~additional~~ quarterly cash expenditures, totaling ~~$3.4~~$4.0 million, through July ~~2022.~~2022, of which $1.0 million has been paid through September 30, 2020. The transfer of Conesville Unit 4 was the last step in DPL's plan to exit its AES Ohio Generation business 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. On December 20, 2019, DPL and AES Ohio Generation, together with AES Ohio Generation's joint owners in the retired Stuart and Killen generating facilities, completed the transfer of the retired generating facilities, including the associated environmental liabilities, to an unaffiliated third-party purchaser.

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 qualifies to be presented as discontinued operations. Therefore, the results of operations, assets and liabilities of this group of components were reported as such in the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets for all periods presented.

The following table summarizes the major categories of assets and liabilities at the date indicated:


$ in millions	December 31, 2019
Accounts receivable, net	$	18.0


Inventories	3.7
Taxes applicable to subsequent years	0.3
Prepayments and other current assets	0.3



Intangible assets, net of amortization	0.1
Other non-current assets	1.0
Total assets of the disposal group classified as assets of discontinued operations and held-for-sale businesses in the balance sheets	$	23.4

Accounts payable	$	5.6

Accrued taxes	0.3
Accrued and other current liabilities	3.1

Deferred income taxes^(a)	(6.5)
Taxes payable	0.3

Asset retirement obligations	8.3
Other non-current liabilities	6.3
Total liabilities of the disposal group classified as liabilities of discontinued operations and held-for-sale businesses in the balance sheets	$	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.

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The following table summarizes the revenues, operating costs, other expenses and income tax of discontinued operations for the periods indicated:


		Three months ended						Six months ended							Three months ended				Nine months ended
		June 30,						June 30,							September 30,				September 30,
$ in millions	$ in millions	2020		2019		2020		2019		$ in millions	2020		2019		2020		2019
Revenues	Revenues	$	8.8	$	19.1	$	22.4	$	40.5	Revenues	$	0.9	$	16.2	$	23.3	$	56.7

Operating costs and other expenses	Operating costs and other expenses	(10.0)		(16.3)		(24.4)		(9.4)		Operating costs and other expenses	0.5		(17.2)		(23.9)		(26.6)

Income from discontinued operations	Income from discontinued operations	(1.2)		2.8		(2.0)		31.1		Income from discontinued operations	1.4		(1.0)		(0.6)		30.1
Gain from disposal of discontinued operations	Gain from disposal of discontinued operations	4.5		—		4.5		0.1		Gain from disposal of discontinued operations	0		0		4.5		0.1
Income tax expense from discontinued operations	Income tax expense from discontinued operations	0.7		0.4		0.5		6.5		Income tax expense from discontinued operations	0.3		(0.2)		0.8		6.3
Net income from discontinued operations	Net income from discontinued operations	$	2.6	$	2.4	$	2.0	$	24.7	Net income from discontinued operations	$	1.1	$	(0.8)	$	3.1	$	23.9

Cash flows related to discontinued operations are included in our Condensed Consolidated Statements of Cash Flows. Cash flows from operating activities for discontinued operations were ~~$(2.7)~~$1.5 million and ~~$6.8~~$(1.7) million for the three months ended ~~June~~September 30, 2020 and 2019, respectively, and ~~$3.6~~$5.1 million and ~~$11.6~~$9.9 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively. Cash flows from investing activities for discontinued operations were ~~$(0.6)~~$(0.4) million and ~~$4.4~~$4.0 million, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, 2020. There were no material cash flows from investing activities for the three and ~~six~~nine months ended ~~June~~September 30, 2019.

AROs of Discontinued Operations

Prior to the transfer of the retired Stuart and Killen generating facilities, the 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, DPL reduced the ARO liability related to the Stuart and Killen ash ponds and landfills by $22.5 million based on updated internal analyses that reduced estimated closure costs associated with these ash ponds and landfills. As these plants were no longer in service, the reduction to the ARO liability was recorded as a credit to depreciation and amortization expense in the same amount. The credit to depreciation and amortization expense is included in operating and other expenses of discontinued operations for the ~~six~~nine months ended ~~June~~September 30, 2019 in the table above.

Note – 14 Risks and 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 ~~resulted in decreased~~impacted energy demand within our service territory, though ~~these~~the stay-at-home restrictions have now been lifted in our service territory. On March 12, 2020, the PUCO also issued an emergency order prohibiting electric utilities, including us, from discontinuing electric utility service to customers. This prohibition ~~is currently scheduled to end~~ended for DP&L on September 1, ~~2020, pending approval by the PUCO.~~2020. We are taking a variety of measures in response to the spread of COVID-19 to ensure our ability to transmit, distribute and sell 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 ~~reduced revenues and lower margins resulting from decreased energy~~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 three and six months ended June 30, 2020, the COVID-19 pandemic primarily impacted our retail sales demand, as~~

Table of Contents

As the economic impact of the COVID-19 pandemic started to materialize in Ohio in the second half of March ~~2020~~ and ~~more so~~continued in the second ~~quarter~~and third quarters of ~~2020. For commercial and industrial customers,~~2020, the COVID-19 pandemic primarily impacted our retail sales demand as shown by the changes in weather-normalized volumes of kWh ~~sold decreased by 11.0% and 19.9%, respectively, for~~sold:


Customer class	For the three months ended September 30, 2020 compared to the same period in 2019	For the six months ended September 30, 2020 compared to the same period in 2019 (a)	For the nine months ended September 30, 2020 compared to the same period in 2019
Commercial	(4.8)%	(9.4)%	(7.0)%
Industrial	0.9%	(9.3)%	(6.8)%
Residential	11.0%	9.8%	6.0%

(a) This period most closely approximates the ~~three months ended June 30, 2020~~duration of the economic impact on our sales demand as ~~compared to~~a result of the same period in the prior year. For residential customers, weather-normalized volumes of kWh sold increased by 8.5% for the three months ended June 30, 2020 as compared to the same period in the prior year. COVID-19 pandemic.

We also have incurred, and expect 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 impact of these expenses. The magnitude and duration of the COVID-19 pandemic is unknown at this time and may have material and adverse effects on our results of operations, financial condition and cash flows in future periods.

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FINANCIAL STATEMENTS

The Dayton Power and Light Company

~~Table of Contents~~

THE DAYTON POWER AND LIGHT COMPANY
Condensed Statements of Operations
(Unaudited)
Three months ended Six months ended
June 30, June 30,
$ in millions 2020 2019 2020 2019
Revenues $ 153.1 $ 177.7 $ 322.1 $ 379.1
Operating costs and expenses
Net fuel cost 0.3 0.5 0.9 1.4
Net purchased power cost 49.0 54.1 111.4 127.4
Operation and maintenance 42.8 44.8 89.9 93.0
Depreciation and amortization 18.2 17.5 35.5 35.5
Taxes other than income taxes 21.0 18.0 41.8 37.4
Other, net 0.1 0.1 — 0.1
Total operating costs and expenses 131.4 135.0 279.5 294.8
Operating income 21.7 42.7 42.6 84.3
Other income / (expense), net:
Interest expense (6.4) (6.7) (12.6) (13.8)
Other income / (expense) 0.2 — (1.6) 0.6
Total other expense, net (6.2) (6.7) (14.2) (13.2)
Income before income tax 15.5 36.0 28.4 71.1
Income tax expense / (benefit) (2.3) 6.2 (1.1) 12.3
Net income $ 17.8 $ 29.8 $ 29.5 $ 58.8

~~See Notes to Condensed Financial Statements.~~

~~Table of Contents~~

THE DAYTON POWER AND LIGHT COMPANY
Condensed Statements of Comprehensive Income
(Unaudited)
Three months ended Six months ended
June 30, June 30,
$ in millions 2020 2019 2020 2019
Net income $ 17.8 $ 29.8 $ 29.5 $ 58.8
Derivative activity:
Change in derivative fair value, net of income tax benefit of $0.0, $0.1, $0.0 and $0.2 for each respective period 0.2 (0.6) (0.1) (0.8)
Reclassification to earnings, net of income tax benefit of $0.0, $0.0, $0.0 and $0.0 for each respective period (0.1) — (0.2) (0.1)
Total derivative activity 0.1 (0.6) (0.3) (0.9)
Pension and postretirement activity:
Reclassification to earnings, net of income tax benefit of $(0.2), $(1.2), $(0.4) and $(1.4) for each respective period 0.8 (0.3) 1.6 0.4
Total change in unfunded pension and postretirement obligations 0.8 (0.3) 1.6 0.4
Other comprehensive income / (loss) 0.9 (0.9) 1.3 (0.5)
Net comprehensive income $ 18.7 $ 28.9 $ 30.8 $ 58.3

~~See Notes to Condensed Financial Statements.~~

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THE DAYTON POWER AND LIGHT COMPANY
Condensed Balance Sheets
(Unaudited)
$ in millions June 30, 2020 December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents $ 74.1 $ 10.8
Restricted cash 0.1 10.5
Accounts receivable, net of allowance for credit losses of $3.0 and $0.4, respectively (Note 2) 66.0 70.9
Inventories (Note 2) 9.1 10.4
Taxes applicable to subsequent years 40.6 77.4
Regulatory assets, current 21.7 19.7
Taxes receivable 37.8 35.7
Prepayments and other current assets 7.4 10.8
Total current assets 256.8 246.2
Property, plant & equipment:
Property, plant & equipment 2,384.7 2,333.6
Less: Accumulated depreciation and amortization (1,014.6) (1,012.7)
1,370.1 1,320.9
Construction work in process 94.0 104.5
Total net property, plant & equipment 1,464.1 1,425.4
Other non-current assets:
Regulatory assets, non-current 176.9 173.8
Intangible assets, net of amortization 17.2 18.2
Other non-current assets 18.1 19.6
Total other non-current assets 212.2 211.6
Total assets $ 1,933.1 $ 1,883.2
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term and current portion of long-term debt (Note 6) $ 0.2 $ 179.8
Accounts payable 59.1 74.4
Accrued taxes 84.8 79.4
Accrued interest 1.3 1.4
Customer deposits 19.0 20.6
Regulatory liabilities, current 17.3 27.9
Accrued and other current liabilities 14.1 16.3
Total current liabilities 195.8 399.8
Non-current liabilities:
Long-term debt (Note 6) 574.2 434.6
Deferred income taxes 171.6 158.1
Taxes payable 42.8 82.3
Regulatory liabilities, non-current 227.5 243.6
Accrued pension and other post-retirement benefits 70.5 79.9
Other non-current liabilities 10.6 11.5
Total non-current liabilities 1,097.2 1,010.0
Commitments and contingencies (Note 9)
Common shareholder's equity:
Common stock, at par value of $0.01 per share 0.4 0.4
50,000,000 shares authorized, 41,172,173 shares issued and outstanding
Other paid-in capital 752.9 617.0
Accumulated other comprehensive loss (35.6) (36.9)
Accumulated deficit (77.6) (107.1)
Total common shareholder's equity 640.1 473.4
Total liabilities and shareholder's equity $ 1,933.1 $ 1,883.2


THE DAYTON POWER AND LIGHT COMPANY
Condensed Statements of Operations
(Unaudited)
	Three months ended				Nine months ended
	September 30,				September 30,
$ in millions	2020		2019		2020		2019
Revenues	$	177.0	$	191.1	$	499.1	$	570.2

Operating costs and expenses
Net fuel cost	0.4		0.6		1.3		2.0
Net purchased power cost	65.7		65.9		177.1		193.3





Operation and maintenance	47.8		42.2		137.7		135.2
Depreciation and amortization	18.2		17.4		53.7		52.9
Taxes other than income taxes	17.8		20.8		59.6		58.2


Other, net	0.1		(0.1)		0.1		0

Total operating costs and expenses	150.0		146.8		429.5		441.6

Operating income	27.0		44.3		69.6		128.6

Other income / (expense), net:
Interest expense	(5.9)		(6.1)		(18.5)		(19.9)

Other income / (expense)	0.2		(0.5)		(1.4)		0.1
Total other expense, net	(5.7)		(6.6)		(19.9)		(19.8)

Income before income tax	21.3		37.7		49.7		108.8

Income tax expense / (benefit)	3.5		(7.2)		2.4		5.1








Net income	$	17.8	$	44.9	$	47.3	$	103.7

See Notes to Condensed Financial Statements.

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THE DAYTON POWER AND LIGHT COMPANY
Condensed Statements of Cash Flows
(Unaudited)
Six months ended June 30,
$ in millions 2020 2019
Cash flows from operating activities:
Net income $ 29.5 $ 58.8
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 35.5 35.5
Deferred income taxes 1.2 (3.5)
Changes in certain assets and liabilities:
Accounts receivable, net 4.9 18.9
Inventories 1.3 (3.5)
Taxes applicable to subsequent years 36.8 36.2
Deferred regulatory costs, net (19.5) (6.7)
Accounts payable (8.7) 6.0
Accrued taxes payable / receivable (36.1) (33.0)
Accrued interest (0.1) 1.5
Accrued pension and other post-retirement benefits (9.3) (8.6)
Other 3.2 2.4
Net cash provided by operating activities 38.7 104.0
Cash flows from investing activities:
Capital expenditures (80.5) (62.2)
Other investing activities, net (0.7) (3.2)
Net cash used in investing activities (81.2) (65.4)
Cash flows from financing activities:
Payments of deferred financing costs (0.3) (3.8)
Returns of capital paid to parent (14.2) (70.0)
Capital contributions from parent 150.0 —
Borrowings from revolving credit facilities 75.0 —
Repayment of borrowings from revolving credit facilities (115.0) —
Issuance of long-term debt, net of discount — 422.3
Retirement of long-term debt, including early payment premium — (436.1)
Other financing activities, net (0.1) (0.1)
Net cash provided by / (used in) financing activities 95.4 (87.7)
Cash, cash equivalents, and restricted cash:
Net change 52.9 (49.1)
Balance at beginning of period 21.3 66.2
Cash, cash equivalents, and restricted cash at end of period $ 74.2 $ 17.1
Supplemental cash flow information:
Interest paid, net of amounts capitalized $ 10.2 $ 10.3
Income taxes paid, net $ — $ 12.0
Non-cash financing and investing activities:
Accruals for capital expenditures $ 10.0 $ 20.4


THE DAYTON POWER AND LIGHT COMPANY
Condensed Statements of Comprehensive Income
(Unaudited)


















	Three months ended				Nine months ended
	September 30,				September 30,
$ in millions	2020		2019		2020		2019
Net income	$	17.8	$	44.9	$	47.3	$	103.7
Derivative activity:
Change in derivative fair value, net of income tax benefit of $0.0, $0.0, $0.0 and $0.2 for each respective period	0.2		(0.1)		0.1		(0.9)
Reclassification to earnings, net of income tax benefit of $(0.1), $0.0, $(0.1) and $0.0 for each respective period	(0.1)		0		(0.3)		(0.1)

Total derivative activity	0.1		(0.1)		(0.2)		(1.0)

Pension and postretirement activity:
Reclassification to earnings, net of income tax (benefit) / expense of $(0.2), $0.9, $(0.6) and $(0.5) for each respective period	0.8		1.7		2.4		2.1
Total change in unfunded pension and postretirement obligations	0.8		1.7		2.4		2.1

Other comprehensive income	0.9		1.6		2.2		1.1

Net comprehensive income	$	18.7	$	46.5	$	49.5	$	104.8

See Notes to Condensed Financial Statements.

