DP&L has given hints of financial stresses

Feb 06, 2018
DP&L’s Stuart power station on the Ohio River will close by mid-2018. CONTRIBUTED

DP&L owner AES Corp. announced sweeping changes late Monday at DP&L and another AES subsidiary in Indianapolis, saying the company will cut 60 jobs in Ohio — including an untold number in Dayton — and 100 jobs in Indiana.

The company did not say where exactly the job cuts will happen, only that employees would be notified in the next few weeks. AES spokeswoman Brandi Davis-Handy said some jobs at the DP&L headquarters in Dayton will be affected.

Among the changes announced Monday: DP&L and a sister company will share a common chief executive.

Tom Raga is being replaced as DP&L chief executive by Craig Jackson. Jackson has been the chief financial officer for both DP&L and the affected Indiana subsidiary in this action, Indianapolis Power & Light Co.

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In a brief interview Monday evening, an AES spokeswoman said Raga will remain with the company as executive vice president of DPL Inc., DP&L’s holding company. There, she said, Raga would focus on the company’s clean energy strategy and other initiatives.

Raga was named DP&L’s CEO in February 2015, replacing Derek Porter. Raga brought local experience and political clout to the job, having worked as an executive for Sinclair Community College and having served as a member of the Ohio House of Representatives.

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There appears to be a history at work here, with DP&L working in an area that is not seeing explosive growth in either population or demand for electricity.

In applying for a new rider — or extra charge — to the Public Utilities Commission of Ohio (PUCO) in 2016, DP&L gave a hint of the stresses it was experiencing, saying then that, “Without approval of the company’s (distribution and modernization rider), both DP&L and its parent DPL Inc. would be unable to maintain their financial integrity.”

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In June 2016, S&P Global Ratings ruled that an Ohio Supreme Court ruling that month had “increased the likelihood of a weaker financial profile, reflecting weaker financial measures for DPL and DP&L that could result in a near-term ratings downgrade.”

That month, the Ohio Supreme Court reversed a PUCO decision that let DP&L charge customers extra in an “electric security plan service stability rider.”

In July 2016, Fitch Ratings revised its outlook for DP&L from “stable” to “negative.”

DP&L owner AES, based in Arlington, Va., bought DP&L in 2011. AES will not release its fourth quarter-full-year 2017 earnings report until Feb. 27.

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But in its third quarter earnings release Nov. 1, AES said last year’s hurricanes, as well as a “high quarterly tax rate,” had adversely affected results.

Diluted earnings per share for AES in the third quarter of 2017 was reported to be 23 cents, a three-cent fall compared to the third quarter of 2016.

The company’s adjusted earnings per share was 24 cents per share, which was a larger, eight-cent decrease compared to the third quarter of 2016, AES said.

More cuts may be on the way.

In that earnings report, Andrés Gluski, AES president and CEO, also said the company was “on track to achieve $400 million in annual cost savings and revenue enhancements by 2020.”

Gluski told investors and analysts at the time that the company was eyeing potential cuts.

“We are aggressively reviewing our cost structure and see potential for additional improvement,” he said.

In a government filing Monday, AES also reported a corporate change that was not mentioned in its press release Monday.

In a filing Monday with the Securities and Exchange Commission, the company said that it and Brian Miller had “mutually determined” that Miller will leave as AES executive vice president, general counsel, and corporate secretary effective Feb. 21, 2018 “in connection with an internal strategic reorganization.”

That particular filing said nothing else about the company’s “internal strategic reorganization.”

DP&L serves about 515,000 customers in 24 Ohio counties and controls some $5 billion in infrastructure.