DP&L employees brace for job cuts
Executive: DP&L not going away; focus is on bolstering business.
Local Dayton Power & Light Co. employees are bracing for layoff announcements now that its owner has said it will cut 160 jobs in Ohio and Indiana.
“These are hard choices and good people who were involved,” said Tom Raga, who will leave his job as DP&L’s CEO and is now executive vice president at DP&L’s holding company, DPL Inc. “We’re committed to treating them fairly.”
AES Corp., DP&L’s owner, announced sweeping changes 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 said it has also named a new chief executive to be shared by the sister companies.
AES did not say exactly where 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.
Raga did offersome reassuring news. “DP&L is not going away,” he said. “We’re focused on strengthening our business and AES is focused on strengthening our business.”
DP&L has 1,200 employees in its service area, which serves about 525,000 customers in 24 counties in West Ohio and controls some $5 billion in infrastructure.
The changes mean Raga will be replaced as CEO by Craig Jackson, who will be CEO of DP&L and Indianapolis Power & Light Co. Jackson has been the chief financial offi- cer for the two AES subsidiaries.
Jackson will likely split his time between Dayton and Indianapolis, Davis-Handy said. Jackson lives in the Dayton area and is accustomed to splitting his time between the two cities, she said.
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.
State Sen. Bill Beagle, R-Tipp City, chairman of the Ohio Senate Public Utilities Committee, said the changes are part of a “global restructuring” on the part of AES, one that is not limited to DP&L.
But Beagle also acknowledged that this is a tough time to be a utility in Ohio, especially in this
region. Electricity customers are often trying to use less electricity, a challenge to any utility’s economic model, he said.
“Their market is not growing, our (Dayton-area) pop- ulation is not growing that much,” Beagle said. “And people are trying to use less of their product. It’s a challenge to their model.”
Raga said all utilities in Ohio face the same competitive environment.
“We’re going to focus on our regulated transmission and distribution business at DP&L,” Raga said.
‘Financial integrity’
DP&L has hinted at the financial stresses it is expe- riencing in the past in legal documents.
In applying for a new rider — or extra charge to customer bills— to the Public Utilities Commission of Ohio in 2016, DP&L said, “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.”
And 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.”
Since then, in Decem- ber 2017, DP&L has been “upgraded” to a status that’s considered “credit-watch pos- itive,” Raga said.
DP&L owner AES, based in Arlington, Va., bought DP&L in 2011. AES will release its fourth quarter-full-year 2017 earnings report on Feb. 27.
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, 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.
Reorganization
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 “in connection with an internal strategic reorganization.”
That particular filing said nothing else about the company’s “internal strategic reorganization.”