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THE DAYTON POWER AND LIGHT COMPANY
Condensed Balance Sheets
(Unaudited)
$ in millions	September 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	26.1	$	10.8
Restricted cash	0.1		10.5
Accounts receivable, net of allowance for credit losses of $3.2 and $0.4, respectively (Note 2)	69.2		70.9
Inventories (Note 2)	8.2		10.4
Taxes applicable to subsequent years	19.7		77.4
Regulatory assets, current	20.9		19.7
Taxes receivable	32.8		35.7
Prepayments and other current assets	6.7		10.8

Total current assets	183.7		246.2

Property, plant & equipment:
Property, plant & equipment	2,409.5		2,333.6
Less: Accumulated depreciation and amortization	(1,025.2)		(1,012.7)
	1,384.3		1,320.9
Construction work in process	109.4		104.5
Total net property, plant & equipment	1,493.7		1,425.4

Other non-current assets:
Regulatory assets, non-current	177.0		173.8
Intangible assets, net of amortization	16.8		18.2
Other non-current assets	19.3		19.6
Total other non-current assets	213.1		211.6
Total assets	$	1,890.5	$	1,883.2

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term and current portion of long-term debt (Note 6)	$	0.2	$	179.8
Accounts payable	53.7		74.4
Accrued taxes	84.3		79.4
Accrued interest	6.0		1.4
Customer deposits	18.5		20.6
Regulatory liabilities, current	19.8		27.9
Accrued and other current liabilities	28.7		16.3

Total current liabilities	211.2		399.8

Non-current liabilities:
Long-term debt (Note 6)	573.9		434.6
Deferred income taxes	172.1		158.1
Taxes payable	2.8		82.3
Regulatory liabilities, non-current	220.5		243.6
Accrued pension and other post-retirement benefits	69.0		79.9


Other non-current liabilities	10.7		11.5
Total non-current liabilities	1,049.0		1,010.0

Commitments and contingencies (Note 9)

Common shareholder's equity:
Common stock, at par value of $0.01 per share	0.4		0.4
50,000,000 shares authorized, 41,172,173 shares issued and outstanding
Other paid-in capital	724.4		617.0
Accumulated other comprehensive loss	(34.7)		(36.9)
Accumulated deficit	(59.8)		(107.1)
Total common shareholder's equity	630.3		473.4
Total liabilities and shareholder's equity	$	1,890.5	$	1,883.2

See Notes to Condensed Financial Statements.

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THE DAYTON POWER AND LIGHT COMPANY
Condensed Statements of Cash Flows
(Unaudited)
	Nine months ended September 30,
$ in millions	2020		2019
Cash flows from operating activities:
Net income	$	47.3	$	103.7
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	53.7		52.9
Amortization of deferred financing costs and debt discounts	2.9		2.8

Deferred income taxes	(0.1)		(17.2)


Changes in certain assets and liabilities:
Accounts receivable, net	1.7		18.9
Inventories	2.1		(2.1)

Taxes applicable to subsequent years	57.7		54.3
Deferred regulatory costs, net	(17.1)		2.9
Accounts payable	(20.6)		(4.8)
Accrued taxes payable / receivable	(71.6)		(65.6)
Accrued interest	4.6		6.0

Accrued pension and other post-retirement benefits	(10.8)		(9.3)
Other	(0.1)		(3.6)
Net cash provided by operating activities	49.7		138.9
Cash flows from investing activities:
Capital expenditures	(125.1)		(121.1)




Other investing activities, net	(0.7)		(3.5)
Net cash used in investing activities	(125.8)		(124.6)
Cash flows from financing activities:
Payments of deferred financing costs	(1.2)		(4.6)
Returns of capital paid to parent	(27.7)		(90.0)
Capital contributions from parent	150.0		0
Borrowings from revolving credit facilities	75.0		60.0
Repayment of borrowings from revolving credit facilities	(115.0)		0
Issuance of long-term debt, net of discount	140.0		422.3
Retirement of long-term debt, including early payment premium	(140.0)		(436.1)



Other financing activities, net	(0.1)		(0.1)
Net cash provided by / (used in) financing activities	81.0		(48.5)

Cash, cash equivalents, and restricted cash:
Net change	4.9		(34.2)
Balance at beginning of period	21.3		66.2
Cash, cash equivalents, and restricted cash at end of period	$	26.2	$	32.0
Supplemental cash flow information:
Interest paid, net of amounts capitalized	$	10.5	$	10.8
Income taxes paid, net	$	0.1	$	19.0
Non-cash financing and investing activities:
Accruals for capital expenditures	$	16.4	$	2.0

See Notes to Condensed Financial Statements.

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THE DAYTON POWER AND LIGHT COMPANY

Condensed Statements of Shareholder's Equity

(Unaudited)


		Common Stock ^(a)													Common Stock (a)
$ in millions	$ in millions	Outstanding Shares	Amount		Other Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total		$ in millions	Outstanding Shares	Amount		Other Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
Balance, January 1, 2020	Balance, January 1, 2020	41,172,173	$	0.4	$	617.0	$	(36.9)	$	(107.1)	$	473.4	Balance, January 1, 2020	41,172,173	$	0.4	$	617.0	$	(36.9)	$	(107.1)	$	473.4
Net comprehensive income	Net comprehensive income						0.4		11.7		12.1		Net comprehensive income						0.4		11.7		12.1

Balance, March 31, 2020	Balance, March 31, 2020	41,172,173	0.4		617.0		(36.5)		(95.4)		485.5		Balance, March 31, 2020	41,172,173	0.4		617.0		(36.5)		(95.4)		485.5
Net comprehensive income	Net comprehensive income						0.9		17.8		18.7		Net comprehensive income						0.9		17.8		18.7
Return of capital	Return of capital				(14.2)						(14.2)		Return of capital				(14.2)						(14.2)
Capital contribution from parent	Capital contribution from parent				150.0						150.0		Capital contribution from parent				150.0						150.0
Other	Other				0.1						0.1		Other				0.1						0.1
Balance, June 30, 2020	Balance, June 30, 2020	41,172,173	$	0.4	$	752.9	$	(35.6)	$	(77.6)	$	640.1	Balance, June 30, 2020	41,172,173	0.4		752.9		(35.6)		(77.6)		640.1
Net comprehensive income													Net comprehensive income						0.9		17.8		18.7

Return of capital													Return of capital				(28.5)						(28.5)

Balance, September 30, 2020													Balance, September 30, 2020	41,172,173	$	0.4	$	724.4	$	(34.7)	$	(59.8)	$	630.3

(a) $0.01 par value, 50,000,000 shares authorized.


		Common Stock ^(a)													Common Stock (a)
$ in millions	$ in millions	Outstanding Shares	Amount		Other Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total		$ in millions	Outstanding Shares	Amount		Other Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
Balance, January 1, 2019	Balance, January 1, 2019	41,172,173	$	0.4	$	711.8	$	(35.3)	$	(231.6)	$	445.3	Balance, January 1, 2019	41,172,173	$	0.4	$	711.8	$	(35.3)	$	(231.6)	$	445.3
Net comprehensive income	Net comprehensive income						0.4		29.0		29.4		Net comprehensive income						0.4		29.0		29.4

Other	Other								(0.3)		(0.3)		Other								(0.3)		(0.3)
Balance, March 31, 2019	Balance, March 31, 2019	41,172,173	0.4		711.8		(34.9)		(202.9)		474.4		Balance, March 31, 2019	41,172,173	0.4		711.8		(34.9)		(202.9)		474.4
Net comprehensive income	Net comprehensive income						(0.9)		29.8		28.9		Net comprehensive income						(0.9)		29.8		28.9
Return of capital	Return of capital				(70.0)						(70.0)		Return of capital				(70.0)						(70.0)

Balance, June 30, 2019	Balance, June 30, 2019	41,172,173	$	0.4	$	641.8	$	(35.8)	$	(173.1)	$	433.3	Balance, June 30, 2019	41,172,173	0.4		641.8		(35.8)		(173.1)		433.3
Net comprehensive income													Net comprehensive income						1.6		44.9		46.5

Return of capital													Return of capital				(20.0)						(20.0)
Other													Other				0.1				(0.1)		0
Balance, September 30, 2019													Balance, September 30, 2019	41,172,173	$	0.4	$	621.9	$	(34.2)	$	(128.3)	$	459.8

(a)$0.01 par value, 50,000,000 shares authorized.

See Notes to Condensed Financial Statements.

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The Dayton Power and Light Company

Notes to Condensed Financial Statements (Unaudited)

Note 1 – Overview and Summary of Significant Accounting Policies

Description of Business

DP&L 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 ~~528,000~~530,000 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. DP&L has 1 reportable segment, the Utility segment. In addition to DP&L's electric transmission and distribution businesses, the Utility segment includes revenues and costs associated with DP&L's investment in OVEC and the historical results of DP&L’s Hutchings Coal generating facility, which is now closed. Principal industries located in DP&L’s service territory include automotive, food processing, paper, plastic, health care, data management, manufacturing and defense. 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 largely offset in 2019 by DP&L’s Decoupling Rider, which was in place from January 1, 2019 until December 18, 2019. See Note 3 – Regulatory Matters for more information. DP&L sells its proportional share of energy and capacity from its investment in OVEC into the wholesale market. DP&L is a subsidiary of DPL. The terms “we,” “us,” “our” and “ours” are used to refer to DP&L.

DP&L employed ~~643~~630 people as of ~~June~~September 30, 2020. Approximately ~~58%~~59% of DP&L employees are under a collective bargaining agreement, which ~~expires~~expired October 31, 2020. On October 29, 2020, DP&L reached a tentative agreement with the union. The ratification vote is set for November 9, 2020. The parties currently plan to work under the terms of the expired agreement until a new agreement is ratified.

Financial Statement Presentation

DP&L does not have any subsidiaries.

We have evaluated subsequent events through the date this report is issued.

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

In the opinion of our management, the Condensed Financial Statements presented in this report contain all adjustments necessary to fairly state our financial position as of ~~June~~September 30, 2020; our results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, our cash flows for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 and the changes in our equity for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019. Unless otherwise noted, all adjustments are normal and recurring in nature. Due to various factors, interim results for the three and ~~six~~nine months ended ~~June~~September 30, 2020 may not be indicative of our results that will be realized for the full year ending December 31, 2020.

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value of property, plant and equipment; the valuation of derivative instruments; the valuation of insurance and claims liabilities; the valuation of allowances for credit losses and deferred income taxes; regulatory assets and

~~Table of Contents~~

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 Balance Sheets that reconcile to the total of such amounts as shown on the Condensed Statements of Cash Flows:


$ in millions	$ in millions	June 30, 2020		December 31, 2019		$ in millions	September 30, 2020		December 31, 2019
Cash and cash equivalents	Cash and cash equivalents	$	74.1	$	10.8	Cash and cash equivalents	$	26.1	$	10.8
Restricted cash	Restricted cash	0.1		10.5		Restricted cash	0.1		10.5
Cash, Cash Equivalents, and Restricted Cash, End of Period	Cash, Cash Equivalents, and Restricted Cash, End of Period	$	74.2	$	21.3	Cash, Cash Equivalents, and Restricted Cash, End of Period	$	26.2	$	21.3

Accounting for Taxes Collected from Customers and Remitted to Governmental Authorities

New accounting pronouncements adopted in 2020 – The following table provides a brief description of recently adopted accounting pronouncements that had an impact on our 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 financial statements.


ASU Number and Name	Description	Date of Adoption	Effect on the financial statements upon adoption
2016-13, 2018-19, 2019-04, 2019-05, 2019-10, 2019-11, 2020-02, 2020-03 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	See discussion of the ASU below.	January 1, 2020	See impact upon adoption of the standard below.

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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 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 financial statements.


ASU Number and Name	Description	Date of Adoption	Effect on the financial statements upon adoption
2020-04, Reference Rate Form (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	The standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference to LIBOR or another reference rate expected to be discontinued by reference rate reform. This standard is effective for a limited period of time (March 12, 2020 - December 21, 2022).	Effective for all entities March 12, 2020 - December 31, 2022	We are currently evaluating the impact of adopting the standard on our condensed financial statements.

~~Table of Contents~~


~~ASU Number and Name~~	~~Description~~	~~Date of Adoption~~	~~Effect on the financial statements upon adoption~~
~~2019-12, Income Taxes (Topic 740): Simplifying the Accounting For Income Taxes~~	The standard removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. Transition method: various	~~January 1, 2021. Early adoption is permitted.~~	~~We are currently evaluating the impact of adopting the standard on our condensed financial statements.~~

Note 2 – Supplemental Financial Information

Accounts receivable are as follows at ~~June~~September 30, 2020 and December 31, 2019:


		June 30,		December 31,			September 30,		December 31,
$ in millions	$ in millions	2020		2019		$ in millions	2020		2019
Accounts receivable, net:	Accounts receivable, net:					Accounts receivable, net:
Customer receivables	Customer receivables	$	40.0	$	45.0	Customer receivables	$	51.2	$	45.0
Unbilled revenue	Unbilled revenue	19.9		19.4		Unbilled revenue	15.1		19.4
Amounts due from affiliates	Amounts due from affiliates	5.8		3.9		Amounts due from affiliates	2.0		3.9
Due from PJM transmission enhancement settlement	Due from PJM transmission enhancement settlement	1.8		1.8		Due from PJM transmission enhancement settlement	1.8		1.8
Other	Other	1.5		1.2		Other	2.3		1.2
Allowance for credit losses	Allowance for credit losses	(3.0)		(0.4)		Allowance for credit losses	(3.2)		(0.4)
Total accounts receivable, net	Total accounts receivable, net	$	66.0	$	70.9	Total accounts receivable, net	$	69.2	$	70.9

The following table is a rollforward of our allowance for credit losses related to the accounts receivable balances for the ~~six~~nine months ended ~~June~~September 30, 2020:


$ in millions	$ in millions	Beginning Allowance Balance at January 1, 2020		Current Period Provision		Write-offs Charged Against Allowances		Recoveries Collected		Ending Allowance Balance at June 30, 2020		$ in millions	Beginning Allowance Balance at January 1, 2020		Current Period Provision		Write-offs Charged Against Allowances		Recoveries Collected		Ending Allowance Balance at September 30, 2020
Allowance for credit losses	Allowance for credit losses	$	0.4	$	2.6	$	(2.9)	$	2.9	$	3.0	Allowance for credit losses	$	0.4	$	2.7	$	(3.5)	$	3.6	$	3.2

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 are expected to impact collectability, as applicable, including the economic impacts of the COVID-19 pandemic on our receivable balance as of ~~June~~September 30, 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.~~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 ~~the second quarter of~~ 2020. See Note 12 – Risks and Uncertainties for additional discussion of the COVID-19 pandemic.

Inventories consist of materials and supplies at ~~June~~September 30, 2020 and December 31, 2019.

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Accumulated Other Comprehensive Loss

The amounts reclassified out of Accumulated Other Comprehensive Loss by component during the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 are as follows:


Details about Accumulated Other Comprehensive Income / (Loss) components		Affected line item in the Condensed Statements of Operations	Three months ended						Six months ended
Details about Accumulated Other Comprehensive Loss components											Details about Accumulated Other Comprehensive Loss components			Affected line item in the Condensed Statements of Operations		Three months ended				Nine months ended
			June 30,						June 30,											September 30,				September 30,
$ in millions	$ in millions		2020		2019		2020		2019		$ in millions					2020		2019		2020		2019

Gains and losses on cash flow hedges (Note 5):	Gains and losses on cash flow hedges (Note 5):														Gains and losses on cash flow hedges (Note 5):
		Interest expense	$	(0.1)	$	—	$	(0.2)	$	(0.1)				Interest expense		$	0	$	0	$	(0.2)	$	(0.1)
		Income tax expense	—		—		—		—					Income tax benefit		(0.1)		0		(0.1)		0
		Net of income taxes	(0.1)		—		(0.2)		(0.1)					Net of income taxes		(0.1)		0		(0.3)		(0.1)

Amortization of defined benefit pension items (Note 8):	Amortization of defined benefit pension items (Note 8):														Amortization of defined benefit pension items (Note 8):
		Other expense	1.0		0.9		2.0		1.8					Other expense		1.0		0.8		3.0		2.6
		Income tax expense / (benefit)	(0.2)		(1.2)		(0.4)		(1.4)					Income tax expense / (benefit)		(0.2)		0.9		(0.6)		(0.5)
		Net of income taxes	0.8		(0.3)		1.6		0.4					Net of income taxes		0.8		1.7		2.4		2.1

Total reclassifications for the period, net of income taxes	Total reclassifications for the period, net of income taxes				$	0.7	$	(0.3)	$	1.4		$	0.3		Total reclassifications for the period, net of income taxes			$	0.7	$	1.7	$	2.1	$	2.0

The changes in the components of Accumulated Other Comprehensive Loss during the ~~six~~nine months ended ~~June~~September 30, 2020 are as follows:


$ in millions	$ in millions	Gains / (losses) on cash flow hedges		Change in unfunded pension and postretirement benefit obligations		Total		$ in millions	Gains / (losses) on cash flow hedges		Change in unfunded pension and postretirement benefit obligations		Total
Balance at January 1, 2020	Balance at January 1, 2020	$	(0.4)	$	(36.5)	$	(36.9)	Balance at January 1, 2020	$	(0.4)	$	(36.5)	$	(36.9)

Other comprehensive loss before reclassifications		(0.1)		—		(0.1)
Amounts reclassified from AOCI to earnings		(0.2)		1.6		1.4

Other comprehensive income before reclassifications								Other comprehensive income before reclassifications	0.1		0		0.1
Amounts reclassified from AOCL to earnings								Amounts reclassified from AOCL to earnings	(0.3)		2.4		2.1
Net current period other comprehensive income / (loss)	Net current period other comprehensive income / (loss)	(0.3)		1.6		1.3		Net current period other comprehensive income / (loss)	(0.2)		2.4		2.2

Balance at June 30, 2020		$	(0.7)	$	(34.9)	$	(35.6)
Balance at September 30, 2020								Balance at September 30, 2020	$	(0.6)	$	(34.1)	$	(34.7)

Note 3 – Regulatory Matters

~~DP&L~~ ESP ~~Orders~~v. MRO and SEET Proceedings

•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

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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 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;

Decoupling

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COVID-19

$0.8 million regulatory asset as of September 30, 2020. Recovery of these deferrals will be addressed in a future

rate proceeding.

FERC Proceedings

Note 4 – Fair Value

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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.


		June 30, 2020						December 31, 2019							September 30, 2020				December 31, 2019
$ in millions	$ in millions	Cost		Fair Value		Cost		Fair Value		$ in millions	Cost		Fair Value		Cost		Fair Value
Assets	Assets									Assets
Money market funds	Money market funds	$	0.1	$	0.1	$	0.3	$	0.3	Money market funds	$	0.2	$	0.2	$	0.3	$	0.3
Equity securities	Equity securities	2.1		3.7		2.3		4.2		Equity securities	2.1		3.9		2.3		4.2
Debt securities	Debt securities	4.1		4.1		4.0		4.1		Debt securities	4.0		4.1		4.0		4.1
Hedge funds	Hedge funds	—		—		0.1		0.1		Hedge funds	0		0		0.1		0.1

Tangible assets	Tangible assets	—		—		0.1		0.1		Tangible assets	0		0		0.1		0.1
Total assets	Total assets	$	6.3	$	7.9	$	6.8	$	8.8	Total assets	$	6.3	$	8.2	$	6.8	$	8.8

		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities	Liabilities									Liabilities
Long-term debt	Long-term debt	$	574.3	$	600.4	$	574.4	$	600.5	Long-term debt	$	574.1	$	615.2	$	574.4	$	600.5

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

Master Trust Assets

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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 Balance Sheets and classified as equity investments. We recorded net unrealized gains / (losses) of ~~$0.8~~$0.3 million and ~~$0.2~~$(0.1) million during the three months ended ~~June~~September 30, 2020 and 2019, respectively, and ~~$(0.3)~~$0.0 million and ~~$0.7~~$0.6 million during the during the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively. These amounts are included in "Other income" in our Condensed Statements of Operations.

Long-term debt

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The fair value of assets and liabilities at ~~June~~September 30, 2020 and December 31, 2019 and the respective category within the fair value hierarchy for DP&L is as follows:


$ in millions	$ in millions	Fair value at June 30, 2020 (a)														Fair value at December 31, 2019 (a)														$ in millions	Fair value at September 30, 2020 (a)				Fair value at December 31, 2019 (a)
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	Assets																	Assets
Master Trust assets	Master Trust assets																	Master Trust assets
Money market funds	Money market funds	$	0.1	$	—	$	—	$	0.1	$	0.3	$	—	$	—	$	0.3	Money market funds	$	0.2	$	0	$	0	$	0.2	$	0.3	$	0	$	0	$	0.3
Equity securities	Equity securities	—		3.7		—		3.7		—		4.2		—		4.2		Equity securities	0		3.9		0		3.9		0		4.2		0		4.2
Debt securities	Debt securities	—		4.1		—		4.1		—		4.1		—		4.1		Debt securities	0		4.1		0		4.1		0		4.1		0		4.1
Hedge funds	Hedge funds	—		—		—		—		—		0.1		—		0.1		Hedge funds	0		0		0		0		0		0.1		0		0.1

Tangible assets	Tangible assets	—		—		—		—		—		0.1		—		0.1		Tangible assets	0		0		0		0		0		0.1		0		0.1
Total Master Trust assets	Total Master Trust assets	0.1		7.8		—		7.9		0.3		8.5		—		8.8		Total Master Trust assets	0.2		8.0		0		8.2		0.3		8.5		0		8.8
Derivative assets	Derivative assets																	Derivative assets

Interest rate hedges	Interest rate hedges	—		—		—		—		—		0.1		—		0.1		Interest rate hedges	0		0		0		0		0		0.1		0		0.1

Total derivative assets	Total derivative assets	—		—		—		—		—		0.1		—		0.1		Total derivative assets	0		0		0		0		0		0.1		0		0.1

Total assets	Total assets	$	0.1	$	7.8	$	—	$	7.9	$	0.3	$	8.6	$	—	$	8.9	Total assets	$	0.2	$	8.0	$	0	$	8.2	$	0.3	$	8.6	$	0	$	8.9

Liabilities	Liabilities																	Liabilities
Derivative liabilities
Interest rate hedges		$	—	$	0.1	$	—	$	0.1	$	—	$	—	$	—	$	—

Long-term debt	Long-term debt	—		583.0		17.4		600.4		—		583.0		17.5		600.5		Long-term debt	$	0	$	597.8	$	17.4	$	615.2	$	0	$	583.0	$	17.5	$	600.5


Total liabilities	Total liabilities	$	—	$	583.1	$	17.4	$	600.5	$	—	$	583.0	$	17.5	$	600.5	Total liabilities	$	0	$	597.8	$	17.4	$	615.2	$	0	$	583.0	$	17.5	$	600.5

(a) Includes credit valuation adjustment

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

•~~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.

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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,~~ ~~DP&L~~ 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 ofFor further information on our derivative ~~instruments are used for risk management purposes~~ and ~~are designated as cash flow hedges if they qualify under FASC 815 for~~hedge accounting ~~purposes.~~policies, See Note 1 – Overview and Summary of Significant Accounting Policies – Financial Derivatives and Note 6 - Derivative Instruments and Hedging Activities of Item 8 – Financial Statements and Supplementary Data in our Form 10-K.

Cash Flow Hedges

~~As of June 30,~~In August 2020, ~~we have 2~~the two interest rate swaps to hedge the variable interest on ~~our~~the $140.0 million variable interest rate tax-exempt First Mortgage ~~Bonds.~~Bonds expired, as the associated debt reached maturity. The interest rate swaps ~~have~~had a combined notional amount of $140.0 million and ~~settle~~settled monthly based on a one-month LIBOR. The AOCL associated with the swaps ~~will be~~was amortized out of AOCL 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~~

Table 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.~~Contents

The following tables provide information concerning gains or losses recognized in AOCL for the cash flow hedges for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019:

Three months ended
June 30, 2020 June 30, 2019
Interest Interest
$ in millions (net of tax) Rate Hedge Rate Hedge
Beginning accumulated derivative gains / (losses) in AOCL $ (0.8) $ 0.3
Net gains / (losses) associated with current period hedging transactions 0.2 (0.6)
Net gains reclassified to earnings
Interest expense (0.1) —
Ending accumulated derivative losses in AOCL $ (0.7) $ (0.3)
Six months ended
June 30, 2020 June 30, 2019
Interest Interest
$ in millions (net of tax) Rate Hedge Rate Hedge
Beginning accumulated derivative gains / (losses) in AOCL $ (0.4) $ 0.6
Net losses associated with current period hedging transactions (0.1) (0.8)
Net gains reclassified to earnings
Interest expense (0.2) (0.1)
Ending accumulated derivative losses in AOCL $ (0.7) $ (0.3)
Portion expected to be reclassified to earnings in the next twelve months $ (0.1)
Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months) 2

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	Three months ended
	September 30, 2020		September 30, 2019
	Interest		Interest
$ in millions (net of tax)	Rate Hedge		Rate Hedge
Beginning accumulated derivative losses in AOCL	$	(0.7)	$	(0.3)
Net gains / (losses) associated with current period hedging transactions	0.2		(0.1)
Net gains reclassified to earnings
Interest expense	(0.1)		0


Ending accumulated derivative losses in AOCL	$	(0.6)	$	(0.4)

	Nine months ended
	September 30, 2020		September 30, 2019
	Interest		Interest
$ in millions (net of tax)	Rate Hedge		Rate Hedge
Beginning accumulated derivative gains / (losses) in AOCL	$	(0.4)	$	0.6
Net gains / (losses) associated with current period hedging transactions	0.1		(0.9)
Net gains reclassified to earnings
Interest expense	(0.3)		(0.1)


Ending accumulated derivative losses in AOCL	$	(0.6)	$	(0.4)

Portion expected to be reclassified to earnings in the next twelve months	$	0.6
Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months)	0

Financial Statement Effect

DP&L 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 DP&L's interest rate swaps are as follows:

~~$ in millions (net of tax)~~

~~Hedging Designation~~

~~Balance sheet classification~~

~~June 30, 2020~~

~~December 31, 2019~~

~~Interest rate swap~~

~~Cash Flow Hedge~~

~~Prepayments and other current assets~~

—

~~0.1~~

~~Interest rate swap~~

~~Cash Flow Hedge~~

~~Accrued and other current liabilities~~

~~0.1~~

—

$ in millions (net of tax)

Hedging Designation

Balance sheet classification

September 30, 2020

December 31, 2019

Interest rate swap

Cash Flow Hedge

Prepayments and other current assets

0.1

Note 6 – Long-term Debt

The following table summarizes DP&L's long-term debt.


		Interest			June 30,		December 31,			Interest			September 30,		December 31,
$ in millions	$ in millions	Rate		Maturity	2020		2019		$ in millions	Rate		Maturity	2020		2019
First Mortgage Bonds									First Mortgage Bonds	3.95	%	2049	$	425.0	$	425.0
First Mortgage Bonds	First Mortgage Bonds	3.95	%	2049	$	425.0	$	425.0	First Mortgage Bonds	3.20	%	2040	140.0		—
Tax-exempt First Mortgage Bonds - rates from 2.40% - 2.93% (a) and 1.15% - 2.47% (b)	Tax-exempt First Mortgage Bonds - rates from 2.40% - 2.93% (a) and 1.15% - 2.47% (b)			2020	140.0		140.0		Tax-exempt First Mortgage Bonds - rates from 2.40% - 2.93% (a) and 1.15% - 2.47% (b)			2020	—		140.0
U.S. Government note	U.S. Government note	4.20	%	2061	17.4		17.5		U.S. Government note	4.20	%	2061	17.4		17.5
Unamortized deferred financing costs	Unamortized deferred financing costs				(5.5)		(5.4)		Unamortized deferred financing costs				(5.7)		(5.4)
Unamortized debt discounts and premiums, net	Unamortized debt discounts and premiums, net				(2.6)		(2.7)		Unamortized debt discounts and premiums, net				(2.6)		(2.7)
Total long-term debt	Total long-term debt				574.3		574.4		Total long-term debt				574.1		574.4
Less: current portion	Less: current portion				(0.1)		(139.8)		Less: current portion				(0.2)		(139.8)
Long-term debt, net of current portion	Long-term debt, net of current portion				$	574.2	$	434.6	Long-term debt, net of current portion				$	573.9	$	434.6

(a)Range of interest rates for the ~~six~~nine months ended ~~June~~September 30, 2020.

(b)Range of interest rates for the year ended December 31, 2019.

Line of credit

At ~~June~~September 30, 2020 and December 31, 2019, DP&L had outstanding borrowings on its line of credit of $0.0 million and $40.0 million, respectively.

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Significant transactions

DP&L.

Long-term debt covenants and restrictions

As of ~~June~~September 30, 2020, DP&L was 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.

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Note 7 – Income Taxes

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

Three months ended Six months ended
June 30, June 30,
2020 2019 2020 2019
DP&L (14.8)% 17.2% (3.9)% 17.3%


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

DP&L’s effective combined state and federal income tax rate was ~~(14.8)%~~16.4% and ~~(3.9)%~~4.8% for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. This is different from the combined federal and state statutory rate of 22.3% primarily due to the net tax benefit related to the reversal of excess deferred taxes and the reversal of an uncertain tax position, which were partially offset by an adjustment to the deferred tax balances.

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

Note 8 – Benefit Plans

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

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The net periodic benefit cost of the pension benefit plans for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 was:


		Three months ended						Six months ended							Three months ended				Nine months ended
		June 30,						June 30,							September 30,				September 30,
$ in millions	$ in millions	2020		2019		2020		2019		$ in millions	2020		2019		2020		2019
Service cost	Service cost	$	1.0	$	0.9	$	1.9	$	1.8	Service cost	$	0.9	$	0.9	$	2.8	$	2.7
Interest cost	Interest cost	2.9		3.8		5.9		7.5		Interest cost	2.9		3.7		8.8		11.2
Expected return on plan assets	Expected return on plan assets	(4.7)		(5.0)		(9.4)		(10.0)		Expected return on plan assets	(4.6)		(5.0)		(14.0)		(15.0)
Amortization of unrecognized:	Amortization of unrecognized:									Amortization of unrecognized:
Prior service cost	Prior service cost	0.4		0.4		0.7		0.9		Prior service cost	0.3		0.4		1.0		1.3
Actuarial loss	Actuarial loss	2.1		1.8		4.3		3.5		Actuarial loss	2.2		1.8		6.5		5.3
Net periodic benefit cost	Net periodic benefit cost	$	1.7	$	1.9	$	3.4	$	3.7	Net periodic benefit cost	$	1.7	$	1.8	$	5.1	$	5.5

Note 9 – Shareholder's Equity

Capital Contribution and Returns of Capital

During the ~~six~~nine months ended ~~June~~September 30, 2020, DPL made a capital contribution of $150.0 million to DP&L. The proceeds will primarily be used for funding needs to support DP&L's capital expenditure program, mainly new investments in and upgrades to DP&L’s transmission and distribution system. Additionally, DP&L ~~made returns~~declared return of capital payments of ~~$14.2~~$42.7 million to DPL,.of which $27.7 million was paid during the period.

During the ~~six~~nine months ended ~~June~~September 30, 2019, DP&L made returns of capital payments of ~~$70.0~~$90.0 million to DPL.

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Note 10 – Contractual Obligations, Commercial Commitments and Contingencies

Equity Ownership Interest

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 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 Financial Statements. As such, costs, if any, that may be incurred in excess of those amounts provided as of ~~June~~September 30, 2020, cannot be reasonably determined.

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Environmental Matters

DP&L’s current and previously-owned 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;

•Solid and hazardous waste laws and regulations, which govern the management and disposal of certain waste.

Note 11 – 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 13 — Revenue in Item 8.—Financial Statements and Supplementary Data of our Form 10-K.

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DP&L's revenue from contracts with customers was ~~$146.3~~$175.2 million and ~~$166.7~~$187.0 million for the three months ended ~~June~~September 30, 2020 and 2019, respectively, and ~~$311.1~~$486.3 million and ~~$367.4~~$554.4 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively.

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The following table presents our revenue from contracts with customers and other revenue for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019:


		Three months ended						Six months ended							Three months ended				Nine months ended
		June 30,						June 30,							September 30,				September 30,
$ in millions	$ in millions	2020		2019		2020		2019		$ in millions	2020		2019		2020		2019
Retail revenue	Retail revenue									Retail revenue
Retail revenue from contracts with customers	Retail revenue from contracts with customers									Retail revenue from contracts with customers
Residential revenue	Residential revenue	$	83.7	$	87.4	$	180.6	$	206.4	Residential revenue	$	99.3	$	107.5	$	279.9	$	313.9
Commercial revenue	Commercial revenue	26.5		33.8		55.4		68.9		Commercial revenue	32.2		34.8		87.6		103.7
Industrial revenue	Industrial revenue	11.9		15.4		23.7		29.8		Industrial revenue	14.5		13.7		38.2		43.5
Governmental revenue	Governmental revenue	8.6		10.9		17.8		21.9		Governmental revenue	9.9		11.4		27.7		33.3
Other ^(a)	Other ^(a)	2.6		3.1		6.0		6.3		Other (a)	3.7		3.1		9.7		9.4
Total retail revenue from contracts with customers	Total retail revenue from contracts with customers	133.3		150.6		283.5		333.3		Total retail revenue from contracts with customers	159.6		170.5		443.1		503.8
Other retail revenue ^(b)	Other retail revenue ^(b)	5.4		10.4		8.7		11.1		Other retail revenue (b)	0.1		3.8		8.8		14.9
Wholesale revenue	Wholesale revenue									Wholesale revenue
Wholesale revenue from contracts with customers	Wholesale revenue from contracts with customers	1.8		3.4		4.5		8.4		Wholesale revenue from contracts with customers	3.2		4.4		7.7		12.8
RTO ancillary revenue	RTO ancillary revenue	10.1		10.9		20.8		21.8		RTO ancillary revenue	11.5		11.0		32.3		32.8
Capacity revenue	Capacity revenue	1.1		1.8		2.3		3.9		Capacity revenue	0.9		1.1		3.2		5.0

Miscellaneous revenue	Miscellaneous revenue	1.4		0.6		2.3		0.6		Miscellaneous revenue	1.7		0.3		4.0		0.9
Total revenues	Total revenues	$	153.1	$	177.7	$	322.1	$	379.1	Total revenues	$	177.0	$	191.1	$	499.1	$	570.2

(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.

The balances of receivables from contracts with customers were ~~$59.9~~$66.3 million and $64.4 million as of ~~June~~September 30, 2020 and December 31, 2019, respectively. Payment terms for all receivables from contracts with customers are typically within 30 ~~days.~~days, though during the third quarter of 2020 DP&L implemented and offered extended payment plans to customers as a result of the pandemic.

Note – 12 Risks and Uncertainties

COVID-19 Pandemic

~~For the three and six months ended June 30, 2020, the COVID-19 pandemic primarily impacted our retail sales demand, as~~As the economic impact of the COVID-19 pandemic started to materialize in Ohio in the second half of March ~~2020~~ and ~~more so~~continued in the second ~~quarter~~and third quarters of ~~2020. For commercial and industrial customers,~~2020, the COVID-19 pandemic primarily impacted our retail sales demand as shown by the changes in weather-normalized volumes of kWh ~~sold decreased by 11.0% and 19.9%, respectively, for~~sold:

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Customer class	For the three months ended September 30, 2020 compared to the same period in 2019	For the six months ended September 30, 2020 compared to the same period in 2019 (a)	For the nine months ended September 30, 2020 compared to the same period in 2019
Commercial	(4.8)%	(9.4)%	(7.0)%
Industrial	0.9%	(9.3)%	(6.8)%
Residential	11.0%	9.8%	6.0%

We also have incurred, and expect to continue to incur, expenses relating to COVID-19; however, see Note 3 – Regulatory

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Matters for a discussion of regulatory measures, which partially mitigate the impact of these expenses. The magnitude and duration of the COVID-19 pandemic is unknown at this time and may have material and adverse effects on our results of operations, financial condition and cash flows in future periods.

4851

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Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations

This report includes the combined filing of DPL and DP&L. DP&L is a wholly-owned subsidiary of DPL and is a public utility incorporated in 1911 under the laws of Ohio. On November 28, 2011, DPL became an indirectly wholly-owned subsidiary of AES, a global power company. Throughout this report, the terms “we,” “us,” “our” and “ours” are used to refer to both DPL and DP&L, respectively and together, unless the context indicates otherwise. Discussions or areas of this report that apply only to DPL or DP&L will clearly be noted in the section.

FORWARD-LOOKING INFORMATION

The following discussion contains forward-looking statements and should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related footnotes of DPL and the Condensed Financial Statements and related footnotes of DP&L included in Part I – Financial Information, the risk factors in Item 1A to Part I of our Form 10-K for the fiscal year ended December 31, 2019, in Part II, Item 1A of this Form 10-Q and our “Forward-Looking Statements” section of this Form 10-Q. For a list of certain abbreviations or acronyms in this discussion, see the Glossary at the beginning of this Form 10-Q.

OVERVIEW OF OUR BUSINESS

DPL is an indirectly wholly-owned subsidiary of AES.

DPL has two primary subsidiaries, DP&L and MVIC. DP&L is a public utility providing electric transmission and distribution services in West Central Ohio. MVIC is our captive insurance company that provides insurance services to DP&L and our other subsidiaries. For additional information, see Item 1 – Business of our Form 10-K. All of DPL's subsidiaries are wholly-owned.

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.

EXECUTIVE SUMMARY

DPL

Compared with the prior year, DPL's net income from continuing operations before income taxes was ~~higher~~lower by ~~$25.8~~$46.8 million, or ~~117%~~173% for the three months ended ~~June~~September 30, 2020 and ~~higher~~lower by ~~$7.5~~$39.3 million, or ~~536%~~153% for the ~~six~~nine months ended ~~June~~September 30, 2020, primarily due to factors including, but not limited to:


		Three months ended		Six months ended			Three months ended		Nine months ended
		June 30,		June 30,			September 30,		September 30,
$ in millions	$ in millions	2020 vs. 2019		2020 vs. 2019		$ in millions	2020 vs. 2019		2020 vs. 2019
Increase due to loss on early extinguishment of debt in 2019, primarily due to the make-whole premium on the partial prepayment of the 7.25% Senior Notes due 2021		$	44.9	$	44.9
Increase due to lower interest expense from debt refinancings in 2019		2.3		7.1
Increase (decrease) due to losses on early extinguishment of debt recorded in Q3 2020 and Q2 2019 (see Part I, Item 1, Note 6 - Long-term Debt in the Notes to DPL's Condensed Consolidated Financial Statements for further discussion)						Increase (decrease) due to losses on early extinguishment of debt recorded in Q3 2020 and Q2 2019 (see Part I, Item 1, Note 6 - Long-term Debt in the Notes to DPL's Condensed Consolidated Financial Statements for further discussion)	$	(31.7)	$	13.2
Impact of changes to DP&L's ESP in December 2019, primarily removal of the DMR, DIR, and Decoupling Rider and reinstatement of the RSC Rider	Impact of changes to DP&L's ESP in December 2019, primarily removal of the DMR, DIR, and Decoupling Rider and reinstatement of the RSC Rider	(21.5)		(32.5)		Impact of changes to DP&L's ESP in December 2019, primarily removal of the DMR, DIR, and Decoupling Rider and reinstatement of the RSC Rider	(13.4)		(45.9)
Net increase / (decrease) in the volume of retail kWh sold primarily driven by weather impacts, partially offset by the purchased power volume variance		1.2		(8.2)
Net decrease in the volume of retail kWh sold primarily driven by unfavorable weather, partially offset by the purchased power volume variance						Net decrease in the volume of retail kWh sold primarily driven by unfavorable weather, partially offset by the purchased power volume variance	(3.5)		(11.7)
Increase due to lower interest expense from debt refinancings in 2019 and 2020						Increase due to lower interest expense from debt refinancings in 2019 and 2020	1.2		8.3
Other	Other	(1.1)		(3.8)		Other	0.6		(3.2)
Net change in income / (loss) from continuing operations before income tax	Net change in income / (loss) from continuing operations before income tax	$	25.8	$	7.5	Net change in income / (loss) from continuing operations before income tax	$	(46.8)	$	(39.3)

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DP&L

Compared with the prior year, DP&L's net income from continuing operations before income taxes was lower by ~~$20.5~~$16.4 million, or ~~57%~~44% for the three months ended ~~June~~September 30, 2020 and lower by ~~$42.7~~$59.1 million, or ~~60%~~54% for the ~~six~~nine months ended ~~June~~September 30, 2020, primarily due to factors including, but not limited to:


		Three months ended		Six months ended			Three months ended		Nine months ended
		June 30,		June 30,			September 30,		September 30,
$ in millions	$ in millions	2020 vs. 2019		2020 vs. 2019		$ in millions	2020 vs. 2019		2020 vs. 2019
Impact of changes to DP&L's ESP in December 2019, primarily removal of the DMR, DIR, and Decoupling Rider and reinstatement of the RSC Rider	Impact of changes to DP&L's ESP in December 2019, primarily removal of the DMR, DIR, and Decoupling Rider and reinstatement of the RSC Rider	$	(21.5)	$	(32.5)	Impact of changes to DP&L's ESP in December 2019, primarily removal of the DMR, DIR, and Decoupling Rider and reinstatement of the RSC Rider	$	(13.4)	$	(45.9)
Net increase / (decrease) in the volume of retail kWh sold primarily driven by weather impacts, partially offset by the purchased power volume variance		1.2		(8.2)
Net decrease in the volume of retail kWh sold primarily driven by unfavorable weather, partially offset by the purchased power volume variance						Net decrease in the volume of retail kWh sold primarily driven by unfavorable weather, partially offset by the purchased power volume variance	(3.5)		(11.7)
Other	Other	(0.2)		(2.0)		Other	0.5		(1.5)
Net change in income before income tax	Net change in income before income tax	$	(20.5)	$	(42.7)	Net change in income before income tax	$	(16.4)	$	(59.1)

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RESULTS OF OPERATIONS HIGHLIGHTS – DPL

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


		Three months ended													Six months ended													Three months ended			Nine months ended
		June 30,													June 30,													September 30,			September 30,
$ in millions	$ in millions	2020		2019		$ change		% change	2020		2019		$ change		% change	$ in millions	2020		2019		$ change		% change	2020		2019		$ change		% change
Revenues:	Revenues:															Revenues:
Retail	Retail	$	138.7	$	161.3	$	(22.6)	(14)%	$	292.2	$	344.4	$	(52.2)	(15)%	Retail	$	159.7	$	174.3	$	(14.6)	(8)%	$	451.9	$	518.7	$	(66.8)	(13)%
Wholesale	Wholesale	1.5		2.8		(1.3)		(46)%	4.0		7.8		(3.8)		(49)%	Wholesale	3.0		4.2		(1.2)		(29)%	7.0		12.0		(5.0)		(42)%
RTO ancillary	RTO ancillary	10.2		10.9		(0.7)		(6)%	20.9		21.8		(0.9)		(4)%	RTO ancillary	11.4		11.1		0.3		3%	32.3		32.9		(0.6)		(2)%
Capacity revenues	Capacity revenues	1.1		1.8		(0.7)		(39)%	2.3		3.9		(1.6)		(41)%	Capacity revenues	0.9		1.1		(0.2)		(18)%	3.2		5.0		(1.8)		(36)%
Miscellaneous revenues	Miscellaneous revenues	3.6		2.8		0.8		29%	6.9		5.7		1.2		21%	Miscellaneous revenues	3.8		2.2		1.6		73%	10.7		7.9		2.8		35%

Total revenues	Total revenues	155.1		179.6		(24.5)		(14)%	326.3		383.6		(57.3)		(15)%	Total revenues	178.8		192.9		(14.1)		(7)%	505.1		576.5		(71.4)		(12)%

Operating costs and expenses	Operating costs and expenses															Operating costs and expenses

Net fuel cost	Net fuel cost	0.3		0.5		(0.2)		(40)%	0.9		1.4		(0.5)		(36)%	Net fuel cost	0.4		0.6		(0.2)		(33)%	1.3		2.0		(0.7)		(35)%
Purchased power:	Purchased power:															Purchased power:
Purchased power	Purchased power	43.2		49.0		(5.8)		(12)%	100.6		115.5		(14.9)		(13)%	Purchased power	55.7		60.5		(4.8)		(8)%	156.3		176.0		(19.7)		(11)%
RTO charges	RTO charges	6.0		5.2		0.8		15%	11.4		12.4		(1.0)		(8)%	RTO charges	10.3		5.8		4.5		78%	21.7		18.2		3.5		19%

Net purchased power cost	Net purchased power cost	49.2		54.2		(5.0)		(9)%	112.0		127.9		(15.9)		(12)%	Net purchased power cost	66.0		66.3		(0.3)		—%	178.0		194.2		(16.2)		(8)%

Operation and maintenance	Operation and maintenance	43.7		45.8		(2.1)		(5)%	90.8		94.4		(3.6)		(4)%	Operation and maintenance	47.9		42.5		5.4		13%	138.7		136.9		1.8		1%
Depreciation and amortization	Depreciation and amortization	18.5		17.9		0.6		3%	36.2		36.3		(0.1)		—%	Depreciation and amortization	18.6		17.7		0.9		5%	54.8		54.0		0.8		1%
Taxes other than income taxes	Taxes other than income taxes	21.0		18.0		3.0		17%	41.9		37.5		4.4		12%	Taxes other than income taxes	17.7		20.8		(3.1)		(15)%	59.6		58.3		1.3		2%

Other, net	Other, net	0.1		—		0.1		—%	—		—		—		—%	Other, net	0.1		—		0.1		—%	0.1		—		0.1		—%

Total operating costs and expenses	Total operating costs and expenses	132.8		136.4		(3.6)		(3)%	281.8		297.5		(15.7)		(5)%	Total operating costs and expenses	150.7		147.9		2.8		2%	432.5		445.4		(12.9)		(3)%

Operating income	Operating income	22.3		43.2		(20.9)		(48)%	44.5		86.1		(41.6)		(48)%	Operating income	28.1		45.0		(16.9)		(38)%	72.6		131.1		(58.5)		(45)%

Other income / (expense), net:	Other income / (expense), net:															Other income / (expense), net:
Interest expense	Interest expense	(19.4)		(21.7)		2.3		(11)%	(38.3)		(45.4)		7.1		(16)%	Interest expense	(17.1)		(18.3)		1.2		(7)%	(55.4)		(63.7)		8.3		(13)%
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—		(44.9)		44.9		(100)%	—		(44.9)		44.9		(100)%	Loss on early extinguishment of debt	(31.7)		—		(31.7)		—%	(31.7)		(44.9)		13.2		(29)%
Other income / (expense)	Other income / (expense)	0.8		1.3		(0.5)		(38)%	(0.1)		2.8		(2.9)		(104)%	Other income / (expense)	1.0		0.4		0.6		150%	0.9		3.2		(2.3)		(72)%
Total other expense, net	Total other expense, net	(18.6)		(65.3)		46.7		(72)%	(38.4)		(87.5)		49.1		(56)%	Total other expense, net	(47.8)		(17.9)		(29.9)		167%	(86.2)		(105.4)		19.2		(18)%

Income / (loss) from continuing operations before income tax (a)	Income / (loss) from continuing operations before income tax (a)	$	3.7	$	(22.1)	$	25.8	(117)%	$	6.1	$	(1.4)	$	7.5	(536)%	Income / (loss) from continuing operations before income tax (a)	$	(19.7)	$	27.1	$	(46.8)	(173)%	$	(13.6)	$	25.7	$	(39.3)	(153)%

(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.

DPL – Revenues

Retail customers, especially residential and commercial customers, consume more electricity on warmer and colder days. Therefore, our retail sales demand is affected by the number of heating and cooling degree-days occurring during a year. Cooling degree-days typically have a more significant effect than heating degree-days since some residential customers do not use electricity to heat their homes. Because of the impact of the Decoupling Rider (effective January 1, 2019 through December 18, 2019), weather had 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 our Form 10-K and Note 3 – Regulatory Matters of Notes to DPL's Condensed Consolidated Financial Statements.

Factors affecting DPL's wholesale sales volume include wholesale market prices; retail demand throughout the entire wholesale market area; unit availability to sell into the wholesale market; and weather conditions.

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HEATING AND COOLING DEGREE-DAYS ^(a)	HEATING AND COOLING DEGREE-DAYS ^(a)																			HEATING AND COOLING DEGREE-DAYS (a)
		Three months ended								Six months ended											Three months ended			Nine months ended
		June 30,								June 30,											September 30,			September 30,
		2020	2019	change	% change		2020	2019	change	% change			2020	2019	change	% change		2020	2019		change	% change
Actual	Actual											Actual
Heating degree-days	Heating degree-days	642	417	225	54	%	2,979	3,206	(227)	(7)	%	Heating degree-days	61	—	61	—	%	3,040	3,206		(166)	(5)	%
Cooling degree-days	Cooling degree-days	355	386	(31)	(8)	%	355	386	(31)	(8)	%	Cooling degree-days	845	975	(130)	(13)	%	1,200	1,361		(161)	(12)	%

30-year average ^(b)	30-year average ^(b)											30-year average (b)
Heating degree-days	Heating degree-days	552	552	—	—	%	3,385	3,381	4	—	%	Heating degree-days	79	80				3,464	3,461
Cooling degree-days	Cooling degree-days	303	300	3	1	%	305	302	3	1	%	Cooling degree-days	671	663				976	965

(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.

(b)30-year average is computed from observed degree-days in the Dayton area on a trailing 30-year basis.

DPL's electric sales and billed customers were as follows:


ELECTRIC SALES AND CUSTOMERS ^(a)	ELECTRIC SALES AND CUSTOMERS ^(a)										ELECTRIC SALES AND CUSTOMERS (a)
		Three months ended			Six months ended				Three months ended			Nine months ended
		June 30,			June 30,				September 30,			September 30,
		2020	2019	2020	2019		2020	2019	2020	2019
Retail electric sales ^(b)	Retail electric sales ^(b)					Retail electric sales (b)
Residential	Residential	1,208	1,070	2,606	2,620	Residential	1,461	1,461	4,067	4,081
Commercial and other	Commercial and other	788	873	1,643	1,776	Commercial and other	973	1,044	2,616	2,820
Industrial	Industrial	763	952	1,656	1,859	Industrial	987	995	2,643	2,854
Governmental	Governmental	262	305	553	610	Governmental	319	355	872	965
Other	Other	3	3	9	8	Other	4	4	13	12
Total retail electric sales	Total retail electric sales	3,024	3,203	6,467	6,873	Total retail electric sales	3,744	3,859	10,211	10,732
Wholesale electric sales ^(c)	Wholesale electric sales ^(c)	81	110	200	270	Wholesale electric sales (c)	123	151	323	421
Total electric sales	Total electric sales	3,105	3,313	6,667	7,143	Total electric sales	3,867	4,010	10,534	11,153

Billed electric customers (end of period)	Billed electric customers (end of period)			528,350	525,176	Billed electric customers (end of period)			529,674	523,915

(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 ~~865~~1,057 kWh and ~~1880~~2,937 kWh for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, and ~~832~~1,041 kWh and ~~1941~~2,982 kWh for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively.

(c)Wholesale electric sales are DP&L's 4.9% share of the generation output of OVEC.

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During the three months ended ~~June~~September 30, 2020, revenue decreased ~~$24.5~~$14.1 million to ~~$155.1~~$178.8 million compared to ~~$179.6~~$192.9 million in the same period of the prior year, and, during the ~~six~~nine months ended ~~June~~September 30, 2020, revenue decreased ~~$57.3~~$71.4 million to ~~$326.3~~$505.1 million compared to ~~$383.6~~$576.5 million in the same period of the prior year. These changes were primarily the result of changes in the components of revenue shown below:


		Three months ended		Six months ended			Three months ended		Nine months ended
		June 30,		June 30,			September 30,		September 30,
$ in millions	$ in millions	2020 vs. 2019		2020 vs. 2019		$ in millions	2020 vs. 2019		2020 vs. 2019
Retail	Retail					Retail
Rate	Rate					Rate
Decrease due to removal of DMR	Decrease due to removal of DMR	$	(24.4)	$	(51.2)	Decrease due to removal of DMR	$	(28.2)	$	(79.4)
Decrease due to removal of DIR	Decrease due to removal of DIR	(4.9)		(11.1)		Decrease due to removal of DIR	(5.6)		(16.7)
Decrease in energy efficiency revenue rate rider	Decrease in energy efficiency revenue rate rider	(2.9)		(5.7)		Decrease in energy efficiency revenue rate rider	(3.0)		(8.7)
Decrease due to removal of decoupling rider		(9.6)		(5.1)
Increase / (decrease) due to removal of decoupling rider						Increase / (decrease) due to removal of decoupling rider	0.4		(4.7)
Increase / (decrease) due to the TCRR rider						Increase / (decrease) due to the TCRR rider	4.5		(1.2)
Increase due to reinstatement of RSC rider	Increase due to reinstatement of RSC rider	17.4		34.9		Increase due to reinstatement of RSC rider	20.0		54.9

Other	Other	(1.2)		(3.7)		Other	1.2		3.5
Net change in retail rate	Net change in retail rate	(25.6)		(41.9)		Net change in retail rate	(10.7)		(52.3)

Volume	Volume					Volume

Net increase / (decrease) in the volume of kWh sold primarily due to favorable / (unfavorable) weather as compared to the same periods in the prior year and, to a lesser extent, the unfavorable demand impacts of COVID-19 in the second quarter of 2020, which resulted in lower demand for commercial and industrial customers, partially offset by higher residential demand		3.7		(10.1)
Net decrease in the volume of kWh sold primarily due to unfavorable weather as compared to the same periods in the prior year and lower demand from commercial customers due to the impacts of COVID-19, partially offset by higher demand from residential customers due to the impacts of COVID-19						Net decrease in the volume of kWh sold primarily due to unfavorable weather as compared to the same periods in the prior year and lower demand from commercial customers due to the impacts of COVID-19, partially offset by higher demand from residential customers due to the impacts of COVID-19	(4.5)		(14.6)

Other miscellaneous	Other miscellaneous	(0.7)		(0.2)		Other miscellaneous	0.6		0.1
Total retail change	Total retail change	(22.6)		(52.2)		Total retail change	(14.6)		(66.8)

Wholesale	Wholesale					Wholesale

Decrease due to lower wholesale prices and lower volumes at OVEC	Decrease due to lower wholesale prices and lower volumes at OVEC	(1.3)		(3.8)		Decrease due to lower wholesale prices and lower volumes at OVEC	(1.2)		(5.0)

RTO ancillary and capacity revenues	RTO ancillary and capacity revenues					RTO ancillary and capacity revenues
RTO ancillary and capacity revenues	RTO ancillary and capacity revenues	(1.4)		(2.5)		RTO ancillary and capacity revenues	0.1		(2.4)

Other	Other					Other
Miscellaneous revenues	Miscellaneous revenues	0.8		1.2		Miscellaneous revenues	1.6		2.8

Net change in revenues	Net change in revenues	$	(24.5)	$	(57.3)	Net change in revenues	$	(14.1)	$	(71.4)

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DPL – Net Purchased Power

During the three months ended ~~June~~September 30, 2020, Net purchased power decreased ~~$5.0~~$0.3 million to ~~$49.2~~$66.0 million compared to ~~$54.2~~$66.3 million in the same period of the prior year, and, during the ~~six~~nine months ended ~~June~~September 30, 2020, Net purchased power decreased ~~$15.9~~$16.2 million to ~~$112.0~~$178.0 million compared to ~~$127.9~~$194.2 million in the same period of the prior year. These changes were primarily the result of changes in the cost of purchased power shown below.

Three months ended

Six months ended

Three months ended

Nine months ended

June 30,

September 30,

$ in millions

2020 vs. 2019

$ in millions

2020 vs. 2019

Net purchased power

Purchased power

Rate

Decrease due to pricing in the competitive bid process

(8.3)

(13.0)

Decrease due to pricing in the competitive bid process

(3.8)

(16.8)

Volume

Increase / (decrease) due to higher / (lower) retail load served primarily driven by weather and, to a lesser extent, COVID-19 demand impacts

2.5

(1.9)

Decrease due to lower retail load served primarily driven by weather, partially offset by COVID-19 demand impacts

(1.0)

(2.9)

Total purchased power change

(5.8)

(14.9)

Total purchased power change

(4.8)

(19.7)

RTO charges

0.8

(1.0)

RTO charges

Increase primarily due to higher rates in 2020

4.5

3.5

Net change in purchased power

(5.0)

(15.9)

Net change in purchased power

(0.3)

(16.2)

~~Table of Contents~~

DPL – Operation and Maintenance

During the three and ~~six~~nine months ended ~~June~~September 30, 2020, Operation and maintenance expense ~~decreased $2.1~~increased $5.4 million and ~~$3.6~~$1.8 million, respectively, compared to the same periods in the prior year. The main drivers of these changes are as follows:


		Three months ended		Six months ended			Three months ended		Nine months ended
		June 30,		June 30,			September 30,		September 30,
$ in millions	$ in millions	2020 vs. 2019		2020 vs. 2019		$ in millions	2020 vs. 2019		2020 vs. 2019
Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider (a)						Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider (a)	2.5		6.0
Increase in deferred storm costs (a)						Increase in deferred storm costs (a)	1.6		4.9
Decrease in alternative energy and energy efficiency programs ^(a)	Decrease in alternative energy and energy efficiency programs ^(a)	$	(3.3)	$	(6.1)	Decrease in alternative energy and energy efficiency programs (a)	$	(3.0)	$	(9.1)
Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider ^(a)		2.1		3.6
Increase / (decrease) in legal expenses, primarily due to an insurance reimbursement in September 2019						Increase / (decrease) in legal expenses, primarily due to an insurance reimbursement in September 2019	2.0		(0.8)
Other, net						Other, net	2.3		0.8

Other, net		(0.9)		(1.1)
Net change in operation and maintenance expense	Net change in operation and maintenance expense	$	(2.1)	$	(3.6)	Net change in operation and maintenance expense	$	5.4	$	1.8

(a) There is a corresponding offset in Revenues associated with these programs.

DPL - Taxes Other Than Income Taxes

During the three ~~and six~~ months ended ~~June~~September 30, 2020, Taxes other than income taxes decreased $3.1 million compared to the same period in the prior year. The decrease was primarily due to an updated Ohio property tax assessment in September 2020, which resulted in a favorable adjustment to property tax expense during the quarter.

During the nine months ended September 30, 2020, Taxes other than income taxes increased ~~$3.0~~$1.3 million ~~and $4.4 million, respectively,~~ compared to the same ~~periods~~period in the prior year. The increase was primarily from higher property taxes due to an increase in assessed values for Ohio properties for 2020.

DPL – Interest Expense

During the three and ~~six~~nine months ended ~~June~~September 30, 2020, Interest expense decreased ~~$2.3~~$1.2 million and ~~$7.1~~$8.3 million, respectively, compared to the same periods in the prior year. The decrease was primarily the result of the reduction and refinancing of debt at DPL ~~and~~ ~~DP&L~~ in 2020 and 2019.

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DPL – Loss on Early Extinguishment of Debt

During the three and ~~six~~nine months ended ~~June~~September 30, 2020, DPL recorded Loss on early extinguishment of debt of $31.7 million primarily due to the make-whole premium payment of $30.8 million related to the redemption of the $380.0 million 7.25% Notes due 2021 in the third quarter of 2020.

During the nine months ended September 30, 2019, DPL recorded 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.

DPL – Other Income / (Expense)

During the ~~three and six~~nine months ended ~~June~~September 30, 2020, Other income / (expense) decreased ~~$0.5~~$2.3 million ~~and $2.9 million, respectively,~~ compared to the same ~~periods~~period in the prior year. The decrease ~~for the six months ended June 30, 2020~~ was primarily the result of unrealized losses on DP&L's Master Trust assets due to decreased fair value of investments, as compared to unrealized gains in the prior year, as well as well as higher interest income on bank deposits in the prior year.

DPL – Income Tax ~~Expense / (Benefit)~~Benefit From Continuing Operations

Income tax benefit of ~~$3.6~~$9.1 million during the three months ended ~~June~~September 30, 2019 ~~changed~~increased to ~~an income tax expense~~a benefit of ~~$2.8~~$10.4 million during the three months ended ~~June~~September 30, 2020. The $1.3 million increase of ~~$6.4 million of expense~~benefit was primarily due to the tax effect of changes in pre-tax income inoffset by the ~~current year as compared to a loss~~impact of the benefit recorded in the prior year ~~as well as a higher effective tax rate in~~related to the ~~current year versus the prior year.~~September 26, 2019 PUCO order.

Income tax benefit of ~~$2.7~~$11.8 million during the ~~six~~nine months ended ~~June~~September 30, 2019 ~~changed~~decreased to ~~an income tax expense~~a benefit of ~~$2.7~~$7.7 million during the ~~six~~nine months ended ~~June~~September 30, 2020. The ~~increase~~decrease of ~~$5.4~~$4.1 million ~~of expense~~ was primarily due to the tax impact of changes in pre-tax income offset by the benefit recorded in 2019 for the ~~current year as compared to a loss in the prior year, as well as a higher effective tax rate in the current year versus the prior year.~~September 26, 2019 PUCO order.

See Note 7 – Income Taxes in the Notes to DPL's Condensed Consolidated Financial Statements for further discussion.

DPL – Discontinued Operations

Net income / (loss) from discontinued operations was ~~$2.6~~$1.1 million and ~~$2.0~~$3.1 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, compared to ~~$2.4~~$(0.8) million and ~~$24.7~~$23.9 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. This income relates to the generation components of Stuart and Killen, which were retired in 2018 and sold in 2019, and Conesville, which was retired in May 2020 and sold in June 2020. See Part I, Item 1, Note 13 – Discontinued Operations in the Notes to DPL's Condensed Consolidated Financial Statements for further discussion.

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RESULTS OF OPERATIONS BY SEGMENT - DPL

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. The Utility segment is discussed further below.

Utility Segment

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See Part I, Item 1, Note 11 – 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:


		Three months ended						Six months ended							Three months ended				Nine months ended
		June 30,						June 30,							September 30,				September 30,
$ in millions	$ in millions	2020		2019		2020		2019		$ in millions	2020		2019		2020		2019
Utility	Utility	$	15.5	$	36.0	$	28.4	$	71.1	Utility	$	21.3	$	37.7	$	49.7	$	108.8

Other	Other	(11.8)		(58.1)		(22.3)		(72.5)		Other	(41.0)		(10.6)		(63.3)		(83.1)
Income / (loss) from continuing operations before income tax (a)	Income / (loss) from continuing operations before income tax (a)	$	3.7	$	(22.1)	$	6.1	$	(1.4)	Income / (loss) from continuing operations before income tax (a)	$	(19.7)	$	27.1	$	(13.6)	$	25.7

RESULTS 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&L, which are included in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations (RESULTS OF OPERATIONS HIGHLIGHTS – DP&L) of this Form 10-Q.

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RESULTS OF OPERATIONS HIGHLIGHTS – DP&L


		Three months ended														Six months ended															Three months ended				Nine months ended
		June 30,														June 30,															September 30,				September 30,
$ in millions	$ in millions	2020		2019		$ change		% change		2020		2019		$ change		% change		$ in millions	2020		2019		$ change		% change		2020		2019		$ change		% change
Revenues:	Revenues:																	Revenues:
Retail	Retail	$	138.7	$	161.0	$	(22.3)	(14)	%	$	292.2	$	344.4	$	(52.2)	(15)	%	Retail	$	159.7	$	174.3	$	(14.6)	(8)	%	$	451.9	$	518.7	$	(66.8)	(13)	%
Wholesale	Wholesale	1.8		3.4		(1.6)		(47)	%	4.5		8.4		(3.9)		(46)	%	Wholesale	3.2		4.4		(1.2)		(27)	%	7.7		12.8		(5.1)		(40)	%
RTO ancillary	RTO ancillary	10.1		10.9		(0.8)		(7)	%	20.8		21.8		(1.0)		(5)	%	RTO ancillary	11.5		11.0		0.5		5	%	32.3		32.8		(0.5)		(2)	%
Capacity revenues	Capacity revenues	1.1		1.8		(0.7)		(39)	%	2.3		3.9		(1.6)		(41)	%	Capacity revenues	0.9		1.1		(0.2)		(18)	%	3.2		5.0		(1.8)		(36)	%
Miscellaneous revenues	Miscellaneous revenues	1.4		0.6		0.8		133	%	2.3		0.6		1.7		283	%	Miscellaneous revenues	1.7		0.3		1.4		467	%	4.0		0.9		3.1		344	%
Total revenues	Total revenues	153.1		177.7		(24.6)		(14)	%	322.1		379.1		(57.0)		(15)	%	Total revenues	177.0		191.1		(14.1)		(7)	%	499.1		570.2		(71.1)		(12)	%

Operating costs and expenses	Operating costs and expenses																	Operating costs and expenses

Net fuel cost	Net fuel cost	0.3		0.5		(0.2)		(40)	%	0.9		1.4		(0.5)		(36)	%	Net fuel cost	0.4		0.6		(0.2)		(33)	%	1.3		2.0		(0.7)		(35)	%
Purchased power:	Purchased power:																	Purchased power:
Purchased power	Purchased power	43.3		49.2		(5.9)		(12)	%	100.6		115.3		(14.7)		(13)	%	Purchased power	55.7		60.4		(4.7)		(8)	%	156.3		175.7		(19.4)		(11)	%
RTO charges	RTO charges	5.7		4.9		0.8		16	%	10.8		12.1		(1.3)		(11)	%	RTO charges	10.0		5.5		4.5		82	%	20.8		17.6		3.2		18	%

Net purchased power cost	Net purchased power cost	49.0		54.1		(5.1)		(9)	%	111.4		127.4		(16.0)		(13)	%	Net purchased power cost	65.7		65.9		(0.2)		—	%	177.1		193.3		(16.2)		(8)	%

Operation and maintenance	Operation and maintenance	42.8		44.8		(2.0)		(4)	%	89.9		93.0		(3.1)		(3)	%	Operation and maintenance	47.8		42.2		5.6		13	%	137.7		135.2		2.5		2	%
Depreciation and amortization	Depreciation and amortization	18.2		17.5		0.7		4	%	35.5		35.5		—		—	%	Depreciation and amortization	18.2		17.4		0.8		5	%	53.7		52.9		0.8		2	%
Taxes other than income taxes	Taxes other than income taxes	21.0		18.0		3.0		17	%	41.8		37.4		4.4		12	%	Taxes other than income taxes	17.8		20.8		(3.0)		(14)	%	59.6		58.2		1.4		2	%

Other, net	Other, net	0.1		0.1		—		—	%	—		0.1		(0.1)		(100)	%	Other, net	0.1		(0.1)		0.2		(200)	%	0.1		—		0.1		—	%

Total operating costs and expenses	Total operating costs and expenses	131.4		135.0		(3.6)		(3)	%	279.5		294.8		(15.3)		(5)	%	Total operating costs and expenses	150.0		146.8		3.2		2	%	429.5		441.6		(12.1)		(3)	%

Operating income	Operating income	21.7		42.7		(21.0)		(49)	%	42.6		84.3		(41.7)		(49)	%	Operating income	27.0		44.3		(17.3)		(39)	%	69.6		128.6		(59.0)		(46)	%

Other income / (expense), net:	Other income / (expense), net:																	Other income / (expense), net:
Interest expense	Interest expense	(6.4)		(6.7)		0.3		(4)	%	(12.6)		(13.8)		1.2		(9)	%	Interest expense	(5.9)		(6.1)		0.2		(3)	%	(18.5)		(19.9)		1.4		(7)	%

Other income / (expense)	Other income / (expense)	0.2		—		0.2		—	%	(1.6)		0.6		(2.2)		(367)	%	Other income / (expense)	0.2		(0.5)		0.7		(140)	%	(1.4)		0.1		(1.5)		(1,500)	%
Total other expense, net	Total other expense, net	(6.2)		(6.7)		0.5		(7)	%	(14.2)		(13.2)		(1.0)		8	%	Total other expense, net	(5.7)		(6.6)		0.9		(14)	%	(19.9)		(19.8)		(0.1)		1	%

Income before income tax (a)	Income before income tax (a)	$	15.5	$	36.0	$	(20.5)	(57)	%	$	28.4	$	71.1	$	(42.7)	(60)	%	Income before income tax (a)	$	21.3	$	37.7	$	(16.4)	(44)	%	$	49.7	$	108.8	$	(59.1)	(54)	%

(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

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DP&L's electric sales and billed customers were as follows:


ELECTRIC SALES AND CUSTOMERS ^(a)	ELECTRIC SALES AND CUSTOMERS ^(a)										ELECTRIC SALES AND CUSTOMERS (a)
		Three months ended			Six months ended				Three months ended			Nine months ended
		June 30,			June 30,				September 30,			September 30,
		2020	2019	2020	2019		2020	2019	2020	2019
Retail electric sales ^(b)	Retail electric sales ^(b)					Retail electric sales (b)
Residential	Residential	1,208	1,070	2,606	2,620	Residential	1,461	1,461	4,067	4,081
Commercial and other	Commercial and other	788	873	1,643	1,776	Commercial and other	973	1,044	2,616	2,820
Industrial	Industrial	763	952	1,656	1,859	Industrial	987	995	2,643	2,854
Governmental	Governmental	262	305	553	610	Governmental	319	355	872	965
Other	Other	3	3	9	8	Other	4	4	13	12
Total retail electric sales	Total retail electric sales	3,024	3,203	6,467	6,873	Total retail electric sales	3,744	3,859	10,211	10,732
Wholesale electric sales ^(c)	Wholesale electric sales ^(c)	81	110	200	270	Wholesale electric sales (c)	123	151	323	421
Total electric sales	Total electric sales	3,105	3,313	6,667	7,143	Total electric sales	3,867	4,010	10,534	11,153

Billed electric customers (end of period)	Billed electric customers (end of period)			528,350	525,176	Billed electric customers (end of period)			529,674	523,915

(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 ~~865~~1,057 kWh and ~~1880~~2,937 kWh for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, and ~~832~~1,041 kWh and ~~1941~~2,982 kWh for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively.

(c)Wholesale electric sales are DP&L's 4.9% share of the generation output of ~~OVEC..~~OVEC.

During the three months ended ~~June~~September 30, 2020, revenue decreased ~~$24.6~~$14.1 million to ~~$153.1~~$177.0 million compared to ~~$177.7~~$191.1 million in the same period of the prior year, and, during the ~~six~~nine months ended ~~June~~September 30, 2020, revenue decreased ~~$57.0~~$71.1 million to ~~$322.1~~$499.1 million compared to ~~$379.1~~$570.2 million in the same period of the prior year. These changes were primarily the result of changes in the components of revenue shown below:

Three months ended Six months ended
June 30, June 30,
$ in millions 2020 vs. 2019 2020 vs. 2019
Retail
Rate
Decrease due to removal of DMR $ (24.4) $ (51.2)
Decrease due to removal of DIR (4.9) (11.1)
Decrease in energy efficiency revenue rate rider (2.9) (5.7)
Decrease due to removal of decoupling rider (9.6) (5.1)
Increase due to reinstatement of RSC rider 17.4 34.9
Other (1.2) (3.7)
Net change in retail rate (25.6) (41.9)
Volume
Net increase / (decrease) in the volume of kWh sold primarily due to favorable / (unfavorable) weather as compared to the same periods in the prior year and, to a lesser extent, the unfavorable demand impacts of COVID-19 in the second quarter of 2020, which resulted in lower demand for commercial and industrial customers, partially offset by higher residential demand 3.7 (10.1)
Other miscellaneous (0.4) (0.2)
Total retail change (22.3) (52.2)
Wholesale
Decrease due to lower wholesale prices and lower volumes at OVEC (1.6) (3.9)
RTO ancillary and capacity revenues
RTO ancillary and capacity revenues (1.5) (2.6)
Other
Miscellaneous revenues 0.8 1.7
Net change in revenues $ (24.6) $ (57.0)


	Three months ended		Nine months ended
	September 30,		September 30,
$ in millions	2020 vs. 2019		2020 vs. 2019
Retail
Rate
Decrease due to removal of DMR	$	(28.2)	$	(79.4)
Decrease due to removal of DIR	(5.6)		(16.7)
Decrease in energy efficiency revenue rate rider	(3.0)		(8.7)
Increase / (decrease) due to removal of decoupling rider	0.4		(4.7)
Increase / (decrease) due to the TCRR rider	4.5		(1.2)
Increase due to reinstatement of RSC rider	20.0		54.9
Other	1.2		3.5
Net change in retail rate	(10.7)		(52.3)

Volume



Net decrease in the volume of kWh sold primarily due to unfavorable weather as compared to the same periods in the prior year and lower demand from commercial customers due to the impacts of COVID-19, partially offset by higher demand from residential customers due to the impacts of COVID-19	(4.5)		(14.6)

Other miscellaneous	0.6		0.1
Total retail change	(14.6)		(66.8)

Wholesale



Decrease due to lower wholesale prices and lower volumes at OVEC	(1.2)		(5.1)

RTO ancillary and capacity revenues
RTO ancillary and capacity revenues	0.3		(2.3)

Other
Miscellaneous revenues	1.4		3.1

Net change in revenues	$	(14.1)	$	(71.1)

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DP&L – Net Purchased Power

During the three months ended ~~June~~September 30, 2020, net purchased power decreased ~~$5.1~~$0.2 million to ~~$49.0~~$65.7 million compared to ~~$54.1~~$65.9 million in the same period of the prior year, and, during the ~~six~~nine months ended ~~June~~September 30, 2020, net purchased power decreased ~~$16.0~~$16.2 million to ~~$111.4~~$177.1 million compared to ~~$127.4~~$193.3 million in the same period of the prior year. These changes were primarily the result of changes in the cost of purchased power shown below.

Three months ended

Six months ended

Three months ended

Nine months ended

June 30,

September 30,

$ in millions

2020 vs. 2019

$ in millions

2020 vs. 2019

Net purchased power

Purchased power

Rate

Decrease due to pricing in the competitive bid process

(8.4)

(12.8)

Decrease due to pricing in the competitive bid process

(3.7)

(16.5)

Volume

Increase / (decrease) due to higher / (lower) retail load served primarily driven by weather and, to a lesser extent, COVID-19 demand impacts

2.5

(1.9)

Decrease due to lower retail load served primarily driven by weather, partially offset by COVID-19 demand impacts

(1.0)

(2.9)

Total purchased power change

(5.9)

(14.7)

Total purchased power change

(4.7)

(19.4)

RTO charges

0.8

(1.3)

RTO charges

Increase primarily due to higher rates in 2020

4.5

3.2

Net change in purchased power

(5.1)

(16.0)

Net change in purchased power

(0.2)

(16.2)

DP&L – Operation and Maintenance

During the three and ~~six~~nine months ended ~~June~~September 30, 2020, Operation and Maintenance expense ~~decreased $2.0~~increased $5.6 million and ~~$3.1~~$2.5 million, respectively, compared to the same periods in the prior year. The main drivers of these changes are as follows:


		Three months ended		Six months ended			Three months ended		Nine months ended
		June 30,		June 30,			September 30,		September 30,
$ in millions	$ in millions	2020 vs. 2019		2020 vs. 2019		$ in millions	2020 vs. 2019		2020 vs. 2019
Decrease in alternative energy and energy efficiency programs ^(a)		$	(3.3)	$	(6.1)
Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider (a)						Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider (a)	2.5		6.0

Increase in uncollectible expenses for the low-income payment program, which is funded by the USF revenue rate rider ^(a)		2.1		3.6
Increase in deferred storm costs (a)						Increase in deferred storm costs (a)	1.6		4.9

Decrease in alternative energy and energy efficiency programs (a)						Decrease in alternative energy and energy efficiency programs (a)	(3.0)		(9.1)
Increase / (decrease) in legal expenses, primarily due to an insurance reimbursement in September 2019						Increase / (decrease) in legal expenses, primarily due to an insurance reimbursement in September 2019	2.0		(0.8)
Other, net	Other, net	(0.8)		(0.6)		Other, net	2.5		1.5

Net change in operation and maintenance expense	Net change in operation and maintenance expense	$	(2.0)	$	(3.1)	Net change in operation and maintenance expense	$	5.6	$	2.5

(a) There is a corresponding offset in Revenues associated with these programs.

DP&L - Taxes Other Than Income Taxes

During the three ~~and six~~ months ended ~~June~~September 30, 2020, Taxes other than income taxes decreased $3.0 million compared to the same period in the prior year. The decrease was primarily due to an updated Ohio property tax assessment in September 2020, which resulted in a favorable adjustment to property tax expense during the quarter.

During the nine months ended September 30, 2020, Taxes other than income taxes increased ~~$3.0~~$1.4 million ~~and $4.4 million, respectively,~~ compared to the same ~~periods~~period in the prior year. The increase was primarily from higher property taxes due to an increase in assessed values for Ohio properties for 2020.

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DP&L – Income Tax Expense / (Benefit)

Income tax ~~expense~~benefit of ~~$6.2~~$7.2 million during the three months ended ~~June~~September 30, 2019 changed to an income tax ~~benefit~~expense of ~~$2.3~~$3.5 million during the three months ended ~~June~~September 30, 2020. The ~~decrease~~change of ~~$8.5~~$10.7 million ~~of expense~~ was primarily due to the impact of the benefit recorded in the prior year related to the September 26, 2019 PUCO order and the net tax benefit related to the reversal of excess deferred taxes, ~~and~~which were partially offset by the reversal of an uncertain tax position ~~which were partially offset by~~and an adjustment to the deferred tax balances.

Income tax expense of ~~$12.3~~$5.1 million during the ~~six~~nine months ended ~~June~~September 30, 2019 changed to an income tax ~~benefit~~expense of ~~$1.1~~$2.4 million during the ~~six~~nine months ended ~~June~~September 30, 2020. The decrease of ~~$13.4~~$2.7 million of expense was primarily due to ~~the net tax benefit related to the reversal of excess deferred taxes and the reversal of an uncertain tax position, which were partially~~a decrease in pre-tax income offset by ~~an adjustment to~~changes in the ~~deferred tax balances.~~full year forecasted rate.

See Note 7 – Income Taxes of Notes to DP&L's Condensed Financial Statements for further discussion.

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KEY TRENDS AND UNCERTAINTIES

Following the issuance of the DRO in September 2018 and the resulting changes to the Decoupling Rider effective January 1, 2019, our financial results were not driven by retail demand and weather but were impacted by customer growth within our service territory. However, the Decoupling Rider was removed with the approved withdrawal of the 2017 ESP and reversion to DP&L's ESP 1 rate plan in December 2019. As such, our results are again primarily impacted by retail demand and weather. 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;

•the passage of new legislation, implementation of regulations or other changes in regulation; and

•the timely recovery of transmission and distribution expenditures.

COVID-19 Pandemic

InSince December 2019, ~~a novel strain of coronavirus (COVID-19) was reported~~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 ~~have surfaced in Wuhan, China.~~the 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 March 13, 2020 the United States declared a national emergency with respect to COVID-19. On March 12, 2020,~~ the PUCO issued an emergency order prohibiting electric utilities, including us, from discontinuing electric utility service to customers. This prohibition ~~is currently scheduled to end~~ended for DP&L on September 1, ~~2020, pending approval by the PUCO.~~2020.

The outbreak of COVID-19 has severely impacted global economic activity, caused significant volatility and negative pressure in financial markets and reduced the demand for energy in our service territory. 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 restricting travel.

In addition to ~~reduced revenues and lower margins resulting from decreased energy~~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. WeFor the quarter ending September 30, 2020, we continued to experience impacts from the pandemic and expect to continue to experience impacts for the remainder of 2020, and any such impacts during ~~the third quarter~~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 Part II, Item 1A-Risk Factors of this Form 10-Q.

Business Continuity - As the COVID-19 pandemic progresses, we are taking a variety of measures to ensure our ability to 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 ~~there have been~~ stay-at-home ~~restrictions in place in Ohio, our operations are considered essential and have not been significantly disrupted. Stay-at-home~~ restrictions have been lifted in our service territory, ~~and non-essential employees are beginning to return to work at our locations in stages. Most~~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 more so in the second ~~quarter~~and third quarters of 2020. For the three and six months ended June 30, 2020, the COVID-19 pandemic primarily impacted our retail sales demand. For commercial and industrial customers, weather-normalized volumes of kWh sold decreased by 11.0% and 19.9%, respectively, for the three months ended June 30, 2020 compared to the same period in the prior year. For residential customers, weather-normalized volumes of kWh sold increased by 8.5% for the three months ended June 30, 2020 compared to the same period in the prior year. See Note 12 – Revenue and Note 14 – Risks and Uncertainties of Notes to DPL's Condensed Consolidated Financial Statements and Note 11 – Revenue and Note 12 – Risks and Uncertainties of Notes to DP&L's Condensed 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 third quarter as stay-at-home orders were ~~lifted, while the increase for residential stayed consistent.~~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 2020 and beyond.

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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 taxable 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. For further discussion of our financial condition, liquidity, and capital requirements, see Part I, Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations - Capital Resources and Liquidity of this Form 10-Q.

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Credit Exposures - We continue to monitor and manage our credit exposures in a prudent manner. During the three and nine months ended ~~June~~September 30, 2020, 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 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 ~~$2.3~~$2.8 million for both DPL and DP&L during the ~~second~~nine months ended September 30, 2020. During the third quarter of ~~2020.~~2020, DP&L implemented and offered extended payment plans to customers as a result of the pandemic. We expect significant economic disruptions from the COVID-19 pandemic potentially for the remainder of 2020 and beyond. If these disruptions occur, further deterioration in our credit exposures and customer collections could result. However, as discussed in Note 3 – Regulatory Matters of Notes to DPL's ~~Condensed~~ Consolidated Financial Statements and Note 3 – Regulatory Matters of Notes to DP&L's ~~Condensed~~ Financial Statements in Item 8. - Financial Statements and Supplementary Data of our Form 10-K, DP&L’s uncollectible expense is deferred for future collection. The prohibition from discontinuing electric utility service ~~is currently scheduled to end~~ended for DP&L on September 1, ~~2020, pending approval by the PUCO.~~2020.

Supply Chain - Our supply chain management has remained robust during this challenging time and we continue to closely manage and monitor developments.

Capital Projects - During the COVID-19 pandemic, our construction projects are proceeding without material delays. For further discussion of our capital requirements, see Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Capital Resources and Liquidity of this Form 10-Q.

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, certain elements, primarily the deferral of payroll taxes, may provide some cash benefits in the near term.

~~Income Taxes~~ - The demands placed on the U.S. Government to respond to the pandemic may cause delays to the expected issuance of regulations pursuant to the TCJA enacted in 2017. Our interpretation of the TCJA may change as the U.S. Treasury and the Internal Revenue Service issue additional guidance. Such changes may be material.

See Note 14 – Risks and Uncertainties of Notes to DPL's Condensed Consolidated Financial Statements and Note 12 – Risks and Uncertainties of Notes to DP&L's Condensed Financial Statements for more information and Part II, Item 1a - Risk Factors of this Form 10-Q for more information.

Regulatory Environment

DPL’s, DP&L’s and our other subsidiaries’ facilities and operations are subject to 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 2019 Form 10-K and ~~Form~~Forms 10-Q previously filed with the SEC during 2020 describe other regulatory matters which have not materially changed since those filings. See Part I, Item 1, Note 3 – Regulatory Matters of Notes to DPL's Condensed Consolidated Financial Statements and Part I, Item 1, Note 3 – Regulatory Matters of Notes to DP&L's Condensed Financial Statements for further information regarding regulatory matters.

~~U.S. Executive Order Regarding Power Equipment~~Stipulation and Recommendation - On ~~May 1,~~October 23, 2020, ~~President Trump issued an executive order banning transactions involving the acquisition, importation, transfer, or installation of certain equipment to be used in~~

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~~connection~~ entered into a Stipulation and Recommendation with the ~~operation~~staff of the ~~U.S. interconnected transmission network~~PUCO and ~~electric generation facilities needed to maintain transmission reliability. The ban would apply if such equipment is~~ ~~designed, manufactured or supplied by any company that~~various customers and other organizations, which is subject to ~~or controlled by,~~PUCO approval. This Stipulation and Recommendation would provide resolution on several matters pending before the ~~jurisdiction~~PUCO. See additional information in Note 3 – Regulatory Matters of Notes to DPL's Condensed Consolidated Financial Statements and Note 3 – Regulatory Matters of Notes to DP&L's Condensed Financial Statements.

Distribution Rate Case - On October 30, 2020 DP&L filed a ~~country considered by the United States~~Pre-filing Notice of Intent to file an application to increase rates for distribution service. The Distribution Rate Case Application will be ~~a foreign adversary and such transaction would pose an unacceptable risk to the national security of the United States~~ (Executive Order). We are reviewing the Executive Order and will consider the rules and regulations to be issued pursuant to this Executive Order when they become available, including rules and regulations that may define foreign adversaries, such as China, under the Executive Order or identify equipment or vendors that are exempt from any restrictions under the Executive Order. At this time, the impact of this Executive Orderfiled on ~~our business is uncertain.~~November 30, 2020.

Ohio House Bill 6 - ~~In late July 2020,~~Legislation, such as Senate Bill 346 and House Bill 738, ~~were~~has been introduced in the Ohio General Assembly seeking to repeal Ohio House Bill 6. Ohio House Bill 6, 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 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

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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.

Reference Rate Reform

As discussed in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Form 10-K, in July 2017, the U.K. 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. We maintain financial instruments that use LIBOR as an interest rate benchmark and 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.

Environmental Matters

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

As a result of DPL’s retirement and subsequent sale of its Stuart and Killen generating stations, the sale of its ownership interest in the Miami Fort and Zimmer generating stations and the retirement and subsequent sale of Conesville, the following environmental matters, regulations and requirements are now not expected to have a material impact on DPL:

•CSAPR and associated updates;

•MATS and any associated regulatory or judicial processes;

•NAAQS; and

•the Affordable Clean Energy Rule.

Regulation of CCR

On October 19, 2015, a USEPA rule regulating CCR under the Resource Conservation and Recovery Act as nonhazardous solid waste became ~~effective.~~effective (CCR Rule). The ~~rule~~CCR Rule established nationally applicable minimum criteria for the disposal of CCR in new and currently operating landfills and surface impoundments, including location restrictions,

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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 ~~rule~~Rule 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 which is in process. On February 20, 2020, the US EPA published a proposed rule to establish a federal CCR permit program that would operate in states without approved CCR permit programs. On ~~July 29,~~August 28, 2020, the USEPA published final amendments to the CCR Rule titled “A Holistic Approach to Closure Part A: Deadline to Initiate Closure”, which amends certain regulatory provisions that govern CCR. On October 16, 2020, the USEPA released a pre-publication version of final amendments to the CCR rule titled “A Holistic Approach to Closure Part ~~A: Deadline~~B”. The CCR Rule, current or proposed amendments to ~~Initiate Closure”. It is too early to determine whether~~ the CCR ~~rule~~Rule, the results of groundwater monitoring data or ~~any revisions to or reconsideration~~the outcome of ~~the rule may~~CCR-related litigation could have a material ~~impact~~adverse effect on our ~~business,~~results of operations, financial condition ~~or results of operations.~~and cash flows.

Litigation Involving Previously 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

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for the Southern District of Ohio, DPL and the other previous owners of the Stuart generating 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 generating station, DPL and the other previous owners submitted a request for termination of the consent decree to the U.S. District Court. On July 14, 2020, the U.S. District Court granted the request and terminated the Consent Decree.

Clean Water Act - Regulation of Water Discharge

DP&L and other utilities at times apply 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. 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, 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. It is too early to determine whether this decision may have a material impact on our business, financial condition or results of operations.

CAPITAL RESOURCES AND LIQUIDITY

DPL and DP&L had unrestricted cash and cash equivalents of ~~$412.2~~$43.5 million and ~~$74.1~~$26.1 million, respectively, at ~~June~~September 30, 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 ~~$1,793.0~~$1,413.0 million and $582.4 million, respectively.

At ~~June~~September 30, 2020, approximately ~~$380.2~~$0.2 million of DPL's long-term debt, including $0.2 million of DP&L's long-term debt, matures within twelve months of the balance sheet date. ~~On June 19, 2020~~ ~~DPL~~ ~~closed a $415.0 million~~

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~~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 on July 20, 2020. These bonds were redeemed at par plus accrued interest and a make-whole premium of $30.8 million.~~

In May 2020, DP&L received approval to, among other things, issue up to $140.0 million in aggregate principal amount of long-term indebtedness for a term not to exceed 30 years. On July 31, 2020, DP&L issued $140.0 million of taxable First Mortgage Bonds and on August 3, 2020 used the proceeds to purchase at par value the $140.0 million of outstanding tax-exempt Ohio Air Quality Development Authority (OAQDA) Collateralized Pollution Control Revenue Refunding Bonds that had been issued in 2015. The new taxable First Mortgage Bonds carry an interest rate of 3.20% and mature on July 31, 2040. ~~As a result of this refinancing, the $140.0 million tax-exempt First Mortgage Bonds are presented as long-term debt as of June 30, 2020.~~

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.

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

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times of political or economic uncertainty could have a material adverse effect on our results of operations, financial condition and cash flows. In addition, changes in the timing of tariff increases or delays in regulatory determinations could affect the cash flows and results of operations of our businesses.

Our discussion of DPL’s financial condition, liquidity and capital requirements include the results of its principal subsidiary DP&L.

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

The following table summarizes the cash flows of DPL:


DPL		Six months ended June 30,
							Nine months ended September 30,
$ in millions	$ in millions	2020		2019		$ in millions	2020		2019
Net cash provided by operating activities	Net cash provided by operating activities	$	82.8	$	99.0	Net cash provided by operating activities	$	81.7	$	136.3
Net cash used in investing activities	Net cash used in investing activities	(80.3)		(66.6)		Net cash used in investing activities	(125.4)		(125.9)
Net cash provided by / (used in) financing activities	Net cash provided by / (used in) financing activities	362.8		(101.5)		Net cash provided by / (used in) financing activities	40.3		(67.7)

Net change	Net change	365.3		(69.1)		Net change	(3.4)		(57.3)
Balance at beginning of period	Balance at beginning of period	47.0		111.7		Balance at beginning of period	47.0		111.7
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	412.3	$	42.6	Cash, cash equivalents, and restricted cash at end of period	$	43.6	$	54.4

DPL – Net cash from operating activities


		Six months ended June 30,							$ change			Nine months ended September 30,				$ change
$ in millions	$ in millions	2020		2019		2020 vs. 2019		$ in millions		2020		2019		2020 vs. 2019
Net income		$	5.4	$	26.0	$	(20.6)
Net income / (loss)								Net income / (loss)		$	(2.8)	$	61.4	$	(64.2)
Depreciation and amortization	Depreciation and amortization	36.4		13.9		22.5		Depreciation and amortization		55.1		34.2		20.9
Deferred income taxes	Deferred income taxes	33.5		8.6		24.9		Deferred income taxes		32.3		(8.7)		41.0
Loss on early extinguishment of debt								Loss on early extinguishment of debt		31.7		44.9		(13.2)
Other adjustments to Net income								Other adjustments to Net income		(0.1)		4.2		(4.3)

Net income, adjusted for non-cash items	Net income, adjusted for non-cash items	71.0		94.2		(23.2)		Net income, adjusted for non-cash items		116.2		136.0		(19.8)
Net change in operating assets and liabilities	Net change in operating assets and liabilities	11.8		4.8		7.0		Net change in operating assets and liabilities		(34.5)		0.3		(34.8)
Net cash provided by operating activities	Net cash provided by operating activities	$	82.8	$	99.0	$	(16.2)	Net cash provided by operating activities		$	81.7	$	136.3	$	(54.6)

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The net change in operating assets and liabilities during the ~~six~~nine months ended ~~June~~September 30, 2020 compared to the ~~six~~nine months ended ~~June~~September 30, 2019 was driven by the following:


$ in millions	$ Change
~~Increase from accrued taxes payable / receivable primarily due to tax payment of $52 million from AES, partially offset by an increase in the current tax benefit in the current year~~	$	~~28.7~~
~~Decrease from accounts payable primarily due to timing of payments~~	~~(17.9)~~
Decrease from deferred regulatory costs, net primarily due to a decrease in regulatory liabilities as we return certain benefits to customers	(20.0)
~~(12.8)~~Decrease from accounts payable primarily due to timing of payments	(19.5)
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 year	8.0
Other	~~9.0~~ (3.3)
Net ~~increase~~decrease in cash from changes in operating assets and liabilities	$	~~7.0~~ (34.8)

DPL – Net cash from investing activities

Net cash used in investing activities was ~~$(80.3)~~$(125.4) million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$(66.6)~~$(125.9) million for the ~~six~~nine months ended ~~June~~September 30, 2019. This ~~$13.7~~$0.5 million ~~increase~~decrease in cash used primarily relates to $5.1 million of proceeds received from the sale of software in the current year and a ~~$20.6~~$2.9 million decrease in the purchase of renewable energy credits, partially offset by a $6.3 million increase in capital expenditures due to an increase in cost of removal ~~payments, partially offset by $5.1 million of proceeds received from the sale of software in the current year.~~payments.

DPL – Net cash from financing activities

Net cash provided by / (used in) financing activities was ~~$362.8~~$40.3 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$(101.5)~~$(67.7) million from financing activities for the ~~six~~nine months ended ~~June~~September 30, 2019. This ~~$464.3~~$108.0 million increase is primarily due to a ~~$571.3~~$160.5 million increase in net issuances of long-term debt ($~~415.0~~4.2 million

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net issuance of ~~senior unsecured notes~~long-term debt in 2020 compared to net retirements on long-term debt of $156.3 million in 2019) and a $98.0 million capital contribution in the current year, partially offset by increased net payments on revolving credit facilities of ~~$207.0~~$152.0 million in the current ~~year (net payments of $144.0 million in 2020 compared to net borrowings of $63.0 million in 2019).~~year.

Cash Flow Analysis - DP&L

The following table summarizes the cash flows of DP&L:


DP&L		Six months ended June 30,
							Nine months ended September 30,
$ in millions	$ in millions	2020		2019		$ in millions	2020		2019
Net cash provided by operating activities	Net cash provided by operating activities	$	38.7	$	104.0	Net cash provided by operating activities	$	49.7	$	138.9
Net cash used in investing activities	Net cash used in investing activities	(81.2)		(65.4)		Net cash used in investing activities	(125.8)		(124.6)
Net cash provided by / (used in) financing activities	Net cash provided by / (used in) financing activities	95.4		(87.7)		Net cash provided by / (used in) financing activities	81.0		(48.5)

Net change	Net change	52.9		(49.1)		Net change	4.9		(34.2)
Balance at beginning of period	Balance at beginning of period	21.3		66.2		Balance at beginning of period	21.3		66.2
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	74.2	$	17.1	Cash, cash equivalents, and restricted cash at end of period	$	26.2	$	32.0

DP&L – Net cash from operating activities


		Six months ended June 30,							$ change			Nine months ended September 30,				$ change
$ in millions	$ in millions	2020		2019		2020 vs. 2019		$ in millions		2020		2019		2020 vs. 2019
Net income	Net income	$	29.5	$	26.0	$	3.5	Net income		$	47.3	$	103.7	$	(56.4)
Depreciation and amortization	Depreciation and amortization	35.5		35.5		—		Depreciation and amortization		53.7		52.9		0.8
Deferred income taxes	Deferred income taxes	1.2		(3.5)		4.7		Deferred income taxes		(0.1)		(17.2)		17.1
Other adjustments to Net income	Other adjustments to Net income	—		32.8		(32.8)		Other adjustments to Net income		2.9		2.8		0.1
Net income, adjusted for non-cash items	Net income, adjusted for non-cash items	66.2		90.8		(24.6)		Net income, adjusted for non-cash items		103.8		142.2		(38.4)
Net change in operating assets and liabilities	Net change in operating assets and liabilities	(27.5)		13.2		(40.7)		Net change in operating assets and liabilities		(54.1)		(3.3)		(50.8)
Net cash provided by operating activities	Net cash provided by operating activities	$	38.7	$	104.0	$	(65.3)	Net cash provided by operating activities		$	49.7	$	138.9	$	(89.2)

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$ in millions	$ Change
Decrease from ~~accounts payable~~deferred regulatory costs, net, primarily due to ~~timing of payments~~a decrease in regulatory liabilities as we return certain benefits to customers	(20.0)		~~(14.7)~~
Decrease from accounts receivable due to PJM transmission enhancement settlement collections in the prior year	~~(14.0)~~(17.2)

Decrease from ~~deferred regulatory costs, net,~~accounts payable primarily due to ~~a decrease in regulatory liabilities as we return certain benefits to customers~~timing of payments	(15.8)		~~(12.8)~~
Other	~~0.8~~2.2
Net decrease in cash from changes in operating assets and liabilities	$	~~(40.7)~~(50.8)

DP&L – Net cash from investing activities

Net cash used in investing activities was ~~$(81.2)~~$(125.8) million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$(65.4)~~$(124.6) million for the ~~six~~nine months ended ~~June~~September 30, 2019. This ~~$15.8~~$1.2 million increase in cash used primarily relates to ~~an $18.3~~a $4.0 million increase in capital expenditures due to an increase in cost of removal payments in the current ~~year.~~year, partially offset by a $2.9 million decrease in the purchase of renewable energy credits.

DP&L – Net cash from financing activities

Net cash provided by / (used in) financing activities was ~~$95.4~~$81.0 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$(87.7)~~$(48.5) million from financing activities for the ~~six~~nine months ended ~~June~~September 30, 2019. This ~~$183.1~~$129.5 million increase primarily relates to a $150.0 million ~~increase due to a~~ capital contribution from DPL in the current year and a ~~$55.8~~$62.3 million decrease in return of capital payments compared to the prior year, partially offset by a ~~$40.0~~$100.0 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 2020 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

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capacity under bank credit facilities will continue to be available to manage working capital requirements during those periods. During the ~~six~~nine months ended ~~June~~September 30, 2020, DPL received $150.0 million in a cash contribution from AES, which DPL then used to make a $150.0 million capital contribution to DP~~&L.~~&L. The contribution at DPL represented an equity capital contribution of $98.0 million and a payment of $52.0 million against its tax receivable. The proceeds from the capital contribution at DP&L will primarily be used for funding needs to support DP&L's capital expenditure program, mainly new investments in and upgrades to DP&L’s transmission and distribution system.

At ~~June~~September 30, 2020, DP&L and DPL have access to the following revolving credit facilities:


$ in millions	$ in millions	Type	Maturity	Commitment		Amounts available as of June 30, 2020		$ in millions	Type	Maturity	Commitment		Amounts available as of September 30, 2020
DP&L	DP&L	Revolving	June 2024	$	175.0	$	173.9	DP&L	Revolving	June 2024	$	175.0	$	173.9
DPL	DPL	Revolving	June 2023	110.0		103.5		DPL	Revolving	June 2023	110.0		15.0
				$	285.0	$	277.4				$	285.0	$	188.9

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 size of the facility by an additional $100.0 million. This facility expires in June 2024. At ~~June~~September 30, 2020, there was one letter of credit in the amount of $1.1 million outstanding under this facility, and $0.0 million in borrowings, with the remaining $173.9 million available to DP&L. Fees associated with this letter of credit facility were not material during the ~~six~~nine months ended ~~June~~September 30, 2020 or 2019.

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, 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 ~~June~~September 30, 2020, there ~~were five~~was one letters of credit in the aggregate amount of ~~$6.5~~$5.0 million outstanding and ~~$0.0~~$90.0 million in borrowings, with the remaining ~~$103.5~~$15.0 million available to DPL. Fees associated with this facility were not material during the ~~six~~nine months ended ~~June~~September 30, 2020 or 2019.

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Capital Requirements

Planned construction additions for 2020 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 considering changes in financial and economic conditions, load forecasts, legislative and regulatory developments and changing environmental requirements, among other factors.

DPL is projecting to spend an estimated $615.0 million in capital projects for the period 2020 through 2022, of which $608.0 million is projected to be spent by DP~~&L.~~&L. DP&L's projection includes expected spending under DP&L's ~~Distribution Modernization~~Smart Grid Plan ~~filed with~~included in the ~~PUCO in December 2018~~Stipulation and Recommendation entered into on October 23, 2020 as well as new transmission projects. See additional information in Note 3 – Regulatory Matters of Notes to DPL's Condensed Consolidated Financial Statements and Note 3 – Regulatory Matters of Notes to DP&L's Condensed Financial Statements.

DP&L is subject to the mandatory reliability standards of NERC and ReliabilityFirst Corporation, one of the six NERC regions, of which DP&L is a member. DP&L anticipates spending approximately $73.0 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.

Long-term debt covenants

For information regarding our long-term debt covenants, see Part I, Item 1, Note 6 – Long-term Debt of Notes to DPL's Condensed Consolidated Financial Statements and Part I, Item 1, Note 6 – Long-term Debt of Notes to DP&L's Condensed Financial Statements.

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Debt and Credit Ratings

The following table presents, as of the filing of this report, the debt ratings and outlook for DPL and DP&L, along with the effective or affirmed date of each rating.

DPL

DP&L

Outlook

Effective or Affirmed

Fitch Ratings

BB+^(a) / BB ^(b)

BBB+^(c)

Negative

April 2020

Moody's Investors Service, Inc.

Ba1^(b)

A3^(c)

Negative

December 2019

Standard & Poor's Financial Services LLC

BBBB+^(b)

~~BBB~~BBB+ ^(c)

~~Negative~~Developing

November ~~2019~~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.

The following table presents, as of the filing of this report, the credit ratings (issuer/corporate rating) and outlook for DPL and DP&L, along with the effective or affirmed date of each rating.

DPL

DP&L

Outlook

Effective or Affirmed

Fitch Ratings

BBB-

Negative

April 2020

Moody's Investors Service, Inc.

Ba1

Baa2

Negative

December 2019

Standard & Poor's Financial Services LLC

BBBB+

~~Negative~~Developing

November ~~2019~~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 selected contracts. These events could 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.

Off-Balance Sheet Arrangements

For information on guarantees, commercial commitments, and contractual obligations, see Part I, Item 1, Note 10 – Contractual Obligations, Commercial Commitments and Contingencies of Notes to DPL's Condensed Consolidated Financial Statements and Part I, Item 1, Note 10 – Contractual Obligations, Commercial Commitments and Contingencies of Notes to DP&L's Condensed Financial Statements.

MARKET RISK

We are subject to certain market risks including, but not limited to, changes in commodity prices for electricity and fluctuations in interest rates. Our Risk Management Committee (RMC), comprised of members of senior management, is responsible for establishing risk management policies and the monitoring and reporting of risk

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exposures. The RMC meets on a regular basis with the objective of identifying, assessing and quantifying material risk issues and developing strategies to manage these risks.

The disclosures presented in this section are based upon a number of assumptions; actual effects may differ. The safe harbor provided in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 shall apply to the disclosures contained in this section. For further information regarding market risk, see Item 1A.—Risk Factors and Item 7A - Quantitative and Qualitative Disclosures about Market Risk of our Form 10-K. Our businesses may incur substantial costs and liabilities and be exposed to price volatility as a result of risks associated with the electricity markets, which could have a material adverse effect on our results of operations, financial condition and cash flows. In addition, we may not be adequately hedged against our exposure to changes in interest rates.

Interest Rate Risk

Because of our normal investing and borrowing activities, our financial results are exposed to fluctuations in interest rates which we manage through our regular financing activities. We maintain both cash on deposit and investments in cash equivalents that may be affected by adverse interest rate fluctuations. DPL has fixed-rate long-term debt. After the refinancing of the tax-exempt first mortgage bonds, DP&L only has fixed-rate long-term debt.

As of June 30, 2020, we have two 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. The

Long-term debt maturities and repayments occurring in the next twelve months are discussed under "CAPITAL RESOURCES AND LIQUIDITY".

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Critical Accounting Estimates

DPL’s Condensed Consolidated Financial Statements and DP&L’s Condensed 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.

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 derivative instruments; the valuation of insurance and claims liabilities; the valuation of allowances for credit losses and deferred income taxes; regulatory assets and liabilities; liabilities recorded for income tax exposures; litigation; contingencies; the valuation of AROs; assets and liabilities related to employee benefits and intangible assets. Refer to our Form 10-K for the year ended December 31, 2019 for a complete listing of our critical accounting policies and estimates. We have reviewed and determined that these remain as critical accounting policies as of and for the ~~six~~nine months ended ~~June~~September 30, 2020.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

See the “MARKET RISK” section in Item 2 of this Part I, which is incorporated by reference into this item.

Item 4 – Controls and Procedures

Disclosure Controls and Procedures

DPL and DP&L, under the supervision and with the participation of its management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), evaluated the effectiveness of our “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~June~~September 30,

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2020, to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Controls over Financial Reporting — There were no changes that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

Part II – Other Information

Item 1 – Legal Proceedings

In the normal course of business, we are subject to various lawsuits, actions, claims, and other proceedings. We are also, from time to time, involved in other reviews, investigations and proceedings by governmental and regulatory agencies regarding our business, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. We have accrued in our Financial Statements for litigation and claims where it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We believe the amounts provided in our Financial Statements, as prescribed by GAAP, for these matters are adequate considering the probable and estimable contingencies. However, there can be no assurances that the actual amounts required to

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satisfy alleged liabilities from various legal proceedings, claims and other matters (including those matters noted below), and to comply with applicable laws and regulations will not exceed the amounts reflected in our Financial Statements. As such, costs, if any, that may be incurred in excess of those amounts provided for in our Financial Statements, cannot be reasonably determined, but could be material.

Our Form 10-K for the fiscal year ended December 31, 2019 and ~~Form~~Forms 10-Q for the ~~quarter~~quarters ended March 31, and June 30, 2020 and the Notes to DPL’s Consolidated Financial Statements and DP&L’s Financial Statements included therein contain descriptions of certain legal proceedings in which we are or were involved. The information in or incorporated by reference into this Item 1 to Part II is limited to certain recent developments concerning our legal proceedings and new legal proceedings, since the filing of such Forms 10-K and 10-Q, and should be read in conjunction with such Forms 10-K and 10-Q.

The following information is incorporated by reference into this Item: information about the legal proceedings contained in Part I, Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations and Part I, Item 1, Note 3 – Regulatory Matters of Notes to DPL's Condensed Consolidated Financial Statements and Part I, Item 1, Note 3 – Regulatory Matters of Notes to DP&L's Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Item 1A – Risk Factors

A listing of the risk factors that we consider to be the most significant to a decision to invest in our securities is provided in our Form 10-K as supplemented in our Form 10-Q for each of the three ~~months~~month periods ended March ~~32,~~31 and June 30, 2020. Except as described below, there has been no material change in our risk factors as previously disclosed in our Form ~~10-K and 2020 first quarter Form 10-Q.~~10-K. If any of the events described in our risk factors occur, it could have a material adverse effect on our results of operations, financial condition and cash flows.

The risks and uncertainties described in our risk factors are not the only ones we face. In addition, new risks may emerge at any time, and we cannot predict those risks or estimate the extent to which they may affect our business or financial performance. Our risk factors should be read in conjunction with the other detailed information concerning DPL and DP&L set forth in the Notes to DPL’s and DP&L’s Financial Statements found in Part I, Item 1, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections included in our filings.

As part of the filing of this Quarterly Report Form on Form 10-Q, we are further revising, clarifying and

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supplementing our risk ~~factors, including those contained in our Form 10-K.~~factors. The risk factor below amends and supersedes the risk factor that we filed in connection with ~~the~~our 2020 first and second quarter Form ~~10-Q~~10-Qs and should be considered together with the other risk factors described in our Form 10-K:

The current outbreak of the novel 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 generation facilities, transmission and distribution systems, results of operations, financial condition and cash flows. Further, the spread of the COVID-19 outbreak has caused severe 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 March 13, 2020 the United States declared a national emergency with respect to COVID-19. On March 12, 2020, the PUCO issued an emergency order prohibiting electric utilities, including us, from discontinuing electric utility service to customers, which prohibition is currently scheduled to end September 1, 2020 for ~~DP&L~~ ~~pending PUCO approval.~~

The outbreak of COVID-19 has severely 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 will incur expenses relating to COVID-19, and such expenses may include those that relate to events outside of our control. 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~~as well as restricting travel. Many experts predict that the outbreak will trigger a period of global economic slowdown or a global recession. COVID-19 or another pandemic could have material and adverse effects on our results of operations, financial condition and cash flows due to, among other factors:

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•further decline in customer demand as a result of general decline in business activity;

•further destabilization of the markets and decline in business activity negatively impacting our customer growth or the number of customers in our service territory as well as our customers’ ability to pay for our services when due (or at all);

•delay or inability in obtaining regulatory actions and outcomes 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 global 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 affected, and on our operations as a result of implementing stay-at-home, quarantine and other social distancing measures;

•a deterioration in our ability to ensure business continuity during a disruption, including increased cybersecurity attacks related to the work-from-home environment;

•delays or inability 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, including with respect to the TCJA.

We will continue to review and modify our plans as conditions change. Despite our efforts to manage and remedy these impacts to ~~the Company,~~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.

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The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty which could materially and adversely affect our transmission and distribution systems, results of operations, financial condition and cash flows.

To 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 our level of indebtedness, our need to generate sufficient cash flows to service our indebtedness and our ability to comply with the covenants contained in the agreements that govern our indebtedness.

Item 2 – Unregistered Sale of Equity Securities and Use of Proceeds

None

Item 3 – Defaults Upon Senior Securities

None

Item 4 – Mine Safety Disclosures

Not applicable.

Item 5 – Other Information

None

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Item 6 – Exhibits

DPL

DP&L

Exhibit Number

Exhibit

Location

4.1

53rd Supplemental Indenture, dated ~~June 19,~~July 1, 2020, bybetween The Dayton Power and ~~between DPL Inc.~~Light Company and ~~U.S.~~The Bank ~~National Association.~~of New York Mellon.

Exhibit 4.1 to Report on Form 8-K filed ~~June 19,~~August 5, 2020 (File No. ~~1-9052)~~1-2385)

~~4.2~~

~~Registration Rights Agreement, dated June 19, 2020, by and between DPL Inc. and J.P. Morgan Securities LLC, as representative of the initial purchasers.~~

~~Exhibit 4.2 to Report on Form 8-K filed June 19, 2020 (File No. 1-9052)~~

10.1

~~Amendment to the Amended~~Stipulation and ~~Restated Credit Agreement,~~Recommendation dated ~~as of June 1, 2020, among DPL, U.S. Bank, National Association, as administrative agent, and each of the lenders party thereto.~~October 23, 2020.

Exhibit 10.1 to Report on Form 8-K filed ~~June 5,~~October 23, 2020 (File No. ~~1-9052)~~1-2385)

31(a)

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith as Exhibit 31(a)

31(b)

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith as Exhibit 31(b)

31(c)

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith as Exhibit 31(c)

31(d)

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith as Exhibit 31(d)

32(a)

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith as Exhibit 32(a)

32(b)

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith as Exhibit 32(b)

32(c)

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith as Exhibit 32(c)

32(d)

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith as Exhibit 32(d)

101.INS

XBRL Instance

Filed herewith as Exhibit 101.INS

101.SCH

XBRL Taxonomy Extension Schema

Filed herewith as Exhibit 101.SCH

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

Filed herewith as Exhibit 101.CAL

101.DEF

XBRL Taxonomy Extension Definition Linkbase

Filed herewith as Exhibit 101.DEF

101.LAB

XBRL Taxonomy Extension Label Linkbase

Filed herewith as Exhibit 101.LAB

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

Filed 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.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, DPL Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		DPL Inc.
		(Registrant)

Date:	~~August~~November 5, 2020	/s/ Gustavo Garavaglia
		Gustavo Garavaglia
		Chief Financial Officer
		(principal financial officer)

	~~August~~November 5, 2020	/s/ Karin M. Nyhuis
		Karin M. Nyhuis
		Controller
		(principal accounting officer)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, The Dayton Power and Light Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		The Dayton Power and Light Company
		(Registrant)

Date:	~~August~~November 5, 2020	/s/ Gustavo Garavaglia
		Gustavo Garavaglia
		Vice President and Chief Financial Officer
		(principal financial officer)

	~~August~~November 5, 2020	/s/ Karin M. Nyhuis
		Karin M. Nyhuis
		Controller
		(principal accounting officer)

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	Three months ended
	June 30, 2020		June 30, 2019
	Interest		Interest
$ in millions (net of tax)	Rate Hedge		Rate Hedge		Power
Beginning accumulated derivative gains in AOCL	$	13.9	$	16.1	$	0.4
Net gains / (losses) associated with current period hedging transactions	0.2		(0.5)		—
Net gains reclassified to earnings
Interest expense	(0.2)		(0.3)		—

Ending accumulated derivative gains in AOCL	$	13.9	$	15.3	$	0.4


	Six months ended
	June 30, 2020		June 30, 2019
	Interest		Interest
$ in millions (net of tax)	Rate Hedge		Rate Hedge		Power
Beginning accumulated derivative gains in AOCL	$	14.5	$	16.6	$	0.4
Net losses associated with current period hedging transactions	(0.1)		(0.8)		—
Net gains reclassified to earnings
Interest expense	(0.5)		(0.5)		—

Ending accumulated derivative gains in AOCL	$	13.9	$	15.3	$	0.4

Portion expected to be reclassified to earnings in the next twelve months	$	(1.1)
Maximum length of time that we are hedging our exposure to variability in future cash flows related to forecasted transactions (in months)	2